Search Results for: incentives to invest

A flood of documents arrived in my email late yesterday, with parties filing their comments in response to the seventh amendment to Telecom Notice of Consultation 2009-261.

The filings should be available on the CRTC website in the next couple days.

In the meantime, here are some highlights.

From TELUS [para. 12]:

While new investment is completely in line with macro-economic policy, unbundling is not. In fact unbundling actually increases the risk of investing in facilities that are required to compete with the market leader in broadband and broadcast distribution. Unbundling is an absurd proposition at best if the goal is to promote competition.

From Bell [para. 19]:

In the end, the trade-off faced by the Commission can be summarized as follows: is it better to mandate access to NGNs and depress investment, in the hope of spurring some hybrid or resale competition in those limited well-served areas where each of cable, ILEC and wireless providers will have built high-speed broadband networks, at the expense of competition in “lost” areas, or is it better to not impose regulatory measures and let ILECs invest as much as market forces allow, in order to provide as many Canadians and communities as possible with the benefits of competition from at least three competing facilities-based networks?

From Rogers and the major cable carriers [para. ES14]

The international evidence points to some risk that wholesale access requirements would have a negative impact on incentives for investment by facilities-based broadband service providers. A review of the literature provides no strong evidence that the benefits would be sufficient to outweigh this risk.

From MTS Allstream [para. E3]:

Based on the U.S. experience, withdrawal of regulated wholesale services is more likely to discourage investment than to stimulate it. In contrast to the existing situation in the U.S., in Europe it is recognized that replication of existing infrastructures is neither practical nor desirable, even in densely populated areas, and that unbundling networks and providing wholesale access is a proven enabler of both competition and investment.

Surprisingly, the Canadian Association of Internet Providers had no comments. Their two page submission consisted of a restatement of the subjects upon which CRTC was seeking comments and a statement that the Competitors “look forward to reviewing the submissions of interested parties.” Considering the association’s declaration of importance of this issue, it is somewhat surprising that there was no substance to its filing, no evidence filed to address the question that seemed to be crying out for input from CAIP et al.

At paragraph 11.B.b, the notice asked for evidence to support or counter:

whether, in the absence of the speed-matching requirement and the mandated provision of the high-speed access services under consideration, there would be competition sufficient to protect the interests of users;

This point seems crucial for the various appeals that were mounted by CAIP over the past year. It seems bizarre that the Competitors wouldn’t put forward evidence to address this point. They need to do more than just look forward to reviewing other submissions. CAIP and the Competitors should have put forward a strong case and prepare to defend it.

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Update [February 9, 7:15 am]
Teksavvy filed a complete set of comments, with supplementary expert evidence, including a literature review that could result in the CRTC being the first quasi-judicial body to pronounce upon the Harvard Berkman study that was released last October [see our many posts such as here, here and here, describing critiques of that piece]. Most importantly, there is a paragraph in Teksavvy’s submission that begs the question of why its evidence wasn’t filed by the CAIP coalition.

TSI notes that the competitive sector is not in good health. Evidence of this is demonstrable through the reduction that has occurred in recent years in the number of competitors participating in the regulatory process and the reduced vigour of the participation of those who are left. The result has been that TSI has had to expend considerable resources in order to ensure that competition does not die, and with it, TSI itself. This is a big burden for one competitor to bear, and it is not a burden that can be sustained indefinitely.

There was considerable press and editorial coverage of Industry Minister Clement’s decision to intervene in the Globalive ownership issue. No need to rehash that ground here. I spoke to a couple reporters from Canadian Press talking about consumer and policy issues.

There was a common thread in the decisions; the government continues to support a model of facilities-based service providers being the means to deliver sustainable competition in world of converged communications.

The three decisions from Friday support a theme of fostering an environment favouring private sector investment in advanced telecommunications infrastructure.

In its decision to send speed-matching back to the CRTC, the Government said that it wants the Commission to consider the impact of its Decision on incentives for investment.

Will Industry Canada keep this in mind when it is developing its auction policy for the next major swath of mobile wireless bandwidth?

IC Schedule – Globalive http://d1.scribdassets.com/ScribdViewer.swf?document_id=23985717&access_key=key-11xt7pmkzsdnfisrdx5g&page=1&version=1&viewMode=list

MTS Allstream Order in Council
http://d1.scribdassets.com/ScribdViewer.swf?document_id=24015524&access_key=key-1tmo7fmofjsb2dddk1fq&page=1&version=1&viewMode=list

Bell / TELUS Order in Council http://d1.scribdassets.com/ScribdViewer.swf?document_id=24015688&access_key=key-bbo0ezlgp1h11zd8gap&page=1&version=1&viewMode=list

As part of its support for the development of a National Digital Strategy, TELUS has released a paper, called “Leaping Forward – Wireless Broadband and a National Digital Strategy.”

According to the paper, now that Canada has built an ubiquitous broadband infrastructure, the question of how to leverage these networks and development of a broadband economy be part of a larger digital industrial strategy:

That industrial strategy for Canada would include:

• incentives for continued investment
• policies that promote consumer access and choice; and
• ensuring that application providers, software developers and content creators across the value chain can reach markets.

Telus expands with its own Top 10 list of principles to guide the discussion and debate in developing the national digital strategy:

1. Canada needs to trust the market to build our broadband future
2. Government can find smart ways to support a digital media strategy without large expenditures funded by taxpayer dollars
3. Spectrum auctions should be fair and open to ensure to ensure that the $2 billion dollar overpayments in the last AWS auction are not repeated again
4. Canada and the world are our markets; we cannot be inward looking
5. Digital content is not limited to narratives/stories but is also software and applications that enable the creation, distribution and sharing of content online
6. Governments are ill equipped to shape new media or to sustain markets that don’t exist, but government can stimulate investment and innovation
7. Canadians must have the opportunities to access, communicate, interact, create and transact over open broadband networks
8. Copyright is not an absolute; it must be balanced against fair use
9. Intellectual property is the currency of an information economy just as much as access to broadband is a prerequisite to participation
10. The consumer and public are already shaping markets and we need to follow their direction to succeed

Each of these points are fleshed out in greater detail in the paper – see below.

Many of these themes have been discussed by Telus before, such as in the context of its Petition to the Governor in Council from last March. A ruling on a series of cabinet appeals is expected later this week.

Leaping Forward-Wireless Broadband and a National Digital Strategy FINAL http://d1.scribdassets.com/ScribdViewer.swf?document_id=23376655&access_key=key-eo0fzs9dtqop8q5cy4i&page=1&version=1&viewMode=list

The Information Technology & Innovation Foundation released a report [ pdf, 330KB] last week called Policies to Increase Broadband Adoption at Home. That policy paper follows a study [ pdf, 600KB] conducted by Janice Hauge of the University of North Texas and James Prieger of Pepperdine University that examined Demand-Side Programs to Stimulate Adoption of Broadband: What Works?

The impetus for these reports was a statistic that should ring a familiar tone for us in Canada: between 92 to 94 percent of U.S. households can subscribe to broadband but only approximately 65 percent subscribe. Why?

We have asked that question a number of times over the past year or more in respect of Canadian broadband adoption and most recently, we raised the issue in our October report [ pdf, 944KB], Lagging or Leading. The ITIF report suggests that there are a variety of reasons why people choose not to subscribe to broadband. The three factors cited in the ITIF report are:

• affordability (e.g., of the service or a PC),
• usability (e.g., lack of digital literacy skills, physical handicaps), and
• lack of relevance or perceived value (e.g., consider Internet a waste of time).

The report finds variability in the relative importance of these factors based on the type of individual. For example, among higher income, older Americans a lack of interest may be a more important factor than the cost; for lower-income, younger households, cost may be more of a deterrent.

If the United States is to achieve near universal broadband adoption—on the order of telephone adoption rates—at least in the near to moderate term, the federal government will have to develop and implement policies designed to spur broadband adoption.

The North Texas / Pepperdine study examined the evidence available on the degree to which demand-side programs have fulfilled their purpose of stimulating broadband adoption.

On the spectrum from national to local programs:

• Nationally funded programs with inadequate oversight can lead to waste, fraud, and abuse.
• Local programs have more complete knowledge of the barriers to adoption in the community.
• Local efforts can better ensure that programs are utilized by the intended recipients.
• Local efforts may have limited capability to collect and evaluate data.
• National efforts may have more capability to collect and evaluate data.

We need to ensure that our national broadband strategies provide incentives for continued investment in advanced infrastructure, a topic to be picked up further at another time.

But, we also need to emphasize the demand component of broadband adoption. Both of these reports reports are worthwhile reading – adding to the knowledge base as Canada continues to develop our national digital strategy.

The release of our report [ pdf, 944KB] was greeted by the popular media with an interesting reception.

We have provided a Canadian interpretation of the body of studies regarding broadband services. Many folks, despite evidence to the contrary, seem averse to any consideration that studies issued by reputable foreign institutions could contain errors.

Some criticisms of our report seem to reflect naivete, ignorance of econometrics or a lack of real world experience. I was struck especially by comments that ridicule the role of satellite in completing the job of providing universal access to broadband in our country – together with most nations. If Australia’s NBN can’t reach more than 90% of its population with wireline facilities, despite plans to spend more than $40B over the next 8 years, exactly what policy will do better in Canada?

Is satellite a perfect substitute for terrestrial solutions? No. But, it is unrealistic to expect any other technology to be able to serve the minority of Canadians who live in areas with low household density. Would armchair critics prefer to have rural Canadians wait indefinitely for fibre to the farm, rather than improve their accessibility through next generation satellite?

The current federal broadband program recognizes this reality:

The Broadband Program will be technology neutral, accepting a variety of wireline and wireless technology solutions, such as fibre, digital subscriber line (DSL), cable and wireless networks (ground based and satellite).

Canadian ISPs aren’t done; there is an ongoing need for more investment, to continue to compete to attract more customers and increase the service levels to those already on-line. Facilities-based competition isn’t just the domain of cable companies and telcos; there are hundreds of entrepreneurs with regional and national networks, competing with all forms of infrastructure.

The report indicates that service providers are already investing about $8B-$10B per year on their networks and there is no indication that this is coming to an end. That is a lot of money – about $50 per month per Canadian household in capital expenditures.

Broadband adoption has two components: supply and demand. Among the recommendations in our report were two suggestions to support each of these factors.

On the supply side, we have recommended that the government should continue to encourage private sector investment in infrastructure:

• Continue policies focused on fostering facilities-based competition
• Build on the past success of private sector investment by removing current policy and regulatory uncertainty regarding investments in next-generation networks

And on the demand side, an area generally overlooked by policy makers, we suggested that research is needed:

• Shift more attention to adoption issues (including adoption of next-generation services) and encourage socio-economic research focused on better understanding the obstacles to, and inhibitors of, broadband adoption
• Consider programmes to improve digital literacy and the use of incentives (tax-based or otherwise) to target and overcome any barriers to broadband adoption

Supporting programmes to increase demand and overcome barriers to broadband adoption are a competitively neutral approach to get more Canadians on-line.

What do you think we need to do to improve Canada’s broadband adoption rates.