July 9, 2022

Lessons from Canada's internet outage

Yesterday's massive internet outage across the country was for me, as well the rest of Canada, a great example of economic realities.  Unfortunately some people did not comprehend the lesson.  


Canada has localized internet and wireless monopolies in different areas.  This is not 100% true, but for all intents and purposes it is correct.  Several smaller carriers exist but do not have a large footprint anywhere. The largest carriers provide both wireless phone service and internet (as well as telvision and some other products like home security for example). Not only do these ISPs/carriers have monopolies in product sales but, and this seems like it is unique to Canada, but they also are the same companies that provide the hardware for these services (they own the cell towers, the cable and fiber optic lines).  There are smaller players, like my internet provider (ISP) who lease access to these lines and then compete with these larger carriers to attract cellular, TV and internet customers.

One of the large three providers, Rogers had a nationwide failure in it's internet and cellular coverage.  Some of the large banks and transaction processors as well as parts of the Canadian government were completely dependent on this ISP so the impact went beyond just their customers.  As well, ISPs such as mine, which lease the lines from Rogers, were impacted.

To further exacerbate the situation, carriers encourage bundling of products by providing discounts, so many people who use Rogers for internet could not switch to their phones and use data instead. 

The problem started yesterday at 2 a.m. in some areas and spread across the country. For most people the problem persisted until last night between 7 p.m. and 11 p.m.  This impacted everything from people with medical conditions not being able to fill prescriptions to people being stuck unable to take taxis to free wifi cafes with working wifi being overrun with customers to some businesses losing thousands of dollars in business.

The Lesson

There are a lot of lessons to be learned from this, for example don't bundle your products as you are more vulnerable to outages, or that Canada is way too susceptible to a hacking incident if this sort of thing if an astute hacker wanted to take advantage of it.

But the real lesson was pointed out by those who did not learn from it.  On message boards I was able to access (I'm not bundled so I could use my phone plan data), many people were calling for government ownership of telecom and internet. So wrong.

The people decrying an over-reliance and a few oligpolistic competitors provide as a solution a single provider. Not only does that make the nation more vulnerable, it puts the operation in the hands of the most inefficient monopoly out there - the government.  It reduces price competition (Canada has the highest prices in the industrialized world for internet and wireless) to zero, it reduces the available product and service selection, it decreases the need for provider responsiveness and locks the country into a solution that undoubtedly would be worse but even if there's only a chance of that, why do it?

The way to solve this problem is to open up the country to more competition; allow American carriers and new Canadian start-ups to compete in the currently monopolized regions. Split the ownership of hardware from the ability to sell the products and services, making them two separate industries.  Poor Government oversight allowed this all to happen, why would anyone think that handing everything over to them would improve anything?  My own experience of not relying too heavily on a single provider yesterday allowed me to escape complete connectivity failure.  The same holds true for Rogers; despite being offline, thet were able to tweet out infrequent and uninformative updates, no doubt using the still working Bell network to do so.  In summary, oligopolies -bad, monoplies - worse and government monopolies - horrifically bad.

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