Canadians love the powerful little computers we somewhat misleadingly call smartphones. They’ve changed our lives and could do so much more for us in the future, but only if we get wireless policy right. We live in an era of immense opportunity for digital communications, but the Canadian government has trouble thinking outside the phone booth. It is data, not voice, that is driving wireless growth, but this is not reflected in current Canadian policy.
Industry Minister James Moore was quick to declare victory when he released results of the lucrative 700 MHz spectrum auction in early 2014. Along with revenues of $5.2 billion, Moore announced that the government’s approach had achieved the goal of ensuring four wireless carriers (cell-phone companies) in all regions of Canada. Any and all critics were preemptively declared “silenced.”
But Canadians want accessible, affordable and reliable mobile communications. To deliver that, Canadian policy must explore avenues beyond the quixotic quest for a fourth cellular carrier.
Newer, larger smartphones closely resemble tablet computers, and the appeal of increased screen size is clearly not for transmission of voice. The Canadian Radio-television and Telecommunications Commission observes that between 2009 and 2013 the compound annual growth rate in revenue for basic voice services in the wireless sector fell by about 4 percent, while revenues generated from data services in the same period grew by 26 percent. Voice services remain profitable (contributing 44 percent of wireless telecom revenues in 2013, compared with about 37 percent for data services). However, a voice-centric mentality no longer serves our long-term needs, as Canadians are increasingly embracing data-centric communications services.
Although Canadians adopted cellphones rather slowly, smartphones have proven extremely popular. Wireless providers have launched fast LTE networks in many areas of Canada. This deployment of faster, more reliable networks, coupled with widespread adoption of smartphones and tablets, has increased the demand for data-intensive video streaming on mobile devices.
Older cellular networks use dedicated connections for voice calls, making them in essence modernized switchboards. However, with voice over LTE, or VoLTE, the voice function becomes just another stream of data — like Skype. The OECD noted in its 2013 Communications Outlook, “Telephony has become increasingly just another application over networks using the Internet Protocol.” As older networks are shut down in the coming years, a voice plan, currently the most profitable part of cellular packages, will increasingly be a false construct.
More data access offers a wide array of communications options that do not require a phone plan with a mobile carrier. Voice over Internet Protocol (VoIP) services (FaceTime, Skype, Google Hangouts) transmit calls via Internet data packets instead of the traditional telecom network. More and more Canadians are making phone calls on their mobile devices using data, rather than voice minutes. Some are choosing to bypass mobile carriers completely with data-only devices that allow VoIP calling and over-the-top (OTT) texting through services like WhatsApp, rather than traditional SMS texting sold by carriers as part of monthly phone plans.
The Canadian government should step back from the telecom battles and instead take action to enable improved access to mobile data services.
When the policy perspective changes from increasing competition among cellphone companies to improving mobile connectivity, there is an opportunity for governments to get more creative. Despite repeated industry concerns about a spectrum shortage, prime spectrum that is suitable for mobile data sits idle across much of Canada.
Our newsletter about the public service.
Nominated for a Digital Publishing Award.
White space is the unused frequencies in the valuable spectrum range allocated for over-the-air (OTA) television. Since many areas of Canada have little or no OTA television coverage, much of that spectrum is underdeveloped. There has been white space broadband deployment in the United States since 2011, and in the United Kingdom it is currently being tested to provide wireless access in central London as well as remote areas of Scotland. This is not about phone service but about wireless connectivity. Industry Canada opened the door to further white space development in January 2015, but we are late to this game and there are currently no deployments.
In 2006, Industry Canada began exploring some of this unused public resource under Remote Rural Broadband Systems (RRBS): a licensed approach to utilizing vacant television spectrum. This is a welcome initiative, and 83 licensed providers now offer rural broadband via unused TV frequencies. In December 2014, Industry Canada placed a moratorium on new RRBS as it examines the future of the 600 MHz spectrum band in which these systems operate. White space and RRBS offer real alternatives to simply expanding the established system.
Other countries are being far more proactive in their search for alternative methods to provide mobile data services. In 2012, the President’s Council of Advisors on Science and Technology released a report calling on the White House to move away from exclusive licences and promote new shared-spectrum technology by setting aside 1,000 MHz of spectrum for shared access. According to the authors of the report, “The norm for spectrum use should be sharing, not exclusivity.” In the UK, Ofcom’s Spectrum Management Strategy, released in April 2014, foresees an increase in shared spectrum access over the next 10 years. In Canada, the government’s 2014 Digital Canada 150 plan makes no mention of shared spectrum.
The advent of WiFi was enabled by a leap of faith by the US Federal Communications Commission (FCC) in the 1980s to encourage use of then-unknown new wireless technologies that did not require exclusive licences. WiFi use exploded and it has now become a ubiquitous household technology based upon shared spectrum principles. WiFi use continues to grow exponentially, and in March 2014 the FCC allocated another 100 MHz of spectrum for it.
Across the US, traditional cable providers Comcast and Cablevision, Cox Communications, Bright House Networks and Time Warner Cable have entered into an agreement, the CableWiFi initiative, allowing their customers to roam on each other’s WiFi data networks. Cablevision has already taken advantage of the growing number of WiFi hotspots by launching a WiFi-only mobile phone service in February 2015. In western Canada, Shaw is developing a commercial WiFi network for its traditional wired Internet customers. None of these initiatives requires an exclusive licence.
The future model for mobile communications is clearly one of spectrum sharing, not private ownership of the airwaves. Yet Canada, where much spectrum sits idle, remains largely mired in an approach — spectrum auctions — that prioritizes restricted access.
There are many avenues at its disposal but thus far the government’s only strategy is to encourage a new national wireless telecom provider — which may very well quickly merge with or cause a merger between the limited players in this sector, leaving Canada with an enduring legacy of telecom concentration. A comprehensive digital strategy (supplementing Digital Canada 150) would have noted that the future is in data, not the telephone. The government should step back from the telecom battles and instead take action to enable improved access to mobile data services, allowing Canadians to experience and shape a more accessible and dynamic communications sector.