Law Bytes

Law Bytes

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  • Episode 21: Why Canada Has Some of the Worlds Highest Wireless Data Prices
    Canada has a well-earned reputation for some of the highest wireless prices in the world with numerous comparative studies finding that consumers pay relatively high prices for low amounts of data. There are obviously many factors behind pricing, but for many consumers the top line issue is how much does the wireless service cost and how much data do I get? Rewheel Research, a Finland based consultancy, has been at the forefront of pricing comparisons with extensive analysis of  mobile data pricing in countries around the world. Its reports have often called out Canada, recently noting that prices are “a world apart” from more competitive markets. With Canadian telco giant Telus commissioning a study to challenge the Rewheel research, I’m joined this week on the Lawbytes podcast by Antonios Drossos, managing partner of the firm, who talked to me from Helsinki about their findings, what lies behind Canada’s wireless pricing, and the Telus-backed study.
    The podcast can be downloaded here and is embedded below. The transcript is posted at the bottom of this post or can be accessed here. Subscribe to the podcast via Apple Podcast, Google Play, Spotify or the RSS feed. Updates on the podcast on Twitter at @Lawbytespod.
    Episode Notes:
    Rewheel Research: The state of 4G pricing – 1H2019 – Digital Fuel Monitor 11th release
    Credits:
    House of Commons, June 10, 2019
    Transcript:
    Law Bytes Podcast – Episode 21 transcript powered by Sonix—the best audio to text transcription service
    Law Bytes Podcast – Episode 21 was automatically transcribed by Sonix with the latest audio-to-text algorithms. This transcript may contain errors.
    39 min
  • Episode 21: Why Canada Has Some of the Worlds Highest Wireless Data Prices

    Canada has a well-earned reputation for some of the highest wireless prices in the world with numerous comparative studies finding that consumers pay relatively high prices for low amounts of data. There are obviously many factors behind pricing, but for many consumers the top line issue is how much does the wireless service cost and how much data do I get? Rewheel Research, a Finland based consultancy, has been at the forefront of pricing comparisons with extensive analysis of  mobile data pricing in countries around the world. Its reports have often called out Canada, recently noting that prices are “a world apart” from more competitive markets. With Canadian telco giant Telus commissioning a study to challenge the Rewheel research, I’m joined this week on the Lawbytes podcast by Antonios Drossos, managing partner of the firm, who talked to me from Helsinki about their findings, what lies behind Canada’s wireless pricing, and the Telus-backed study.

    The podcast can be downloaded here and is embedded below. The transcript is posted at the bottom of this post or can be accessed here. Subscribe to the podcast via Apple Podcast, Google Play, Spotify or the RSS feed. Updates on the podcast on Twitter at @Lawbytespod.

    Episode Notes:

    Rewheel Research: The state of 4G pricing – 1H2019 – Digital Fuel Monitor 11th release

    Credits:

    House of Commons, June 10, 2019

    Transcript:

    Law Bytes Podcast – Episode 21 transcript powered by Sonix—the best audio to text transcription service

    Law Bytes Podcast – Episode 21 was automatically transcribed by Sonix with the latest audio-to-text algorithms. This transcript may contain errors. Sonix is the best way to convert your audio to text in 2019.

    Michael Geist:

    This is Law Bytes, a podcast with Michael Geist.

    Charlie Angus:

    On a two gigabyte plan where you pay about 75 bucks a month Canadian for a two gigabyte plan on your phone and you can still get gouged on top of that. In Paris, you pay 30 bucks. Rome, 24. Now, they might say that’s not really fair. You know, it’s different in Europe. So let’s compare a similar sized country with a similar sized population, similar size large rural regions, Australia. Australians pay $24.70 a month on average for two gigabytes. And in Canada, we’re paying 70.

    Michael Geist:

    The competitiveness of wireless markets has emerged as a major political issue in countries around the world as consumer pricing for those services attracts mounting attention. Many consumers and by extension media coverage looks to comparative data to see whether their pricing is “high or low”. There are obviously many factors behind wireless prices, but for many consumers, the top line issue is how much does the service cost and how much data do I get? Rewheel research, a Finland based consultancy has been at the forefront of pricing comparisons with extensive analysis of comparative mobile data pricing in countries around the world. Its reports of often called out Canada recently, noting that our prices are a world apart from more competitive markets. With Canadian telco giant Telus recently commissioning a study to challenge the rewheel research, I’m joined this week on the podcast by Antonios Drossos, managing partner of the firm. He talked to me from Finland about their findings, what lies behind Canada’s wireless pricing situation and the new Telus backed challenge.

    Michael Geist:

    Antonios, thanks so much for joining me on the podcast.

    Antonios Drossos:

    Thanks, Michael, and thanks for inviting us and giving us the opportunity to actually discuss about the work that we’re doing.

    Michael Geist:

    Okay, that’s great. What do we actually start there? Can you tell me a bit about your company and the reports you produce and who relies on your services and reports?

    Antonios Drossos:

    Yeah. So actually, you know, what is not widely known is that we are basically consultants. The independent research that we do is a side thing. So basically, when we are not very busy consulting operators, regulators, competition authorities and all the rest of our clients, then we do this independent research. The company was actually founded, let me remember now to was 2009. So we Rewheel has been operating now for over 10 years. Our background is basically 20 years from the industry. We started from equipment vendors. Then we work for mobile operators, wireless operators, and then went into consulting. We myself and the other founding partner Pal Zarandy, has been basically working for consulting after we left the operators mobile operators for some years. And at some point we were involved with mobile data. Back in 2007, 2008, and we we show a great opportunity to actually create the really specialized focus consultancy on mobile data. We were expecting already that mobile data and mobile broadband would become really, I would say, central, you know, going forward as it finally became, you know, in many countries. And that’s how we set it up Rewheel. So most of our work we do from consulting most of the income, we actually comes from consulting. And, you know, in our spare time, we do this independent research and we are kind of like a different of consulting firm because we take public, we take our opinions public. So we are pro competitive. We mostly work with clients that have similar views with us. And we usually very upfront on this when we meet a new client, either this is a private operator or is it a regulator or a competition authority would tell them this is our views can answer any you kind of like like what you hear or would be happy to to work with you.

    I say a few things about our research we got involved in to the state of the European mobile markets back in 2012. We have done a lot of work privately and then we saw that some markets, you know, effective competition was working in some markets was not working pretty well. And ourselves, we had the can we ask to see, you know, why is this happening or what is actually drives competition in wireless mobile markets. So we started our research back in 2012, our independent research. And when I say independent, nobody pays on our research is an activity that will carry, you know, with our own initiative and we find ourselves in our show from their proceeds of the revenues of the companies. And back in 2012, the European Commission, the antitrust authority in Europe, took notice out of one of our first studies about the what drives competition in the European wireless markets and decided our study, they they they they start discussing with us. And since then, we basically have been doing a lot of research in the state of competition, primarily pricing prices in European and overseas markets. And as well, we have done a lot a lot of work in mergers 4 to 3 mergers. You know, that’s a short introductions. What do we do.

    Michael Geist:

    That’s perfect. And in fact, it’s certainly it’s the pricing competition reports that lead Canada attracted some attention in terms of just we’ll get into some of the most recent reports, including one from April of this year that examined 4G pricing. Where does the data come from that underlies the reports?

    Antonios Drossos:

    Yes. So we basically started with this methodology back in 2014. I mean, our idea and you know, this is not often a lot of people that read our reports make them mistake to talk about the price of mobile communication services. This is not what we measure. I mean, when we design the methodology back in 2014, we were focusing to actually, you know, measure and track the price of mobile or wireless broadband connectivity. That’s what we are aiming with our research. So basically, you know, back many years back, you know, customers, consumers were buying voice services, SMS services and increasingly mobile data services starting from 2007 onwards. But we saw that a few years down the line that actually mobile broadband connectivity and mobile data will become the central. That’s a commodity that wireless operators are selling. So when we design it. Designed to measure that, so we measure it in two specific plans. This is the model plans that it may have as well or half as well. Voice and SMS and we measure it as well as data only. That is the mobile broadband in our terminology. And how we do it is we basically it is entirely based on public data. So twice a year, as you probably know, this will have this the monitor releases since 2014. We go and we collect ourselves in, you know, in the web from the websites of all the operators, MVNO, not subbranch of the operators. We’re looking for specific plans. We are looking for consumer plans. We’re looking for consumer monthly rolling plans. Some people always make the mistake that we track only postpaid or prepaid, no. We track monthly rolling plans and only the payment is postpaid or prepaid. We don’t really care what we do not track. We do not track prepaid plans that they are not month, meaning that you are buying an allowance for, I don’t know, three months and then it expires. And when you collect all the data, you know, then we carry on down listeners with two specific metrics that we have been using. Most of those years. And then button click, you know, the public personal report with the main findings. And then there is obviously that the full version which contain more detail analysis.

    Michael Geist:

    Right. So in many ways that that kind of scan of pricing reflects what a consumer would see if they were going out into the market and looking out for those kinds of services.

    Antonios Drossos:

    Exactly. And that was that was our intention. I mean, obviously, that before us and still there is a number of actually private companies that measure the price with mobile communication services, different services. And and those are primarily targeted for their operators. Can a poor computer better intelligence to see how their competitors are pricing our again? You know, our sole focus is the competitiveness of mobile broadband connectivity. I mean, we are trying to expose the naked price of, you know, wireless connectivity, mobile data or broadband connectivity, how you want to call it.

    Michael Geist:

    Sure. Interesting. So that I obviously want to get into what you find from a Canadian perspective, given that it’s attracted a lot of attention here. But before we do that. Can you give us a sense of where are we worldwide on pricing? How have things evolved over the years that you’ve been tracking this? And where do countries stand now? What are the kinds of countries that stand out when it comes to their 4G pricing and competitiveness?

    Antonios Drossos:

    Yes, I think this is really, really fascinating stuff because, you know, we realize ourselves and we actually start driving prices back. We started as early as 2012. But for OECD countries we included, obviously the countries within our European, the European 28 countries starting on 2014. So the most fascinating thing is the price development. I mean, obviously, you know, the price measure back in 2014 compared to the price of 2019. And now we can all have all these very rich data. And it’s worth mentioning that every single DF monitor release contains thousands of actually plans, thousands, thousands of tariff plans from, you know, all of them mobile network. But those in the country, there are sub brands, meaning discount brands also call and as well the major MVNOs in the country. Now what we actually see that the prices of gigabyte, which is basically the main metric that operators are using to tier their plans and, you know, explain, you know, the amount of data that their plans contain has been dropping really off of a cliff within the last four or five years and has continued to drop till the late last release, which was April 2019. The same is true for Canada. The same is true for all the 41 countries that we have been tracking the last four or five years. You know, gigabyte prices have been falling. Now, there is still important caveats and two important findings in all of that. Our data suggest that prices gigabyte prices fall faster in markets where there is four mobile medical operators, the 4 MNO markets, as we call them, than in 3 MNO markets. And that’s has some, let’s say, repercussions, I guess, you know, as we as we interpret them, the higher that the competition appears to be more effective appears to be more intense in markets where there is more mobile network operators versus less mobile network operators. And that’s also as a result that Ofcom, the regulator in the UK, found from their own study back in 2015, if I remember.

    Antonios Drossos:

    Now the other the other important trend and this is something that we highlight in almost every single release that prices in four MNO markets are tend to be much, much lower gigabyte prices than in 3 MNO markets and again, you know, there is a very important conclusions, words which we make and, you know, a lot of regulators and competition authorities seem to acknowledge by citing our research, including the Competition Bureau in Canada, which recently gained access to our research and gained access to. It’s important to mention that the competition authority in Canada have recently got access to raw tariff data because what they wanted to do is that was to use our raw tariff data for the last five years to make their own analysis, not apply our own metrics. But, you know, do their own analysis and come to their own conclusions. You know what do you suggest for them for the future of the Canadian wireless market.

    Michael Geist:

    Okay, interesting. So the Canadian authorities are looking at your research, not purely from the reports that you’ve been developed, but rather the raw data that you’ve been collecting specifically.

    Antonios Drossos:

    Exactly. Specifically, they they want to go to their own analysis on the raw tariff data that we have collected the last five years.

    Michael Geist:

    Right. So I just have to make sure that it’s clear. So we’re looking at those last five years. What you’re finding is that those countries are looking at 41 countries worldwide and emphasis on Europe, looking at countries around the world, those with more competitors with four network operators tend to have lower prices and tend to have prices that drop faster than those that have fewer competitors, say three.

    Antonios Drossos:

    Exactly.

    Michael Geist:

    Okay. Which, of course, brings us then to the Canadian market, because that’s become a big focal point, certain certainly of our government. What does the report find from a from a perspective in terms of where Canada stands relative to other countries around the world?

    Antonios Drossos:

    Yeah. I mean, basically, we find what everybody else found when they actually tried to compare and benchmark the prices in the Canadian wireless market. Prices the absolute the level of prices, meaning the monthly price for a plan either been there’s been a smartphone plan that includes minutes, SMS being a mobile broadband plan are substantially higher than other countries in OECD and as well as European markets. And as well, the gigabyte prices is much, much higher than many other countries. And that’s again, you know, I’m kind of like emphasizing on that because some obviously for obvious reasons, you know, the incumbents in Canada may not like this finding. But this is a finding that, you know, I could easily name three or four different, you know, independent research that has come to this to the same conclusion. And now the the real question, and I don’t think that there is a debate that Canadian prices are higher than prices in wireless pricing or gigabyte prices in other OECD or European markets. The real question is why?

    Antonios Drossos:

    Now through these five years that we have doing this independent research ourselves, we we kind of like we have seen every single market and and the main character, this is every single market. And we came to the conclusion that while there is a number of factors that affects prices, both that, you know, the monthly level and as well the so-called variable level or the gigabyte level nowadays in wireless. The most important factor of that is the number of competitors, which obviously it is not a let’s say it is not something new in terms of economic policy. You know, the whole competition law is build up on the idea that, you know, very few competitors, you know, lead to oligopolies lead to duopolies lead to monopolies and that obviously lead to higher prices and consumer harm. And and we believe the fact that the Canadian market has, in essence, three national operators. Yes, we do ourselves qualify Canada as a market with four operators because we kind of like consider Freedom owned by Shaw nowadays to be the fourth national operator. And I think they are en route becoming one. You know, they’re expanding their coverage continuously. But but clearly, this is this is not, you know, a black and white, you know. So we think that if a fourth operator or like Freedom, which unfortunately, you know, unfortunately neither of you was actually acquired by Shaw, was to emerge as a strong fourth, mobile competitor, we believe this will only improve the situation in Canada. And I know I know that there is a lot of discussion ongoing right now because of the current CRTC review on. And there’s a lot of focus on MVNO, the so-called mobile better network operators or the guys who actually buy wholesale access from the actual network operators and then they retail to add to to their consumers. However, you know, our research would have done a lot of work in their area, suggest that while they could help and primarily that could, let’s say, help to lower prices in the short term. The problem with mobile virtual network operators is that inherently wholesale access on mobile network do not work. And you know, if you like to ask more, I can go on and more in details. But and I can I can use some cases from the European market to illustrate why it doesn’t work that well. And effectively you will need a network operator in the long run if you want to have effective competition.

    Michael Geist:

    Ok. I mean, it is worth it’s not where I thought we’d go, but I think it’s it’s worth focusing focusing on at least for a moment. Do you collect MVNO data as well? Regardless of what what do you see as the experience with MVNO? I suppose in Europe?

    Antonios Drossos:

    Yes, we do. We do. We do collect. I mean, since the start of DF monitor, as I as I mentioned earlier, you know, we collect the network, the price of the network operators in every country, the price of their sub brand discount brands. And as well, the price is offered by major MNVO also in the country. And so there is over 70 MVNO, as you know, this 41 countries that we track on on a regular basis. And that was one of the interests as well of the competition authority in Canada. They want to see how does the pricing of this can be and how competitive it is compared to their pricing of them. So, I mean, to make it very clear, because this was a huge debate that we we went through in Europe between 2014 and 2018, because back in 2014, the European Commission, which is their antitrust authority in Europe, approved 3 – 4, 2 – 3 mergers in Europe, not by creating a new fourth network operator, but by by giving wholesale access to MVNOs. And there was a big debate. Can MVNO actually substitute the competitive pricing accepted by it for mobile network operator? So the problem lies on the front end and it is quite easy to fall.

    Antonios Drossos:

    So let’s say that. And I had I had this discussion already with the Competition Authority in Canada. Let’s say that CRTC, you know, mandates wholesale access obligations to them, to the network operators, and then several MVNOs can can can purchase that wholesale access and can reach their consumers with their own retail offer. Now, the major question will be what should dictate the price, the price for which they were buying mobile data from the network operators? And how do you do that? And the moment that you start going into that discussion, things become very, very complicated. And I will explain why. Because it is let’s simply say that in Canada, you know, 40 dollars, you usually buy max 3 – 4 gigabytes per month in a smartphone plan that has unlimited minutes and SMS. That’s more or less what you buy in Canada. So let’s say that CRTC comes in, dictates the price. And now the MVNO could offer for a bit less the same gigabytes for 30 or 35 dollars. They could offer those four gigabytes rather than for forty dollars. Or they could build a bit more fewer gigabytes, say six gigabytes for forty dollars right now, the four of them MNOs have been selling on retail. Yeah. So essentially this is a retail minus model. But the real question is that when a network operator comes into the market, for example, look at Iliad, that they just became the new fourth operator in Italy, the whole gigabyte price. You know what? The market knew before or what was, let’s say, the norm? How many gigabytes should you buy if you spend 20 euros, you know, when in a completely different level nowadays you buy in Italy for 7, 8 euros per month, unlimited amounts minutes and SMS and 50, 60 gigabytes. Now was unheard before the network operator came to the market. And here is the really question I’m asking. There is no wholesale access offer that they will make an MVNO to offer 10 times or 100 times more gigabytes for the same price that the network operators are offering in the market. Because obviously the network operators will never agree to such a wholesale offer. Meaning that an MVNO in mobile wireless would never be able to replicate the near zero marginal data cost of a network operate or meaning that an operator could offer unlimited. As you know, in 23 countries out of the 41 OECD and 28 European countries operators are often truly unlimited service for 20 – 30 euros a month. Now the question one will ask, but how can they afford it? How can you offer a truly unlimited service similar to fixed broadband and still make money? Well, they could, they can, because of the the marginal cost for mobile operators often come at near zero. And the more, you know, the technology evolves and we move to 5G, that their actual ability, the capacity of mobile networks to offer a lot of traffic means that the incremental cost for operators who carry out incremental traffic is really, really small.

    Antonios Drossos:

    So to conclude, what we have seen is number one commercial MVNO, they don’t, they cannot offer, you know, so attractive and competitive offers as network operators, they’re the fourth network operators and you know, they will. It’s impossible for a regulator to set a price for wholesale mobile, for wholesale access, for mobile data, because it will find itself on the problem that every three months or every six months it will have to change this price because the network operatiors will be, you know, all the time will be lowering the gigabyte price on their own retail plans, you know? So it is almost impossible.

    Michael Geist:

    Ok. That’s a that’s some valuable insights. It does sound to me that they’re the difference in many ways between an MVNO approach and a new operator or an MNO approach comes down to whether or not you want a transformative change in the marketplace that injects competition or something that feels far more incremental and creates some challenges along the way. May result in some lower pricing with some new competitors from a consumer perspective. But it’s not going to shake up the marketplace in quite the same way that a fourth network operator would. Now that that debate is going to continue to play out here in Canada over the coming months, as you mentioned, the CRTC studying the issue and the government’s sending strong signals about where we’d like to see things go. But the large providers in Canada, the incumbents have been reacting strongly, certainly to even the suggestion that Canadian prices at the moment are high relative to other countries and taking aim at a number of reports along those lines. Telus in particular has commissioned reports from the NERA Economic Consulting Group, a US firm that tries to call into question some of those reports. It started first with something known as the Wall Report and most recently took aim at your reports. So I guess I’d start with any initial comments on the Telus effort as it looks to NERA Economic Consulting to sort of look through and assess what it sees as some of the shortcomings in which the work you’ve been doing.

    Antonios Drossos:

    Yeah. Well, as we actually said publicly on Twitter as well, we we responded by saying we’ll be happy to actually respond to any critic if that critic is independent. And you know what? We presently passed to Telus because we actually were in discussion with Telus. You know, a few weeks ago. And there is so there is some background on this on this activity by Telus is that obviously that were not the first operator to do that. I mean, throughout the, you know, 10 years that we have been around because of this independent research and because a lot of operators will feel very strongly about the findings of our research, claiming that their prices are high compared to other markets or not. You know, they have done it before. And as I said to Telus they will do it again. You know, there will not be the last operator that did that. But but interestingly, as I mentioned, you know, we were in discussion with Telus, you know, about our services, about our research. And we are we were asked by Telus if we would be willing to do to do to carry out the study paid by paid by them for which study they would have a say. And, you know, our response to them. And it’s it’s not different to any other customer. You know, it’s always no. I mean, the studies that we do are independent and are always, you know, aim at the independent authorities, at the policymakers, you know, and the competition authorities, the regulators on the call, the competition authorities, you know, meaning to conclude, you know, on that related It’s not that we haven’t seen reports like NERA before which criticize, you know, our our status and methodology. And we have responded, you know, if such a report was actually, you know, independent. But in this particular case, you know, we didn’t really feel that, you know, the report was independent. And again, which probably, you know, it will be interesting. Interesting for you for you to hear is that there was a lot inside that report. And while, you know. So the problem with with this type of study, is, as I said, we were in the start of our call. We have a very specific task with our research, and that is to measure the price of wireless naked wireless connectivity. Now, there is many other prices. There is, you know, a lot of wireless operators. They’ve been selling washing machines and they could actually bundle the washing machine together with with their service for mobile service or mobile broadband service. But we are looking always specifically for for for their broadband connectivity and go to benchmark those prices. But if you have any specific comments, you know that you want to touch on that the NERA report, I would be happy to to give some quick responses.

    Michael Geist:

    Yeah, sure. I guess there’s there’s two that I thought I might might ask you about. And I think you’ve actually I think in some ways responded to the first. One in the NERA report emphasizes that there are other factors at play beyond just the data allowances that you’re taking a look at. They talk about network quality, customer service and those kinds of things. I’m guessing, I’d love to hear what you have to say, that that in many ways that doesn’t really undermine your conclusions at all. You’re looking at relative pricing and they’re saying, well, yeah, but you should you should be thinking about other things. But that’s that’s a different study. And from the perspective of a consumer, maybe they care about that, maybe they don’t. But those that care about pricing would would I’d imagine look at your study and see that it’s useful.

    Antonios Drossos:

    Yeah, I mean, absolutely. I mean, this I think I think it’s pretty obvious when we measure prices and when we talk about markets being competitive or non-competitive, the focus is on prices. You know that one will argue that there is other things, for example, like customer care, which is the most competitive market. It does and has the best customer care. Well, obviously, it is not part of, you know, our methodology and you know, to actually rebase the whole discussion, because, you know, that’s that’s the main reason why we tend to avoid, you know, responding and going into details to such critique. You know, usually that is made by operators for the specific reason that, you know, I mean, they do not price customer care. The last time that a Canadian operators, wireless operators price on gigabytes, meaning that price almost like anybody else. So if you price on gigabytes and you are I mean, these have very, you know, linear pricing on gigabytes and you don’t price on other factors. It’s easy it’s hard for me to understand how you could turn this argument around and you say that price doesn’t matter and gigabytes doesn’t matter because other things.

    Antonios Drossos:

    But I want to comment with other things because it’s it’s important. So we never said that mobile networks in Canada are not of a good quality. We never said that, you know, the Canadian market is not competitive because the the quality of mobile networks really sucks. What is important to note, and NERA had presented the consumer survey about what other factors is important to consumers when they decide what service to buy. You know, mobile communication service or in this case, broadband mobile broadband service to buy. They present it. Consumers have it from the US, if I remember well, which anyway, still had price and gigabyte allowance on the top, although not with the percent that is that we have seen from independent consumer surveys. And I want to pick one specifically because you know, even consumer surveys, you would make it with a very different way and that it matters who makes the consumer survey. The European Commission, when it examines four to three mergers, it all most of the times, well, not always, but most of the times countries is independent consumer survey. They do that because they want to determine the diversion and the switching ratios between the operators. But when they do those consumer surveys, they do ask how people make their decision, which provider and which plan to choose. And in those surveys, that independent surveys that we have seen from the European Commission commissioned by the European Commission, we saw 87 percent the attractiveness of the priceline, meaning the price and the gigabyte. That’s 87 percent, 22 percent that were network reliability and 5 percent network performance. Yes, other things matter. But, you know, the thing that matters the most is the price. And how much can you use the service? And this is pretty straightforward.

    Antonios Drossos:

    Now, two more things. I think this is an important point. I will take a bit more time to elaborate on this. One, whoever is familiar and I’m pretty sure not a lot of policy makers, not a lot of consumers are familiar with competition law. Competition law has prices central to its design so that the purpose of competition law is focuses in preventing consumer harm through price increases. Yes. And the independent research that we are doing is usually an input to competition law, because that’s exactly what competition law is thinking. Yeah, other stuff when competition authorities are looking at the effect of competition in the market through a merger or other stuff, they look at other stuff as well. But their main concern is that will this merger, will this concentration increase price in the market? And that’s important to remember.

    Antonios Drossos:

    You know that usually operators there, they use their investment as a counter argument. You know that, you know, mergers and more consolidation helps operators to invest more. But even that, you know, the European Commission has rebut this argument by presenting data from France that went from a 3 to 4 operator market between 2012 to 2018. And so that actually network investment in the market increased.

    Antonios Drossos:

    And my final point about network quality in Canada follow or this is mentioned in the NERA report, they use an open signal. Open Signal are crowd source application that measures the speed and other quality factors on mobile networks around around the world. And they you know, in in opposing the reports, you could see that Canadian operators in Canada runs high on the average download speed. You know, however, it’s important to note that both open signal and another Canadian company called Total as well, which I will save, and they have more reliable data, crowd source data. And they are very active around the world. And we have work with them producing a white paper. Basically say that the quality of the networks in Canada is really top tier, but similar on par with the quality of the national networks in the Nordics. You know, for example, Finland where where we come from. And here is the interesting thing. I mean, the pricing benchmark reports that you do is not the only report. We do a lot of reports about capacity, network capacity on on potential network capacity, potential out of mobile networks around around the markets that we look.

    Antonios Drossos:

    And in order to do those reports, we collect a lot of data. For example, one of the data that you collect is the number of sites that different mobile network operators have in different countries. Now, Finland, the three Finnish mobile operators have our own 7000 sites. This is the physical sites there where you could actually you could have an antenna. Now, from the information that we have, this is more or less the same amount of sites that Canadian operators have. And what do we do not understand, which is also used by NERA as it now given, you know, against our methodology and our guest there, there there are conclusions claiming that mobile nobles in Canada are really of high quality. Is that Canada has seven times or six, seven times more people than Finland and 30 times more area. But Finnish operators have as many sites as Canadian operators. So it’s a bit difficult, you know, to actually argue that the quality in Canada would be better than the quality in the Nordics. You know, and Finland has a lot of sites in the Nordics, but other Nordic countries have similar a lot a lot of sites and claim that this is the reason why the prices are actually much higher in Canada. So we don’t really we don’t really buy that argument. And we believe that the main reason that prices in Canada is higher is purely for competition reasons.

    Michael Geist:

    Ok. And in some ways, I think that’s a good, good way to end it ultimately. Canadian policymakers, the government and I think Canadian consumers are really looking to understand why is it that their own, I think, experience when they go elsewhere, as well as reports such as yours and others, consistently suggest that the pricing and focusing on the pricing, which I think, I personally agree with you, I think that’s what consumers are primarily concerned with is far higher in Canada than it is elsewhere. And I take it that your takeaway, having looked at countries around the world at this now for many, many years, is that it ultimately is all about competition.

    Antonios Drossos:

    Yes. Yes, it is. And if I have one more minute, I think that what I can say is that because to make it more concrete for other people, you know, what exactly do we mean by competition? I mentioned France briefly. And it’s important. France and Netherlands are two very important markets in Europe because they used to be 3 MNO markets. And nowadays the number of network operators in the market doesn’t increase that often because there is less and less spectrum in offer and the higher barriers of entry. But it’s important to not do not that both in 2012, both of France and the Dutch market went from three to four. So there was a new fourth operator in the market. Now it’s important to note that back in 2011, 2012, France and Netherlands were one of the most expensive European markets. Well, in 2018, they became some of the cheapest of the European markets. After four or five years of having a fourth operator operator into the market. And, you know, it’s it’s it’s hard to deny those facts that I mean, somebody who makes a new investment, has an empty network, has every economic incentive to price their service competitive in order to get as many customers as possible, paying them something like 20 euros per month, because that’s how you actually recoup your investment right now. So that’s how they could create positive cash flows and so on.

    Michael Geist:

    So in other words, Canadians can at least take heart in knowing that there is always the possibility that we could go from where we’ve been for many years now. One of the most expensive countries in the world, at least amongst the developed economically developed countries in the world through wireless and can possibly find ourselves in a far more competitive market down the road if we adopt some of the right policies.

    Absolutely. Absolutely.

    Michael Geist:

    Antonios, thanks so much for joining me on the podcast.

    Antonios Drossos:

    Thanks. Thanks, Michael, for having me. Thanks.

    Michael Geist:

    That’s the Law Bytes podcast for this week. If you have comments suggestions or other feedback, write to lawbytes.com. That’s lawbytes at pobox.com. Follow the podcast on Twitter at @lawbytespod or Michael Geist at @mgeist. You can download the latest episodes from my Web site at Michaelgeist.ca or subscribe via RSS, at Apple podcast, Google, or Spotify. The LawBytes Podcast is produced by Gerardo LeBron Laboy. Music by the Laboy brothers: Gerardo and Jose LeBron Laboy. Credit information for the clips featured in this podcast can be found in the show notes for this episode at Michaelgeist.ca. I’m Michael Geist. Thanks for listening and see you next time.

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    39 min
  • Episode 20: Why Canadian Universities Should Get Out of the Patent Game - Richard Gold on Canada’s Failed Research Commercialization Strategy
    Technology transfer in the university context has emerged as significant policy issue with governments seeking to maximize the benefits of public investment in research at Canadian universities. For example, the Ford government in Ontario recently launched an expert panel on intellectual property squarely focused on the issue that speaks to maximizing commercialization opportunities with an emphasis on intellectual property. But what if maximizing commercialization opportunities does not mean prioritizing patents?  Professor Richard Gold from McGill University’s Faculty of Law argues that universities should get out of the patenting game. He joins me on the Lawbytes podcast this week to discuss the failure of patent first strategies and why open science may offer a better path for commercialization success.
    The podcast can be downloaded here and is embedded below. The transcript is posted at the bottom of this post or can be accessed here. Subscribe to the podcast via Apple Podcast, Google Play, Spotify or the RSS feed. Updates on the podcast on Twitter at @Lawbytespod.
    Episode Notes:
    Gold, Should Universities Get Out of the Patent Business
    Credits:
    AUTM, About Technology Transfer
    TechCrunch, Judge Rules CRISPR-Cas9 Belongs to Broad Institute
    SGC Channel, Welcome to SGC Toronto
    Transcript:
    LawBytes Podcast – Episode 20 transcript powered by Sonix—the best audio to text transcription service
    LawBytes Podcast – Episode 20 was automatically transcribed by Sonix with the latest audio-to-text algorithms. This transcript may contain errors.
    37 min
  • Episode 20: Why Canadian Universities Should Get Out of the Patent Game - Richard Gold on Canada’s Failed Research Commercialization Strategy

    Technology transfer in the university context has emerged as significant policy issue with governments seeking to maximize the benefits of public investment in research at Canadian universities. For example, the Ford government in Ontario recently launched an expert panel on intellectual property squarely focused on the issue that speaks to maximizing commercialization opportunities with an emphasis on intellectual property. But what if maximizing commercialization opportunities does not mean prioritizing patents?  Professor Richard Gold from McGill University’s Faculty of Law argues that universities should get out of the patenting game. He joins me on the Lawbytes podcast this week to discuss the failure of patent first strategies and why open science may offer a better path for commercialization success.

    The podcast can be downloaded here and is embedded below. The transcript is posted at the bottom of this post or can be accessed here. Subscribe to the podcast via Apple Podcast, Google Play, Spotify or the RSS feed. Updates on the podcast on Twitter at @Lawbytespod.

    Episode Notes:

    Gold, Should Universities Get Out of the Patent Business

    Credits:

    AUTM, About Technology Transfer

    TechCrunch, Judge Rules CRISPR-Cas9 Belongs to Broad Institute
    SGC Channel, Welcome to SGC Toronto

    Transcript:

    LawBytes Podcast – Episode 20 transcript powered by Sonix—the best audio to text transcription service

    LawBytes Podcast – Episode 20 was automatically transcribed by Sonix with the latest audio-to-text algorithms. This transcript may contain errors. Sonix is the best way to convert your audio to text in 2019.

    Michael Geist:

    This is Law Bytes, a podcast with Michael Geist.

    AUTM:

    Universities hospitals and research centers conduct a lot of research that generates groundbreaking inventions that not only save lives but improve the way we live. Work and play on a daily basis. Technology transfer plays a central role in bringing these ideas from the lab to the market.

    Michael Geist:

    Technology transfer in the university context has emerged as a significant policy issue with governments seeking to maximize the benefits of public investment in research at Canadian universities. For example, the Ford government in Ontario recently launched an expert panel on intellectual property that squarely focused on the issue. A government release stated that the panel quote will deliver a report on how Ontario can maximize commercialization opportunities for the post-secondary sector and its partners included in the expert panel report will be an action plan for a provincial intellectual property framework. But what if maximizing commercialization opportunities does not mean prioritizing patents. This week’s guest on the podcast, Professor Richard Gold from McGill University’s Faculty of Law, argues that universities should get out of the patenting game. He joins me to discuss the failure of patent first strategies within universities and why open science may offer a better path for commercialization success.

    Michael Geist:

    Richard thanks so much for joining me on the podcast.

    Richard Gold:

    Well thank you Michael for inviting me.

    Michael Geist:

    I’m really glad you’ve come on. The question of commercialization of intellectual property within the university environment has been a big policy issue for a long time and as you know better than just about anybody, many have advocated for increased commercialization more intellectual property especially on the patent side and universities are increasingly pressured to justify public investments in research through metrics like spin offs patents and other intellectual property. And this issue is getting even renewed focus in Ontario with the creation of an expert panel on IP and a lot of talk about maximizing commercialization. So that’s where much of the discussion seems to be at least in the media and amongst some of the politicians and policymakers. But you’ve written that universities should consider getting out of the patent business. And so I wanted to start there. Let’s talk about universities patents and the approach that we’ve seen for a long time. You think the focus on patents and commercialization has been the wrong approach. Why is that?

    Richard Gold:

    Well I think it was a really good idea forty years ago. We said look we’re producing a lot of knowledge at the universities. The government is putting a lot of money into research. We want to translate this in to economic growth. We want to have companies come out of Canada and become world leaders. We’re now 40 years later and I challenge you to name a Canadian company that has a large scale market that came out of a university. We’ve had a few they’ve all either been sold or gone under. When we think about BlackBerry it was not a spin off out of the university. So we’ve had 40 years of failure. It was a good idea. It just doesn’t work. And it’s time now to think about why it doesn’t work. What’s missing and we can look to the United States where this idea originated and we see you know it’s not working even particularly well there in the US about 84 percent of universities lose money on tech transfer and there are about 15, 16 universities that have generated real companies. It’s not like this idea hasn’t done anything, but it hasn’t done really well. And so we should be looking at alternatives that will do better. And I think today with our communication systems are deep deep interlinking both through technology through networks that university professors have created. I mean look at scientific publications there are often many many people on the team from different institutions. It’s time to look at a different model and that model in my view at least one part of that model means getting out of the patent business. We’ve done a poor job at it. Let’s try something different.

    Michael Geist:

    Okay. I want to get to what some of those alternatives could be in a moment but you mentioned that the data at least in the United States suggests that the vast majority of universities that have pursued this approach and as you note this has been something that universities both in Canada and the United States and elsewhere have faced as a real pressure point have lost money on this. So what’s the cost associated with pursuing the essentially patent first commercialization model from a Canadian university perspective.

    Richard Gold:

    So there is a direct cost which is actually running these offices. And what we’ve seen over the last 20 years or so is increasing expenditures going into professionals hired by the university frankly often with very little private sector experience because they can make a lot more money in the private sector so it’s hard to attract people. We’ve seen an increase in expenditures going to these individuals and their output hasn’t gone up. What we see is redundant patent applications. So in the first part of the 2000s the number of patent applications went up but the actual patents granted did not. So we were wasting a lot of direct expenditure on these individuals plus playing the patent game. There’s also been a significant increase in litigation particularly United States. So I don’t know if you’ve been following the debates over patents over the CRISPR technology this breakthrough technology to edit DNA.

    TechCrunch:

    Judges at the United States Patent and Trademark Office in Alexandria Virginia ruled today that the technology belongs to the Broad Institute and Harvard. Not the University of California Berkeley. CRISPR promise is huge. The technology could potentially change genetic code as well as produce new types of treatments and even cure diseases. And because it’s such a huge breakthrough it’s estimated to be worth billions even trillions of dollars.

    Richard Gold:

    That has pitted two universities against each other fighting over who gets the patent it’s going to cost you know one hundred million dollars plus to settle this. In the meantime nobody knows who has the right patents who doesn’t. So there’s a cost to industry about the uncertainty. There’s the cost of defending these patents but that doesn’t include what I think is the major cost which is the cost that we don’t account for. And that is the time of the researchers spent on filing patent applications because they must be involved. And that takes up time and nobody knows what that’s like. But even more significantly it gets in the way of setting up agreements with the private sector because as soon as the university says look if I’m taking an IP position here I want IP then of course the firm that they’re dealing with is going to say well hold on we’re putting money in, we want our IP. And so we see extended contract negotiations even on very simple agreements like material transfer agreements where the university transfers a cell or a DNA sample or molecule to the private sector and it can take six months. We’ve often seen it go much longer. And so if you take into account all those costs of just slowing down the research and the person power it takes to negotiate those agreements it’s extreme. But even beyond that it means a delay in research. It means that a research project can’t start as soon as it ought to. So the science is there the scientists are ready to go but they have to wait for the agreement to be signed. And so we have a delay of six months a year sometimes more to even get one partner involved. And imagine as we see today more and more often multiple partners need at each person bringing each person each firm bringing their own skills whether it be AI, whether it be a molecule whether it be some other type of knowledge each one needs to negotiate with the university so we may be pushing research back by a year or two years. That means people are suffering because we’re not even starting the research that may result in a drug and other people aren’t benefiting from that knowledge because we know once I publish someone else’s going to use it. So we’re delaying the initial start of the research which has a follow on effect and we have no idea how much that costs.

    Michael Geist:

    So I there’s a lot to unpack there. By the sounds of it you’ve got on the one hand the costs that the universities themselves incur because the commercialization strategy and and invariably involves the creation of tech what are called tech transfer offices within the universities these individuals who are supposed to specialize in taking the research finding private sector partners negotiating those deals and in a sense pursuing that commercialization strategy. Your data suggests that isn’t working very well it’s expensive to do. They’re not great necessarily at what they do with many more patent applications but not necessarily more patents actually granted. And then that process itself leads to the litigation that you described, leads to delays on the research side and it takes researchers out of doing what they do best which is conducting research.

    Richard Gold:

    That’s exactly right. So the initial instinct I think was right: let’s help the private sector and there’s always been historically links between universities and the private sector in fact a hundred some years ago most of the research was funded by the private sector. But since the 1950s the government has taken over the major role of funding and we’ve been trying to figure out how do we breach this gap especially since technology is becoming more complicated and we need bigger team. So it’s a good instinct. But it simply doesn’t work. The costs are way too high.

    Michael Geist:

    It’s interesting. I know that this goes back now decades. You mentioned that this really got started in the United States with the Bayh-Dole Act I believe back in 1980 which was sort of that first real attempt did we have something or do we have something similar in Canada at least that either a legislative or even a policy level that was designed to pursue this kind of commercialization approach.

    Richard Gold:

    Yes. And going back to 1980 the Bayh-Dole Act was trying to solve two problems. One is this commercialization gap. The other was in the U.S. there was a rule that if the government funded your research they had a veto over anything you did with it. So at a university that had an industry partner could not transfer the knowledge to the university without going through a byzantine process of getting permission from the federal government Bayh-Dole got rid of that and and rest and put control over these decisions the university in Canada we never had that situation. The granting councils never imposed an intellectual property policy. And so universities were always free to engage with firms as they want. So we never needed a Bayh-Dole. We don’t have the Bayh-Dole but what we have had is some policy. And one of those and I’ll just give one example is the Federal Government’s creation of the Canada research chair program. So this is a program to fund are our best researchers from across disciplines and the government demanded in return for funding these chairs that the universities triple their commercialization output. And so it was embedded into the agreement between the federal government and the universities that they would do more commercialization by which was understood at the time more patenting and more licensing. So we’ve had an embedded in pieces of policy like that. We also count patents when we’re assessing universities. Some governments on occasion have looked at patents as one of the things they look at in terms of making funding decisions. So it’s all been soft policy or through these arrangements with the university community. But it’s not in legislation. And so we don’t have to do it but we tend to follow the U.S. lead.

    Michael Geist:

    Right. Well I’m a fan needless to say of Canada Research Chair program but having held on for a long time but not necessarily thinking of that chair program as one that also sparked requirements on commercialization. Is there data on the kind of revenue that that post the creation of the CRC program that we saw you know did we get that tripling of commercialization revenue as the government was hoping for.

    Richard Gold:

    Well we have data from the 2000s until the government and until the government basically stopped collecting this data through Statistics Canada and around 2010. So the Harper government severely cut back on the types of data we have. But we have data from the early 2000s until 2009 and what we we see is that commercialization revenues increased. But the cost of generating those revenues rose even more. So in fact we went from twenty four million dollars in about 2001 of net benefit of net revenue to ten point seven million in 2009 because the costs way exceeded the extra little extra revenue we gained.

    Michael Geist:

    All right. So that comes back to your one of your very first points about the costs of pursuing a commercialization strategy. It’s not free and in fact I mean it’s striking to think that revenues net revenues go down rather than up at least in Canada in that first almost 10 years despite the increased emphasis on commercialization. That provides compelling data as to why the system hasn’t been working in Canada. And frankly you you’ve provided some references to why it doesn’t work for the vast majority of universities in the United States. So if not commercialization and as we know is where there continues to be an emphasis where we’re likely to see come out of Ontario as well if we’re not going to make commercialization the focus, what do you propose?

    Richard Gold:

    Well depends what you mean by commercialization. So this is a word that’s bandied around and often people interpret it thinking correctly as this notion of let’s patent everything we have and transfer it to a Canadian firm. As they said they were good instincts behind it but if we have a broader interpretation of commercialization as both about generating research and cutting edge research in the university and assisting our firms then I think we can take many different approaches. We can realize that universities are just terrible managers of intellectual property. We don’t know what to patent. We don’t know how to patent it. And we usually don’t know who to patent it too. Anecdotally I hear from people in tech transfer offices that the squeaky wheel that is the professor who complains gets his or her research patented not because it has a commercial value per se but because they want to patent and they’re not paying for it. So we we just don’t aren’t good at managing this. So the alternative is just simply say that the university is not about patenting. It’s about bringing people together. We’re really good at that. We can. We’re an honest broker so we can bring industry with community organizations with researchers and talk about what do we want here. What kind of knowledge do we need. A lot of this knowledge is high risk in the sense of we don’t know if it’s going to work. We don’t know how it’s going to work. We don’t know how much it’s going to cost. So there is a role for the university in doing the research. Adding to the world’s knowledge and the industry partners can then at being part of a consortium can see opportunities for themselves to develop their own products. So they become active partners and they will see opportunities you know some research that’s come out of the university they can say oh well with that knowledge I can now go off and develop my own molecule as a treatment for this disease or I can develop this product in the I.T. space. And that’s a different model of commercialization it still emphasizes the economic benefits of research but it doesn’t tie the hands of university researchers to immediately gaining an economic benefit from what they do.

    Richard Gold:

    And if you look historically we’ve just been terrible at guessing what’s going to work. If you look at when the television came out people were saying oh no one’s ever going to watch that the radio’s much better because you can do other things. Who could imagine that someone’s going to sit in front of a box and watch what’s happening. When they looked at when the computer came out the personal computer came out people thought wow no one’s going to use that even IBM didn’t think anybody was going to use it. So we’ve been really bad at guessing what is going to be a benefit. Why don’t we just let our researchers create knowledge and let others and firms in particular figure out where are the market opportunities are and they develop their own technology. Or a community organization can use the knowledge and say look there’s a better way of delivering services here we don’t need a new technology. We just need to figure out how to deliver this better. Maybe using I.T. maybe not. So the university should generate knowledge and bring people together and their interaction we know brings out new ideas and new opportunities.

    Michael Geist:

    I mean it’s an interesting point in suggesting that it isn’t an abandonment of commercialization, it’s a different road to commercialization one in which the university isn’t premising what it needs to do on based on the number of patents that it gets and locking down that information but rather taking a much more collaborative approach by trying to bring together other innovators other firms and using that research using that knowledge in innovative ways that may ultimately lead to more effective commercialization.

    Richard Gold:

    Yeah that’s exactly it. And yeah some places have experimented in fact Canada is the leader. In some ways in experimenting with it in Toronto there’s the structural genomics consortium headquartered in Toronto but has labs in at Oxford at the Karolinska in Stockholm at in Frankfurt.

    SGC:

    Welcome to the structural genomics Consortium at the University of Toronto. The SGC is a not for profit public private partnership supported by pharmaceutical companies charities and government agencies. We support drug development through relevant basic science. We enter our findings into the public domain without restrictions or patent protection. Our open access policy means we can share our results with the world immediately and freely.

    Richard Gold:

    Everything they do is out in the open. That is there are no patents all the data is freely available to all and a quarter of their funding comes from industry. And industry is really interested in becoming involved because this they’re interested in the knowledge that’s generated and we know that commercial partners that are part of these collaborations are better positioned than other firms to take advantage of it. So their turnaround time from working in this consortium and then developing their own product is much shorter and direct than it is for another company that just watches it from the outside.

    Michael Geist:

    All right so there is a there is that there’s still benefits from the private sector perspective in this kind of more open approach and I think you offer for as an open science type of approach, where the research takes place via collaboration without patents but with active participation of the private sector.

    Richard Gold:

    That’s right. We see it at the Montreal Neurological Institute which when open science in 2016 and they’ve been able to attract funding and partnerships from very large scale and smaller scale firms because they’re open because the firms realize that most of what we at universities patent is not the technology that they’re bringing to market. In fact it represents a cost to them they have to negotiate these agreements with us. They’re wasting time you know six months a year as I said before working with the university over something that’s likely not at all a commercially viable. They have to go through it because that’s the game that the universities have set up but they’re much happier engaging with universities where they don’t have to worry about all this stuff they enter into a simple agreement they contribute knowledge they get a lot more out of it than they put in because they they gain from the basic knowledge that’s coming out and then they go off and develop their own product and the SGC has success stories, the Montreal Neurological Institute is starting to gain those. This is a model that works.

    Michael Geist:

    I’d like to to focus for just one more moment on that as those SGC success stories because often times especially in the pharmaceutical industry sector we’ve been conditioned to believe that unless you’re focused on patents and patent protection that innovative new drugs simply don’t happen. Can you tell me a bit about some of the spin outs we’ve seen from SGC that seem to really run counter to that kind of narrative.

    Richard Gold:

    Sure. I should point out that the SGC was actually the idea of a private sector. GlaxoSmithKline took a leadership role in setting it up and were took a leadership role in ensuring that there were no patents there because they saw right from the beginning a benefit. But let me give you a more concrete example and this is this is just one of many types of agreements that the SGC has. The SGC started off looking at proteins and its three dimensional structure. And this is important because the way that drug discovery works is you try to find a drug that fits the three dimensional shape like a key into a lock. And so it’s really important to understand how these molecules fold up and then they moved on to developing what are called probes and these are molecules that will attach to various proteins. And if you can find a molecule that will lock onto the protein we know it’s drugable in the sense of we can find some molecule that will perhaps inhibit that model. That protein from acting or changed the way it acts. So SGC routinely enters into agreements with private sector or other institutions to develop these probes that they make freely available to the research world. One example is something called the W D repeat containing protein 5 or W D R 5. It had been an uninvestigated protein and as G C wanted to spur research on this protein so it entered into a partnership agreement with the Ontario Institute for Cancer Research which is a public institution in Ontario with a mandate to obviously do cancer research but also commercialization. And under this agreement the cancer the OICR the Ontario Institute for Cancer Research developed a probe for the W D.R. five gene protein. No one knew exactly what the protein did. The first try did not work very well because what the SGC did because it’s got this international network it said to other researchers can you just test out this probe and see if it’s really as effective as we think. Turned out it wasn’t. So that a leading researcher who was willing to participate because no one was getting patents this was helping academia, helping knowledge growth.

    Richard Gold:

    And so the OIC are redid their probe and came out with a very high performing probe. The SGC and the OICR made this probe freely available. There were researchers in Australia the US and Austria who took up the probe and discovered links between the protein and different types of cancer leukemia breast cancer and neuroblastoma and published the results so the researchers were interested in getting into a high impact factor journals. That’s the currency of researchers. And so by getting this free probe they were able to say look this was an unknown area. We can do this research rapidly and get a high impact journal. And each one of them did. Because the OICR had been involved with this open project they knew what was happening. They were you know they had not in-house knowledge about how this probe was built. They knew about the WDR5 protein. They already had staff trained on it and so they were quickly able to take this knowledge and develop a separate molecule that they then patented. So the OICR then took this public knowledge available to everyone in the world and developed a new new drug that they took through some preclinical trials and proved that it was effective in the leukemia field. So much so that Celgene a very large company approached them and agreed to pay 40 million up front for the right to use the drug. The patent stays with the OICR but Celgene has the commercialization rights and up to a billion dollars if the drug makes it all the way to approval in the meantime the research is being conducted in Ontario some more Ontario researchers are being funded. We’re developing more of this knowledge about how this protein works and so we’re leaving a legacy behind. So here’s an example of a commercialization route that did not involve the University taking a patent but making it open and converting it into a commercial success.

    Richard Gold:

    The SGC has other models though that don’t even involve patenting. They’ve set up a company called M4K Pharma which is medicines for kids and M4MD which is for for neurological diseases and here everything is done in the open. There are no patents but in the healthcare in the drug space there is an opportunity to get data exclusivity when you file an application to the FDA. United States Health Canada and in Canada for drug approval. The data that you submitted cannot be used to allow another company to get market approval. They would have to do the research themselves. And so M4K pharma is using this as a as a way to commercialize it. So they’ve got charities that are interested in the fundamental diseases they’re going after. And at the very least they’re going to get knowledge gain. And if there happens to be an opportunity that comes out of this then there’s a commercialization route. Again no one else is restricted from developing their own drugs. All the data is out there but we see that there’s a benefit to being part of the partnership you’re just more nimble and able to commercialize faster so is an advantage to participate. But we’re not blocking anybody else who isn’t interested in participating from following their own research and commercialization routes.

    Michael Geist:

    It’s really remarkable set of stories to to highlight how this has in fact worked. It’s not just a theory it’s in fact in practice we see an alternative route not dependent upon a patenting model that actually leads in many ways to more innovation and actually more commercialization opportunities. What’s it going to take do you think to see this proliferate more broadly especially at a time when governments look at the investments they make in research in universities and for so long their knee jerk reaction has been we need more we need more patents.

    Richard Gold:

    Well I’m somewhat hopeful that the commission in Ontario will acknowledge this conundrum and actually support experimentation because that’s what we really need. These are this one model I gave you of open science. There are other models of open science there probably other models and we need experimentation. I know some of the people on the on the commission are open to these ideas including Jim Balsillie who well understands that universities have done a poor job. I mean you know Jim and the government are upset that we’re commercializing or universities are commercializing knowledge for the benefit of foreign firms so if we’re going to get patents let’s not transfer order data exclusivity lets not just transfer them to the Facebook’s of the world. Let’s at least make it go to Canadians. But at the same time they recognize that universities are poor managers of patents. And so I think we’re going to see. I’m hopeful that we’ll see some experimentation. We’ve seen some signs from Canada’s chief scientist that open science is something that she’s interested in. In fact Environment Canada is the lead department in the government on the open government file which includes open science. What we’re hoping for is that the funding agencies such as Canadian Institutes for Health Research their equivalents in engineering and social science start to experiment with Open Science by having open science calls. That is research grants aimed at Open Science that meets a minimum criteria. Open data, open publication, no patents. We’ve seen an example of this from the Wellcome Trust, one of the largest international funders of health research. They’ve been experimenting with open science. CZI, Chan Zuckerberg Initiative, is also interested in open science. So what we’re hoping for is that the funders start putting their money into open science experimentation.

    Richard Gold:

    When the universities see that there’s money available to do open science they will do it doesn’t matter whether they believe in it or not. The way universities count whether they’re doing well is how much money they’re bringing in. So if they can bring money in by open science they will. I actually think universities are going to be the most difficult to change as as you’ve mentioned a long history of a belief in this failed system. It’s only by enticing them to try something different by publicizing the stories of the SGC and the MNI and other places that are interested that will start to see a change. And if Canada doesn’t do it other countries will. The UK in fact funded my research on open science. I have no Canadian funding it comes from, right now do but I didn’t at the time, because they think open science is a way for them to increase scientific productivity and commercialization in the UK. Brazilian institutions are approaching us and asking about how they can implement it. We know the Netherlands is interested in this. Your colleague Jeremy de Beer working in Africa is seeing a desire for openness and sharing and unfair terms. We’re talking to patient groups and they’re interested so we can increase trust in science if we all come together and say look this is a public service, creating knowledge but it’s not done at the expense of commercialization it actually assists those who are willing partners.

    Michael Geist:

    Right. And it’s amazing to hear that. Just the sheer number of organizations and countries that are now focusing on this issue is somewhat ironic that it feels as if we have to get the Canadian institutions kind of pull them along to come into that same space. Richard thanks so much for joining me on the podcast.

    Richard Gold:

    It’s been a great pleasure. Michael.

    Michael Geist:

    That’s the Law Bytes podcast for this week. If you have comments suggestions or other feedback, write to lawbytes.com. That’s lawbytes at pobox.com. Follow the podcast on Twitter at @lawbytespod or Michael Geist at @mgeist. You can download the latest episodes from my Web site at Michaelgeist.ca or subscribe via RSS, at Apple podcast, Google, or Spotify. The LawBytes Podcast is produced by Gerardo LeBron Laboy. Music by the Laboy brothers: Gerardo and Jose LeBron Laboy. Credit information for the clips featured in this podcast can be found in the show notes for this episode at Michaelgeist.ca. I’m Michael Geist. Thanks for listening and see you next time.

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    37 min
  • Episode 19: Canada's Quiet Success Story: Irene Berkowitz on the Canadian YouTube Creative Sector
    Canadian Heritage Minister Pablo Rodriguez recently appeared to pre-empt the government’s broadcast and telecommunications legislative review panel in his response to the panel’s interim report. Rodriguez indicated that the government will move to mandate new contributions and Cancon requirements for online services regardless of what the panel recommends. New creators leveraging online platforms don’t typically participate in government consultations, but that doesn’t mean their voice and experience should be ignored. Ryerson’s Irene Berkowitz recently released Watchtime Canada, a report on the role YouTube plays in fostering opportunities for creators. The study found an eco-system that provides thousands of Canadians with full-time employment opportunities and export strategies that outshine the traditional creative sector.  She joins me on the podcast this week to discuss the report and what it might mean for Canadian cultural policy.
    The podcast can be downloaded here and is embedded below. The transcript is posted at the bottom of this post or can be accessed here. Subscribe to the podcast via Apple Podcast, Google Play, Spotify or the RSS feed. Updates on the podcast on Twitter at @Lawbytespod.
    Episode Notes:
    Watchtime Canada report
    Credits:
    Standing Committee on Canadian Heritage, May 2, 2019
    Unbox Therapy, This Smartphone Changes Everything
    Gigi Gorgeous, This is Everything
    How to Cake It, GIANT Juice Box Cake with JUICE INSIDE
    The Icing Artist, Mini ANIMAL CAKES
    Vanoss Gaming
    Transcript:
    Law Bytes podcast – Episode19 | Convert audio-to-text with Sonix
    30 min
  • Episode 19: Canada's Quiet Success Story: Irene Berkowitz on the Canadian YouTube Creative Sector

    Canadian Heritage Minister Pablo Rodriguez recently appeared to pre-empt the government’s broadcast and telecommunications legislative review panel in his response to the panel’s interim report. Rodriguez indicated that the government will move to mandate new contributions and Cancon requirements for online services regardless of what the panel recommends. New creators leveraging online platforms don’t typically participate in government consultations, but that doesn’t mean their voice and experience should be ignored. Ryerson’s Irene Berkowitz recently released Watchtime Canada, a report on the role YouTube plays in fostering opportunities for creators. The study found an eco-system that provides thousands of Canadians with full-time employment opportunities and export strategies that outshine the traditional creative sector.  She joins me on the podcast this week to discuss the report and what it might mean for Canadian cultural policy.

    The podcast can be downloaded here and is embedded below. The transcript is posted at the bottom of this post or can be accessed here. Subscribe to the podcast via Apple Podcast, Google Play, Spotify or the RSS feed. Updates on the podcast on Twitter at @Lawbytespod.

    Episode Notes:

    Watchtime Canada report

    Credits:

    Standing Committee on Canadian Heritage, May 2, 2019

    Unbox Therapy, This Smartphone Changes Everything
    Gigi Gorgeous, This is Everything
    How to Cake It, GIANT Juice Box Cake with JUICE INSIDE
    The Icing Artist, Mini ANIMAL CAKES
    Vanoss Gaming

    Transcript:

    Law Bytes podcast – Episode19 | Convert audio-to-text with Sonix

    Michael Geist:

    This is Law Bytes, a podcast with Michael Geist.

    David Yurdiga:

    Are we prepared for the the YouTube generation. I like to call because that’s the that’s the medium they’re playing in at this point.

    Scott Hutton, CRTC:

    Our suggestion is we need to legislative changes and new tools to be able to help the regulatory system adapt to those particular environments. YouTube can contribute to Canadian content. You know we can all post there and it is contributing and that means right now Canadians can. It’s it’s one of the more open systems Canadians can post and receive revenue from from YouTube. On that element but an example in that case is how does one find that Canadian story and the sea of what is available on on YouTube. So for example that’s why we’ve raised many concerns with respect to discoverability is sort of the term that everybody is using as to how do you find that piece of Canadian content in the plethora of content that is available.

    Michael Geist:

    Canadian Heritage Minister Pablo Rodriguez recently appeared to pre-empt the Government’s broadcast and telecommunications legislative review panel. In his response to the panel’s interim report. Rodriguez indicated that the government will move to mandate new contributions and Cancon requirements for online services regardless of what the panel recommends. While the comments signal a shift in policy – and perhaps that an election is on the way – they also suggest that the narrow view of the Canadian creative sector has taken hold within the government.

    Michael Geist:

    New creators leveraging online platforms don’t typically participate in government consultations but that doesn’t mean their voice and experience should be ignored. Ryerson University’s Irene Berkowitz recently released Watch Time Canada a report on the role YouTube plays in fostering opportunities for creators. The study found an ecosystem that provides thousands of Canadians with full time employment opportunities and export strategies that outshine the traditional creative sector. She joins me this week on the podcast to discuss the report and what it might mean for Canadian cultural policy.

    Michael Geist:

    Irene thanks so much for joining me on the podcast.

    Irene Berkowitz:

    Thank you very much for inviting me. I’m sort of awed, honoured and I hope I can contribute as your other amazing guest have.

    Michael Geist:

    Okay. Well it’s a pleasure to have you and this comes at a really important point in time. As you know we’re recording this about a week after the government’s broadcast and telecom legislative review panel released its “what we heard” report. The actual recommendations on reforms to Canada’s broadcast and telecom laws aren’t scheduled until 2020, but this report kind of provides as the title suggests what they heard from the various stakeholders who participated.

    Michael Geist:

    I think it’s fair to say for anyone who’s paying attention to the report didn’t really surprise very much. There are many in the cultural community in Canada that see this this review as one of their best chances for new regulation in the cultural sector possibly mandated Cancon contributions maybe even site blocking, new taxes. And so there’s been a lot of emphasis there and certainly you see it in the report. But if you only read those submissions I think you’d be pretty surprised to learn that Canada is experiencing record spending on Cancon production right now. A lot of it supported by foreign investment. But even that is only part of the story. And well the reasons I’m so excited to have you on the podcast is that you recently released a study that examined the role of YouTube in Canada’s media ecosystem focusing both on Canadian YouTube creators and consumers and the data which frankly you don’t see in the what we heard report strikes me as incredibly important for cultural policy. So why don’t we start as a long intro but why don’t we start then with the background. What were you looking to study and how did you go about doing it.

    Irene Berkowitz:

    Well thank you for asking that question because it actually has an important answer which was as you know and many other people who are probably listening know there has been you know hundreds if not thousands of reports filed on the legacy media system from its very beginning. Probably you have also read most of the documents from 1929 as I have and yet there isn’t there wasn’t a baseline study of YouTube which has been present in Canada since 2006 to take its place at that at that table and there’s a lot of generalizations made about new media giants without much specificity so we wanted to take a look at what is the role of YouTube in the Canadian media ecosystem.

    Irene Berkowitz:

    What we found was quite remarkable we were not experts in YouTube. As you know I’m more of an expert in legacy media at the time. And just for further transparency to say that the report was commissioned by Google but contains no proprietary information we there’s 50 charts and lots of contextual information. And unless we omitted it accidentally a footnote all of it is done by reporting our original research or public public information that’s adequately or appropriately footnoted. In fact Google was quite explicit on numerous occasions saying that they would not want to interfere with our academic freedom.

    Michael Geist:

    Ok. So just so that we know who the “we’ is in this case it’s yourself. But it was also with some colleagues from Ryerson.

    Irene Berkowitz:

    Yes very important to mention my team the first team member is Dr. Charles Davis whose credentials are quite impressive. He’s the Edward S. Rogers Senior Research Chair in Media Management and Entrepreneurship. He’s also a professor in the RTA School of Media and the associate dean of scholarly research and creative activities here and my so he you know you can understand this was sort of the the royal oversight in this report as well as our second of our third of our three part team and Hannah Smith whose Phd student and communication and culture which is the same program from which I received my PHC in 2016. And she is a graduate researcher in audience lab which is an initiative started here it at faculty of communication and designed to study audiences with data both qualitative and quantitative research is done here.

    Michael Geist:

    Ok. I wanted to make sure that we give credit to the full team and I’m glad that you that you noted that. Google provided support but had no input in terms of the outcome in the research itself in what’s a lengthy reports of some hundred thirty five pages of lays out the data that you found. Let’s let’s talk just that’s the why that is an area that’s not well understood and the who that was involved. What did you go about doing as part of the study.

    Irene Berkowitz:

    Well we took a look at the key stakeholders in YouTube and with an eye on understanding what stakeholders are most often reported on in it in the legacy reports and we decide to take a look at the audience or consumers and the creators because they are the creators are obviously the focus of much of much of the regulation and discussion in the in the legacy system. There is a third stakeholder in YouTube which is the advertisers and that that part may be maybe coming eventually but we we started with this. It was a big job. You can see the results are big also. We did we ended up doing two surveys one with consumers. We did that first because was a bit easier from a process point of view and that had fifteen hundred responses with a demographic that was the same as Statscan, which we requested. And then we also did a study of survey of creators and that what that has round twelve hundred responses and we ended up with a dataset that was not certainly not big data. But it is for surveys it’s quite a large data set and we we proceeded to crunch the data and understand what our results were.

    Michael Geist:

    Okay. So twelve hundred Canadian creators working on YouTube does sound like a really large sample size. Once you crunched some of that data, what are some of the some of the conclusions that you were able to come to in terms of just the scope or size of of Canadian creator presence on YouTube.

    Irene Berkowitz:

    Yes. Let me just respond to sort of instinctively to you. The first part of your question then I’ll get to the key takeaway which is that by definition the creator survey had to be self selected because it had to be anonymous. So we’ve we were kind of amazed because we had heard that these kinds of surveys get 1 or 2 percent response. We weren’t really sure if we were going to get anyone. And as we saw these results coming in we were we were quite happy to be working with asking Canadians the subsidiary of Delvinia, who administered these surveys. As we saw the results coming in two hundred three hundred six hundred eight hundred. We were quite amazed. And it led me to think that we had struck a chord with Canadian creators on YouTube who really wanted to tell their story.

    Irene Berkowitz:

    So they said that that’s not those are not the results. There are in the report I’m sure you saw there’s twenty one value propositions unique value propositions that YouTube seems to be offering into the Canadian media marketplace. I was quite amazed as I went through and and sort of tried to deduce each part of the report and I realized that wow this is actually for real. And then I tried to reduce it further into five insights and one key takeaway which I’ll just tell you what that is because then we can unpack that according to what you find most compelling.

    Irene Berkowitz:

    So we found that YouTube in addition to facilitating the rise of a new group of Canadian creative entrepreneurs. That’s 160,000 of them by our estimation. They are inventing totally new forms of popular content. Youtube has also resulted in significant outcomes with respect to those creators with respect to diversity, employment, domestic popularity, global export, Canadian creators lead the platform and global access. And furthermore YouTube has achieved these results without requiring either the transfer of IP rights from creators which as you know is a highly controversial aspect the legacy system and largely in the absence of public funding and its associated costs which has been pegged by the former chair of the CRTC at 4 billion dollars per year.

    Irene Berkowitz:

    The other thing is that we ask Canadian consumers about Canadian content. I think that there’s a lot of discussion about Canadian content but I’m not sure many studies have actually asked Canadians whether what they think what they’re wnd what what their practices are around it. So 90 almost 90 percent I think was 88 percent of Canadian consumers do not search for Canadian content on YouTube and in our almost 9000 qualitative responses from these surveys because both surveys had a few qualitative questions, the consumers made it very clear why: they’re searching for content that either helps them learn something, they’re searching or they’re searching for the content they want and they don’t really care where it comes from.

    Michael Geist:

    It’s interesting consumer data and preference can come come back to some of the public’s perspective on that. I want to drill down focus a bit more intently on the creator side of course because that’s where so much of that policy for better or worse is focused when we start thinking about Cancon and cultural policy, although one would have thought that you’d be interested in what Canadians themselves are interested in. But let’s try to better understand the creator side because the hundred and sixty thousand creators is a is a big number. Of course the question that immediately follows for many in the sector would be well how many of those people or are able to generate some revenue coming out of that. If not as a full time career at least as a source of revenue. Do you have some sense of the data in terms of how many are sufficiently successful to be part of the partnership programs that then lead to the prospect of revenue.

    Irene Berkowitz:

    Yes. That’s obviously very very important. Mindful that YouTube is a startup culture that about 25 percent or around 40,000 Canadian creators are what’s called eligible for monetization which is means they can join they are eligible to join the partner program, which means around a thousand subscribers a certain amount of watch time and obeying and those strikes against them in terms of their adherence or obeying the community guidelines that YouTube sets.

    Michael Geist:

    We see large numbers of Canadian creators succeeding on YouTube. But the report does a really nice job of highlighting some of the major success stories some of some of them were household names but a bunch. Unless you’re I guess in this space aren’t necessarily so but they’ve got enormous numbers of views and presumably generating some significant revenues. Could you tell us a bit about some of the YouTube stars as it were that come out of Canada.

    Irene Berkowitz:

    Oh I would love to. I’m actually glad that I didn’t meet these people in person until the launch of this report because anyone would fall so in love with their exuberance and energy that I wouldn’t have been able to maintain my scientific objectivity during the preparation of the research. Well you know someone like Shawn Mendes or Justin Bieber. These are household iconic names in Canada. What everyone. What people don’t know is someone like Shawn Mendes actually learned how to play the guitar on YouTube. There’s another household name is Lily Singh, who started as a funny and charming girl from Scarborough who is now made it to the top of royalty in the legacy entertainment system who just recently has been named as the host first only female host of a late night show on NBC. There is Lewis Hilsenteger.

    Lewis Hilsenteger:

    Today is the day that the smart phone game changes. In front of me I have the future and it’s in the form of the Find x. This thing has been top secret and for good reason because it changes everything.

    Irene Berkowitz:

    Unbox therapy is the top technology platform on the technology channel excuse me on the entire platform. There’s Gigi Gorgeous.

    Gigi Gorgeous:

    My camera became my therapist and YouTube became my diary where I would post everything. If your parents don’t get you, if your friends think you’re weird, I love you and I want you to be exactly who you want me to be.

    Irene Berkowitz:

    Who is the top transgender transgender creator on the entire platform. There are so many creators with billions of views such as How to cake it.

    How to cake it:

    Welcome back to how to take it. I’m Yolanda and this week I have taken a juice box a giant juice box that you can take back to school.

    Irene Berkowitz:

    Which is a lifestyle platform started by a group of Canadian creators whose frankly their show was was canceled and Yolanda Gallop has become a top creator on the channel. There’s fascinating export stories. The the icing artist.

    Laurie Shannon:

    My name is Laurie and you’re watching icing artists.

    Irene Berkowitz:

    By Laurie Shannon and her husband they were both cabinet makers. They literally learned how to decorate cakes on the platform. She started this channel and she discovered through data analytics that on YouTube studio that she had a lot of audience in the Middle East and realized well she’ll take away herself talking and she’ll add subtitles which is easy to do on on on the platform that’s that’s also enabled. And she saw her audiences go from 30 her subscribers go from 30 thousand to a million. Now she has three million. Her husband and her have both quit their day jobs. We see this a lot and they are supporting their family from YouTube. There VanossGaming who probably is Evan Fong from Richmond Hill.

    Evan Fong:

    What is up guys. So today I have some Ghost Recon breakpoint gameplay and I’m playing with my friends wildcat Mu and asers.

    Irene Berkowitz:

    Who launched his show on gaming. I don’t know if the gaming on YouTube isn’t gaming, its channels that what its videos that you’re watching other people playing video games. It’s gigantic. Anyway he has billions of views and he is actually earning. He had earned to 17 million in 2018 making him the seventh highest paid YouTube star ever. The list could go on. What we found in terms of the export data was that Canadian creators as I said earlier not only lead the platform in export but they have actually transformed historic disadvantage which is being next to the US if not a key motivator for the entire policy framework for the 20th century. They have transformed that into a remarkable competitive advantage and they are monetizing that you know like crazy.

    Michael Geist:

    And I’m assuming that on the monetization side and I know that your report indicates that while some are generating less than ten thousand dollars you’ve got a sizable percentage of those that are able to generate revenue generating a hundred thousand dollars or more. It’s the millions of course are a small number of people. But nevertheless people literally being able to to to make this their full time occupation, to live off their creativity this ways is an amazing thing to see. And the report talks about not just about money that gets generated through advertising, but brand deals, sponsorship, appearances, book deals. All of these become part of the norm for some of the creators that find for that establish a global presence.

    Irene Berkowitz:

    One hundred percent in fact. Thank you for for connecting those dots because we started out with the revenue sharing and exactly as you just said we found that it’s the norm even very early on, people are using a variety of highly creative variety of revenue streams to to to monetize their work on YouTube for instance. It’s not all about subscriber numbers sometimes. We came across a channel I won’t I won’t violate privacy but that only has 50,000 subscribers which doesn’t seem a lot compared to the hundreds of millions if not billions for for our other creators. But they are supporting a family of four because the advertising, the type of advertising that that this channel appeals to family advertising: Home Depot, Wal-Mart, Structure, are high paying advertisers. And so there are many many routes to success on YouTube and these the level of excitement about their work is positively contagious.

    Irene Berkowitz:

    So I mean, overall for me, the key takeaway was I wouldn’t say that our study is RCT or randomized clinical trial of what would happen in the absence of protection or support but you couldn’t do that anyway. But it is somewhat sort of like that because here we have Canadian creators sort of let loose naked into the globe into a global platform. And if it comes down to whether protectionism or competition builds strength in terms of content that is popular. Well it seems like we have an answer because Canadian creators truly are thriving on YouTube.

    Michael Geist:

    I’m glad that you know you made that connection because that’s really what we’re talking about law and policy. That’s kind of in a sense the next question. Once you’ve managed to canvas the waterfront of what’s taking place in YouTube and the report goes into far more detail on on a lot of these kinds of issues uncovers this thriving ecosystem with thousands of Canadians succeeding. The question if you’re on the broadcast telecom review panel or government or policymaker or someone who is concerned with what cultural policy looks like, is whether or not you need policies that are responsive to this. What sounds like you’re suggesting is that we’ve seen this kind of success really in the absence of those sorts of policies this is in a sense that opportunity to compete on the global stage and doing so without new kinds of taxes or mandates, but rather doing so by the kind of creativity and finding an audience.

    Irene Berkowitz:

    Well finding an audience. A case a strong case could be made that for the 20th century it was building an industry on the broadcasters side and on the independent production side and those all those quotas and regulation. I mean clearly the framework was brilliant. Beginning with you know the sort of I call the two the two pillars are really simultaneous substitution, which delivered 30 percent of a boost to the broadcasters, and then on the other hand we have the 30 percent investment and then we have the independent production community that is sort of anchored by the point system which took four years. I’ll just say that those were 20th century goals in the 21st century, that’s not the challenge. The challenge is the market is global.

    Irene Berkowitz:

    I did want to make sure to ask whether or not you asked about regulation. So if we could see how this has succeeded in the absence of regulation did you ask those that are actively engaged in this whether or not they pay attention to these policy issues, whether they think regulation is needed. They haven’t been a vocal part of the policy process to date, but is this something that they think very much about or they’re just busy creating.

    Irene Berkowitz:

    I think that what we did at we did ask one question of creators and we also asked about it asked it to consumers. We were careful not to take up too much time in the surveys with too many of these questions because as you just indicated most people in the industry and in the world just want to pay their mortgage, get through their day and they’re not thinking about these issues the way you and I might as a giant fascinating puzzle that needs to be rejigged for the 21st century. But we did ask. We did ask creators that whether they’re content if their content was promoted in Canada but that meant it was demoted in other countries which would which would be the type of thing that would happen because the platform is global. They what how this would impact their experience. And the answer was overwhelmingly negative because they depend on these larger markets to fund their Canadian creativity and they depend on these audiences.

    Irene Berkowitz:

    We also ask consumers about whether they thought the government should have a role in in regulating what they can see on YouTube and what they felt was that sixty five percent of Canadian consumers value YouTube as the best place to watch the same video as anyone else in the world. And a majority also believe that also 65 percent no government or other organization should determine what they can watch on YouTube. Now we asked that in the context of YouTube. We didn’t ask it in the context of protections around harmful content defined you know in many different ways. So I want to be clear about that, but it seems that you know in terms of YouTube’s ability to leap the walled garden, Canadian consumers and Canadian creators are quite protective of their right to access the global market.

    Michael Geist:

    Thanks so much for joining me on the podcast.

    Irene Berkowitz:

    Thank you so much.

    Michael Geist:

    That’s the Law Bytes podcast for this week. If you have comments suggestions or other feedback, write to lawbytes.com. That’s lawbytes at pobox.com. Follow the podcast on Twitter at @lawbytespod or Michael Geist at @mgeist. You can download the latest episodes from my Web site at Michaelgeist.ca or subscribe via RSS, at Apple podcast, Google, or Spotify. The LawBytes Podcast is produced by Gerardo LeBron Laboy. Music by the Laboy brothers: Gerardo and Jose LeBron Laboy. Credit information for the clips featured in this podcast can be found in the show notes for this episode at Michaelgeist.ca. I’m Michael Geist. Thanks for listening and see you next time.

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    30 min
  • Episode 18: Open to Open Banking?: My Appearance Before the Senate Committee on Banking, Trade and Commerce

    Open banking, which is designed to allow customers to easily share data held by their banks with third parties, has been attracting considerable attention in recent months. The Standing Senate Committee on Banking, Trade and Commerce conducted a study on open banking this spring with a report released in late June. I was invited to appear before the committee to discuss regulatory concerns, particularly with respect to privacy and data protection. Given that it is a holiday week in Canada for Canada Day, this week’s podcast adopts a different approach with excerpts from that appearance, including my opening statement and the ensuing discussion with several senators on the need for regulatory reforms.

    The podcast can be downloaded here and is embedded below. A transcript of the appearance can be found here. Subscribe to the podcast via Apple Podcast, Google Play, Spotify or the RSS feed. Updates on the podcast on Twitter at @Lawbytespod.

    Episode Notes:

    Senate Report – Open Banking: What it Means for You

    Transcript of Senate Standing Committee on Banking, Trade and Commerce

    Credits:

    Senate Chamber, June 19, 2019

    Open Banking, What Is Open Banking
    PwCCanada, Canadian Banks: CEO Spotlight with Darryl White, CEO of BMO Financial Group

    36 min
  • Episode 18: Open to Open Banking?: My Appearance Before the Senate Committee on Banking, Trade and Commerce
    Open banking, which is designed to allow customers to easily share data held by their banks with third parties, has been attracting considerable attention in recent months. The Standing Senate Committee on Banking, Trade and Commerce conducted a study on open banking this spring with a report released in late June. I was invited to appear before the committee to discuss regulatory concerns, particularly with respect to privacy and data protection. Given that it is a holiday week in Canada for Canada Day, this week’s podcast adopts a different approach with excerpts from that appearance, including my opening statement and the ensuing discussion with several senators on the need for regulatory reforms.
    The podcast can be downloaded here and is embedded below. A transcript of the appearance can be found here. Subscribe to the podcast via Apple Podcast, Google Play, Spotify or the RSS feed. Updates on the podcast on Twitter at @Lawbytespod.
    Episode Notes:
    Senate Report – Open Banking: What it Means for You
    Transcript of Senate Standing Committee on Banking, Trade and Commerce
    Credits:
    Senate Chamber, June 19, 2019
    Open Banking, What Is Open Banking
    PwCCanada, Canadian Banks: CEO Spotlight with Darryl White, CEO of BMO Financial Group
    36 min
  • The LawBytes Podcast, Episode 17: What To Do About Huawei? - Christopher Parsons Unpacks One of Canada's Most Challenging Policy Issues

    What to do about Huawei? The Chinese telecom giant has emerged as one of Canada’s most challenging policy issues, raising concerns involving competition, communications, security, and trade not to mention kidnappings and arrests of corporate personnel. The government has repeatedly promised to articulate a policy on the use of Huawei equipment in Canada’s next generation wireless networks only to regularly delay doing so. Dr. Christopher Parsons, a senior research associate at the Citizen Lab, the world-famous cyber-security lab located at the Munk School of Global Affairs and Public Policy at the University of Toronto, joins the podcast to help sort through fact from fiction when it comes to Huawei.

    The podcast can be downloaded here and is embedded below. The transcript is posted at the bottom of this post or can be accessed here. Subscribe to the podcast via Apple Podcast, Google Play, Spotify or the RSS feed. Updates on the podcast on Twitter at @Lawbytespod.

    Credits:

    CBC News, Should Canada Ban Huawei?

    CBC News, Should Canada Trust Huawei?
    Sky News, Should UK Be Using 5G Technology from Chinese Companies?
    Canadian Press, Reports Canada Banning Huawei from 5G ‘Speculation’: Goodale

    Transcript:

    Law Bytes Podcast – Episode 17 | Convert audio-to-text with Sonix

    Michael Geist:

    This is Law Bytes, a podcast with Michael Geist.

    CBC News:

    Front and centre in Beijing today, a report from Reuters that the U.S. president is preparing to sign an executive order making it impossible for American companies to use Huawei’s equipment. A purely political move made without a shred of evidence, China says. The order would be confirmation of the U.S. stance that Huawei’s equipment could easily be used by the Chinese government to spy on Americans. The U.S. Australia and New Zealand have all banned Huawei from their networks. Canada hasn’t gone that route nor has Britain. But that may soon change.

    Michael Geist:

    What to do about Huawei? The Chinese telecom giant has emerged as one of Canada’s most challenging policy issues, raising concerns involving competition, communications, security, and trade. Not to mention kidnappings and arrests of corporate personnel. The government has repeatedly promised to articulate a policy on the use of Huawei equipment in Canada’s next generation wireless networks only to regularly delay doing so. Despite the attention and discussion around the company, the issues are often poorly understood by the public and even by some politicians.

    Michael Geist:

    Here to help sort through the exceptionally complex issues is Dr. Christopher Parsons, a senior research associate at the Citizen Lab, the world famous cybersecurity lab located at the Munk School of Global Affairs and Public Policy at the University of Toronto. Christopher specializes in third party access to telecommunications data as a research specialty, making him ideally suited to sort through fact from fiction when it comes to one of the world’s most challenging global tech policy issues.

    Michael Geist:

    Chris welcome to the podcast.

    Christopher Parsons:

    Thanks so much for having me.

    Michael Geist:

    I’m really glad you’ve come on because the issue that we’re going to talk to vote today – Huawei – is one where that’s generated I think an enormous amount of political and business attention both in Canada and certainly around the world. And yet despite the attention it certainly feels a bit like it’s a fairly poorly understood issue, certainly by the public and perhaps by some of the politicians as well. So I was hoping you could. Certainly at the beginning help unpack things a little bit and so why don’t we start with the basics. What is Huawei?

    CBC News:

    Huawei is the world’s largest supplier of everything related to telecom it sells more smartphones than Apple but is also a leader in cloud storage and cyber security. Sales for 2018 are projected to reach one hundred and two billion dollars. Ren Zhengfei founded the company in 1987. He was a former engineer for China’s People’s Liberation Army and a member of the Communist Party.

    Christopher Parsons:

    Huawei is a massive massive Chinese company. So they produce a large range of telecommunications products everything from core networking equipment, edge networking equipment, handsets. I think they’re doing. They’re starting to move in to video stuff as well. Really they just if it’s telecommunications related they either have a hand in it one of their product offerings or offerings that are then built in other companies products or at least prior to some of the issues with the Americans, they had intent of moving into that space right.

    Michael Geist:

    It feels like they’ve come a little bit out of nowhere. I mean to the extent to which consumers have heard of the company it’s probably from the smartphones because they are I think the second largest smartphone maker in the world. But it seemed like overnight you had this massive technology company suddenly now dominating business pages and is as you say in every part of the communications market.

    Christopher Parsons:

    Yeah I think that for a lot of people they’re sort of shocking especially people who have been in telecommunications space. Those who have been looking at routing or you know anyone who’s been looking to purchase carrier grade telecommunications equipment. I mean they’ve known Huawei for quite some time. Huawei began quite sometime ago in the way that they got it was selling carrier grade equipment and they have a whole bunch of features over some of their competitors. One of them is Huawei has enormously benefited from the relatively protected Chinese market which has meant that they’ve had a huge market that they can sell into with limited competition. And they’ve also had the advantage of a bunch of very advantageous state loans that have been provided to them at different points in their development which is facilitate facilitate both R and D, and production and then the sale of goods often at a rate that is just a better market price than something from Ericsson, Nokia, or Nortel, when Nortel was still around.

    Michael Geist:

    So better pricing and significant by the sounds of it support from their own government from the Chinese government. What’s their presence in Canada. I mean certainly if you walk into your local phone store you Rogers or your Bell you’ll find some of their devices. But do we find them within Canada’s large networks or are they part of the broader communications infrastructure in Canada.

    Christopher Parsons:

    Yeah they’re very much. So Telus is based on business reporting predominantly running a Huawei stack. Bell has included it. There is a little bit as memory serves and Rogers’s networks although they’re principally running on Ericsson kit and then for the smaller wireless providers that’s subsequently been gobbled up I’m not entirely certain what equipment they’ve they’ve invested in.

    Michael Geist:

    Okay but we’ve got at least a couple of the largest telecom companies two of the Big Three with significant investments in this equipment. Given that that’s the case there they’re here in Canada people are using them as their devices. I guess the question then becomes well what’s the concern. We’ve seen investment we’ve seen Canadians buy their products and we’re seeing large companies use them to run their networks.

    Christopher Parsons:

    Yeah. So the concern runs a whole bunch of different lines. So there is questions that have been percolating for a very long time around national security that have sort of bubbled up to the fore with 5G. There is concerns about the way that Huawei is involved in Canadian academic institutions and there’s also concerns more broadly around the potential for Huawei to grow and grow and grow grow to the extent that it threatens Western telecommunications companies who provide competitive services such as Nokia and Ericsson. So there’s a bunch of different things and part of the challenge with Huawei and addressing it is. I mean this is to say nothing of course as the the current status of their CFO in Vancouver. Part of the difficulty is there’s all these issues there that are happening simultaneously and they blend together but are simultaneously distinct. And I think that’s part of the reason why there’s a lot of confusion as to is this an economic issue. It’s a national security issue. Is it an IP issue. Is it a trade issue. Because in parts its all of these things but if you don’t break them out of those discrete parts, it’s very nebulous as to what you’re actually talking about.

    Michael Geist:

    I think you hit on a great point. I mean which may help explain why this has become so poorly understood. We’re talking about multiple issues that blend one from the next. Why don’t we try to unpack them a little bit. Let’s start with the competition related issue, security is where I thought we would generally go, but why do we try to just pick off at least several of the other ones starting with some of the concerns from a competition related perspective. What are some of those and should Canada be concerned, are we competing in that space?

    Christopher Parsons:

    Yes. So with competition the concern is that there really aren’t that many providers that can do top to bottom full stack 5G deployment. Nokia has capabilities there. Ericsson has some capabilities there, Huawei has capabilities there and then there’s a bunch of other players that do discrete elements but that aren’t going to build a beautiful stack. So the worry is that if Huawei becomes dominant it’s going to starve Western companies or Western allied companies and that could have the effect of ultimately moving into almost a monoculture where Huawei is the predominant international supplier of 5G that could subsequently have implications for pricing implications for conditions of access or license so you can get this but you must buy this as well. So many of the concerns that are associated with monopolies typically is one of the fears linked with this. And also because the R&D that go into building this telecommunications network is so significant that when the competitors or rather should the competitors truly become starved of capital their ability to invest is going to be challenged.

    Christopher Parsons:

    And that correlates with in some respects with IP related issues. Because as you know I suspect much better than I do, certain patents that are developed which Huawei is developing over 10 or 15 percent of the core patents for 5G at the moment as they obtain more and more patents, there is the concern that they could then build hedges to also prevent their competitors from from coming in. And so this is another way where they might be able to build a moat around any research advantages that they develop and certainly within the Canadian context on that latter point around patents, Huawei is a very active investor in Canadian academic institutions. I should note that one of them is the University of Toronto although the Citizen Lab has never and would not take money from any corporate body including Huawei. And so when that money is assigned to research labs, professors, and graduate students go do their work and in some universities the patents that have been generated are automatically ceded back to Huawei. And so that’s where there’s sort of an academic tie to patent development and also tied to the potential for Huawei to grow bigger and bigger if they’re able to develop actual market monopoly status.

    Michael Geist:

    Ok. I just want to you’ve you’ve hit on a bunch of things there and so I’m going to try to bring it down just one level just to ensure that that everyone’s got it. We’re fundamentally by the sounds of it talking about next generation networks especially around so-called 5G, the faster telecom networks that we often hear about and that carriers are making significant investments there. And by the sounds of it the concern is that you could have a single company in this case a large Chinese company, leveraging significant control at least on a global, potentially on a global basis when it comes to 5G both in terms of being able to control or controlling much of the technology compared to what some of their competitors are able to do as these things get implemented and able to do that both by leveraging their size and economic power as well as seeking to leverage the intellectual property that they develop over time by in a sense creating a patent thicket or patents around many of the kinds of technologies that will go into 5G. Do I largely have it right?

    Christopher Parsons:

    Yeah. You’ve got it right there.

    Michael Geist:

    Okay so so while we’ve seen these investments from companies as you mentioned like Telus and Bell to date, I suppose that one of the reasons we are hearing more and more about it is that some large countries and companies have really turned their attention to 5G and suddenly they see a giant competitor that that has the potential capability of really controlling what most see as the next generation market for telecommunications.

    Dan Albas:

    Every day we get more reasons to ban well away from our 5G network.

    CBC News:

    The big concern is its powerful 5G capability, the next generation technology is expected to deliver internet speeds that are tens of times faster than what we have now. And it will support networks that run major infrastructure like self-driving cars, connected homes, even factories and power grids.

    Christopher Parsons:

    When we’re talking about 5G we’re talking about massive investments you know billions and billions and billions of dollars and where there’s some contention at the moment and it’s not entirely clear who is right is you have certain certain business leaders that are coming out and asserting that the Huawei 5G equipment goes on top typically of other Huawei 4G equipment because it’s an upgrade system as opposed to a totally new like rip out infrastructure and that it is not possible to add in say Ericsson or Nokia equipment on top of Huawei 4G equipment. And further to the point should we say in five years or six years. Oh while this was a big mistake to put Huawei in and we need to replace it again there’s the stated concern that there’s actually an inability to make a switch out of that type.

    Christopher Parsons:

    Now there is some doubt associated with that. So at least the some of the senior executives in both Nokia and Huawei as well some independent talk medications experts who I’ve done reading about it they have asserted that it is possible to actually where Ericsson or Nokia on top of Huawei or vice versa. But while we’re on top of an Ericsson or Nokia kit so there is some question about how much it would cost to replace and indeed whether it whether we’re in a path dependent situation with companies like Telus in particular or whether we can do a course correction without massively just ripping out infrastructures there and rebuilding.

    Michael Geist:

    All right. So it sounds like there’s this potential strategy there of both locking in and locking out. Locking out through the on the patent side by stopping some from entering into the marketplace, locking in basically by using your existing technology to try to lock people into future upgrades.

    Christopher Parsons:

    That’s certainly the concern and it remains to be seen how effective that particular lock in is. And it’s definitely an evolving element of this space right now it’s it’s almost changing week to week.

    Michael Geist:

    Right now if this was purely an economic issue one can understand why there would be concerns although of course there would be counterarguments that this cheaper pricing and more efficient implementation of some of these systems makes it perhaps more likely that we’ll see the necessary investments, perhaps more competitors come into the marketplace if it’s cheaper to institute 5G, but those are the kinds of battles that we see from time to time of course when it comes to antitrust related issues. But what makes this particular case I think particularly interesting and perhaps particularly challenging is that as you suggest earlier on there is a security gloss that that comes with this is very often the issue isn’t framed so much as a threat from an economic perspective but rather first and foremost a security one.

    Sky News:

    The first 5G pilots are launching in the U.K. promising everything from smart cities to hologram calls. Yet the rush to build the superfast wireless network comes with a risk. Because the best technology comes from Chinese manufacturers such as Huawei and ZTE, raising the fear the Chinese government will gain ground level access to, even control of, the U.K. critical data infrastructure.

    Michael Geist:

    You sit there the Citizen Lab, leading the world in unpacking and discovering security related issues in the network. Let’s talk a bit about what the security concerns are and whether or not they’re legitimate.

    Christopher Parsons:

    Yeah. So I think that one thing that’s helpful to frame it to begin with is there are certain technical security concerns and there’s national security concerns. And the latter is politicized and the former is sort of a standard bread and butter technical assessment. So with national security all the pieces that we just talked about fit into a national security concern. So you know economic or sorry monopolization of a core technology that’s going to in theory you know advantage Western economies. You know that’s a national security issue by default because of the core networking technology that’s that’s the infrastructure the way that the world might turn out to be. But in addition there are concerns that under Chinese legislation that was passed a few years ago that Huawei could be compelled to modify the operation of its systems and it really doesn’t have a choice as legal experts who have assessed that element of Chinese legislation have asserted. If the Chinese government asserts that we’re going to be compelling a backdoor or more likely simply don’t patch this thing. And so it’s not a deliberate insertion. It’s just you leave some particular bit of leaky code in place in perpetuity and just encourage the company to not patch it. So those are the core concern types of concerns like technically what might be done. And so this is again where the national security concerns blend into technical security because at a national level we’d be concerned about Chinese intelligence or military or other elements of the government or bodies associate with the government taking advantage of 5G networks or 4G networks or any other Huawei system for that matter, to the advantage of the Chinese government to the disadvantage of presumably Canada their competitors.

    Christopher Parsons:

    And then at the technical level we have what is the actual robustness and security that is afforded by these pieces of equipment and on that front the UK which has been doing assessments of Huawei for many many years, an element to the GCHQ does this now, center that’s built up between GCHQ, the British equivalent of the NSA and Huawei and the technical assessments that they’ve done on Huawei equipment is being sold into the UK has been absolutely terrible with very senior members of GCHQ fairly recently, in the past month or so, coming out and saying that the security culture and security practices that is evident when they do these tests of Huawei equipment is something like security circa 2000. And just as absolutely not meeting the expectations that you would have for any company today selling mass infrastructure to the world.

    Michael Geist:

    And are those conclusions. Is there a sense that those conclusions in terms of the weaknesses security is that driven. Is there a thought that that’s being driven by government pressure to create kind of the sort of leaky or weak security or it’s just a company that’s trying to dominate or rush out as much gear as it can as quickly as it can and security may not have been a priority along the way.

    Christopher Parsons:

    The assessment by the GCHQ is that there is no evidence that they have detected that there is compulsion on the part of the Chinese government to code badly and that it’s just an absolute lack of security processes that are embedded in you know to be to be fair to Huawei and Huawei engineers you know if you go back to around the 2000s and you think of Microsoft at the time and their security culture was equally just abysmal and that it took a massive transformation of Microsoft and other major software vendors to really start prioritizing security. The concern however is in the case of Huawei, GCHQ which which went and traveled to Huawei’s headquarters in China and did spot tests of certain practices and processes. The report came out this year from the evaluation of Huawei so (a) there hadn’t been a change year over year and two there were serious doubts that a change could happen. And so they are basically asserting that the culture of security within Huawei was so inadequate that they were uncertain that they could bootstrap their way up to an adequate and adequate security position.

    Michael Geist:

    Now before we get to how company countries rather have responded to this you know I guess a market based approach to this would say if I’m a telecom provider concerned about potential liability that could arise from some of these kinds of issues. I wouldn’t want to be buying security equipment or telecommunications equipment that is 2000 circa security but yet it seems like many telecom providers including some of Canada’s largest are buying. Is it that price trumps all in this environment?

    Christopher Parsons:

    I suspect there’s a few pieces that go on with regards to it. One I’m certain that the decreased capital expenditure is attractive to anyone especially in a publicly traded company. Two, security is always something that no one wants to talk about. Security only cost you things and ultimately you can never know if having a more secure product actually saved you money or not, because if it worked you don’t know and if it didn’t work you also may not know unless your detection systems are up to snuff. And third most telecommunications networks. Well you know they have abstract conceptual commonalities. They are boutique and that they there’s a lot of individual individual development for all of them. And so it is possible in some cases that you know telecoms can see some of these deficiencies and they can try and shore up their own defences internal or make modifications to how the equipment works. But one of the issues that was pointed out again in this most recent GCHQ report was that Huawei didn’t have an ability to reliably issue patches to all systems with with a common vulnerability. And so that means that let’s say security folk in Telus are doing audits of their equipment and they find a vulnerability or a problem in one of the boxes that they have. They can go to Huawei in theory over time, look at a patch but there isn’t no guarantee that the patch that then is issued to those Telus boxes are then also going to go to Bell or AT&T or Vodafone or anyone else even in the same country when you know obviously when you’re talking about Europe or Italy there when you have multiple major competitors because phones clearly not here. So there’s this is what I mean by like there’s a deficiency in culture and I suspect other elements is this probably isn’t getting up to executive ears. You know this is a boutique security issue. And until probably past a year and a half or so in Canada, I would be sort of surprised if this was top of mind for for executives when they’re trying to evaluate how to move their companies forward.

    Michael Geist:

    So if we can’t count on the companies to act for some of the reasons you’ve just articulated, then I suppose it falls to governments to set regulations and it would appear that some governments have done so by seeking to ban the company from being part of their networks.

    Christopher Parsons:

    That’s definitely one approach that has been taken. One of the difficulties is that many of the times when these bans have been asserted, their asserted on national security grounds with spooky waving behind a behind a curtain and you’re you’re asking well what exactly is the what exactly is the concern that you’re pointing to and it’s it’s never revealed in open settings and indeed it’s not. It’s not immediately apparent that there has been an instance to date that showcases that Huawei is behaving or has behaved in the past as a national security threat. The concern in fact as it’s been pointed out by the US – the House Intelligence body – has come out and stated that the issue is that a good position they take rather is that a good piece of Huawei equipment is only good until its first malevolent firmware update. And so once again to say.

    Michael Geist:

    Sorry could you just explain what that means.

    Christopher Parsons:

    Yeah absolutely. So a firmware update is just some of the base code that operates these routers so much like you know the computer that you have at home with your smartphone or something like that. There’s all sorts of different components that can receive updates and firmware is sort of very close to the the silicon or the metal of the machine. So it’s different from your from the operating system itself. And so all it would take would be one deliberate bad firmware patch that you know would enable a foreign actor to do any number of things. Right. And this is where that whatever you’re wherever your imagination, goes whatever sci fi you’ve seen, it’s not necessarily the worst place to go to run your imagination. So can it be anything from slight modification to the way that data traffic is moving. It could mean certain packets are dropped. It could collect certain packets and shuttle them to a given location, were there a situation where the routing equipment was dependent on a random number generator or a pseudo random number generator to develop encrypted streams then there would be the concern that maybe the number generator was tampered with so that third party who is capturing data could subsequently decrypt the traffic. It could cause issues with the way that the virtual systems that are put up on top of some of these routers operate such that rather than having actual perfect isolation between them that you might be able to bleed data from one to the other which would be useful for actual trading data and then moving it elsewhere or potentially modifying data and one of the virtual systems. So really the concern is that Huawei routers could be transformed similar in manner to the way that the NSA has targeted and transformed quite frankly or taken advantage of exploits in Cisco routers and all the other major providers as part of their national security activities through the NSA and partnership with Canada and the CSE.

    Michael Geist:

    So there is a bit of irony here in terms of trying to imagine what some of the threats are often take a look at what we’re doing or with the United States is doing and say hey they could do that too. I do want to just make sure that we touch on where Canada stands on this so we have seen some of the some countries respond to the kinds of threats you’ve just identified. Canada for the moment hasn’t taken a strong position. Can you just elaborate a little bit on on where we are and where you anticipate things might head?

    Ralph Goodale:

    The advent of this of this new technology 5G is about to revolutionize the information technology that we deal with in our in our daily lives. That revolution has been ongoing what with with 5G compared to 4G the pace and the magnitude of change are going to be enormous. We want to ensure that Canadians enjoy the full benefits of this incredibly powerful technology but at the same time we want to ensure that Canadians and our systems are sound and safe and secure.

    Christopher Parsons:

    To some extent there have been some commentators have criticized Canada for not taking a position. I suspect that us not taking a position is probably the best thing that we could be doing at the moment because we’re actually seeing natural experiments play out. We currently haven’t decided whether we’re going to ban, whether we’re going to permit, or whether we’re going to partially ban. And so a full ban is something like what Australia has done where Huawei is not permitted to engage in the 5G network. A partial ban is where you have Huawei systems which are not permitted in the core of the networks of the telco companies, but they can provide edge based services and so IP radio network radios and things of that nature. And there’s an other approach which is they’re allowed in, but they get audited and that’s what the British are doing right now is as deep audits to evaluate then certainly a catch and release. They they look at the equipment, assess the equipment, then release into the market for use. The difficulty is that the catch and release doesn’t seem to I mean again the UK government’s assessments are relatively bleak. They are not confident they are going to be able to mitigate the harms to national security that are associated with what was equipment full on bans are potentially very expensive and in the case in context with the Canadian governments historical efforts over the past decade or so to expand trade with China banning Huawei, which is one of their champion companies, would be probably very deeply problematic for those trade negotiations. To say nothing of the fact that China has demonstrated a willingness to engage in hostage taking and other activities principally in response to the seizure of Huawei’s CFO. But China’s generally demonstrated both in the region and internationally, a willingness to flex their muscles. And so if we ban or block, Canada will probably continue to see the sorts of economic difficulties that we’ve had for the past several months: blocking of pork, inability to send our agriculture products and such into China. So what is Canada going to do? Prior to their CFO being seized this was an issue that was more squarely to my assessment in the security domain and less in the trade domain, less in the domain of politics. But now it’s a front and centre political issue and it’s a front in centre trade issue. So what we do is I have no idea. I would be surprised if whatever decision is reached, is reached on the basis of security although it may be presented as such. This has become a massive political football or a hand grenade. And I think we’re watching the Liberal government try and figure out what exactly to do with it which is in part why they’ve they continue to defer when they’re going to have a decision they keep pushing it further and further out. So I believe that a decision now is due right around the election either shortly before or shortly after. But it’s it’s a challenging issue and it’s not apparent how the government’s going to move.

    Michael Geist:

    Well based on the way you’ve described and we haven’t even got into the issues around phone bans and obviously the kidnapping issues and broader trade issues. It’s one that is so complicated with a country that has been viewed for some time is critically important as part of a diversification of Canada’s economy and trade strategy. And at the same time dealing with all these challenges on top of the desire to ensure that we get the next generation 5G networks and see the kinds of investments that the government is hoping to see from a number of players to help create and foster a more competitive environment.

    Christopher Parsons:

    Yeah it’s again I think that the fact that Canada’s waiting on the one hand if we’ve made a decision we wouldn’t be in quite the same political mess we’re in now but because we have we can actually evaluate what systems work. So the one to to watch for is how effective the partial ban is in the network level. So if it actually turns out that you know the various spy agencies which you know hack these things, if they think that that might be a way of keeping things secure then maybe that’s a way of threading this particular needle. But there are some pretty severe concerns that because we haven’t seen this equipment that hasn’t been deployed yet in any meaningful numbers that we may end up finding vulnerabilities or difficulties in the way that any company puts it in and the concern becomes do we want to work with a western country and company who we think is probably quote unquote on our team and sort of the world of international politics or do we want to instead rely on Huawei continuing to behave as a good corporate citizen but one that may well the one that operates out of the country but frankly doesn’t respect the rule of law and could very significantly engage with Canada on both economic, military, and intelligence matters. You know at any time in the future.

    Michael Geist:

    Yes indeed well you know I started off by by commenting on how poorly understood and how challenging the issue is and I think if anything over the last half hour of this discussion you’ve highlighted that it is perhaps even more complex than people appreciate. But the the notion that Canada might even benefit from late mover advantages by being able to see how this plays out elsewhere is interesting because we’ve seen that in some other policy areas as well. Chris thanks so much for joining me on the podcast.

    Thank you so much for having me.

    Michael Geist:

    That’s the Law Bytes podcast for this week. If you have comments suggestions or other feedback, write to lawbytes.com. That’s lawbytes at pobox.com. Follow the podcast on Twitter at @lawbytespod or Michael Geist at @mgeist. You can download the latest episodes from my Web site at Michaelgeist.ca or subscribe via RSS, at Apple podcast, Google, or Spotify. The LawBytes Podcast is produced by Gerardo LeBron Laboy. Music by the Laboy brothers: Gerardo and Jose LeBron Laboy. Credit information for the clips featured in this podcast can be found in the show notes for this episode at Michaelgeist.ca. I’m Michael Geist. Thanks for listening and see you next time.

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    37 min
  • The LawBytes Podcast, Episode 17: What To Do About Huawei? - Christopher Parsons Unpacks One of Canada's Most Challenging Policy Issues
    What to do about Huawei? The Chinese telecom giant has emerged as one of Canada’s most challenging policy issues, raising concerns involving competition, communications, security, and trade not to mention kidnappings and arrests of corporate personnel. The government has repeatedly promised to articulate a policy on the use of Huawei equipment in Canada’s next generation wireless networks only to regularly delay doing so. Dr. Christopher Parsons, a senior research associate at the Citizen Lab, the world-famous cyber-security lab located at the Munk School of Global Affairs and Public Policy at the University of Toronto, joins the podcast to help sort through fact from fiction when it comes to Huawei.
    The podcast can be downloaded here and is embedded below. The transcript is posted at the bottom of this post or can be accessed here. Subscribe to the podcast via Apple Podcast, Google Play, Spotify or the RSS feed. Updates on the podcast on Twitter at @Lawbytespod.
    Credits:
    CBC News, Should Canada Ban Huawei?
    CBC News, Should Canada Trust Huawei?
    Sky News, Should UK Be Using 5G Technology from Chinese Companies?
    Canadian Press, Reports Canada Banning Huawei from 5G ‘Speculation’: Goodale
    Transcript:
    Law Bytes Podcast – Episode 17 | Convert audio-to-text with Sonix
    Michael Geist:
    This is Law Bytes, a podcast with Michael Geist.
    CBC News:
    Front and centre in Beijing today, a report from Reuters that the U.S. president is preparing to sign an executive order making it impossible for American companies to use Huawei’s equipment. A purely political move made without a shred of evidence, China says. The order would be confirmation of the U.S. stance that Huawei’s equipment could easily be used by the Chinese government to spy on Americans. The U.S. Australia and New Zealand have all banned Huawei from their networks. Canada hasn’t gone that route nor has Britain. But that may soon change.
    37 min

About Law Bytes

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In recent years the intersection between law, technology, and policy has exploded as digital policy has become a mainstream concern in Canada and around the world. This podcast explores digital policies in conversations with people studying the legal and policy challenges, set the rules, or are experts in the field. It provides a Canadian perspective, but since the internet is global, examining international developments and Canada’s role in shaping global digital policy is be an important part of the story.

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