From the Jetsons to the Flintstones: Canada shifts into low gear on the info highway

Some folks at Industry Canada, in a recent report entitled Catching up with the Jetsons, have found that Canada is falling behind the U.S. in developing our knowledge-based economy and meeting the challenges of rapid technological change. Well, in the words of a more contemporary cartoon family member…. "Doh". The 33-page report, prepared by the Micro-Economic Analysis Directorate of Industry Canada and released July 24, first points out that technological advances are transforming the Canadian economy at an unprecedented pace, and then compares the challenges we face in pursuing or attracting emerging opportunities, investment and high-knowledge activities to the high-tech successes of our American neighbour. Of particular interest to the Canadian Association of Internet Providers (CAIP) is the report’s conclusion that the U.S. is taking better advantage of the Internet and the Internet economy.We can see a number of reasons for this, including the lengthy wait for cable high speed Internet competition in Canada, and the U.S. refusal to impose new taxes on the Internet. We in Canada have seen that competition in telephone services and in broadcasting delivery breeds innovation and leads to better service, lower prices and more product choice. Over four years ago, the federal government and the CRTC announced that Canada’s cable companies would be obliged to open up their networks to ISPs to ensure that Canadians would also reap the benefits of competition in high speed cable Internet services. We’re still waiting. Without competition, there’s no incentive for the monopoly providers of high speed cable service to push its potential. One reason Canadian businesses and consumers have yet to embrace e-commerce is because slower speed, dial-up applications are just not sexy enough, i.e. they generally can’t provide the kinds of services that are of value to Canadians. Broadband services that would entice more Canadian consumers and businesses to actively use the Internet are out there. Unfortunately, without competition expanding the number of broadband providers, deployment has been limited. As a result, where Canada once seemed to be leaders in this race toward high-speed innovation, a la the Jetsons, we’ve recently looked more and more like the Flintstones, peddling on the information highway with our feet. Fortunately, it appears we’re about to get our jet packs back. On August 21, the CRTC, in a long-awaited decision, announced that wholesale rates for cable access will range from $19 to $21.50/end-user/month. As long as cable companies do not artificially slash their current high speed retail prices, these wholesale rates should leave independent ISPs enough room to build in their own costs and offer a competitively-priced high speed cable service. We’ll have to see, however, how the cable companies respond to the tariffs: only willing partners can make third-party access work, for our respective businesses and for Canadian consumers. If Canada is to catch up to the U.S., we also have to avoid introducing new taxes on the Internet. Unfortunately, some parties have asked the CRTC to contemplate that very thing, by way of imposing contribution obligations, a subsidy to the local phone companies, on ISPs. In fact, if we are comparing our ability to compete strictly against the U.S., it should be noted that the Federal Communications Commission decided to exclude Internet access from the list of contributing services because the services were not considered basic telecom services. CAIP also believes that ISPs do not provide services that render them obliged to pay into universal service obligations in Canada; moreover, ISPs are major customers of the telephone services that are already contributing. If we, as Canadians, are truly interested in closing the gap with the U.S., then we must follow their lead and allow our ISPs to develop, free from stifling financial contributions that only serve to further inhibit Canada’s ability to compete with the U.S. in a race where we are already considered a distant second. Jay Thomson is president of CAIP, an Ottawa-based lobby group for Canadian ISPs. (Note: Given CAIP’s broad membership, these comments do not necessarily represent the view of all CAIP members.)

From the Jetsons to the Flintstones: Canada shifts into low gear on the info highway

News | August 28, 2000

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