{"id":14152,"date":"2020-09-30T06:44:37","date_gmt":"2020-09-30T10:44:37","guid":{"rendered":"http:\/\/mhgoldberg.com\/blog\/?p=14152"},"modified":"2020-09-29T14:41:22","modified_gmt":"2020-09-29T18:41:22","slug":"50-chance-of-a-warmer-than-average-winter","status":"publish","type":"post","link":"https:\/\/mhgoldberg.com\/blog\/?p=14152","title":{"rendered":"50% chance of a warmer than average winter"},"content":{"rendered":"

A while ago, I did some work with a weather agency. The project leader, we’ll refer to him as Tony since that was his name, told me that he received a call from a news station that wanted to know what the long range forecast was for the upcoming winter. Tony told the reporter, without consulting any computer models and with a completely straight face, “we’re forecasting that there is a 50% chance of a warmer than average winter.” The station led with that breaking news. <\/p>\n

The reporter didn’t understand that there was also a 50% chance of a colder than average winter ahead. Tony got a chuckle out of that story. <\/p>\n

This story came to mind as I read the CRTC’s Decision<\/a> on staying the requirement for facilities based telecom companies to file new tariffs as part of the implementation of last year’s aggregated wholesale high-speed access services ruling (2019-288<\/a>).<\/p>\n

It seems to me to be an impossible task for a regulator, or anyone, to set the rates exactly right. Set too high, competitive service providers won’t be able to compete; set too low and facilities-based providers are effectively subsidizing their competition and lose the incentives to invest in new technology and expanding territory. <\/p>\n

What are the defining characteristics of an ideal wholesale rate? For example, at one time, the regulator sought rates to be set at a level that smaller ISPs could find an opportunity to serve their customers, while maintaining an incentive to invest in facilities as they grow in a given area. Is this still part of the thinking when setting rates? <\/p>\n

While the rates can never be ‘bang on’, since cost elements change over time and with 100% certainty will not precisely match the very best forecasts, there must be a range that can prove to be acceptable to both parties, the buyer and the seller. <\/p>\n

It’s a real challenge in a regulated market for the adjudicator to find that middle ground. From the response to the rates decision of August 2019<\/a>, it appears clear that the CRTC’s rate cuts coupled with retroactive rebates went too far.<\/p>\n

Can a regulator reasonably replace the results of direct negotiations? Along these lines, I found it interesting to read in the Stay Decision<\/a> of the competitive factors at play between some of the facilities-based providers. At what point should the regulator determine the wholesale marketplace is sufficiently competitive to allow market forces to take over in setting rates?<\/p>\n

In the meantime, I’m prepared, with complete confidence, to forecast a 50% chance that the coming winter will be warmer than average. And, there is a 100% chance that however the CRTC rules in its review of the August 2019 rates, one side or the other (or maybe both) won’t be happy.<\/p>\n","protected":false},"excerpt":{"rendered":"

A while ago, I did some work with a weather agency. The project leader, we’ll refer to him as Tony since that was his name, told me that he received a call from a news station that wanted to know what the long range forecast was for the upcoming winter. Tony told the reporter, without …<\/p>\n

50% chance of a warmer than average winter<\/span> Read More »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","two_page_speed":[],"footnotes":""},"categories":[1],"tags":[],"class_list":["post-14152","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\n50% chance of a warmer than average winter • Telecom Trends<\/title>\n<meta name=\"description\" content=\"A while ago, I did some work with a weather agency. 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