Search Results for: incentives

In  testimony before the parliamentary industry committee yesterday, Minister Tony Clement said that access to the Internet is fast becoming a crucial part of social and economic fabric of the country.

I agree. It was 3 years ago last week that I first wrote about the need to be more inclusive, giving birth to the idea that has become a One Million Computers initiative.

Maybe Canada needs to look at targeting broadband subsidies based on income, regardless of where people live. There is a gap in the level of connectedness among lower income Canadians in urban markets as well. Maybe it is time to consider making PCs and broadband part of our social welfare system.

I asked then whether the government would be considering a broadband tax credit in its next budget.

It is budget time in Canada once again. Will the government introduce targeted programmes and incentives for low income Canadians to participate more fully (and more digitally) in this crucial part of the social and economic fabric of Canada?

Columbia law professor Tim Wu doesn’t like usage based pricing for internet services. In his article in yesterday’s Globe and Mail, he provides a clever soundbite: “A nation that spends its time worrying about bandwidth caps is not a nation that leads.”

Different people do use the Internet in different amounts. And there are, in fact, perfectly reasonable ways to deal with variable demand. Operators can offer faster connections for those who want more and offer discount plans for light users. An ongoing bandwidth limit is much preferable to a monthly cap.

Implicit is a view that usage based billing should be banned. Professor Wu is credited with coining the term net neutrality and he has recently been named as a senior advisor to the US Federal Trade Commission. His perspectives on usage-based billing seem to be at odds with the US Federal Communications Commission. In its landmark Order on Net Neutrality issued late last year [pdf, 1.0MB] the FCC wrote:

prohibiting tiered or usage-based pricing and requiring all subscribers to pay the same amount for broadband service, regardless of the performance or usage of the service, would force lighter end users of the network to subsidize heavier end users. It would also foreclose practices that may appropriately align incentives to encourage efficient use of networks.

Professor Wu’s solution restricts the types of offers that could be made to target light volume users or perhaps lower income broadband users. He says that budget offerings should only be low bandwidth, rather than restricting volume of use. I suppose dial-up service would be his idea of the ideal low-bandwidth budget offering.

His proposal for a budget priced product offering is one suggestion, but it isn’t the only one. And we should heed the warnings of the FCC before imposing any constraints on the flexibility of operators to develop commercial offers.

It is difficult to understand how consumers can benefit from restrictions in the types of offers available to them.

How can it possibly be in the interest of end-users to have only one price structure in the marketplace? Why would we say to someone seeking a low price internet solution that they should not even be able to consider trying out a high bandwidth application? Not every high bandwidth customer has a need for their applications the same way; shouldn’t we let the internet service providers develop their own market plans and let users make informed purchase decisions?

Restricting light volume or low income internet users to dial-up speeds doesn’t sound very reasonable to me. I don’t think we want the government restricting internet pricing models.

As I mentioned yesterday afternoon, it is unlikely that we will see the elimination of usage sensitive pricing for the aggregated wholesale services that many internet services providers use to reach their customers. Usage is an efficient and fair cost allocation system for shared resources, as suggested in the National Post.

However, the currently mandated approach of applying charges on a per-user basis may need to give way to some form of aggregation in order to provide ISPs with sufficient flexibility to offer consumer increased choice among price plans.

A number of times, I have referred to the all-you-can-eat buffet metaphor. The local restaurant tolerates the football team because there are enough other customers that don’t eat quite as much. The challenge is that the current user-based pricing mechanism charges excess fees to the heavy eaters, even if there are lighter users who don’t consume their maximum.

So under the current regime, we could have a situation where an ISP has two customers, one who uses 30 GB in a month and another who uses 5 GB. Under the current plan, the ISP will pay excess usage for the customer who exceeded the 25 GB threshold. Another ISP may have two customers who each use 20 GB, putting a total load of 40 GB on the wholesale access network, but there are no excess usage charges. If UBB is supposed to help manage traffic loads, it is difficult to reconcile this anomaly.

This is where we could see a directive from the government that allows a resolution to the problem, but continues to preserve the economic efficiency of usage based cost allocation. My long time colleague, lawyer and friend, Ed Antecol, who heads up regulatory affairs at Globalive, believes the key to resolving this could be found in the third paragraph of the dissent to Decision 2010-255 by Commissioner Molnar.

I would note that I am not convinced that the Bell companies’ proposal to apply UBB charges based upon end-customer usage is the most effective Internet traffic management practice (ITMP) approach. Nor am I persuaded at this time that an aggregated usage model, if properly structured, would nullify the potential effectiveness of UBB as a means of managing network usage. Certainly, an aggregated usage model would have provided ISPs that subscribe to the Bell companies’ GAS (GAS ISPs) with greater flexibility to manage end-user pricing/service solutions.

Usage based billing across an ISP’s entire base of customers makes sense. The non-facilities based ISPs will be able to offer flexible service plans, including unlimited service, by balancing their customer base with innovative pricing models and services.

Along these lines, an aggregated model will help drive the alternate ISPs to possibly develop innovative solutions to attract people who are not yet internet users, because such users may start with lighter loads to help balance the overall traffic levels. This will contribute to increasing broadband adoption rates, and dovetails nicely with my drive to increase digital connectivity among lower income earners.

An aggregated usage regime enables the smaller ISPs to continue to be a source of competition, driving the entire industry to provide creative products and improved service, while preserving the incentives for continued capital investments by all industry participants. 

It is a solution worth careful examination by the Industry Minister.

Canada needs a million computers for lower income households.

We have computers in 81.7% of our households, heavily skewed by income. High income households are already computer equipped – better than 97% of households in the top income quintile have a computer and virtually all of them are internet connected. But in the lowest income quintile, only half of the households have a computer. I think this points to computer ownership being an affordability issue. 

Canada has about 12.5 million households, so each quintile represents 2.5M homes. We need to start with households with school aged children. If we want to have the world’s most digitally literate economy, we need to make sure that no kids are left behind because their parents couldn’t afford a computer to help them compete.

Of Toronto’s 1.8M households, around 225,000 are without computers. In Montreal, there are about 300,000 households without a computer. Vancouver: 100,000. Many urban centres lag the national average; Yellowknife has among the highest rate of computer ownership.

A million computers will bring the lowest income households to parity. One Laptop Per Child set out to provide the world’s poorest children with a connected laptop computer. Shouldn’t all Canadian children be comparably (if not better) equipped?

How many computers are being discarded from corporations that should find their way out of recyclers and into the hands of school kids? Are there low cost incentives to encourage re-use of business computers and stimulate investment in new machines? Can we develop a voucher system that encourages competition among retailers to win the business of eligible households?

Virtually all households with computers already have an internet connection, but one in five Canadian households lacks a computer. To grow the market for internet services, we need to increase the number of households with computers. That represents an opportunity for more than 2 million new household connections. What is the role of the telecom services industry in increasing computer ownership?

One million computers. What ideas do you have?

Forty years ago, my father participated on the Commission on Emotional and Learning Disorders in Children that issued a report called “One Million Children” providing a blueprint for meeting the needs of one million Canadian children with primary learning disorders. The title of that report inspired the title of this blog post. We need to ensure that all Canadian children have access to the tools to succeed. 

I’d like to update Hoover’s 1928 promise of prosperity: We need a connected computer for every home.

Will activists join me in calling for universal access to computers? I have been sitting on a blog posting for about a month now. As we approach the end of the year, I think this makes for a suitable set of messages.

The Globe and Mail’s feature last month on “Disconnected: Canada’s digital divide” helped to keep Canadians interested in the development of a national digital strategy. The on-line version was re-titled as “Rural Canada loses as politics and business fail to get broadband down the last mile.” That title is inaccurate and the article itself was confusing.

An example:

By some estimates, about 700,000 homes in Canada lack broadband Internet access, and many Canadians who do connect to the Internet do so at speeds slower than 1.5 megabits per second – barely faster than dial-up, which can take an hour to download an average music album.

How is 1.5 Mbps “barely faster than dial-up”?

Dial-up in rural communities is rarely able to exceed 14.4 Kbps, less than 1% the speed of the 1.5 Mbps. How is more than 100 times faster – 2 orders of magnitude – reduced to an descriptive like ‘barely faster”? A call-out box in the print version of the article compares the time to download a 700 MB video for 1.5 Mbps service versus 70 Mbps. About 20% of Canadians choose to connect to the internet using 1.5Mbps or less. How many  of us choose 70 Mbps service? It is inaccurate when the article says that 1.5 Mbps is too slow to stream videos on-line.

The article also bounces back and forth mixing present capabilities with future requirements. For example:

It’s too slow to stream videos online, and certainly far too slow for future applications such as telemedicine, where diagnoses and checkups can be done through high-definition, real-time video connections.

Actually, 1.5Mbps is sufficient to stream videos – granted not HDTV. But the article is completely off when talking about telemedicine. Virtually all consumer telemedicine applications are low bit rate telemetry. Canadians will have residential diagnostic imaging devices around the same time that my car gets powered with a Mr. Fusion machine. Comparing the current state of affordable residential broadband with future business-grade connectivity requirements is sloppy – mixing the future with the present; confusing residential and business services.

Mixing the future ambitions of other countries with Canada’s present is a frequent problem. For example, when describing the inadequacies of 1.5 Mbps, the article says:

By comparison, the U.S. government’s “National Broadband Plan” sets a target speed of “affordable” 100 megabits-per-second Internet service connecting at least 100 million homes by 2020.

Let’s take a look at this objective [pdf],  in closer detail. The US has about 120 million households, increasing by about 1 million each year. So, in 10 years, the FCC would like to see around 75% of households connected to a service that most urban Canadians and Americans have access to today.

But what is the relevance to the 700,000 rural Canadians who are the subject of the article? The “by comparison” is meaningless without talking about what the FCC envisions for the 25% of Americans not captured by the “100 Squared” ambition.

The article mentions Finland having declared broadband as a legal right, without mentioning that it is for a 1 Mbps service. If 1.5 Mbps is “barely faster than dial-up” as the article writes, then what is really implied by a Finlandian declaration of rights, as opposed to what Canadians can truly access without political grandstanding.

In the article, I am quoted saying

I think we’ve got parts of Toronto that have more people who don’t have [Internet] access than all parts of rural Canada

I am pretty sure that I would not have said that there are any parts of Toronto that don’t have internet access. As frequent readers of my blog know, I have campaigned on these pages for more attention to be spent on broadband adoption – which is the correct term for the demand side of the equation.

The web-version of the article includes an audio recording of an interview with Industry Minister Tony Clement that has an important statement not captured in the written version:

Technologies have advanced that collapse some of these borders and allow a lot of those needs to be looked after. We have to keep nurturing that and creating incentives for that to be deployed.

All of us involved in the communications industry have similar objectives: to increase the availability and adoption of advanced communications services and technologies. We may disagree on how to achieve this, but as we approach the new year, we need to keep looking forward.

I have a specific target in mind. Before we can have universal adoption of broadband, we need to look at how to get computers into every home, starting with households that have school-aged children.

With a possible election in 2011, will the agenda of any political party include a modern promise for digital prosperity: a connected computer in every home?