Of bit caps and market forces: Why the Tories’ digital consultation will fail Canadian consumers (part 1)

Are any Canadian politicians ready to dismantle the market forces doctrine?

The current government’s digital consultation faces deeply-rooted problems which I predict will derail any meaningful policy changes of benefit to mainstream Canadian consumers.

Some of these problems are built into the consultation (point #1 below). Others are contextual – structural constraints like the anti-consumer “market forces” doctrine that rules Canadian telecomm policy (point #2 below). A third problem concerns the long-time failure of Ottawa’s mandarins to help Canadians understand their technology-related decisions, something neither public hearings nor consultations are designed to do (point #3 below).

To provide perspective, I’ll be making invidious comparisons between the recent triumphs of the FCC and the corresponding failings of the CRTC. If this post isn’t long-winded enough, I also have an opinion piece on the politics of the consultation in the current issue of Telemanagement (in which I argue that the Liberal Party, despite Marc Garneau’s progressive views, seems as oblivious as the Conservatives to the real social and economic opportunities of broadband).

1 – The digital consultation has tossed consumers over the brink, while lavishing its attention on the needs of business. Here’s a semantic clue: The consultation background paper uses the word investment over 70 times; it uses the word affordable exactly once. And that latter usage refers in the paper to technology for creators – “the value of our digital infrastructure depends on the content it carries” (p.25). This is from the chapter devoted to Digital Media and the irresistible inclination to see the Internet as a delivery system for professional content. This is a highly prejudicial assumption: that policy should bend to the needs of content creators, rather than the needs of the millions of Canadians who use the Internet overwhelmingly for personal not “cultural” reasons. Download the paper here.

2 – Canadian telecomm policy is captive of the market forces doctrine that hangs over every CRTC decision. It’s enshrined in the December 2006 Cabinet Policy Direction, which orders the CRTC to “rely on market forces to the maximum extent feasible as the means of achieving [Canada’s] telecommunications policy objectives.” The Policy Direction, the first measure of its kind ever implemented by Cabinet, reiterates the substance of paragraph 7(f) of the Telecommunications Act, which stipulates federal policy must “foster increased reliance on market forces.” The Direction, as we’ll see, goes further in a companion provision set forth in 1(b)(iii), whereby the Commission is also ordered to implement non-economic regulations, to the greatest extent possible, “in a symmetrical and competitively neutral manner.” I maintain that, if left in force, these provisions will nullify any meaningful, pro-consumer outcome the consultation might otherwise have. And when we look at the CRTC’s May 6 decision on usage-based billing (Telecom Decision CRTC 2010-255), we’ll see that the goal of “competitive neutrality” not only trumps consumer protection but also, paradoxically, may be leading to reduced competition in residential broadband.

3 – Canadians are being asked to comment on issues which the government and its agencies have done a terrible job of explaining. The sum total of information provided online by Industry Canada about its Connecting Rural Canadians program (excluding application forms and maps) amounts to roughly eight Web pages, counting back to the July 2009 announcement. See them here, here and here. In the original announcement, one page features five photos of Stephen Harper, the other page six photos. Both pages share space with the PM’s Pet Adoption Program, whose connection with fast, affordable broadband is left to the imagination.

One general datapoint provided with the May 9 announcement about the 52 grants made under the rural program so far reads as follows: “6% of Canadian households currently lack broadband (1.5 Mbps) access” (citing the CRTC). Do you suppose the average moron in a hurry will take that to mean Canada boasts 94% broadband penetration? On the contrary, one-third of Canadians do not have broadband at home. Whether they have “access” to broadband says nothing about whether they can afford it, their awareness of its benefits or whether they even own a computer.

The Broadband Canada site also urges the visitor to sign up in order to receive future information. I signed up for the listserv in the summer of 2009. Eleven months later I’ve received exactly three emails. Nevertheless, the very first email provided a lot more information than I had bargained for:

“For both upload and download, the [rural broadband] program expects a maximum oversubscription ratio of 10:1 on access bandwidth to backhaul bandwidth when the total number of users per node is 100 or less. The acceptable oversubscription ratio would scale linearly up to 50:1 as the number of users on a node approaches 10,000.”

Less ignorance, more bliss

If you’re not an engineer, you need to know two things about this spec. One is that this is the formula for how much potential for congestion will be allowed on the rural networks being subsidized by the program. Or to be more charitable, it’s a calculated statistical gamble that not all subscribers will use their nominal bandwidth at the same time. But if you’re not an engineer, then who exactly was this email supposed to enlighten?

This is not a rhetorical question. There’s plenty of evidence the vast majority of Canadians have no clue what is at stake in the consultation or how to assess the issues. Some of the evidence is anecdotal, some of it more empirical. I’ve taught 400-odd undergraduates, almost all of them Communication Studies majors – and Millenials to boot, who spend their lives online. In some of my classes not a single student has been able to define basic terms like bandwidth; or explain the difference between the Web and the Internet; or use “Mb/sec” in a sentence. Most students have no idea how much RAM they have in their own laptop – or even what RAM is. (This issue goes to the state of education in the liberal arts and social sciences, rather than native intellect or motivation.)

But the most interesting feature of the oversubscription spec is that, to my knowledge, none of the network specs proposed under Connecting Rural Canadians was issued publicly in draft form so that knowledgeable parties could comment on them. By contrast, this kind of outreach and public involvement was the hallmark of the research and development behind the FCC’s National Broadband Plan.

Although it can hardly be blamed for Industry Canada misrepresenting its 6%-of-households figure, the CRTC is one agency that should be taking a much more aggressive approach to public outreach. Better outreach should be implemented in a bigger effort to interpret important decisions – to educate the public through open letters, blogs, social software, open meetings and workshops in the field. Instead, the Commission issues decisions that are for the most part utterly incomprehensible to those paying the price for the outcome – telephone, broadband and cellular subscribers – as we’ll see next in the May 6 UBB decision. We’ll also have a comparative look at some of the FCC’s recent pro-consumer activities and what Canadians might learn from their example.