Search Results for: incentives to invest

“Delivering on the Copper Decommissioning Promise” is the title of a recent Scotiabank report, issued as part of its Converging Networks 2.0 series. Frequent readers know that I have often cited Scotiabank research. I thought the bank’s September 13 report merits highlighting.

North American incumbent local exchange carriers (ILECs) have been aggressively deploying fiber within their territories over the last decade. These upgrades have delivered sizable improvements in market share, churn, average revenue per user (ARPU), and cost to serve. Canadian ILECs have been more aggressive than their US peers in rolling out fiber; hence, they have been able to deliver stronger wireline metrics. But what about the “holy grail” of copper decommissioning? TELUS Corporation is the most advanced on the copper decommissioning path within our coverage. Why is this relevant to investors, and when should we begin to bake value upside into these names? In this report, we explore some of the regulatory differences between the United States and Canada related to copper decommissioning and provide an update on fiber rollout and decommissioning plans for companies under our coverage. Bottom line, we believe regulators should encourage ILECs to decommission copper while also making sure to protect vulnerable customers. Fulfilling the copper decommissioning promise will provide additional incentives for ILECs to invest in network upgrades down the road.

As this paragraph notes, Canadian phone companies have been more aggressive than their US counterparts in deploying fibre. Scotiabank estimates that fibre represents about 60-65% of the Bell and TELUS total footprint, while Verizon is about 60%, Frontier is approximately 47% and AT&T has the lowest percentage, despite covering close to 28 million of its premises.

The copper migration by TELUS is seen as enabling monetization of the scrapped copper cables, as well as permitting redevelopment of real estate as central offices are converted. “The saved space inside COs is being rented to cloud companies to install servers.”

Of course, this raises the question of how regulators view the network evolution to fibre. In the US, the FCC has had rules in place for nearly a decade. The US regulator has a web-page describing how technology transitions could affect consumer services. In Canada, the CRTC has indicated “it will shortly address issues related to decommissioning practices through further process.” In its wholesale broadband decision last month, the CRTC added “In the interim, to ensure that consumers are not negatively affected, parties are expected to avoid instances where competitors could lose access to higher-speed aggregated HSA. Should such situations arise, the Commission is prepared to address them expeditiously on a case-by-case basis.”

Scotiabank said “We believe it will be important for the CRTC to not impede ILECs’ copper decommissioning initiatives, especially now that fibre to the home (FTTH) wholesaling will be regulated, while at the same time enforcing measures to safeguard users who need access to 911 services in case of power outages.”

Scotiabank noted two primary concerns with copper decommissioning: reduced competitive choice; and, emergency phone access during a power loss. Solutions exist to mitigate against each of these. The CRTC’s Telecom Regulatory Policy CRTC 2024-180: Competition in Canada’s Internet service markets, addresses the risk of reduced competitive choice by mandating fibre resale. Battery backup provides an option for emergency access, where customers do not have alternate means to call during a power outage.

The CRTC has a very full calendar of activities, so it is difficult to forecast the timing of a regulatory review of copper decommissioning policies. I’ll leave the topic with this caution from the Scotiabank report. “We understand why putting some guardrails in place for copper decommissioning is important; however, we hope that this review does not lead to a heavy-handed regulatory decision that would curtail ILECs’ drive to decommission their copper.”

Alan Borovoy, Canada’s great civil rights lawyer, used to say we should censure, not censor, those who spew hate speech.

He and I worked together on a committee many years ago. I would frequently give him a ride home afterwards which gave us opportunities to chat. His views continue to influence my perspectives on Bill C-63, Canada’s Online Harms Act. An editorial in the Toronto Star (written to mark his passing in 2015) should be mandatory reading for parliamentarians reviewing the Bill.

Alan was the long time general cousel of the Canadian Civil Liberties Association. The CCLA has called for “substantial amendments” to the Act.

Our preliminary read raises several serious concerns. While the CCLA endorses the declared purposes of upholding public safety, protecting children, and supporting marginalized communities, our initial assessment reveals that the bill includes overbroad violations of expressive freedom, privacy, protest rights, and liberty. These must be rectified before the bill is passed into law.

I referenced The Star’s tribute a couple years ago, writing about early proposals for the Online Harms Act. It is worth another look. As The Star notes, Borovoy’s view, that even the most offensive speech deserved protection, would lead him into “clashes with others on the left.”

I have frequently cited Aaron Sorkin’s version of that perspective from the film The American President: “You want free speech? Let’s see you acknowledge a man whose words make your blood boil, who’s standing center stage and advocating at the top of his lungs that which you would spend a lifetime opposing at the top of yours.”

There are a number of recent articles highly critical of portions of the proposed Online Harms Act, especially as related to Part 2, amendments to the Criminal Code and the Canadian Human Rights Act. Michael Geist writes about why those provisions should be removes from the Act. Christine Van Geyn writes in the National Post that the proposed process creates financial incentives for filing complaints. Individuals face no costs in bringing a complaint — not even the costs of a lawyer — and could receive a $20,000 civil award if successful. “The process becomes the punishment even if the case does not proceed past an investigation.”

Last week, Andrew Coyne wrote “Canada’s Online Harms Act is revealing itself to be staggeringly reckless”, saying, “the more closely it was examined, the worse it appeared.”

There is, first, the proposal to increase the maximum penalty for promoting genocide from its current five years to life imprisonment. Say that again: life in prison, not for any act you or others might have committed, not even for incitement of it, but for such abstractions as “advocacy” or “promotion.”

The most remarkable part of this is the timing. At the very moment when everyone and his dog is accusing someone else of genocide, or of promoting it – as Israel’s defenders say of Hamas’s supporters, as the Palestinians’ say of Israel’s, as Ukraine’s say of Russia’s – the government proposes that the penalty for being on the losing side of such controversies should be life in prison? I have my views on these questions, and you have yours, but I would not throw you in jail for your opinions, and I hope you would not do the same to me – not for five years, and certainly not for life.

Earlier this week, writing in the Toronto Star, Rosie DiManno says “Bill C-63 is a mess of a bill, a fatally flawed piece of overreaching legislation that has drawn scorn from, and made weird allies of, Margaret Atwood and Elon Musk. So maladroit that it can’t possibly be fixed — apart from the obvious correction of severing the child protection part from everything else”.

Finally, a commentary by David Thomas, former chief of the Canadian Human Rights Tribunal, says Bill C-63 is “terrible law that will unduly impose restrictions on Canadians’ sacred Charter right to freedom of expression”.

I have also said that there are limits to our speech freedoms. As the (oft misattributed) expression says, “one’s right to swing their fist ends precisely where the other one’s nose begins.” As CIJA said in its statement on March 6, “We cannot allow mob-driven demonstrations to obstruct our right to participate fully in society.”

There are lines that may not be crossed. Intimidation, threats of physical harm, go beyond the bounds of protected speech. But, we should be able to find a better balance than what has been proposed in Bill C-63.

As Alan Borovoy espoused, censure, not censor.

Many of us have come to expect constant connectivity.

I don’t mean we necessarily want to be online 24/7, with a screen in front of our face around-the-clock. But, we want to be able to be connected whenever we want, wherever we happen to be.

Constant connectivity.

Most of us have phones that are effectively able to serve as mobile offices, equipped with word processing and other business apps. Personally, I find spreadsheets painful to navigate on my 5-inch screen, but I frequently edit blog posts and documents from waiting rooms or restaurants. We have tablets, computers, smart TVs, smart speakers, thermostats all connected to our home internet. As I write this, my home router reports 33 devices are connected. (I don’t have many of the “smart home” devices that are increasingly commonplace).

On our mobile networks, in addition to our smartphones, we have metering and other forms of telemetry. With home security and health applications, we increase the need for reliability, often using wireless backup for wireline connections. There are many working groups talking about connected autonomous vehicles.

This state of constant connectivity carries with it a variety of implications.

Many applications can be designed to tolerate hiccups in their connections. For example, by their very nature, email messages are transmitted on a ‘store and forward’ basis. A delay measured in tens of seconds or even minutes or hours is somewhat meaningless for most messages. It is silly to be concerned about a sub-second delay for emails or most text messaging. Most streaming video applications are designed to buffer the signal, storing multiple seconds of content on your device in anticipation of possible interruptions. But, what about voice and two way video calling? Delays (latency) of more than a few hundred milliseconds can be challenging for many who are used to virtually instantaneous responses in a normal conversation. We can witness the uncomfortable user experience when foreign news correspondents are having on-air communications with anchors using satellite connections.

What about performance issues with applications requiring non-stop high performance connectivity, such as remote surgery?

Connected vehicles is a category that enables us to understand a wide range of performance requirements, just in connecting a car. What kind of network performance should be anticipated by developers of connected car applications? The performance characteristics will vary based on whether the connectivity is used for navigation, entertainment, diagnostics, accident avoidance, or telemetry for vehicle maintenance (among other applications).

For many applications, constant connectivity may not have to be quite so constant.

Over the past few years, I have frequently referred to the tension between quality, coverage and price in architecting networks. Increases in coverage, or improvements in performance are always possible, but there is a cost associated with each. That cost ultimately would need to be recovered.

Do regulation and policy recognize that not all bits need to be treated the same?

How should variances in technical requirements receive consideration when examining network resilience from a regulatory perspective?

How do we ensure that appropriate incentives are in place to encourage continued investment in networks for improved reach, robust network resilience, increased capacity and more advanced capabilities?

Regulators regulate. It is just what they do.

Consider it to be a corollary to Maslow’s Hammer: “If the only tool you have is a hammer, it is tempting to treat everything as if it were a nail.”

Why does Canada’s current government seem to believe that regulation should be the primary approach for achieving its communications policy objectives? Indeed, it might help if the government could clearly state what those objectives are and how they are being measured.

A week ago, I wrote about regulating misinformation. Digging way back into the archives, I found this excerpt that appeared as well in a National Post OpEd [ pdf, 330KB] in 2005.

In Canada, as in most countries around the world, we have a regulator that oversees the market for telecom. But what sets the CRTC apart from regulators in nations that are also some of our most important trading partners is the Commission’s presumption that new technologies and services should be regulated. It isn’t surprising. Regulators regulate. It is just what they do.

That article (from more than 18 years ago) spoke of “major changes” in Canada’s communications industry being at hand, as phone services based on internet protocol technology began to move into the mainstream, offering more service capabilities, lower prices and a wider variety of choices for consumers. I identified potential roadblocks, “perhaps the biggest is the possibility of unnecessary regulatory intervention.”

We understand why the CRTC would want to ensure that basic consumer safeguards – including access to emergency safeguards, general protections related to privacy and service level disclosure – are guaranteed. We also recognize that this will likely entail a degree of regulation that, by necessity, should apply equally to all companies offering communications services.

But to go beyond that – to deny certain companies the freedom to offer innovative new services, new capabilities and lower prices without first receiving approval from the Commission – goes too far.

Unfortunately, empowered by recent legislation, the CRTC is extending its regulatory reach beyond the communications facilities and into the content carried over those facilities. In the old broadcast world, this was understandable. Radio waves – spectrum – is a limited resource, so there was only space for a limited number of voices to be carried over the public airwaves. No such limit exists in an internet world. Consumers have the ability to access every program offered anywhere.

That means our ears and eyeballs are no longer fixated on legacy media: newspapers, radio, television. In the case of radio and television, these are regulated by the CRTC under the Broadcasting Act. New media, whether it is streaming alternatives for TV, such as Netflix or Amazon Prime or Apple Plus or other subsciption services, or podcasts and other audio services, or short form content such as TikTok or YouTube, have typically been unregulated, subject only to the terms of service of the platforms.

There were two ways the government could have gone in order to provide regulatory parity for legacy media and new media: relax the regulations on the traditional services; or, regulate the new services. In Canada, the government has chosen to impose regulatory obligations on new media.

It is a consistent approach for Canada. As I wrote earlier this year, “Canada’s policy framework for net neutrality is among the most prescriptive and restrictive.”

Regulators regulate.

Intellectually, I understand the underlying motivation behind the approach that imposes regulation on all content providers. Unfortunately, the legislation has not benefited from meaningful committee review, with the government putting egos and partisanship ahead of genuine improvements to flawed sections of the various Online Acts. We were told that the CRTC will take care of concerns as it works through the details and regulations.

The first details emerged late in the day on the last Friday of September, setting out registration requirements in an 85-page Broadcasting Policy and Order [ pdf, 521KB]. While the CRTC is targeting platforms with more than $10M in Canadian revenue, there are real concerns that smaller content creators will be caught by indirect regulation – the CRTC imposing conditions on a platform, leading the platform to control hosted content produced by smaller independent creators.

Regulators regulate. I get that.

How do we avoid regulatory over-reach to avoid disincentives for Canadians to benefit from investment in content, infrastructure, and leadership in a next generation economy?

Can connectivity play a role in fighting climate change digitally, contributing to Canada’s sustainability goals?

That is the theme of a new report from Accenture, released earlier this week by Canadian Telecommunications Association. “Canada’s next sustainability frontier: Powering digital transformation with connectivity” [ pdf, 12.4MB] explores the environmental impact of connected technology and industrial reinvention.

The new report expands on Accelerating 5G in Canada: The Role of 5G in the Fight Against Climate Change discussed a few months ago in “Broadband’s broader benefits”.

Digital transformation includes the deployment of industrial Internet of Things technology, artificial intelligence, cloud computing, and other technologies to drive increased productivity. Technology enables re-engineered processes and automated operations, powered by data and analytics. “By leveraging technology to produce the same or increased outputs with fewer inputs and waste, this improved productivity, in turn, reduces resource and energy consumption and greenhouse gas emissions. With access to better data on their operations, businesses can further improve their processes over time, driving continuous improvement in both efficiency and sustainability.”

The report examines three specific use cases in key Canadian sectors: oil and gas, mining, and agriculture. Accenture says predictive maintenance of oil rig equipment can significantly reduce downtime and energy consumption, leading to 20% reductions in wasted fuel. Connectivity improves management of mining tailing ponds, leading to a 90% reduction in incidents, and improved worker safety. Precision agriculture, with connected sensors and drones, reduce water and fertilizer use by 20-40%. Each of these sectors are described in greater detail in the report.

Most sustainability initiatives focus on renewables and alternative energy. Digital transformation of key industrial sectors can play a significant role in Canada’s sustainable future. “Canada’s next sustainability frontier” makes the case for digital transformation as part of the solution space.

How do we get there?

The report identifies levers for Canada’s sustainability acceleration.

1. Expansion of the Next Generation of Network. CSPs need to continue to deploy and upgrade wireless and wireline network infrastructure so businesses have the connectivity they need to transform and power use cases
2. Use Case and Device Availability. Solution providers need to build and provide market-ready, proven use cases for businesses that can allow them to digitally transform and meet their industrial needs, accelerating adoption & benefits
3. Industry Verticals Transformation. Businesses need to undergo total enterprise reinvention by investing in their infrastructure and enterprise architecture, use cases and solutions, and talent & services to support digital integration
4. Incentives, Programs, and Impact Measurement. Government programs & incentives need to include digital transformation, supported by a strong end-to-end sustainability measurement strategy to measure and verify emissions more precisely, and drive continuous improvement

Continued investment in advanced telecommunications infrastructure is a key enabler for reimagined business processes. Connectivity, driving digital transformation, work together as important catalyts for fighting climate change digitally.

Canada’s future depends on connectivity.