Big telecoms urge market approach for CRTC in basic-service review

Canada’s largest Internet service providers told the CRTC it’s not necessary to implement a subsidy system for broadband Internet service, while advocacy groups argued that relying on market forces and government funding alone hasn’t worked to ensure all Canadians have satisfactory Internet access. The regulator is currently reviewing its definition of basic telecom services, and will hold a hearing on the issue in April next year. Initial interventions were due Tuesday. The CRTC is looking at questions like acceptable Internet upload and download speeds, the need for funding mechanisms, and the proper role of the CRTC, the government and industry players in the market. The current basic services definition, dating from 1999, obliges companies to offer local telephone service, the ability to call emergency responders and low-speed Internet via dial-up at regulated rates. It doesn’t include broadband Internet, an expansion that some have called for in recent years. “It is self-evident to Rogers that broadband Internet service is a basic telecom service that should be available to all Canadians,” Rogers Communications Inc. said in its intervention. It said that while most Canadians have access to broadband, it “acknowledges that there may be some percentage of the population that still does not have access to a service that qualifies as high-speed.” Rogers argued that the CRTC should first determine whether those areas are likely to be served by the “competitive market in the near term.” Rogers said that includes looking at what subsidies the federal government has awarded to extend broadband access, the “activities of the many competitive suppliers of high-speed Internet access, who are constantly extending and upgrading the quality of their services,” and “exciting new developments involving satellite, drone and balloon technology initiatives aimed at delivery of lower cost broadband service by several of the largest tech companies in the world.” It said basic service should be considered a speed of at least 5 Mbps for downloads and 1 Mbps for uploads, though it suggested the CRTC set a target objective for 2020 of 25/1 Mbps. “The fact that some of the remotest communities have yet to receive the 5/1 Mbps service does not mean that they will not receive them under the existing regulatory framework, or through ongoing initiatives of the Government and the private sector,” Rogers said. Currently, the CRTC has a subsidy system in place for landline phone service in high-cost serving areas, which applies to incumbent telephone-service operators such as BCE Inc. and Telus Corp. Telcos with telecom revenues of $10 million or more are required to contribute to the subsidy. During its last review of basic telecom services in 2011, the CRTC chose not to put in place a mechanism to subsidize broadband deployment, stating that “market forces and targeted government funding, an approach which encourages private and public partnerships,” should drive broadband expansion. Rogers said the CRTC would be doing Canadians a disservice by choosing now to put in place a subsidy system for broadband Internet, arguing that subsidies are a “very blunt instrument that produces unintended consequences and economic distortions.” If the CRTC decides the status quo isn’t sufficient, Rogers argued, it should instead redirect “the existing subsidy for local telephone service towards achieving this objective in a manner that is both technologically neutral and competitively neutral, that is, does not favour or hinder any particular class of carrier over another.” BCE Inc.’s submission argued that it is “important for the regulatory framework to continue to support investment by private and governmental entities.” Bell said broadband deployment should be supported by a combination of policies “encouraging facilities-based competition,” a “light-handed regulatory regime that incents, rather than discourages, investment in remote areas” and targeted subsidies. The CRTC’s current market-driven approach has produced “tangible results in terms of the availability of robust broadband networks built by facilities-based competitors,” Bell said, though it acknowledged that “there remain a few rural and remote areas in which broadband services are not available today because there is simply no business case to build the necessary infrastructure to serve them.” It said that any subsidy regime should only be put in place if no government funding is available for a particular community, only used to extend broadband in the most remote communities, and that a target speed of 5 Mbps would be appropriate. The CRTC should only fund deployment of broadband in remote areas that aren’t currently capable of 5 Mbps upload and 1 Mbps download speeds, it added. Like Rogers, Bell also suggested that any new broadband subsidy should be reallocated from the local voice service subsidy currently in place. Also like Rogers, Bell suggested that the CRTC could “set an aspirational broadband target of at least 25 Mbps.” Shaw Communications Inc.’s intervention argued the status quo is sufficient to address the problem of insufficient Internet access for Canadians in remote and rural parts of the country. “To address these gaps, a combination of market forces, focused government funding and public-private partnerships have been relied on as the principal means of rolling out broadband services to the far reaches of our country without imposing onerous subsidy burdens on Canadian consumers,” Shaw said, arguing that this approach has been “extremely successful.” At the same time, it said, the existing subsidy regime “is devoted almost exclusively to the funding of a monopoly era service, namely wireline primary exchange voice service, which is being rapidly substituted and replaced by other services and technologies.” It said the CRTC should look at whether that funding is still required in all the areas where it's currently in place, and if it decides it’s necessary to subsidize other telecom services, “this funding should be capped at the amount that is currently used to subsidize services that no longer warrant that funding.” It added that the funding process should be “technology agnostic so that the widest range of networks and delivery technologies is eligible for subsidy, provided they meet the relevant service requirements.” Advocacy groups, however, presented a different picture. Nunavut Broadband Development Corp. said that the “current approach of relying on market forces and targeted government programs has failed” in the territory, where the “digital divide is widening by the day.” It asked the CRTC to put in place long-term funding for Internet access in rural and remote areas of the country, and said that funding should replace the existing subsidy for landlines. The Eastern Ontario Wardens’ Caucus, a group of Ontario counties and municipalities, said that market forces haven’t been sufficient to meet the growing demand for Internet service in eastern Ontario. “Despite past funding commitments and progress in terms extending access to basic broadband services in Eastern Ontario, substantive digital infrastructure gaps remain that raise concern,” the group said. “These include closing remaining coverage gaps (particularly to northern communities), further improving service quality in terms of download/upload speeds, and addressing mobile network coverage and capacity gaps we have identified.” The Public Interest Advocacy Centre (PIAC) said that “market forces and targeted government funding have not worked.” It argued that a 5 Mbps target speed is too low, with typical households requiring speeds of 9 to 26 Mbps, and added that focusing on “speed alone ignores the problem of affordability facing low-income Canadians.” It said the CRTC should put in place a new funding mechanism that would supplement the current subsidy regime, as well as an affordability subsidy for low-income households. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Big telecoms urge market approach for CRTC in basic-service review

News | July 15, 2015

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

Big telecoms urge market approach for CRTC in basic-service review

News | July 15, 2015

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

Telus’ arguments for incumbent access to wholesale regime not supported by competitors

CRTC finalizes terms of Uvagut TV distribution

Bell won’t participate in subsidized broadband projects if wholesale access for Big Three continues, signs agreement with CNOC

CRTC announces changes to Broadband Fund

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us