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Technology, not the CRTC, will drive phone bills lower

Peter Nowak is a Toronto-based tech writer and author

The key question surrounding the federal government's choice of telecom veteran Ian Scott for the post of CRTC chairman isn't whether he'll end up favouring industry, but whether his appointment will make much of a difference one way or the other for consumers.

Having spent years as an executive at Telus and most recently as a lobbyist for satellite firm Telesat, consumer advocates fear Mr. Scott's stewardship may signal a return to regulatory capture. In those bad old days, the perception was that corporate interests routinely trumped consumer concerns.

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Under previous chairman Jean-Pierre Blais, the Canadian Radio-television and Telecommunications Commission managed to reshape that image by siding with consumers on big decisions more often than not. The concerns now – about putting the proverbial fox back in charge of the henhouse – are easy to understand in that light.

It's obviously too early to judge Mr. Scott, who takes office in September. He may turn out be a consumer champion despite his background. There is precedent, after all.

Barack Obama's choice for U.S. Federal Communications Commission chairman, Tom Wheeler, for one, faced similar concerns because of his background as a cable lobbyist. In the end, consumer groups lauded his willingness to fight industry on issues such as Net neutrality.

Mr. Scott will have a number of hot-button subjects to deal with as he oversees telecom and broadcasting regulation over the next five years, with affordability of services chief among them. On that front, recent history suggests he's likely to have little effect even if he chooses to champion consumers.

Ten years ago, the Conservative government launched its war on wireless with an auction of public airwaves designed to net new cellphone carriers. At the time – just as the first iPhone was making its debut – Canadians were paying some of the highest bills in the world. The auction did indeed establish several new independent providers, but the startups have all since been acquired by incumbent telecom companies.

For its part, the CRTC created a wireless code of conduct in 2013 in hopes of outlawing some of the industry's more egregious practices. Roaming fees were capped and three-year contracts were effectively banned. A prohibition on phone unlocking charges was recently added to the rules.

Despite these efforts, Canadians are right where they started – still paying wireless bills that are among the highest in the world, according to CRTC figures.

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It turns out that manufacturing competition and manipulating pricing isn't easy to do. Few investors are willing to spend the necessary billions to compete against entrenched incumbents, even when rules are bent in their favour. Limitations on specific behaviours, meanwhile, inevitably lead to new fees elsewhere.

Canadians therefore shouldn't place their hopes on policy makers to engineer lower bills, but rather on the one force that has routinely delivered such results: technology.

It wasn't so long ago that a long-distance call could rack up hundreds of dollars in charges. The arrival of Skype and other Internet-based calling apps changed that.

It was also only a few years ago that consumers were paying through the nose – or thumbs, rather – for text messages. Then came WhatsApp, Facebook Messenger and others. The cost of calls and texts are now virtually nil.

The same companies that provide wireless services are also now witnessing the dismantling of their television monopolies. It wasn't the CRTC's "skinny basic" TV packages that did that, but rather the advent of Netflix and YouTube.

The one, true monopoly that telecom companies still own is the provision of Internet access – the proverbial pipe to the platform that has allowed all these bill-busting apps to arise – but this stranglehold can't last forever. Inevitably, technology to circumvent this bottleneck will emerge and the price of access will drop dramatically.

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There are some early efforts at finding such a solution. Technology companies including Google and Microsoft, for example, have been experimenting with "white spaces," the unused and unlicensed parts of the wireless spectrum.

These frequencies could become a way to connect to the Internet at marginal cost, without necessarily having to go through a service provider. Time will tell – and other possible solutions may present themselves in the meantime.

Policy makers' key role now lies in protecting the Internet from unnecessary interference by access providers so that new technologies and apps can continue to disrupt the status quo. Mr. Blais deserves much credit for strengthening Canada's net neutrality rules, which will do this, during his tenure.

The comforting knowledge that technology will some day lower telecom bills is tempered by the uncertainty over the timing of such a development, but it's more of a surety than hoping that government or regulators come through.

They haven't yet and there's little reason to expect they will in the future.

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About the Author

Peter Nowak has been writing about technology for 15 years, with a focus on trends and how they affect the world. He worked at The Globe and Mail between 1997 and 2004 before moving to China and then New Zealand, where he won the award for best technology reporter at the New Zealand Herald. More

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