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Happy New Year! How about a digital strategy?

03 Jan
"What do you mean you don't see the Digital Strategy? I'm holding it right here, in my hands."

“What do you mean you don’t see the Digital Strategy? I’m holding it right here, in my hands.”

“More than one hundred representatives from libraries, museums, archives, publishers, copyright collectives, the education community, and government gathered last week in snowy Montebello, Quebec for a national summit on a Canadian digital information strategy. The by-invitation only event marked the culmination of a year-long cross-country effort to ensure that Canada is not left behind as our trading partners race to develop their own 21st century digitization plans.” – Toronto Star, Dec. 11, 2006

“Free access to government data and equitable access to the internet itself are key to a prosperous digital economy, say many of those who took part in recent federal consultations. For two months, the government has been seeking public input on its strategy for a digital economy… [Industry Minister Tony Clement] did not provide a specific timeline, but suggested Canada would take about the same time as other countries, who have typically developed strategies in six to 18 months.” – CBC, July 14, 2010

“For over a year Prime Minister Stephen Harper and his government has been talking about the need to create a digital economic strategy for the nation, with Industry Minister Tony Clement promising to reveal details this spring.” – IT Business, Mar. 23, 2011

“I will launch a Canadian-made digital economy strategy by the end of the year.” – Industry Minister Christian Paradis, Aug. 28, 2012

With the start of a new year, there’s no better time to review and reflect on the federal government’s complete and utter failure in providing leadership on digital issues. The country has been waiting on a digital strategy – a comprehensive plan for how Canada intends to compete in the global information economy – for years.

If the government’s latest broken promise is any indication, the wait is going to continue, despite numerous consultations and reports having already taken place. For those paying attention to other countries and their digital strategies (New Zealand had one in 2005, Japan in 2001), it’s exasperating at best, infuriating at worst.

Yet, the government could do worse. It could, as many fear, release a digital strategy that is low on specifics and without any real teeth. Such a plan would be a disservice – Canada is behind in many ways, from web usage by businesses to internet access pricing to research and development spending to venture capital access. There are many problems to be fixed, so any digital strategy must take specific actions to get the country back on the right track.

The other danger with any sort of digital plan is the tendency to throw money at a problem in the hopes that it’ll fix itself. That’s also the wrong way to go, since government-provided funds are often squandered without any concrete results to show at the end.

Most importantly, a digital strategy must be bold. There is no sense in aiming for the future if you’re not aiming high. Timidity has no place in such a plan.

The government has already heard from a broad range of Canadians as to what the country’s strategy should contain. Here is a list of 10 suggestions, some of which are repeated from submissions and some of which are my own additions. The list – sort of a set of New Year’s resolutions for government – is by no means comprehensive, but it would make for a good starting point.

Technology Minister: Creating a cabinet ministerial position that would deal with all things technological would go a long way to showing the public that the government does indeed take digital issues seriously. Which it currently doesn’t, obviously.

Merge Telecom and Broadcasting Acts: Telecom and broadcasting technologies have converged, as have their owners, so why are the laws governing them still separate? Indeed, the government should move to liberalize foreign ownership in broadcasting the same way it did last year with telecom. Maintaining the restrictions does much to counter any positives introduced by telecom ownership liberalization.

Infrastructure regulatory holiday: Any new company that wants to build a telecom network in Canada, whether wired or wireless, gets a 10-year exemption from any regulations affecting access to that network (in other words, they won’t have to give access to third-party independent internet service providers). The holiday could be even longer for northern Canada, where things are even more dire. Some might say this is unfair to the likes of Bell or Rogers or Northwestel, but those companies got to build their networks and customer bases with government-granted monopolies. Such an exemption might seem especially intriguing to certain search engine companies that are currently building fibre networks in the United States.

Broadband targets: Speaking of which, the government should institute pricing, speed and usage targets that ISPs must reach within three years. The targets would be set based on projections of what will be needed to measure among the top countries at that time. Failure by the ISPs to hit the targets would result in the government launching consultations on how to structurally separate network owners from retail operations, and/or the feasibility of building a nationally-owned fibre network. Is this de facto regulation? Yes indeed, but it’s market forces that have caused Canada to fall behind. When the carrot doesn’t do the trick, sometimes you need to turn to the stick.

Internet access subsidies: With broadband simply being too expensive for many poorer Canadians, a simple subsidy program is needed – if your household income is under a certain amount, the government pays part of your monthly internet bill. Not only would this connect the people who need internet access the most, it would also saddle the government with a continually escalating tab. If that doesn’t cause politicians to spur better internet service and prices, nothing will.

Computer programs: In that vein, there are also too many households that don’t have computers, wherein internet access would obviously not make a lick of difference. The digital strategy should outline a specific plan to work with private sector companies in providing such households not just with computers, but with the training required to use them effectively. Certain individuals have expressed a desire to help on this front; these people should be sought and hired to lead such projects.

Tech export credits: Canadian businesses aren’t using the internet enough to reach global markets, so applying further tax rewards on sales specifically made using digital means might spur some to finally take online expansion seriously.

Foreign recruiting: Going the other way, the government should step up recruitment in countries that have large numbers of the sorts of skilled people needed here. Universities have tried various recruitment drives over the years, but they can only promise students so much. Government is much better positioned to deliver such workers jobs, not to mention a life in Canada.

Incubators, incubators, incubators: The venture capital problem might actually be one that can be helped with money. With early-stage investment identified as a real issue for Canadian startups, the government could accomplish much by funding lots of technology incubation projects, where entrepreneurs can cut their teeth until they get noticed by proper VCs.

R&D tax breaks: The federal government should take a cue from the provincial governments of Quebec, B.C. and Ontario, which created a vibrant video game industry through tax breaks. Those governments attracted large multinationals by giving them big discounts on labour costs, with the result being thousands of new jobs. More importantly, an ecosystem of very talented developers has formed, with Canada now becoming a leader in independent game design as well. The same model should be used to attract multinationals in setting up research and development centres, with similar benefits likely to result.

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13 Comments

Posted by on January 3, 2013 in government

 

13 responses to “Happy New Year! How about a digital strategy?

  1. Marc Venot

    January 3, 2013 at 12:53 am

    Since you are talking about Canada you should focus on its specificities like to have most of its population on a thin line near the USA and be politically close to the UK (in the good sense not on the one to buy their lemon submarines).
    About the population location the main problem is the abuse of roaming.

     
  2. russellmcormond

    January 3, 2013 at 10:20 am

    “Yet, the government could do worse. It could, as many fear, release a digital strategy that is low on specifics and without any real teeth.” Things could be much worse — the lack of basic technology understanding by politicians demonstrated during the Bill C-11(and related) hearings makes me very nervous. The higher-level policy they come up with might be good, as a superficial look at the “copyright” bill was, but considerable damage to the digital economy can still show up in the details as we saw in C-11 (the “TPMs” section, which I will always argue isn’t legitimate “copyright” policy at all).

    I also disagree with “Merge Telecom and Broadcasting Acts”. What we need is to modernize the policy to focus on actions rather than actors. It is not “broadcasters” or “telecommunications companies” that should be regulated as entities, but the specific activities. When someone is “broadcasting” that activity should be regulated, regardless of who or what they are. When someone is committing “telecommunications” that activity be regulated, no matter who is doing it.

    This should also deal with the stupidity of action-specific foreign investment/ownership limits given we would no longer be regulating the entity, but the activity. It should never matter where the head office of a company is: when they are broadcasting/telecommunicating in Canada they are regulated by Canadian law.

    This should also deal with the silo’d failure of the CRTC as well as within Industry Canada. It may also be useful to clarify that this be under a single department, and not the oddball feuding between Industry and Heritage on this and related policies (such as Copyright).

    Technology Minister? In the past we had a Department of Communications that was separate from Consumer and Corporate Affairs. I believe this has been a failure, and suggest Industry Canada should be split back into a Department of Information and Communications Technology (Just adding a few words 😉 separate from what could again be called Consumer and Corporate Affairs. It would be great if the policy direction we recently saw in the CRTC was solidified by giving Consumer Affairs prominence again, given the way things were folded into Industry Canada really screwed consumers.

    Heritage should really be kept out of technology law, whether that be broadcasting, telecommunications, or copyright. Arts funding and possibly technology-neutral CANCON regulation are about as close to these activities as they should be allowed.

     
  3. Ian Buck (@buckstop)

    January 3, 2013 at 10:36 am

    I nominate Pete for Technology Minister

     
    • petenowak2000

      January 3, 2013 at 2:33 pm

      No way man, that would require wearing pants to work again. ; )

       
  4. mcfudge

    January 3, 2013 at 10:55 am

    Hey Pete, excellent post.

    The Christian Paradis hyperlink does not work in the paragraph “I will launch a Canadian-made digital economy strategy by the end of the year.” – Industry Minister Christian Paradis, Aug. 28, 2012

    Having said that, I’m going to shoot him an email now and hopefully many others will, to continue to remind him that we the general public expect him to do his job — or move aside so someone better qualified and motivated can do it.

     
    • petenowak2000

      January 3, 2013 at 3:52 pm

      Thanks for the kudos and the catch. I’ve fixed that link now. I completely agree with your comments.

       
  5. James Van Leeuwen

    January 6, 2013 at 12:51 pm

    If the Conservatives actually developed a digital strategy, would you expect it to reduce facilities-based competition or increase it?

    I’m of the strong opinion that we need a new industry paradigm rooted in shared infrastructure and service-based competition. A country with our geography cannot afford facilities-based competition… our transport costs will remain among the highest in the world.

     
    • Infostack

      January 11, 2013 at 10:09 am

      Metcalfe’s law applies to Canada, as well as rural markets. If Canada and US (and Mexico) were to develop standardized regulation, ownership and roaming across all three markets, the velocity of information and trade (and hence GDP) would increase significantly throughout N. America. Europe needs to undergo a similar consolidation and restructuring of its information networks.

       
  6. Michael Elling

    January 11, 2013 at 9:50 am

    Regulations have historically followed (and retarded) the markets. That’s not to say that regulation isn’t important. But what is really needed is a fundamentally new framework. One that accounts for convergence, horizontalization (a la the data OSI stack), and rapid technological obsolescence. The US was developing the blueprint for this framework until we destroyed competition beginning in 1996 with the Telecom Act, “de”regulating privateline/special access in 2002 and killing equal access for broadband in 2004. It is with respect to the latter in part that I totally disagree with your infrastructure holiday. A horizontal model that fosters open, scaled, horizontal intranets and exchanges in the lower, middle and upper layers of the stack is the best model going forward.

     
    • James Van Leeuwen

      January 11, 2013 at 2:59 pm

      Michael Elling wrote:

      “… what is really needed is a fundamentally new framework. One that accounts for convergence, horizontalization (a la the data OSI stack), and rapid technological obsolescence.”

      There is a framework we can probably learn a lot from… the one we’ve developed over the last century to enable better utilization of automobiles.

      Some food for thought:

      http://www.ventus.ca/eCitizen.pdf

       
      • Infostack

        January 11, 2013 at 6:03 pm

        All networks share some basic traits and components. The value of the communications network is principally Metcalfe’s law. Individual component costs are driven by Moore’s law and the concentration of traffic based on Zipf’s law. Mapping supply and demand assumptions across a service provisioning, geographic and application/market segment gradients is the best way to understand investments in lower (access and transport), middle (addressing, network controls, security, settlements), and upper (application) layers. I don’t believe we are talking about the same approach.

         
      • James Van Leeuwen

        January 12, 2013 at 2:48 pm

        Michael,

        who should be making the assumptions and decisions around supply and demand, and for what business model? Today, it’s telecom and broadcasting incumbents with business models rooted in a legacy paradigm of facilities-based competition, i.e., the supply side of our digital economy.

        To get where you want to go, which is where I want to go also, we need a great deal more influence from the demand side of the digital economy. Here in Canada, our federal government lacks the technical savvy, political capital and sheer intestinal fortitude to drive regulatory reforms that would appropriately serve the demand side. It might be different in the U.S., but this remains to be seen.

        We need a new agency with a mandate that comes directly from consumers and enterprises. Metcalfe’s Law, Moore’s Law and Zipf’s Law would provide solid technical grounding for such an agency, which could design a simple and powerful set of principles and operating objectives around this ‘canon of law’.

         
      • Infostack

        January 14, 2013 at 11:58 am

        Today’s network/business model failure is a result of vertical integration. No carrier can scale the rapidly obsoleting investment (suppy) sufficiently at all layers of the stack across all market segments (demand). Vertically complete systems/solutions (such as Apple has successfully developed across several market segments and maybe Google is doing even better on a larger scale) across horizontally scaled providers and exchanges is the model that regulators, academics, trade and capital market participants can follow.

        The other problem with monopolies is that they can only operate in a world of “averages”. Demand is always driven at the “margin”. The challenge is to come up with pricing models that reflect marginal cost a priori. This is achieved via an iterative process of modeling the 4Cs of supply (cost, coverage, capacity and clarity) across the 4Us of demand (user-interface, ubiquity, usability and universality). The internet and rapidly evolving wireless (2/3/4G and 802.11) have disproved the notion that there are high fixed costs; upon which all regulatory and monopoly theory is falsely based. Ever since the 10 cent price model of MicroCell/Fido (Yeah Canada!), I’ve always asked the question “what’s the most expensive wireless minute?” The first minute? No, because it has a positive slope. It’s the unsold minute that is most expensive, as the slope is infinite. The same goes for all bits and bytes.

         
 
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