Telecom Trends

Compost from garbage

2009-11-06T06:18:00.001-05:00

A recent commentary was written by Angel Gurría, the Secretary General of the OECD, citing a need for statistics to give a more accurate picture of society and the economy.

As Mr. Gurría wrote in European Voice:

We need tools to measure what is going on in our society – where we are progressing, where we are failing and what are the consequences of our actions. There is nothing wrong with the quality of the indicators, but some of them are not looking at what matters.
...
Statistics are not an end in themselves. Their importance lies in the policy discussions they stimulate as much as the evidence they provide.

I agree. We have to get the numbers right to empower intelligent policy discussions.

In last month, we saw university logos applied to papers, statements and ideological manifestos, giving credence to data analysis that would have trouble holding up to serious scrutiny in peer-reviewed journals of academic research.

A jewel from a recent broadband study would raise the eyebrows of any reasonable statistician reviewer:

Speedtest data is not perfect, but it offers an enormous database of actual tests, which provide insight into the speeds users experience on their computers. The dataset we analyzed included about 41 million actual tests from the OECD countries, from the fourth quarter of 2008.

Translation? Even though the source data smells funny, there's so much of it that maybe we can find something useful. Perhaps. But we're not convinced that the correct conclusions were drawn.

There is much more wrong with these reports, as Suzanne Blackwell and others wrote a few weeks ago. The Harvard study penalized Canada for OECD sampling errors (that I walked you through), such as ignoring Quebec as being part of the country. And as I wrote a couple weeks ago, the folks at Harvard tell us on one page that Canada had no 35 Mbps services and then 3 pages later, oops - they discovered one! Just not in time to use in their rankings. A rebuttal published on Wednesday by the study author did not address this mistake that resulted in erroneously ranking Canada as 30th for these very high speed services. Since the Harvard study also used flawed OECD sampling, this error was doubled in unfairly scoring Canada.

No matter how many studies adopt flawed speed and pricing survey data, the source just won't smell any better. By wrapping it up with impressive academic logos, the data might have taken on a better appearance - just don't get too close and be sure to wash your hands after touching it.

Northern lessons for FCC

2009-11-05T06:25:00.005-05:00

On Monday, a remarkable letter [ pdf, 71KB] was filed with the FCC.

Of particular note was the signature line - 6 leading academics who describe themselves as "professors of law who have spent many years devoted to research on the architecture of the Internet and its related policies."

Jack Balkin, Yale
John Blevins, South Texas College of Law
Jim Chen, University of Louisville
Larry Lessig, Harvard
Barbara van Schewick, Stanford
Tim Wu, Columbia

In their letter, the authors note that several have testified or filed comments with the FCC, and they have published widely on the topic of Network Neutrality and related internet issues. Why did they collaborate on this special letter?

We submit this extraordinary early letter only to flag what we believe are two ambiguities in the Notice that we hope can be addressed early to provide a clearer foundation for comments.

The ambiguities are "Defining Non-Discrimination" and "Reasonable Network Management."

Regarding the second point, these distinguished professors of law ask if the FCC is asking for comment on what the standard should be, or proposing no clear standard at all? The letter suggests that the FCC should consider the distinction used by the CRTC in defining certain tests for an acceptable internet traffic management practice.

These US law professors seem to be squarely at odds with the statement by the NDP's critic, Charlie Angus:

South of the border, the FCC has taken clear steps toward the establishment of internet neutrality on U.S. networks.

The professors say that the FCC's statement is ambiguous and they point north of the border for clarity. Who should we believe?

A CAIP press release issued last Friday tries to compare the CRTC's ITMP decision with the FCC's initial Notice of Proposed Rulemaking:

Nowhere in the FCC draft principles will one find the suggestion that higher prices for Internet access is an acceptable method of network management. By contrast, Canada’s regulator, through its policy statement, has further eroded Canada’s standing in international Internet metrics.

On Monday, the same day that the academics cited the CRTC's approach, CAIP issued another press release that said:

Despite putting in place proceedings that appear like they are progressive thinkers, the Commission has been issuing regressive decisions related to competitive issues.

Both press releases from CAIP play loosely with language, saying that the CRTC's approach was calling for "higher prices for Internet services" to deal with growing demand.

The letter to the FCC from the US internet law professors seems to contradict CAIP's assertions that the CRTC's decisions are regressive.

We stand by our observation that Canada is a leader in setting out the world's first clearly defined framework for managing internet traffic.

Fibre and productivity

2009-11-04T06:24:00.001-05:00

A study [ pdf, 368KB] by a New Zealand policy research firm is calling into question billions of dollars of government stimulus for upgrading broadband connections to fibre.

In a paper called The Need for Speed: Impacts of Internet Connectivity on Firm Productivity, researchers at Motu Economic and Policy Research claim to provide the first firm-level estimates of the degree of productivity gains sourced from upgraded internet access.

We use a large New Zealand micro-survey of firms linked to unit record firm financial data to determine the impact that differing types of internet access have on firm productivity. ... Having matched firms, we examine the productivity impacts that arise when a firm adopts different types (speeds) of internet connectivity. Broadband adoption is found to boost productivity but we find no productivity differences across broadband type.

Translation? The study finds a productivity benefit associated with a firm being connected to an 'always on' internet connection, but it could not show a benefit associated with higher speeds.

The implication? Billions of dollars are being spent by some governments on a belief that upgraded infrastructure is necessary to improve national economic productivity. Some governments, perhaps impatient with the pace of natural evolution of network development, are imposing structural separation or even nationalization of access infrastructure.

This study appears to affirm the benefit of ensuring universal access to a broadband connection; the challenge is in demonstrating a benefit from government intervention in broadband network upgrades.

If the Motu study is really the first to study the impact of broadband upgrades, one would hope that a fraction of the billions of tax dollars being spent around the world will fund econometric research to make sure that it is a worthwhile investment.

Regulatory symmetry

2009-11-03T06:04:00.001-05:00

The Globalive ownership Decision from the CRTC may have an error.

Frequently, the expression 'regulatory symmetry' refers to the even handed application of regulations across various technologies or industries.

In today's context, I use the expression in its literary sense.

Last Thursday's CRTC Decision that reviewed Globalive's ownership was complex: 119 paragraphs, organized under about a dozen level 1 headings and a few of those sections had sub-sections.

It is a well organized and readable piece - and for those who are willing to take the time, the decision lays out the difficult arguments and issues that were considered by the Commission in reaching its conclusion.

The literary symmetry that I want to refer to is in paragraph 115 of the Decision. The language in the decision reads:

Globalive has made numerous significant changes to its corporate structure and documents in order to address many of the Commission's concerns. In this decision, the Commission has identified additional changes that are necessary to address certain remaining concerns with respect to Orascom's influence over Globalive. These changes relate to the composition of the boards of directors, liquidity rights, and the threshold for veto rights.

However, if you look through the body of the Decision, you will see that the term "should" shows up in paragraphs 45, 64 and 72. These are the final paragraphs in sub-sections titled: "Composition of the boards of directors"; "Eligible Purchasers"; and, "Veto rights".

Contrast these three items with the last sentence in paragraph 115. That paragraph, quoted above, indeed refers to 3 changes being necessary, but the second item listed in paragraph 115 says "liquidity rights", not "eligible purchasers".

In fact, there is a section called "liquidity rights", but paragraph 59 in that section simply observes that this is an "an indication of Orascom's influence" without suggesting that a remedy is required (such as the use of the word "should" which appears in the other paragraphs). As such, the last sentence in paragraph 115 appears to have had a literary asymmetry - a dissonance that doesn't align the concluding paragraphs with the body of the decision.

This is what leads me to believe that an erratum is needed to clarifies the summary and restores a kind of talmudic balance.

Like straightening out a painting on a wall - did that dissonance bother anyone else?

More importantly, does that dissonance lead to confusion on what is required of Globalive to cure the CRTC's foreign control concerns?

Collecting more & better data

2009-11-02T06:36:00.001-05:00

Each year, the CRTC conducts an extensive data collection exercise, working together with Industry Canada, Statistics Canada, BBM Canada and BBM Nielsen Media Research, BBM Analytics for Media Technology Monitor, comScore, and Mediastats.

Despite this collaborative effort, it is quite possible that the Communications Monitoring Report undercounts business internet accesses in Canada.

The issue is partly due to definitions used in the data collection process.

The CRTC's Form 253 is the primary source of information for internet subscriptions.

That form asks for information about internet subscriptions, not internet connections, broken out by residential, business and wholesale.

Look at a business with 5 locations each having internet access. How does Form 253 count this customer? Is it one subscription or is it 5 connections? Note that "subscription" is defined by the CRTC as:

Internet access subscriptions are measured by the number of unique IP addresses which may be used simultaneously by different parties.

Is the term "subscription" an adequate way to determine internet connections?

Note that Form 253 may also not consider internet connectivity enabled over integrated communications services access. The form asks about internet subscriptions.

Consider a business that buys a hosted telephone solution. In this case, the internet connection comes for "free" with integrated data pipe that connects the business to the service provider. For Form 253, is the internet connection for that business scored at all?

A further enhancement to the data collection process might be to identify fibre connectivity for businesses and residences. Already, the forms [252 and 253] seek to distinguish 'fibre' from DSL and other technologies, but this may not be sufficient resolution to enable meaningful international comparisons.

For example, if there is a fibre connection to an apartment building and then DSL or cable modem connections from the utility closet to the customer, should fibre to the premise accesses be captured separately?

More fibre to more premises

2009-10-30T06:06:00.001-04:00

Cogeco Data Services has announced a 10 year deal with the City of Toronto to expand the fibre network that already connects all schools and school board buildings (as we wrote about in March), under separate deals with the Toronto District School Board and Toronto Catholic District School Board.

Under the terms of the deal with the City announced earlier this week, Cogeco Data Services will provide a fibre optic-based wide area network to various departments, agencies, boards, and commissions, serving a majority of the City's 50,000 employees.

The new sites will be installed over a three year period with the first coming on-line later this year. Cogeco Data Services expects 95 per cent of construction completed by 2011.

There is a lot of fibre being deployed in a variety of communities by telephone companies, cable companies and alternate providers such as Atria and Cogeco Data Services. Businesses and residences are being served with fibre to the premises solutions, often with multiple suppliers in a building.

How do we improve statistical data collection to improve our understanding of the state of advanced networks in Canada? We'll at this question some more on Monday.

What's next for Globalive?

2009-10-29T21:17:00.005-04:00

The CRTC issued its decision in the review of Globalive's ownership. Reading some of the re-tweets and comments on various news sites and blogs, I see the distain for our regulator that might be expected from those who don't have an understanding of Canada's structural framework.

As Michael Geist wrote:

It is tempting to blame the CRTC or the incumbent telecom providers (who filed the complaint over the Globalive structure) for this mess, but the real culprit lies with outdated legislation that prioritizes Canadian ownership over a competitive Canadian marketplace.

I agree with that assessment. Last month, I wrote about the Telecom Policy Review Panel's views on liberalization of foreign ownership.

One of the Globalive lawyers, Hank Intven, was a member of that panel that delivered its report three and a half years ago. Shortly thereafter, Hank was commissioned to develop a book detailing the specific legislative changes required to implement the recommendations of the report.

The Panel was created by the last Liberal Government and its response was delivered to a the new Conservative Minister of Industry. I remember asking a local Liberal MP if the bipartisan origins of the TPRP would permit a more constructive legislative approach to speed discussion and passage of the package of reforms.

Silly me.

So here we are. Where do we go from here? To those who wonder how Industry Canada could approve the ownership and then watch the CRTC deny approval, there are a number of reasons that we can discuss.

The CRTC set out the remedies required to gain approval in its decision. The fastest and most certain course would be for Globalive to bring its structure into conformance and receive authorization from the Commission.

Alternatively, Globalive can appeal to Cabinet, but with such a process, the Telecom Act has prescribed timetables to allow consultations with the provinces and the public. This would not be fast and I'll ask lawyers to consult on whether Cabinet has the legal authority to simply ignore the foreign ownership restrictions entirely. It is possible that the path of least resistance would be for Globalive to ask Cabinet to order the CRTC to delete paragraph 118 of the Decision - the one dealing with Orascom holding the debt - perhaps using a justification of the exceptional circumstances of the current economic situation.

Alternatively, Globalive could sit on the spectrum asset, waiting for legislation to remove the foreign ownership restrictions. I'm not holding my breath.

One way or another, there will be new players in the Canadian mobile space. Public Mobile, DAVE Wireless and Videotron are also building networks.

At the end of the day, Globalive entered the spectrum auction fully aware of the ownership regulations and precedents for previously approved corporate structures. It acquired new entrant spectrum that had been set aside to enable smaller start-ups to offer increased wireless choices to Canadians and it outbid the others perhaps hoping that it could push the envelop a little further.

All along, Globalive has been in control of the timetable for approval. The next move is up them as well.

Enforcing indirect regulations

2009-10-29T06:17:00.001-04:00

The issue of indirect regulation came up again in last week's internet traffic management decision.

The issue: how does the CRTC impose regulations on service providers that aren't carriers? So, the CRTC created two new definitions to distinguish between "secondary ISPs" (defined as service providers that don't own their own facilities and therefore aren't regulated as carriers; and, "primary ISPs" that own transmission facilities and are therefore more easily brought before the CRTC as carriers under the Telecom Act.

The CRTC assumed that "secondary ISPs" must get access to their customers by dealing with at least one "primary ISP" and so the Commission ordered all "primary ISPs" to include a contractual obligation for their wholesale clients (ie. "secondary ISPs") to agree to abide by the rules.

This is problematic on a number of levels.

First, as I described last week, the requirement doesn't capture secondary ISPs that don't deal with a primary ISP. It is quite possible for an ISP to do all of its wholesale buying through another secondary ISP. Alternatively, there may be colocation companies that are carriers, but not ISPs. The latter can be dealt with by simple rewording of the order; let's face it, the use of the term "primary ISP" instead of "carrier" was to appease the "secondary ISPs" who may have found the term "reseller" to be pejorative. It isn't as simple to go after second tier "secondary ISPs" (should they be called "tertiary ISPs"?).

More fundamentally, what happens if a secondary ISP is in breach of its contractual obligation? How does this get enforced?

In the absence of meaningful regulatory oversight, will an industry association enforce a code of conduct to provide assurance to Canadians? Still, the CRTC didn't believe a voluntary code offers sufficient consumer protections. Don't customers of secondary ISPs deserve the same protections?

Building rural capacity

2009-10-28T08:46:00.002-04:00

Hughes Network Systems has announced that Canada's largest rural broadband provider, Barrett Xplore has committed to acquire and operate over 10 Gbps of capacity on Jupiter, a next-generation, high-throughput satellite. Jupiter is scheduled for launch in 2012.

With Jupiter, Barrett Xplore expects to offer a range of broadband packages up to 10 Mbps for residential service and up to 25 Mbps for business, with performance and pricing comparable to that in terrestrial broadband markets.

John Maduri, CEO at Barrett Xplore said:

Jupiter will enable Barrett Xplore to provide significantly enhanced service offerings to our current customers, and offer additional capacity to serve hundreds of thousands of rural Canadian households. This considerable investment in satellite capacity demonstrates Barrett's ongoing commitment to rural broadband and strengthens our ability to reach all rural Canadian households with cost-effective, high-speed Internet.

The agreement is valued in excess of U.S. $100 million.

Giving broadband the time of day

2009-10-28T06:26:00.000-04:00

My electric utility came to the house on Wednesday and installed my new smart meter. Earlier this year, we installed the Peaksaver thermostat.

The idea behind the smart electric meter is to enable the utility to charge differential prices based on the time-of-day or day-of-week when we consume power.

The Peaksaver thermostat not only enables some very cool programming and remote internet access, but also permits the utility to kill the air conditioner for a brief period (hopefully not noticeable) during the hottest, most power intensive days of the summer.

I wonder if the concepts behind these capabilities might find application by a creative ISP.

For example, internet services don't really have a monthly capacity constraint; monthly download caps are a convenient measure of total consumption for proportionate allocation of resources, but the pipes are really provisioned for peak load. For real-time applications, like voice calls and streaming content, ISPs need to make sure there is sufficient capacity to handle everyone's aggregate requirements. Less sensitive applications can be delayed slightly without any impact.

Outside of the peak, it doesn't matter as much if an individual user is consuming a little or a lot; the network capacity is sitting available.

It seems to me that an ISP might want to create a service offering that provides user incentives to shift loads out of the peak - for example, offering software utilities to make sure those routine software updates are scheduled to downloaded during slower network loads, and perhaps exempting such behaviour from contributing to the download caps.

What about another product that permits interruptible service? Rather than degrade all bandwidth intensive traffic, would some consumers be interested in a service that cuts certain bandwidth intensive applications at peak times - like killing the air conditioner on peak electrical days.

Of course, these kinds of network based developments require network operators to have the flexibility to deploy and use technologies like DPI interfacing to various billing and management systems - and to advise customers on what is going on.

Would such services help preserve flat rate internet for some users, while providing effective economic internet traffic management?

Offering a clear choice

2009-10-27T10:01:00.002-04:00

Yesterday, I wrote about TELUS launching the iPhone and its HSPA network on November 5.

Today, TELUS announced simpler pricing, called Clear Choice with Clear and Simple Pricing.

TELUS is also simplifying the number of rate plan options.

Beginning November 5, TELUS will offer clear and simple pricing, with no System Access Fee (SAF) or carrier 911 fee, across business and consumer wireless rate plans.

Existing TELUS clients can continue to renew on their existing rate plans or have the option to switch to the new rate plans at launch.

It's beginning to look like Christmas

2009-10-27T06:17:00.000-04:00

Nokia has announced its Christmas line-up of phones and accessories.

Bluetooth earpieces, headphones and speaker phones figure prominently on their website.

The current version of the Nokia Holiday Gifts website only shows phones for the Rogers network. Nokia plans to update the site frequently - possibly showcasing more devices and choices after some of the competitive HSPA networks launch later this year. For example, the Nokia website shows the E71 in grey and white for the Rogers network, but Mobile Syrup is saying that TELUS will offer that device in black and red.

An preliminary version of the site showed the Nokia N86 incorporating an 8-megapixel camera including Carl Zeiss optics. The phone can be bought from on-line sources in Canada, but it isn't being promoted by a carrier, yet.

Will it be available through one of the major service providers before Christmas?

HSPA competition starts next week

2009-10-26T08:57:00.002-04:00

November 5 is the date that TELUS will be activating its HSPA network, with speeds of up to 21 Mbps over what is being called the largest 3G+ network in Canada.

Pricing for the iPhone is now being advertised.

Consumers will now have more choices for suppliers of some of the world's top selling devices. As TELUS President & CEO Darren Entwistle said in the press release:

Our new wireless network enables advanced speeds and services for more than 30 million Canadians based on the most innovative wireless technology available today. More importantly, it offers Canadians more choice and timely access to almost all major mobile devices in the world across TELUS' three leading wireless networks.

Let the games begin.

Projecting urban values

2009-10-26T06:34:00.001-04:00

A long time reader wrote me a note that is worth sharing.

Normally, I use a smaller font size for quotations, but to ease your reading, I'll keep the size normal:

Have followed with interest your comments on the need to analyze the demand side for broadband before reaching any conclusions about penetration rates.

I agree.

However, we might learn something in this regard from our long experience with narrow band penetration rates. Generally, narrow band i.e. old fashioned local exchange voice service, has been almost universally available, due to cross-subsidies, and penetration rates have been very high (over 90%) in most parts of Canada. (I am leaving aside the more recent replacement of wireline service by wireless).

But there are exceptions. In many communities North of 60, penetration rates for traditional narrow band voice service have been much lower, often in the 60-80% range. From a national policy perspective, some might conclude that our telecom policy "failed" these communities. But, there is another point of view.

The low penetration rates, in spite of massive subsidies, are only a "failure" if one assumes that residents of such communities ought to exhibit demand and consumption patterns that mirror those of the urban south.

Clearly, this reflects a projection of our urban technophile values on all others and an assumption that those who do not adopt such values are wrong or have been left behind. In fact, the residents of many such Northern communities have made an entirely rational economic calculation of cost and value and determined that, for them, telephone service is not worthwhile. If there is any "failure", it is that of urban policy makers who assume that their own demand and consumption patterns are right for everyone.

We must, of course, recognize, that broadband offers a different (i.e. much wider) suite of capabilities to end users. Nevertheless, in developing a broadband strategy, we should not fall into the trap of assuming that only one set of consumption patterns is right for all.

There will almost certainly be some user groups, including some in urban Canada, who will decline to adopt broadband in spite of any subsidies. Our many years of experience with narrow band subsidy programs has already demonstrated this.

A few years ago, I remarked that it seems patronizing to assume that all rural and remote users require a subsidy for broadband. In our recent report, we observed that some big ticket items like housing are often less expensive in rural areas. We need to understand inhibitors on the demand side - price is only one factor.

Your comments are invited.

Bell virtual Olympic torch

2009-10-23T09:05:00.002-04:00

Bell is getting into the Olympic spirit and hopes to get all Canadians thinking about the Games (which are less than 4 months away).

As the Olympic Torch relay gets under way, why not carry a virtual torch with you? Bell has created an animated torch that can be used as a mobile phone wallpaper or screensaver. Visit http://bellvirtualtorch.mobi for the mobile download. (Bell Mobility customers can text "torch" to 2044 - standard text and data charges apply.)

Or for that matter, you can get a screensaver for your computer here.

You can follow the live torch relay here.

Be sure to check out the new Vancouver 2010 website. My favourite Olympic event? Short track relay.

Critiquing the Harvard broadband study

2009-10-23T06:13:00.004-04:00

Other voices are finding problems with the data at the core of the FCC's broadband study, produced by Harvard's Berkman Center for Internet & Society.

On Monday, George Ou of the Digital Society think tank systematically trashed the Harvard Berkman Study, concluding:

The underlying data cited by Berkman study is simply too flawed to be of any use. And because the study bases its conclusions on flawed data, the conclusions drawn in the Berkman broadband study are equally unreliable.

Bret Swanson (former executive editor of The Gilder Technology Report) writes:

the real purpose of the report is to make a single point: foreign “open access” broadband regulation, good; American broadband competition, bad.
...
The gaping, jaw-dropping irony of the report was its failure even to mention the chief outcome of America’s previous open-access regime: the telecom/tech crash of 2000-02. We tried this before. And it didn’t work!

There will be more criticism leveled at this report. Bottom line?

As we stated on page 24 of our report [ pdf, 944KB], in undertaking any international comparison, one must be cautious not to fix on any one measure regardless of whether it provides good or bad news. Much more can be learned by considering a range of indicators and most importantly, understanding and taking into account the underlying factors that influence the results.

Ignoring this understanding, too many are seduced by capturing easy headlines and fail to do their own scholarly analysis of the data.

FCC looks at demand side for broadband

2009-10-22T12:23:00.000-04:00

Xchange is reporting that the FCC is surveying citizens to find out why people with access to broadband still aren't signing up.

Sound familiar?

At a session at Supercomm, the FCC spoke about low adoption rates as a key hurdle, rather than access.

The FCC is developing a national broadband plan that aims to expand broadband reach to all U.S. residents but policymakers still have to figure out why some people resist subscribing to broadband.

As we wrote last week, in our recent report, we made the same observation and two of our recommendations dealt with this issue.

Shift more attention to adoption issues (including adoption of next-generation services) and encourage socio-economic research focused on better understanding the obstacles to, and inhibitors of, broadband adoption
Consider programmes to improve digital literacy and the use of incentives (tax-based or otherwise) to target and overcome any barriers to broadband adoption

Which side of the border will act first on demand-side programmes to overcome barriers to broadband adoption?

Competitive ISP market affirmed

2009-10-22T06:38:00.005-04:00

Later today, there will be an announcement from the FCC that will be much heralded by many who confuse political rhetoric for action. It will be a long process before the US has any kind of net neutrality regulation, let alone the proposed framework that will be articulated today by the FCC.

Keep in mind that there is big difference between an operational approved framework that was put in place by the CRTC yesterday and a notice of proposed rulemaking just going out for comment today south of the border. Even after a year-long consultation, the FCC action will attract litigation that could drag out implementation for years.

Let me say it again - no country in the world other than Canada has an internet traffic policy framework and rules in place to protect consumers and deal with discriminatory behaviours by all ISPs - incumbents and new entrants alike.

At paragraph 46 of yesterday's network management policy framework, the CRTC continued to recognize the competitive alternatives available to consumers on a retail level:

Consistent with the current regulatory approach, under which the Commission has granted forbearance for retail Internet services, primary ISPs may continue to apply ITMPs to retail Internet services as they consider appropriate, with no requirement for prior Commission approval. This approach remains valid due in part to the large number of existing ISPs. A change in the approach would amount to interference with market forces and would result in inefficient regulation, which is contrary to the Policy Direction.

The CRTC, the competitive industry and Canadian consumers benefit from having generalized nondiscrimination rules enshrined in Section 27(2) the Telecom Act and a prohibition against interfering with content in Section 36.

However, there is a bit of a legal challenge for the CRTC in applying Section 27(2) of the Telecom Act directly to some service providers.

"Secondary ISPs" (defined as companies that don't own the facilities) aren't regulated. As a result, the CRTC needs to regulate indirectly, imposing a condition on "primary ISPs" to contractually obligate their wholesale clients ("secondary ISPs") to agree to abide by 27(2).

There may need to be some clean-up by the CRTC in the language used to define these new primary and secondary terms. The current language of the rules has loopholes that could enable some secondary ISPs to escape regulation under the framework.

For example, while primary ISPs are defined to be carriers, the converse is not true: not all carriers are necessarily primary ISPs. It is unclear why paragraph 50 was a direction to "primary ISPs" and not to all "carriers". A company operating as a wholesale carrier enabler may enable co-located DSLAMs for one or more ISPs, without the carrier ever becoming an ISP.

In addition, it is possible for secondary ISPs to purchase all of their underlying services from another secondary ISP (acting as an aggregator). As a result, the CRTC will need to try to ensure that contractual obligations to abide by 27(2) cascades appropriately.

Procedurally, it is already difficult to enforce indirect regulation through carrier contracts. It is not clear that there is a meaningful mechanism to enforce obligations on supplementary tiers.

Watch for amendments.

Canada leading the world

2009-10-21T14:09:00.003-04:00

As CRTC chair Konrad von Finckenstein was quoted in the Commission's press release:

Canada is the first country to develop and implement a comprehensive approach to internet traffic management practices

In a regulatory policy decision issued this morning, the CRTC has affirmed that it already has sufficient legislative authority within the Telecom Act to police discriminatory practices by ISPs. Similar clauses do not exist in US legislation.

Contrary to rhetoric from people who really know better, Canada doesn't lag the US in net neutrality legislation. As we have written before, the generalized nature of anti-discrimination provisions in Canada's Telecom Act have continued to provide sufficient tools for the CRTC to protect consumer interests on the internet.

Further, the CRTC has stated (at paragraph 116 of today's decision) that it expects mobile wireless internet services to abide by the principles set out in this decision - likely the first regulator in the world to apply such provisions in a mobile context. Even though it lacks the ability to enforce these provisions, the message is clear to the mobile industry.

Let me say it again - no other country in the world has a set of rules in place to deal with net neutrality. No other place has regulatory certainty, enforcement processes and a clear framework for defining and dealing with violations of principles that balance the interests of users and service providers.

The FCC and its chair may have made policy statements, but it has not completed a Notice of Proposed Rule Making (NPRM). Tomorrow, the FCC will perhaps start a long consultation process for its new proposal.

Providing clarity for consumers and the industry alike, Canadian regulators are leading rather than following the FCC.

Corporate liability for mobile phone distractions

2009-10-21T07:41:00.002-04:00

Interesting article in the National Post today by Howard Levitt on the legal implications of having employees who are distracted while driving.

He writes that the various provincial bans on calling and texting while driving will likely increase the risk of liability for employers, by making it that much easier for a court to link careless driving to illegal use of a cellphone.

Employers can be sued for accidents caused by employees driving while taking a call or texting a customer or the office. This is a risk whether or not bans are legislated.

His article has suggestions on how to manage the risk through such measures as:

introduction of formal policies
training
remove expectation of dealing with calls and emails while on the road.

The corner record store

2009-10-21T06:16:00.001-04:00

A few weeks ago, I wrote about my attraction to XM Radio's Channel 27, The Bridge. I wrote the piece to talk about micro-market programming that is enabled by digital broadcasting and some of the benefits of push versus pull content delivery in exploring the unknown.

Sure, I could load up an iPod and play my tunes, but I don't own everything from that period - every so often, there is a cut inserted that reminds me of a missed purchase from 30 years ago.

Enter Panel.

Panel is a new iPhone / iPod app that provides recommendations from a Panel of music industry experts, in the same way that corner record store owners, DJs and music writers were once the "go-to" source for new and undiscovered music.

The Panel app streams two full albums per week in various categories (rock, pop, indie, alternative, jazz, etc) chosen by the week's "Panelist."

It is another interesting approach to micro-programming. Comments?

Who is shortchanging Canada?

2009-10-20T06:30:00.009-04:00

I keep hearing voices say that Canadians are paying more and receiving lower speeds than our peers in the OECD. I keep saying that the data is biased. A couple leading academic institutions cite OECD statistics in their reports - meaning their studies are equally biased.

How many of the critics have actually looked at the data that the OECD used [ xls, 286KB]?

Indulge me, please.

Download the spreadsheet and look at the tab called "BBPricing". Look through the worksheet and you will see the basis of the speed and pricing and price per megabit that keeps getting quoted. Canada appears on lines 117-133 of the worksheet - line 133 is the arithmetic average of the 16 lines above it. It is as simple as that.

I want you to take a little time to actually go through these numbers, because I think that anyone who actually looks at the table will see the same problems that we have with the data.

Take some time to get a really good look at how the OECD numbers were developed, because these are at the core of the Oxford and Harvard studies.

Anyone wonder why Australia has 71 samples of data - some duplicates - and Canada has just 16? Why little Dansk Bredbånd (less than 100,000 subscribers in Denmark) merits 9 samples from their offerings - more than Bell Canada's 8 and more than double the representation from Rogers and Shaw). The OECD liked Dansk Bredbånd enough to include duplication of 3 of its offers, thereby over-weighting the highest speeds.

Videotron's high speed services were ignored by OECD, apparently because it isn't one of the top 3 providers in Canada. So, no coverage of TELUS, Bell Aliant, Cogeco or Novus either.

The OECD didn't limit its review of other countries to only 3 service providers. For example, 5 providers were sampled in Ireland; 4 in Iceland; 4 in France; 4 in Japan; 4 in Netherlands; 5 in Sweden; 6 in Spain; 4 in Portugal; 4 in the Slovak Republic; 5 in the US. Why only 3 from Canada?

Governments can't set a broadband policy based on faulty data.

Why isn't the OECD reporting of Canada more complete? That is a question that politicians should be asking.

The myth of regional monopolies

2009-10-19T08:19:00.002-04:00

An oft-repeated myth is that Canada's industry is characterized by players that keep to their home turf. A press release caught my eye this morning that contradicts that view.

TELUS has teamed up with the IWK Health Care centre in Halifax to deliver a specialized portfolio of solutions to break down the walls that separate hospitalized kids from friends and family.

Created by Kids' Health Links Foundation, Upopolis.com provides the best features of social networking for young patients who often feel disconnected when they're in the hospital.

Kid's Health Links and TELUS launched the program in 2007 at McMaster Children's Hospital in Hamilton, Ontario. Since then, it continues to expand to hospitals across Canada, including B.C. Children's Hospital and the Children's Hospital of Eastern Ontario.

Of significance is the evidence of TELUS' active presence in eastern Canada - Bell and Bell Aliant territory - with the service in Ottawa at CHEO and in Hamilton at Mac. TELUS has chalked up a number of significant wins in the public and financial sector.

The battle goes both ways: just look at Bell's Olympian efforts to equip the Vancouver winter games and delivering Alberta's Supernet.

Consumers benefit from this level of competition as well. Choice between phone companies, cable companies and various fibre owners enable the smarter smaller operators to leverage competitive wholesale arrangements for delivery of customer solutions.

More on the Harvard study

2009-10-19T06:04:00.002-04:00

I have to believe that some of the more vocal critics of the Canadian broadband scene know that the data is biased, but have avoided acknowledging the problems.

Suzanne Blackwell has detailed some econometric concerns with the recent Harvard study [ pdf, 2.92MB]. In a number of cases, the study recognized problems with the OECD data and tried to modify the results.

While the steps taken to improve the pricing data were helpful, it is curious why the Berkman Center decided to create its overall ranking on price based on both the OECD price observations and a combination of the OECD and its own updated and expanded data. The latter would, for the most part, encompass the former observations so there is no reason to use both.

Suzanne notes that the Harvard study ignored high speed service data that it had available for Canada (recall, it showed that information in one of its figures), Canada was again artificially pushed lower in the rankings.

The Harvard study is marked "Draft". Will the authors acknowledge these and other obvious errors and issue a revision?

Focus on adoption

2009-10-16T06:45:00.002-04:00

The release of our report [ pdf, 944KB] was greeted by the popular media with an interesting reception.

We have provided a Canadian interpretation of the body of studies regarding broadband services. Many folks, despite evidence to the contrary, seem averse to any consideration that studies issued by reputable foreign institutions could contain errors.

Some criticisms of our report seem to reflect naivete, ignorance of econometrics or a lack of real world experience. I was struck especially by comments that ridicule the role of satellite in completing the job of providing universal access to broadband in our country - together with most nations. If Australia's NBN can't reach more than 90% of its population with wireline facilities, despite plans to spend more than $40B over the next 8 years, exactly what policy will do better in Canada?

Is satellite a perfect substitute for terrestrial solutions? No. But, it is unrealistic to expect any other technology to be able to serve the minority of Canadians who live in areas with low household density. Would armchair critics prefer to have rural Canadians wait indefinitely for fibre to the farm, rather than improve their accessibility through next generation satellite?

The current federal broadband program recognizes this reality:

The Broadband Program will be technology neutral, accepting a variety of wireline and wireless technology solutions, such as fibre, digital subscriber line (DSL), cable and wireless networks (ground based and satellite).

Canadian ISPs aren't done; there is an ongoing need for more investment, to continue to compete to attract more customers and increase the service levels to those already on-line. Facilities-based competition isn't just the domain of cable companies and telcos; there are hundreds of entrepreneurs with regional and national networks, competing with all forms of infrastructure.

The report indicates that service providers are already investing about $8B-$10B per year on their networks and there is no indication that this is coming to an end. That is a lot of money - about $50 per month per Canadian household in capital expenditures.

Broadband adoption has two components: supply and demand. Among the recommendations in our report were two suggestions to support each of these factors.

On the supply side, we have recommended that the government should continue to encourage private sector investment in infrastructure:

Continue policies focused on fostering facilities-based competition
Build on the past success of private sector investment by removing current policy and regulatory uncertainty regarding investments in next-generation networks

And on the demand side, an area generally overlooked by policy makers, we suggested that research is needed:

Shift more attention to adoption issues (including adoption of next-generation services) and encourage socio-economic research focused on better understanding the obstacles to, and inhibitors of, broadband adoption
Consider programmes to improve digital literacy and the use of incentives (tax-based or otherwise) to target and overcome any barriers to broadband adoption

Supporting programmes to increase demand and overcome barriers to broadband adoption are a competitively neutral approach to get more Canadians on-line.

What do you think we need to do to improve Canada's broadband adoption rates.