Search Results for: incentives to invest

For months now, I have been writing about the disturbing lack of context in respect of some reports examining the state of Canada’s telecommunications industry, especially those that have cited various OECD studies released over the past few months.

As I wrote in June, it has become increasingly clear that the OECD’s analysis is flawed.

The failure by so many to analyse the data appears to confirm what President Barack Obama said recently in a newspaper interview:

I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding.

Countless statistics and rankings have been developed regarding the state of broadband networks in countries around the world. Yet, the sum total of all this work may have clouded the issues and caused confusion among policymakers and other stakeholders.

Canada is no exception. While some paint a picture of crisis, others argue that Canada has enviable broadband infrastructure and is well-positioned for the future, despite facing unique geographic challenges.

One matter that is uncontested is that the stakes are high. Countries around the world see information and communication technologies (ICTs) like broadband as key to their economic futures. In Canada, as in other countries, these issues are important to the economic present as well. Canadian telcos, cablecos and wireless providers invest between $8B and $10B each year in advanced communications infrastructure. These investments support $54B in revenues and provide jobs to more than 140 thousand Canadians.

ICT policy sets an enabling foundation for Canada’s participation in a global knowledge-based economy.

A group representing Canada’s largest internet service providers commissioned my firm to study the issue. Today, we are releasing our report [pdf, 944KB] that seeks to clarify the facts, dispel myths and provide the analysis needed to constructively move the issues forward and facilitate a more informed debate.

The report concludes that Canadians benefit from a robust, diversified broadband infrastructure. All Canadians who want to subscribe and pay for broadband can obtain service. We have 100% availability when you consider all the technology choices available. The vast majority of Canadians benefit from a world-leading level of choice in access to broadband technologies, using twisted pair, coaxial cable, wireless (fixed and mobile) and satellite.

Moreover, Canadians have access to some of the most affordable services, while also benefiting from some of the world’s fastest connection speeds for both wireline and wireless broadband services.

In terms of adoption, Canada continues to lead all G-8 countries in adoption of internet services, and ranks in the top ten for most international comparisons on broadband penetration and speeds, contradicting last week’s student project from the Said School of Business at Oxford.

With almost 70% of Canadian households already subscribing, there remains a significant opportunity to expand broadband adoption even further.

The report recommends:

• As we go through the process of developing a national ICT strategy, recognize the true state of Canada’s ICT 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
• 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

You may download the complete report here [ pdf, 944KB]. It provides the context to enable a better understanding and discussion of the issues for expanding broadband in Canada.

Financial Times has an article called The broadband numbers racket, by former FCC chief economist Thomas Hazlett, now a professor of law and economics at George Mason University.

Hazlett points out that too many people use superficial selection of statistics to bolster questionable policy positions.

Cherry picking broadband penetration numbers to imply the US is slipping into Third World status is fine for a quickie term paper, at least if Wikipedia goes down. But adults ought sort through the multi-dimensional complexity of the real world –

The article refers to a paper published in the Review of Network Economics [ pdf, 138KB]. The paper looks at different models of regulation on broadband networks and among the findings, it states

incentives for network investment decline when network owners lose a set of valuable property rights.

Both articles – from Financial Times and Network Economics – make an interesting read.

As I mentioned earlier this week, responses to the March 11 Cabinet appeals were submitted on Monday. A few parties cobbled together rushed submissions and at least one group asked for an extension – it is almost as though some groups were reminded of the deadline by this blog!

TELUS summarizes its reply comments with a call for policies that encourage and not discourage investment and innovation.

You cannot expect carriers to make risky investments if they are forced to share new infrastructure at artificially low rates in order to benefit competitors that won’t invest.

CAIP has filed responses that support the MTS Allstream application and call for the Bell and TELUS applications to be denied. In its press release, CAIP said:

Canada is no longer a broadband leader and Canadians are paying higher prices for an inferior product than customers in other OECD countries. If Bell and TELUS prevail, the situation for Canadian customers and businesses will only get worse.

Of course, absent investment in their own infrastructure, it is unclear how ISPs that resell telco DSL access services are driving increased speeds for Canadian consumers. The ILEC argument is that it is precisely the requirement to share their infrastructure that stifles their appetite for risky investment.

The outcome of the cabinet appeals will impact incentives for investment and innovation. What policy will guide carriers building and delivering broadband services to businesses and consumers. How will Canadian broadband networks evolve?

We’re exploring that theme at The 2009 Canadian Telecom Summit on Monday June 15, with a panel of leaders with different approaches in rural and urban settings. What are the roles for fibre, wireless and satellite technologies?

On Tuesday June 16, the Regulatory Blockbuster and the panel on Network Neutrality will look at key issues from a policy perspective. And don’t forget the address by MTS Allstream CEO Pierre Blouin who can be expected to lay out his views on the case before cabinet. The conference opens on June 15 with an address by Rogers’ CEO Nadir Mohamed.

Have you registered yet?

I received a bizarre email last Thursday that tried to appeal to my nationalist sentiments. According to the email, I should be recommending Nortel equipment to my clients because it is Canadian.

Not because it is the best way for service providers to deliver leading edge solutions to their customers; not because it is cost effective; not because it makes my services run faster and jump higher. The appeal says that we should buy Nortel’s stuff because Nortel’s stuff is Canadian; because Canadians created 5000 Nortel patents and Nortel invests pantloads of cash in Canadian R&D.; [You can see a web version of the email here.]

There is a promotion [ pdf, 674 KB] that provides cash incentives to consultants who recommend Nortel business solutions to their clients and I guess it is trying to appeal to my colleagues’ patriotism.

It seems to me that Nortel’s Canadian roots may be an interesting factor, but is it a reason to buy? I used to look to the Detroit 3 automakers because of where my in-laws live, but that loyalty seemed to be a one-way love affair.

How relevant is the flag flying in front of your suppliers’ headquarters?

Technorati Tags:
Nortel, Canadian

A loyal reader, frequent commenter and fellow eater of kippers for breakfast sent me a link to a release from the US Chamber of Commerce, describing two new major studies showing the economic benefits of delivering broadband to all consumers, especially senior citizens.

The papers recommend that the federal government should adopt policies to incent investment in broadband infrastructure.

The two reports, Network Effects: An Introduction to Broadband Technology & Regulation [pdf 288K] and the first of 4 companion reports: The Impact of Broadband on Senior Citizens [pdf 482K], provide a number of policy recommendations with a US focus but relevance for Canada. Other companion reports to be released will review the impact of broadband on telemedicine, people with special needs, and education.

These US Chamber of Commerce reports are worthwhile reading over the holiday period.

We will want to look at them further in the new year – especially in preparing for the CRTC’s internet network management proceeding.Here is a sample of what the US Chamber has to say:

Network regulation would serve only to slow innovation and discourage continued network deployment by increasing regulatory uncertainty and decreasing financial incentives to deploy advanced infrastructure.

The Chamber also suggests some guiding principles for ensuring that all U.S. consumers have access to broadband and broadband-enabled tools. So far, Canadian initiatives have been provincial initiatives.

In recent months, we have seen 3 provinces announce universal broadband access plans: PEI, Saskatchewan and last week’s announcement from New Brunswick.

What will be the role of the January federal budget in launching national broadband infrastructure initiatives? How will we create an effective, pro-competitive national broadband strategy for Canada?