The Government of Canada just gave Darren Entwhistle of Telus enormous incentive not to serve rural and remote areas. It is raising wholesale prices across the country to enhance "the phone companies' ability to invest in building high-quality networks, particularly in rural and remote areas."

Entwhistle is one of the sharpest CEOs in telecom. He'd be a fool to invest more than the minimum in rural areas That way, the government will continue to give the company boons like this. 

Where will the money go? 

In May 2019, TELUS announced its intention to target ongoing semi-annual dividend increases, with the annual increase in the range of 7 to 10 per cent from 2020 through to the end of 2022. This announcement further extends TELUS’ multi-year dividend growth program originally announced in May 2011 and extended for three additional years in each of May 2013 and May 2016. This program provides investors with ongoing clarity with respect to TELUS’ dividend growth model.

My experience is that 2/3rds of improved cashflow goes to shareholders, not investment. That will almost certainly be true here, Telecom worldwide is a slow growth business due to cost per bit falling more than demand increases. If raising dividends is a priority, that's where the money will go.

Telcos worldwide are holding back on rural coverage in order to get subsidies and government boons like this. 

Canada has long had superior networks in the cities and terrible rural coverage.

Possible Chancellor acts as if Ericsson and Infineon don't exist

"Norbert Röttgen, CDU politician with aspirations for the party chairmanship and the chancellorship," writes Achim Sawall says, "European companies were not allowed to roll out 5G in China ... Beijing would never even think of opening its 5G network to foreign providers."

China Mobile and China Telecom/Unicom are Ericsson's largest customers for 5G, I believe. Sawall adds, "The Europeans received over 40 percent of the core network orders from China Mobile." This is widely reported and the German language press called Sawall on his error. 

He refuses to admit his mistake, like a Washington politician. (All parties.) It's highly likely that "confirmation bias" makes it impossible for him to see facts in front of his face.

Around a decade ago, China allocated 10% of its telecom market to each of Alcatel, Ericsson, and Nokia, Alcatel CTO Marcus Weldon mentioned at the Brooklyn 5G conference. The Nokia purchase of Alcatel had been announced. Marcus said he wasn't sure whether Alcatel's share of the Chinese market would be added to Nokia's. 

The Chinese allocated nearly a third of their market to European companies under threat of a ban on Huawei. China and Europe came to an agreement on industrial policy.

Inflammatory headline? Perhaps, but the clear reading of the announcement below implies the US wants to create the biggest split in Internet history. It goes far beyond the attacks on Huawei & TikTok. The U.S. Secretary of State just called for the US and 30 other countries to:

• Remove Chinese and other "untrusted apps" from the Android and iPhone store
• Not to allow China Mobile and China Telecom to connect with domestic telecommunications services
• Block Alibaba and other Chinese clouds, even if they agree to store information domestically. (Alibaba is growing fast and a threat to the leaders, Amazon, Microsoft, and Google.)
• Prevent apps from around the world - not just the US - from being installed on Huawei phones, currently the bestselling in the world. Huawei has close to half of the Chinese phone market, meaning that even those apps not blocked by China will be blocked in China by US fiat.

Pompeo made clear he wants much of the world to go along.  

      "Momentum for the Clean Network program is growing. More than thirty countries and territories are now Clean Countries"

Everyone reading this has her own opinion on the security and economic battle between the US and China. You don't need to hear mine. 

I was a member of this group, which was led by exceptionally able and gracious engineers. There is an enormous amount of misinformation from people who haven't read the primary documents. This isn't about Chinese control, and I expect CNET and FT will soon correct the errors in their articles. It's about telcos wanting control, to guarantee low latency/QoS and charge more. See the list below.

Putting it in the middle of the US China war will alienate those needed to prevent it being approved, especially the Europeans.  

I think New-IP was a mistake. I was actually on the ITU Focus Group 2030 where it was presented. Among those who approved the final document were

Mehmet Toy, Verizon
Alexey Borodin, Rostelecom
Yuan Zhang, China Telecom
Yutaka Miyake, KDDI Research (Japan's #2)
Dong-Hi Sim, SK Telecom (Korea's #1)
Sundeep Bhandari, NPL​

Actually, nearly all the large telcos, including Deutsche Telecom, Vodafone, and British Telecom, support this kind of control. (Deterministic Networking, also called Non-IP at ETSI, the European Standards group.)

Here's the key document.  I will have more later. Meanwhile, email This email address is being protected from spambots. You need JavaScript enabled to view it. for details.

Kyle Malady of Verizon is holding the first Ericsson 5G radio built in the U.S. It's interesting to see the size and weight of the unit. Kyle is neither a giant nor a champion weightlifter; today's base stations just aren't that big. 

Verizon ordered over 10,000 of them, as have AT&T and T-Mobile. That wasn't enough to persuade Ericsson to manufacture domestically, especially since the Chinese are buying 100,000 from Ericsson.

But DC came in, imposed a tariff, and put numerous non-tariff obstacles in front of Ericsson. Nokia and Ericsson lobbyists were laugh out loud silly when they attacked Huawei on 5G, given that both did primary 5G manufacturing in China.

Protectionism has disadvantages. By definition, it reduces competition in the short run, raising prices and hindering innovation. Economic orthodoxy has long been that "free trade" is always best, but Nobelists Joseph Stiglitz and Paul Krugman use empirical data to rip apart the theory.

Apple has just started making its high-end models in India because of tariffs. America has 7 of the top 10 Internet companies. It would probably have 10 out of 10 if China hadn't protected its companies. India, Germany, and France are now pressing for "digital sovereignty."   

I'm sure Vint Cerf - and the vast majority of Internet architects - remain certain that TCP/IP with minor improvements is the right way forward. But the European and Chinese telcos, backed by their suppliers, want a replacement called "New IP Networking." ETSI, the very powerful European standards group, calls it "non-IP.:They claim, as you can read below, "A fundamental change is needed." Deutsche Telecom and suppliers are key proponents.  

Update July 20: 

Current status of deterministic networking:

• IETF RFC moving forward with support from Cisco, Ericsson, and Huawei
• ETSI Special committee formed to move Non-IP forward
• ITU Focus Group 2030 included it in final architecture, likely to be rubber stamped by Study Group 5. US may make noise that will lead to same result with slightly toned down wording.
• Internet Society Opinion piece but no active engagement visible

Highly likely result, unless something dramatic is done: will replace TCP-IP over 5-15 years in favor of telco system. End update

Since the 1980's the telcos in the U.S. have been fighting to control the Internet, a war described as Bellheads vs Netheads. (Ask Vint Cerf or Dave Farber about this or "protocol wars.") The telcos are back big time, with proposals called "Deterministic Networking" (IETF, Ericsson, Cisco) New IP (ITU, China,) and Non-IP (ETSI, Deutsche Telekom, France Telecom.)

Telcos have an enormous advantage because they control the physical network. They are businesses dedicated to making money; of course they would like to erect a "tollbooth on the Internet." The problem they face is that Internet connectivity is very cheap to deliver. The local and long-distance phone networks were enormously profitable. 

The telcos continue to be among the most profitable companies on Earth. Verizon's net income has averaged over US$20 billion the last three years. But they are not providing investors the promised increased profits.

Ed Markey for two decades has been the most important US legislator protecting the Internet and consumer rights in telecom. His opponent, Joe Kennedy, has a distinguished name and an undistinguished record.

Maya Wiley, probably running for New York Mayor, forcefully advocated for protecting consumer and public access to spectrum for Wi-Fi when the telcos proposed to take too much for LTE-U. Sharing unlicensed spectrum is a reasonable idea, but the particulars of the telco proposal mismeasured the interference caused and the disruption of other users. Wiley, then working for New York City, was one of the very few who spoke up.

This is a technical publication and rarely makes endorsements except on a strong record on Internet and telecom policy. Readers should know the editor's politics are left.

David McCabe in the NY Times reported a 67-page official Google filing claiming

it does not control enough of the industry ... 
It has not built its system to give its own services an advantage ...
They denied that the company’s software gave it an inappropriate advantage... 

Until Google presented these facts, investors (and just about everyone else) assumed that in fact Google did have strong market power. It was fined almost US$2 billion by the EU and the US Justice Department is likely to file an antitrust suit shortly, So are the state Attorney-Generals and possibly the UK.

The $1.067 trillion dollar market cap represented a 32:1 price to earnings ratio. As investors discovered they were mistaken about Google market power, the stock fell over $200 billion, although the P/E ratio remained above the 22:1 average of the Dow. 

(The stock price effect here is pure satire. Everyone knows Google lawyers were doing what American lawyers usually do, make claims on behalf of the client that are not true. Jennie laughed out loud when I told here what Google claimed.)