Smartphones, CRTC and Foreign Ownership

This weekend there was an interesting article in the Globe and Mail about smartphones driving Canadian wireless data usage. The article then dove into the black hole of spectrum auctions in 2012.

The article was speculative, but laid out various tidbits related to the 700 Mhz auction planned in the coming months to increase wireless data capabilitities. 

As innocuous as the article was, there were two pages of comments from the great unwashed masses complaining about the Canadian wireless industry and urging the government action a handfull of idiotic activities to *support the Canadian public*. It never ceases to amaze me how uninformed and short sighted the general public is. (I can’t even read comments on the CBC site any more)

Foreign Ownership: Yes, a little foreign ownership is good, and the CRTC has made some innovative recommendations regarding the opening up of ownership regulations. The expectation is that if a Canadian company has less than 10% marketshare, they may be capable of obtaining foreign ownership greater than 50% . This would apply to all the new wireless startups, Allstream, (mostly) regionalized players like Cogeco, Distributel, Primus Canada, and Xplorenet to name a few….

Foreign ownership of the Big 3 is a BAD thing. I’ve said it before and I’ll say it again. The Canadian Telecom industry now employs over half a million Canadians. 

Canada’s telecommunications industry makes up 3.3 per cent of the country’s gross domestic product, generating $40-billion of revenue annually.

It doesn’t take a rocket scientist to realize all that great Canadian goodness will disappear in a heartbeat if the Canadian government opens the flood gates for foreign ownership, with no terms and conditions. 

People want unlimited voice and data plans for less than $40/month. My question to that: is it worth that much to you, that the end result is 2-3 friends and family members being laid off because their job is now redundant to someone working for (insert US/Global Carrier Name here) in a call centre around the world? 

Of the two pages of commentary, there were 2 intelligent posts: 

• Discussion of reasonable and worthwhile changes to the current offers (per second billing is a smart suggestion)
• The idea of a nationalized network backbone is creative (but I don’t know if Canada is smart enough to organize an initiative of that magnitude, we can’t even really figure out how to reasonably use the Deferral Account)

The rest of the garbage made my head hurt thinking that these people somehow survived their adolescence and are now pro-creating.

I’m looking forward to the next few years and the evolution of the Canadian Wireless/Communications Industry:

• deeper national penetration of services and providers
• new handsets that allow for more ubiquitous applications
• Canadian innovations

What do you want for the future of Canadian telecommunications?

Will Google Kill Telecom?

Thanks Mashable!

This is Part 1 of a two part series on Google Voice in Canada. Part 2 will theorize on what the impacts will be on Canadian Telecom when Google offers Canadian phone numbers.

This week’s announcement of Google Voice integration with Gmail, with free calling and free long distance is perhaps one of the most controversial moves yet by an Internet company to change the telecom industry. Free computer to computer calling (a la Skype) isn’t problematic, it’s when free extends to long distance and calls to to the PSTN (public switched telephone network) that the Google service gets spooky.

Telecommunications companies around the world continue to invest billions of dollars into *the last mile*, that’s the distance from your house back to their closest switching office. Folks with a regular telephone (as opposed to a VoIP phone) rely on that last mile to make and receive telephone calls. Despite pushes to move everything to the Internet, that last mile is going to be important for a long time to come. 

If Google is offering free calls to the last mile (this is called call termination), you know they aren’t paying [hardly] anything to the carrier who is actually providing that last mile call termination. They’ve managed to strong arm someone into offering it at no charge, perhaps in exchange for some other service.  Where it gets very spooky is with Long Distance Termination. Again - free over Google, but there is a real and true cost to terminate a call to a standard telephone in Canada and the United States.  If no one is paying for that call, then the local carrier is losing money, and has less revenue to be able to maintain their local telephone network.

:-(

Let’s look at an example:  I called my PRIMUS phone from Gmail. The call routed from Google, through Verizon, up to Allstream, and then down to Primus. All for free to me. Perhaps Google did indeed pay Verizon something, who had to then pay Allstream, and lastly Primus. And this is the call flow for a VoIP call, where most of the routing bypasses the local mile of infrastructure, since my Primus phone is layered on top of my Rogers Broadband connection. Confused yet?

If I call my Bell phone line from Gmail [yup, 2 carriers in this house - diversity and redundancy is important with 2 teleworkers under the same roof], the call still starts in the US, at Google’s data centre, heads off to Verizon, up to Bell Canada, and then down my little copper wires from the Richmond Hill Bell wire centre. If there’s no costs to the user [me], then there are no revenues flowing to Verizon to maintain their interconnection with Bell, and no revenues to make sure my little copper wires from the Bell wire centre stay nice and healthy, or get upgrades when needed. At some point, in the not-too-distant future, there won’t be any money left to manage, maintain and upgrade the public telephone network.  That’s all well and good if EVERYONE in the world has migrated to VoIP service over Broadband Internet, but not so good if you are a carrier who has to maintain 2 networks, one for VoIP and one for the public telephone network. It’s certainly bad news if you have to rely on the public telephone network for your phone services.

At some point, carriers will realize that getting into bed with Google is going to destroy the telecom industry. Everything will be free, for a while. Then everything will be bad, very bad.  Right now, Google can only offer outbound free dialling from Gmail. Just wait until Google gets its hands on Canadian phone numbers. I can only hope that it won’t be a free service too.