Universal high-speed internet essential: Liberals

[foresterab]

If it is revenue neutral then yes it is a solution that could be lived with, but then you get into the issue of the government owning more assets rather than less.  Not to mention a probable increase in some sort of regulation of the industry (in those proposed areas) rather than less.  It is not so viable with the truly isolated areas like the north where small isolated pockets of Canadians live.  That is where the true cost comes in and quite frankly as a taxpayer is not acceptable.  High speed internet is not a right and thus should not thrust into the spotlight like it is.  I will say again with the technology available today, the cost is not worth it to us the Canadian tax payer.

While I agree that there is a limit to what level of service one should expect when living in northern/remote/rural areas and there is a cost associated with living there I also disagree with that taxpayers as a whole should not have a role.  In a nutshell Canada's economy is an urban population based upon natural resources found in increasingly remote/northern/rural areas.  Look at the TSX stock exchange and see how many buisnesses are based there on natural resources hence the Canadian Petro buck..

While a company who operates a mine/mill/facility in the remote areas may be able to find some form of internet communications the cost of that will be applied to the raw resource they produce and eventually it is us, the taxpayer, who pay that difference.  For example one company I deal with can only get dial-up internet in their area....yet due to the current technology on websites and small pdf volumes it is not a workable solution for them to use and are stuck with fax/Canada Post.  Now we have two processes, one for the majority of clients and then one-off solutions which increase the buerocracy of the government....

VOIP and video communication have basically meant that we at the provincial level have drastically cut travel costs for meetings.  There is a loss of content with pure internet based meetings but it has also allowed those who used to travel 8-9 hours one way for a meeting to participate much easier.  Web based training is on the rise as well which has meant that I can train fire crews on safety/driving etc. on a registered course from  a remote fire base instead of paying to bring the entire crew into town...or better yet send a contact an e-mail with a bunch of courses to take and have trained staff who did the training at home show up to work instead of wasting time in camp. 

With the aboriginal populations in many of these northern towns if the training isn't offered locally people don't go...and then a whole other series of concerns comes up with who does the work needed to deliver the raw product needed for the upgrading facilities near larger centers.  There is another thread on here talking about productivity and Canada's economy but how do I take a population of low education people and make them more effective...training and investment in what they can do is a big first step irregardless of race/background.

Cell phones and how the spread of towers has expanded to cover many remote areas is probably a good starting point on how this could be implemented.  I can access towers now in much of Alberta and northern BC where previously I could not mostly due to oil and gas companies subsidizing tower construct for their employees and well site monitoring.  Level of service quality does vary and I should not expect to use a fancy iPhone or latest gadget that works in downtown Edmonton  but I can get out and make a phone call...again a big jump in safety (which saves money for all long term) and productivity.  Having the government subsidize the financial backing that would allow a town/reserve/mill/mine to install some form of internet access and pay out the monies over time...much like issueing bonds...would allow for the service to be installed and run based upon the level of local investment.  This means that a market can arrange for a service to be installed today and pay off the debt, gareunteed by the federal government, over  a period of time by the local population/industry and yet still realize the gains of the service today.  We the taxpayers would be on the hook for loan defaulters and administration costs but it is cheap compared to adding 10% to all power or construction or material costs used due to the primary producers of Canada being forced to add infrastructure costs to their existing operating costs.

There is a post earlier in this thread raising the question of what level of technology should be installed and to what standard.  To be honest I don't speak enough IT language to know the differences and what could work but it is an oportunity for targeted, national level R&D towards a situation that has potential world wide export potential.  Think of Finland and Nokia...it is a national level R&D focus to be a leader in the cell phone industry and they have succeeded.

 

[Edward Campbell]

Although related to electricity pricing this article, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Globe and Mail, is, also broadly applicable to e.g. Telecomm connectivity:

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/the-economists/hydro-price-relief-good-pr-bad-policy/article1804297/

Hydro price relief: Good PR, bad policy

STEPHEN GORDON
Posted on Thursday, November 18, 2010

Stephen Gordon is a professor of economics at Laval University in Quebec City and a fellow of the Centre interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE). He also maintains the economics blog Worthwhile Canadian Initiative.

Ontario premier Dalton McGuinty is making the same mistake that countless politicians have made in the past. The argument they make goes like this: low-income households have difficulty paying for a certain good or service, so governments should intervene to reduce its price in order to help those in straitened circumstances.

Those who make this argument may mean well, but they are making a fundamental mistake. As Kevin Milligan of UBC puts it, they are prescribing a price solution for an income problem. The issue isn’t that electricity prices are high, it’s that many households have low incomes. And the solution is a simple one: give extra money to those who need it, possibly by means of increasing the HST rebate.

There are at least two negative side-effects of this sort of misdiagnosis. Firstly, it introduces yet another price distortion. An important role of prices is that they identify which goods are relatively scarce. Artificially reducing electricity prices gives the signal that that electricity is more abundant than it really is, and that there’s less need to reduce consumption. Secondly, electricity consumption expenditures increase with income, so most of the sacrificed revenue will accrue to those with above-median incomes.

The best solution – one which would help low-income households and which would not give the wrong signals about the need to conserve electricity – would be to provide direct cash transfers to those in need. If it is more politically advantageous to spread the benefits more widely, then Dalton McGuinty could take a page from Mike Harris’ playbook and have identical cheques sent to every household, regardless of income. Either of these measures would be less wasteful and more progressive than keeping electricity prices artificially low.

We have, traditionally, in Canada, adopted what Prof. Gordon describes, correctly, as a “price solution to an income problem.” That solution is wrong for the reasons he describes.

Telecomm has, nearly from its inception, suffered from that flaw: business users subsidized residential users and residential users subsidized rural users – ditto for postal and roads and rail and, and, and ... by the way. The steady subsidization means that most of us pay far too little for telecomm service, hydro, water and so on and so forth.

What to do? Shall we let the poor starve and die from the cold? It's an option, I suppose, allowing us to test the limits of our own individual greed. Or shall we find ways to provide everyone with a guaranteed annual income that allows them to buy essential goods and services at proper market prices? Of course we must recognize that the second solution means that many, many people will misuse their guaranteed annual money and will still be at risk of freezing and starving and so the dilemma of the first solution comes 'round again.

But, in an economically sane system: things cost what they cost and people pay the full cost or do without. Nothing else will work in the long term.

 

[Kat Stevens]

Things cost what they cost because the producer can charge what they want and the cattle will pay for it.  Diesel has gone up $.13 per litre here in 2 weeks, gas hasn't budged.  Huh?  Both come from the same crude oil, the same refinery, and the technology to produce diesel hasn't taken a quantum leap into the 24th century, so why?  Because everyone switched to diesel a few years back when it was the cheaper alternative, and we can't let the energy company's profits slip, now can we?  So up goes the price.

 

[readytogo]

Ahhhh i remember a time when we would have little "gas wars" in the town i live in, Gas would get as low as 25-30 cents a litre   As well as when diesel was the cheaper alternative.  Like almost every other market the price is what it it because we are willing to pay it.  My brother in law just bought a 700 sq ft condo for $220 000, I built my first house in southern alberta (back in 2005) for $276000 and it was 2200 sq ft.  Has the value of construction gone up that much in 5 years.  Having worked in the industry for the past 10 years i can tell you that it hasnt.


RTG

 

[Dennis Ruhl]

My blood boils with any question to do with telecommunication.  Internet? - Satellite internet would be a reasonable consumer choice instead of building more soon to be obsolete infrastructure.  What drives me nuts about the big companies are long distance charges based on 100 year old manual exchanges.  Even though technology has eliminated the distinction between short and long distance, big telecom charges billions for a service that doesn't really exist.  Some times I think the mandate of the CRTC is simply to maximize the revenue flowing from poor people to rich people.

 

[foresterab]

It is interesting that due to a lack of competition serious alternatives are not explored.  This thread is focused on internet/communications but in many regards this matches power generation...

Alberta has a deregulated market which has meant as a private consumer my bills jumped.  But it has also meant that since the de-regulation occured 3? 4? wood co-gen plants have been built by sawmills/pulp mills as a means of offsetting costs/making money and several more are under discussion.  Wind power growth has also expanded significantly.  Now I'm hearing about small towns (2,000 pop. ) looking at trying to find a way to create their own power generation facilities in order to offset the costs of running municipal infrastructure...big issue is the taxes of 2,000 people and some small industry limits the size of funding available locally.  One of the projects currently on the plate is to convert an unprofitable, closed OSB plant and turn it into a powerfacility and chemical plant using the same wood, same employment numbers but higher wage jobs, and higher value end product.  Times are changing and large amounts of regulation do not help.

By subsidizing power consumers through charging artifical low rates how do we help our economy?  Ontario just anounced a 46% price increase over the next 5 years to bring rates up to current market rates as I understand it.  Quebec has mulitple long term deals with outfits such as aluminum smelters that are signficantly lower than what the export power at ($0.05 vs $0.13/KwHr IIRC) yet given the power usage of these industries it is a political trade off of some jobs vs. a large sum of money in the provincial coffer/lower equalization payments. 

We have at the federal level Export Development Canada that helps purchasers of Canadian products secure funding for international exports....why can we not have something similar for Canadian communities to draw upon for infrastructure whether it is internet, roads, or power?    For companies they are able to write investments off against profits but if they have to import the technology from outside of Canada you are only able to claim this write off if you are a profitable company....if the technology upgrade is going to make the difference between a profitable company and a bankrupt company why do our rules support failure?.

 

[Colin Parkinson]

Things cost what they cost because the producer can charge what they want and the cattle will pay for it.  Diesel has gone up $.13 per litre here in 2 weeks, gas hasn't budged.  Huh?  Both come from the same crude oil, the same refinery, and the technology to produce diesel hasn't taken a quantum leap into the 24th century, so why?  Because everyone switched to diesel a few years back when it was the cheaper alternative, and we can't let the energy company's profits slip, now can we?  So up goes the price.

My sister works for Chevron here in BC, having owned diesels myself long before they became popular again I toake a keen interest in them. I asked about the ongoing price increase in fuel prices for diesel. Her answer was that the facilities to make and store the diesel was limited and originally designed around the commercial user, the advent of many smaller diesels were not anticipated. However the regulatory process to add or change the production of refineries is prohibitive and there is little cost benefit for the fuel company. While the headquarters of the large fuel companies might be showing a healthy profit, the regional arms struggle more so, in fact most gas stations make more money from their store/ kiosks than on the fuel.

 

[Brad Sallows]

No discussion of energy - production and consumption thereof - has any value unless hard numbers are attached to it: how much is consumed, and how much can be produced by whatever means (wind, water, nuclear, etc) are envisioned.  Talking about producing meaningful amounts of commercially competitive power from wind, for example, is just wanking until real data is produced which shows differently.

I don't question that high-speed internet has value to a company.  I suppose companies operating in remote areas have some sort of communications, and are probably spending millions of dollars on operations to extract timber, ore, etc.  Now how much is it really going to cost them to piggyback data services onto their own communications, and in particular how much is it relative to what they are spending?  When you have that number, try and make a convincing case they deserve subsidies.

 

[Kat Stevens]

My sister works for Chevron here in BC, having owned diesels myself long before they became popular again I toake a keen interest in them. I asked about the ongoing price increase in fuel prices for diesel. Her answer was that the facilities to make and store the diesel was limited and originally designed around the commercial user, the advent of many smaller diesels were not anticipated. However the regulatory process to add or change the production of refineries is prohibitive and there is little cost benefit for the fuel company. While the headquarters of the large fuel companies might be showing a healthy profit, the regional arms struggle more so, in fact most gas stations make more money from their store/ kiosks than on the fuel.

Fair enough, but diesel, and propane, are byproducts of gas refining.  Diesel is the prime mover.  everything you eat, drink, read, watch, or listen to got to you at some point via a diesel engine.  Because me and 3 of my neighbours bought a new F250 all of a sudden  it crippled the production and storage capabilities?  Sounds like a corporate version of "people bought diesels because they're cheaper to run, so we need to give them an equal to or greater than rogering." $.13 discrepancy from gas in less than 2 weeks?  Guess they just noticed the "problem" now.

 

[ltmaverick25]

I thought we were a freemarket?  Government sponsored business is doomed to fail.  Or is this another "right"?

A true freemarket would be great but the problem for us is that you have 2 mega providers dominating the industry.  We pay way more for communications services then the Americans or British do. 

 

[Dennis Ruhl]

Alberta has a deregulated market which has meant as a private consumer my bills jumped.  But it has also meant that since the de-regulation occured 3? 4?

Unfortunately with deregulation came high prices in California which caused Alberta prices to jump from 3.5 cents to over 18 cents despite the fact that it was physically impossible to get anything other than miniscule amounts of power out of the province.  So much for free market.

There were also rumours which no-one seems to have investigated that the power companies including the disgraced Enron, exported their miniscule amounts of power at over market value in order to claim it as a market value.  In my humble opinion, the freeing of prices of electrical energy in Alberta simple means that I am paying twice the wholesale price of power PLUS the cost of delivery for which there is a separate charge which is over half of my bill.

 

[Edward Campbell]

We rarely have "free" markets.

In telecomm, for example, the CRTC and the FCC, in the USA, regulate the bejeezus out of the industry - even when it is clear (think of cable TV)  that regulation is neither required nor beneficial to anyone, except maybe a couple of corporations. 

Canadians, like Australians, Brits and Americans, believe, despite massive evidence to the contrary, that government or, better  : quasi-government regulators will give them something for nothing. They, the regulators, do give us something ... and the correct response is BOHICA* - but it sure ain't for nothing.

Our faith in regulation defies logic and, eventually, will bankrupt our country. There are legitimate, productive, necessary roles for government - but sadly, about 80% of the Public Service of Canada is not involved in any of them.


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* See here.

 

[Nostix]

I find it rather ironic that you chose to highlight the phrases "Believe" and "Faith" when describing a functioning system of governance in many countries, while at the same time praising the theoretical benefits of a system which does not exist outside of a Utopian libertarian fantasy.

 

[Edward Campbell]

I highlight words like belief and faith because there is no evidence, compelling or not, that most* government or, worse, quasi-government regulation does any good for anyone - aside, as I mention, from a few corporations that do benefit from artificially maintained, even ordained monopolies.

Look at this list. I defy anyone to explain what most of these organization do for Canada - for some specific clients, I will agree that they do a lot. But for the country at large? Nada. Bear in mind that each province has its own similar list. We are over-governed because we believe rather than think.


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* I agree that we should regulate things like driving on one side of the road or another; I even agree that we should regulate, nationally and internationally, radio frequency allocations, but, really, do we need to regulate which US or Arab channels one can subscribe to on a (practically) limitless capacity cable TV system?

 

[a_majoor]

Further on the subject of regulatory failure, California "deregulated" the electric power market but at the same time erected a regulatory barrier which discouraged any new entrants into the market. Californians found that since supply was not able to meet demand, they were subjected to rolling blackouts and spikes in the price of electricity.

Companies like Enron and PE&G were quick to take advantage of regulatory failure (but of course the narrative never states why these companies had such a favourable environment to operate in). Ontario has a similar problem, the "breakup" of Ontario Hydro only resulted in three quasi monopoly companies, plus the taxpayer being forced to subsidize inefficient "green" energy, also resulting in huge increases in energy prices. PErhaps luckily for us, there is massive generating capacity in the Ohio valley, and the operators of those coal fired thermal plants will be only too happy to meet our electric demands, for a premium.

It is hard to see all the ramifications of the Liberal plan, but some of the unintended consequences might actually make this worthwhle. High speed broadband will allow Netflix and Google TV to provide content to anyone who wants it, undermining the Cable TV monopolies. VoIP services like SKYPE and "G-Phone" (for want of a better word) will crack the Bell/Telus/Rogers troika. Regulatory agencies like the CRTC will have a hard time regulating my content if I am accessing it through servers in Panama or high speed bandwidth can be accessed through alternative means which avoid the existing cable and fiber infrastructure (look at the future military technologies threads to see how this could be done. I will invest in any company which can roll this out as an alternative to the existing players, and I am sure lots of other Canadians are tired of being chained to expensive monopoly providers). Liberal Party payoff to their clients may backfire horribly as subscribers drop cable and phone packages in favour of alternatives they were not able to access before.

The short answer is always "be careful what you wish for"...

 

[Colin Parkinson]

I was reading a book on design of American sailing ships 1750-1870. It was surprising to note how much influence tax regulations had on ship design even then.

As for fuel, proposing to build a new refinery is a huge proposition that will require at least 5 years of lead time and millions spent by the company in regulatory review. Just the printing costs for one pipeline I am reviewing was $60,000 and the application weighed 60lbs. People not involved in the review process generally grossly underestimate the amount of work done by proponents, government and affected parties in the review.

When Independent Power Producers where given access to the market by BC Hydro, we had over 400 applications for power generation facilities in a 75mile long valley. There was no way the government, BC Hydro, the government and local users groups could review all of them and for the most part the majority were “approval mining” That’s where a group spends the least amount of money possible to get an approval from the various governments and then tries to flog those approvals to the people that have the capital to build the project. Needless to say many project die a natural death, but not before consuming huge amounts of everyone’s time.

Just try deregulating everything , you will be surprised how many people have their “sacred cow” and will demand that it remains but others peoples sacred cows are ripe for slaughter. Of course that limits the total number of sacred cows to culled