Funding Broadband Deployment

I decided to rush out a brief post before my holiday break when I read this article. I fully sympathize with the need for more broadband competition and broadband deployment to under-served areas, it's just that we should not confuse the two: competition and ROI (return on investment), respectively, are completely different animals.

Line sharing (aka network access unbundling) can improve broadband competition in currently served areas, by driving down prices and creating incentives for better service where facilities-based competition is limited -- this is the reasoning behind GAS (gateway access service) in Canada. However, line sharing will not only not create an incentive to deploy broadband to under-served areas, it will slow deployment to those areas.

I would have thought this would be obvious, but perhaps it isn't. I think the discussion has been confused recently by reports about AT&T's declining investment in their networks, which is occurring even in the face of a moderately-competitive market for mobile wireless in the US. The contention seems to be that the present level of competition isn't sufficient to prod AT&T to maintain or increase their capital budget, therefore the regulator should encourage investment by other means. It must be said that the criticism of AT&T may turn out to be misplaced since it could very well be that they are making a sufficient investment in their wireless data network, and that the decreases may be elsewhere in their budget; AT&T is a diversified corporation with several major lines of business.

Getting back to the topic at hand, if line sharing for currently-served areas ends up in reducing the price for broadband service (or increasing investment in the service side of the business) there will be less money available for capital expenditure in the network. Of course one could argue that the carrier should find cost savings elsewhere in their operations to compensate for the reduced revenue, although that is easier said than done when you consider just how much they have been trimming the fat (including massive headcount reductions) over the past several years.

If you then combine this price pressure with the loss of service revenue due to line sharing on new technology -- deployment to under-served areas or upgrades of existing networks -- the business case for capital investment gets much tougher: same or higher costs, and less potential cumulative revenue from served customers. This situation in the US has its parallel in Canada, as exemplified by the recent government decision to overturn the CRTC ruling on GAS for higher-speed technology. I discussed this point in an earlier article.

With that, I am out of here. My next post won't be until after the coming Earth perihelion in early January, assuming we survive our annual close brush with the Sun. Enjoy the holiday.

How Rogers Wireless Can Win

In my previous post I said that it is possible that Rogers will benefit, not lose, from Wind's entry into the Canadian mobile wireless market. While I did briefly touch on the reason -- roaming charges -- I now think it is an interesting enough point to deserve elaboration. That is the purpose of this article.

As mentioned before, Wind's network will take some time to roll out, whether across our urban areas, the suburbs, transportation corridors or the great expanse of rural areas. They make up for their current low geographic coverage through a roaming agreement with Rogers Wireless, which is only one of the big 3 to share the same radio technology: GSM. The CRTC has mandated that the incumbents must enter into these roaming agreements with the new entrants, and that the roaming charges in those agreements must be reasonable (probably cost plus a small profit, although I have not looked into the actual language). The quoted rate is $0.25/minute, which appears to meet the requirement.

Let's look into a sample scenario using round numbers that I believe are good approximations to many typical cases so we can see how Rogers business changes when subscribers switch to Wind. The format of my analysis should be usable for those interested in doing some digging and using figures more accurate than my approximations.

The market shares of the big 3 are not equal, but let's assume that they each have 1/3 of the total market, and each of their subscribers are equally likely to switch to Wind. Now we can look at what happens when one subscriber from each -- User R (Rogers), User B (Bell) and User T (Telus) -- switches to Wind.

If each subscriber's current bill is $50/month (not including taxes), each carrier has their revenue reduced by that amount. Wind charges less, so their revenue increases by $90 when they charge these subscribers $30/month. We can now back up and exclusively look at the impact on Rogers -- we'll come back to the relative impacts on Bell, Telus and Wind at the conclusion of this analysis.

Rogers has a marginal cost to support each customer, mostly due to billing and customer service (terrible as it is), that goes to personnel, systems, mailings and so forth. If we assume that this cost is $6/month/subscriber, the net revenue loss is $44/month. I'm assuming that the ETF (early termination fee) subscribers pay when they break their contracts to switch to Wind will cover subsidies for the phone they may have provided for free.

Each of the subscribers who switched to Wind will spend a portion of their air time on Rogers' network. For a typical user (and deliberately choosing nice, round numbers!) we can estimate this at 40 minutes/month. This works out to $10 for each of Users R, B and T, or a net revenue to Rogers of $30 (I am making the reasonable approximation that the roaming fees collected by Wind are forwarded to Rogers without any transaction fees). Rogers' net loss has now been reduced from $44 to $14/month.

If the 40 minutes of roaming represent 1/3 of a typical subscriber's total monthly air time, the sum of these three subscribers roaming load is equivalent to one Rogers Wireless subscriber. Therefore the network cost for Rogers is the same as before Wind came on the scene; Rogers lost one subscriber, then gained three 1/3-subscriber traffic loads. The network load is not distributed the same since the roaming is mostly in outlying areas, but rarely in urban cores. Even so, we can call it a wash since the overall long-term equipment impact is similar.

If the actual roaming load is less than what I've described, the roaming revenue declines as does the network load. While the marginal network cost will be lower than the marginal revenue for every unit of air time -- if this isn't clear, think about it some more -- there is some savings since the lower network load allows some network capacity increases to be deferred to a later date. This saves capital expenditure in the near term.

The final tally is a net loss of $14/month/subscriber rather than the $50 charge that appears on their subscriber's monthly statement. This isn't bad! Ok, so while my earlier guess that they might show a net benefit was wrong, they still do very well. This becomes especially apparent when compared to Bell and Telus which each show a net loss of $44/month (using the same set of assumptions). As for Wind, they are carrying a large debt load and are further burdened with a high ratio of capital expenditures to revenue. Of the four carriers it should be clear from even this simple analysis that Rogers Wireless will be the net winner for at least the next year or two.

Perhaps that is why, of the big 3, Rogers raised the least stink when Clements overruled the CRTC to let Globalive turn up the Wind network.

Rogers said it believes competition is good for Canadian consumers.

"We've always thrived in a competitive environment and we're ready to meet the competition head on," spokeswoman Odette Coleman said.

Too bad that a good deal for Rogers Wireless is not so good for us until Wind's geographic coverage is far better than it is now.

Switching Carriers, Or Not

I hate to say it, but mobile wireless competition in Canada has not arrived. Even worse, it could take some time yet. Neither Wind Mobile nor the other new entrants to the market will have a significant impact until later in 2010 at the very least. It is also possible that competition could be set back by Wind offering service now when their network is only partially turned up, which could cause a backlash from their early adopters when they see what their bills are really like in the first months of service.

The threat of competition made quite the impression on the share prices for Rogers, Telus and BCE on the days subsequent to Minister Clement overturning the CRTC ruling on the foreign ownership of Globalive, which owns Wind. While it is said that the stock market is a future discounting mechanism looking forward about 6 months, these declines are premature. I am beginning to doubt that their 2010 calendar year earnings will be significantly impacted by Wind and the rest, and therefore the predictions by many analysts will be proved wrong. Unfortunately this also means that the big 3 will not be quick to drop their prices in response to Wind's opening salvo of simple, low-price contracts (and full-price smart phones).

At the risk of stating a tautology, a key feature of mobile phones is the ability to, well, be mobile. If you try to do that with Wind's service you will pay a high price. Their coverage areas are (sensibly enough) in the urban cores of our major cities, but it will take time for that coverage to be extended to the suburbs, and perhaps much longer before they cover rural areas and major transportation corridors. If you are truly mobile, expect to pay a substantial amount for roaming ($0.25/minute plus long distance).

From what I've seen, it appears likely that Wind, slow as they are in getting their network in place, is further along in their geographical roll out than the others. Facilities-based competition is what we need, but it's expensive and it takes time. It may in fact turn out that Rogers' business will increase as Wind enters the market since they will have windfall revenue from Wind's customers who will spend a lot of air time roaming on their network. This revenue could more than compensate Rogers for the customers they lose to Wind since they will also gain air time from the subscribers Wind takes from Bell and Telus. (Wind subscribers can't roam on Bell or Telus networks since Wind uses GSM technology which, of the big 3, only Rogers supports.)

This situation reminds me of the mid-1980s when for a few years AT&T's biggest customer was MCI; MCI entered the long-distance market in 1984 when the FCC first allowed competition, but their geographical coverage was poor while they built out their network, so they leased facilities from AT&T, the former monopoly and now MCI's competitor.

It looks like I won't be switching to Wind anytime soon.

Climate Change: Who Decides What Our Government Does

Everyone seeks to influence the decision-makers in our lives. This is true at work, within the family, and on matters of governance. On the other side, the decision-makers need input from experts, their constituents and even their social groups. However, when all is said and done, the decision-maker is responsible for making decisions.

That explains accountability and responsibility, but still leaves the decision-maker in jeopardy. No such position within any sphere of control is permanent and unchangable. That is, decision-makers are judged and can be removed. When we speak of government leaders, change can be by the ballot box or by other means, largely determined by the prevailing system of government.

This makes it crucial for a decision-maker to listen to his or her judges if continuance in their position of power is desirable. As I watch the protests going on in Copenhagen I do wonder who the decision-makers are listening to, and who they are prone to being swayed by in their deliberations. Is it the protesters, whether they are peaceful or violent, or is it their electorates?

Leadership has a cost. If you go against the electorate to do what you believe is right, you may lose your position. If you follow the electorate -- policy-making by opinion poll -- you may keep your position only to be excoriated later for having chosen power over doing the right thing. Politics isn't easy! It is particularly difficult in the present circumstance since the electorate is uncertain -- we generally want to deal with the problem but are not ready to pay the price -- while the activists are certain (climate scientists, who are only rarely activists, aren't "certain" but strongly lean toward action).

As I write this, it appears that our decision-makers are listening to neither the protesters nor the scientists. I understand the former since protesters do not represent the majority, and seek to circumvent the lack of wide public support by confronting the politicians. I understand the latter since doing what is in a sense "right" will have a cost -- make no mistake about it -- on our standard of living, for the near term at least.

We can criticize our decision-makers, who are all easy targets, yet their job is difficult. The loudest voices seeking to influence them are the ones least able to determine their own political futures, even if they are right. The quieter voices are those of the electorate and the corporations that will pay the price for any radical action, since those are the ones whose immediate interests are threatened. Yes, the electorate's interests are tied to corporate interests whether or not this is acknowledged: we are mutually dependent on economic stability and maintaining profitability, jobs and living standards. Even so, in the long-run the status quo is unsustainable: fossil fuels will inevitably rise in price and climate change will occur to a lesser or greater extent, with all the consequential impacts on local and global economics and social order.

So, what should our leaders do? Go slow, go fast, or find some wishy-washy middle ground? Our current federal government seems to strongly favour the status quo. They may only change their position in order to align our actions with the world's major economies, which at least preserves our ability to trade and therefore offers the best economic protection. Either way, the climate will continue to change and so further action will be deferred to a future time when the problem is more acute. Despite the howls of the protesters and the warnings from the scientists, the government will most likely win this round, where winning is measured when Canadians next go the polls. Whether they, and we, are right is another matter.

Canadian Enough? Telecommunications Policy Objectives

It seems that my prediction that Globalive would get the nod from the federal government was correct. That doesn't make me feel omniscient since the outcome was just too predictable. The halfhearted negative response from two of the incumbents (Telus and Bell) tells me they expected this result as well.

For those paying attention, this was only one of two important telecommunications policy decisions on Friday by the government, both of which went contrary to earlier CRTC decisions. While in seemingly different industry segments -- wireless and DSL -- I believe these decisions were closely related. I'll get into this later in this article.

First, we should dispense with the Globalive decision, in particular regarding whether this company meets the rules for Canadian ownership and control. I believe the CRTC got it right when they ruled against Globalive. I also believe Clement got it right when he overruled the CRTC.

Clement stressed that Friday's announcement was not giving Globalive special treatment.

"Let me state for the record, government is not removing, reducing, bending or creating an exception to Canadian ownership and control requirements in the telecommunications and broadcast industries," he said.

I am not being inconsistent by agreeing with both the CRTC and the Minister. The CRTC made a correct ruling (so far as I can tell) on the specifics of the law, despite pejorative comments that can be found on media comment threads and in various blogs.

"The CRTCs seemingly arbitrary decision to impose restrictions on Globalive..."

The only uncertainty I have is in regards to the fine details of the Globalive-Wind-Orascom corporate structure, with which I am unfamiliar in its details. If you have ever had to deal with the legal specifics of shareholders agreements, voting rights, share classes and corporate decision procedures, you will know that much is hidden deep in these matters and can be difficult to unravel even by experts in corporate law. I cannot say how much of these specifics are understood by the Commissioners and the Minister, though I would think they understand it enough for their purposes.

Nevertheless, as a matter of national policy I think Clement got it right. As of right now it is reasonable to state that Globalive is Canadian owned and controlled. This may not be true tomorrow: it will depend on the gotchas in the corporate documents and debt instruments should Globalive fail to meet its future obligations to Orascom. That was why the CRTC correctly noted that Globalive's Canadian ownership and control situation is unstable. Clement disregarded the uncertain future in favour of increasing competition today, something which is sorely needed in the present market.

Here is where we can begin to tie this decision with the one on DSL. On Friday, Clement voided the CRTC decision from earlier this year that the incumbents will need to extend GAS (Gateway Access Service) to technologies that support higher data rates. My view is that both decisions by Clement were united by one policy objective, and one that I've discussed in earlier articles: to promote facilities-based competition, not competition by forcing sharing of incumbents' networks. Globalive is building telecommunications infrastructure, and the government wants exactly this. GAS encourages the opposite by extending ISPs' abilities to stay in business with minimal network investment while discouraging incumbents from investing in infrastructure since the return on their investment will be reduced.

"With access to advanced broadband services denied, MTS and small ISPs are now under pressure to invest more in their own infrastructure."

As a broadband consumer who uses an ISP that takes advantage of GAS, this decision is not to my personal advantage. Even so, I have to recognize that in the long run it is to the benefit of the country. There can be no guarantee of this: the decision reduces competitive options for consumers today, but it is merely neutral on creating investment incentives for ISPs other than those operated by the incumbents. That is, Clement's decision limits ISP dependence on the incumbents' networks but provides no other specific incentive to invest, except insofar as they may feel compelled to do so if they wish to remain viable well into the future.

I will now return to the Globalive decision's implications on Canadian ownership and control of telecommunications networks and services to better understand the future implications. Some believe we are on a slippery slope to seeing this and other critical infrastructure open to being acquired by foreigners.

"It has established an enormous precedent going forward as to how people are supposed to interpret our Canadian ownership laws," said Michael Hennessy, [Telus] senior vice-president of regulatory and government affairs.

I disagree with this sentiment. The present law only made sense when the industry was run by monopolies or at most two or three major corporations. For the purpose of national security and economic stability, in the past we did need to prevent foreign control of these companies. (Students of history will know that this was not always true since Bell Canada, BC Tel and others were foreign-controlled at times, and no catastrophes ensued because of this.) However, with competition it is less important that each individual company be Canadian owned and controlled: if Globalive defaults on their debt and Orascom takes it over, the overall wireless industry will still be majority owned and controlled by Canadians.

It is correct to ask what is to become of the ownership and control requirements contained within the Telecommunications Act. Perhaps the right solution is to require that some threshold percentage of each critical industry segment -- wired and wireless -- be Canadian owned and controlled in aggregate. This suggestion has its own difficulties but may be preferable to the present law, and it could provide a workable balance between promoting competition and protecting the national interest.

It will be interesting to see if this government opens up the law to amendment. I don't think it's a priority of theirs, so for the time being they may be content to deal with related issues ad hoc. I doubt that the government much cares for the sensibilities of the CRTC Commissioners and will think nothing of overruling them again in future.

Excessive Corporate Profits ... Yum!

I am amused by stories like this one that demonstrate how some people don't understand how business operate within the total economy. It is only possible to be horrified by corporate profits if you assume that the capitalism and free markets are evil, where money is being transferred from our pockets to the balance sheets of large corporations. That isn't how it works.

Banks don't earn money. Really. A bank, like any company, is a fictitious entity that only exists on a piece of paper. A bank does not drive fast cars, do drugs or chase after loose women. It's the bank's owners -- the shareholders -- that earn money from the company's profits (dividends), and capital gains (hopefully!) from increases in enterprise value. Society as a whole gains through taxation of those corporate profits, which, conceptually at least, keep taxation of private individuals at a lower level, unless of course if you're a bank shareholder and must pay taxes on dividends and capital gains.

Investors have an easy solution to this phantom problem: buy shares in companies that make obscene profits. Credit card interest rates and bank fees too high while savings interest rates are too low? Buy bank shares. You whimper in pain every time you fill the tank on your SUV? Buy shares of petroleum producers. Your cable bill has gone up again and again? Buy shares in the cable companies. When done well, you can gain more through investing than you lose through being a customer of those companies.

Not to be too dismissive about these companies' prices, there is one segment of society that is hurt: the poor. They generally are unable to invest enough to compensate for the price increases while also maintaining their standard of living. While this has no easy answer, at least corporate profits generate government tax revenue (both corporate taxes and taxation of individual shareholders who partake of the banks' profits) that is then used to provide social services and keep the marginal tax rates low for those at the lower end of the income scale.

I am just not able to feel any outrage at all when I see stories like the one referenced above. It simply isn't a problem.

Unfairly Tossing a Fair Coin

I had a good laugh while reading this CBC article about teaching students how to cheat at coin tossing. The article does not relate the ways by which this can be done, however the techniques have been well-understood and used or abused for a very long time. If you are unfamiliar with the "tricks" involved, it may be difficult to picture how it could be done; that is, how the tosser can cheat without rousing the suspicion of observers.

In a traditional coin toss the coin is launched from a flat position with the spin imparted by an off-axis force from (usually) the thumb. A coin flipped in this way has two superposed motions: a gravitationally-determined parabolic arc and a rotation about an axis that contains a diameter of the coin. The result is a coin spinning rapidly end-over-end and travelling through the air in an arc. Since the spin about the coin's diameter is many times the rate of the (roughly-speaking) half-revolution about an invisible centre -- usually near the parabola's focus -- and both rates are not precisely controlled, the outcome is sufficiently uncertain that the outcome of the toss -- heads or tails -- can be said to be random. It isn't entirely random: it is possible that a tosser with a sufficiently fast eye and hand could interrupt the coin's flight at just the right moment to reach a desired outcome. However it is good enough to be an uncontroversial way to decide the kickoff in a football game.

That's was a simple toss, but there are other ways to spin a coin. Further, these various motions can be combined to create some complex, seemingly-random spins that are often easier to manipulate. If you want to find out all the ways to spin a coin (and cheat) I recommend you read the description provided by the physicist and statistician E. T. Jaynes. He went so far as to train himself in the various techniques and then test the results. From the raw data of many, many hundred of trial runs, he became very accomplished at achieving almost certain outcomes with tossed coins. The book where his description can be found is called Probability Theory: The Logic of Science, which you may want to avoid purchasing since it is heavy, large, expensive and highly technical. Happily, early drafts of the text are available online. One place is here (browse down to chapter 10) provided you have a Postscript viewer handy. If not, do a web search and you will find versions in other formats, though you may have to hunt a bit in each one since there is no consistency in the work's structure and content across its many versions. You'll also need a good imagination since Jaynes provides no diagrams, just precise descriptions.

If you don't want to do all that work, let's review a few of the spin types that a fair coin can exhibit. The most trivial is where the spin axis goes through the coin's centre and is orthogonal to the coin's surfaces; in other words, the spin axis is at a right angle to that in a traditional coin toss. No matter how much the coin spins, the result of the "toss" is trivially identical to the face that is showing at the start.

Next, we can launch a coin spinning on its orthogonal axis along the same parabolic arc as in the traditional coin toss. However, if no additional spin component is employed, this form of travel will not affect the outcome: it will still show the same face as if the coin were not launched. You can try this by placing a coin in your palm and accelerating it upward without changing the attitude of your palm. You could also do it with your thumb but it is more difficult to centre the force so that the coin does not tumble. In either case, this is difficult to do while also imparting spin around the orthogonal axis.

A slight variation is to launch the coin so that the same face of the coin points inward (along the coin's orthogonal axis, and approximately toward the parabola's focus). This is much like the tidally-locked orbit of the Moon around the Earth where the same face (but not quite due to libration) always faces the Earth. This is nearly as easy as a flat toss, but this time the outcome of the coin toss will be opposite to the face shown at the start.

Now it gets more complicated. Consider a spin axis that is intermediate between the two preceding cases of the orthogonal and diameter axes. The resulting motion is a wobble that is much like you get by spinning a plate on a table if you launch it an angle to the surface (where the plate touches the table at only one point). You do this with a coin by centering the force imparted by your thumb off to one side of the coin while simultaneously pulling your thumb towards yourself. You may have to brace the coin with another finger so it doesn't slide off your thumb, or you can direct your thumb's motion at an angle that is off the vertical. It can be learned with only a little practice.

The wobble amplitude (the angular difference between the highest and lowest excursions of the rim at any fixed point at the coin's edge) is important to creating the impression of a fair coin toss; to an untrained eye a large wobble is hard to distinguish from a spin about the diameter axis, if the spin rate is high enough. However if you think about it for a moment I think you'll see that the outcome of the toss is exactly the same as the original, trivial case where the spin axis is orthogonal (no wobble, and the top face doesn't change). Combine this with a flat or tidally-locked arc and you can get any outcome you desire. According to Jaynes, depending on the resiliency of the landing surface you can often let the coin land on the floor without greatly reducing the predictability of the outcome. This tactic also has the advantage of allaying the doubts of observers about the toss's fairness. It is of course better when the surface is soft enough that the coin doesn't bounce, such as a natural-turf football field.

There is more to it if you want to get into even more arcane combinations of spin axes that give highly deterministic outcomes while appearing to have random, unpredictable flights. Jaynes pretty much goes through all the possibilities in his book so I'll leave off here and let the curious read what he has to say on the topic.

Government Policies to Push IP-based Communications

Last week the FCC in the US publicized a proceeding to solicit questions on the content of a forthcoming NOI (notice of inquiry) on VoIP and IP communications. In effect they are asking the public to tell them what questions they ought to be asking.

"...appropriate policy framework to facilitate and respond to the market-led transition in technology and services, from the circuit switched PSTN system to an IP-based communications world."

This first quote from the short (3 page) document seems appropriate. They recognize that communications is increasingly occurring on packet-switched networks, and they are concerned that their policies and regulations may hinder this market-driven change. So far so good.

"...we seek to understand which policies and regulatory structures may facilitate, and which may hinder, the efficient migration to an all IP world."

This second quote is very similar in tone to the first, but with the addition of a desire to get into details. This is also very fair and so quite reasonable. I believe that the real, underlying problems are not so straight-forward, and I expect that this will muddle the long process of public engagement they are beginning. One important reason for this is that while the public is being invited to respond, as usual in these matters it will be the industry players, especially the largest incumbent corporations, with the greatest budgets and motivation to participate.

This is not to say the FCC will not try to be fair. I have dealt with the FCC in the past and they are for the most part eager and able to do good work. They will nevertheless find it difficult to achieve a fair outcome. To see this we need only go back in time to earlier initiatives, such as, for example, the attempt to achieve equitable competition in the local telephony market with the 1996 Telecommunications Act.

Look around now and you'll see that after nearly 14 years we have a largely reconstituted oligopoly of massive telcos with mostly tiny hosts of niche competitors. The only competition with any heft are the cable companies, but they didn't need at least 95% of what the Telecom Act engendered to be successful. It was enough that they were permitted to enter the telephone market and able to secure interconnection with other phone companies. Almost everything else in the Act was about unbundling and securing access to the equipment and facilities of the telcos. With their own facilities-based networks, the cable companies didn't need this; what took them time to get into the market was the encumbrance of a more mundane nature: upgrading their technology and the will to enter the market.

In that light I have to wonder what this FCC proceeding can realistically accomplish? VoIP certainly already exists as both a technology and as a basis for driving down the prices for telephone service by means of regulatory arbitrage, through utilizing the broadband and (more recently) wireless consumer services provided by the incumbents. Will the FCC dismantle the existing plethora of bizarre rules for inter-carrier settlements and fees for user-funded services like 911 and the Universal Service Fund boondoggle? A lot of these persist for political reasons to support high-cost rural areas but are often misused and are poor at achieving the intended results.

I have come to strongly believe that no regulations that seek to micro-manage the business operations of corporations can succeed, and will only end up creating unintended consequences by distorting the normal operation of the free market. Regrettably, facilities-based competition is the only effective solution; it's regrettable because it is expensive and takes a long time to flower. With effective competition, there is no need to come up with regulations about IP communications: let the market decide on the best technological solutions and services to serve and grow the market since the public will have a real choice.

What the FCC should be doing is fine-tuning its regulations so that the major facilities-based telecommunications providers -- telcos, cable companies, mobile wireless and fixed wireless -- have a reasonably equal shot at success. If they can do that, they will have a far better chance of not only meeting their objectives but also re-energize this important and critical industry sector.

If you'll excuse one note of what I believe is justified cynicism, I am not focused on the US because it is an important and nearby market (which it is), but rather because what they do will be implemented in some fashion here in Canada about 3 years later. Only then will Canadians see effective telecommunications competition and some real choice. So let's cheer on the FCC!

A House Stands On Its Own

Imagine that you commission a house to be built for you and your family. All seems to go well during its construction. Every inspector has finally given the nod that all is well, and that the routine problems that crop up in any custom job have been addressed. The contractor is about to hand you the keys and collect your cheque for the final invoice when you learn something disturbing. Many of the trades people who built your house were not model citizens: some were murderers, swindlers of the elderly, child molesters and, yes, even washed-up politicians. What are you going to do?

If the inspectors have done their jobs, the house will stand. It will not suddenly disintegrate or have a lower value because the character of one or more of the workers is called into question. Regardless of character, even if one or a few workers were less than capable at their tasks -- say, attempting to hammer in a nail using a stapler -- presumably this was caught by the contractor or an inspector and the incompetent person was forthwith escorted from the job site. The work was inspected and the house will stand. Believing otherwise will only cause you to suffer monetary or other stress-related difficulties down the road. The house is a house regardless of what you choose to believe.

Now let's move on to a similar situation that is getting a fair amount of media attention: the hacking of the email and files of the CRU (Climate Research Unit) at the University of East Anglia in the UK. Scientists and technicians associated with this group played a role in the IPCC's report on climate change. The leaked material shows that scientists are as human as you and me, complete with instances of braggadocio, rudeness, conflict (sometimes personal) and sloppy thinking. This is unsurprising. I would hope that no one still believes the stereotype of the scientist grimly in a white lab coat humourlessly pronouncing incomprehensible equations and facts to anyone silly enough to engage them in conversation.

"The e-mail exchanges among several prominent American and British climate-change scientists appear to reveal efforts to keep the work of skeptical scientists out of major journals and the possible hoarding and manipulation of data to overstate the case for human-caused climate change."

The above quote from a blogger at the National Post goes a little far in the interpretation of what the material reveals of real scientists doing real work. To claim fraud and malfeasance is not justified, or at least not yet. Like in the house example, it seems that the prospective owner is calling in more inspectors to inspect the house yet again, and the work of the previous inspectors, all because the poor character of some of the workers has come to light.

It is not surprising that hard-nosed skeptics and outright political opponents of the case for climate change would latch onto any opportunity to re-open the science with the objective of reducing its credibility. However, opposition is not equivalent to proof of anything. For now the house still stands. It may be that the foundations of the house are indeed rotten and every inspector on the job site has missed this obvious flaw, although that is improbable. More likely is that some of the building materials were defective or several studs were incorrectly secured. It would be surprising if it were not so, since perfection is unattainable even with the very purest of intentions and diligence of everyone involved. This is as true for science as it is for house construction; that will not cause the house to fall.

The rhetoric is a distraction. I am content to watch while the inspectors go back in and poke around. Possibly they will suggest some remedial work, though even if it is not done I doubt that the building will fall. This is no house of cards, so a flaw here and there will not bring it down. So be prepared to pay up and move in when the latest batch of inspectors complete their review.