WirelessNorth.ca on Canada's Digital Economy

Summary

WirelessNorth.ca's take on Canada's digital (particularly wireless) landscape and a set of policy ideas and recommendations for Canada's digital future. Our ideas include:

• Addressing some remaining sore points in Canada's mobile services: international roaming and Canada's world–leading contract lengths.
• Do not let future spectrum auctions act as a deadweight tax on connectivity: Reinvest all spectrum proceeds back into Canada's digital economy
• On not feeding the dinosaurs: be wary of legacy business models and interests capturing the digital agenda, actively invest in new models and in disruption
• Invest in policy that enables any/all Canadians to be creators and innovators
• Waive tax on the pipes: Exempt wired and wireless data service from GST/HST
• Establishing better metrics and targets to measure Canada's digital competitiveness

Submission

Dear Minister Clement

Thank you for this opportunity to comment on Canada's digital economy strategy. For some time we have been an outspoken on issues of digital policy through the blog WirelessNorth.ca and other forums. Together with our sister community StartupNorth.ca we come from a place of being staunch supporters of the use, development and diffusion of digital technology. We believe that the digital economy is transformative to the economy and daily lives of Canadians. Therefore we find it laudable that our government is establishing a digital economy strategy. We even wish that this government, or any of the previous, had gotten to making a digital strategy even sooner.

Although we cannot predict specifically the future of technology, to us it is clear that that the future of computing, ICT and media is in the clouds.

As an individual and later editor of WirlessNorth.ca, it was in 2007 that I first became engaged in mobile and digital advocacy. My involvement was at first driven by frustration. It has been long clear that the future of computing was going to depend on new mobile platforms and ubiquitously available connectivity to networks. As applications, as content, as everything digital migrates to the web, we will need connectivity that is not tethered to walls, that is accessible from any or many devices.

Back in 2007, a ubiquitous connected future was nearly unthinkable in Canada. At that time, Canada had access to no 3G networks, Canadians paid the highest rates for data in the developed world, and we had access to very few of the most advanced devices.

The last few years however, have brought enormous changes to Canada's wireless digital landscape. Most of these changes have been positive. We now have not one but several advanced 3G networks in competition in Canada, Canadian carriers do now offer the worlds most advanced devices and costs for mobile data have declined. Prices in for mobile data packages in Canada have declined from thousands of dollars per gigabyte to tens of dollars per gigabyte. However, combined pricing for voice and data mobile services remains, if not as astronomical, at least rivaling some of the highest rates by international standards.

In a short time, we have from some of the most laggardly service standards with some of the worst pricing in the world, the services rivaling the best in the world at prices only rivaling the highest in the world. This is something like progress and should be recognized.

Nonetheless we must remain vigilant as few areas of concern remain as well as mus as–yet unrealized opportunity.

Roaming fees are still a problem, with roaming pricing for data sometimes factors of thousand of times higher than non–roaming pricing. When roaming costs are prohibitive, whether in Canada or abroad it has an impact on Canadian's ability to participate in global trade and tourism. High costs of roaming are a problem not unique to Canada. Ways for Canada to address the issue might include limiting carrier locks on devices or through greater international regulatory cooperation.

Contract lengths are another area of concern for wireless subscribers. Canada remains a world–leader at contract length. Contracts increase switching costs effectively reducing effective completion between carriers. In addition, in the fast–evolving mobile industry, longer contract lengths could act as a barrier to adoption and investment by Canadians in most–current generation technologies.

The remainder of this comment will address ideas within three of the specific questions asked within the consultation.

Digital infrastructure

Don't make spectrum auctions a tax on the digital economy — The current government should be applauded for introducing new competition into the wireless industry with the 2008 AWS auction. The set aside, and rules for tower sharing and in–territory roaming were a great idea. What was less of a great idea about AWS auction was that approximately 4 billion dollars was extracted from the industry with none of those funds reinvested in the digital economy.

Auctions could well remain the best way to allocate scarce licensed spectrum. But we must be wary of auctions acting as a high tax on infrastructure development. Ultimately it is the digital subscribers that have to pay the costs of spectrum. In the future, auctions should be carefully structured to avoid cases of winner's curse and to ensure that any money raised by spectrum auctions is re–invested in the digital economy.

Any number of ways that spectrum auction proceeds could be better spent:

• As tax credits for capital expenditure on new infrastructure (e.g. network rollouts)
• As funding to improve access to more remote or rural areas
• As funding for digital content–based programs particularly focused on early–stage startups and digital content creators
• As incremental funding to support existing and new mobile, digital and mobile design industry associations and incubators
• As funding to expand digital literacy programs
• By not auctioning spectrum and releasing more available spectrum as White Space or by expanding current unlicensed spectrum allocations
• By providing GST/HST exemptions for wired and wireless broadband plans

Canada's Digital Content

Don't feed the dinosaurs — Let's not let powerful industries whether they be the telecom industry themselves or last–century's media industry dictate the terms of the digital economy. For better or worse, not all of Canada's current content creation and distribution businesses will survive the transition to digital. We should seek a balance between aiding existing creators transition to a digitial economy, but not at the cost of stifling or failing to support new creators and new models of digital distribution.

If anything, what Canada needs most of all is digital policy that actively drives disruption. Policy that maximizes the creative and innovative potential of any Canadian not just legacy Big Content.

Let's make Canada a nation of creators, not a nation of consumers. Let's make digital policy and copyright policy that maximizes the distribution potential of the internet rather than blocking, throttling or criminalizing the tubes at the behest of walking–dead distribution models.

Recommendations:

Let's invest in the public domain — At present, our copyright policy is for the most part focused on those creators that wish to retain rights. Where are the policies that reward, recognize or support creators who would voluntarily release work into the public domain or creative commons?

Let any Canadian be creators — From an infrastructure and skills perspective, lets ensure that any Canadian has the tools to become a publisher. Currently, most Internet connections in Canada are highly asymmetric giving much more bandwidth to downloading rather than sharing or uploading content. Similarly a lot of digital platforms like set–top boxes or consoles inherently lock users in to be consumers rather than creators of media.

Building Digital Skills

Recommendation: Let's waive sales tax on broadband — Adoption of ICT will be driven by a combination of access to digital services, affordability of those services and digital literacy with those tools. Without regulating pricing or interfering with market forces, there is one way our government could materially reduce the cost of digital access. That way would be for the government to waive sales tax on wired and wireless broadband.

As we start to consider connectivity as an essential service with many positive externalities we should reduce the cost of adoption as much as possible for individuals, families and businesses.

By all means tax discretionary services that run on the pipes like voice minutes, cable packages or e–commerce, but tax–exempt the pipe itself. Zero–rate ISP fees, zero–rate data packages for mobile devices.

In the digital economy basic connectivity is no longer a luxury item essential service. We don't tax bread, milk and vegetables, we don't tax basic financial services, we should not tax broadband.

Lost tax revenue from GST would substitute for the revenue earned from spectrum auctions. Furthermore, by acting as a stimulus to the aggregate demand for broadband, such a tax rebate would help to drive capital investment and increase the rates of utilization of available digital infrastructure.

Recommendation: Encourage free/open access — Establish policies that encourage, fund or help to enable free–of–charge open networks in public spaces. Similarly, releasing greater portions of unlicensed spectrum will enable future wireless technologies to provide greater access for both private and public networks.

Recommendation: New metrics for adoption — Already, broadband and mobile penetrations is edging closer to 100% in Canada. Getting to 100% would be a great achievement. But what that also means is that we need to focus on new metrics. Canada should establish metrics the quality of services (download speed, upload speed, latency, caps, costs) as well as usage rates of that connectivity. Establishing effective metrics may require mandating Canadian carriers and ISPs publish more data than they do currently.

As we are setting goals for Canada's digital strategy, these goals should be fluid. If Canada is to be a leader in the digital economy we need to benchmark ourselves against the thresholds of what could be possible not just what our international peers may have already accomplished. From an infrastructure perspective, we want to see capacity and pricing not being static but constantly progressing. What we want to see is speed of available networks doubling and/or the cost per delivered bit declining on a long term trend roughly on par with Moore's law.

About us: WirelessNorth.ca is an online community primarily covering the Canadian mobile industry. Our editorial policy is cover any issue where we can deliver insight, truth and moderate entertainment. If we have bias, it's a bias towards competition, access to connectivity and encouraging Canada towards awesomeness in wireless/mobile related innovation. And we'll wear that bias on our sleeve. WirelessNorth.ca and our sister community StartupNorth.ca are nonprofit ventures.

URL: WirelessNorth.ca Digital Economy Page