Monday, August 15, 2022

Can competition increase network resiliency?

Rogers chief executive officer Tony Staffieri and Rogers’ new chief technology officer Ron McKenzie appeared before the House of Commons Standing Committee on Industry and Technology on July 25 to provide details about the company’s country-wide network outage on July 8. During the discussion, Members of Parliament questioned the two execs on what commitments the company has made to prevent a recurrence.

Although the Canada Radio-television and Telecommunications Commission (CRTC) deemed the issue to be a technical one, the discussion between Rogers, MPs, regulators, and other witnesses on Monday eventually landed on the topic of competition. Multiple participants raised concerns about the health of competition in Canada’s telecommunications sector and whether having more providers would have contained the outage’s scale.

In an earlier interview, Todd Hofley, vice-president of policy and communications at Beanfield Metroconnect, a Toronto-based internet service provider (ISP) that sells to multi-unit buildings, told IT World Canada that competition can indeed build resiliency.

“When you don’t have as many businesses and residents relying on a single or a few large players, and when the telecommunication needs are spread across a competitive playing field with a number of different networks, then the danger and risk to the overall telecommunication system as a nation, as a region, or even as a building is obviously less,” he said.

For more than 14 hours on July 8, millions of Canadians across the country were left without connectivity when Rogers’ mobile and internet services suffered a complete shutdown. In addition to impacting the remote workforce, it also halted Interac payments and even hampered 911 emergency services. Rogers’ employees had to seek out connectivity from elsewhere to restore their own network.

For businesses, the outage was a wake-up call to rethink their resiliency plans. The most direct solution is to subscribe to a second provider as a backup, but small businesses may struggle to fit the cost into their tight budgets. Hofley said that competition can help.

“With increased competition, you would have much lower prices, which would mean that instead of only having a single provider, the business might be able to spend a small fraction more and actually have a backup system in place so that if their first and chosen provider went down, they could immediately switch. But those two services would be available at a far cheaper cost to the business,” he explained.

But as the fallout highlighted, the issue extends beyond simply finding a backup. When Rogers’ network went down, its customers flooded Bell and Telus networks, causing service slowdowns. At the hearing, Rogers admitted that no one provider can handle the sudden surge of traffic. So even if businesses did have a redundant provider in place, they may still experience interruptions.

This raised the issue of whether Rogers’ massive subscriber base is a challenge to resiliency in and of itself, as noted by Nathaniel Erskine-Smith, MP for East York, Ontario.

Staffieri replied that ensuring reliability and redundancy for Canadians is a technical issue and that the company strives to add value to its customers.

“[Canadians] have alternatives and they have choice,” said Staffieri.

However, Hofley said that regulators need to do more than just tackle the issue from a cost perspective. He believes that while adopting a wholesale-based internet structure cuts costs, it doesn’t factor in the redundancy and resiliency of the overall telecommunication network.

“I think they’ve just been looking at it a little too myopically,” he said. “Real price competition happens from multiple competing networks, not just somebody selling an existing network.”

His concerns were spurred by wholesale-based providers’ reliance on Canada’s incumbents. When Rogers went down, it also took down service providers, like TekSavvy, that built a portion of their services using the Rogers network.

The outage prompted Technology and Industry Minister François-Philippe Champagne to demand that the mutual assistance and emergency roaming agreements between service providers be codified. He further ordered the service providers to develop a communications protocol with the government and customers.

The CRTC has launched a full investigation into the catastrophic failure. Rogers filed a 39-page reply to questions from regulators on July 22. Some details were redacted from the version released to the public for security or competitive reasons.

Uncertainty lingers in Rogers-Shaw merger

The outage struck as Rogers is negotiating with Canada’s competition watchdogs to approve its C$26 billion acquisition of Shaw Communications. While the deal has been greenlit by the CRTC, which only oversaw the broadcasting portion of the deal, it has faced heavy pushback from Canada’s Competition Bureau, which seeks to reject it completely. Additionally, it still needs to be granted approval by Innovation, Science and Economic Development Canada (ISED).

As an attempt to appease regulators, Rogers and Shaw had already agreed to divest Freedom Mobile, Canada’s fourth largest mobile service provider, to Quebecor for C$2.85 billion. That did not appear to move the needle all that much, however, as Rogers recently failed to reach an agreement in its mediation with the Competition Bureau, even with the divestiture. The recent outage only complicated the deal’s status.

Staffieri said during the hearing that the Rogers-Shaw merger would enable the two companies to invest in resiliency and redundancy more than either one of them could do alone.

In response, Erskine-Smith said the deal will “further concentrate an industry whose very concentration is undermining resiliency and affordability for Canadians.”

Hofley feels the same. “If the Rogers and Shaw merger was to happen, you’d have almost 40 per cent of Canadians getting their services from a single provider,” he said. “If 40 per cent of a telecommunication system goes down, that is a significant impediment. However, if those 40 per cent of people were spread over four more providers, then you would have only 10 per cent of a system down. So the amount of competition would reduce the effective risk by 75 per cent, from 40 per cent down to 10.”

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Jim Love, Chief Content Officer, IT World Canada

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Tom Li
Tom Li
Telecommunication and consumer hardware are Tom's main beats at IT World Canada. He loves to talk about Canada's network infrastructure, semiconductor products, and of course, anything hot and new in the consumer technology space. You'll also occasionally see his name appended to articles on cloud, security, and SaaS-related news. If you're ever up for a lengthy discussion about the nuances of each of the above sectors or have an upcoming product that people will love, feel free to drop him a line at tli@itwc.ca.

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