The COVID Crisis Highlights the Crucial role of Spectrum in Canada

The coronavirus pandemic has added enormously to the daily load on Canada's broadband networks. Fortunately, these networks are holding up well under this strain, a result of the carriers' aggressive investment in network infrastructure. This investment has been spurred by Canada's traditional policy of relying on facilities-based competition in the telecom sector. Facilities-based competition is –competition among carriers that invest in building out their own networks, rather than the artificial competition generated by forcing these carriers to let others, who do not invest in, or build infrastructure, to use their networks at low, regulated rates.Unfortunately, this policy direction is now changing, and this change, along with Canada's inefficient spectrum policy may soon throttle network outlays that are essential for Canada's network to maintain its superior performance.A large number of Canadians have been forced to work from home, using the Internet to communicate with colleagues, customers, and vendors. We even saw the nation's first ever virtual parliament convene, further highlighting the need for connectivity. This reliance on online services will continue to grow as Canadians become more familiar with these rapidly-expanding options to conduct business and access entertainment from home. It is likely that few people even knew about the video-conferencing platform, Zoom, until they were confined to quarters by the virus outbreak. Now Zoom is experiencing weekly usage that is about 14 times its weekly average in the last quarter of 2019. Google and Microsoft have reported similar surges in usage of their online conferencing services.All of this new demand must be accommodated by Canada's broadband networks at the very high speeds to which Canadians have become accustomed. Expanding capacity on these networks will require a continuation of, or even an acceleration of the rapid pace of Canadian network investment. Canadian carriers have invested much more aggressively than carriers in the rest of the developed world over the last decade. As a result, Canadian subscribers have access to some of the fastest landline broadband speeds in the world. The most recent Global Speedtest Index finds that download speeds on Canada's landline networks are 40 percent higher than the global average and are faster than all but eight of the 37 developed-country (OECD) networks. Today, Canada enjoys the fastest wireless broadband speeds among all the countries recently surveyed by OpenSignal, speeds that have diminished very little during the coronavirus crisis, unlike the experience in some other advanced countries.How can the Canadian industry continue to expand capacity fast enough to keep up with the continuing increase in broadband usage? It all comes down to investment in network infrastructure and spectrum. Telecom investments are significantly affected by government policies, which appear to be headed in the wrong direction at present. The CRTC has been gradually moving away from its earlier reliance on competitive markets and is now in the midst of a regulatory proceeding to impose regulated access in the wireless sector in response to a new government policy pronouncement. Unfortunately, such wholesale network mandates have been shown to reduce network investment incentives, particularly in Europe where they have been most aggressively employed to the detriment of network quality.To expand wireless capacity efficiently, national carriers must also be able to obtain spectrum at reasonable prices. Unfortunately, the Canadian government has continued to set aside substantial amounts of spectrum for smaller, regional carriers, a policy that the government is proposing to utilize in an upcoming auction. This policy has resulted in very high Canadian spectrum costs for the national carriers and less rural coverage because the smaller carriers simply do not use their spectrum to offer service widely to rural areas.Providing more spectrum for the national wireless carriers would allow them to expand capacity rather quickly, an option that is not available for landline carriers who must deploy facilities widely at considerable expense and over a much greater period of time. Recently T-Mobile was able to expand its capacity quickly by obtaining spectrum from a U.S. satellite carrier that had accumulated substantial spectrum over many years but left it fallow. In Canada, the regional wireless carriers – Eastlink, Freedom, and Videotron – have not used their set-aside spectrum to offer service throughout the rural areas in their territories. Were this spectrum available to Canadian national carriers, they would surely use it to expand capacity in rural areas to support Canada's extreme population dispersion. Surely, the government should search for remedies to this problem of inefficient use of spectrum, and in doing so, it should sharply curtail the set-asides.Finally, the Canadian government cannot lose sight of the need to encourage network investment in the next-generation, 5G wireless technology. Many countries have already begun to deploy the facilities required to utilize this new technology, which promises to revolutionize virtually every sector of the economy, but Canada lags behind. The current crisis should be signaling the government to deploy the 5G spectrum quickly to facilitate life and work for everyone.Dr. Crandall is currently a non-resident Senior Fellow at the Technology Policy Institute in Washington, DC. He has written seven books and more than 50 articles on communications policy and has been a consultant to Canadian and U.S. competition authorities and communications companies.