Investing in wireless technology is the key to innovation in Canada

By Robert Ghiz

This article was originally published in The Hill Times on October 18, 2017.

Necessity is the mother of invention. Given Canada’s vast territory and large land mass, our need to find ways to stay in touch has been the driver of many a Canadian innovation, from the telephone to the first transatlantic wireless signal to mobile email.

Today, telecommunications is a vital thread of our social fabric, and an enabling technology. It also forms the backbone of other innovative sectors such as healthcare and automotive manufacturing, which are attracting the disruptors of tomorrow.

However, based on flawed and incomplete international studies, the federal government is contemplating action that could undermine investment in these critical Canadian services.

Every day, Canadian consumers and businesses benefit from innovative commercial and industrial uses of wireless services, from mobile payments to smart farming, that rely on the high speed and low latency of our networks. All these functions require world-class networks, and in Canada, the wireless industry has achieved its status as a global leader thanks to massive investments made by facilities-based carriers over the last three decades.

Canada’s mobile network operators have invested close to $45 billion in wireless infrastructure to provide Canadian consumers, businesses and governments with access to some of the most advanced and most reliable wireless networks and services in the world. In a report released by the OECD just last week, Canada ranked fourth overall and well above the OECD average for investment as part of revenue.

Canadian mobile network operators have also contributed to the public good by paying more than $3 billion in spectrum licence fees and more than $14 billion in spectrum auction fees since that first cell phone call on July 1, 1985, Art Eggleton and Jean Drapeau, the mayors of Toronto and Montréal at the time.

These important investments have borne fruit: wireless networks in Canada consistently outperform those of most other G7 countries, including the US, on metrics such as 4G download speeds, average mobile connection speeds, number of competitive 4G networks, and percentage of population with access to 4G networks.

And at a time when economies around the world are laying the foundations for 5G networks that will buttress economic and social development for decades to come, it is critical that Canada maintain policies that not only encourage investment but make it possible.

Continued investment in wireless networks is also critical for rural regions of Canada, where the economics of deploying infrastructure is already challenging due to smaller populations and Canada’s vast landscape. Investment in mobile wireless networks is essential to rural Canada’s ability to participate in the global digital economy, and policies should foster such development, not impede it.

However, the conversation about wireless in Canada too often disregards how innovation and investment go hand-in-hand. And by focussing on incomplete international pricing comparisons, the conversation fails to acknowledge Canada’s world-class networks, and how these are essential to Canada’s innovation agenda in all parts of the country.

Some international studies, including those conducted by the OECD, do not take into account technology, speed or quality of networks, population density, terrain, climate, socioeconomic factors, roaming and overage rates, and device subsidies, among other factors.

The comparisons made in these reports are not representative of the offers available to consumers on any given day by all providers in any given market. Instead, the reports focus on the prices of a few non-representative service plans offered by major national brands in six urban markets.

Concretely, this means that flanker brands and regional service providers (which together cover most of Canada) are typically disregarded in international comparisons. Measuring pricing without looking at discount brands or at the lower-priced service plans offered by regional service providers is an inherently flawed proposition.

Narrowly relying on incomplete international pricing comparisons to justify a policy reversal in favour of resale-based models could lead, counter-intuitively, to harming what Canada needs most to advance an innovation agenda: continued investment in facilities-based networks.

The Minister of Innovation, Science and Economic Development recently asked the CRTC to reconsider a decision related to mandated access to wireless infrastructure by mobile virtual network operators (MVNOs). The CRTC determined in 2015 and again in 2016 that mandating resale, even if only on national carriers’ networks, would discourage investment so dramatically that the benefits of any theoretical short-term pricing decreases could not offset the medium- and long-term impact on our world-leading networks. And yet this overall framework, which has proven to favour innovation, competition and investment, is now being re-examined.

I am hopeful once all the evidence has been considered, the CRTC will maintain its long-standing position on MVNO access. Not only is it in the public interest, but it is essential to advance Canada’s innovation agenda. As Minister Bains wrote in these pages recently, “Canada has a unique story to tell” when it comes to innovation. That script is only possible with vibrant facilities-based competition. Let’s not jeopardize that.

Robert Ghiz is President and CEO of the Canadian Wireless Telecommunications Association.