Johnston ties public funding of broadband infrastructure to third-party access

Any government funding given to cablecos, satellite distributors or telecommunications companies to deploy broadband would be contingent upon those companies providing third party access to their networks, according to the chair of the National Broadband Task Force. David Johnston says all levels of government are expected to contribute up to $1.5 billion of a price tag that could top $4.57 billion to extend high-speed Internet to rural and remote communities by 2004. The task force’s recommendations were released Monday in its final report to Industry minister Brian Tobin. Johnston’s comments were made to counter concerns that taxpayers’ money would help large suppliers, such as Rogers Communications or Shaw Communications, build broadband pipes to communities, and then see them charge consumers a premium price for Internet access. "By virtual of the fact that public money has been used to set up the infrastructure, then the public is entitled to expect that it is going to be a very competitive market place," says Johnson. "Another player should be allowed to use the pipe up to a certain point and then provide its own access to individuals (perhaps at a better price)." The CRTC ordered cablecos in 1999 to open up their lines to outside parties, but it has so far not happened with large distributors. Regional Cablesystems Inc, which does not have the size to set up its own Internet provision companies, is leasing its lines to Internet service providers and telcos. "The (third-party) principle has existed for some time for Canada’s cable networks, yet Canadians still do not have the ability to choose amongst multiple providers of cable high-speed Internet services," Canadian Association of Internet Providers president Jay Thomson notes. He adds the CRTC should continue "to hammer" large cablecos to lease their lines. Johnston says compliance could be ensured by making third-party access a condition of funding agreements. The CRTC, Industry Canada or a provincial body could then monitor deployment to ensure compliance. The role of the CRTC, says Johnston, is to "continue to encourage a very competitive marketplace. If there are public funds to be invested in broadband access, then the CRTC, Industry Canada and provincial governments would also be interested in ensuring a high degree of competition to provide those services at the highest quality at the lowest price." The 103-page report of the task force, entitled The New National Dream: Networking the Nation for Broadband Access, calls for funding to bring broadband to unserved communities, connecting public institutions, funding so-called "community champions" and linking businesses and residences, something not initially proposed by Industry Canada. But Johnson points out that no government funding would go toward connecting businesses and residents, which has been pegged at $900 million to $2 billion. "Public funds would go toward connecting to a point of presence in a community, but we do not believe that the government should subsidize pipes to an individual or business," he adds. The cost of transport to unserved areas has been estimated at $1.3-$1.9 billion, depending on the technologies used. Connecting public institutions has been budgeted at $500-$600 million, while $50-$70 million has been earmarked for "community champions". The task force also identified the importance of developing broadband content to drive traffic to the new infrastructure once it was in place. Johnston suggested that for every dollar spent on infrastructure, another dollar should go toward content and application development. The task force singled out the need for content and services in the areas of learning, health, government, culture, entertainment, community building and e-business. The task force recommends that all communities have access to a high-speed, high-capacity and scalable transport link that can support 1.5 Mbps to each end user. Such speed would facilitate the carriage of applications such as full-motion interactive video. Priority is given to first nations, and rural and remote communities. As expected, the group also called for a review of foreign investment restrictions (CCR, May 24/01). "To ensure that a maximum amount of capital is made available to finance the expansion of broadband access..., the federal government should conduct an urgent review of foreign investment restrictions for telecommunication common carriers and distribution undertakings…," the report states. Foreign ownership controversial Johnston says the issue of foreign ownership led to a lot of controversy within the group. Alliance Atlantis Communications Inc chair Michael MacMillan opposes the move, while BCE Inc has gone on record as calling for a cautious approach, since it would be difficult to separate telecom and broadcast assets, while the Canadian Cable Television Association favors a liberalization of foreign ownership in terms of telecommunications, cable and satellite carriage. Convergence in both technology and services has resulted in a melding of content and carriage, making it increasingly difficult to distinguish between the two. Rogers Communications spokesperson Jan Innes says her company has considered segregating its media assets in a separate company to take advantage of any easing of ownership rules as they apply to its cable and wireless units. The issue was complicated and not one the task force was prepared to tackle, says Johnston, so the recommendation was for the federal government to review the matter. Industry minister Brian Tobin says a review of foreign ownership rules is justified, given that the government is asking the industry to spend billions of dollars in capital investment to deploy broadband. "We’re not saying as a government, that this is our policy, we’ll pay for it. We’re saying this is our policy, we’ll partner with you. By and large, we expect you to pay for it." He made it equally clear that the review would deal only with infrastructure and not content or culture. In the end though, Johnston predicts the foreign ownership debate "will largely be settled at the multilateral trade table in spite of what a nation might like to do with respect to ownership conditions." As globalization intensifies and multinational conglomerates grow, Johnston predicts countries may look more at the behaviour of capital, rather than ownership as a way to stimulate investment. "Instead of concentrating on specific sources within a jurisdiction, governments may have to pay attention to the behavior of that capital," he notes. Such a policy could reflect both the social and economic objectives of a nation, he adds. The task force report is now in the hands of Tobin, who is expected to bring the matter to Cabinet. The 35-member task force included representatives from the cable industry, satellite distributors, community groups, and public bodies, such as schools and libraries.

Johnston ties public funding of broadband infrastructure to third-party access

Broadcast | June 21, 2001

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