Front Burner - Rogers outage and Big Telecom's control in Canada

Episode Date: July 11, 2022

A massive network outage at Rogers Communications shut down mobile and internet services across much of Canada. Millions of people found themselves offline, but the widespread impact of the outage also meant business owners couldn't process debit card payments and many 911 services couldn't receive incoming calls. The mass disruption has put Canada's telecommunications sector under the microscope. Three companies dominate the market and underpin some of the most basic services that are relied upon across the country. Today, Ben Klass, a member of the Canadian Media Concentration Research Project, explains the stranglehold that Rogers, Bell and Telus have on Canadian telecommunications and what, if anything, can be done about it.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Allie Janes, in for Demi Poisson. Canada is one of the most wired countries in the world, with customers who also pay some of the highest rates. Which, many people say, has something to do with the fact that the country is at the mercy of a triopoly. Three companies that dominate the entire market. One of them, the biggest one, failed spectacularly on Friday. A massive outage

is affecting a number of Rogers services across the country, including a wide range of businesses that rely on the company. Millions of people woke up with no cell service, no internet, no debit payments, even 911 access was affected. I woke up and I thought maybe I haven't paid my bills or something like that. Feeling a little disoriented because I went across the street to get groceries and of course debit machines and credit machines are not working. Cash only, which is kind of a different experience for a lot of people. And apparently the bank machines aren't even working. And in Toronto, the Rogers outage forced the cancellation of a giant concert at the Rogers Centre. The weekend's concert at Rogers Centre was forced to be postponed because the lack of service impacted venue operation.

Because Rogers Tech underpins some of the most basic services in Canada. And the reason why it went down wasn't even that dramatic. The company says it was a maintenance issue. The whole story underscores just how dependent Canadians are on this handful of powerful communications companies. Today, I'm talking to Ben Klass, a member of the Canadian Media Concentration Research Project and a PhD candidate at Carleton University's School of Journalism and Communication

about the stranglehold that telecom companies have on the country and what, if anything, can be done about it. Hi, Ben. Thanks so much for being here. Thanks for having me today, Allie. So to start, can you just give me a sense of the kinds of services that were affected here and the impacts that that had across the country? So Rogers has got a little over 2 million households subscribing to its Internet service. We're mostly east of Ontario. I believe they've got somewhere north of 10 million mobile subscribers across the country.

That's a fairly big proportion of the population that was without communication services for a good part of the weekend. Wow. Well, and I also understand, I mean, some really critical services were affected, right? I mean, things like hospitals, people's ability to call 911 in some cases. We've got police services right across the country saying 911 calls are not getting through. In fact, the Toronto area police are telling people, get to a landline. But if your landline is Rogers, that's not working either. Yeah, you know, these types of services have, over the past couple decades, really become deeply entrenched in not just our

day-to-day interactions, but the way our economy works and the way critical infrastructure like hospitals function. You know, without telecom services, as we saw on Friday, things can just grind to a halt. My ability to process prescriptions, ring people through the cash register, answer phones, is completely non-existent at the moment. And some hospitals asked staff to come in for on-call shifts. Others redirected patients. The CRTC, that's the government regulator that sets standards for how we expect these companies to operate. Requires 911 to be offered in such a way as to be able to always call. Like you can take the SIM card out of your phone and still call 911. But I understand that there were some aspects that made that not work as it was supposed to, which can be a real problem for people in an emergency.

I think we can all agree that when you need to call 911, you need to call it and it doesn't matter whose fault it is that you can't. Right. Yeah, absolutely. And on Friday, Rogers Senior Vice President Kai Prigg couldn't say for sure where the problem was coming from. As of now, we do not have an ETA on when the problem will be fixed. We're investigating the root cause of the failure that's impacted our customers coast to coast, but I do not have an ETA at the moment. So what did you make of Rogers' communication with customers on that first day when this was happening? Well, I have to assume that Rogers was all hands on deck trying to get to the bottom of this. You

know, the outage occurred in the middle of the night. And so I think, you know, I feel for the people who were aroused from their sleep, had been looking forward to a restful weekend, were all of a sudden called into action. However, that being said, you know, I think it does need to be a priority given our really, really critical reliance on access to communication services around the clock, that the communication coming out of the company could have been better. You know, when hydro goes out in your house, the hydro company is right on it. You know, they're dispatching people to solve the problem. They provide estimates for how long it's going to be out. They let people know who's affected. And that happens at the drop of a hat. You know, they even have outage maps that they put up. So I think there are lessons

to be learned from the way that this was handled. The lack of communication and the sort of very general, not necessarily the most helpful communication that was coming out in the early stages, is reflective of a general unpreparedness on the part of a company that is supposed to specialize in communication and that we're all relying on all the time. You know, I don't mean to beat a dead horse, but it really, it's hard to understate when Interac transactions are down across the country, how much we rely on these services. I think it's incumbent on providers like Rogers and Bell and Telus and the other major telecom providers to be prepared for dealing with these situations. And the lack of communication just reflects a lack of preparation.

Rogers now says that it believes that this was caused by a network system failure after a maintenance update. What do you make of that response? I think there's a lot of different reasons that these large technical systems can mess up. A boat can drag an anchor over a cable underwater, a squirrel can chew on a wire, someone could trip over a cable. For you and me who are affected by this, I think the reasons that the outage took place are less important than what the company is doing about it. And there needs to be some certainty and reassurance. And I think that providing that type of information to people in a timely and compassionate manner would go a long way towards diffusing some of the frustration that

people feel. You know, the internet might be invisible to us while we're using it, but it's made up of physical things that wear out and break down. More than once, I think I've seen a news headline placing the blame for an internet outage on the shoulders of a beaver. You've probably heard the old excuse, the dog ate my homework. But what about the beaver ate my internet? Some determined beavers ate through a TELUS fiber cable over the weekend, knocking out internet, television and cell service for hundreds of customers in Tumblr Ridge. So, I mean, I think that this type of problem is,

it's a when is it going to happen and not an if, especially when you're dealing with such large, complicated technical systems. Okay. So in the short term, what can Canada do to make sure that these kinds of outages are handled better? It's clearly unacceptable the way Rogers responded to this outage. It's clearly unacceptable for way Rogers responded to this outage. It's clearly unacceptable for the service to be going down in the first place, but perhaps unavoidable. We have a body like the CRTC that invites people to comment on things that they think need improvement. It invites participation from the service providers who might normally be competing with each other to collaborate and solve problems. You know, I think it's going to take a lot of smart people getting together to make our networks more resilient, to maybe add some redundance so that when these types of problems do occur,

that there is a plan of action instead of scrambling after the fact to pick up the pieces. It's going to take a lot of people putting their heads together to come up with that type of solution. And luckily, we have an institution that's designed specifically for that. So in the immediate aftermath of this outage, while it's present in mind how much we're all relying on these things, what I'd like to see is the CRTC opening up a consultation, inviting the smartest minds around the country, the people who are engaged in working in these industries, to come up with a solution that's going to work for everyone and that will actually work. Do you feel like right now the CRTC is taking enough action?

No, the CRTC is definitely not taking enough action these days in general. There's been a real slowdown in terms of, I think, the effort they're expending to address issues on the telecom side. The CRTC has been, I think, predominantly focused on broadcasting issues in recent years. But when you look at the relative importance to the economy of the telecommunications industry, it's something that underpins everything we do. The CRTC, it's not a perfect institution, and I'm often the first to criticize the way they go about doing their business but i think it is an important institution and it is worth fixing and it's worth preserving there's a change in management that's coming this year the current leadership uh the current chairman is scheduled to um leave and be replaced and I'm hoping that the people who come in to take charge

will be a little more vigilant about addressing problems that affect us all. Some experts have also suggested that Canada needs some kind of public backup system for incidents like this. What do you make of that idea? I think the idea of having backups is absolutely crucial to prevent this type of problem. You know, the internet itself was conceived of in the 1960s and 70s as a redundant system that would be capable of withstanding nuclear war in the context of the Cold War between the United States and the Soviet Union. You know, the U.S. didn't want Russia being able to bomb their communication networks. And so we need to keep that central principle in mind here. On a similar note to nuclear threats, what does Friday's fallout tell you about how Canada would do in a cyber attack?

I don't know a heck of a lot about the technical specifics of cyber warfare, but I do know enough to be worried that if there was some sort of malicious activity going on here, then we could be in a lot worse of a situation than we are right now. Three companies control, you know, the vast majority of the telecommunications market in Canada. So how does that play into this massive failure that we saw? Yeah, so we're used to hearing in conversations about telecoms and communications policy that bigger is better. Rogers, Shaw, and Tellis are often singing from the same prayer sheet or hymn

sheet when they're asking for government policies and when they're seeking to shape those policies through lobbying and consultations, they're praising their ability to deliver the newest technologies, to continue making investments and to achieve scale. I think what we witnessed this past week is the flip side of that argument. The bigger isn't always better. And when control over our communication systems becomes too concentrated, then it's like these companies are becoming too big fail. control over our communication systems becomes too concentrated, then it's like these companies

are becoming too big fail. You know, Roger's outage this past weekend wasn't just an inconvenience. It cost businesses money. It potentially put people's lives at risk. If we saw a more diverse, more decentralized marketplace, it's not that we wouldn't have internet outages. It's just that the effect of them would be more limited. How concentrated is this market in Canada compared to other countries? Like, is it this bad in other countries? This is something that the research project I work for has been studying for a long time under Dwayne Winsec.

He's a professor at Carleton. In general, you see that communication markets are fairly concentrated. That means that, you know, the economics and technology that underpins these markets means that you're not going to have 100 different phone companies. You know, if you think about it, would you want to have 100 wires coming into your house or 100 cell phone towers in your backyard? It just doesn't make sense. world and other countries, you've had public authorities who are more willing and more vigilant to step in and to help consumers and to help the economy by putting the brakes on companies from getting too much control over the marketplace. In Canada, we've pursued an

approach that's sort of more like two steps forward, one step back. You know, things have gotten better. And we do have a number of policies that have come in in recent years that have improved the situation. But I think there's a lot more work that still needs to be done. And I hope that, you know, we don't drop the ball on that. I mean, in terms of, you know, kind of the quality of service, the rates we pay, the packages that you can get from phone companies, how does what we get compare to other countries? Canada is a big country. That's often used as a justification for the high prices we pay. Although when you look at somewhere like Australia, which is similarly densely populated as Canada, they're getting a much better deal for their mobile

service. But Canada is a big place. It's very diverse. It's very regional. And so some places have it better than others. Quebec has, in recent years, had more affordable rates than Ontario, for instance. And the Prairie Provinces have, since the turn of the century, had much better rates than everywhere else. They've had unlimited services for much longer. And so it's tough to make generalizations. But with that caveat in mind, there have been a slew of studies in recent years, government studies, private market studies, all of which basically point to the same fact.

The prices we pay, especially for mobile services in Canada, are much higher than what you see in countries around the world. And this has problems, you know, creates real problems when, you know, we see ourselves as an advanced democratic society, but we have prices that are keeping people out of the market.

People who are new to Canada, maybe not able to afford service. Single moms, maybe not able to afford a cell phone. It's not just a matter of conceiving as consumers, whether they're getting ripped off or not. It's a real pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections.

Hi, it's Ramit Sethi here. You may have seen my money show on Netflix. I've been talking about money for 20 years. I've talked to millions of people and I have some startling numbers to share with you. Did you know that of the people I speak to, 50% of them do not know their own household income? That's not a typo. 50%. That's because money is confusing.

In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. Last year, Shaw and Rogers announced that they had reached an agreement to merge. Rogers Communications has agreed to buy its rival, Shaw Communications. The transaction is valued at $26 billion, including $6 billion in debt. And that deal is still in front of the Competition Bureau for approval right now. But could this outage that happened on Friday impact that merger? Well, I think that the merging parties, Rogers and Shaw, have really been laying it on thick with the government, making big promises and basing it on the idea that they need to get bigger in order to succeed. The example of this outage, I think, gives us, again, the flip side of that.

And if we concentrate too much power and too few hands, especially for something that we're all reliant on, then we're really making a gamble, you know, that they're going to be able to deliver. And so I'd hope that the people reviewing this merger, that's the Competition Bureau and the Minister of Industry, Philippe-Francois Champagne, will keep this in their mind. There are some aspects to size that can be beneficial, but there are also risks to it. And I mean, my own personal view informed by my research is that allowing this merger would be bad. In a democratic society, the idea that we concentrate all the power over our ability to communicate in few hands it's it's anathema to a healthy democratic society and i think what we need is more diversity in the media not more concentration you know i think the scale of this present outage should be a wake-up call and serve as an opportunity to think

about how we can avoid these things in the future and what we want from our communication system. Hmm. I mean, you've said, you know, you've kind of talked about how the government has been behind the ball on this for years. What could change right now to provide more reliable, more affordable service for this whole country? The best step we could possibly have, and I mentioned this before, is to open up a public consultation about this, to look beyond just the single incident in the single company and think about best practices that we can apply to the industry, borrowing from best practices that we

see elsewhere. You know, when your plane gets delayed or canceled, or you get bumped from a flight, there's a formula that the air transport regulator has come up with so that you can get a certain refund. Why haven't we got that in telecom? The starting point is that we need the authorities who are responsible for overseeing this in the public interest to take up the call. And so I think that the first best thing that can come out of this is for the CRTC to have a public consultation focused on this issue. And would it be fair to say, I mean, even more broadly than that, that in general, you'd like to see the government take kind of a more proactive, maybe more aggressive role on how it's sort of approaching telecom companies? Yeah, there's been a lot of deference paid to the telecom

companies executives and the promises that they make. You know, things will always be better tomorrow, a new technology is always going to come along that's going to make government intervention backwards and unnecessary. And you know, I think wouldn't it be nice if the market could just deliver the goods. We here in Canada have been waiting far too long for that to happen. And we've been far too generous to companies who have been profiting off of services that we all rely on. So a healthy mix of government regulation to pick up the slack is by no means a radical proposal. There have been definite improvements. We've seen the introduction of unlimited plans, and that's thanks to Shaw's Freedom Mobile expanding its footprint. We've

seen data allowances going up, and we've seen that reflected in increasing adoption levels in the country, increasing use of the internet, which are things that we want to encourage. So I think we need more of the same, but more importantly, I think we need a firmer commitment to it because you get this Goldilocks approach by the CRTC where they are always looking for something that's just right. They haven't gotten to it yet and things are getting better, but I think we need to commit to that path and sort of stop being so deferential to the incumbent players who are loud and constant in their threats to the government that this type of action will be harmful. I think we need to call their bluff. Ben, thank you so much. It was great to talk to you. Cheers. Some other news before we go today.

On Sunday, two days after former Japanese Prime Minister Shinzo Abe was assassinated during a campaign speech, his Liberal Democratic Party and its junior coalition partner won a supermajority in Japan's upper house. Abe was Japan's longest-serving prime minister. He was in power from 2006 to 2007, and then again from 2012 to 2020. He was both wildly popular and highly controversial. He was known for his ambitious domestic reforms, especially Abe-nomics, which was a contentious stimulus policy which some experts say helped revitalize Japan's economy, although there's some debate. He was also known as an ultra-nationalist, who repeatedly downplayed

the Japanese military's atrocities in many parts of Asia during World War II. Abe was 67 years old. That's all for today. I'm Allie Janes, sitting in for Jamie Poisson. Thanks for listening to FrontBurner, and we'll talk to you tomorrow.