1.     Canada's High ARPU Rates

My post began by arguing that Canada is the most carrier-friendly market in the world as the carriers extract higher revenues from their users than any other country as measured by ARPU, average revenue per user (Peter Nowak extended that analysis in his post). McTaggart says this is simply a function of Canadians using their wireless services more than other countries and therefore generating higher revenues. Yet the best evidence he can muster for that claim is a Comscore report that talks about Internet video (but not wireless access), data from 2005 on Canadian voice usage of wireless, and a Cisco report that lumps North America together.

The reality is that the Bank of America Merrill Lynch Global Wireless Matrix indicates that Canadian smartphone penetration is below the developed world average as measured by smartphones per capita. There is little to suggest that Canadians are the biggest users of wireless data. In fact, OFCOM, the British regulator, reported in December 2012 that the UK was the leading country in mobile traffic volume per connection and that France and China are the fastest growing countries (Figure 6.3).  Despite the UK's leadership in mobile use, its ARPU is $29.11, less than half of Canada's world leading $60.79. 

Moreover, McTaggart's effort to minimize the importance of ARPU runs contrary to each quarterly call from company executives. At the most recent Telus quarterly call in February, ARPU was referenced 22 times. That is typical for all the carriers, who are judged by business analysts based on their ability to maintain or grow revenue per user.  That creates a significant disincentive to reduce pricing and - as further discussed below - without sufficient competitive discipline to reduce pricing, leads to world leading ARPU.

2.     Canada's High Wireless Prices

My post cited data from the CRTC and FCC to support the claim that Canadians face higher wireless prices than those found in peer countries.  McTaggart doesn't dispute the figures, but argues that Canadian carrier costs are higher given our geography and so therefore higher costs should be expected. Yet it is not clear that Canadian costs are higher. McTaggart provides a chart on wireless revenue per km, in which Israel is the global leader and Canada ranks among the lowest revenue earners. However, the Bank of America Merrill Lynch Global Wireless Matrix indicates that Israeli wireless companies have far higher capital expenditures on a per capita basis than the Canadian carriers, despite the much smaller geographic footprint. In 2011 (the latest year of actual data), the three Canadian incumbents capex was 2.3 billion or about $66 per person. By comparison, the three Israeli carriers spent 1.05 billion or about $141 per person.

In fact, both Telus and Bell regularly tout how low their costs are given the shared network the two companies built. In 2011, their combined capital expenditure was less than Rogers, showing the value of splitting the costs. But their customers don't seem to benefit from those greatly reduced expenditures. In February, Telus CEO Darren Entwistle told business analysts:

To have a network sharing partnership that allows us to invest very effectively in coverage, reliability, cell densification, deployment of new technologies to address the data and consumption appetites of our clients - that's a big differentiating factor for us to make sure that we stay ahead of the curve on technology but we do it on a very client-friendly and very cost-efficient fashion.

That's a big benefit for the company, but there is not the price differentiation one might otherwise expect from a market where two competitors have sharply lower network costs. Indeed, in February Bell executive Wade Oosterman told analysts that not only does Bell have "a fairly significant cost advantage due to our network sharing agreement" but that he sees the prospect of increasing wireless data prices as "there should be some pricing power there to come." Later in the same call,  Oosterman notes that the move to LTE provides another cost advantage stating that "LTE is a lower cost infrastructure, lower cost to operate and carry traffic than alternatives." Despite the cost advantages, Oosterman boasts that the company does not need to reduce prices.

In recent months, all three incumbent carriers have focused on the shift to smartphones and prospect of 100% smartphone usage in the years ahead.  The message is clear: we can grow revenues from within as our customer base shifts to more expensive data plans. That is good for shareholders, but reduces the need to entice consumers away from other providers, which ultimately results in a market that looks uncompetitive to Canadians seeking better pricing.

3.    911 Carrier Fees

My post noted that carriers charge 75 cents per month for E-911 service that carries a tariff of ten cents. That is true for both Rogers and Bell, but I mistakenly included Telus in that group. McTaggart is right. 17 million Canadian subscribers pay an additional 75 cents per month for E-911, not 24 million.

4.    High Roaming Fees

My post cited the 2011 OECD study that found that Canadian roaming fees are among the highest in the world. McTaggart says the report is no longer accurate with respect to Telus, since it has since reduced its roaming fees. In fact, McTaggart says Telus seeks the lowest rates it can get and passes the saving on to its customers. But that isn't exactly what Telus executives tell analysts during the quarterly earnings calls. Over the past few calls, higher data roaming revenues have been consistently referenced by executives as one of the reasons for increased wireless earnings (this includes both customers roaming outside the country and non-Canadians roaming in Canada). For example, in the Q1 call held on May 9, 2012, analysts specifically asked about increased roaming revenue. Robert McFarlane, Telus' EVP and CFO responded:

What is changing, as you know, is the international roaming revenues for us as a result of the HSPA network build. And sometimes we kind of -- oh, yes, we built that a few years ago, so that's in the past. What we have to remember is that it enabled us for the first time to enjoy participation in non-US international roaming in a meaningful way. It wasn't instantaneous with respect to whole market, because it was with respect to people had HSPA handsets as opposed to GSM, and GSM was the dominant side of the base. So as time has marched on, more and more of the traveling base has HSPA phones, whether they're our clients going overseas, or whether they are oversea clients coming here. So there is a built-in inflator in volume, if you will, that is a multi-year dynamic that we are really only in year two of, so to speak. So I think that's a positive contributor -- it is a positive contributor to our ARPU growth year-over-year, and it would expected to be so on a go-forward basis.

Roaming revenues have continued to grow, with Telus citing it again during its most recent  quarterly report in February.

5.    System Access/Government Regulatory Fees

McTaggart doesn't claim error here - there is no disputing that Rogers charges a government regulatory recovery fee - only that Telus does not.  As I argued in my post, these costs would be a cost of doing business in just about any other sector, but for Rogers it is a chance to charge for spectrum licensing, CRTC contributions, and local number portability.  Other carriers (including Telus) have dropped the system access fee, but maintain an assortment of other fees for device setup, unlocking, and rate plan changes. 

6.    Smartphone Adoption

I raised the smartphone adoption issue in response to the unfounded Scotia Capital claim that three-year contracts may be responsible for high smartphone penetration. I noted that other countries are ahead of Canada in smartphone adoption and have banned three year contracts.  McTaggart says he will let Scotia Capital defend its claim.

7.    Unlocking Phones

McTaggart distances himself from Bell's claim that companies such as Apple might not sell immediately into the Canadian market if there was a mandatory unlocking requirement, though he argues that Canadian carriers have relatively weak bargaining power in negotiations with device manufacturers. He does note that Telus' fee is $35 rather than the $75 charged by Bell. That's obviously a better price, though it is worth asking why a consumer should be forced to pay anything to remove a lock they didn't want in the first place, particularly once their phone is not subsidized.

8.    Wireless Speeds

My post noted that recent data from Akamai still indicates that Canadian mobile data speeds are far slower than many peer countries. McTaggart trashes the Akamai data, calling it wrong, meaningless, and suggesting that even the company distanced itself from the Canadian numbers. But if you read the full quote from Akamai, you find that they stood by the report:

I believe that the listed mobile carrier would be considered one of the incumbents, and it appears that they do offer LTE service as well...Having said that, the observed speeds do look surprisingly low, especially compared to the US carriers (But they are relatively in line with the speeds we've seen for that provider in the other 2013 reports).

It is a surprise to see Canada ranked that poorly, but that doesn't mean that data is meaningless, particularly since many users are not on the faster LTE networks. In fact, the 2012 OFCOM study shows LTE revenues (as of the end 2011) with Canadian revenues and subscribers little more than a rounding error.  That may pick up over time, but pointing to LTE speeds today means little when most Canadians face slower speeds.

9.    Canada's Lower Wireless Penetration Rates

My post notes that Canadians may love their cellphones, but there are far fewer subscribers in Canada on per capita basis than in other countries.  McTaggart dismisses this criticism, pointing to differences in the European market and arguing that the difference with the U.S. can be attributed to wireline penetration and a six year delay in launching wireless services. Yet the Bank of America Merrill Lynch Wireless Matrix says that South Korea has the same wireline penetration, but wireless penetration of 106.7% compared to Canada's 78.2% (and South Korea started wireless services at the same time as Canada).

Moreover, the U.S. comparison is still relevant, with 107.6% wireless penetration in a market that shares many of the same characteristics as Canada (and claims that the wireless industry, now in Canada for nearly 20 years, is still behind due to a late entry seems fanciful). McTaggart maintains that smartphone penetration is the more telling figure, but given that Canadian wireless penetration ranks below every country in the Wireless Matrix with the exception of India, Pakistan, and Bangladesh, it is hard to see why (as noted above, the Wireless Matrix also reports that Canada is below the developed world average in smartphone adoption).

10.    Spectrum Inefficiency

McTaggart response does not dispute the issue of Canadian spectrum inefficiency, only that Telus should not be included in the list of the inefficient. He notes that Telus has less spectrum than Bell or Rogers, implying that the hoarding problem may be real issue with their competitors.

The Committee recommends that the Government of Canada (in order to support Canadian businesses on the global stage and ensure the administration of Canada’s IP regime is internationally compatible and streamlined) ratify the following key international agreements: the Patent Law Treaty, the Madrid Protocol and Singapore Treaty for trade- marks, and the Hague Agreement for Industrial Designs.

But as the NDP minority report notes:

As the Committee heard no testimony on the Patent Law Treaty, the Madrid Protocol and Singapore Treaty for trade-marks, and Hague Agreement for Industrial Designs, New Democrat committee members are surprised by the inclusion of a recommendation regarding these treaties in the majority report. The Committee should seek more information before pronouncing on such treaties.

So why does the report include recommendations to ratify several international treaties that were not discussed by the dozens of witnesses who appeared before committee (with the exception of a brief reference to the existence of the Madrid Protocol)? The answer likely lies in the Canada - EU Trade Agreement and the Trans-Pacific Partnership. According to leaked documents, CETA includes provisions that require Canada to make all reasonable efforts to comply with the Singapore Treaty and the Patent Law Treaty as well as accede to the Madrid Protocol and the Hague Agreement. The leaked U.S. proposal for the TPP IP chapter contains similar requirements: ratify or accede to the Madrid Protocol and the Singapore Treaty as well as make reasonable efforts to ratify or accede to the Patent Law Treaty and the Hague Agreement.

The committee report represents a case of policy laundering with recommendations to ratify treaties that were not even discussed at committee. Yet should Canada reach agreement on CETA or the TPP, the committee report will presumably be used by the government to short-circuit further review on those treaties or to simply claim support for ratification on the basis on a committee recommendation that was secretly fabricated behind closed doors without any witness raising the issue during the public hearings.

Canadian officials indicate that progress is being made, but the outstanding issues have remained unchanged for years. Some commentators claim the agreement is being held up by "nickel and dime politics", but leaving aside the nearly $2 billion cost to health care from the patent reforms alone (which is a lot of nickels), the reality seems to be that the hold up involves more than just political posturing.  Given that everyone knew the key issues going in, Canada seems to have hoped that the negotiations would follow a conventional compromise script: the EU would compromise on some key concerns (agriculture, investment) in return for Canadian compromises on issues such as pharmaceutical patents and agriculture.

But with the EU the stronger of the two parties, it doesn't see any urgency to compromise. In fact, with a growing number of EU negotiations (including talks with the U.S.), compromise with Canada may undermine its position in more economically important deals.  If CETA were the only deal on the table, it might be willing to find middle ground, but given the effect on talks with the U.S., Japan, India, and Vietnam, the Canadian deal just isn't important enough to harm its position elsewhere. That suggests the EU is presenting a take-or-it-leave-it deal to Canada - it wants to win on all its issues in order to make the agreement worthwhile.

If that is the case, that leaves three possibilities. The first is that Canada continues to hold out hope of a compromise. That approach has failed for several years but hope springs eternal, particularly when this is the only option that allows the government to present CETA as a "win." The second is that Canada simply caves to the EU demands.  This gives the government its trade deal, but with an election in 2015, caving on everything from agriculture to investor protection to pharmaceutical patents, is a risky political strategy as a CETA deal won't win many votes but could prove costly among certain vocal constituencies.

The third possibility is that CETA is replaced by TAFTA, the Transatlantic Free Trade Area. At the moment, TAFTA involves only the U.S. and EU, but there have been reports that Mexico wants in and Canada might follow suit. The argument for TAFTA would be that Canada is consolidating its negotiations into major agreements covering the Pacific (TPP) and Atlantic (TAFTA) to ensure that it is part of two potential large trading blocks.  The danger with this approach is that Canada becomes a bit player in both negotiations with even less leverage to promote Canadian interests. But if CETA isn't going anywhere, the switch would buy time and the hope that a restart would lead to a better deal.

While officials are not intellectual property experts, the assessment includes consideration of whether any of the Copyright Act's exceptions may be applied. These determinations are complex - courts often struggle with the issue - yet the bill envisions granting these powers to customs officials with no review by a judge and no limits on the types of goods involved. Should a customs official determine that there is infringement and that no exception applies, the goods may be seized and prevented from entering the country.

In addition to the seizure provisions, the bill involves expansive information disclosures, with detailed information sharing on shipments as well as the ability for rights holders able to seek assistance from Vic Toews, the Minister of Public Safety (who will be delegated some responsibilities under the Copyright Act) to detain imports and exports. Moreover, penalties associated with copyright and trademark are on the rise, with tougher criminal provisions added to the law.

While most would agree that officials should have sufficient tools to protect public health and safety, the bill does not confine the broad new powers to those special cases. For example, the government could have limited seizures without court oversight to instances where officials reasonably believe there is a public safety risk, but the bill treats everything from counterfeit pharmaceuticals to a suspect painting in the same manner.

The substance of the bill is cause for concern, yet what has many up in arms is that the bill signals Canada intention to implement ACTA. Public protests against ACTA were staged throughout Europe last year, leading to a European Parliament rejection of the treaty. Similar opposition has arisen in ACTA participating countries such as Switzerland (which has not signed the treaty), Australia (where a Parliamentary Committee recommended against ratification), and Mexico (where a Senate motion rejected it).

ACTA is badly damaged and will seemingly never achieve the goals of its supporters to emerge as a new global standard for intellectual property enforcement.  But for the U.S., which spent years pressuring ACTA participants to strike a deal, it still hopes to revive the agreement by at least garnering the necessary six ratifications for it to take effect.

With Europe and Switzerland both out of the agreement, there are only nine countries left. The U.S. apparently sees Canada as an easy target for support, leading to mounting pressure to implement the bill. That leaves Canadians with Bill C-56, which may be characterized as a counterfeiting bill, but whose primary objective appears to be to satisfy U.S. pressure to implement an agreement that the majority of our major trading partners have either never signed or flatly rejected.

CIPPIC's December letter to the court raised this possibility, arguing that "such a purpose is improper and bars the applicant from establishing a bona fide claim." CIPPIC followed up with an affidavit that identified 22 file sharing cases involving Voltage in the United States. Distributel raised similar arguments in its challenge against NGN Prima Productions, which also involves Canipre. Distributel argued:

The Moving Parties appear to be engaged in a practice to profit by engaging in zealous copyright enforcement, a practice referred to as "copyright trolling". It involves sending letters to customers demanding significant financial compensation for the alleged copyright infringement. The amount of money demanded far exceeds any potential damages to the Plaintiff arising from the alleged breach. The customers are threatened with legal action if they do not comply. Following the November Motion, at least one Distributel customer received such a letter.

The speculative invoicing practice has faced serious criticism from courts in other countries. In the UK, the practice has led to findings of professional misconduct for several lawyers and adverse court rulings. For example, in the ACS case the court considered the possibility of banning the practice, with the lawyer ultimately suspended from practice for two years. In the Golden Eye case, the UK court ruled against sending thousands of letters with set payment demands and sought to discourage speculative invoicing schemes, stating:

I do not consider that the Claimants are justified in sending letters of claim to every Intended Defendant demanding the payment of £700. What the Claimants ought to do is to proceed in the conventional manner, that is to say, to require the Intended Defendants who do not dispute liability to disclose such information as they are able to provide as to the extent to which they have engaged in P2P filesharing of the relevant Claimants' copyright works. In my view it would be acceptable for the Claimants to indicate that they are prepared to accept a lump sum in settlement of their claims, including the request for disclosure, but not to specify a figure in the initial letter. The settlement sum should be individually negotiated with each Intended Defendant.

U.S. courts have also raised questions about copyright trolling practices, with concerns that the lawsuits constitute a "fraud on the courts" and some courts rejecting demands for subscriber disclosures. In fact, just yesterday a U.S. court ordered copyright trolls to appear in court to face allegations of misconduct.

Canipre's admission could have a major impact on the TekSavvy and Distributel cases as it removes any lingering doubt that these lawsuits involve copyright trolling that are unlikely to proceed to trial. Alongside copyright reforms that cap statutory damages in Canada for non-commercial infringement, the Federal Court may think twice before ordering the disclosure of personal information of thousands of subscribers in support of what is now acknowledged to be a speculative invoicing scheme.

1.    Canadian Carriers Enjoy the Highest ARPU in the World

While there many ways to calculate the competitiveness of a wireless market, the one that matters most to the carriers and business analysts is ARPU, the average revenue per user.  By that standard, Canada is the most carrier-friendly market in the world as the carriers extract higher revenues from their users than any other country. The Scotia Capital report points to declining voice ARPU in Canada, claiming "this was largely due to competition and data/text substitution." The reality is that competition has little to do with declining voice ARPU as it is dropping around the world (Europe, U.S.) with changing usage patterns. 

Moreover, it is total ARPU that matters, not voice ARPU. On that front, Scotia Capital notes that ARPU for Bell, Rogers, and Telus has been largely unchanged since the entry of the new wireless competitors (Bell is up slightly, Rogers and Telus down slightly). When compared to other countries, Canadian ARPU stacks up as the highest in the world. The CRTC's Communications Monitoring Report 2012 shows Canadian ARPU as tied with Japan as the highest among eight leading economies (Canada, US, UK, France, Germany, Italy, Japan, and Australia) (Figure 6.1.9). In other words, despite new entrants designed to spur greater competition, the incumbent providers are still enjoying world-leading ARPU, which is indicative of a market sorely lacking in strong competition.


2.    Higher Consumer Prices than Peer Countries

Scotia Capital trumpets Canadian pricing, noting that a comparison of plans reveals that they are cheaper than those found in the U.S. Yet the comparison with the U.S. ignores the many other peer countries where Canadian consumer prices remain higher. In fact, the U.S. comparison is convenient since it stands as one of the only countries where Canadian prices compare favourably in some studies. The CRTC's Communications Monitoring Report 2012 provides data comparing wireless service pricing across three levels - basic users, average users, and premium users - in Canada, the U.S., UK, France, Australia, and Japan (Table 6.1.1).



The CRTC report finds that Canadian prices are on the higher end across each category. For basic users, Canada ties with the U.S. as the most expensive country (double the price of the UK). For average and premium users, Canadian prices were the third most expensive among the surveyed countries. While the U.S. was more expensive in both of those categories, Canada was far more expensive than the UK and Australia in every category and more expensive than France and Japan in two out of three categories. 

Moreover, last August the U.S. Federal Communications Commission released its third annual International Broadband Data Report, which compares broadband services as required by a U.S. law. Canada ranked 26th out of 37 countries for the cost of smartphone data based on plans with usage limits. Canada did not even rank in a comparison of countries with no usage limits since no such plans could be found. In other words, concerns that Canadian prices are high is no myth.



3.    Still Gouging, Part One: Enhanced 9-1-1 Costs

A clear indication of an uncompetitive market are fees to consumers that are relatively uniform across the major carriers but that bear no relationship to actual costs (in a competitive market, carriers might be expected to reduce those fees to closer to actual costs in order to lower prices and attract more consumers). For example, the incumbents all charge their subscribers 75 cents per month for enhanced 9-1-1 services.

But as WindMobile told to the CRTC during the consumer wireless hearings (para 10084), the actual cost for E-911 service is closer to ten cents. WindMobile does not include a separate fee for E-911 on its service, choosing instead to bear the cost. However, it pays a monthly tariff rate for E-911, which it told the CRTC was "around seven to 11 cents." Assuming the tariff rate more closely reflects actual cost, the 75 cent charge to consumer represents an enormous markup. Consider the costs to Canadian consumers: assuming an actual cost of 10 cents per month, the carriers generate 65 cents profit per subscriber per month. With roughly 25 million subscribers with the incumbent carriers, that is an extra $180 million in annual revenue after costs are covered.

4.    Still Gouging, Part Two: High Roaming Costs

A 2011 OECD study captured national headlines after it found that Canadian carriers had the most expensive data roaming charges in the world. The study looked at the cost of using 1 MB in a single session for a traveler assuming they travel to all OECD countries. The result left Canadians paying the most at an average of $24.61. By comparison, Greek consumers paid $4.17 and Iceland customers paid $4.42. The OECD average was $9.48. The report included several other baskets of roaming data with Canada typically ranking among the most expensive (with the exception of 20 MB packages).

In the two years since that study, Canadian carriers have introduced various measures to address roaming costs, but the persistent stories of roaming sticker shock remain. For example, last week the CBC reported on a B.C. family that ran up $22,000 in charges for 12 hours of YouTube streaming while in Mexico. While critics of the story argued that Rogers never actually billed the full amount and noted that cheaper roaming packages were available, left unsaid was any explanation for how charging $30 for one MB as a pay-per-use charge is anything other than gouging. Indeed, other countries have taken action against high roaming fees with the European Union placing price caps on data roaming and opening the door to greater competition on roaming rates next year by separating domestic service from roaming service. The OECD has also recommended that countries take action, including the possibility of wholesale or retail price regulation.

5.    Still Gouging, Part Three: Regulatory Recovery Fees

A long-time staple of the Canadian wireless market was the system access fee, which misleadingly suggested a fee for accessing the network that was mandated by the government or the CRTC. In fact, the fee was not a regulatory requirement, but rather an effort by the carriers to disguise the actual costs of their plans as it shifted nearly six dollars each month to a separate fee item. Some carriers dropped the system access fee in 2009, though a multi-billion dollar class action lawsuit continues to wind its way through the courts.

Rogers replaced the system access fee with a monthly government regulatory cost fee.  These costs would be a cost of doing business in just about any other sector, but for Rogers it is a chance to charge for spectrum licensing, CRTC contributions, and local number portability.  Other carriers have dropped the system access fee, but maintain an assortment of other fees for device setup, unlocking (see below for more), and rate plan changes. 

6.    Three Year Contracts Are Not Correlated to Smartphone Adoption

The Scotia Capital report touts the value of three-year contracts, arguing that "we think the three-year contract has actually led to low handset prices that helped smartphone penetration in Canada." Yet the evidence doesn't appear to support claims that there is a correlation between three year contracts and smartphone adoption. Comscore just released its 2013 Mobile Future in Focus report which indicates that Canada is ranked third for smartphone adoption, trailing Spain and the UK, but ahead of France, Italy, Germany, and Japan (no other countries are listed). 

If Scotia Capital were right, one would expect three year contracts in other countries with leading smartphone adoption such as Spain and the UK.  But Spanish incumbent carriers have actually reduced handset subsidies in recent months and new entrants have aggressively promoted two-year contracts with a better subsidy than that offered in Canada (the iPhone 5 is available for free from Yoigo, a new entrant, with only a €25 per month cost). Meanwhile, the UK banned three year contracts in 2011, making a two-year contract the longest permitted and requiring all carriers to offer one-year deals. With countries ahead of Canada in smartphone adoption rejecting the three-year contract, claims that it is needed to help smartphone adoption simply isn't supported by the experience elsewhere.

7.    Mandatory Unlocking of Phones Does Not Delay Market Entry of New Devices

During the recent CRTC hearing on a consumer wireless code, Bell claimed that a rule mandating unlocked phones would delay entry of new devices into the Canadian market. The company told the CRTC (para 8041):

I don't know because I'm not Apple but we were discussing, for example, would Apple have allowed -- if Canada had a rule that mandated unlocking, would we be one of the first countries to get the latest iPhone? I don't think so. I think they would want to launch it in other countries. I'm not saying that it wouldn't come to Canada. So I don't want to overexaggerate to say they wouldn't ever. What I'm saying is if we had a rule like that, I think it's going to put Canadians getting iPhones, the next generation iPhone later if it was a mandated requirement.

Yet there is no evidence to suggest that Apple would delay entry into the Canadian market due to an unlock requirement. JF Mezei of Vaxination Informatique notes in his final submission to the CRTC:

The incumbents argued that Apple's iPhone would not be available as quickly in Canada if a requirement it be sold unlocked were made. For the iPhone5 launch, Hong Kong (which requires unlocked handsets) was part of the original list of locations (including Canada and USA) which got the iPhone5 on launch day (Sept 21). Italy and Finland [which also require unlocked handsets] got the iPhone a week later on the same date (Sept 28th) as the other western European countries.

Not only are the claims of delayed market entry unsubstantiated fear mongering, but the exorbitant fees for unlocking should be factored into the analysis.  Bell charges $75 to unlock a device and admitted to the CRTC that "we absolutely could do it for less. We choose not." (para. 7916). That fee - effectively an additional $2 per month charge on a three year contract to unlock a phone - poses a significant additional cost for consumers and helps lock consumers into the high roaming fees discussed above.

8.    Actual Canadian Mobile Speeds Are Slower than Peer Countries

Canadian wireless providers have trumpeted their new LTE networks, yet recent data from Akamai still indicates that Canadian mobile data speeds are far slower than many peer countries. The most recent Akamai State of the Internet report (2012, Q3) includes data on carriers around the world. There is data on one Canadian carrier, which badly trails both average and peak speeds when compared to China, Hong Kong, Singapore, Austria, Belgium, Czech Republic, France, Germany, Greece, Hungary, Ireland, Israel, Italy, Lithuania, Netherlands, Russia, Spain, UK, Australia, and New Zealand.  The CRTC reported similar slow speeds (based on Akamai data) in its 2012 Communications Monitoring Report (figure 6.1.8), with Canadian mobile data speeds slower than all other countries in the comparison group.

9.    Fewer Subscribers Per Capita in Canada Than Peer Countries

Canadians may love their cellphones, but there are far fewer subscribers in Canada on per capita basis than in other countries. The CRTC's 2012 Communications Monitoring Report reported that Canada had the lowest mobile subscription penetration among Canada, the U.S., UK, France, Germany, Italy, Japan, and Australia (Figure 6.1.5). While higher penetration rates (well over 100 subscriptions per 100 inhabitants) may be expected from European countries where roaming between countries in close proximity is widespread, Japan and Australia are islands and the U.S. market is not driven by roaming outside the country. Yet the U.S. (106 per 100), Japan (101 per 100), and Australia (130 per 100), all rank well ahead of Canada's 78 per 100. With prices high and contracts long, Canadians are often locked into a single provider and less likely to subscribe with more than one device.



10.    Canadian Carriers are Inefficient Users of Spectrum

The incumbent carriers continue to claim that they need more spectrum, yet Canadian carriers have hoarded more spectrum than their counterparts in practically any other country. In 2011, the CTIA, the lead association for U.S. wireless companies, compared the amount of spectrum with the number of wireless subscribers to determine how many subscribers are served per MHz of spectrum allocated. In a comparison of ten leading countries, Canada ranked last in spectrum efficiency. While the U.S carriers used one MHz to nearly 740,000 subscribers, the Canadian rate was 90,992 subscribers per MHz. The Canadian market was the smallest of the 10 countries (which would reduce the number of subscribers per MHz), but the data suggests that Canadian carriers could do far more to maximize current spectrum holdings and reduce their costs in the process.

For example, in yesterday's Full Pundit, Selley quotes John Graham in the Globe on the death of Chavez:

“Illiteracy has all but disappeared. … Education and free health care are almost universally available. … Improving the quality of life for millions at the bottom levels of society is no small achievement. He also imparted to these millions a sense of dignity about themselves and pride in their leader’s often bombastic rhetoric.”

If you try to highlight the text to cut and paste it, you are presented with a pop-up request to purchase a licence if you plan to post the article to a website, intranet or a blog. The fee would be $150. In other words, the National Post is seeking payment for text in an article that was itself copied from the Globe. Of course, it is not just Selley's work as many articles quote from other articles or sources (for example, this Post article on Taylor Swift is primarily quotes from Vanity Fair.  If you highlight a chunk of text, the licence message pops up). If you click no to the pop-up, you cannot copy the text. If you click "quit asking me", the request stops.

None of this requires a licence or payment. In fact, the amount of copying is often so insubstantial that a fair dealing analysis is not even needed. Last year, the Federal Court of Canada ruled that several paragraphs from a National Post column by Jonathan Kay posted to an Internet chat site did not constitute copying a substantial part of the work. If there was a fair dealing analysis, there is no doubt that copying a hundred words out of an article would easily meet the fair dealing standard. In fact, the Supreme Court of Canada has indicated that copying full articles in some circumstances may be permitted.

The National Post is using iCopyright as its licensing service.  The company provides a fair use statement that simply does not reflect the law, suggesting that fair dealing may not apply to the use of work that may generate revenues, is not highly creative, was available under licence, is something more than a footnote, or is posted to the Web. None of these are conditions that exclude the application of fair dealing and the recent Supreme Court of Canada decisions make it clear that the required broad and liberal approach would cover the excerpt copying for which iCopyright seeks payment. All media organizations rely on fair dealing to support a free and robust press. Those same organizations should not be undermining those hard earned users' rights by raising unnecessary licensing demands.

Mr. Speaker, we are very happy to have introduced an anti-counterfeiting bill in the House. Counterfeiting is a growing problem in Canada. Counterfeiting deceives Canadians and is linked to security-related issues. So it was our duty to modernize the legislation to ensure that we can end counterfeiting, so that Canadians are not deceived, and to provide better security.

Borg tried again with a direct link between Bill C-56 and ACTA:

Mr. Speaker, a number of countries have rejected this unacceptable agreement. The anti-counterfeiting trade agreement - ACTA - was drafted behind closed doors and would incriminate the daily users of cultural content. This agreement will turn our border officers into instant copyright experts, without the adequate legal support. Canada must seriously study the problem of counterfeiting. However, the failure of Bill C-30 means that Canadians do not have faith in this Conservative government. Is Bill C-56 not simply a way to support ACTA through the back door?

Paradis ducks the question once again:

Mr. Speaker, let us be clear: Bill C-56 is a way to support and protect Canadian families.
Counterfeiting is a growing problem that must be stopped. Counterfeiting deceives Canadians and poses risks to the safety of Canadians. We must ensure that the legislation is updated and appropriate in order to equip the authorities with effective tools to fight counterfeiting, which is exactly what was introduced on Friday. If the NDP is responsible, I hope they will support us.

The 52 page bill requires careful scrutiny, but the NDP is right for drawing attention to the elephant in the room. ACTA has been rejected in Europe and stands as a discredited agreement. Despite that, Bill C-56 is fundamentally a bill designed to allow Canada to implement ACTA.

Kickstarter is the best-known crowdfunding site, having raised huge sums of money and seen the films funded by its community enjoy commercial and creative success.  By the end of this year, over 100 Kickstarter-funded films will have been released theatrically in North America. In 2012, three Kickstarter funded films ranked among the best reviewed films of the year with six films - two documentaries, a live action short, and three documentary shorts - garnering Oscar nominations.

The live action short nominee, Buzkashi Boys, was the work of Montreal-based filmmaker Ariel Nasr. Nasr turned to Kickstarter to help complete his film about Afghanistan and the community responded with over $27,000 in funding. After the film received its nomination, Kickstarter users provided another $10,000 to cover travel costs for the stars in the film to travel from Kabul to Hollywood.
 
While Kickstarter attracts the lion share of crowdfunding attention, Canadians may face some challenges in using the platform due to payment restrictions. A 2012 report commissioned by the Canada Media Fund points to many homegrown alternatives, yet few have gained much traction. A notable exception is DocIgnite, a site run by the Hot Docs festival in Toronto that identifies works-in-progress that would benefit from crowdfunding.

The barriers to Canadian crowdfunding extend beyond payment problems and sparsely populated websites. Legal uncertainty about venturing into crowdsourced investment has limited the ability of Canadian creators to tap into their home market.

Canadian sites are typically based on a donation model in which there is no expectation of financial return, though some creators offer incentives and gifts in return for support. The United States has opened the door to an investment model that would allow for crowdfunding investments that could result in revenue sharing or the issuance of stock in the project or company.

The Ontario Securities Commission just closed a consultation on the issue with many potential safeguards being considered. These include registration requirements, investment limits, disclosure obligations, and "cooling off" periods that would allow investors to back out of an investment.

The failure of Canadian crowdfunding sites to keep pace with sites such as Kickstarter unsurprisingly means that creators are forced to look south of the border for financial support. Given the many success stories, Canadian funding agencies may soon begin to factor crowdsourced support into their programs.

For example, agencies could shift some of their support toward a matching funds approach that encourages creators to look beyond the conventional funding mechanisms. By tapping into Kickstarter-style initiatives, creators could benefit from greater financial assistance just as the funding agencies use crowdfunding as an external review process, leveraging the public's willingness to back a project with their own support.