Monthly Archives January 2013

Northwestel announces $233M modernization plan for Canada’s north

After years of significant pressure from the Canadian Radio-television and Telecommunications Commission (CRTC), Northwestel has finally announced a strategy to improve Internet and wireless services in Canada’s north.

The plan – formally submitted to the CRTC on Wednesday – calls for a five-year, $233 million investment in its telecommunications network to support core infrastructure and upgrade and expand new services. Existing wirelines will be upgraded, as will cable infrastructure to boost Internet speeds to nearly 60 communities. Another 67 communities will receive 3G wireless broadband, which Northwestel says will allow 99 per cent of northerners to access the latest smartphones, tablets and handsets.

An earlier proposal by Northwestel was tied to Bell Canada Enterprise’s proposed takeover of Astral Media Inc., a deal rejected by the CRTC. Northwestel was given until mid-January 2013 to resubmit.

“We have developed a modernization plan that delivers for our communities,” said Paul Flaherty, president and CEO at Northwestel. “In addition to supplying more northern communities with enhanced services, the plan puts in place measures to facilitate competition and builds on partnerships with other parties. The Northwestel plan outlines how we will bring next generation wireless and broadband services to the North and essentially reduce distances with technology. This plan puts northerners first and provides our customers with access to modern and innovative services.”

Enhanced calling features, such as call display, will be made available to 96 communities in the operating area. Eighty-four per cent of the population will be able to keep their phone numbers if they choose to switch to another service provider.

Though Flaherty said Northwestel is working to put customers first, the CRTC has been impatient when it comes to the company’s efforts. In December, the CRTC launched a public process to study the telecom services Northwestel offers to northern Canadians. It is the only telecom offering service in the Northwest Territories, the Yukon and Nunavut, areas with a population of over 107,000.

“Last December, we issued a decision to address the communications challenges facing citizens, businesses and governments there,” said CRTC acting chairman Leonard Katz, in an address to the Canadian Telecom Summit in Toronto last June. “They deserve to have access to reliable services comparable to those that other Canadians take for granted. But they’ve had to put up with aging infrastructure and service outages, as well as the geographic and demographic challenges.”

Although Northwestel received $20 million a year for service improvements, the CRTC alleges it has dropped the ball when it comes to investing in its network. In 2011, the regulator opened the doors for telecom competition in the north, attracting interest from companies including SSI Micro and Iristel.

The need for faster Internet speeds and improved service has been well established, with the lack of infrastructure impacting basic services like education and health care. In an interview with the Globe and Mail published in December, Rich Thompson, CEO of Northern Vision Development LP, said more competition and stronger connections are needed.

“Northwestel has worked hard over the years to make sure that services are updated, but there’s no question that we struggle in the North,” Thompson was quoted as saying. “It is speed of Internet access and the cost of having quality Internet access for our guests. So, we struggle to get the right packages for our hotel from the telephone company that will allow our guests to experience the Internet the way they would expect to in any other hotel when they are travelling across Canada.”

More details about Northwestel’s latest plans are available on its website. The public can submit feedback to the CRTC.

Telecom companies sign on to cyberthreat program

Telecom providers are now in the position to offer valuable information on security threats to business customers as part of their service bundles.

AT&T and CenturyLink are among the first companies to sign on to the new U.S. Defense Industrial Base Enhanced Cybersecurity Services program, which will allow them to receive classified cyber threat information from the Department of Homeland Security. Their customers will be able to use the information – previously only made available to government agencies – to protect critical data.

In November, Congress attempted to pass a law requiring utilities and telecom companies to implement voluntary security standards. The U.S. Chamber of Commerce has been vocal in its opposition of the measure, stating the regulations would be too onerous.

In an interview with Businessweek, Eric Rosenbach, deputy assistant secretary of defence for cyber policy, said the program’s aim is to provide the information to the private sector for it to innovate and market it. CenturyLink has already received a favourable response from private companies interested in buying the service.

Telstra admits to overbilling customers $30 million

Telstra is preparing to refund customers about $30 million after overcharging for international roaming services for six years.

An internal audit brought the issue to light early last year, but the Australian telco only began contacting customers a few months ago. The number of subscribers affected by the overbilling has not been made public.

The industry-funded Telecommunications Industry Ombudsman discovered several startling discrepancies in customers’ bills, including one woman who bought a $129 plan to make calls during a holiday in Europe, only to be charged $75,000. The bill eventually grew to $147,908.

Telstra has maintained its innocence, blaming the errors on international carriers, which it alleges charged customers multiple data session fees. However, no other Australian telecom companies have experienced the same issues.

The Australian Communications Consumer Action Network said the real challenge lies in contacting customers who are owed refunds but have switched providers.

”It is surprising that the inaccurate charging was undetected for six years and staggering to think of the number of bills Telstra will have had to review in order to provide refunds to consumer and business customers,” Elise Davidson told the Sydney Morning Herald.

Bill shock from international mobile roaming fees has ballooned into a worldwide epidemic. A 2006 European Commission study found the average retail charge for a roamed call was approximately five times higher than actual wholesale cost. In Australia, it has been reported domestic carriers often enjoy profit margins of 1,000 per cent on international roaming fees they charge to their customers.

To learn more about international roaming and its impact on consumers, check out our recent analysis of the issue.

Apple on the decline

It appears Apple smartphone sales are on the decline and so are the company’s shares after news broke this morning that the tech giant has slashed component orders.

Stocks dropped up to 4.5 per cent Monday morning in response to a Nikkei newswire report that Apple had reduced its original iPhone 5 display order by half, informing its suppliers of the reductions last month. Some analysts are speculating the slowdown is a result of oversaturated markets.

According to USA Today, 75 per cent of smartphone shipments in a three-month period last summer were Android devices. The iPhone only accounted for 15 per cent, which was just a one per cent increase over the previous year.

Meanwhile, rumours that Apple is developing a cheaper iPhone run rampant. An examination of device prices around the world shows the smartphone is still out of reach for many consumers. The average price of a unlocked iPhone 5 in the U.S. is $649, while the cost elsewhere is substantially higher: China $840, Sweden $918, Brazil $983 and Italy $955.

The video below, from the Wall Street Journal, sheds some light on the development of the inexpensive iPhone.

Take T-Mobile out to the ball game

The bullpen is about to come into the 21st century thanks to a new deal between Minor League Baseball and T-Mobile to boost wireless capabilities on and off the field.

The partnership will see T-Mobile install new on-field communication systems, including a wireless voice system to connect the dugout with the bullpen. There are plans to increase cellular connectivity in ballparks on the carrier’s 4G network, allowing fans better network coverage in the stands. An app, At Bat, is also in the works.

“T-Mobile has made a significant commitment to Major League Baseball across our game and business and its innovative drive and expertise in wireless technology will be an outstanding addition to the baseball industry,” said Tim Brosnan, MLB executive vice president, business, in a press release. “T-Mobile has been an impact player in the wireless industry and we look forward to their innovative spirit positively influencing the game and the way fans enjoy it.”

Last season, MLB regular season games attracted more than 74 million fans, making it the fifth best season for attendance since its inception. The partnership with T-Mobile is just one part of MLB’s new marketing approach, which will include partnerships with FOX, Turner, MLB Network and ESPN.

FCC orders emergency power back-ups

The Federal Communications Commission is demanding back-up power requirements for telephone companies after 911 disruptions endangered millions of citizens last summer.

The recent report –  from an examination of emergency response issues during the June 2012 derecho storm, one of the most destructive in U.S. history – also calls for carriers to monitor networks more closely, and abide to federal outage reporting requirements.

Nearly 80 emergency call centres in six states lost phone connections during the storm that cut a swath of destruction from the east coast through the Midwestern United States.

Service providers included Verizon and Frontier. FCC investigators found that in northern Virginia, phone circuits were powered by a single central office that did not have functional generators, leaving about 1 million citizens with no way to call for help. About 17 per cent of generators belonging to one unnamed company didn’t work.

“They didn’t maintain them or test them properly,” the FCC was quoted as saying in a USA Today story.

It has also been pointed out that phone companies took too long to notify 911 centres of outages. Officials in Fairfax County, Virginia said it took Verizon three hours to inform them that service was down.

“Verizon understands the critical role it plays in the 911 ecosystem. We take this role seriously, and when an issue arises, we act quickly to investigate, correct and apply any learnings across our system,” Verizon said in a statement.

On Tuesday, the FCC announced dates have been set for a series of hearings on communications failures during Superstorm Sandy, with the first scheduled to take place in Manhattan on Feb. 5.

Lawsuit filed over Portland’s new wireline tax

Portland, Oregon implemented a new wireline phone service tax last week that has CenturyLink seeing red. The telco filed a lawsuit Friday alleging the tax violates state and federal law, and leaves an uneven playing field amongst telecommunication providers.

The intent of the tax is to raise as much as $5 million for police department reforms. Portland Mayor Sam Adams has said it will make the city’s telecommunications service taxes more equitable. That’s because Comcast and Integra have paid five per cent of their gross revenues, including proceeds from related services such as call waiting and caller ID, to the city for some time.

However, CenturyLink and Frontier – which has also spoken publicly against the new tax but is not involved in the lawsuit – have been paying seven per cent of their local voice service revenues alone. The new tax would see them pay five per cent of their gross revenues like their competitors.

CenturyLink maintains the tax is unreasonable because it only applies to landline service, not wireless operators. Currently, Oregon has well over 3 million wireless subscribers versus fewer than 950,000 wireline subscribers.

“CenturyLink believes that this change in how the city taxes local telephone companies is in conflict with applicable state and federal restrictions on the taxes and fees that cities may charge consumers for local telephone service,” CenturyLink said in a statement to FierceTelecom. “For this reason, CenturyLink filed an injunction in Multnomah County Circuit Court to obtain a definitive resolution of this issue and to protect its customers’ interests.”

Merchants facing credit card fee hike

MasterCard Canada is planning a significant hike in card processing costs for small business effective this July.

The move – which will see assessment fees jump to 7.7 basis points from 6.4, a 20 per cent increase – comes on the heels of a similar announcement by Visa, which will boost its fees by one-third this April.

Visa also plans to increase the cost of foreign card transactions by 40 basis points and introduce an “uber-premium” card for its top spenders, which will carry a higher processing fee for merchants.

The Canadian Federation of Independent Business (CFIB) – which has over 100,000 members across the country – is up in arms at the news, concerned about the impact on already-struggling merchants. The fees assessed to Canadian merchants ring in at $5 billion per year, making them the second most expensive in the world eclipsed only by what is being charged in the United States.

“CFIB is very disappointed that MasterCard is choosing to increase its fees at a time when small firms are struggling with an uncertain economy,” said CFIB president and CEO Dan Kelly, in a media release. “While MasterCard is raising fees by a smaller amount than Visa, it is particularly surprising that both major card brands are increasing their fees just before Canada’s Competition Tribunal is expected to rule on its case against the two card giants.”

In 2011, the Competition Bureau filed a case against the credit card giants, alleging they were participating in anti-competitive practices by forcing merchants to accept all cards and prohibiting them from applying a surcharge to help them recoup costs. A ruling is expected to be made in the coming days or weeks.

“Unfortunately, the only competition between Visa and MasterCard is to see who can raise prices the most for merchants and consumers and deliver the highest fees for Canada’s banks,” Kelly said.

Visa, MasterCard and card-issuing banks are embroiled in a similar $7.25 billion anti-trust case south of the border, where US merchants and trade associations allege the credit card companies conspired with banks to fix fees. The settlement was given preliminary approval in November and has since been appealed. Similar suits have also been filed in Europe, where the fees cost retailers about $33 billion annually.

Back in Canada, the CFIB has also raised the issue of credit card sales practices, suggesting small merchants are being trapped in “terrible” credit card processing deals, even signing equipment lease agreements that, unbeknownst to them, sharply increase fees. The Financial Consumer Agency of Canada is investigating and has already issued a few draft guidelines to stop some of the unfair practices.

Last winter, a CBC News investigation revealed small business owners were being duped by surprise fees and payments by contractors who supplied them with debit and credit card machines. In one case, a tax preparer had seemingly random amounts of money automatically withdrawn from her bank account by the payment provider. In another, a cab company was being charged more than double per debit transaction than what was agreed to its contract, a claim that was denied by the payment provider.

BYOD heads to court

Two of the most risky factors to consider in a Bring Your Own Device environment are privacy and ownership. The employee owns the mobile device and the contents within – after all, they purchased the phone and their name is on the carrier contract. This has been a major area of concern for many businesses since the start of the BYOD trend.

What happens to a phone and its contents if an employee is terminated or quits? The phone number goes with them, which is an obvious issue: Just one missed call from a client could cost the company a significant sum, probably much more than its monthly BYOD savings.

But it’s not just the number that exits with an employee. Unless a company has taken steps to install software that allows it to wipe the device, the former employee may walk away with a mobile filled with company documents, emails, sensitive information and trade secrets.

Who would have the legal upper hand in such a situation? A recent US District Court case in California (Mintz v. Mark Bartelstein & Associates, Inc.) has shed some light on the matter. The plaintiff left his job at sports and entertainment talent agency for a position with a competitor. His former employer alleged he stole clients and trade secrets upon his exit. He shot back with a claim his email had been illegally accessed. The former employer subpoenaed AT&T, hoping to gain access to text messages and calls, including times, dates, call length and numbers the text messages were sent between.

The court’s ruling fell somewhere in the middle. It found the Stored Communications Act prohibited AT&T from handing over the text message information that was subpoenaed. When it came to the phone calls, the court found the employee did have a limited expectation of privacy. Since the company paid for a portion of the device and circulated a policy stating it had the right to review communications – though the employee denied having ever received or read it – AT&T was ordered to hand over the call information in the end.

In his analysis of the ruling, Silicon Valley lawyer Stephen Wu pointed out a few important lessons businesses can learn from the court’s decision. Wu said companies wanting control over devices should provide the phone number, pay for the entire cost of the device, and have a signed agreement in place with the employee. There should be no personal use of the phone.

“… Companies with BYOD policies will have to accept that employees will have a greater expectation of privacy than a non-BYOD workplace,” Wu wrote. “The phone account may predate employment and may be in the employee’s name. The employer will know that personal calls, texts, and emails will be made using the device. And if the employer does not pay all of the cost of the device, the employee will have a greater expectation of privacy. These factors may be unavoidable with a BYOD policy.”

Sprint pre-paid service launching this month

Sprint is rumoured to be readying itself to launch a new pre-paid service on Jan. 25. Multiple online media outlets broke the news about the company’s new Sprint As You Go plan, offering no-contract phones that include unlimited voice, text, data and voice roaming. Leaked documents indicate there will be no activation, termination or late fees.

Sprint pricing

The plan will kick off with four phones – two smartphones and two feature phones – ranging in price from $50 to $250. Feature phone plans will be $50 per month, while smartphone plans will be $70.

However, Evolution Data Optimized (EvDO) roaming will not be available, and at least one report suggests it may result in extra charges, burning through pre-paid credits. It has been noted the Samsung Victory’s 4G LTE branding has been removed in promotional materials, leading some to speculate the pre-paid version may have its radio disabled. It does not appear standard Sprint phones can be rolled over to the pre-paid plan.

Sprint’s new offering isn’t the first on its network – pay-as-you-go is already offered by Boost Mobile and Virgin Mobile. But this could be Sprint’s big move to capture a segment of the market for itself, perhaps in response to the T-Mobile-MetroPCS merger.