Search Results for: nbn

I’d like to follow up on the passing reference I made recently to structural separation in my post about Australia’s broadband quagmire, the $50B government sinkhole known as NBN.

Structural separation is the regulatory theory that posits better consumer outcomes will be achieved if regulations require a separation between the builders of telecom network infrastructure and the retailers of telecom services. The theory is that the infrastructure company will have incentives to invest all of its energy in building better networks, and the various retail service providers will compete on an equal footing to deliver service excellence.

Two and a half years ago, at a meeting of Parliament’s Industry Committee (INDU), the British model was identified by Canadian Conservative MP Michelle Rempel Garner as an potential example for Canadian telecom policy. Tony Geheran, Chief Operations Officer at TELUS told the Committee, “I haven’t seen that work anywhere globally, to sustainable effect.”

At the time (May 19, 2020), I noted “Ofcom is showing that broadband speeds in the UK increased 18% between 2017 and 2018 to reach 54.2 Mbps. According to the CRTC, average speeds in Canada reached 126.0 Mbps by the end of 2018, an 89% increase over 2017.”

A year later (May 19, 2021), I provided an update: “According to Ofcom, “the average download speed of UK residential broadband services increased by 25% since 2019, from 64 Mbit/s to 80.2 Mbit/s.” According to the CRTC, at year-end 2019, 18 months ago, the average download speed in Canada was already 176.9 Mbps, more than double the current speed in the UK.”

Some recent articles show that the situation hasn’t improved for those in the UK. A recent article in the Financial Times says “almost a hundred smaller alternative networks — or “altnets” — have emerged with the goal of laying fibre as quickly as possible to attract customers frustrated by their existing service”. As it turns out, these “altnets”, such as Virgin Media O2 and the UK’s largest altnet, CityFibre, have argued against BT OpenReach lowering its wholesale prices, claiming the move would be uncompetitive.

The CRTC is reporting Canada’s average download speed was 220.4 Mbps by year end 2020, two and a half times what the UK regulator has observed.

Structural separation isn’t a solution. As Tony Geheren told INDU in May of 2020, “if you look at the UK, they are wholesale moaning about the quality of their infrastructure, their lack of fibre coverage. across what is a very small geography. I know. I originated from there. And quite frankly, the Canadian networks are far superior in coverage and quality and performance through COVID has demonstrated that.”

The Canadian model, creating a policy environment that encourages private sector investment in competitive infrastructures, means that most Canadians can choose from multiple suppliers of broadband access. It is a framework that has delivered better broadband for more Canadians than the structurally separated policies in the UK and (as discussed a few weeks ago) in Australia.

Canada’s future depends on connectivity.

I have written a number of times about Australia’s multi-billion dollar broadband boondoggle, more formally known as the National Broadband Network (NBN).

NBN was established in 2009 to design, build and operate a wholesale broadband access network for Australia. To date, the government of Australia has poured more than AU$50B into the project (approximately C$45B), including nearly AU$20B in government debt that is supposed to be replaced by private debt by 2024.

Last week, we learned that the Australian government is pouring another AU$2.4B into the company over the next 4 years, to enable another 1.5M homes and businesses to have access to fibre to the node (FTTN). According to Light Reading, “That includes 660,000 premises in rural Australia and means around 10 million homes and businesses across Australia will have access to top download speeds of around 1 Gbit/s by late 2025”.

There was an interesting data point in the Light Reading story:

More than 8.5 million Australian homes and businesses were connected to the NBN at 30 June 2022, with another 3.6 million ready to connect.

However, just 18% of NBN customers were on wholesale plans offering download speeds of 100 Mbit/s or above.

How does that compare to Canada, where networks are competitively built, owned, operated and financed, by the private sector, without structural separation?

According to the latest figures from the CRTC, of 12.2M broadband connections in Canada, 7M have speeds of 100 Mbps or higher (57%), which is more than 3 times the proportion in Australia.

A couple of weeks ago, my wife forwarded one of those cutesy motivational sayings that she saw on social media: “If you choose not to find joy in the snow, you will have less joy in your life, but still the same amount of snow.”

It is an appropriate expression for Canadians facing the arrival of December.

And since I am writing it on this blog, you can expect that I am going to find yet another of those metaphorical allusions to the telecom sector.

As I wrote last month, there are some advocates who naively seek to spend other people’s money “to give virtually every person access to essentially the same quality of internet connectivity, whether they reside in a major city or a remote Indigenous community.”

It just isn’t going to happen. I am sorry to be the bearer of such bad news. Australia has spent tens of billions of dollars building its NBN, National Broadband Network, and it isn’t providing the same quality of internet connectivity to urban and rural communities.

Unpopular as it may be to say so, in my view, there are some basic realities that need to be faced: there are disadvantages to living outside major urban centres that accompany the wonderful benefits associated with a more rural geography. You simply don’t have access to all the same government services or private sector services once you leave the cities.

“If you choose not to find joy in the snow, you will have less joy in your life, but still the same amount of snow.”

You can complain about it, but you are likely to find that many Canadians in rural markets still won’t be able to go to the same concerts, theatre, variety of restaurants, many will lack ready access to world class hospitals, and relevant to today’s post, many will have to rely on broadband solutions that are not the same as the technology choices available to their compatriots in urban settings. Through the summer, I wrote, “Fibre optic connections aren’t always the best solution for broadband.”

When fibre optic connections are set as a mandatory requirement for broadband, rather than simply being identified as one of the possible solutions, it restricts the degrees of freedom for solutions that could be innovative, more cost effective, and delivered sooner. In today’s environment, an adequate solution delivered sooner is more likely to be viewed more positively by consumers than a perfect solution delivered years later as I wrote in “Isn’t some broadband better than nothing?”

Just three weeks ago, I wrote “We can’t wait for a perfect, “future-proof” solution for universal broadband for all Canadians. But surely we can strive to do a lot more, a lot better, and a lot sooner.”

We can moan about rural communities lacking equal access to the identical range of service options as those enjoyed by urban dwellers, or it seems to me that we can (and should) celebrate the availability of access to more than adequate broadband services that meet the CRTC’s target objective of 50 Mbps down and 10 Mbps up with an unlimited option, regardless of the delivery technology.

I’m not saying that we shouldn’t always aim higher. However, an adequate solution delivered sooner is indeed better than a perfect solution delivered years later.

“If you choose not to find joy in the snow, you will have less joy in your life, but still the same amount of snow.”

Assuming you believe in evidence-based policy making, last week wasn’t very good for advocates of structural separation in telecommunications, and with good reason.

New reports from the UK communications industry regulator, Ofcom, provide further evidence of the short comings of structural separation for investment in broadband infrastructure.

It was a year ago today that I wrote “A more evidenced based approach is warranted”, which included a video of an exchange between TELUS Chief Customer Officer Tony Geheran and then Conservative Industry Critic, Calgary-Nose Hill MP Michelle Rempel Garner at Parliament’s Industry Committee (INDU). Let me refresh your memory of the exchange.

Michelle Rempel Garner: “Mr. Geheran, I think I am saying your name right. You made a comment tonight. You said ‘if you have a policy that fundamentally undermines an investment strategy, you have to change policy’ and I think I agree with that. So I’d start with saying, do you think that structurally separating the builders of network from Internet Service Providers is a way to solve the policy tension that I just described?”

Tony Geheran: “No, I don’t. I haven’t seen that work anywhere globally, to sustainable effect.”

Michelle Rempel Garner: “It’s in the UK, right?”

Tony Geheran: “Yeah.”

Michelle Rempel Garner: “It’s like the primary model in the UK.”

Tony Geheran: “But if you look at the UK, they are wholesale moaning about the quality of their infrastructure, their lack of fibre coverage. across what is a very small geography. I know. I originated from there. And quite frankly, the Canadian networks are far superior in coverage and quality and performance through COVID has demonstrated that.”

Michelle Rempel Garner: “Well, that’s certainly not what we’re hearing in our offices from end users and that’s not the reality that we’re hearing in testimony tonight from you.”

Last week’s report from Ofcom confirmed Mr. Geheren’s view of the world. According to Ofcom, “the average download speed of UK residential broadband services increased by 25% since 2019, from 64 Mbit/s to 80.2 Mbit/s.” According to the CRTC, at year-end 2019, 18 months ago, the average download speed in Canada was already 176.9 Mbps, more than double the current speed in the UK.

In its Spring 2021 Connected Nations Update, Ofcom indicated that “Full fibre coverage continues to increase at pace, up to 21%” of UK homes by January 2021. According to the CRTC, 44.7% of Canadian homes had fibre to the home access, again more than double what is in the UK.

Those who promote “structural separation” won’t like seeing the evidence published by the regulators, but it is proof that Mr. Geheren was right, “the Canadian networks are far superior in coverage and quality and performance through COVID has demonstrated that.”

Last week also saw a new report on Australia’s state-owned National Broadband Network (NBN), saying that 5G “will take business away from a financially fragile [NBN] operation loaded up with debt. The state-owned telco owes A$19.5 billion to the national government, with revenue last year of A$3.5 billion.”

So, last week wasn’t very good for those who advocate structural separation, at least for those who believe policy should carefully examine the evidence.

Such evidence continues to confirm what most of us know: that structural separation is a losing regulatory model.

As the CRTC, the Competition Bureau and government policy have each determined, facilities-based competition is the sustainable regulatory model, promoting investment. Canada’s future depends on connectivity.

Bronwyn Howell authored an important commentary in Cartt.ca with “Lessons from Australia’s national network mess.” Based on observations about Australia’s broadband and mobile markets, she warns that politicizing Canadian telecommunications regulation is a bad idea.

Australia appears to be a simple counter example to Canada, with similar population density and geographic challenges. However, the political interventionism in Australia’s mobile and internet markets should serve more as a cautionary tale than a gold standard.

Like her recent piece on the AEIdeas blog, “Upping the political ante in mobile markets: A cautionary tale from Canada” (the subject of my post “A cautionary tale of political interference“), Dr. Howell warns that we should be concerned when “politicians usurp the role of regulators and start making matters of regulatory purview the subject of election campaigns.”

Advanced communications infrastructure is too important to be abandoned to the vagaries and short-term agendas of the political process. Australia’s failed NBN experiment is stark reminder, for Canadians, of how expensive this trade off can be.

Paul Burbank at Faskens wrote an article (see: “Calling All Voters – Be Wary of Wireless Promises this Election Season”) that sums up the election hype over mobile prices: “Affordability has become a central theme in this campaign and cheaper wireless makes for great politics. But great politics doesn’t always translate to great policy.”