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It is fitting that Michael Geist’s column is published in The Toronto Star, which has a reputation as being the official news agency of Her Majesty’s Loyal Opposition. Yesterday’s column reflected the leftist bias that inspires many academics so thoroughly. It is a wonder that university graduates can become functional in the capitalist environment that greets them in the real world.

There are just too many critiques of Michael’s piece to address while keeping this posting manageable. I’ll touch on just a few.

Although he tries to find inspiration in the report of the TPR to support his populist campaign against a ‘two-tiered internet’, Michael continues to quote the text out of context – in exactly the same manner that he did last November. In the interest of space, I’ll advise you to simply look there. The TPR explicitly permits ISPs to “take into account any reasonable technical constraints and efficiency considerations related to providing such access,” no matter how much Professor Geist tries to ignore the plain text. If you repeat a half truth does it become whole?

He suggests that the FCC imposed net neutrality conditions on AT&T – when the reality was that these were AT&T;’s voluntary commitments in order to sway the minority Democrat commissioners. The FCC itself has consumer protection principles that are comparable in effect to what is set out in the TPR and are have been generally upheld by CRTC practice.

The article complains on one hand about “steady price increases” from DSL and cable providers, but on the other hand, net neutrality advocates don’t want these ISPs to develop alternate revenue sources in order to keep prices for internet access affordable. Indeed, most comments on his site argue that the carriers should just charge more to people who want faster downloads. Well, I’m confused. Which is it? Charge more or avoid price increases? Should the carriers lose money when they invest in your infrastructure?

The article charges that the Minister is “burying attempts to establish a national broadband infrastructure,” ignoring the fact that there are already numerous national broadband backbones owned, maintained and continually upgraded by a number of carriers operating in a competitive environment. The last thing we need is a government initiative competing against or replacing private sector corporations. It seems that we are seeing a call to nationalize the internet backbone – returning to central planning and control by government.

Life would be simpler that way – one benevolent crown corporation carrier with all of our best interests always in the forefront of their planning. Sorry to say that the era of PTTs has largely become a distant memory. I seem to recall that we found that those government monopoly phone companies ended up restraining innovation and charging way too much for lousy service.

Of course, the PTTs had decent wages and great pensions for employees. Those were the good ol’ days.

Creating a vision for telecom policy reform was part of the theme of a posting a couple weeks ago.

How does Industry Canada get the average donut-eating-public interested in the report of the Telecom Policy Review panel in order to move the issue higher on the public agenda?

I mentioned two weeks ago that the report is a great recipe book, but many people may have trouble seeing what the end result looks like. I think that we have to show people a vision of tomorrow. The picture of some gourmet delight on the cover of the recipe book.

Let’s take a look at parts of the executive summary of the report for to find a place to start.

The new objectives [of the Telecom Act] should focus on three broad goals:

• promoting affordable access to advanced telecommunications services in all regions of Canada, including urban, rural and remote areas

• enhancing the efficiency of Canadian telecommunications markets and the productivity of the Canadian economy

• enhancing the social well-being of Canadians and the inclusiveness of Canadian society by meeting the needs of the disabled, enhancing public safety and security, protecting personal privacy and limiting public nuisance through telecommunications networks.

MTS Allstream was quick to trash the report of the Telecom Policy Review panel, calling it “Hopelessly Complicated and Impractical.”

Let’s look at this statement and parse it.

“In the near term, we see no practical effect on our business. ” Correct. Of course, even if MTS Allstream loved the report, it would have no effect on anybody in the near term. It is a report, not a CRTC Decision, not a new Telecom Act, etc.

“Longer term, the recommendations appear hopelessly complicated and impractical.” To start with, let’s remember that this is a panel whose mandate was:

With these objectives, we had to be expecting something more substantial than a weekend school report!

The report is 400 pages long and it uses detailed technical language. Not just geek technical terms, but economist terms, lawyer terms and social policy terminology. Of course the report is complicated. Hopelessly though?

After you get past the first look, you realize that the report contains step-by-step instructions on how to do it. How to build a 21st century policy and regulatory framework.

There are precise wording changes recommended for various sections of the Telecom Act. Details on how to open up foreign ownership. Recommendations for follow-up work to cover the issues that were beyond the scope of this panel. Complicated? Yes. Impractical? Hardly.

“They appear based on the rather implausible notion that greater bureaucracy will result in greater efficiency for Canadian consumers and businesses.” My initial read of the report led me to a similar set of thoughts. Why create new arms of government if we are trying to streamline regulation and paperwork? How is the creation of bureaucracy consistent with migration to market forces?

More than most companies, MTS Allstream should be familiar with the disruptive benefits of reorganization once in a while. Could the Telecommunications Consumer Agency exist within today’s CRTC. I think so. But those are not the major issues.

I am certain that the heartburn being felt at MTS Allstream has little to do with overall complexity and bureaucracy. Their pain is summarized in the opening statement from the panel:

In other words, the panel believes in facilities-based competition, just like the CRTC has been saying. MTS is heavily reliant on its competitors for access. It has been relying on regulated wholesale rates rather than build its own access. In fact, it sold off its holdings in Inukshuk, the one opportunity to economically control its own destiny.

MTS Allstream: Be grateful for the recommendations to relax foreign ownership restrictions. It may be just the thing to get you back on your feet.

The Canadian Human Rights tribunal has ruled against an ISP finding it liable for hate messages hosted on their site in what is believed to be a precedent setting case.

Specific findings included a determination that material sent over the Internet is a ‘communication’ within the meaning of the Canadian Human Rights Act and finding an ISP, Affordable Space.com, responsible for the illegal material that it knowingly hosted.

The CHRC levied fines of $13,000 and damages of $5,000 in connection with the case.

Warren Kinsella, a Toronto based lawyer and author of Web of Hate, says that the case shows that the CHRC has been willing to step up and apply regulation to parts of the internet despite the CRTC’s unwillingness to do so.

On one hand, it is good to see the CHRC dealing with such matters. However, their jurisdiction likely does not apply to websites hosted in Canada. In our humble view, the CRTC has to take on the role of keeping material found to be illegal out of Canada.

That viewpoint will be explored at The Canadian Telecom Summit in its special panel looking at “Illegal Content on the Internet.”

Background
“Contribution” is the term used in Canada to refer to the subsidy from long distance services towards basic dial tone. The level of Contribution varies by province, however, it is generally in the order of 0.5¢ to 2¢ per minute per end of the call, charged in addition to switched access or egress charges.

The CRTC has updated Contribution rates for the year 2000, and has ruled against AT&T Canada and Call-Net’s applications to lower the subsidy even more due to the effect of increased volumes of minutes stimulated by flat rate calling plans. New rates are set out in the table below.

Contribution on DALs
As reported in the July 24, 1999 update, traffic sent over Dedicated Access Lines (DALs) continues to be exempt from paying contribution, and carriers will continue to apply a “DAL” surcharge on switched traffic charges. Further, at that time, the Commission determined that carriers which do not use DALs at all should be exempt from the surcharge. The surcharge was determined in Telecom Decision CRTC 99-20, released December 15, 1999.

International Issues
Western Canadian telephone companies had complained that international traffic patterns had been distorted because low contribution rates in Bell Canada territory created an incentive for traffic to use Ontario and Quebec as border crossings (thereby saving up to 2.5¢ per minute). In response, the CRTC has determined that all international traffic will attract the Bell Canada rates (about half a cent per minute), effective January 1, 2000.

Summary
As we have reported before, per minute access and contribution charges continue to be a significant issue challenging profitability for Canadian carriers. The competitors for voice services have not been able to convince the CRTC that there is a problem and there are signs of a credibility gap for the industry in presenting numbers to the Commission. There is a continuing proceeding to review the “per-minute” approach to contribution as well as the overall level of funding required to maintain affordable local service.