Timothy M. Denton

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Evolution of Canadian Telcom Policy 2008-2013

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Let me begin with what I know to be true. Over the course of the time I was there, a Commissioners had growing sense of the inadequacy of facilities-based competition, with a limited duopoly of cable and telco in each market.

There are two problems with moving to a policy of leased access to cable (coaxial) and telephone (optical fiber and copper pair) infrastructure. One is ideological, and I will deal with that shortly. The second is historical.

The trouble with leased access competition is that the burden of it, if burden it is,  falls largely on telephone companies. Cable had so arranged its protocols as to defeat ready usability of its networks by third parties, and there were other impediments: dispersed and therefore expensive aggregation sites; an artificial need for large numbers of spare IP addresses for competitors, most of which would remain unused; and there were a few of them left as IPv4 exhausted. 


The CRTC sought to make more even the burden of third party access between cable and telco by making cable more attractive: lowering rates, making aggregation more sensitive to third party needs, and outside of the CRTC, ARIN made IPv4 addresses more  available for access to cable. I doubt that this has had all the effect we wanted but it was a start.

The primary problem with leased access is not however practical; it is ideological. When I say "legitimizing" third party access, I mean that the Commissioners had to overcome the prejudice that the only "real" competition is between facilities holders, and that third party access, by involving  closer regulation of the incumbents, is somehow less manly, full-blooded, and effective. There is a school of economists who act effectively and, I think,  sincerely as porte-paroles of the telcos. Their constant refrain is that facilities-based competition is the only "real" competition, and the the lease of facilities to other potential competitors is somehow economically damaging. There is always a prejudice to be overcome in any group of people charged with thinking about telecommunications, that leased access competition is not desirable. The reason for this belief is that it involves fairly close regulation of prices charged for access to facilities, which in turn involves some notion of costs of operation, which are difficult to establish and which are subject to change in a world of Moore's Law.

There is never any lack of people who are ready to take the incumbents' position on leased access.

People have trouble making the leap of analogy that the builder of the highway does not determine who makes cars. Carriers had always encouraged vertical integration of the app and the transport, as was inevitable in telephony, when there was only one application, voice;  whereas the Internet, in principle at least, allowed for  disentanglement of application from transport.

Indeed during my time at the Commission there was very little discussion of the technical nature of what we were regulating. The fact that British Telecom, for instance, had gone to a fully common carrier model was treated as an event on Mars, of no relevance; we had two carriers, cable and telco, and that was that. European regulation to promote access to facilities was treated as if it were irrelevant when we had such a large cable plant available for competition. That its DOCSIS protocols and engineering plant rendered it less apt to be leased to competitors was not considered significant for many years.

But for the diversity of opinion in telecom branch, our principal source of advice on telecommunications, from whose debates commissioners were largely excluded, we had no technical advice, no source of opinion about the technical meaning of what we were regulating. Commissioners were presented with decks (summaries of the cases); we discussed the options presented, but the options were carefully crafted beforehand so as to contain discussion to a range of options thought feasible by staff and the Chairman. The commissioners would have been hard pressed to understand the significance of interconnecting in the telcos' central offices, for instance, versus before reaching it.

 

Once Commissioners had come to the position that there was insufficient competition in Canada generated by an infrastructure duopoly, two sets of decisions needed to be made. One set concerned prices of access to facilities, and particular terms relevant to gaining access to which parts of the networks on which terms, which included: aggregation points, backhaul costs, access to IP addresses, where to interconnect (inside the central office or elsewhere).

The second set of decisions concerned the terms on which carriers could control their networks for protection against various kinds of potential damage, versus the rights of people, including their competitors, to place applications on the network. In Canada this became known as the Internet traffic management procedures (ITMPs). The Commission's decision lay out a series of graduated circumstances in which it would be appropriate for the carrier to act. The most severe attacks could be managed unilaterally,some could be dealt with by notice and technical consultation, and by far the largest ordinary circumstances could be dealt with by economic (price) signals.

If I had the authority to change things, here is what I would do.


The CRTC needs more telecom-trained commissioners. This goes directly to the appointments process, and possibly as far as  limiting telecom decisions to commissioners specifically appointed for that purpose. The days of appointing former broadcasters and media people are not yet over, nor should they be excluded in the future. But the talent pool of commissioners capable of informed decison making in telecoms is very thin, with the result that the discussion is biased first to what telecom branch thinks, and behind them, what the incumbents think is within the realm of possibility. Getting alternative technical views before commissioners from other quarters is both rare and difficult.

Second, I believe the CRTC needs a chief technology officer to help frame the discussion more. The FCC has appointed a series of prominent experts in Internet-telecommunications issues as its Chief Technology Officer, foremost of whom is Henning Schulzrinne, who has devised several important protocols. Since protocols are the new bottlenecks, we need people at the Commission who understand and are able to play in the engineering standards forums. For example, the CRTC completely missed out on shaping the DOCSIS protocols, or even observing their creation, because of a want of attention to the issue. An ounce of prevention is worth a pound of cure, and a great deal of anti-competitive potential could have been addressed if regulators saw it within their mandates to involve themselves in places like the IETF.

Third, that there needs to be a much more open discussion of theories of networks: general ideas of what we are doing rather than case by case drivel, pardon me, "precedents". We need to get away from understanding what we do as "law" and more as improvizations in the handling of market power exercized through networks.

In summary, my overview of where Canadian telecom policy has gone and may be going for the next few years (2014-2015) is:
1. The past five years in Canadian telecom policy have seen a conjunction of government and regulatory agency in agreeing to more, not less regulation of the large carriers.
2. There has been accorded an increased legitimacy to leased access to facilities.
3. Conscious that the burden if access has fallen largely on the telcos, decisions were made to ease that terms of access to cable and arrange to make it more usable.
4. The regulator is very concerned not to dissuade companies from investing in facilities. Profits allowed to the incumbents in leasing access third party access remain healthy.
5. Canada's CRTC paid almost no attention to European developments, insofar as it was assumed that the duopoly between cable and telco obviated the need for structural separation. What did attract the regulator's attention was the comparison of prices per unit of bandwidth, in which  according to the OECD, we were not doing so well. A subsequent study showed that, when Canada was compared by delivered as opposed to promised bandwidth, we were competitive with European price/bandwidth. I believe this study.
6. We have room for more improvement, and the federal cabinet is ready to regulate more aspects of services and more profoundly to increase consumer satisfaction.
7. Canadian consumers are quite aggrieved by their carriers, and welcome the large incumbents being thrown under a bus from time to time, right or wrong.
8. Canada is clearly on a course to diverge more from the States, as they have rejected leased access to competition, and we are embracing it. For how long, I cannot tell.

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Timothy Denton is a lawyer by training who practices principally in telecommunications and Internet policy and domain name issues, with a strong concentration on explaining what the technology is and what it means.

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