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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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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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.

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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Business Lobbying and Canadian Telecom Governance

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Another recently completed selection of my winter reading was Cornelia Woll’s Firm Interests: How Governments Shape Business Lobbying on Global Trade. Woll explored the relationship between government economic policy and business lobbying interests, suggesting in complex and transitional periods where business may not have clearly articulated — or even internally known — positions, government can have quite a bit of influence to shape interests. Once business internalizes government goals, the businesses eventually generate objectives within that framework and execute on the strategies.

Woll uses liberalization of telecommunications service in the 1990s and open skies arrangements in the 2000s as case studies, primarily focusing on US and European actors. She argued they presented strong examples, as they consisted of companies that had been (or, in some cases, still were) monopolies/oligarchies that had traditionally operated in highly protected domestic markets. Woll charts the move from resistance to acceptance and then championing of liberalization by firms with a historical bias towards protectionism, demonstrating in these industries how government — especially US trade policy of the late 80s and 90s — started influencing companies thoughts on international competition. The triggering point, Woll suggests, was in part the changing nature domestic economic affairs.

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Email amongst Friends leads to Musings about Telecoms

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A graphic designer/illustrator friend of mine emailed to ask of my thoughts were regarding the new branding for Sportsnet due to my interest in the Canadian telecom sector. Thought I’d make some additions and edits, and turn my reply into a post.

James brought up it’s positioning vis-à-vis TSN, Canada’s leader in sports broadcasting, and some potential latent Americanization with the red, white[-ish] and blue colour scheme. I wasn’t actually aware of the re-brand being busy with school and not having TV. And as I primarily play attention to the distribution side of things instead of content, my regular news feeds didn’t have anything on it. Googling brought up a Globe & Mail article that stated it was a Hollywood firm that did the new logo but they also did SportsCentre on TSN.

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Spectrum, how ‘scarce’ is it?

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With the ongoing AT&T-T-Mobile proposed merger continuing to attract a lot of attention, I’m using it as a good comparative analysis case study for spectrum politics in Canada. Especially when seen as a proxy for the assumed spectrum crunch coming due to an explosion in the usage of wireless broadband for smartphones and other devices.

The problem is, of course, while there’s definitely evidence of increased data consumption, the spectrum crunch is less clear and straightforward.

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Reflections on ‘Navigating Convergence II’

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Going through my feed reader, Mark Goldberg had pointed out that the CRTC has released a 2011 edition of the ‘Charting Canadian Communications Change and Regulatory Implications: Navigating Convergence II’ [PDF / HTML]. I’m making my way through the document and thought I’d note a couple quick observations.

According to Media Technology Monitor (MTM), 27 percent of Anglophones and 14 percent of Francophones in Canada own smartphones, up from 6 percent and 4 percent, respectively, in 2007. (pg. 14-15)

What accounts for such a growing discrepency between Anglo- and Francophone adoption of smartphones? Even amongst feature phones there seems to be quite a divide in usage patterns. One table (Figure 7, Cellphone activities of Canadian cellphone owners 18+) indicates that approximately 65% of Anglophones texted in 2010 while only around 45% of Francophones did.

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One way to speed up advanced network deployments

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While I haven’t had much chance to start on another book, I’ve been increasing the amount of telecommunications feeds to my information stream. It’s stimulating questions and areas of inquiry for me to be thinking about as I look to start classes in the fall. I’ve requested CC8940 – The Political Economy of Communication and Culture and should be joined by at least one friendly face.

While reading, I came across this story from Engadget, noting Ericsson is testing an LTE-Advanced network achieving mobile 1Gbps downloads in trials.

Not only is Ericsson cranking up the speed, it’s also endeavoring to make the new network more efficient by offering 8×8 MIMO (Multiple-Input, Multiple-Output) functionality, which enables data to be retrieved and sent faster regardless of network congestion.

Of course, these test results are taking advantage of 60MHz available bandwidth, as opposed to the global max of 20MHz and the US standard of 10.

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Evolution of my “Considerations”

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So, it looks like I may have been a little unfair to Gruber in my last post. Or, at the least, a bit premature. I took advantage of the sun’s emergence this afternoon to sit outside and finish reading the final chapter in The Economics of Mobile Telecommunications. Though I had assumed that a final chapter before the Appendix would offer a conclusion and not a lot of further analysis, I found some very interesting observations and Gruber addressed many of the concerns I raised at the end of my last post.

The final chapter, ‘The evolution of market structure in mobile telecommunication markets’, also reinforced my acknowledgment that I’m not a natural economist. It took me about half an hour to really wrap my head around about 3 pages of material. To be fair to me, some of that was while in transit, which is not the easiest way to think about the implications of formulas like Π(n*, s, F) > 0 > Π(n* + 1, s, F) — the zero entry condition used to help determine the Cournot equilibrium number of firms in a homogeneous goods industry. [Note to self: need to read up more on industrial organization and oligopoly theory.]

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