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Net neutrality at the EDP

U of TAs I mentioned in my posting last Monday, the first day of the Executive Development Program at University of Toronto featured network neutrality presentations by Lawson Hunter of Bell and Professor Andrew Clement of U of T’s Faculty of Information Studies.

Both speakers expressed concern about the loaded nature of the terminology – and the definition itself. Net Neutrality is a term that evokes images of mom and apple pie: who could oppose it?

But there are definitional challenges – is there even a common understanding of what is meant by the term “net neutrality”?

Professor Clement rejects the view by some that net neutrality carries with it a requirement to treat all packets equally. He favoured a Lessig/McChesney definition set out as “like content must be treated alike.”

Andrew suggested principles for a neutral internet:

  • Basic broadband service
    • Broadband network operators should provide “Basic Access Broadband,” a meaningful, neutral Internet connectivity service, capable of handling all major application classes. Beyond providing this level of service, operators would be free to determine all service parameters.
  • Common carriage
    • Broadband network operators should maintain a strict separation between network carriage infrastructures and the content and services offered over them. They must ensure nondiscriminatory access and interconnection to competitors, including municipalities and public utilities, as well as data and content service providers.
  • Open
    • Network infrastructures at all layers should be based on open architectures, standards and protocols, especially for interconnection and interoperability with other networks and devices.
  • Transparent
    • Network operators should make available to customers, citizens and oversight bodies in clear and understandable terms their service offerings, prices, terms of inter-connection and peering agreements, as well as other aspects of their operation of vital public interest. Where operator actions may impair service, they need to provide clear notice and justifications.
  • Privacy protective
    • In keeping with legislative requirements and common carrier principles, network operators should keep personal information secure and under customer control. No ‘back-doors’ and deep packet inspection. Surveillance activities should be strictly limited in scope and demonstrably lawful.
  • Accountable
    • Network operators should be held accountable to legitimate and effective public bodies charged with promoting the public interest. Any regulations developed should be clearly justifiable for meeting core societal goals, including affordability, universality, equity, safety and national sovereignty.

Thoughts? There was quite a lively discussion on Monday at the EDP.

Some even suggested that the network equipment providers couldn’t or wouldn’t handle all these requirements, such as the requirement for adherence to open standards at all layers.

It reminded me of a time in the early 1980’s that equipment providers suggested that equal access wasn’t possible – the US didn’t buy that argument then. Let’s face it. If policy makers dictate certain capabilities as a mandatory requirement, then suppliers will develop the equipment accordingly or new suppliers will be found.

The issue is more fundamental – why should these requirements be imposed by regulation?

Each principle can and should be examined separately – why can’t market forces continue to drive internet development?

In my view, the internet has flourished without imposing limitations on degrees of freedom for service providers and equipment suppliers. Why risk regulating that which has flourished without?

As Lawson Hunter subtitled his presentation: is Net Neutrality “A Questionable Solution in Search of a Problem.”

Presumptive regulation interferes with market forces [and] therefore should only be used where/when proven necessary.

As always, your comments are welcome.

Canadian wireless market accelerating

Last week, I mentioned a report by Kazam Technologies that was delivered in April 2006 but has only recently been released by Industry Canada.

According to the report, the Canadian wireless telecommunications market is expected to generate over CAN$15B by 2009, representing an 11.5% growth rates from 2005 to 2009. The report expects that, at that rate, the Canadian wireless market will grow at a faster pace than the US, forecasted at 10 percent.

An interesting point in the report, which was also cited at last week’s CWTA forum, is that Canada’s cost of acquisition (which includes handset subsidies) is among the highest in the world: 75% higher than the US. As a result, it is misleading to only look at per minute rates in determining the affordability of services and the competitiveness of the Canadian market.

Operators are faced with the difficult dilemma of reducing handset subsidies (to offset their cost of doing business) vs. driving adoption of new services, such as Mobile TV, that require users to upgrade handsets.

This report is hardly the last word on wireless – first round comments for the auction rules are due toward the end of May, with reply comments due in late June. We have scheduled a session looking at competition in wireless services at The 2007 Canadian Telecom Summit on June 13.

Rogers released its first quarter numbers after the markets closed last night. Net additions, data consumption, ARPU were all strong and churn was significantly better than the prior year. Rogers President and COO, Nadir Mohamed, will be delivering the opening keynote at The 2007 Canadian Telecom Summit on June 11.

Bell’s results are out this morning and are showing continued challenges in the wireless segment. Net additions on post-paid accounts were only a tenth of what Rogers gained. TELUS results are out later today – watch this space for updates.


Update: [May 2, 11:15 am]
TELUS has released its numbers and it has added 6 postpaid wireless customers for every one that Bell captured – leaving it with a total number of customers (4.136M) just shy of Bell’s (4.254M). At the current pace, TELUS will catch up to Bell in 2 more quarters. Rogers has 5.493M postpaid subscribers. The 3 major carriers added about 165,000 customers in the first quarter: Rogers grabbed 57% of them, TELUS 37% and Bell just 6%.

What will this mean for consumers in the coming months?

De-myth-tifying Canadian wireless

A common element running through a number of presentations at Monday’s CWTA forum was tackling the myths of competition in Canadian mobile wireless, further challenging the call from some elements for government subsidies to stimulate a fourth national carrier. Later this week, I’ll write more about reaction from regional cable companies to spectrum set-asides.

Dvai Ghose of Genuity led off the ‘myth-busting’ with an attack on 8 myths in Canadian wireless:

  1. Wireless penetration is lower than the US due to prices
  2. Canadian ARPUs are high due to high usage
  3. ARPU is the only indicator of wireless affordability
  4. Canadian carriers are underspending on networks
  5. Canadian wireless consumers are unhappy
  6. Wireless is more of an oligopoly in Canada
  7. Consumers have very little choice
  8. Wireless has always been profitable

His conclusion was that the industry was not broken and government should not intervene.

Rob Bruce, president of Rogers Wireless, spoke of Lies, Damned Lies and Statistics during his luncheon keynote address. His talk took aim at the myth of a cozy relationship between the 3 major carriers.

He asked how cozy the industry can be when Canada has seen such a significant shift in market share over the past 5 years. According to his charts, Bell has seen its share of the postpaid market fall from 42% in 2001 to 23%. In the same period, TELUS share climbed from 21% to 32% and Rogers has grown from 20% to 45%.

The fireworks are just getting started.


Update: [April 25, 8:05 am]
Iain Grant – who was unavailable for Monday’s event in Ottawa – did an interview in today’s National Post. The theme of the article is the role of small players in pricing. Iain continues to call for subsidies for smaller players – like city of Toronto-owned Toronto Hydro Telecom, while conceding that Quebecor would not need the financial help. The interview suggests that there are really only 2 carriers in any given region; a myth that conveniently ignores the dozen or so brands and competitors that are acting in precisely the role of offering creative and often aggressive pricing alternatives.

I am hearing rumours that next week’s earnings reports may show more shifts in share. Hardly signs of coziness.

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