Funding gaps, policy shortfalls keeping rural Canada offline, experts say

Despite billions of dollars in government funding aimed at bridging the digital divide, experts argue that Canada’s current connectivity policies are falling short by leaving rural and Indigenous communities behind. For a number of Canadians living in rural areas, the promise of reliable, affordable internet remains out of reach. While the Canadian Radio-television and Telecommunications Commission’s universal service objective and the federal government’s connectivity strategy have pledged Canada-wide access to internet download speeds of 50 Mbps and upload speeds of 10 Mbps by 2030, progress has been slow for the residents outside of urban areas. With rural, remote, and Indigenous households making up a disproportionate amount of those still disconnected, some experts advocate for a shift in policy focus, moving beyond simply funding infrastructure and towards fostering an environment where local initiatives can flourish. “The irony is that the people that need the connectivity the most are typically going to be the last ones in line to get it,” said Wayne Kelly, director of Brandon University’s Rural Development Institute (RDI), in an interview with The Wire Report. “Because this is all based on market stimulus funding, then you're typically rolling it out on a model that's based on market demand,” said Kelly, pointing to “easy access” rollouts that prioritize areas with higher population density and market demand. By going incrementally from bigger towns, to slightly smaller ones, to the next tier of smaller ones, and so on, the smallest, most-remote communities are expected to be the last to be connected. Despite the challenges of the current market stimulus approach, Kelly acknowledged the benefits that recent funding initiatives have had for rural connectivity, noting “an expansion of networks across rural Manitoba.” The CRTC’s 2016 establishment of the universal service objective was a “game changer,” he said. “It’s been really important from a policy perspective, and from an impact perspective.” According to Innovation, Science, and Economic Development Canada , 94.8 per cent of Canadian households had access to high-speed internet as of the end of 2023. While the department did not provide specifics on the disparities between urban and rural households, a report from the federal auditor general shows that as of 2021, 99.3 per cent of urban households had high-speed internet access, compared to 59.5 per cent of households in rural and remote areas, and 42.9 per cent of households on First Nations reserves. Although these communities present a less-profitable market for major providers, Kelly argues they are the most in need of connectivity because of existing barriers to accessing essential services, such as health care and education, as well as economic opportunities. “Building it isn’t enough. It's not a ‘build it and they will come’ scenario, it's just the very first phase. Is it a required element? Absolutely. But you need to build the digital infrastructure, then you need to build the digital capacity, and then you need to build the culture of use — and it's only at that point that you really start to see the benefits of digital technology,” said Kelly. In urban spaces, people’s awareness and understanding of the benefits that Internet technologies can bring has developed naturally over the past 20 years as connectivity has improved. For rural spaces, however, “sometimes additional supports are needed,” he continued. “There are stories of when rural communities get connected, everyone is super excited because now three people can watch Netflix at the same time. But they're not using it for work, they’re not using it for school, per se.” To help rural and remote communities catch up on the digital usage front and know what is available to them, “it's going to take targeted and dedicated supports,” said Kelly. Some supports can be as simple as helping universities offer more online classes or having a dedicated organization identify all online training opportunities available to rural residents. “Those are low-cost supports that could be game changers,” said Kelly, noting the “substantial impact” that things like online learning can have on communities and the young people who no longer need to leave to pursue a post-secondary education. Kelly argues that connectivity for communities in these areas will continue to lag behind the rest of the country — even if they eventually gain access to target speeds of 50/10 Mbps — unless the government implements supports for them to develop their own broadband solutions so they can upgrade their networks. “Those targets were fantastic for 2016. The problem is the target was for 2030, 14 years later,” he said, noting that in 2002, the broadband service target was 1.5 Mbps. “The thought of having 1.5 Mbps speeds in 2016 was ridiculous, you couldn't do anything,” said Kelly. There is a risk that rural and Indigenous communities, particularly those that have been connected through fixed wireless or other technologies not considered future-proof, are going to continue to be left behind as technology and data needs evolve, he argued. “We need to consider much more strongly how to incorporate community solutions in areas where markets are not providing the answer,” said Kelly. Michael McNally, library and information studies professor at the University of Alberta, echoed Kelly’s sentiment. “Even now, I think it's questionable putting money into projects at 50/10 when the United States is looking at speeds double that, and the Europeans are building gigabit networks with the target of universal gigabit coverage by 2030,” he said. “Some of the projects we're funding are not going to be scalable,” said McNally. “The speed target is one of the key things that needs to be addressed because it's simply not going to be competitive in a few years’ time.” According to Ian Baggley, director general of the Broadband Fund, the CRTC remains focused on the 50/10 universal service objective. “There are still areas that don't even have that minimum level of service,” said Baggley in an interview with The Wire Report. “The fact of the matter is, a significant number — if not the majority — of the projects that we have funded provide services that exceed that minimum standard,” he stated, noting that fibre can reach speeds up to one Gbps. Baggley said that ISED will be examining the service standard “of their own accord” following recommendations from the auditor general’s report, but the CRTC will continue moving forward with its current funding plan “as it is.” “We've had a rather incremental approach, and tried to connect the next easiest community to connect to the next easiest household to connect, and really, in some ways, we should be flipping it around,” he said. McNally noted the importance of mobile wireless for rural connectivity. According to the CRTC, 97.1 per cent of rural communities have mobile wireless coverage. He commended ISED for establishing stricter deployment requirements for spectrum and creating more “granular” Tier 5 licensing areas. “But they haven't really embraced using in any of the major wireless spectrum auctions, so they've got one piece of the puzzle, they just haven't really implemented it.” According to the Spectrum Policy Framework established in 2007, “market forces should be relied upon to the maximum extent feasible.” McNally argued that this fails to consider the reality of rural connectivity. “That doesn't necessarily work in rural communities where there are little to no market forces in telecommunications,” he said. McNally called for the framework to be revisited so that “strategic considerations around how to get the most out of spectrum in rural context” could be carved out. He also called for policy measures aimed at providing local governments with the necessary training and expertise needed so they can make their own informed decisions about what connectivity solutions are best for their community. “There's no one-size-fits-all solution for rural broadband, but what has constrained a lot of these rural communities is they still see it as something that either the federal government or big telecommunication companies are going to come and solve,” he said. Individual communities do not have to go it alone, noted McNally. He pointed to several examples of groups of communities consolidating demand and taking up their own projects to tackle connectivity challenges, including initiatives like Southwestern Integrated Fibre Technology (SWIFT), the Eastern Ontario WardenRegional Network (EORN), and K-Net. These initiatives can be structured in various ways, such as community-owned and operated internet service providers , co-operatives, non-profits, or public-private partnerships with regional providers. “Ownership is the key to broadband development” in rural and Indigenous communities, said Tim Whiteduck, chair of the First Mile Connectivity Consortium (FMCC) and technology director of the First Nations Education Council (FNEC). He told The Wire Report that he believes community ownership is essential for ensuring the long-term sustainability and responsiveness of Internet services in rural and Indigenous communities, noting that when communities control their own networks, the benefits that stem from those networks stay within the community. “When we invest in the community, it stays in the community,” said Whiteduck. Not only does it create jobs, but it also has a “ripple effect,” extending possibilities to other parts of the community such as enabling the creation of remote health services, e-learning, telepolicing, or telejustice. Community ownership — while often a more affordable option — does not automatically mean that networks in high-cost service areas are sustainable, noted Whiteduck. He emphasized the importance of optimizing operational costs and trying to support them through different means. Sustaining services “can become costly when you're remote. You’ve got to pay for your engineering, your network maintenance contract, which is huge.” He noted that contracts for next-day service repair in some areas can run as high as $30,000. “It would be nice to see more support for these high-cost networks,” said Whiteduck, calling for funding measures to take other expenses beyond initial capital expenditure into account. Currently, neither the Universal Broadband Fund (UBF) administered by ISED, nor the CRTC’s broadband fund consider any costs incurred after a broadband build is complete as eligible for funding, besides upgrades. “Everything is more expensive,” particularly in rural and remote areas, said Whiteduck. “So communities need support to balance so they can keep affordability relatively even and not let it spike out of control.” Redundancy builds should also be considered eligible, he said. According to Whiteduck, the FMCC is regularly reminding the CRTC that rural and Indigenous communities are in great need of redundancy support to ensure the operation of their networks. As chair of the FMCC, Whiteduck is responsible for relaying messages from the First Nations that the consortium represents, one of which is the community of Opitciwan in the Mauricie region of Quebec. “The only way we could get to them is by road, and the closest corridor where we could make the connection into the network was 160 kilometres away,” said Whiteduck. It is connected by one fibre cable buried under a main road, which he noted is “highly likely to be dug up somewhere, and the fibre will break.” “If something were to happen to that fibre, in trouble,” said Whiteduck. Members of the Independent Telecommunications Providers Association also advocated for more financial support on the operational side. Government subsidies have been a “great boon” in helping make the business cases for internet justifiable in rural areas, said Ken Naylor, general manager of Mornington Communications Co-operative. Without them, the typical return on the initial investment could be around 10 years or more, he noted. “After 10 years, the electronics on both ends of the fibre starts to age out and you have to do replacements — and there's just ongoing maintenance and such. So to have this massive investment and then not to keep throwing money into it to maintain it, is a losing proposal,” said Naylor. “So some support on the would be appreciated. The concern is, if that doesn't happen, then the only resource left is to increase rates for consumers, which then you get into this divide about consumers in urban areas having access to affordable services, whereas in rural areas — just to maintain services — we have to increase prices.” Minister of Rural Economic Development Gudie Hutchings was not available for comment, but a spokesperson from her office said that the government is “exploring options for competitive pricing and infrastructure support that reduce end-user costs” in rural areas. ITPA member Richard Biron, vice-president of business development for Sogetel, agreed with Naylor and noted that subsidizing the operational costs of telcos in high-cost service areas is not without precedent. “There used to be a mechanism for telephony to be subsidized,” said Biron, referring to a now-removed provision of the CRTC’s revenue-based contribution regime. “I think in the long term, the CRTC or the government will have to think about such a mechanism to make sure that the networks that we have deployed, we can maintain them in rural areas.” The CRTC has been reviewing its Broadband Fund policy since July of last year. In an interview with The Wire Report, Julie Cook, director of the broadband funding regime, did not share any details about the ongoing review, but did say that the regulator is “looking at whether or not” it should fund operational costs through the Broadband Fund. “We hope to have a decision come out probably in the next year or so,” said Cook. phalentm@thewirereport.ca This article has been cross-published with The Hill Times.

Funding gaps, policy shortfalls keeping rural Canada offline, experts say

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By Phalen Tynes-MacDonald
| October 30, 2024

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