A while back, Mark Evans and yours truly both read a Globe and Mail Saturday feature interview with Bell Canada CEO Michael Sabia.  I meant to pick up on this thread but the work caught up with me, until today, while Googling around at work trying to uncover some Canadian telco data, I accidentally came across a great find.  Like the saying goes - some great findings are truly accidental - and this was no exception to that adage.  I discovered an editorial that Dr. Yves Rabeau wrote in the Financial Post back in August of 2004.  Dr. Rabeau has impressive credentials, including a Ph.D. in Economics from my alma mater (MIT) and is Professor of Business Strategy in the Faculty of Management Science at UQAM and Director at the MEI - Montreal Economic Institute). 

More importantly, at the bottom of the web page article, I discovered a link to an excellent discussion paper authored by Dr. Rabeau that I wanted to share with TF readers.  The study is called "The Schumpeterian Wave in Telecommunications: Policy Implications", and it is a must read.  At the time of my discovery, I made an instant connection to the Schumpeter reference in the Sabia interview with the Globe and Mail.  Joseph Schumpeter (shown in the photo) struck again - the Austrian economist that so greatly influenced the economic development theory and coined the famous term "creative destruction".  Schumpeter is not only Sabia's favorite economist, but also an inspiration for Dr. Rabeau's paper. 

The "Schumpeterian Wave" is very well described in the discussion - long waves of innovations both create and destroy wealth.  However, the net long-term effect is positive, because innovation eventually brings productivity gains which enhance the living standards in the economy.  Of course these innovation cycles bring about some major turmoil - new firms and existing ones that can adopt the new technologies can thrive under this environment, whereas others eventually vanish because they cannot make the necessary adjustments. 

But the central theme of the paper is to determine whether, if telecom regulation were in tune with the changing technology and the competitive landscape, this could have limited excesses such as the telecom speculative bubble.  More importantly, the study also raises a few very important questions about what role the CRTC should pursue, and whether or not the goal of achieving a healthy level of competition in the local markets is a realistic one.  The big question asked is - while trying to balance the interests of new competitors with those of the incumbents, will the CRTC end up in an "economic impasse" (where it seeks to create a competitive regime that is not naturally cost-effective) that will also curtail the flexibility of the incumbents?