Faith-Based Competition: the end of a false doctrine?

With the publication yesterday of the revised terms of the government’s direction to the CRTC, the Internet Society and Canadians have gained a significant victory. Or so we hope.

Telecommunications policy is a theatre largely devoid of ideas, and the ones that have dominated it are generally bad. By bad I mean they have fostered a false picture of reality. Telecom policy discussion has managed to treat the Internet as if it were of no real significance for how networks should be conceived. That is the measure of how resistant to thought the area has been. I have in times past been reproached by Hudson Janisch, a dean of telecom lawyers and professor at the University of Toronto Law School, for proposing that how the Internet is constructed ought to have some influence on how telecom law should be implemented. I guess the idea that law ought to take into consideration how something is engineered struck at the legal profession’s amour propre. And Janisch would not be alone in this view. 

Whatever the cause, one of the large stupid ideas has been facilities-based competition, which fetishized a certain form of investment over others. In particular, it favoured those forms of investment that only people able to borrow billions could engage in. In the theory of “ladders of investment” – one of the Really Bad Ideas – smaller competitors should be nurtured by regulatory action to become bigger. Then, at some point when they have achieved sufficient size, we would have facilities-based competition.

It will be obvious in retrospect that the ladder of investment idea presupposed that competition should take a certain form: that real competition – the right kind of competition, not competition dependent upon government action, but real hairy-chested manly competition of the kind that Terence Corcoran likes – would turn out to be another kind of telephone or cable company. Real stuff in the ground, not this panty-waisted software-dependent pussy footing services-based competition. You get the picture. It was twaddle, and I have heard it spouted  for decades. As Paul Andersen pointed out, it was if competition involved three or four natural gas or water pipes into your house. Infrastructure! That’s the answer! In the end we have called it Faith-Based Competition, because that is what it is, a doctrine, not a reality.

Thus we in Canada went through three or four phases of setting aside spectrum for new entrants and then watched them fail or be bought out by the incumbents. There was enough time between each iteration of this policy that the officials in the appropriate ministry would have moved on and each time spectrum set-asides would be discovered as if new. Tories and Grits alike abided by this loser idea. The setting of prices of rights to roam, and to interconnect, were detached from the agency that had the most direct power over the matter, which was the CRTC. Thus the two policy arms of government never coordinated to bring effective competition to the wireless incumbents.

It will take an active regulator to set prices for access to networks. Given the appalling example of rate-setting in relation to Bell’s optical fiber capacity, it is quite likely that inertia by regulators, added to bad faith and obstruction by the carriers, may negate the effect of this direction. There’s many a slip twixt cup and lip. 

For these and other reasons, in January of 2019 the Internet Society, Canada Chapter, called for a break-up of the CRTC to separate telecoms from broadcasting, and to place spectrum policy in the CRTC. This was in our submission to the Broadcasting Telecom Legislative review, and you should read it.

My studies of foreign countries have persuaded me that Canada has been particularly slow to amend its regulatory and policy-making apparatus, compared to the UK, Australia, France, the EU, Japan and Korea. Just because we may be doing better than the United States – as we think- is no reason to be satisfied. From what we hear of how the BTLR is proceeding, we see  no sign of policy innovation so far. 

Another fetish that could use some questioning is the extent to which the CRTC is considered and considered itself to be quasi-judicial. The Commission is an instrument to make, recommend, impose and to convey policy. While I do not allow sufficient justice to its quasi-judicial status in these remarks, it must never be forgotten that the CRTC is intended to achieve results, not to ponder its judicial independence in isolation on the Quebec side of the Ottawa River. A little finding out of facts outside paper transactions would be in order.

I regret if I am being unfair. But it has taken a policy direction from the Minister to dynamite the Faith-Based Competition idea, and it may take more. 

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