Hoping for a wireless revolution in Canada

If ever there was an industry in need of disruption, it’s Canada’s wireless sector


Yesterday Industry Minister Christian Paradis emerged from the secret invisible fortress he’s been hiding in since his appointment to announce the new rules that will govern the upcoming auctions of wireless spectrum.  He revealed a number of conditions designed to foster competition and extend services to rural areas, chief among them being the welcoming of foreign capital into our newer, smaller wireless providers.  Let’s hope the measures achieve these goals, and more.  If ever there was an industry in need of disruption, it’s Canada’s wireless sector.

It’s not that we pay too much (although we do).  It’s not that our services are lagging behind international standards in speed and coverage (although they are). The real problem is that we’re getting left behind. Wireless networks are getting so fast in other parts of the world that they are rendering moot the infamous “last mile” problem of networking.  First, each and every home needed its own telephone line. Then cable. It looked like fibre would be next, and the costs would be enormous, especially in a country like Canada where we’re all so darned spread out.

But while we’ve been wringing our hands over this problem, countries unlucky (read: poor) enough to have skipped telephone and cable networking have entered the wireless era with guns blazing.  Foreign mobile firms have entered 2nd and even 3rd world economies in South American, Eastern Europe and Africa, investing hundreds of millions of dollars in state-of-the-art wireless infrastructure and then charging whatever the people can afford for access.  Eventually the investment is returned and  almost all new income is profit. Governments have eagerly welcomed these companies, as they connect entire populations in a handful of years. The benefit to these economies has been incredible.  After decades of digital isolation, entire populations are rapidly getting online, joining the information economy, performing digital services and starting businesses.

And then there’s Canada.

If wireless service here were comparable in price and speeds to wired service, Canadians would quickly grow uncomfortable with the many bills we pay for our data.  Why pay a cable TV bill, a phone bill, a broadband Internet bill, a cellphone bill and a datastick bill when all of these services boil down to zeros and ones we send and receive through the air?  It would be like having to pay one bus ticket if you’re only wearing pants, another if you wear a shirt and another for your shoes.  The bus doesn’t know or care what you’re wearing, and zeros and ones don’t know or care if they add up to a Skype call, an episode of 30 Rock or an MP3 download.

But our incumbents do.  If we leave wireless innovation to our handful of massive telecom firms, we can expect to remain a digital ghetto.  Sure, they have and will invest in next generation wireless networks, but they can be counted on to mete out these services in drips and drabs, charging us through the nose for every minor incremental improvement in speed.  Worst of all, they will fight tooth and nail to segregate our data, resisting the natural convergence I’ve described.  If they don’t, they know that wireless will cannibalize their incredibly lucrative “last gen” services.  They know this will happen eventually, but they want the process to take as long as possible. We can’t afford that.

Ottawa’s last wireless spectrum auction, with its set-asides for new entrants brought us WIND, Mobilicity and Public – bargain providers who largely piggyback the incumbent networks in order to offer us reasonably priced cell phone service (CORRECTION: since launching, the new carriers have built out their own networks and only “piggyback” for roaming services. Thx Jamie). In just a few years, they have succeeded in driving prices down across the board. They have challenged the fictions of “system access” fees and domestic long-distance charges. But all together, they only comprise 4% of the market.

We need more than for these providers to simply stick around.  We need them to disrupt.  We need foreign firms to pump money into them, build out their own networks, and offer services that are not only faster than anything we’ve seen, but cheaper and use-neutral.

I’m still parsing the difference between set-asides and caps, but let’s hope Ottawa’s new terms for the next two spectrum auctions will bring revolution to our market- not evolution.

To put it bluntly, the first company to offer Canadians all the high-speed wireless data we can eat, however we care to eat it, for under $100 a month, will win this market.  And it’s a plum.

Jesse Brown is the host of TVO.org’s Search Engine podcast. He is on Twitter @jessebrown




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Hoping for a wireless revolution in Canada

  1. “And then there’s Canada.”

    Virginia Postrel ~ The One Best Way:

    “The enemies of the market are…not the socialists,” wrote the economist John Kenneth Galbraith in his influential 1967 book, The New Industrial State. “It is advanced technology and the specialization of men and process that this requires and the resulting commitment of time and capital. These make the market work badly when the need is for greatly enhanced reliability—when planning is essential.”

    We lived, critics and supporters agreed, in what Galbraith called “the technostructure,” an oligopolistic industrial state where the future was carefully planned in advance, either through government or private bureaucracy. “With the rise of the modern corporation,” wrote Galbraith, “the emergence of the organization required by modern technology and planning and the divorce of the owner of the capital from control of the enterprise, the entrepreneur no longer exists as an individual person in the mature industrial enterprise.”

    Technocrats are “for the future,” but only if someone is in charge of making it turn out according to plan. They greet every new idea with a “yes, but,” followed by legislation, regulation, and litigation. Like Schlesinger and Attali, they get very nervous at the suggestion that the future might develop spontaneously. It is, they assume, too important and too dangerous to be left to undirected evolution. “To conceive of a better American future as a consummation which will take care of itself—as the necessary result of our customary conditions, institutions, and ideas—persistence in such a conception is admirably designed to deprive American life of any promise at all,” wrote Herbert Croly, among the most influential Progressive Era thinkers, in The Promise of American Life, published in 1909.

    Most political arguments thus take place between competing technocratic schemes. Should there be a mandatory “family viewing” hour on TV, or ratings and a V-chip? Should the tax code favor families with children, or people attending college? Should a national health insurance program enroll everyone in managed care, or should we regulate health maintenance organizations so they act more like fee-for-service doctors? The issue isn’t whether the future should be molded to fit one static ideal. It’s what that static ideal should be. There must be a single blueprint for everyone.

  2. Jesse typically argues that access to the existing infrastructure is hopelessly overpriced.  ok

    Of course, everyone knows that the existing infrastructure sucks.

    “welcoming of foreign capital into our newer, smaller wireless providers” who lease the infrastructure is hardly likely to solve the problem.

    And nobody is going to invest  ”hundreds of millions of dollars in state-of-the-art wireless infrastructure” unless they get to “charge whatever the people can afford for access.”

    Say I had a couple hundred million, to create an entirely new level of connectivity for Canadians.  Why would I invest it in Canada, when the government will tell me how much I can charge and that I have to lease it out to my competition.

    If Canada had a food shortage, Jesse’s solution would be to open more mini-marts and force Loblaws to share its food with them.

  3.  There’s an OECD report that talks about this, the idea that wireless services are expensive because Canada is geographically large is a lie. Canada has less cellular towers compare to the US and a lot less then Europe yet their services are amazingly less expensive, less maintenance required of these facilities should mean less costs. Added to that while Canada is a large country the fact remains that most of our population lives in suburban or urban centres and the shift towards that hasn’t stopped or slowed. Adding more towers in the GTA, Vancouver or Montreal will always be a lot easier then in Barrie, Thunder Bay or Nunavut.

    The Conservatives should have removed all barriers on the telecom industry. There’s no reason to protect these ass%*$! and it’s a joke to believe any foreign company would act any better or worse when it comes to outsorucing, customer service or quality over the existing two or three “Canadian” options we’ve been left with.

    • Though I generally agree, I don’t exactly envision several deep-pocketed foreign providers champing at the bit to enter into a battle-royale over our relatively small market. Of course, one could also just buy the mobile divisions of Bell, Rogers, and Telus and call it a day.

  4. I like to think we’ve currently got the best party in government for deregulating a whole bunch of this regulatory crap. The CRTC’s mandate needs to be changed dramatically, and they need to do a lot less.

    The technologies exist, and are affordable, to provide wireless data access over huge swaths of land for fractions of what it costs now. I’m never one to advocate for government getting into private industry, but there’s really no reason why municipal governments shouldn’t be able to put up towers and provide data access to anybody in the area for “free” (obviously taxpayers would foot the bill, but it would literally be pennies). That’s the kind of thing that would be revolutionary. Imagine a world where getting access to the information super highway would be as simple as getting access to an actual highway… all you’d need is a vehicle.

    But of course such a revolution would be much too disruptive. It’s the same as our education systems. The resources available on the internet make textbooks unnecessary, teachers obsolete, and even the idea of huge buildings packed with students and teachers seems so 90s. But even though the schools have Internet access, they refuse to innovate because change is scary, and some people might lose jobs.

    And perhaps the worst part is that all of our politicians are either too ignorant, or too terrified to tackle any of these big ideas. Almost every private industry has used the Internet to become more efficient and innovative. The only ones that don’t are those run by governments. It’s absurd, and it needs to change now!

    • Isn’t that kind of like saying we’ve got the best turd in the toilet?

      •  Excellent comment to such kind of bitter opinion, I admire your words.

  5. “Yesterday Industry Minister Christian Paradis emerged from the secret invisible fortress he’s been hiding in”. Does MacLeans find it completely impossible to lead or write an article without this sort of obvious bias?

  6. Monopoly leads the way! Jesse Brown is on the money! We need to deregulate. Foreign entry won’t make an iota of difference when these Corporations operate in a monopolistic regulated environment. Our Harper Gov’t obviously is hypocritical by maintaining this monopolistic structure so unfriendly to Consumers not to mention Progress. Follow the MONEY…………PB

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