Aligning Policy Goals with Policy Outcomes

This recent story in the Financial Post caught my eye, suggesting Industry Canada rejected a proposed spectrum licence transfer (sale) from WIND Mobile to SaskTel prior to the recent AWS3 auction. The decision seems in keeping with 2013’s Framework Relating to Transfers, Divisions and Subordinate Licensing of Spectrum Licences for Commercial Mobile Spectrum, which was (in part) meant to increase competition by preventing spectrum concentration in market leaders. The question is will Industry Canada’s decision actually increase competition?

First, some context. WIND Mobile won the licences in question during 2008’s AWS spectrum auction. They currently operate their cellular networks in BC, Alberta, and Ontario but have not deployed in Saskatchewan — nor built networks in Manitoba, Northern Quebec, Atlantic Canada, the Yukon, North West Territories or Nunavut, also areas they won licences. These areas are all smaller markets and it seems likely that WIND will focus on their current operating markets for the foreseeable future, looking to deploy LTE networks in the areas where they secured AWS3 licences.

WIND’s AWS licences were won as part of a new entrant set-aside. According to the Policy Framework for the Auction for Spectrum Licences for Advanced Wireless Services and other Spectrum in the 2 GHz Range, “licences obtained through the set-aside may not be transferred to companies that do not meet the criteria of a new entrant for a period of 5 years from the date of issuance.” This moratorium on set-aside spectrum has lapsed though — the AWS auction occurred 6.5 years ago. What’s more, SaskTel counted as a “new entrant” in the AWS policy framework.

To be eligible for the set-aside, a new entrant is defined as:
An entity, including affiliates and associated entities, which holds less than 10 percent of the national wireless market based on revenue. 

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Winner’s Curse: If you buy it, they still may not support it.

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[Update: The Nexus 6, which supports Band 12, was launched in Canada November 26th. Rogers did not secure spectrum in the AWS-3 Auction in early 2015.]

Winner’s Curse: A phenomenon that may occur in common value auctions, where the winner will tend to overpay due to incomplete information.

I was planning on writing a short blurb about Rogers and winner’s curse/buyer’s remorse when Industry Canada initially announced the AWS-3 auction. I got into a Twitter conversation about AWS-3, with the thinking that the high cost of Rogers’ 700MHz spectrum would cause them to be uncompetitive against a TELUS-Bell effort to gain the non-set aside block. JF noted that Rogers would still be bidding to drive up their competitors’ costs. It’s a strategic move I agree will be likely, but felt just further reinforced my original observation.

Rogers wouldn’t hesitate to add to their industry-leading spectrum holdings, if it could be acquired at a good price. But with the significant capital outlay for their 700MHz spectrum — some might say, overpaying — Rogers would need to be extra wary of the risks of inflating auction prices beyond what value could be reasonably extracted, not wanting to ‘accidentally’ win over-priced spectrum. Europe’s experience with the winner’s curse surrounding 3G licence costs is a major contributing factor to lagging in LTE investment, something that wireless executives haven’t addressed at all during the recent CRTC wireless wholesale roaming proceedings.

I also noted that this situation would, in fact, be the worst of both worlds. Rogers would be increasing TELUS’ or Bell’s (and, thus, consumer) costs, while likely still not maximizing government revenues.

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School’s (almost) out for summer.

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At the end of last semester I moved one step closer to finishing up my graduate studies — huzzah! — by completing all the coursework requirements. The two courses that I took were exceedingly different from each other but, for me, also showed off the value of such a multidisciplinary program.

I took a second Schulich MBA course, Communications Policy taught by Peter Grant of McCarthy Tétrault. Much like my previous MBA course, I was able to contribute a lot of technical understanding about communications systems. I was also pleasantly surprised just how much of the various media industries I already had a strong knowledge about — some days it felt like the class was my RSS feed come to life. It was a great opportunity to debate various issues on a regular basis with others interested in the topics.

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Still unclear on 700MHz outcomes.

I’m currently in the process of finalizing my Major Research Project proposal, so I kinda wish that the 700MHz spectrum auction had finished sometime next week (or the week after!). I’d much rather be analyzing the results and reading others analysis of outcomes than finding some additional sources to support my methodological approach — though I’ll be happy to also tackle a bunch of readings that are contributing to my literature review. 

But seeing as carriers and government officials weren’t working on my schedule, I’ll just throw out some quick thoughts.

I think Vidéotron is perhaps the clear financial winner. They picked up prime spectrum in major Canadian markets and did it in a very fiscally advantageous manner. Peter Nowak has a good overview of some of the broad options to Vidéotron and attributes the ability to pick up the licences on the cheap due to lack of auction competition other than the Big 3. Mark Goldberg highlights that in 2008, Vidéotron spent $555M to acquire AWS spectrum primarily in Quebec, on a 10 year license. In  2014, they spent just $233M for a 20 year license in Quebec, Southern and Eastern Ontario, Alberta and British Columbia — 60% less.

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A simple experiment highlighting why I’m more of an applied than theoretical researcher.

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Due to scheduling challenges and lack of telecom-specific electives in my program (note to all prospective graduate students: if you’re interested in specific courses within a program, check to see they are actually offered), I ended up taking two research methods courses for my program. I’d originally taken Applied Research Methods: Policy & Regulatory Studies last Winter. Based out of York University’s Osgoode Hall Law School, it was taught by Liora Salter, who specializes these days in public and environmental law but cut her research teeth in communications policy.

While many of my classmates were novice researchers from the environmental studies area, Liora was a fantastic instructor and the material was so practical that more advanced students like myself still really benefitted. From the first class, Liora focused on the process of policy studies. This allowed her to equip students with the tools needed to move forward with their own research projects, regardless of what the area was (international or domestic, federal or municipal, education or spectrum governance, etc).

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Academic goal achieved, I’m a “published’ author!

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Although my current research focuses on telecoms and spectrum policy, my interests in ICT are fairly broad. In part, this comes from my political science background and the emergence of Web2.0 services during the latter part of my undergraduate studies. And, of course, my Honours Thesis explored ICT’s impact on democratic processes. During my time at Ryerson, I’ve been able to contribute to three distinct research projects. There’s the current (and longest/best fit) CSPR project, a short stint with the Infoscape Lab, where I supported some quantitative analysis for a book, and a couple of projects with the Privacy and Cyber Crime Institute.

The primary project involved working with Dr. Avner Levin on a report for Public Safety Canada, helping to inform Canada’s developing cybercrime strategy. Along with another graduate student, we conducted a comparative review of strategies of a number of countries, including those in the Anglosphere, Europe, Commonwealth of Independent States, Baltic Region, and China. Our findings argue that states’ strategies can largely be summed up as either a Budapest-approach (named for the Council of Europe’s Convention on Cybercrime) that emphasize law enforcement acting across state lines or a UN-informational security approach, which emphasizes state sovereignty.

A copy of our report can be found online — Levin, A. Research Assistance provided by Goodrick, P., and Ilkina, D. “Securing Cyberspace: A Comparative Review of Strategies Worldwide” Final Report, July 2012.

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CSPR & the pending 700MHz auction

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One of the big challenges in updating this site is being so busy between classwork, my ‘day job’, and the work I’m doing with the Canadian Spectrum Policy Research group at Ryerson University. I end up doing a lot of research duties for the principal investigator while also writing for the website. Not that I’m complaining, as it’s some of the more fun and interesting work that I get to do, since my research position is much more focused on my area of studies than most of my coursework.

The most recent update to our site was the page on upcoming 700 MHz auction itself. One of the main tasks of the CSPR project is to help translate the often technical and seemingly arcane information around spectrum policy into something that can be more accessible to the general public. It’s can be a challenge to walk that line between providing enough information and detail to allow interested people to get a more critical understanding of the issues then they find in the media — not to mention the PR war between national incumbents and government.

I think our (my) write up strikes a nice balance, and was encouraged when a (day job) coworker shared that she was able to closely follow along with a radio segment on the auction after having read a draft of the page. Success! I was also glad for the opportunity to sketch out some thoughts under the heading “Potential Auction Results”, as this was my first time to document some of my more industry-specific analysis.

So this post gets to pull double duty. It serves as an update and also links to my Research Associate position with CSPR, which I don’t think I’ve mentioned here.

Vertically Integrated Studies

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In Fall 2012, I took CC 8844: Intro to Broadcast Management (Managing In The New Broadcast World) with Doug Barrett. While not an out-of-program course, its home is the Schulich School of Business’ MBA program — so not the standard ComCult course. My aim was two-fold, add a course with a strong, practical component to my MA and provide an increased holistic understanding of the Canadian telecommunications market. It has been one of the best courses in my program and fully achieved both goals.

Going into the course, I knew that I had a strong foundation in the carriage-side of things but I really wanted to ensure that I had a strong grasp on the content-side. Most other students (from the MBA program) had a content background (work with production companies, reporter for a major newspaper, etc), so I was able to effectively provide some technical input when we discussed topics like OTT services. I also was able to provide a pretty detailed response as to why moving to completely wireless home connectivity was unlikely with current infrastructure/business models.

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Summer 2012 Reading

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I’ve often been known to say I know more about cellphones then 95% of people, but compared to that 5%, I don’t know much. So one of my primary goals this past summer was to improve my technical knowledge of mobile communication network architectures and technologies. I really enjoy reading Martin Sauter’s blog WirelessMoves — even when it gets a little over my head — so I decided to purchase his book.

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Still pondering capacity…

I’ve been busy working on a specific work project — writing copy for a spectrum/telecom primer website — so haven’t gotten as far along with my own capacity project as I’d like. Though this probably speaks to one of the best benefits that professors have mentioned about grad school, the space and time to just think about things.

Part of my reflecting on capacity issues is thinking how the surplus value is captured and how the benefits are disseminated amongst society. Is there an ideal split between industry, consumers and citizens? Does having the first two groups in competition naturally result in positive benefits for the third? How do power asymmetries influence those outcomes? What kind of policies can be created/instituted that results in the ideal outcome? Is it better for innovation to steadily improve all groups simultaneously or do alternating periods of over- and under-capacity trigger rapid improvement that have better long term outcomes? After all, if necessity is the mother of all inventions…

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