Posted December 27, 2016
Everyone in Canada should be able to access high-speed Internet, the country’s telecom regulator has declared, setting bold targets for speeds and establishing a new fund that will invest up to $750-million over five years to expand broadband services to remote regions.
The Canadian Radio-television and Telecommunications Commission ruled Wednesday that broadband Internet with download speeds of at least 50 megabits per second and upload speeds of at least 10 Mbps will now be considered a “basic telecom service.” It also said all customers, even in rural areas where plans often have low caps on data usage, should have access to unlimited data options.
Such high speeds and high-bandwidth plans are commonplace in urban areas – the CRTC says 82 per cent of Canadians already have access to those download and upload speeds – but are frustratingly out of reach in rural and northern areas.
“They are ambitious targets but I think they’re realistic,” CRTC chairman Jean-Pierre Blais said in an interview, noting that the commission looked at similar targets set by Canada’s trading partners. “The U.S. is at 25 [Mbps], Australia’s at 25, Europe generally is targeting 30 and Germany is at 50.”
“So we didn’t want to be in the middle of the pack.”
The CRTC ruling is part of a complicated puzzle as governments at various levels and industry players try to figure out how to pay for Internet infrastructure in sparsely populated areas with little prospect of a return on investment. The federal government last week announced it plans to target “backbone” connections that help transport Internet traffic to and from remote areas as part of its own five-year, $500-million fund.
Wednesday’s decision stems from a review of basic telecom services in the spring. The last time the CRTC considered this issue in 2011, it set an aspirational target of universal access to download speeds of five Mbps and one Mbps for uploads but did not include high-speed Internet in the basic service definition.
Now, to help deliver high-quality service to remote regions and along highways, the CRTC will rely on contributions from industry revenue, taking a percentage of the money customers pay for a range of telecom services.
The commission plans to extend an existing levy on voice services – which has been used to help fund land-line telephone service in hard-to-reach areas – to the revenues companies earn from Internet and text-messaging services.
Geoff White, a lawyer who acted for the a group of public interest and anti-poverty advocates dubbed the Affordable Access Coalition, called the decision “important and transformational.”
He said the coalition’s research, which included public opinion polling, showed support for the idea of paying more for monthly telecom services to help others get online.
“To the extent that there is any nominal increase in their bills, this is something Canadians are behind; they want to see their fellow Canadians having better access, and that’s the result of this decision.”
However, the ruling stopped short of adopting proposals the coalition put forth to address affordability issues, such as setting a low price for a basic broadband plan or establishing monthly affordability subsidies for low-income households.
“That was a bit disappointing,,” Mr. White said, adding that there was significant evidence from low-income Canadians of the sacrifices they make to afford Internet access. But he said he was encouraged that the CRTC also filed a report on broadband issues Wednesday with the federal government and highlighted concerns about affordability.
CRTC chairman Mr. Blais said the commission relies on market forces, and while it does not regulate retail prices, it has taken steps to encourage a wholesale market with a view to creating sustainable competition and, ideally, better prices.
He pointed to a recent move by TekSavvy Solutions Inc. – which buys access from companies such as BCE Inc. and Rogers Communications Inc. and resells it to retail customers – to lower prices after a CRTC ruling slashed the wholesale rates the large players can charge.
Mr. Blais said the CRTC is aware that Navdeep Bains, the Minister of Innovation, Science and Economic Development, is looking at the issue of affordability and that it is one that “clearly requires a multifaceted, shared responsibility to get this done.”
He lauded companies such as Rogers and Telus Corp. for launching initiatives that offer monthly Internet plans for about $10 to certain low-income households and said, “Right now, we’re giving a chance to Minister Bains and others to fill that affordability gap.”
The CRTC said it expects services that meet the target speeds to be available to 90 per cent of households by the end of 2021 and to the remaining 10 per cent of households within 10 to 15 years.
The fund, which will be operated by an arm’s-length, third-party administrator, will distribute no more than $100-million in its first year, which was the amount of the subsidy for local voice service in 2016. It will increase by $25-million in each year over the following four years, totalling a maximum of $750-million over five years.
At the hearing, large telephone and cable companies urged the commission not to extend the contribution fund to Internet revenues. But stock analysts said Wednesday the ruling was more “benign” than feared because it did not include any retail price regulation or a basic broadband plan.
“In addition, the ruling did not outline any specific build-out requirements/timeline,” Barclay’s Capital analyst Phillip Huang said. “While the $750m figure may appear to be a huge burden, we do not believe it is financially material for any one player in the industry.”
David Watt, senior vice-president of regulatory affairs at Rogers, said he was encouraged by “this reasonable plan to help increase access to Canadians in hard to reach areas of our country,” adding Rogers already offers much faster speeds and unlimited data plans.
BCE spokesman Mark Langton said Wednesday the company is still reviewing the decision.
Telus spokesman Richard Gilhooley similarly said the company would take time to review the “important and complex” decision before commenting extensively.
Article by Christine Dobby for the Globe & Mail