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As someone who has been an observer of government consultations, it is easy to sometimes be cynical about whether Ottawa actually is willing to incorporate suggestions to improve the preliminary views that have been circulated.

In the case of the 2019 Policy Direction to the CRTC, there are a number of subtle but important changes between the original and final text. Here is a ‘track changes’ version of the main body:

1. the Commission, when relying on regulation, should consider how the measures used its decisions can promote competition, affordability, consumer interests and innovation, namely in particular the extent to which they
   1. encourage all forms of competition and investment,
   2. foster affordability and lower prices, particularly when there is potential for telecommunications service providers to exercise market power,
   3. ensure that affordable access to high quality telecommunications services is available in all regions of Canada including rural areas,
   4. enhance and protect the rights of consumers in their relationships with telecommunications service providers, including rights related to accessibility,
   5. reduce barriers to entry and barriers to competition for new, regional or smaller telecommunications service providers,
   6. enable innovation in telecommunications services, including new technologies and differentiated service offerings, and
   7. stimulate investment in research and development and in other intangible assets that support the offer and provision of telecommunications services; and
2. the Commission, when relying on regulation, in its decisions, should demonstrate its compliance with this Order and should specify how the measures used those decisions can, as applicable, promote competition, affordability, consumer interests and innovation.

Subtle, but significant changes, demonstrating that the consultation considered the representations brought forward. I find that to be refreshing.

You can find the final text below:

2019 Policy Direction to the CRTC

Over the coming weeks, I will post some of the sessions from The 2019 Canadian Telecom Summit. Today’s post is the first in the series.

On June 5, the closing keynote address at The 2019 Canadian Telecom Summit was delivered by Innovation, Science and Economic Development Minister Navdeep Bains. Following his speech, I had a chance to sit down and have a chat with him, as captured in the video.

Here are his remarks. Please check against delivery:

Much has been written about the proposed Policy Direction released last week by ISED Minister Bains to the CRTC, and the Commission’s subsequent Mobile Wireless Services Notice of Consultation.

My regular readers know that I like to cover these kinds of things from paths that are less traveled, trying to bring a fresh perspective. As such, I’d like to examine last week’s releases from the perspective of incentives to invest.

The term “investment” appears 13 times in the CRTC’s notice of consultation; it appears just once in the proposed Policy Direction, and that instance is in relation to “stimulate investment in research and development and in other intangible assets that support the offer and provision of telecommunications services.” However, the proposed Policy Direction also speaks about “innovation in telecommunications services, including new technologies and differentiated service offerings” and ensuring “affordable access to high quality telecommunications services is available.”

That kind of language needs to be contrasted with the CRTC’s consultation that speaks in terms of the need “to make significant investments in network infrastructure” for 5G. The Commission’s concern about maintaining incentives for continued capital investment is set out in the core of the proclamation for this proceeding:

21. The Commission is hereby initiating a proceeding to review mobile wireless services in Canada. This proceeding will focus on three key areas:
    • Competition in the retail market
    • The current wholesale mobile wireless service regulatory framework, with a focus on wholesale MVNO access
    • The future of mobile wireless services in Canada, with a focus on reducing barriers to infrastructure deployment
22. The scope of each of these issues is described in detail below. In addition, parties may raise other matters, issues, or proposals that are relevant to and appropriate for a broad policy review of mobile wireless services. The Commission’s focus in this proceeding is to ensure that its mobile wireless service regulatory framework facilitates sustainable competition that provides reasonable prices and innovative services, as well as continued investment in high-quality mobile wireless networks in all regions of the country.

I observed on Twitter last week that network investment frequently falls into 1 or more of the 3 C’s: Coverage, Capacity, or Capability.

Many carriers have focused their investments on coverage and capacity enhancements, adding reach to the networks to previously under-served regions and adding capacity to increase data connection speeds and relieve congestion. Most carriers have upgraded capabilities for most regions to enjoy access to advanced fourth generation technology and are readying to deploy 5G.

Mandated wholesale access has the potential to impact the business case for investment. Of course, in core urban areas, there are strong incentives to invest driven by competitive behaviour, where carriers will ensure that their networks are able to offer top speeds as part of their bragging rights. However, it is clear that the business case for such investments is not limitless, otherwise we would see 5 bars of LTE-Advanced everywhere in Canada.

So, we know that there are already certain areas with lower population densities that already cannot support a business case for some carriers to invest. Now, imagine that that the carrier will no longer be able assume the same level of retail revenues. What happens to the business case for those marginal areas? If potential revenues decrease, one would expect that fewer areas will be able to support a business case for enhanced levels of investment. People in under-served areas today should carefully consider whether mandated MVNO and lower retail prices will help or hinder their cause.

Recall that when the current CRTC Chair was welcomed to his job, he received a letter from the Ministers of Heritage and of Innovation, Science and Economic Development, saying, “All Canadians and Canadian businesses deserve high quality telecommunications services at affordable prices.” At the time, I wrote “It is a delicate balance. Quality and coverage require significant levels of capital investment, especially in a country like Canada.”

The proposed Policy Direction echoes that language in the clause suggesting that the CRTC should consider the extent its regulatory measures “ensure affordable access to high quality telecommunications services is available.”

The CRTC consultative process will most likely be informed by engineering economic analysis, assessing the potential impact on investment in marginal areas for coverage, capacity and enhanced capabilities.

Maintaining incentives for investment requires a delicate balance.

On Friday, Innovation Minister Navdeep Bains announced agreement had been reached with his provincial and territorial counterparts on the principles for a national broadband strategy.

The strategy is based on 3 key principles: Access, Collaboration and Effective Investment. These form what could be a “table of contents” of a more complete strategy document.

As we move forward and engage in this work, we will be guided by the following connectivity principles:

Access

• Access to reliable, high quality and affordable services are necessary for Canada’s success in a digital world, to allow all Canadian businesses, households, and public institutions to realize the economic and social benefits of connectivity through the use of advanced technologies and applications
• Work towards establishing universal access of at least 50 Mbps download / 10 Mbps upload taking into context scalability and longer-term growth.
• Businesses should have access to networks that support their ability to utilize technology, compete, and contribute to the economy.
• Mobile connectivity on major highways and roads is an important need, including for safety.

Collaboration

• Collaboration is essential to address the scope of the challenge and maximize the effect of our actions.
• Shared objectives and priorities will lead to better outcomes.
• Gathering, having access to, and sharing reliable data can significantly improve analysis and deployment strategies, as well as enable public reporting on progress.
• Recognize the unique circumstances of Indigenous communities, especially in remote and isolated locations.

Effective Investments

• Targeting market failures allows governments to direct support to where it is needed most.
• Coordination of regulatory and spending levers helps ensure effective implementation.
• Open access requirements can promote competition, affordability, and greater choice and should therefore be considered.
• Addressing deployment barriers can significantly reduce constructions costs of digital infrastructure.

Improving broadband adoption is predicated on two key elements: an effective strategy needs to be concerned with increasing the availability of high speed services (supply), as well as ensuring that all Canadian households are able to get on-line (demand).

The elements in Friday’s announcement set out a framework that needs to reach beyond the various levels of government and encourage increased private sector investment, potentially unlocking billions of dollars per year in capital spending.

There are many ways that government can help, especially in improving access to rights of way and access to existing government infrastructure, as well as providing faster processes for investment approvals. The recent court decision striking down a bylaw from the City of Calgary shines a light on how some policies have restricted telecommunications industry access to rights of way and municipal infrastructure, creating disincentives for investment. I have written before “How smarter policy can create smarter cities.” And more than 11 years ago, I wrote that a “city would be better off with a declaration that it will no longer fight carriers looking to invest and it will get out of the way of service providers that want to improve fibre access to their customers. The best way to support industry may be for the city to just get out of the way.”

Canada should examine the rules recently put in place by the FCC that require accelerated timelines for municipalities to approve or reject construction projects and the federal regulator also imposed limits on the fees that municipalities could extract for communications infrastructure projects.

The strategy appears to endorse the CRTC’s pragmatic approach for implementing its new Broadband fund. “Work towards establishing universal access of at least 50 Mbps download / 10 Mbps upload taking into context scalability and longer-term growth.” As I have written recently, the Commission recognized the challenges of extending broadband to some remote area, even when it set its ambitious national broadband target. “In some underserved areas, achieving the objective will likely need to be accomplished in incremental steps due to many factors, such as geography, the cost of transport capacity, the distance to points of presence, and the technology used.”

How do we increase demand?

This past June, Minister Bains announced the coming launch of “Connecting Families“, a project in collaboration with most of Canada’s major telephone and cable companies, that is designed to help hundreds of thousands of low income Canadian households get affordable internet services. It is a major step in the right direction. While Rogers and TELUS have been offering similar services for a number of years, the national program is supposed to be launched very soon.

As the Federal and Provincial ministers agreed, “Gathering, having access to, and sharing reliable data can significantly improve analysis” to improve our understanding of other factors that are inhibiting increased adoption, as I wrote in “Building a broadband research agenda.”

The new national broadband strategy, based on the principles of Access, Collaboration and Effective Investments, will help drive supply of advanced broadband infrastructure. The launch of Connecting Families will be an important step in helping to increase subscriber adoption.

With far less fanfare than the previous government’s widely ridiculed national digital strategy – perhaps better characterized as a national digital pamphlet – Minister Bains has put forward a more actionable broadband strategy. Digital issues have moved higher on the national agenda evidenced by the multi-stakeholder broadband strategy, the Broadcast and Telecom Legislative Review and the CRTC’s Broadband Fund.

These are encouraging signals. We will continue to watch the file as greater detail is released.

The following is a piece I wrote for the National Newswatch Opinion page:

Isn’t some kind of broadband better than nothing?

The CRTC thinks so. And I agree.

When the Commission released its plans for its $750M Broadband Development Fund earlier this fall, it decided that it would accept applications to provide broadband service at download speeds of 25 Megabits per second (Mbps) and 5 Mbps up, despite having previously announced an aspirational target for all Canadians to eventually be able to get twice those speeds.

Activists wrongly claimed that the Commission had cut its objectives in half from the bold universal service objective set less than 2 years ago. Indeed an opinion piece at cbc.ca asked, “Why would service providers hold themselves to CRTC targets when the CRTC itself won’t?”

The fact is, in its 2016 policy, the CRTC itself recognized that “in some underserved areas, achieving the objective will likely need to be accomplished in incremental steps.”

The newest CRTC policy isn’t making any kind of a change to the 2016 policy; it is executing precisely as envisioned in 2016. In both cases, the Commission realized that the current state of technology makes it impractical to provide 50 Mbps service to some parts of the country at anything close to a reasonable subsidy per household.

The reality is that funds are limited. As the CRTC found in 2016, “Closing the gap in broadband Internet access service availability in Canada is an enormous financial challenge, requiring billions of dollars in funding and investments that can only be overcome through shared responsibility.” Various government programs are helping bring affordable broadband access to Canadians in rural and remote regions.

If those subsidies were only applied where speeds of 50Mbps are possible, then some Canadians will continue to have no access at all. While we would all like to have faster internet at a lower price, I think most people will agree that access to some level of broadband is better than no broadband. And let’s not forget that that the speeds being required by the CRTC are the kinds of broadband that nearly half of all Canadians chose for our own homes.

When some Canadians are wanting for any kind of affordable broadband, it takes a certain kind of arrogance to proclaim that 25Mbps just isn’t good enough.

There are lots of reasons Canadians like to gripe about the CRTC – it is part of our national birthright. The Commission’s Broadband Plan isn’t one of them. It’s time to stop complaining and get on with building more broadband networks.