Wednesday, 12 February 2014

Telecom and the Federal Budget 2014

The Federal Budget released on 11 Feb 14 had a few sections affecting telecommunications. The full budget and related information can be found starting at the budget home page.  Information about telecommunications can be found in Chapter 3.4 pages 177 to 180.

In the cellular arena, the budget calls for amending the Telecommunications Act by introducing a cap on “wholesale domestic roaming rates to prevent wireless providers from charging other companies more than they charge their own customers for voice, data and text services.” This action is obviously being introduced to help the new entrants –, Mobilicity, Vidéotron and Wind – who rely on the incumbent carriers for network access (roaming) outside their home area.  There should be little direct impact on the average consumer unless they are a new entrant customer and the companies decide to pass the potential savings on to their customers. On the other hand, there is the chance the incumbents could adjust their rates to make-up for any loss income.

The budget implies that the cap will be temporary and may be adjusted as a result of the ongoing CRTC study of Canadian roaming rates

The Telecommunications Act will also be amended to give Industry Canada and the CRTC “the power to impose administrative monetary penalties on companies that violate established rules.” Some of the target infractions relate to the Wireless Code, spectrum deployment timelines, service to rural areas and tower sharing.

There are also a number of areas that the government feels need addressing including such as:
  1.       Enhanced information sharing amongst the CRTC, Industry Canada and the Competition Bureau; 
  1.      Clarify the elements of the spectrum auction rules; and 
  1.       Clarify the prohibition on jamming devices. 
There is an additional one that I do not quite understand so I will quote it in full:

“Provide the CRTC with the authority to impose conditions pertaining to social requirements on telecommunications service providers that are not carriers (i.e. “re-sellers” of services) to help ensure that all consumers can benefit, no matter which provider they choose.”

On the broadband (high speed) Internet side of the house, the budget identified the sum of $304 million over five years “to extend and enhance access” broadband access networks. The body of the document also mentions “enhancing and extending access.” This is a subtle change to previous funding programs which could not be used to enhance or improve existing services.

One has to question the targeted speed of 5 Mbps. While this may be considered barely adequate today, I suspect that by the time implementation actually takes place it will be borderline acceptable.

Also, the budget does not address the issue of the fiscal digital divide. The fact remains that many people cannot afford the hardware and recurring charges associated with getting Internet service in their homes.

The telecommunications section ends with a short discussion of the use of spectrum to deliver broadband in rural areas. It reinforces the previously espoused principle of “use it or lose it” where licensees are given a specific time period to implement the service roll-out or lose the license.  

It is a fact that while cellular broadband and data is the fastest growing segment of the market and in the rural areas the cheapest for the vendors to install, it is also the most expensive for the end user on a monthly billing basis unless a special tariff is created.

The section ends with this statement: “…an additional 280,000 Canadian households, which represents near universal access. The Government will announce further details about the new program in the coming months.”

One can only hope that they learned from their previous efforts and the new program shows a vast improvement. 

Stay tuned for additional news. 

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