Mark Goldberg


www.mhgoldberg.com





Fox Group Dispatch

Competition for rural broadband

In March 2017, TekSavvy and Entegrus Transmission (part of the Chatham and St. Thomas, Ontario based electric utility) presented a report to the Chatham-Kent Municipal Council recommending a fibre-based broadband project for the Chatham-Kent region of Southwestern Ontario. A month later, Chatham-Kent’s Council passed a motion to endorse and support a proposal by Teksavvy and Entegrus for Connect to Innovate funding from the federal government. Funding for this project has not been approved yet.

In a related but different project, TekSavvy announced plans earlier today to invest up to $26M to “connect more than 38,000 residences and businesses in the region, starting in Chatham with plans to expand to Blenheim, Ridgetown, Tilbury, and Wallaceburg.” According to TekSavvy, the Municipality of Chatham-Kent intends to invest $6.5 million to facilitate an open-access fibre backbone connecting the communities. This represents about 20% of the $32.5M total project.

Exactly two months ago, Bell and the municipality announced plans to roll out fibre to 38,000 premises, “starting in Chatham and expanding to Blenheim, Ridgetown, Tilbury and Wallaceburg.” In Bell’s press release, the project was described as fully funded by Bell, without taxpayer contributions to the capital cost.

A number of thoughts come to mind.

I found it interesting that the two press releases use almost identical language and list the planned roll-out in the same order. In the TekSavvy release, the Chief Administrative Officer for the Municipality is said to be “heartened that this local company is working with the Municipality in its goal to bring advanced communications services to the community.” The same person is quoted in the Bell press release, saying “the Chatham project is the first phase of bringing Bell’s advanced communications services to the region.”

If broadband adoption rates are in the order of 85% in the area, and Teksavvy captures 50% of the market, then the Municipality contribution works out to a subsidy of just over $400 per Teksavvy subscriber.

The regional municipality has succeeded in recruiting competitive provision of broadband in its collection of smaller towns. What isn’t clear is why taxpayers are funding one of the competing networks and whether this changes the economics of building in some of the lighter density areas within these communities.

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