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As Canada heads into a snap election, I thought I would take a look at what I would want to see in a party platform. It was just 23 months ago that I wrote “A telecom platform”, in which I observed “many political parties are trying to curry favour among the electorate by bashing telecom service providers. Such positioning may be good politics, but not necessarily good policy.”

The NDP released its “Ready for Better” suite of commitments in advance of the election call. It may be replaced by an actual platform in the coming days. I found “Ready for Better” to be somewhat outdated and frankly disappointing, as though the ideas were recycled from earlier campaigns.

For example, the NDP says it will introduce a Telecom Consumers’ Bill of Rights. Should I suppose this means something different from combining the Wireless Code, the Internet Code, the Television Service Provider Code and combining them under a single complaint-handling agency? Maybe we could call it the Commission for Complaints for Telecom-television Services?

Many of the consumer focused commitments from the NDP have already been addressed in those codes. One of its commitments may sound consumer friendly if you say it fast enough, but on reflection doesn’t really help. For example, the party says it will abolish data caps for broadband internet.

Why?

Why remove consumer choice? I certainly understand the desire to have unlimited data as an option – I have that on my broadband connection. But not everyone necessarily wants that. Whatever the price is for an unlimited service, wouldn’t you expect the cost – and therefore the price – for a capacity constrained service to be lower? Why would you limit such choices?

What about “Expanding cell coverage and delivering reliable, affordable broadband internet to every community in Canada is vital to the economic future of rural Canada and remote communities. But it has been ignored by successive governments for far too long.” This simply isn’t true. Look at the billions of dollars that has been spent in the past two years by the federal government accelerating rural broadband investment under the UBF program and in a variety of provincial partnerships such as with quebec and Ontario. Further, the response from the federal government review of wholesale internet rates was premised on the view that “Canada’s future depends on connectivity”.

I’m disappointed, but unfortunately not surprised, to see such pandering in the NDP commitment document.

The Conservatives released their platform, “Canada’s Recovery Plan” [pdf, 3.9MB], a 164 page glossy magazine that included a half page on telecom policy promises. The Conservatives promise to allow “foreign telecommunications companies to provide services to Canadian customers”, which is interesting (and perhaps a little awkward) since foreign ownership in telecom was relaxed back in 2012 under (Conservative) Prime Minister Stephen Harper. The only restrictions are that foreign companies are currently prohibited from buying Bell, Rogers or TELUS.

The Conservatives also promise to accelerate broadband investment to connect all of Canada to high speed internet by 2025. Current government programs plan to have 98% by 2026 and cover the remaining by 2030. We don’t see details on how the Conservatives plan to crank up the dial, but they do say they will “Promote investment in communications facilities by local and regional communities.” I have written extensively on the poor track record of municipal broadband and most recently, we have seen O-Net, once the poster child for municipal advocates, put into receivership.

Community networks are hard, and as Conservatives know, governments have a really lousy track record running businesses. Where a business case is lacking for private sector investment, the far better model is to partner with the private sector for cost sharing. That reduces the burden on taxpayers, and leverages private sector funding and expertise.

I wish there could be a political party that possesses, and is willing to demonstrate, a deeper understanding of the economics of broadband expansion in Canada; a party that understands the difference between EBITDA margin and profit, and understands the relationship between capital intensity and EBITDA.

Am I asking too much?

Over the past parliamentary session, there has been much disappointment for followers of telecom issues at the Industry Committee. As I described in “A more evidenced based approach is warranted”, policy statements on telecom were released by each of the Conservative and NDP caucuses in advance of hearing from witnesses. So much for evidence-based policy making.

We should demand better from our elected representatives.

Just 23 months ago, I wrote “It is easy to call for measures that lower prices. It is more responsible to set out a policy platform that understands the balance between competition, affordability, consumer interests, investment and innovation.”

As we move into this pandemic election, I plan to look at how the various party platforms aim to ensure that all Canadians, those in urban and rural areas, will have access to affordable, high quality, innovative services. How will they balance the tensions between the various interests?

Seriously, am I asking too much?

It was pretty gratifying to read yesterday’s announcement of the launch of what is being called “Connecting Families 2.0”, effectively an upgraded version of the basic low-income broadband service launched in 2018 by telecommunications service providers across the country, expanding the program to low-income seniors and significantly increasing the speeds to provide a 50 Mbps down / 10 Mbps up for just $20 to qualifying households. The original program will continue to be an option, offering 10/1 service for just $10.

Connecting Families 2.0 is introducing significantly faster speeds and increasing the data usage amount. At 50/10 megabits per second (Mbps), the download and upload speeds will be five and ten times faster respectively than Connecting Families 1.0, with 200 GB of data usage for $20 a month. This new phase will also broaden eligibility from families receiving the maximum Canada Child Benefit (CCB) to include low-income seniors. The previous Internet plan offering under Connecting Families 1.0 will also remain available. Access Communications, Bell Canada, Cogeco, CSUR, Hay Communications, Mornington, Novus, Rogers, SaskTel, Tbaytel, TELUS, Vidéotron and Westman Communications are all participating in offering improved Internet quality, coverage and price to eligible Canadians.

Some service providers have even more options available, such as Rogers portfolio of Connected for Success services, with 25 Mbps for $10; 50 Mbps for $15; 75 Mbps for $25 and 150 Mbps for $35, all of which offer unlimited usage. Rogers Connected for Success was launched in 2016, as was TELUS Internet for Good, and have been models for the national roll-out by service providers.

As long time readers know, I take a certain amount of pride in talking about Connecting Families and its kin.

Still, I wonder if there is another approach that we should be exploring to ensure affordable mobile services for Canada’s most vulnerable populations? Can the government do a better job on the issue of telecom service affordability?

While the US has specific programs such as Lifeline and the Emergency Broadband Benefit that provide targeted subsidies for communications services from common funds, Canadian programs are currently funded completely by participating service providers and on a completely voluntary basis. The FCC’s Emergency Broadband Benefit, rolled out during the early days of the pandemic, is being replaced by a permanent program known as the Affordable Connectivity Benefit funded by the US Government’s infrastructure bill.

Contrast the direct government subsidy in the US with Canada’s Connecting Families, which coordinates the offer of “low-cost Internet service packages from Internet service providers that voluntarily participated without government subsidy.”

And what about mobile services?

In its recent Review of mobile wireless services, the CRTC set specific characteristics for a “low-cost” mobile plan, but the Commission did not tie it to a means test (such as limiting the plans to members of lower income households), and it did not attach a funding mechanism, whether from industry revenues or the federal treasury. While the CRTC said “an important issue raised in this proceeding is whether lower-income households and other Canadians, seniors notably, are being priced out of the market”, it did not restrict its low-cost plan to these groups.

Specifically, these plans are expected to

• be offered at a monthly rate not exceeding $35;
• allow customers to bring their own device; and
• include
  • unlimited Canada-wide incoming and outgoing calls and SMS messages,
  • the ability to send and receive MMS messages, and
  • a minimum of 3 GB of data per month.

This approach may create aggressively priced options based on the marketplace in the spring of 2021, but how will these specifications be viewed in 2 years time?

Do we actually know if the particulars of this low cost plan actually addresses the question of “whether lower-income households and other Canadians, seniors notably, are being priced out of the market”?

Doesn’t it seem somewhat patronizing for a central body to arbitrarily determine that this single set of characteristics will suit the needs of everyone in the market for a low-cost plan? How does this plan help a low-income Canadian who needs more than 3 GB of data per month?

Should Canada consider creating programs that provides a portable voucher to targeted groups to enable the consumer to get a discount off of whatever plan they might choose?

Are there structural problems between agencies and departments (ISED, CRTC, Social Services, Finance, Federal-Provincial, etc.) that inhibit the development of a more holistic approach? Can the validation systems created for Connecting Families be repurposed or reused for a directed funding program?

Is there a better approach to affordable telecom service for vulnerable Canadians?

I have frequently written about the regulatory policy tension in balancing quality, coverage and price for telecommunications services. These were key attributes at the foundation of the Canadian government’s policy statements over the past 5 or so years.

There has been an explicit recognition in Canadian policy that the public interest is multi-dimensional, seeking lower prices, while continuing to provide incentives for investment in new technologies and expanded coverage.

A recent blog post by CWTA uses a similar trilogy of terms: value; affordability; and, investment. “Canada’s wireless industry delivering greater value, affordability and investment” criticizes the level of attention “given to one-dimensional and misleading price comparison studies that paint an inaccurate picture of telecom prices and affordability in Canada” and concludes with:

Canada’s economic well-being, safety and quality of life depend on high-quality digital infrastructure. Making world-class telecommunications services available to all Canadians at affordable prices remains the focus of our industry.

No one is saying that Canada has the lowest prices in the world, but contrary to what some would have us believe, Canadian telecom prices are not the most expensive in the world and Canada is not an outlier when it comes to prices. Comparing prices to other countries without factoring in differences in average income levels, quality of service, and cost structures produces misleading results. And as I have written recently, price and affordability are not the same.

As someone who pays bills each month, I too would like lower prices, just as I do for housing, gas, water, electricity, milk, chicken, eggs and everything else. But I also want fast mobile broadband when I am in the suburbs and rural parts of the country. That takes a balance of the various factors that make up the public interest, not just looking at price.

In May, I wrote about an Opensignal report indicating “that Canada’s mobile customers put a value on quality, and will migrate between service providers based on their mobile network experience.”

I had a multi-part Twitter thread on that theme:

Prices are declining, consumers get more data included in plans and at far faster speeds. Aided by regulatory certainty, investments are being accelerated by carriers, expanding the reach and coverage of wireline and wireless networks, both fixed and mobile. Advanced technologies, such as 5G and fibre to the home are not just for Canadians in urban centres, but also in rural and remote regions. More Canadians are signing up for mobile and fixed services every month, evidence of people are finding plans that suit their budgets.

As I wrote last week, we need to do more work to understand and develop solutions for the factors that are inhibiting adoption by those Canadians who have access but have not yet subscribed. That is a different challenge from the industry focus on delivering greater value, affordability and investment.

Bell Canada is crediting regulatory certainty and a positive investment climate in announcing an accelerated capital investment program. In February 2021, Bell had announced plans for $1B to $1.2B in additional network funding to help drive Canada’s recovery from the COVID crisis.

According to the press release, with last week’s CRTC decision and “ongoing government policy support for facilities-based competition and investment, Bell has now increased the amount of accelerated funding to $1.5 billion to $1.7 billion.”

The CRTC reinforced its long-standing support for facilities-based competition in the opening paragraphs of the decision:

The Commission’s general approach towards wholesale service regulation has been to promote facilities-based competition wherever possible. Facilities-based competition, in which competitors primarily use their own telecommunications facilities and networks to compete instead of leasing them from other carriers, is typically regarded as the most sustainable form of competition.

Its accompanying press release talked about the plan to migrate to a disaggregated wholesale interconnection model to “increase competition and investments”. These were important signals to the capital markets and companies that invest in facilities.

Last summer, in “The economics of broadband expansion” I described how wholesale rates impact the business case for rural broadband expansion. The announcement from Bell is the first evidence of the spin-off consumer benefits to emerge from the decision.

The consumer interest is much more than just price. As I wrote last week, we know that consumers value network quality and will switch service providers in order to get a better network experience.

It is why regulators have to balance a variety of public interest issues in its deliberations, such as investment in broadband; expanding access to unserved areas; upgrades to existing areas with faster speeds and newer technologies and capabilities. In “Acting in the public interest” I talk about the tension in balancing quality, coverage and price, the priorities described a number of times by former ISED Minister Navdeep Bains.

In a six-part Twitter thread, I pointed out the importance of looking at complex regulatory and policy issues from a more holistic vantage point.

“Canada’s future depends on connectivity”. Connectivity requires investment to expand coverage and improve quality. Billions of dollars of investment.

From Bell’s announcement: “Now, with greater regulatory stability fostering an improved investment climate, Bell is proud to take our plan even further by growing our investment to advance how Canadians in communities large and small connect with each other and the world.”

Satisfying the consumer interest is a broader issue than simply lowering prices. The CRTC’s affirmation of its support for facilities-based competition supports the investment necessary for improving quality and coverage as well.

A new report from Opensignal indicates that Canada’s mobile customers put a value on quality, and will migrate between service providers based on their mobile network experience.

The report, “Mobile experience explains why urban and rural Canadian users change mobile operators”, found that on average, users who changed their mobile carrier – termed “Leavers” – had a worse mobile experience before they switched, than they typically experienced on their original network.

Opensignal found that users who switched operators had a below average mobile network experience. As might be expected, the data suggests that those users who experienced pain with their former mobile service were more likely to change their mobile service provider. On the former network, mobile users who switched were found to have spent less time on either a 3G or 4G mobile connection, and they experienced lower 4G Availability. “Canada has some of the fastest 4G download speeds globally, which benefits both urban and rural users, but these fast speeds are meaningless when users spend time either without a mobile signal or without at least being able to connect to 4G.”

The report shows that mobile users are willing to switch to get a better mobile experience, indicating they value quality. It confirms the value of investment in infrastructure, upgrading to faster speeds, extending network coverage and reach, and improving network experience. Opensignal found “mobile experience matters to subscribers and that it is a critical driver of churn in Canada.”

In an interview at the Canadian Club last week, CRTC Chair Ian Scott explained why he supports facilities-based competition as the most sustainable model for Canada. “We’re focused, as best as we can, on eliminating obstacles to the rapid deployment of the latest technology whether it be in the broadband space or in the wireless space.” While acknowledging services-based competition as a means to enter the market to discipline pricing, he said that such a business model becomes fragile as prices approach competitive levels. “So, in general, I would say facilities-based competition is more robust and sustained.”

Opensignal found that the mobile experience of Canadian customers (both urban and rural) who switch is, on average, significantly higher than in many other countries globally. It also observed that some Canadian users will have a worse mobile experience than others.

Our data shows that Canada’s Leavers had a worse mobile experience before they switched to another carrier, compared to the typical experience of users on their original network. This shows that mobile experience matters to subscribers and that it is a critical driver of churn in Canada.

If customers will switch service providers to get a better quality mobile experience, it confirms the need for continued network investment, consistent with Canadian policy favouring facilities-based competition.

Canada’s future depends on connectivity.