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Sweden: miles ahead of Canada on the internet

19 Jan

I was flipping through the latest issue of Wired the other day and I came across an article on Spotify, a music-streaming service based in Stockholm. I’d heard a little about the service before but, because it’s not available in North America, I hadn’t paid much attention to it.

The article was illuminating and Spotify indeed sounds like a cool service. It’s not here thanks to record labels and their reluctance to give listeners anything for free even though it sounds pretty much like an internet version of commercial radio, except that it allows people to actually buy what they hear.

Ah well, such is not the point of this particular rant. What struck me is that Spotify was started in Sweden, which got me thinking: what is it with those Swedes and their incredibly popular internet services? By my count, at least three internationally successful, game-changing services have been started there: Spotify, Skype and, yes, The Pirate Bay.

The effects of the three are easy to summarize. Spotify is changing the way music is consumed in Europe. Skype has completely revolutionized phone calls (especially long distance), while The Pirate Bay – a torrent tracking website that courts and other authorities seem incapable of shutting down – has forced the entertainment industry to change how it does business because it enables free swapping of music, movies and other stuff.

Then I got to thinking about the many internationally successful, game-changing internet services that have been started in Canada. Hmm. Wait a second. Actually… there aren’t any.

Why is this? We’re constantly told how smart Canadians are, how we’re very big users of computers and how we’re very clued in to the internet. So where are our world beaters? Why have no earth-shaking internet services arisen here?

It’s a good question and could probably serve as the basis of a Master’s thesis as I’m sure there are many answers. But, as usual, I think it’s prudent to start with the obvious: internet access and the philosophy government and regulators take toward it.

All of the Scandinavian countries (Sweden, Finland, Norway and Denmark) fare very well in international benchmarks, scoring in the top 10 of the OECD by most measures. Canada, not so much. In terms of average advertised speed, for example, Sweden is 13th out of 30 compared to Canada at 25th. In terms of prices for medium speed connections, Sweden is third while Canada is 20th.

The numbers are from a study by the Berkman Center at Harvard, which is probably the best such report I’ve seen on such stuff. Here in Canada, of course, some of our big telecom companies screamed bloody murder over the report when it came out, claiming it was full of errors. Of course they did. While no international comparison is going to be completely correct, when enough independent studies (read: not industry funded) point in the same direction, when a good number of experts say the same thing, and when all of that combines to confirm what you already felt to be true, well then there might just be something there.

As that study states, “the level of competition in Swedish broadband markets is strong,” a fact that has been achieved by correctly applied unbundled local loop rules, an open door for foreign competitors and government involvement in building infrastructure – issues I remarked on the other day (that post generated an incredible amount of traffic, by the way – thank you for reading and commenting!).

As for Canada, we’ve had none of those things. The report tries hard to shatter the illusions some people may still have: “Canada continues to see itself as a high performer in broadband, as it was early in the decade, but current benchmarks suggest that this is no longer a realistic picture of its comparative performance on several relevant measures.”

You would think Canada actually has several advantages over Sweden when it comes to starting new internet businesses. We’re just as connected but we’re closer to the heart of the internet – the U.S. – which means that our companies surely have better access to venture capital, and perhaps better talent. Our population is four times bigger, which means we should have a higher statistical likelihood of producing more killer internet companies. We also have more universities producing more computer scientists and business graduates. English is also our mother tongue, the main language of the internet.

One possible reason I’ve heard for why we still haven’t produced even a single great internet firm is our over-reliance on natural resources. Canada is teeming with oil, gas, lumber and other “dumb” commodities, so we haven’t really had a need to “get smart.” That’s a good theory, especially when you look at the staggering disparity between how much Canada and Sweden spend on research and development. (Sweden isn’t home to the Nobel prize for nothing.)

Another possibility is that Canadian startups are more visible to Americans and are therefore either snapped up by them quickly (Google seems to like buying Canadian companies), or they go out of business when a U.S.-based competitor starts up. Swedish companies, meanwhile, benefit from flying under the radar until they’re too big to be denied.

Like I said, there are probably many reasons. If you ask me, though, at the root of it all is a different mentality when it comes to the internet. The common denominator shared by those three Swedish internet services is that they used the true power of the internet – the ability to innovate without permission – to upset the status quo and affect change. This has also happened a lot in the United States, where companies such as Google, eBay, Amazon, Netflix, Craigslist and so on have emerged.

It hasn’t happened in Canada because that “innovation without permission” mentality hasn’t been allowed to develop. To bring it back to our internet access, it seems like every step of the way we have to ask our internet providers for the right to innovate. The current issue of usage-based billing is a case in point. Limiting how much people can use the internet – rather than encouraging them to use it more, like Sweden does – is a very strong way of continuing and enshrining this permission-based system.

Like I said last week, while I’m not completely opposed to charging heavy internet users more than light users, there should be alternatives available where if an internet provider wants to give its customers unlimited usage, than it should have that option. By forcing all ISPs to play the permission system game, we’re not just limiting our internet usage, we’re limiting our options.

The real effect of the system we’ve allowed to developed isn’t just cranky internet users, it’s a lack of services such as Spotify, Skype and Pirate Bay. That’s a far more serious effect than people griping about their bills.

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15 Comments

Posted by on January 19, 2011 in government, internet, sweden

 

15 responses to “Sweden: miles ahead of Canada on the internet

  1. Kittyburgers

    January 19, 2011 at 2:43 pm

    Are you trying to say that ISP’s aren’t allowed to have an unlimited data plan? If so, is it the government that is forcing them to cap data usage? I didn’t think this was the case.

    I think the main problem in Canada doesn’t have as much to do with bandwidth and data usage as much as copyright and advertising issues. I’d gladly use hulu and Pandora if I could access it easily from here.

     
    • Vihsadas

      January 23, 2011 at 10:09 pm

      No, it is NOT the government who is forcing companies to do this. In fact, Bell Canada has filed a tariff to the CRTC for completely outrageous usage-based billing costs, and the CRTC in the interest of “regulatory symmetry” has accepted Bell Canada’s ridiculous proposal, and furthermore has allowed bell to charge Small ISPs *the same per GB costs that they are allowed to charge their own subscribers*. Effectively, these small ISPs now *must* charge their own customers the same prices that Bell charges — thereby eliminating differentiation of services in the market. This is a “wrong” model for two reasons:

      Noone “makes” gigabytes. Unlike power companies, where they physically turn turbines to produce each Watt of electricity at a measurable and direct cost to the power company, there isn’t a factory that makes gigabytes per second and sells them to you.
      There are only the internet pipes, and the cost associated with connecting you to the cloud. And in fact, it is both the website you are connected to, and yourself who *create* the data flowing down the pipes. The Internet companies just supplies you the pipe with which to do so–They don’t make the data on the internet!

      Up until this usage based billing scam, small ISPs could buy, say, a 100 Gigabyte/s pipe which has a maximum capacity of transfering 100GB of data per second and split that pipe between as many people as they thought a 100GB/s pipe could handle.

      You see the inherent problem with UBB is that the internet company is allowed to charge you for the pipe, as well as the data you push through it…and that is highway robbery.

       
  2. NS

    January 19, 2011 at 4:41 pm

    It wasn’t the government that came up with the idea but one of the largest ISPs in Canada, Bell Canada who also have a TV business and own many Tv stations, lobbied the gov to impose caps and usage based billing onto internet providers who use Bell Canada lines but not their servers. The smaller ISPs had no choice but to accept these caps and cut unlimited plans and tell users that beyond 60GB users will have to pay per GB extra up to a max of $60 added on top of the monthly rate.

    Most of the major ISPs in Canada also have television services and own TV properties so downloading video over the internet takes away from buying expensive TV packages so this is why they’re cutting bandwidth usage to an average of 50GB nationally. The cord cutting currently going on in the USA will never happen in Canada as long as Bell, Rogers, Shaw, and Videotron continue to collude and keep the price of internet high.

     
  3. Moosebump

    January 19, 2011 at 5:14 pm

    “It hasn’t happened in Canada because that “innovation without permission” mentality hasn’t been allowed to develop. To bring it back to our internet access, it seems like every step of the way we have to ask our internet providers for the right to innovate.”

    This strikes me as a completely spurious attempt to link Canada’s broadband services to our lack of innovation. I’m not saying there is not a link but after reading this I have no idea if they are or not. Seems like you noticed that Canada lacked any big successes and you decided to link to a favorite whipping boy.

    Sweden has tried to shut down Pirate Bay so you can’t exactly hold them up as an example of innovation that has been encouraged in Sweden. Its hard to deny that all they really do is aid illegal activity so maybe Canada’s law abiding culture wouldn’t allow them to have developed here. I don’t beleive they have done anything innovative – ie they didn’t invent the torrent.

    2 examples of innovative services to 0 is not enough observations to be statistically significant.

    Actually, a completely disproportionate number of successful websites and internet services actually appear to orginate from a small area in northern California. Gee, you must get really great internet access there!

    How about some statistics? How are places like Australia, Denmark, the UK, Korea doing? Just Sweden? Maybe they happen to be Europe’s version of Silicon Valley.

    I can see Canadian entrepreneurs leaving for Silicon Valley to immerse themselves in a culture of innovation but can you find any thatsay they are making that move because their ISP is oppressive?

     
    • petenowak2000

      January 20, 2011 at 10:20 am

      Actually, I do see The Pirate Bay as an innovator. The fact that they’ve managed to keep the site up despite concerted efforts to shut it down shows the people behind it have come up with some amazing new tricks. Other torrent sites have been closed or neutralized while The Pirate Bay keeps going and going. There is much to be learned from TPB – don’t write it off just because it deals in torrents.

       
  4. RobertMano

    January 20, 2011 at 2:40 am

    Thank you for your continued efforts to bring this issue to the public’s attention. We are supposed to be a leader in technology, and instead, we have some of the worst internet access in the world.

    Companies like Shaw are using UBB as an excuse to limit our access to their online competitors. Shaw TV has trouble competing with Netflix, so Shaw Internet simply switches to Usage Based Billing, begins charging massive overage fees, and makes it cost prohibitive to use Netflix. Our ISP should not be in full control of our access to their competitors products.

    * How is this anti-competitive business practice going unnoticed? *

    Our internet bill will double next year, due to UBB. Shaw even cut our usage caps by 30% this month, without telling customers – just at the same time as they began charging for overages! On top of that, they are charging $2 per GB for overages, when it costs them approximately 2 cents per GB.

    The CRTC approved UBB, and always seem to give Canadian ISPs/Telco’s anything they desire. It’s really remarkable that we allow the CRTC to get away with it. The few remaining countries in the world that use UBB are already moving towards Unlimited access again, to help promote internet use. Here in Canada, we’re switching to UBB!

    Please be sure to visit http://openmedia.ca/meter and sign the petition to put a stop to UBB.

     
  5. alQpr

    January 21, 2011 at 12:12 am

    Three things:
    1. The infrastructure guys charging the ISPs on a UBB basis doesn’t prevent the independent ISPs from providing unlimited plans if they can figure out a way of doing it. But I’m not interested in subsidizing other people’s waste of resources.
    2. What is needed are competitive rates (for either bandwidth or data) with terms and service that are symmetrical wrt upload and download so as to encourage the development of independent web services.
    3. If the barrier to competitive rates is lack of competition, then we need to encourage more independent infrastructure systems.

     
  6. bwalzer

    January 21, 2011 at 9:51 am

    I was not able to find a reference to your comment about “an open door for foreign competitors” in the linked study with respect to what is happening in Sweden. A page number would be helpful to me. Thanks in advance…

     
    • petenowak2000

      January 27, 2011 at 11:45 am

      Hey there – sorry for taking so long to reply. If you’re still reading, the section you’re looking for begins on page 144-145. It talks about how unbundling worked properly in Nordic countries by allowing new ISPs to form and eventually get acquired by bigger companies from other countries.

       
      • bwalzer

        January 28, 2011 at 9:36 am

        Thanks for the reference. This is interesting because right at the moment I am quite ambivalent about the foreign ownership rules. Actual data is helpful. I did note that the foreign investment occurred in a open access environment. Is it possible that open access is a prerequisite to the good effects of a more open market?

         
  7. pat donovan

    January 21, 2011 at 12:21 pm

    ALL of the above services cannibalized exsisting data.

    NOW try to get a popular webtv show past
    the CRTC, quebec, and flavor of the month minority group.

    or better yet, popularize a web centric app, like interactive web-tv.

    best i’ve seen are 3d web-comics.

    packrat

     
 
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