Further Comments : Individual (Intervenor 742)

Document Name: 2015-134.223698.2537040.Further Comments (1$dlc01!).pdf
John P. Roman
1006-322 Eglinton Ave E, Toronto, ON *** ***
07 February 2016
Mr. John Traversy, Secretary-General

Canadian Radio-Television &Telecommunications Commission Ottawa, ON *** ***

**** Mr. Traversy:

Re: Telecom Notice of Consultation CRTC 2015-134 1 In my initial submission (intervention #217), I proposed several arguments that might, at that time, have appeared somewhat theoretical, in addition to one aimed at providing high(er) speed internet access for remote communities. Since them however, changes in the telecommunications marketplace have occurred and my former suppositions are even more relevant to this review. For this reason I would request permission to appear at the public hearing in **** 2016.

I - Foreign entrants into the Canadian market – Response to the Rogers submission

2 Paragraphs 56 to 58 of Rogers’ submission suggest that, if we just wait long enough, external events will solve Canada’s rural internet connectivity issues when foreign-owned companies harness satellites to blanket the world in the warm glow of global internet access delivered at respectable speeds. In essence, Rogers is advocating that Canada reverse its decades’ old policy and accept nation-wide delivery of basic internet service by non-Canadian corporations (Google/Virgin)

3 If Rogers is correct, access to the World Wide Web will soon be beamed from space to farms, fishing shanties and homes across this country and, indeed, across the world. Among the important policy issues raised by this prospect are several points relevant to this hearing:

 Should Canadians be considered to have access to these foreign services as of right, or does the Commission’s jurisdiction with respect to licensing, terms of services, etc.

apply?

 Are these proposals to be granted special status as ‘first come’ concepts?

 **** this innovation mean that the Canadian market has become too porous to prevent foreign service delivery and, if so, should terrestrial alternatives that may be proposed by other foreign competitors also be given access.

II - Issues raised by Bell (Canada? Media? Who?)

4 In its submission, Bell provided the table (see end note) i for consideration, footnoted as #36 as a partial response to the Commission’s Question #1.

5 In the subsequent four paragraphs of commentary (# 65-68), Bell argues that Sections 1 and 2 of the chart (Email and web-browsing) are far more important to the digital economy than is Section 3, (other internet applications) which they quite correctly point out are the most intensive users of bandwidth. Further, Bell contends that “although of interest from an entertainment perspective, high bandwidth applications and services are not necessary to participate in the digital economy.”2 6 What Bell fails to acknowledge is that activities in this third category represent most of the social and cultural elements of internet usage. They do not deserve the implicit denigration that Bell assigns with its definition as ‘mere entertainment’.

7 Here is just one example of the complications this table will generate: ‘social media sites’ are listed in Category 2, but the much-watched videos shared on Facebook fall into Category 3. Could uploading videos to YouTube (something Canadians do more per capita than any other nationality3) count as ‘contributing content’ in Category 2 when the downloading or watching of that Canadian-produced content is categorized as Category 3?

8 What good is a digital economy if it is only used for the mundane, like banking and email? If it does not enrich our lives with offerings of cultural content like CraveTV, Netflix, I-tunes or online telephone service through Skype? The digital economy’s contribution to Canadian life will be limited indeed if its use is restricted to strictly commercial transactions only. Without the social and cultural elements that the internet enables through Category 3 activities, the digital economy will offer little more than consumer convenience which, while not to be downplayed, would markedly under-utilize much of the internet’s life-enhancing potential.

9 Is it Bell’s prerogative to determine for Canada whether something is a “meaningful participation in the digital economy”? I respectfully submit that Bell has missed the mark in terms of its assessment of videogames in particular. Certainly, videogames use large amounts of bandwidth as does utilization of streamed content. But online games are a social experience 1 Bell submission paragraph 68

2 According to the Google submission to the Let’s talk TV hearing Sept 2014 enjoyed by and with millions of people, who simultaneously communicate live over VOIP services.

10 Gamers routinely engage with people of shared interests from all over the world, at the same time as they are accessing social networking sites and news services, and sending emails.

To assume that any of these internet-based activities is done in isolation from others is an antiquated notion and betrays an unfortunate lack of familiarity with contemporary communications usage.

11 Of course, it is understandable that Bell would be less than enthusiastic about Category 3 activities because they represent a heavier drain on bandwidth. It makes it possible for Bell to argue that Standard Definition reception in rural areas is sufficient to contribute to the digital economy, implying that reception of higher quality video is a luxury, not an essential. However this has the effect of creating two classes of Canadians: those in rural markets where Bell might view Standard Definition as acceptable and those in heavily populated urban markets where videogamers and TV streamers compete for bandwidth, and only the fastest fibre optic gigabit speeds will do.

12 Clearly, Bell’s infrastructure expenditures generate less profit in rural settings where the cost to provide service must be spread over fewer potential subscribers. Nevertheless, to make the leap from that fact to the claim that rural Canadians deserve only a second-class service is evidence of an antiquated approach to service inequities that should not go unchallenged.

III - A link to the Past

13 In its recent tiff with Teksavvy about wholesale access to its new fibre-optic distribution infrastructure, Bell has threatened that “it will scale back on installation if the CRTC ruling stands”, suggesting that many Canadians may have to wait much longer to get access to fibre at all.4

14 If this is, in fact, its position, it would seem only fair that the Commission seriously consider the re-introduction of rate regulation, especially since Bell is attempting to hold hostage Canada’s infrastructure development, the marketplace and consumers. Alternatively, the CRTC might wish to consider allowing foreign companies into the Canadian market to develop the infrastructure that Bell is reluctant to address, and let those foreign companies contract with smaller Canadian ISPs.

IV - Market forces
3

http://www.cba.ca/news/technooogy/crtc-bell-fibre-1.3350885.

15 Market forces do have the potential to provide a solution to certain of Canada’s telecommunications’ infrastructure limitations. Certainly, it would appear that Shaw and Rogers are content that the introduction of service by global players may eventually address domestic inequities (despite their currently being prevented from operating in Canada. Meanwhile, Bell is demanding a monopoly for any new rural market it enters.

16 What has not been addressed by Shaw, Rogers or others is that if the new GOOGLE/VIRGIN satellites can provide speeds of 16-25mbs (speeds that - if reliable – are certainly fast enough for most home applications), what, other than regulation, would prevent these services from poaching the majority of customers from urban markets as well? It is true that high-speed satellite-delivered internet will be a boon for rural Canadians trying to access Netflix - but the average urban household does not need fibre speeds to send emails or do online banking either.

17 In fact, these ‘market forces’ (a.k.a GOOGLE or VIRGIN satellite services) could provide internet connection speeds adequate for most Canadian households; eventually they may also deliver high speed internet for those interested in enjoying even more demanding Category 3 activities as well. It is important that, in the course its current considerations, the Commission also weigh the longer-term implications of its decisions for, if the market were to unfold over the next decade as predicted above, it is not clear that there would continue to be any room for Canadian operations that are not fully integrated into TSP/ISP/BDUs? In other words, will Teksavvy and other smaller competitors have any chance of survival at all?

18 With respect to the issue of the market, it remains to define exactly what is the market in question. If it refers to home internet, is that different from mobile internet? Or because there is only one internet service accessed through different technologies, is it, fact one market regardless of the means of access? Alternatively, can you sub-divide the market by delivery mechanism into cable, mobile phone or satellite internet, since all three are capable of delivering video content? This current usage of the term ‘market’ is blurred because the dominant market players cross-promote and offer deals over all three services whereas new, smaller entrants often compete in only one or two of the three fields.

V – ANALYSIS

19 If Rogers and Shaw are correct and access to the World Wide Web will soon be beamed from space into Canadians homes, then one must ask why policies should continue to exclude other foreign terrestrial services from competing in the Canadian market. Is there some threshold after which our domestic market becomes too porous to prevent foreign competition? Prohibitions to such activity currently exist but these incumbent protections could evaporate through an unconsidered – perhaps even involuntary – regulatory bypass.

20 Such a Regulatory Bypass could occur quite easily through these satellite ISPs. If rural Canadians in the ****, West, Central and Eastern Canada all have access to higher-speed internet through foreign-owned services in addition to current offerings from local providers, then of course they will want to switch if the price isn't prohibitive. These foreign satellites do not currently fall within the CRTC’s jurisdiction. While the CRTC could try to make it illegal to receive signals from these ‘ISP-ellites’, it would be counterproductive since Bell, Rogers, and Shaw apparently have no interest in competing in these rural markets. Indeed they seem quite eager to defer to these foreign-owned ISP-ellites as a better alternative to any ‘Made in Canada’ solution. Either way it represents something of a Catch-22 for the Commission.

21 A review of the documents that underpin NAFTA may be useful. Chapter 12, ****-border Trade in Services of CNAFTA, Article 1202: National Treatment states: “1. Each Party shall accord to service providers of another Party treatment no less favourable than it accords in like circumstances to its own Service providers.”5

22 This means that, in the absence of a special exemption, Canada could not restrict foreign satellite-based service delivery to urban areas once they already provide service in rural areas. Put another way, it means that once foreign-owned services have cracked the regulatory barrier, Canada’s telecommunications borders will have been breached.

VI - CONCLUSION

23 In these circumstances, the key policy issue for the Commission – and for the Federal Government – becomes not if, but when barriers to foreign telecommunications services should be removed. If this is inevitable, it remains only to determine if it is advantageous to permit outside forces to decide how and when our regulatory controls will change – or, looking forward just a few years, we accept that there will inevitably be a market shift and begin adaptation to this reality with all due speed.

24 The choice is clear: Canada can be proactive and define a regulatory framework that incorporates foreign ISPs, or do nothing and wait for foreign satellite ISPs to smash the existing regulatory framework, leaving us to react after the fact. I would respectfully suggest the former might be a more prudent – and fruitful - regulatory approach.

i
http://www.sice.oas.org/trade/nafta/chap-12.asp
Internet activity
Percentage of
Surveyed Canadians
that engaged in
Activity 2012
1) EMAIL
E-mail 93.0
2) Web-Browsing
Visit or interact with government websites 62.7
Search for medical or health-related information 66.8
Formal education, training or school work 36.6
Travel information or making travel arrangements 66.4
Search for employment 35.6

Electronic banking (paying bills, viewing statements, transferring funds between accounts)

72.0
Research investments 26.5
**** or watch the news 70.6
Research community events 57.8

Window shop or browse for information on goods or services 76.6 **** goods or services (through auction sites) 23.3

Use social networking sites 67.0

Contribute content or participate in discussion groups (blogging, message boards, posting images)

24.0
3) Other Internet Applications
Use instant messenger 39.6
Play online games 34.9
Obtain or save music (free or paid downloads) 50.5
Obtain or save software (free or paid downloads) 38.2
Listen to the radio online 38.2
Download or watch television online 39.0
Download or watch movies or video clips online 54.2
Make telephone calls online 43.3
Re: Telecom Notice of Consultation CRTC 2015-134

Further Comments : Individual (Intervenor 742)

Document Name: 2015-134.223698.2537041.Further Comments (1$dld01!).html

Raisons pour comparaitre / Reasons for appearanceIssues I would like to discuss include: foreign owned satellite delivery of internet to Rural and urban markets, lifting the domestic protections, the regulatory bypass of the CRTC, how 'the market' is defined by both the CRTC and the industry.My written comments aren't sufficient because this hearing isn't over. This isn't a stagnant process, but one that happens as mergers and takeovers are changing the landscape of telecommunications in Canada. This was a follow up submission to my first round submission. Additionally, I would suspect that the CRTC or some of the large ISP's might raise questions in their second round submissions (or their oral testimony) that I would like to respond to.