broadband

More Broadband Competition, Mr. Clement?

By Mark Evans in ILEC News, Analysis 1 Comment Tags: , , , ,

Amid the uproar about the CRTC’s flawed and misguided decision to allow metered-billing for broadband usage in Canada, the spotlight is finally started to shine on the fact one of the big problems in Canada is the lack of broadband competition. At best, most markets have a cozy oligopoly – great for the ISPs, bad for consumers.

It was surprising to see this quote in the Toronto Star for Ministry of Industry Minister Tony Clement amid speculation the federal government could overturn the CRTC’s decision.

“We feel very strongly that we need more competition, we need more consumer choice, we need more choices for small business owners and operators and our entrepreneurs and our creators.”

So, Mr. Clement, how are you going to get more broadband competition in Canada? How are you going to change a regulatory and competitive environment that hasn’t worked over the past decade?

Are you going to force the ISPs to play nice with companies that would like to use their networks – something that hasn’t worked despite rulings by the CRTC?

Are you going to allow foreign competition into Canada to really shake up the marketplace – something that would shake up the Telus, Bell, Shaw, Rogers cartel?

While more broadband competition is a great idea, making it happen is another thing altogether. It makes for a great sound bite and great political/election fodder when you talk about “more broadband competition” but talk is talk unless you’re prepared to walk as well.

So the $64,000 question is: Mr. Clement, what’s your plan to attract more competition?

Canada Needs More Broadband Competition

By Mark Evans in ILEC News, Analysis 2 Comments Tags: , , ,

So it looks like metered billing could become a reality in the Canadian broadband market, which will give ISPs, who already enjoy an oligopoly, another way to make even higher profits as they take advantage of the growing demand among consumer for bandwidth so they use online services such as video and games.

The real issue isn’t metered billing but the lack of competition within Canada’s broadband market. In most markets, consumers are lucky if they have two choices – the cable or telephony company. This means competition is, at best, light because there’s no need to compete when all you have to do is match what the other guy is doing.

While Canada’s telecom regulator, the CRTC, has made some half-hearted attempts over the past decade to encourage cable and telephone companies to offer wholesale access to other ISPs, the market has not flourished.
The small number of ISPs using wholesale services have established a modest foothold by, in part, offering unlimited bandwidth – something will be killed if the CRTC’s metered billing decision is established.

The troubling reality of Canada’s Internet landscape is how unprepared the government and the CRTC has been for the Internet’s emergence as the way to communicate, consume services and do business. We’re still struggling with major decisions such as whether the Internet should be regulated or not. There’s no regulation of broadband services so the ISPs can pretty much do what they want.

And while the federal government has bent over backwards to encourage more wireless competition, little has been done to stimulate more broadband competition. It has left the market with few choices and, as a result, innovation and competition have not flourished. In Canada, broadband is seen as an unregulated utility rather than a valuable service that will be a more essential part of Canada’s economic future.

While metered billing will likely become a political hot potato because it’s so consumer-friendly as we head into a federal election later this year, it shouldn’t overshadow the dearth of broadband competition. It has been something that has been ignored for years but it will come home to roost as broadband becomes an essential service in our personal and professional lives.

If the federal government were forward-thinking, it would create a new policy to encourage more broadband competition. It would be a bold and aggressive move because it could mean introducing policies that would force the existing ISPs to provide better and more wholesale access to networks in which they have invested hundreds of millions of dollars. It could mean opening the doors to foreign companies so we get new well-financed competitors willing to move into an oligopolistic market.

At the end of the day, more broadband competition is crucial is Canada is looking to thrive globally. Metered billing is just a symptom of what’s wrong with the market but it should be used as an excuse to focus on a much bigger and more important issue.

Links:
- Michael Geist providing more details and insight into what the CRTC’s decision means.
- Anti-UBB, include ways to get involved in stopping metered billing.
- TechCrunch – “Say Goodbye to Innovation”

What Tony Clement Really Meant About Broadband

By Mark Evans in ILEC News, Analysis 3 Comments Tags: , , , ,

Tony Clement, Canada’s Minister of Industry, issued a statement yesterday about a CRTC decision that will allow the major broadband ISPs to introduce metered Internet usage – something that could line the pockets of the ISPs but damage innovation and new online services in the process.

In the spirit of the glass always being half-full, I have taken the liberty of translating Mr. Clement’s statement with an optimistic spin.

Clement: On Tuesday, January 25, 2011, the CRTC announced its decision to allow wholesale and retail internet service providers to charge customers for exceeding the monthly usage of data transfer permitted with their broadband Internet package. This will mean, for the first time, that many smaller and regional internet service providers will be required to move to a system of usage-based billing for their customers.

Translation: Darn, darn, double darn. The CRTC has made another dumb decision. When will those telecom/nerd bureaucrats get something right. Last year, they almost destroyed our plans for more wireless competition by poking around the foreign ownership of Wind Mobile before I had finally step in and fix things. Now, they want to screw small ISPs just trying to make a buck offering good service and lots of bits and bites (which also happens to be one of my favorite snack foods).

Clement: I am aware that an appeal has been initiated by a market participant. As Canada’s Industry Minister, it is my job to help encourage an innovative and competitive marketplace, and to ensure Canadian consumers have real choices in the services they purchase. I can assure that, as with any ruling, this decision will be studied carefully to ensure that competition, innovation and consumers were all fairly considered.

Translation: The good news is the ISPs skewered by the CRTC have decided to appeal. This gives me time plenty of time to figure out a master plan to counter-attack the decision while the appeal works its way through the system. Then, I can save the day (again!) by proposing a solution that makes everyone look good, especially my party.

Clement: The Harper Government is committed to encouraging choice and competition in wireless and internet markets. Increased choice results in more competition, which means lower prices and better quality services for Canadians. We have always been clear on our policies in this regard and will continue on this path.

Translation: You know, we spent so much darn time getting more wireless competition that we completely forgot about the broadband oligopoly that exists. Our bad. You gotta believe encouraging more broadband competition would be a kick-ass part of a election platform ’cause it’s so voter-friendly. And, it will support that innovation/Web 3.0 thing-a-jig that everyone keeps blabbing on about.

Clement: Our Conservative Government is focussed on the economy and creating a positive environment for job creators and business to flourish. Canadians can count on us to do what is in the best interest of consumers.

Translation: Hey, Rogers, Telus, Shaw, Videotron, Bell and the other ISPs making a killing from broadband service, don’t worry too much. We’ll take care of you too ’cause, after all, we’re pro-business and we’ve got an election to win.

More: For anyone who wants to get involved in the fight about metered Internet usage, check out the Anti-UBB Web site.

The Looming War About Data Usage

By Mark Evans in ILEC News, Analysis, Uncategorized 6 Comments Tags: , , ,

For the past 15 years, the Internet has been an amazing all-you-can eat buffet. Not only have Internet access plans offered unlimited usage but the proliferation of free online services has thrived because there have been no concerns about how much bandwidth is being used.

The salad days, I’m afraid, look like they’re about to be a thing of the past. As consumers use more online services and, in turn, more data, ISPs providers smell money; a lot of money. To them, broadband services is the razor; the razor blade is the data that consumers need to satisfy their need to access online applications, games, video, telephony, storage, music, etc. According to someone on Twitter, ISPs are charging $1/GB of extra data – something that costs them one cent/GB.

The more that things move into the cloud, the more data we use and need. The cable and telephone companies have taken a long time to act on the new data reality but that’s about to change. Consumers should get ready for tiered services not so much based on speed but on data consumption. If you want to use online services, just be prepared to pay for the privilege. And boy you will pay because once ISPs have their hooks into data, they will squeeze this golden goose as hard and often as they can.

In Canada, ISPs have been playing this game with broadband access for the past decade. There’s no competition so prices keep going up. It’s a far cry from the sweet days of dial-up when there were hundreds of ISPs battling it out on price and customer service. Today, there are limited options so if you want broadband service, you pay for it.

The question facing consumers is whether they’re going to accept bandwidth caps without a fight. It’s important to remember that free and unlimited access to the Internet has been a key principle of its growth. The idea of actually paying for bandwidth AND access was never part of the mix. If ISPs are allowed to make bandwidth caps stick, the danger is innovation will be neutered because consumers will think twice about using new, high-data services.

It’s bad enough that there isn’t more incentives by the federal government to have more broadband competition. But the idea that bandwidth caps could become part of the landscape is troubling for a lot of reasons. My fear is bandwidth caps are here to stay. ISPs love them because it is another major source of revenue, particularly among telephone companies who have seen their local telephone business erode over the past five years.

So what are we going to do, take it on the data chin or fight?

More: If we’re looking for a friend to fight bandwidth caps, NetFlix looks like they’re gearing for major battle.

Why Bandwidth Caps Kill Innovation

By Mark Evans in ILEC News, Analysis 8 Comments Tags: , , ,

Content may be king but when it comes to people being able to access content, the value lies in the pipes from cable and telephone companies. The broadband market is an oligopoly with a handful of players offering service. As a result, they can charge pretty much whatever they want. If you don’t like it, there are few, if any, alternatives.

In Canada, most consumers are lucky if they have two options – cable or telephone. Not only do Canadians pay high prices but the new golden goose being embraced by broadband companies is data. With video, cloud computing, social media, gaming and telephony becoming more popular, consumers are gobbling up lots of data

For broadband companies, it offers a great opportunity to charge consumers for the privilege to using lots of data. This explains why data caps have quietly been put into place. They are not something broadband companies are actively marketing – speed is still the sizzle they want to highlight – but data caps are becoming a fact of life.

Aside from being an easy cash grab by broadband companies, bandwidth caps pose a major threat to innovation and how Canadians can use and take advantage of the Internet.

It wasn’t that long ago Canada was among the world leaders in broadband access but our status as a global tour de force is disappearing. The lack of competition is a sad state of affairs, and the fact broadband companies can pretty much do what they want is troubling.

It is a marked contrast to the wireless market in which the federal government has bent over backward to make sure there was more competition, led by the apparent need for more innovation and lower prices.

What’s puzzling is the potential of Inukshuk building a nation-wide wireless network to compete against the cable and telephone companies was snuffed when the federal government allowed it to be purchased by Rogers and Bell.

This has left Canada with an uncompetitive broadband market in which one player simply has to keep up with the other player to keep customers from jumping ship. And while the cable and telephone companies have invested a lot of money to build out their broadband networks, innovation isn’t a word that is used a lot. For Bell’s marketing push about the speed of its Fibe network, broadband speeds in Canada pale to other parts of the world.

If the federal government was serious about broadband competition and innovation in Canada, it would create real incentives for more players to enter the market, while keeping the existing players at bay – much like it is doing in the wireless market. Maybe this will happen when the foreign ownership rules are relaxed, which could encourage U.S. companies to move begging for more choices.

In the meantime, Canada will continue to suffer from a broadband infrastructure that is, at best, good enough as opposed to world-class. As a result, it stifles the development of innovative new services that could leverage real high-speed networks to meet the needs of data and cloud hungry consumers.

Who Controls the Pipes, Wins

By Mark Evans in ILEC News, Analysis, Media 2 Comments Tags: , , ,

Given some of the recent transactions, convergence has come roaring back after being considered dead in the wake of some disastrous deals earlier this decade. Can anyone say AOL/Time-Warner?

Despite the renewed belief that content and connectivity are a magical pairing, my take is it’s much ado about nothing all over again. At the end of the day, the pipes are much more valuable than content. Why? It’s simple: There are only a limited number of pipes but lots of content. This may live in a 500-channel universe but there’s limited way to access all of this content.

If consumers want content, they need a way to get it, and they are willing to pay higher prices for better, faster, more convenient connections. Look at how broadband prices continue to be increased with nary a whimper from consumers, who are loathe to pay anything for online services, even those they find valuable and useful.

No one talks about it much but he/she who controls the pipes, wins. It’s as simple as that.

There’s at least one person who seems to share my thesis: Rogers Communications CEO Nadir Mohammed, who provided this juicy quote to the Globe & Mail:

“We think there’s a lot of glory in dumb pipes,” he says. This is shortly before he also says, “There’s no such thing as dumb pipes.”

This quote come from the leader of a company which owns large broadband and wireless businesses, as well as radio stations and TV stations, magazines, Web sites and a baseball team.

The sudden need by pipe owners such as Bell Canada and Shaw to own content sounds like the same arguments pipe owners were making a decade ago, and we all know how well that turned out. The difference between then and now is there’s so much more content being created, which has made content is more of a commodity.

Meanwhile, the number of pipes has stayed relatively the same. Sure, there are a few more wireless carriers but it’s not like billions of dollars being poured into building new broadband networks being created. As long as pipes are in short supply, they will remain an extremely valuable asset – much more valuable than content.

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