Conservative Government telecom mess continues…

Back when the Government was pondering what to do about the CRTC decision to block Globealive from entering the Canadian wireless market on the grounds that it was under foreign ownership, I predicted that if the Government were to over-rule the CRTC it would face a lawsuit that it would lose.

On February 4th, the federal court ruled that the government decision was based “on errors of law and must be quashed“. Of course they are planning on appealing but if they lose again it’s going to cost tax payers a fortune.

Globealive could be forced to shut down and presumably Canada would have to give back the money from the spectrum auction ($442-million). And with potential losses in the billions one can only assume they would sue the government to recover their loses.

In addition, the rest of the participants in the auction could also sue arguing that the prices were artificially inflated by allowing an illegible participant to bid. The court might even rule that the auction should be done over again!

The Conservatives have managed to create one mess after another in Telecom.

Second-guessing the CRTC comes at a price

The Globe & Mail has a very good opinion piece from Richard French on the larger implications around over-ruling the CRTC. The article pretty much speaks for itself but it echoes concerns I raised way back when the Conservatives first over-ruled the CRTC.

Forgotten in the fury over usage based billing, is just how badly the Conservatives have damaged the integrity of the CRTC. Now that the Conservatives have demonstrated that they are more than willing to overrule the CRTC at a moments notice, they have now turned the CRTC into nothing more than yield sign on the regulatory highway, next stop, cabinet.

Aside from gutting the authority of the CRTC, they’ve also opening themselves up to a big political liability. Canadian’s “hate” the CRTC, but traditionally the ruling party has always been able to claim that it wasn’t responsible for it’s unpopular decisions. No longer. The Conservatives will now be in the direct line of fire for every unpopular decision the CRTC has to make. And trust me, that is a lot of unpopular decisions.

Conservatives reverse CRTC UBB decision

Can the Conservatives turn Canadian Telecom into any more of  a farce?

Having ordered the CRTC to rely on market forces, the Conservatives are now outraged that the CRTC has done just that.

What exactly did the Conservatives think would happen when the ordered the CRTC to rely on “market forces” in a market that is effectively a duopoly? That competition would improve? Have any of those guys ever taken a introduction to economics course?

On the up-side, maybe this will be the tipping point that forces the government to rescind it’s policy directive and let the CRTC do it’s job? Probably not. Sadly I honestly don’t think they even understand the implications of what they’ve done. They’ll probably just fire the head of the CRTC and let him take the blame.

National Post readers not happy with it's position on Usage Based Billing

Hot on the heals of an editorial in the Vancouver Sun which showed an amazing lack of understanding of  the Internet, the National Post has also decided to extol the virtues of charging astronomical rates for internet usage. The great thing about this editorial are the comments from readers, of which nearly 100% point out that the National Post has no clue what it’s talking about.

The Post also makes the same mistake of comparing the Internet to something else, in this case electricity, “[Internet is important] But so is electricity, and no one is suggesting that meters be ripped from homes so that heavy users can get a break.”

I love when opponents of something inadvertently destroy their own argument. This analogy fails spectacularly in just about every way.

First, the infrastructure for the electrical grid costs orders of magnitudes more than the Internet “grid”. In fact, the “Internet” is so much cheaper that when Hydro companies are running new transmission lines they also typically run fiber-optic cables at the same time because the incremental cost of doing so is effectively zero.

Second, electricity is not being marked up 10,000%. As one commenter correctly points out, under the internet caps, it’s actually cheaper to copy data to physical storage, send it in the mail then throw the storage away than it is to transmit data over the internet.

Finally, electricity is provided by government owned crown corporations that are heavily regulated! When proponents of usage based billing start making that comparison, then I say I’m all for it! Lets build a public internet infrastructure just like the electrical grid and charge users a small markup to use it.

Funny how their comparison to the electrical grid stops short of that?

And one other suspicious thing, the National Post is owned by Postmedia Network which also owns The Vancouver Sun. Is there a corporate directive to support the cable and telco companies? I’m wondering what the links are between the papers and the big internet providers?

Bell explains why it should(n't) be allowed to buy CTV

While defending itself from accusations leveled by Telus that it’s hording content, Bell manages to explain quite nicely why it shouldn’t be allowed to buy CTV.

“Bell defended its bid in front of the CRTC Tuesday on the grounds that the majority of its major competitors now own broadcast assets integrated with television, Internet and wireless systems”

In other words, it’s not anti-competitive to own the entire stack of services from content on down to Internet access because the only other competitors (the cable providers), are doing the same thing.

That’s all well and good as long as Canada never intends to have any more than 2 competitors (Cable & Telco).  It’s already effectively impossible for competitors to enter the Canadian market in any of segments, telecom, cable, internet, mobile, etc. Once the telcos and cable companies own the entire stack, there will be no chance. Say goodby to over-the-top services like Netfix who are already on life support given the recent lowering of caps on internet usage and inability to secure original content.

It’s too late of course. Rogers & Shaw are already deep into owning the entire stack so denying Bell the right to purchase CTV won’t happen. Besides, if the CRTC did block the sale it would be suicide. For one thing it would directly contravene the idiotic “market forces” directive from the Conservative Government and we already know the Conservatives are more than willing to overrule anything the CRTC does that they don’t like.

A letter to the Vancouver Sun

For some reason the Vancouver Sun though it would be a good idea to publish an opinion piece on Internet usage-based billing by someone who has absolutely no idea what he’s talking about. This is a real tragedy since network neutrality is not an issue that is easily understood by anyone who is not educated on the topic (as Harvey Enchin so brilliantly demonstrates). Publishing a piece such as this just reinforces the misconceptions on the topic.

To add further insult to injury, according to his bio, Harvey Enchin usually write about economics and politics, two topics that are actually integral to this story but which he completely ignores.

I generally don’t bother sending comments to news papers anymore because it’s so obviously a waste of time, but this one inspired me so I sent off the following email:

—

I’m not sure why the Vancouver Sun would publish an opinion piece from someone like yourself on Usage-based Billing when you so obviously have not been following the debate and possess little to no understanding of the issues involved.

Google tells me that you typically write on economic and political issues so it’s a real shame that you not only demonstrated that you don’t understand technological issues, but you also completely missed the political and economic story as well.

I really don’t have the energy to rehash and explain all the issues in detail, especially in light of the fact that a Google search will tell you all you need to know, but in short form:

Your wrong on the Technology because:

- The Internet is nothing like a bus.

Your wrong on the economics of usage based billing because:

- Networks (like computers) get cheaper and faster so raising prices makes no sense, especially in light of the fact that Canadians already pay among the highest prices on earth.

- The actual cost per Gigabyte can be measured in fractions of a penny but is charge in dollars.

- The capping of bandwidth has nothing to do with preserving an investment in internet infrastructure, rather it has everything to do with defending the Cable and Telecom investments in traditional T.V. delivery.

Your wrong about the politics because:

- You completely failed to mention that the CRTC was forced by the Conservative Government to reinforce the lack of competition when it issued it’s infamous “market forces” directive.

To help you out, here are set of keywords you can enter into Google on each of the important points:

- To clarify why it makes no sense to compare the internet to riding the bus:

Search for: “A series of tubes”

- To enlighten yourself on the economics:

Search for “significant market power”, “telecom monopoly”, “Netflix”, “Over-the-top services”

- To enlighten yourself on the underlying politics that explain why the CRTC is allowing monopolies to crush competition:

Search for “Maxime Bernier Market Forces”

- And to clarify why you should not write on topics that you don’t understand:

Again search for “A series of tubes”

Regards,

John Lange

Netflix doubts future in Canada

Netflix has now said publicly what we’ve known all along, this dismal state of Canadian broadband internet access will inevitably lead to a reluctance to invest in Canada by technology companies.

I’ve said it again and again, the conservative government’s “Market forces” edict has had a horrible effect on Canada by preventing the CRTC from making sensible rulings to promote competition in Canada.

If you’re a company like Netflix that relies on broadband to deliver your over-the-top internet based service, you’d be very reluctant to come to Canada knowing that the incumbent players are free to manipulate their networks to stifle competition.

2011: The year of the cable cut?!

Duncan Stewart of the Globe and Mail thinks that people cutting cable in 2011 in favor of over-the-top services like Netfix is over-Hyped. I completely agree. Changes in people’s behavior with regard to technology are much more likely to be evolutionary than revolutionary.

Take cell phones for example. It’s been a couple of decades since cell phones became common place but land lines still dominate, their numbers only just beginning to slowly decline as teenagers leave home with their cell phones and don’t sign up for land lines. We can expect the same trend with T.V.

My guess is it will take at least 5 years before over-the-top starts to have any impact and I’m guessing much longer once cable companies and telco’s  really start to use their broadband and content holdings to cap bandwidth and interfere with consumer choice.

Net Neutrality Explained in a short video

If you don’t understand what Network Neutrality is, or why it’s important, then you should check out this short video.

Conservative Government Phone deregulation fails consumers

The CBC has a story about how the Conservative government has hurt competition in the Canadian telecommunications sector with their ham-fisted miss-management. It’s exactly everything I’ve been saying for the last 4 years.

“The report points to a policy decision in December 2006 by then Industry Minister Maxime Bernier that ordered the Canadian Radio-television and Telecommunications Commission to use market forces to the maximum extent possible, and ensure that regulation was minimally intrusive.”

“…it recommends the government allow foreign competition and more liberal rules for small market players.”

Wow, its like I wrote this report.

http://www.piac.ca/telecom/regulate_telecommunications_by_results_not_promises_consumer_group_says/