Peter Menzies to the Conference and Annual General Meeting of the CanWISP
February 24, 2016
Peter Menzies, Vice-Chairman of Telecommunications
Canadian Radio-television and Telecommunications Commission
Check against delivery
Thank you for inviting me to your Annual General Meeting and giving me this chance to meet with members of CanWISP, the Canadian Association of Wireless Internet Service Providers. I’ve met with you some of you in my previous role as the CRTC Commissioner for the Alberta/Northwest Territories region. But this is my first opportunity to meet with you as a group—something I’ve look forward to.
I’ve come today to update you on some of our recent work at the Canadian Radio-television and Telecommunications Commission (CRTC). And to explore how we can support each other’s efforts in advancing our mutual goal of ensuring “all Canadians have access to our interconnected world.”
Before I do, I first want to congratulate you for your Association’s stellar rise on the national scene. You’ve come a very long way in a very short time and certainly made your presence known here in the National Capital Region. Since your organization’s formation three years ago, your voice is being heard in Ottawa in a way it never was before.
That was clear in the former Department of Industry’s 2014 decision on the use of the 3500 MHz band of spectrum. It acknowledged the thoughtful feedback received from Internet service providers, local municipalities and individuals Canadians on how to ensure that spectrum is deployed in the best interests of consumers. Your position on that question appears to have been heard as, under the new rules, the 3500 MHz spectrum continues to support service to rural Internet users.
As you are aware, regulations governing your sector are dealt with by several federal departments and agencies. As a representative of the CRTC, I’m not the best person to talk about spectrum—your group’s primary focus. That said, I recognize that access to spectrum for rural delivery, especially the last mile, is important to your members.
While the CRTC may not be in a position to address this, there are things within the Commission’s jurisdiction that are complementary parts of the puzzle. So, today I want to outline the work we are engaged in to create a competitive marketplace that ensures space for smaller service providers.
Don’t worry, I don’t want to get between you and your meal, so I promise to be brief.
Wholesale Wireless Decision
Let me start with our wholesale mobile wireless decision released last May. The decision was driven by our determination to increase competition, innovation and investment in the wireless service market. Because competition among Internet service providers (ISPs) provides Canadians with a wider choice of innovative services and packages.
Access to high-quality telecommunications services is a necessity in today’s world – whether you live in downtown Vancouver or Bonavista, in Newfoundland and Labrador. We live in an age when digital technologies are integral to Canadians’ everyday lives. We rely on technology to work, learn, play and connect with each other. We use it for banking and shopping … to keep track of our kids or elderly parents…to apply for jobs or connect with medical professionals through e-health … and to access government programs and services.
There are over 28 million wireless subscribers in this country—people who depend on voice, text and data services to go about their business—which means the wireless market is equally important to Canada’s economy.
That’s why we launched a proceeding back in December 2013 to examine whether certain mobile wireless service providers were placing their Canadian competitors at an unfair competitive advantage.
We also launched a second proceeding in February 2014 to gauge whether the wholesale mobile wireless market was sufficiently competitive.
Our reviews concluded that it is necessary to regulate the rates that Bell Mobility, Rogers, and Telus charge other Canadian mobile wireless carriers for domestic wholesale roaming. We found insufficient competition when it comes to wholesale roaming.
I appreciate that this decision doesn’t have a direct bearing on your members’ day-to-day operations. However, it is an essential part of our plan to increase consumer choice, ensure sustainable competition, and promote innovation and investments in the wireless services market. We are working to create as competitive and dynamic an environment as possible for consumers.
And that’s where smaller service providers like you come in. You occupy a very important niche in the marketplace, particularly in under-served regions of the country, which larger providers have largely ignored. Where there’s a vacuum, innovators will invariably fill it. And you have done exactly that, contributing to the overall competitiveness of the retail Internet market.
Wireline and wireless networks reach over 99% of Canadian households. That being said, you know, better than most, that there are undeniable differences in the levels of services available in various regions, especially in rural and remote areas.
According to our broadband data, fixed wireless technology is available to 68% of Canadian households. We estimate there are nearly 270,000 residential subscribers to fixed wireless service. That’s a significant number of homes and businesses served, thanks to investments made by wireless internet service providers, like you. Your members often bring high-quality connectivity to homes and businesses in rural and remote areas.
To use your own words from your input into the spectrum consultation I referred to earlier, “CanWISP members have made effective use of spectrum for many years to provide broadband services to customers who frequently had no other option to participate in the digital world.”
And, as you pointed out, you have done so without relying on government subsidies.
Equally valuable to the CRTC, your members play a vital role in ensuring the build-out of Canada’s Internet infrastructure. Your companies are ideally situated to expand coverage to many more rural customers in locations that digital subscriber line and cable Internet technologies cannot reach.
Rate of change
Market size is not the only thing that matters, of course. I’m sure you can also attest to the extraordinary rate of technological innovation driving the demand for Internet access. Even for those of us working in and around the telecommunications industry, the pace of change is astonishing.
The CRTC looked at what should be considered a basic telecommunications service in the late 1990s. A time when people were still discovering what the Internet was all about.
No one could have imagined high-quality HD video on the Internet as recently as the turn of the century. Facebook and YouTube are only about a decade old. Netflix and the spin-offs it spawned didn’t exist back then—even though 40% of Canadians have now signed up for the service.
We reviewed our definition of a basic telecommunications service again in 2011, when we set a speed target for broadband Internet access services across Canada. These were considered ambitious targets at the time—very future oriented.
Many parties in the 2011 proceeding suggested setting a target download speed of 3 to 5 Mbps. As you know, we set a target speeds of 5 megabits per second (Mbps) download and 1 Mbps upload for broadband Internet access services across Canada by 2015.
I can tell you, there was no shortage of eye rolling when people heard those numbers. I remember visiting with consumer groups in Northern Canada and being told it was a stretch to think they would ever get to 5 Mbps.
In roughly the same period, the FCC proposed that a target of 4 Mbps downstream and 1 Mbps upstream should be available to all Americans by 2020.
Those assumptions were understandable when you realize how different the world was a mere five years ago.
A study conducted by the Convergence Consulting Group in 2011 found just one in seven households had dropped their landlines in favour of cellphone-only service. At the time, there were 12.2 million residential landlines in Canada.
Three years later, for the first time, more Canadians subscribed exclusively to mobile wireless services, at 85%, than to landline telephone services at 79%. The number of residential landlines decreased to 10.9 million in 2014.
Back in 2011, Research in Motion’s Blackberry was a leader in the smartphone market, shipping 52.5 million devices and earning revenues just shy of $20 billion.
As recently as five years ago, Netflix was a mail order service, Blockbuster Video still operated 253 stores across Canada and Rogers had 93 retail stores.
If you want a really poignant reminder of how times have changed, consider this: oil was trading at US$111 in 2011 and the Canadian dollar was at par.
So, while in retrospect, the Internet speed targets we set five years ago were pretty modest, they were completely reasonable given the times.
Who would have predicted the way we now consume data and information? The average monthly data download by residential subscribers increased 49% between 2013 and 2014. According to our most recent Communications Monitoring Report, Canadians downloaded 66.5 GB per month in 2014.
The technological tsunami has raised both expectations and demands. That’s a good thing, in that it spurs innovation and investment. But it also poses challenges in terms of connectivity. I know this is a reality you face on a daily basis, as people want more and more services but expect to pay the same price as in urban centres, if not less.
I’ve seen first-hand the challenges smaller communities—and the telecom operators that serve them—face in my travels with the CRTC over the years. It’s easy to make assumptions about connectivity until you visit the far corners of Canada and appreciate just how vast our country. This has reinforced for me the valuable work of smaller service providers such as you.
Given the trends I’ve just described, it probably shouldn’t have come as a surprise that, so soon after we last looked at basic services, we need to do so again. We want to ensure Canadians have access to world-class telecommunications services that enable them to participate in the digital economy.
The CRTC launched a proceeding to review the basic telecommunications services last spring. The first consultation phase consisted of collecting information to better understand the telecommunications services available to Canadians and to determine the areas of the country that are not being adequately served.
We also sought input on the need for funding mechanisms as well as the role of the economic and regulatory players. That includes the private sector, governments and the CRTC.
We’ve already received feedback from over 25,000 Canadians in both urban and rural areas in all parts of the country during Phase I.
The second consultation phase, which began in mid-January, is an example of our new approach to engage even more effectively with the Canadian public. Rather than limiting public input to rigid submission processes, we are proactively attempting to engage with Canadians to solicit their ideas. Because we want to listen to the voices of all Canadians who depend on these basic services or that may have varying levels of access to them.
We are offering more user-friendly options. We have developed a simple questionnaire so that they can share their views on broadband availability, how they communicate and pricing.
The questionnaire is available online, of course. But we also wanted to make sure that Canadians in underserved or unserved areas could participate in ways that was convenient for them. They have the option of calling a toll-free number to speak with a service representative who can conduct the survey over the phone. If they prefer, they can even ask for a paper copy, which is sent out with a stamped, pre-addressed envelope and mail back their responses.
As well, we’re holding focus groups in six small communities to get a better sense of their needs.
The strong response to this invitation shows that Basic Telecommunications Services is an issue Canadians take to heart. To date, more than 24,000 have completed the questionnaire.
This phase of the consultation remains open to anyone interested in having their say until February 29th, so feel free to marshal your own constituency. A report summarizing the results of the questionnaire will be placed on the public record of the proceeding as soon as it is available following this consultation period.
The third phase is the public hearing on basic telecommunications services, which will begin here in Gatineau on April 11th. I look forward to hearing your Association’s presentation at that time.
While I can’t presuppose the outcome of this proceeding, I think it’s safe to assume that our eventual decision on BTS will be consistent with the Commission’s overall philosophy.
That is our desire, and determination, to make sure all Canadians have access to world-class telecommunications services that enable them to participate actively in the digital economy.
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