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Canada’s wireless policy, like our national digital strategy, has been characterized by inconsistency and uncertainty.

In the past, I have referred to it as Calvinball, from the Calvin and Hobbes comic strip. A game where no one really knows the continually changing rules.

This week’s carrier appeal of the CRTC’s retrospective application of the Wireless Code highlights more of the uncertainty facing the sector as it prepares for “back to school” sales beginning next month.

Consumers and the industry alike don’t really know what the CRTC intended for implementation timing because of imprecise language used in the Wireless Code decision, and the contradictory clarifications [here and here] that have been provided subsequent to the Decision.

A number of carriers have filed with the Federal Court of Appeal because the CRTC appears to be asserting a power to retrospectively apply the Code to contracts that existed before the Decision, contrary to an Opinion that was filed as part of the proceeding that led to the release of the Wireless Code.

Even if an expedited schedule is granted, there is no way for the Federal Court of Appeal to make a determination before the summer is out. Uncertainty is bad for consumers, it is bad for the carriers and it is bad for the economy. It is hardly a satisfactory introduction for the national Wireless Code.

As such, a colleague and I wondered if there may be a solution that could allow the court case to be dropped while achieving most of the consumer objectives.

As I wrote a couple weeks ago, the trouble has been caused by the timing set out by the CRTC in Paragraphs 368 and 369 of the Code:

368. In light of the above, the Commission determines that all aspects of the Wireless Code will take effect on 2 December 2013.

369. The Commission finds that where an obligation relates to a specific contractual relationship between a WSP and a customer, the Wireless Code should apply if the contract is entered into, amended, renewed, or extended on or after 2 December 2013. In addition, in order to ensure that all consumers are covered by the Wireless Code within a reasonable time frame, the Wireless Code should apply to all contracts, no matter when they were entered into, by no later than 3 June 2015.

We wondered what the impact would be of changing the final date in paragraph 369 to 3 June 2016. Superficially, some would say that this provides the wireless carriers with an extra year, but in reality, the change creates the right incentives for the carriers to quickly shift to shorter contracts.

Had the CRTC responded to my June 7 tweet with such an erratum, I wonder if the carriers would have launched their appeal? Contracts entered into after the release of the decision (during the period between 3 June 2013 and 2 December 2013) fall into a grey area that are not as clearly beyond the CRTC’s power to change. Carriers would want to move quickly to shorter schedules for their device subsidies in order to avoid the risk of consumers walking out prior to the device being amortized.

It is a simple change – a single digit – and what is really being lost? Carriers will have the incentive to quickly shift operations to remove 3-year deals well in advance of the 2 December 2013 deadline. Carriers and consumers have the certainty that old contracts stand: a deal is a deal. The government isn’t going to retrospectively apply new rules to old deals. Going forward, from 3 June 2013, deals are being done with the new rules having been published. If carriers don’t want the risk of being left with an unpaid balance, they need to move more quickly to offer shorter amortization schedules, or shorter deals.

Can changing a single digit crack the code? Would the carriers withdraw their motion and focus on introducing innovative new deals for the student market? Would the CRTC consider this a friendly amendment, maintaining the incentives to quickly transition from 3-year contracts?

It is old news that Industry Minister Tony Clement announced last November that the government was going to delay making a decision on changes to the rules on foreign direct investment in the telecom sector. After all, just a few weeks after rejecting BHP Billiton’s takeover of the rock mining operations of Saskatchewan’s Potash Corp., how could the minority government face the opposition on critical telecommunications infrastructure.

So at the International Institute of Communications conference, the Minister stated: 

With respect to foreign ownership, I have been consulting throughout the summer on whether the current restrictions constitute an impediment to growth in the wireless sector. Those consultations will continue as we proceed with our discussions on the 700 MHz spectrum.

And this just makes sense. After all, how spectrum is allocated and who is eligible to compete for it — and pay for it — are interrelated issues. And so we will consider foreign investment rules and decisions around the 700 MHz auction together, as part of an integrated regulatory approach.

Of course it was necessary to understand how foreign investment plays in the 700 MHz auction. But the converse isn’t true. We don’t need to understand who gets to bid on 700 MHz to sort out foreign direct investment in the entire sector – we need clear investment rules that apply to all telecommunications services providers – wireless and wireline. As Terry Corcoran wrote yesterday, in a piece called “Ottawa drives backward down the infoway“, we’re looking at the issue backwards.

When the Minister announced the process to review foreign investment in the sector at last year’s Canadian Telecom Summit, he said:

In the next few days, I will be releasing a consultation paper on this subject as well, and I will be looking forward to hearing your views on this important issue. Let me give you a little taste of what this consultation paper will be about. First of all, we will be confirming that we are intending to move ahead with telecommunications reform when it comes to foreign direct investment, and of the need for that reform. Secondly, we will have a relatively short, but important, discussion period in the next few days, commencing with the release of the report, so that we can get feedback from both the industry and Canadian consumers.

Note the expression “relatively short.”

The Consultation Paper referred to 3 studies that had already examined the issue: a 2003 report from the House of Commons Standing Committee on Industry, Science and Technology; the 2006 report from the Telecom Policy Review Panel; and, the 2008 report from Competition Policy Review Panel. The Department solicited public comments last summer and it received more than 40 submissions from companies and organizations and more from individuals.

We cannot continue to anchor foreign investment decisions solely on spectrum, completely ignoring the impact of delay on the rest of the telecom sector.

Wireline service providers are investing billions of dollars in fibre infrastructure and ISPs seeking to expand to the next stage are caught in purgatory waiting for a decision. Want to mess up the capital markets for a critical sector? Open up a consultation on allowing foreign investment and then keep it festering.

Next week is when comments are due for the 700 MHz consultation. That paper asked for more input on foreign investment – outside of the original process from last summer.

It will be interesting to see which non-Canadian carriers participate in the 700 MHz consultation. Perhaps even more interesting will be to consider which carriers didn’t bother participating because of the uncertainty playing Calvinball in our telecom marketplace.