Broadband affordability will be key to universal access, experts say

The affordability of broadband service, as opposed to where it’s available, will be the big question when the CRTC next reviews Internet access and whether it should be considered a “basic service,” industry experts say. “It’s not a matter of building it out, it’s a matter of subsidizing the cost,” Len Katz, the CRTC's former vice-chair of telecom, said in a phone interview Tuesday. “With satellite technology, particularly, I’m not sure where the marketplace couldn’t be served.” CRTC Chair Jean-Pierre Blais said in a speech Friday that he expects universal access to broadband Internet to one day be defined and regulated as a "basic service," as home telephone services are now. If designated as a basic service, broadband access would become subject to price and availability regulations requiring incumbent providers to offer those services at a capped rate. In the CRTC’s “obligation to serve” decision in May 2011, the commission declined to classify broadband access as a basic service. Instead, it established “universal target speeds” for all Canadians to have access to Internet services with download speeds of 5 Mbps and upload speeds of 1 Mbps by 2015. The CRTC said in that decision that it would “continue to gather information” from service providers to “monitor progress towards reaching these target speeds,” and that it may “revisit” those targets. Katz said he expects the CRTC to review its regulation of broadband services in 2015 to determine whether providers have met the target speeds established in May 2011. Hank Intven, a telecom expert and partner with McCarthy Tetrault in Toronto, said the commission could consider the issue “at any time” if it wants to make it a priority. “ clearly signalling that he wants to move in that direction,” Intven said, referring to the chair’s speech Friday. “They may well be working on something.” Katz said “all Canadians” should now have access to broadband services, and that requiring providers to make it available would not increase the number of people using it, because the issue is affordability. That problem, he said, should be addressed before the 2015 deadline for meeting the speed targets. “The real issue, I think, becoming more and more prevalent, is although the industry has actually provided for the broadband capability, there still are a number of Canadians who don’t have computers and don’t use the Internet,” he said. “That’s where I think there needs to be some focus, perhaps long before 2015.” Independent telecom consultant Mark Goldberg agreed in a phone interview that the majority of Canadians who do not have broadband access live in areas where it’s available but they cannot afford it. He said data collected by Statistics Canada in 2009 showed there were more than 100,000 households in each of the country’s three largest cities—Toronto, Montreal and Vancouver—that did not own a computer. “That means there are more households in Toronto, Montreal and Vancouver than in all of rural Canada who don’t have broadband,” he said. He added that the problem is acute for school children who need computers and the Internet to complete homework assignments. Children with no access to high-speed Internet in their home, he said, risk falling behind. “It isn’t enough to have computers in schools and computers in libraries,” he said. “There’s too big of a lineup for them and it doesn’t help on a Sunday night.” Intven said the CRTC's speed targets will not address the issue of affordability and noted the commission previously used a subsidy regime to cap home phone prices in high-cost areas. “To be fair to the carriers, if the commission were to make a part of the basic service obligation, they’d have to find a way to fund it,” Intven said. Section 46.5 of the Telecommunications Act says the CRTC can require telecom providers to “contribute, subject to any conditions that the Commission may set, to a fund to support continuing access by Canadians to basic telecommunications services.” In the case of home phone services, the funds are redistributed to telecom providers offering basic services in high-cost areas, such as rural and remote areas. C.J. Prudham, chief legal officer at satellite Internet provider Xplornet Communications Inc., said in an interview that the company's two fourth-generation satellite services offer 5 Mbps Internet services to 92 per cent of the 1.7 million Canadian households the CRTC says are not being served by a wireline provider. She said the company’s third-generation satellites will be upgraded “long before 2015” and capable of offering the commission’s targeted speeds in any location in Canada. “It doesn’t matter where you are in Canada, we can reach you,” she said. Chris Pierce, chief corporate officer for MTS Allstream Inc., said he believes a subsidy regime could ensure affordable Internet services are available to Canadians in rural and remote locations, and that government support could help with affordability issues in urban areas. He said Canadian service providers are now required to contribute to a subsidy program run by the CRTC called the National Contribution Fund. “Obviously we don’t want a rate that’s up near 15 per cent,” he said, referring to U.S. providers that pay higher contributions to support similar programs. “But if you got to two or 2.5 per cent of eligible revenues and you included things like retail Internet revenues in the measure, I think you could have a really sustainable plan for delivering broadband to high-cost areas where otherwise it’s just not going to happen.” Goldberg said subsidies for service providers in high-cost areas would not help low-income households in urban centres. Instead of giving subsidies to broadband service providers, he said, low-income households should be given a subsidy or voucher to help pay monthly service bills. “If you target the user, not the service provider, you actually create a business model that encourages competitive entry,” he said. Katz said the commission does not have the ability to create a voucher program to support low-income households. “That is beyond the scope of the CRTC unless it’s been ordered by the government to do so,” he said. nkyonka@thewirereport.ca

Broadband affordability will be key to universal access, experts say

News | December 4, 2012

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