Canadian Manufacturing

Ottawa should adapt policies to new IoT reality, says MEI

The Montreal Economic Institute says that the Internet of Things will create a $21 billion Canadian market by 2018, and Ottawa needs to enact policies to ensure that telecoms managing the exchange of data can keep up



MONTREAL—The Montreal Economic Institute (MEI) says Ottawa will soon be forced to reconsider its telecommunication policies to account for the rise of the Internet of Things.

The think-tank presents this argument in the 2017 edition of its report, The State of Competition in Canada’s Telecommunications Industry.

Labeling IoT the “fourth industrial revolution,” MEI says this technology will create a $21 billion market in Canada by 2018.

This increase in traffic data, needed to connect physical devices, will need to pass through telecom networks.

“Major network investments will therefore be required to accommodate this exponential growth of traffic,” said Martin Masse, co-author of the report.

He continued, “Yet only solid national and regional providers with their own infrastructure have the means to invest in the wireline and wireless networks that will be required to keep up with IoT developments. These providers invest more than $11 billion on average every year in network infrastructure, while resellers only invest about $30 million.”

Masse says that the policies of the federal government and the CRTC over the past decade, aimed at propping up undercapitalized wireless players and Internet service resellers, have only encouraged artificial competition and led to waste and the misallocation of resources.

He argues that if these policies are pursued by Ottawa going forward, they may well slow down the development of the Internet of Things in Canada.

“Facilities-based competition, as opposed to service-based competition, is the best way to spur innovation. We pointed this out in previous editions of this report, but it’s even truer today, with the arrival of the Internet of Things,” said Paul Beaudry, co-author of the report.

Beaudry says that Ottawa should adapt its policies to the new IoT reality.

Beaudry continued, “In any case, only providers with their own wireline and wireless infrastructure will be able to manage the networks so as to ensure the safety and robustness required, for example, for the navigation systems of self-driving cars. Resellers will have no role to play in this market.”

The report also criticizes a 2015 Canadian Radio-television and Telecommunications Commission decision to mandate the sharing of next-generation networks with resellers, which the authors argue make little, if any, infrastructure investments to improve Canada’s telecom structure.

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