CRTC to consider whether broadband should be basic service

The CRTC announced Thursday that it will re-examine the definition and role of so-called basic services, paving the way for potential changes to the offerings telecom companies are mandated to make available to every Canadian. The regulator said it will examine several issues in the proceeding, including which services Canadians find necessary to participate in the digital economy, acceptable Internet upload and download speeds, the need for funding mechanisms to support the provision of modern telecom services, and the proper role of the CRTC, the government and industry players in the market. “As our habits change in this digital age, our telecommunications services must keep pace,” CRTC Chairman Jean-Pierre Blais said in a news release. “The proceeding we are launching will help us ensure that telecommunications services meet the changing needs of Canadians.” The original basic services definition, defined by the regulator in 1999, obliges companies to offer local telephone service, the ability to call emergency responders and low-speed Internet via dial-up at regulated rates. The CRTC’s basic services definition currently does not include broadband, and some have called for such an addition. Now, the CRTC has launched the first phase of a proceeding to examine the issue and is calling for public comment on where and how Canadians are getting their telecom services. The deadline for comments in the first phase of the proceeding is June 30. Len Katz, former interim CRTC chairman, said in a phone interview the time is "clearly right now" to include broadband in the definition of basic services. Katz was a CRTC commissioner in 2011 during its previous basic services review, and he said at the time the CRTC wanted to see how the market would evolve before adopting broadband into the definition. "There were some strong considerations to having it done at that time, but they wanted to let market forces continue to evolve," he said. “I think it’s pretty clear now that is their intent.” In 2012, Blais said he expected universal access to broadband to be a part of the basic services definition in the future. “Deciding exactly what constitutes a basic service is open to interpretation, of course,” he said then. “Years ago, it meant having a basic telephone line. In light of the growing importance of broadband to all aspects of Canadians’ lives, I can foresee the day when universal access to broadband will form part of the definition.” Speaking on Thursday, Katz said broadband is a necessity for any Canadian to participate in public life. “Clearly, for any business or any individual to survive and thrive in Canada these days, you need to have the skills and the capability to use the digital economy,” he said. “Without broadband, people will just fall further and further behind.” The CRTC’s pledge to use the proceeding to examine Internet speeds could bring clarity to the government’s conflicting definitions of broadband Internet access. In the CRTC’s “obligation to serve” decision in May 2011, following its last review of the issue, 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. Industry Canada, in its own 2014 plans and priorities document, said it aimed to have 77 per cent of the population on broadband subscriptions of 1.5 Mbps or higher by March 31 of this year. In February, the U.S. Federal Communications Commission (FCC) raised its definition of broadband to 25 Mbps from 4 Mbps. The FCC called the old standard, set in 2010, “dated and inadequate” for assessing the broadband needs of the country. The American regulator said the redefinition was necessary to reflect “advances in technology, market offerings by broadband providers and consumer demand.” Bill St. Arnaud, an independent telecom analyst, said the CRTC's approach is flawed and that the regulator has "boxed itself into a corner." "They're defining the basic service for all Canadians, so you're automatically limiting yourself to defining the basic service to those in rural and remote areas," he said in a phone interview. Something like the FCC's redefinition of broadband is impossible in Canada, he said, because there are parts of the country that are only covered by low-speed, high-latency satellite Internet connections. "The physical limitations of satellite are going to be the tail wagging the dog here," he said. "We can't do what the Americans have done because you can't do that with satellite.” St. Arnaud said a better approach would be to assure a basic service for most Canadians, rather than all, or to divide the basic services definition into urban, suburban and rural. "If they phrase the question that way, then we would have three different answers," he said. That said, he acknowledged that the latter suggestion would be politically unpalatable, given the CRTC's mandate to serve the interests of all Canadians. "But as long as we tie our hands to satellite service in remote areas, there's not much we can do," he said. The CRTC expressed concern in its notice of consultation for the basic services proceeding that rural Canadians may be left behind in the digital world, saying that “in many rural and remote areas, access to these services or to more than one may be limited, which may impact the ability of consumers living in these areas to participate in the digital economy.” Industry Canada has pledged to spend $305 million by 2017 to extend broadband access to rural and remote communities. The current basic services rule includes subsidies to provide telecommunications services to rural communities, raised by a levy on certain revenues from companies earning $10 million a year or more from telecom customers. In a March 4 decision on Internet rates from Northwestel Inc., which provides telecom services in remote areas across the Canadian North, the CRTC said it would use the basic services proceeding to “establish a mechanism … fund capital infrastructure investment in transport facilities, as well as the cost of maintaining and enhancing these facilities to ensure that they support evolving telecommunications services, such as broadband Internet services.” Defining broadband as a basic service could also lead to price caps, which some experts have said are just as important to broadband access as availability. Katz said the basic services definition could also lead to a subsidy regime for companies rolling out service to remote areas. “Once you create the basic service definition to include broadband service, those carriers that offer the service but are not recovering their costs will be able to apply to get that subsidy,” he said. The second phase of the CRTC’s review, which will begin this fall, will be a further public consultation on the issues raised in the first phase of the proceeding. The CRTC will hold a public hearing on basic services on April 11, 2016. — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

CRTC to consider whether broadband should be basic service

News | April 9, 2015

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CRTC to consider whether broadband should be basic service

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