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The CRTC has officially launched its proceeding to examining broadcasting and new media.

In effect, the proceeding is looking at how Canada’s broadcasting system is affected by new delivery mechanisms, such as the internet and point-to-point transfers to mobile devices, as contrasted with over-the-air and cable.

The Commission is focusing on responses to six main themes:

1. Defining broadcasting in new media
2. The significance of broadcasting in new media and its impact on the Canadian broadcasting system
3. Are incentives or regulatory measures necessary or desirable for the creation and promotion of Canadian broadcasting content in new media?
4. Are there issues concerning access to broadcasting content in new media?
5. Other broadcasting or public policy objectives
6. The appropriateness of the new media exemption orders

The CRTC has a New Media website. There are a couple of research studies that were commissioned by the CRTC that can be found there: Changing Channels, that I referred to in a blog post last August, and TV or Not TV, Three Screens, One Regulation, prepared by Eli Noam of Columbia University.

In CRTC parlance, new media refers to broadcasting content over non-traditional broadcast distribution facilities. In other words, this proceeding, issued under the banner of the broadcast side of the CRTC, should be of interest to all telecom service providers and internet service providers.

Comments are due on December 5 and there will be an oral public hearing in Hull beginning on February 17, 2009.

Last January, I wrote about a US cable industry standardization initiative, tru2way, intended to enable open development of new services and features that rely on two-way communication over the cable network.

In effect, tru2way will eliminate proprietary set-top boxes, allowing conforming open standard set-top boxes to run on any cable network. Alternatively, tru2way could be built into new TV sets, eliminating the set-top box altogether. That is precisely what Sony, Panasonic, Samsung, and LG Electronics plan to do, helping to eliminate at least one remote control and for many, simplifying household wiring.

Light Reading wonders how telcos will respond. As a cable industry initiative, how would IPTV networks interface to tru2way TV sets?

It might be in the best interests of cable companies facing IPTV competition to provide incentives for customers to buy tru2way equipped TVs. Will telephone companies need to develop a kind of plug-in-the-wall interface to enable IPTV to operate with tru2way TV sets.

With wall mounted flat panel TVs becoming more common room fixtures, I have to think that eliminating the extra device, the set-top box, has value for a lot of people. For cable companies, tru2way-enabled TV sets may help keep customers from churning away to IPTV.

Consumers in a Multi-screen World is the theme of one of our break-out sessions at The 2008 Canadian Telecom Summit on June 16. Have you registered yet?

Last quarter’s carrier earnings reports show the value of corporate clients in enhancing ARPU in the wireless segment. Those corporate clients are more likely to have data plans to feed their Blackberry habits and are less sensitive to international roaming charges.

No question, kids are buying add-ons like messaging packs, music, ringtones – but watch for incentives on multi-year contracts for corporate wireless plans, prior to the arrival of new competitors in the wake of this month’s AWS auction.

MTS Allstream is likely to emerge as a national wireless carrier when the final gavel comes down. Over the coming days, I will put together some thoughts that emerge from an analyst briefing session that the company hosted yesterday in Toronto. Among other themes, MTS Allstream spoke about their unified communications portfolio that would seem to be screaming for mobile wireless integration.

How well will MTS Allstream be able to leverage its corporate wireline relationships to quickly build a high value wireless customer base? What strategies are most appropriate for the incumbents to retain these high value accounts and what should customers do to benefit from the attention that all of these account managers will bestow upon them?

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Update [May 22, 6:20 pm]
Obviously, the collapse of the MTS Allstream bid consortium puts the likelihood of the company emerging as a national wireless carrier in some doubt, however, the concepts in this posting still hold true. Continue to watch for MTS Allstream to leverage its enterprise-centric customer base as part of a national brand emerging from the auction.

Bill St. Arnaud recently pointed to an Educause whitepaper: A Blueprint for Big Broadband in the US.

The paper strikes me as alarmist right from the opening lines.

The United States is facing a crisis in broadband connectivity. The demand for bandwidth is accelerating well beyond the capacity of our current broadband networks, especially as video traffic and home‐based businesses become more prevalent. In the very near future, a single family will be watching HDTV video at the same that they engage in remote health monitoring, videoconferencing, gaming, distance education class lectures, and social networking.

The authors seem to feel no compulsion to be factually accurate, completely ignoring Verizon’s fibre to the home initiative and the cable industry’s investments in advancing higher speed internet access services, such as those first announced by Videotron, but coming to all major cable systems:

While other nations are preparing for the future, the United States is not. Most developed nations are deploying “big broadband” networks (100 Mbps) that provide faster connections at cheaper prices than those available in the United States.

Like New York Governor Spitzer, this January 2008 report points to Canada as a shining light:

The paper recommends the public‐private partnership approach followed in Canada, where one‐third of the funding would be provided by the federal government, one‐third by the states, and the remaining one-third by the private and / or public sector.

Bill St. Arnaud correctly points out that public private partnerships are hardly a guarantee of success.

Several municipal and government funded broadband initiatives are in already in trouble such as Utopia, Philadelphia WiFi and South Dundas (which is paradoxically is cited as good example in this paper).

Allow me to digress a moment.

I was at a meeting last week for a volunteer organization that was looking to get more involved in advocacy for social action causes. Among the issues that we plan to address is child poverty and the working poor in families led by single women. Almost immediately, there was a call for minimum wages to be raised. I objected to advocating such a subject. Raising the minimum wage isn’t a goal; it is one of the means to achieve a goal. After a lively discussion, we looked at goals such as enabling immigrant professionals to achieve Canadian accreditation; ensuring all children have access to meals at school and a roof over their heads to sleep.

I have written before about defining requirements rather than solutions. This report advocates for Canadian style solutions, yet it shows that Canada is behind the US on many measures – such as broadband connections per 100 inhabitants, average advertised speed, average cost, etc.

Bill’s comments on the study asks about increasing facilities based competition.

The challenge with broadband in North America is lack of facilities based competition. What we need to find out is why the big telcos and cablecos are not deploying infrastructure in their competitor’s territory? They seem to have no problem deploying nation wide wireless networks, but nobody wants to make the make investment in nation wide broadband in direct competition with existing incumbents. What are the hurdles? Is broadband a natural monopoly?

There is clearly no monopoly in broadband. There are two facilities based players and opportunities for others to build. Competition between cable and telcos has driven technology deployment that matches consumers’ willingness to pay.

Government involvement in dark fibre will result in a monopoly on facilities that removes incentives for innovation. We have government bodies that have determined these markets to be competitive. Why would we want to establish a state-owned monopoly?

Let me suggest that the role of Government is to set goals, not intervene in solutions.

If necessary, perhaps Government could administer and provide needs-based subsidies or tax credits directly to consumers. As difficult as it may be to resist, there seems to be a temptation to distort the marketplace by building infrastructure.

Michael Geist suggests that Barack Obama has led other candidates in placing technology policy as a campaign issue. What broadband policies will emerge in this year’s elections south of the border and posturing in Canada?

Telecom Public Notice 2006-14, Review of regulatory framework for wholesale services and definition of essential service, is one of the most important regulatory proceedings before the CRTC. It will set the stage for how competition in telecom services will evolve in an era of increasing retail forbearance.

The public notice was issued nearly a year ago and the paper process has unfolded over the course of this calendar year. (Of course, there is little actual paper these days. Virtually everything is available in electronic format on the CRTC’s website.)

Oral hearings open today in the national capital region and will continue over the coming weeks. You can listen to it live by webcast.

The opening statement from TELUS summarizes the purpose of this process, which will have taken almost two full years by the time a decision is released in mid 2008:

• To determine the extent to which regulation should mandate the provision of facilities, functions and services by some facilities-based telecommunications providers to other telecommunications service providers. In other words, to what extent and on what terms should facilities-based carriers be required by regulation to share piece parts of their networks with others.
• Two regulatory frameworks will need to be determined:

1. The regulatory framework for mandated facilities sharing to be implemented at the end of the transition period.
2. The regulatory framework for mandated facilities sharing to be implemented at the end of this proceeding and continue until the end of the transition period

In the view of MTS Allstream,

The Government’s goal is to create a competitive telecommunications market in Canada – a market that will deliver the greatest benefits to customers, produce the greatest level of innovation and provide the greatest incentive for investment.

TELUS seems to agree with that, and adds that the CRTC’s also has to consider a sufficient transition period to allow market participants to adapt business plans to the newly competitive market. Rogers suggests that 5 years is an appropriate duration for such a transition period.

There is contention over many issues, not the least of which is defining precisely what is meant by the terms “essential facilities” and “essential services.” Last week, the CRTC issued a letter describing 6 possible categories of facilities, in order to try to help bring a focus to the proceeding:

1. Essential: Would include functionalities that meet the criteria of the Commission’s definition of essential facility and would continue to be made available to competitors via mandatory unbundling and mandated pricing (such as basic subscriber listing information).
2. Conditional Essential: Would include functionalities that would meet the criteria of the Commission’s definition of essential facility, conditional on specific circumstances (such as unbundled local loops in exchanges where wire-line competitors are not yet present). These functionalities would be made available to competitors via mandatory unbundling and mandated pricing until the specific circumstances were no longer in effect.
3. Non-Essential services subject to phase out: Would include functionalities that would not meet the criteria of the Commission’s definition of essential facility, and mandatory unbundling would be phased out over a specified transition period. Provisions would be made to enable annual price increases during the transition period in order to provide incentives for investment in, and construction of, competing telecommunications network facilities. Provisions would also be made for a carrier, at the end of the transition period and at its discretion, to: i) continue to offer the service pursuant to a tariff; ii) file an application for forbearance; or iii) file an application to withdraw the service.
4. Conditional Mandated Non-Essential: Would include functionalities that would not meet the criteria of the Commission’s definition of essential facility, but would continue to be made available to competitors via mandatory unbundling and mandated pricing, conditional on specific circumstances (such as unbundled local loops in exchanges where local forbearance has been approved on the basis of mandated access to such loops). Mandatory unbundling and mandated pricing would continue until the specific circumstances were no longer in effect.
5. Public Good: Would include functionalities that would not meet the criteria of the Commission’s definition of essential facility, but there would be general agreement that the functionalities should continue to be made available to competitors via mandatory unbundling for reasons of public benefit (such as access to 9-1-1 call routing services).
6. Interconnection: Would include interconnection and certain services ancillary to interconnection that would continue to be made available via mandatory unbundling and mandated pricing on the same basis as essential facilities (such as direct connection).

Which services fit into each box? That is the essence of the next few weeks, serving to clarify the lengthy submissions. Of course, one of the challenges from such a major and lengthy proceeding is the cost for smaller competitors to participate fully. As such, it will be interesting to see the extent to which niche operators are able to preserve the core interconnection requirements for their businesses in the long term.

The debate over essential services is not just a Canadian issue. Just last week, Sprint Nextel raised the level of its fight over wholesale access to broadband lines.

Ultimately, this proceeding will play a critically important role in determining the profitability and direction of competitive communications investment in Canada. The determinations in this proceeding could impact whether certain types of competition are viable at all.

As such, the proceeding is important to all of us.

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