CIB, UBF to collaborate on projects that fall between market cracks

The $2 billion Canadian Infrastructure Bank rural broadband fund will seek to fund projects that fall in the gap between profitable connectivity projects the market could support on its own, and projects that would be mostly or entirely reliant on the Universal Broadband Fund, which launched Monday. Speaking at the Keeping Canada Connected online event hosted by the Canada 2020 think-tank, Innovation, Science, and Economic Development deputy minister Simon Kennedy said that projects with CIB involvement will be those where a certain level of contribution from the UBF, paired with a certain amount of investment from the CIB would make a project attractive enough to draw viable funding on capital markets. The federal government launched the long-awaited UBF on Monday with $750 million in additional funding, on top of the $1 billion allocated in the federal government's 2019 budget. Alongside that $1.75 billion from the government is the partnership with the Canadian Infrastructure Bank, and a previously tipped $600 million agreement to fund Telesat Holdings Inc.’s constellation of low-earth orbit satellites (LEOS). From the total $1.75 billion UBF, $750 million is set aside for "large impact projects," though it is unclear exactly how much of the UBF funding will be used in conjunction with funding from the CIB. In a statement emailed to The Wire Report, an ISED spokesperson said that the CIB is "interested in supporting bidders to the Universal Broadband Fund for broadband projects that require approximately $200 million in private capital and CIB financing." "The thinking is: you have a project that might actually be attractive to the market — might be close to economic — and with some contribution from the UBF, 'bang' you're right in the zone where the Infrastructure Bank can work with its private partners to close the deal," Kennedy said. Because of the complex nature of these multi-party arrangements between the UBF, the CIB, and private capital, the CIB will most likely be involved with a "relatively small number of fairly large projects," Kennedy said. According to an ISED statement emailed to the Wire Report, a bidder seeking joint UBF-CIB funding "may choose to include as part of its project financing plan a variety of sources of capital including bank debt, bond debt, and equity capital, in addition to the requested funding from the Universal Broadband Fund and Canada Infrastructure Bank financing." Also speaking at the online event, president of Rogers Communications Inc.'s business division Dean Prevost said that in the long term, the company is looking at large scale projects, with "a thousand kilometres of connectivity with hundreds of communities hanging off of it, that you can then build a program to create access for all of them along that route." Prevost explained that Rogers currently has a connectivity project underway along a pipeline route between British Columbia and Alberta, describing it as "a way we can piggyback on efforts that are already under way to drag fibre connectivity, wireless (both fixed and mobile), to a couple dozen communities that sit along those routes.” At a later Canada 2020 session, Rural Economic Development Minister Maryam Monsef said that targets for the UBF "are based on the number of households connected," when asked if the program will fund projects that primarily serve energy sector installations like mines and pipelines. However, Monsef noted that businesses and other public entities would not be barred from applying to the UBF. "The private sector is definitely included as an eligible partner," she said, adding that the only people precluded from applying are individuals and agencies of the Crown. "As long as you're applying for a region or community that does not currently have access to 50/10, as long as you're applying with an ISP onboard to move your project forward, we should talk," the Minister said, referencing the CRTC's universal service objective minimum of 50 Mbps download speed and 10 Mbps download speed. Monday’s UBF launch came after months of delay, which was initially announced in the 2019 federal budget, declared accelerated in April, and then tipped in June to launch in the “coming days.” Asked why there was such a significant delay in the launching of the fund, Monsef blamed the pandemic. "We were ready to go, actually, in March. And then the pandemic hit, and we had to make sure that we were ready to process applications without delay, and we had to make sure that we were ready to process a Rapid Response stream in a really thoughtful way," Monsef said. "We took the time to get it right because Canadians are counting on us to get this right." Asked by president of the Canadian Rural Revitalization Fund Sarah Minnes about affordability of the connectivity coming out of the projects, Monsef said "a component of eligibility for the Universal Broadband Fund is being able to demonstrate first of all, that your price point is going to be reasonable.” Monsef also said the fund has a requirement that backbone projects funded under the scheme will have to share access, which she said "will lead to greater stability and competitiveness." — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Tim Forster at tforster@thewirereport.ca

CIB, UBF to collaborate on projects that fall between market cracks

News | November 13, 2020

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