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The futility of CRTC’s Talk Broadband hearings

Technological disruption, not intervention, is the real last best hope for affordable broadband.

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Google wants to provide internet access through balloons.

Talk Broadband:

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For the past two weeks, I’ve been searching for a word to describe the CRTC’s ongoing Talk Broadband event, a set of hearings designed to plot the future of internet access in Canada. I’ve settled on “interesting,” which is the polite word for when you want to tell someone that you don’t like what they’re doing, but you don’t want to offend them.

So far, consumer groups and anti-poverty advocates have pleaded that something needs to be done about broadband affordability in Canada. Big telecom companies, meanwhile, have argued that poverty is a larger problem that has little place in a discussion specifically about internet access. Nothing surprising here.

If there has been anything unexpected, it would have to be some of the comments made by CRTC chairman Jean-Pierre Blais.

First, to open the second week of hearings he chided… well, seemingly everyone for Canada’s utter lack of vision on broadband.

Blais chewed out the industry, but mainly the federal Liberal government for lacking a coherent strategy. The fact that broadband is vital to all Canadians is self-evident, so it’s disappointing that no one is taking the lead on putting together an overall plan.

“It strikes me that this proceeding, launched over 12 months ago, may very well be the last best chance to get it right – a chance to create, together, a coherent national broadband strategy through an open and transparent process based on evidence from all Canadians, achieved, to the extent possible, through consensus and implemented through shared responsibility,” he said.

Well, amen to that. It’s nice to see the chairman finally acknowledging what has otherwise been self-evident to anyone who has been paying attention for the last, uh, decade or so.

But he didn’t stop there. Blais also bawled out the industry, with representatives of the Canadian Cable Systems Alliance unfortunately bearing the brunt of his wrath, for employing so few women – especially when it comes to CRTC hearings. Apparently, they’ve been keeping stats, and they’re not good.

Well, amen to that too, even if it did seem like opportunistic grandstanding – but that’s an issue for another time.

Despite the surprising comments, there’s an air of futile inevitability to the Talk Broadband hearings. Is anyone really banking on the CRTC as the “last best chance to get it right?”

It’s an audacious boast given the current television brouhaha. After a similarly lengthy set of hearings on the TV system in 2014, the CRTC settled on lowering Canadian content requirements in broadcasting and forcing skinny basic, a paradigm under which TV providers would be forced to sell basic packages for no more than $25 a month.

The system arrived with much fanfare – but little uptake – in March, as providers oozed around the loopholes. Surcharges, hardware rental fees and undesirable channel lineups have resulted in few subscribers, many complaints and declarations of skinny basic as a flop. Oh, and Blais telling Canadians that they should haggle for better prices.

It’s not just skinny basic. The CRTC’s track record isn’t exactly stellar elsewhere. Last summer, the regulator gave small internet providers leased access to the newer, faster fibre networks of bigger competitors. Bell is appealing that ruling to the government, but where are those faster services from indie ISPs in the meantime?

They’re mired in limbo because the CRTC hasn’t yet figured out what those ISPs must pay for their access. Somehow, the regulator has managed to snatch defeat from the jaws of victory. In the meantime, broadband prices remain high compared to many OECD peers.

The situation isn’t any better in wireless. The CRTC’s Wireless Code took effect last year, effectively banning three-year contracts and capping roaming charges. And yet, Canadian cellphone bills are still the highest in the world. Yay?

The fault here isn’t just the regulator’s. The previous Conservative government essentially went to war with Bell, Rogers and Telus. Ten years later, with all three independent wireless companies (Wind, Mobilicity and Public Mobile) now under the ownership of cable and telecom incumbents and consumer bills still sky high, it’s clear who won that war.

It’s also not just Canada’s fault. Regulatory ping-pong and government intervention gone awry isn’t a Canadian issue. It happens everywhere.

U.K. regulators, for example, received much praise years ago when they urged BT, the nation’s phone incumbent, to voluntarily split itself into separate retail and wholesale operations. The wholesale business, Openreach, was supposed to sell access to its broadband network to all third parties equally.

It did, and broadband is dirt cheap in the U.K. as a result, but service is slow and crappy. Regulators and government are now poised to take “radical action” against BT.

Over in Australia, where everyone was tired of terrible service from incumbment Telstra, the government decided to build its own National Broadband Network. Years later, it would be charitable to say that the multi-billion-dollar effort, which has endured changes in government, has been a cluster-ahem.

Take all of that together and it’s hard to dismiss the arguments that free marketeers continually make – that any sort of regulatory or government intervention is wrong-headed and ultimately futile.

Those arguments are reinforced when you look at where meaningful change has come from in the communications space.

Long-distance phone rates, which once upon a time were similarly sky high, didn’t come down thanks to intervention from on high. Skype killed them. It also wasn’t regulators or governments who sent TV providers’ business into a nosedive – that’s happening thanks to Netflix.

Broadband access (and wireless access for that matter) is going to be expensive or crappy – or both – for as long as it’s expensive to provide, and therefore for as long as only a few rich entities are able to do so. The actual last best hope of anyone ever achieving good, affordable broadband isn’t regulators or governments, but technological disruption.

Some offbeat efforts are already underway – Google is testing offering broadband through balloons while Facebook is trying to do the same with drones. They’re both goofy, seemingly out-there ideas. But history suggests such experiments have a better chance of delivering on their promise than any regulatory effort, as well-meaning as it may be.

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