Taxpayer subsidies for broadband and other big lies

Recently the campaign to save the Internet(didn't know it was in trouble)has ramped up into high gear in terms of rhetoric. According to critics of recent shifts towards a more commercially-based wholesale regime in Canada, "monopoly" telephone companies like TELUS and Bell are trying to kill competition by preventing access to networks built at the expense of the taxpayer. Now to anyone with any sense of regulatory history this is bull. No wait, bull is to small a concept to describe for such blatant and deceptive sophistry. Moose pooh, or MP for short is a better description for sure. Moose pooh is like bull but bigger and more substantial.

A little history here. Bell has always been a shareholder-owned and operated company. TELUS is a combination of AGT,BC Tel, Quebec Tel and Clearnet (with a dollop of Ed Tel thrown in). BC Tel and Clearnet were shareholder owned. While AGT was publically owned a generation back, it was privatized in 1990 well before the creation of the world wide web or the launch of DSL service . MTS Allstream a promoter of the taxpayer MP story, was also once the child of public enterprises (the state-owned Manitoba Telephone system and CN Rail part of the CNCP consortia that morphed into Unitel,ATT Canada and Allstream). However no one today is suggesting that MTS is a taxpayer funded entity.

In point of fact the investment that now supports the Internet for all the major local exchange carriers (outside of Saskatchewan) has been built on the regulated backs of shareholders first under rate of return regulation and subsequently price caps. Cable Internet was built with much less regulation .It is simply beyond myth to suggest, as some do, that taxpayers subsidized investment under ROR. Rather under ROR shareholders of telephone companies were provided a opportunity to earn a reasonable return on investment. The quid pro quo was that prices were kept artificially low to ensure universally affordable local phone service. The local telephone company was never the recipient of subsidy ,rather the local phone customer was heavily subsidized by the phone company in order to achieve universality objectives.

Rate of return was replaced by price caps in the late 1990s, but even before that the CRTC had imposed a split rate base regime in 1995 that moved most competitive investment, including DSL investment out of the regulated rate base. Price caps subsequently insulated subscribers even further from the risk of new investment to shareholders. Even so all that initial DSL investment has been and will remain subject to access tariffs, regardless of what happens around next-generation networks.

The other myth, is the myth of monopoly and the inability of other carriers to invest. First cable not telephone companies are the market share leaders in Internet access based on billions of dollars of infrastructure investment in a more deregulated environment. It is economically inaccurate to call the market share follower a monopoly. Second in addition to cable, a company like TELUS is facing new competition in the retail internet space in three areas. First the Inukshuk, Rogers and Bell fixed wireless play is making inroads at 2.5 and 2.6 Ghz. Second new wireless HSPA networks are being rolled out that will deliver downstream retail speeds comparable to some wireline internet today. Third satellite internet has proved to be another downstram alternative for consumers in rural and remote markets. Again this competition is enabled by billions of dollars of new investment.

Perhaps the most telling evidence of competition and investment is demonstrated by investments made by TELUS beyond the borders of Alberta and BC. By continuing to invest in facilities outside of its heritage borders, TELUS has been executing a national growth strategy that has led to it winning major contracts from the Governments of Ontario, Quebec and Canada away from Bell and other carriers.

Competition is real and investing in the future works. Rhetoric can buy time from government to live under a regulated umbrella (maybe) but it won't support a sustainable business strategy in the face of very real competition.

Bizarre letter raises concerns for safety of banker at CRTC hearings

Just when we thought that the endless regulatory summer from Hull could not get any weirder, lawyers for an alleged (by them) Canadian wireless carrier filed a request for a secret appearance by a secret banker or other financial institution (hmm who could that be we ask?) with secure access to in-camera CRTC hearings so that other Canadian carriers could not be in a position to identify and subsequently do bad things to said secret banker or perhaps his or her friends and family assuming that such friends and family exist.

In summary, the lawyers for the alleged (by us) foreign carrier requests a ruling from the Commission that it will not disclose any information regarding the name or other identifying characteristics of the Bank or other financial institution that may appear at the hearing on this matter to deal with evidence of ******’s (we have removed Globalive’ s name to protect their identity)past, current and projected financing plans and that the CRTC provide secure access to the hearing room for the bank or other financial institution so that representatives of the incumbent wireless carriers or the public cannot ascertain the identity of the bank or other financial institution.

Your erstwhile blogger, having a rather checkered and unfortunately non-anonymous career in regulatory matters, can remember no request quite so bizarre or unprecedented. Not to say that these things never happen in Canada. Why it was only back in 1958 that former Soviet spy Igor Gouzenko appeared on Front Page Challenge wearing his trademark hood to protect him from KGB hit squads.

Whendogsrunfree recommends watching the clip of Igor’s appearance to get a feel for what the CRTC in camera panel hearing may look like. I think you will agree that Fred Davis made a wonderful Chair for that panel. http://archives.cbc.ca/politics/national_security/topics/72/.

While it is a given that in some countries wearing hoods in public is a good idea for reasons of personal safety, Canadians have generally shunned this practice and even our American cousins tend to look askance at the few remaining relics of the past who see hoods and sheets as some sort of fashion statement.

Now I don’t disagree that TELUS will take a hard position on matters of law and principle (like we think as a matter of law and principle that a foreign entity holding 65% equity and 98% debt of a company makes that company foreign), we don’t tend to act like the KGB when it comes to problem solving and as far as we know have never forced our competitors or critics a state of paranoia that requires a hood (although it has been rumored but not ascertained that Michael Geist is prone to Ray Ban’s when near an angry crowd of TELUS employees).

As for the need to protect bankers from the public we can only suggest that after the financial collapse of the last year that they might want to consider the Igor look regardless of the CRTC ruling on this nutty request.

Hard rain falling on CRTC

Next time I share some corporate sushi with my good friend Phil Lind I am going to have to explain how it was I came to the defense of the CRTC. Now usually when Phil and I get together and talk about the CRTC the topic of the best way to blow it up for crimes real (fee for carriage)or imagined (cant think of any right now :-)usually comes up in the conversation. Luckily Phil being a mellow force in the media world usually calms me down. But even so how to explain this blog to Phil where in the midst of corporate nashing of teeth over fee for carriage and potential ISP taxes, I find myself actually challenging an online petition called disolvethecrtc.ca aimed at shutting down the CRTC and replacing it with some secretariat or politburo with delegated authority to speak on behalf of the people.

The premise of the petition seems to be that the CRTC is too reflective of corporate interests and not concerned with the public voice. Now this comes as a surprise to me since I measure my effectiveness from various cuts and bruises recieved from regulators ( I should be out of hospital soon,thanks for asking). That's why on bad days I yell like some corporate anarchist about blowing up the CRTC,Industry Canada or whatever government body has upset me.

Yet I must admit as a revolutionary, I am clearly not worthy . For as reported through the blogoshere and on cbc.ca the petition to disolve the CRTC has legs .The CRTC's crime you ask having waded through 3 paragraphs to get here? Well crime of the century. The CRTC approved a Bell tariff that included consumption -based rates for wholesale services. Now maybe I am old fashioned and out of touch (don't comment back, your repartee would be too obvious) but when did it become a crime for an economic regulator to approve a bulk rate that varied on volume consumed? Isn't that how most products are priced ? Take other regulated products like electricity or water.

The petition shows the power of the Internet to change things . And it is a powerful tool indeed but also a dangerous one . As powerful as the Internet is for the power to communicate and share ideas it is also a powerful tool to affect political power in good and bad ways depending on who manipulates the tool. In this case what egregious crime was commited? None that I can see although as in any regulatory decision affecting price there are winners and losers (and I have seen lots of losses ).

Stuff that comes out of the Internet like disolvethecrtc is often good as quick news and fun for those of us that increasingly process information in tweets and blackberry messages. The validity of the arguments behind this petition only make sense if you dont think about them ;actually a new type of thinking now popularized in a world of instant messaging where reason is made sacrifice to speed, emotion trumps rational thought and gossip and inuendo can have as much force as fact.

Not thinking too hard is a recipe for chaos. As powerful as as the Internet is for a rebalancing of power in a democartic sense, it is also open to manipualtion in a world where the time for sober second though gets lost in the noise.

Thus my support for the CRTC on this one .It is well within their mandate to do this . And yes maybe we do need a new approach to regulation, but surely before we do that government,users and suppliers in the ICT and digital media realm need to keep working towards some consensus on a national strategy . The design of regulatory bodies should follow the strategy not lead it.

The Internet is a powerful tool for change. It has been used to provide voice to those that had none in an analog world. It was used to elect a President. But its a tool that often sways opinion without fact or attribution. As the Internet becomes a tool to affect power it will be increasingly adopted by the powerful (like political machines in Chicago). Its a two edged sword and it enables quick learning. Imagine a couple of old GR warhorses over some corporate (yet sustainable ) sushi suddenly seeing the light. Imagine if they decided that rather than advocating blowing up the CRTC when it did bad things to their interests ,they help fund viral campaigns to blow up the CRTC for totally unrelated reasons that the Internet rebels thought were their own .Hmm welcome to the future where it will be increasingly hard to figure out who's agenda is whose .

Note to self .Call Phil .Got an idea.

Lets spend as much on ICT as Obama is spending on cash for clunkers

Yesterday Tom Jenkins wrote an op-ed in the Globe lamenting a lack of any ICT strategy for Canada (agree) and once more echoing the concern of all who repeat the mantra the Canada is falling behind in our broadband leadership. The problem is that I do not buy the thesis (not to say we dont have huge investment challenges) . I sometimes think that with all the cutbacks in the newsrooms of the Country that what now passes for fact is often what was once rumour online but subsequently repeated often enough to attract a patina of dogma. I have ranted on this before but let me try again.

A lot of the concern on our broadband gap stems from a recent OECD report that showed Canada dropping in the global broadband ratings .That is concern indeed when once the Industry department under John Manley, Kevin Lynch and Michael Binder was able to brag that Canada was numer 2 or 3 in the world when it came to broadband penetration. Oh woe is Canada for now we have dropped fast and can no longer boast that we are world leaders. But wait according to the data we are still best in the G8 but who gives a toss about that eh?

One could argue that canada leading larger G8 economies is an accomplishment. But what about those irritating Danes who score above Canada. Will the insults never stop . First they steal our cod and then place nefarious land claims to rocks somewhere in the Artic. How can a country with a land mass the size of Denmark have rolled out more broadband than Canada. Shameful indeed.

Worst still we trail Luxemburg a country the size of Missassauga. What is Hazell McCallion to do about this insult to our sense of nation.

Ok so Tom has a point . ICT is critical and government should spend more time on that than propping up the old economy. But let's figure out a way to measure the "problem". I would submit that our measurements are unsophisticated and outdated. The OECD reflects the world of 2008 but even there its not clear what's measured is valid.

• Most cable modem service is not reflected in the OECD report even though cable has more broadband share than DSL (add in the real cable count and speed and penetration jump)
• By 2010 Canadians wil be able to access multiple HSPA networks delivering the fastest speeds in the world(HSPA will deliver broadband at speeds in excess of some landline speeds today
• In order to assess our ability as an economy to benefit from broadband we need better measures of the quality of our enterprise networks (total broadband penetration is great for bragging right but business access is a bigger driver of productivity)
• If we were to measure what our broadband penetration will be by 2010 in a way that includes cable penetration, new wireless broadband and our enterprise infrastructure then I bet we would still top the G8 (although the US would be at the top as well). We would still lag Korea or Japan for pure speed but that's a result of industrial strategy and intervention more than business investment.

So I can agree with Tom Jenkins that we need to focus on ICT in this country. And he and the ITAC community can count on support from TELUS on pushing an ICT agenda. I also believe we can accelerate investment with less regulation and fees and more improvements in capital cost allowances and tax credits for commercial development . That would sure help drive our efforts to increase investment in fiber to the home (which is a challenge) .But I am tired of the continued references by opinion makers to problems in broadband that dont exist or are overstated.

So step1 in Canada's new ICT strategy. How about our government working with the OECD to actually input reality into these global scorecards we so emotionally tie ourselves to? And bigger step 2 ,lets incent as much investment in broadband and IT as Obama is spending on cash for clunkers.

The anonymous assasssination of Marian Hebb

An article in Straight.com from Vancouver struck me just how much free speech can suck online. The article which supports a levy I disagree with (as a voice for an ISP) was never the less well thought out . The author a lawyer named Marian Hebb had proposed that

Copyright infringement has become a habit for many ordinary Canadians—at school, at work, and at home. When they scan a short story or an article, or download a photograph from a Web site and send it to family, friends, and colleagues without permission, they are infringing copyright.

Ms Hebb who advises writers on copyright had suggested that writers were entitled to credit or compensation for works used or downloaded online through a collective licence. Not a radical proposal , if perhaps the thin edge of the wedge for the imposition of similar levies on consumers that may or may not see any benefit from such fees . However what struck me most was the all too common and nasty comments from the internet freedom fighters who snipe endlessly, under a cloak of anonymity, at all who carry different views from theirs.

Brian1234 for instance suggested that Marian was ... nothing but another levy-promoting do-gooder trying to dig your hand into as many Canadians' pockets as you can. If your profession is not paying you enough, get another job. I certainly won't miss reading tripe like this.

Pounder (one can only guess at what he pounds besides his head againsts brick walls) argues even more eloquently that The author looks to be the age of most politicians who are behind these various corporate lobbied bills; and whom have not a clue about how the internet in general is used by people under the age of 45. I suggest doing some reading on the issue Ms Hebb before writing anymore ridiculous commentaries that only show your age and ignorance of the information superhighway.

Right on Pounder you tell the oldster to get stuffed. (Hint she is younger than me buddy).Seriously if we are into tossing names as a substitute for debate what kind of moron that proports to comment on Copyright has to call himself Pounder? Is Pounder hiding behind a fake name in fear that Marian might come over to his Mom's basement and spank him. How fearless. Freedom fighter indeed.

So is this is what the fight for net neutrality is all about? The right to opine in 140 characters or less and to boil down complex debate into nuggets like "you suck". Great. With all the opportunity for enlightenment that the Internet offers we get"Pounder" and his ilk instead.

Perhaps a quote from Thus Spoke Zarathustra by Friedrich Nietzsche says it all about what passess for intellectual discourse from those that lurk anonymously online

Life is a well of delight; but where the rabble also drink, there all fountains are poisoned.

An intrusive but arguably reasonable synapse adjustment inside the brain of an unamed CRTC Commissioner.

Officials of Truth and Reconciliation on the Internet Pogrom (TRIP) denied rumours that they had been involved in any redactive intervention resulting in an intrusive but arguably reasonable synapse adjustment inside the brain of an unamed CRTC Commissioner. Speaking on behalf of the Canadian Human Left Commission, in turn commenting off-record on behalf of unamed CRTC spokespersons, TRIP suggested that reports that parts of the text of the CRTC New Media decision had disappeared were false. "Only ISPs shape or otherwise degrade content online, just ask anyone on Twitter" said the Tripster spokesperson to requests for comments from from Dogs Ran Free.

Dogs Ran Free became curious about allegations of brainshaping when reports surfaced from a July 8 post of Mr.Stephen Taylor that a paragraph containing the following comments had been digitally erased from our conciousness. The paragraph attributed to a loquatious CRTC Commissioner ,assuming it had ever existed,which, according to sources, it didn't because it does not exist on the CRTC site today and therefore cannot have existed in the past without offending the laws of physics, would have stated:

"The history of the regulation of speech in this country does not engender confidence that such powers will be used wisely. Canada has experienced several instances in recent times where regulatory commissions of another type and armed with a different mission have challenged the right to say controversial things. The struggles of Ezra Levant, Mark Steyn and others have served as important warnings that regulatory authorities charged with combating racism, hatred, and other evils have consistently expanded their mandates, have abused their powers and eroded fundamental liberties. Wherever there is official orthodoxy, disagreement is heresy, and where there is heresy, there is usually an inquisition to root it out. After centuries ridding ourselves of thought control agencies, 20th century Canada re-invented them"

According to TRIP (but not for attribution) no one can seriously believe a government document would ever have contained such right wing twaddle to begin with. And if it it had then surely the Globe or Post would have covered it rather than MJs funeral. "We dont know who this wanker Taylor is" said TRIP "But dont blame us if he gets a visit from CISIS."

Attempts to reach CBC were unsuccessful as it was rumoured CBC was too busy not working this weekend to erase wafergate footage from the web. "Bull, they did that last week" alleged the TRIP spokesman.

CTV claimed no knowledge of any of this, since they cannot afford to do news unless people give them more money. "This never could not have happened without due process " said CTV " We love the CRTC . They are going to give us lots of money from the cable guys,(who probably blocked the paragraph to begin with) and then we will cover important events like Canadian Idol again"

TRIP confirmed that "the redaction that wasn't" rumour was likely started by serial traffic shapers like Bell and Rogers, in order to shift the blame for the collapse of the Internet and free speech from their practices to the CRTC and other elements of government tasked to ensure peace ,order and good government.

Canada's security services suggested there is nothing they can do to confirm or deny all these rumors until Parliament passes legislation to allow them to sniff the web.

A spokesperson for TELUS suggested that it had no idea what what the fuss was about. "If that were true it certainly does not seem the least restrictive way of thought-shaping. However we never read these descision anyways, they just bum us out. We get our opinions shaped by Twitter"

I remember the day we got a second TV network

As we prep for our appearance at the CRTC tomorrow, I feel somewhat disconnected from the reality of choice facing me online and the "threat" to the distribution of content online because of vertical integration. PS yes I completely agree blocking access to content sucks.

Maybe its my age that leaves me ever astonished by the sheer magnitude and diversity of content online today. I can remember back in 1961 when CTV came to Ottawa and I got to watch all these cool TV shows for the first time. Whow two TV networks. It was magic. Black and white and no remote but magic. Choice is a relative thing I guess.

We got cable in 1966 and again a new world opened up. I remember being able to watch NBA for the first time. And as the 70s kicked in, FM alternative did too launching the background noise for the revolution.

Flash forward and choice is awesome on TV, sat radio, the web. Its good and awful, trite and compelling and often beyond my grasp. But its beyond cool and I get nervous when anyone wants to tell me what I can watch or listen too. Assuming its legal. But as I get bogged down in the whole net neutrality stuff happening at the CRTC. I find myself wanting to escape the maddness and rhetoric and put the new Wilco CD onto my ITouch. I want to just go back to surfing and absorbing the flow. (Ok so that's a bit of a stretch since I am blogging as I listen to the CRTC hearing).

Reality check here. The Internet is not falling apart under the sway of the vertically integrated. Maybe the studios still dominate the Brittany Spears content space but this is also the golden age of indie. We really dont have to but the studio stuff anymore.

So for sure lets make it clear if it is not already obvious public policy. An open Internet is de facto good. The Internet is about the free flow of information and messing with that free flow is de facto bad. The CRTC should be prepared to deter bad actors that limit choice. Just don't expect me to believe much of the rhetoric online . Let me start by calling into question the assumption that the ISPs are hurting the independent production industry in Canada. The industry presented this as fact yesterday without an iota of evidence. And let's all worry lot when this story becomes national news without any research.

Maybe I am getting old but freedom to publish bs, does not make the bs true. Man do we need some filters. Personal and self-supplied of course .