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By brians, August 20, 2009 1:37 pm

There’s a lot of discussion on the internets this morning about an article Peter Nowak from the CBC has written about a petition and facebook group requesting the dissolving of the CRTC. Twitter users have taken a liking to this from a quick CRTC of the stream and the petition is gaining some steam, or seems like it is. Discussion on the CBC page is extensive and intense with over 220 comments since last night’s posting of the article.

Michael Hennessy has responded on his blog WhenDogsRunFree, with an unusual defense of the CRTC, although I love his admission in the head for his blog, that while he loves free market, he makes his income on regulation itself “I now work in an anti-regulatory occupation although without regulation I would be unemployed.Kinda ying yangish”

The interesting thing about this discussion is the fact that we can have it – and it is worth having. Questions like “Why does the CRTC exist?” are real questions worth answering. On the telecom side (we’ll leave it at that for now) we can ask such things as: Is it there to protect us from natural monopolies? To decide where towers should go? or where wires should be strung? how much we, as consumers, should pay for various services? how much companies should pay to each other? or, more broadly, to promote cheap and plentiful communication among Canadians.

The carriers all spend much of their regulatory money on folks like Michael, to promote the notion that the market is highly competitive. And in a competitive market, one assumes we don’t need a regulator. But on the flip side, that regulator ensure that the competition stays minimal. Regulators create nice barriers to entry for new market entrants. Keeping a tight rein on new telecom licencees, issuing tiny pieces of spectrum (yes, that’s Industry Canada, but it’s the same issue), and making sure new phone numbers don’t get too freely given to folks like Skype such that they might tread heavily into the carriers markets. This, for carriers, is highly important to protect.

Rather than get into the nitty gritty of whether the CRTC made a bad decision on wholesale tariffs for TekSavvy, we might stand back and ask broader questions like: What are we protecting? Culture, communications, or profits for an industry. That that’s a bad thing to protect – Bell and Telus employ many Canadians.

We can also ask the question. If we started a dissolving of the CRTC, what would happen? Would new entrants come? or would we revert to natural monopolies? would Global companies offer service at more competitive rates? what would be the downside?

All good questions to engage a discussion.

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By brians, August 19, 2009 5:14 pm

The OECD came out with it’s most comprehensive telecom report to date, but the headline grabber in this part of the world was highlighted by the CBC’s “Canadian cellphone rates among world’s worst”.

Speaking from personal experience, I know telecom executives in this country take comments like this to heart. And, as Canadians who once held leadership positions in telecom equipment manufacturing with Nortel, and still wave the RIM flag, we do feel somewhat offended.

Pundits, especially ones who make much of their money defending the Canadian telecoms, jumped on the report as flawed. Issues like the size of the call baskets, issues with incoming and outgoing minutes, LD pricing and such, they say,  make the report flawed to the point of useless.

I disagree. Rudulph Van Der Berg Blogs: It’s here, it’s full of statistics! Statistics we can all fight over!

As a primary author of the July 2005 SeaBoard paper “Lessons for Canada – A Cross National Survey of Wireless Pricing”, I know a bit about building a survey like this. It is challenging.Trying to come up with a methodology to compare apples-to-apples will never work out exactly right. As a researcher, you make best efforts to come as close as you can.

At the time that the SeaBoard paper came out there was an existing OECD paper, which showed Canada in a much better light, using a much more primitive methodology. Carriers thought the OECD paper, because it suited their interests, used the right methodology, and the SeaBoard methodology was flawed. (despite having access to all the spreadsheets and data). When I finally got around to reading this report, I was struck by how much the OECD had adapted the SeaBoard research methodology to include more comprehensive baskets. Their buckets of minutes have increased, well above the SeaBoard’s usage levels, (but that’s likely because usage levels world-wide have gone up).

I credit the folks as the OECD for taking a much more thorough approach. Now the carriers are going to turn their PR guns on the OECD, through the CTIA, because their stats aren’t favourable. Instead they cite the Merrill Lynch wireless matrix, which in full admission, the researchers there have noted that they measure “charged minutes as reported by carriers”, not usage minutes, so it’s not much of a research report for comparing apples to apples. It is very good for telling how profitable carriers are globally.  It’s pretty typical.

Rather than get into detailed criticisms of the OECD report, because overall I think they did a great job. Issues like bucket sizes, # of incoming minutes, average usage per country, are difficult to equate. Considering you can almost never compare apples to apples, I’d point out a couple things to Canadian, and even American carriers.

1. The survey is over a year old. In telecom years, that’s a long time. I watched how data rates in Canada plummetted drastically during the course of one years, with the introduction of the iPhone inspired 6Gb data plan. So plans a year old are like looking in a long rear view window. What’s behind doesn’t matter.
2. For some reason the OECD didn’t consider mobile data. They added SMS, and MMS usage (which is almost harder to equate North American to European usage because of the differences), but skipped mobile data – even limited volumes. With the increase in usage of smartphones, blackberries, and other mobile devices, missing that is a key factor in determining phone usage and pricing. Yes, it’s hard to include, because usage among countries varies highly, but that factor would have shown some interesting traits. But it’s more of an example of looking backwards instead of forward. Mobile data is mobile carriers future. With the arrival of skype over iPhone and other VoIP services, mobile carriers should care less about minutes and more about mobile data.

If I was the carriers, or the CTIA, acting as their chief lobbiest and PR folks, I’d dismiss the OECD report as old, and not focussed on the right issues. Move forward, think about tomorrow, not yesterday.

As for Canadians, we’ve already seen drastic shifts in the market for data over wireless in the last 18 months, and with the emergence of companies like Wind Mobile, Public, and DAVE, the market will change again. As Canadians embrace new technology on their own, carriers will need to catch up to consumers.