Mark Goldberg


www.mhgoldberg.com





Fox Group Dispatch

Are broadband subsidies ever finite?

A recent CBC story about PEI caught my eye: “Province issues RFP for high-speed internet in rural areas”. The province has launched a new Request for Proposals [RFP pdf, 655KB], seeking “Expansion of Broadband Internet Services across PEI”.

The vision and objective of this RFP is to enhance broadband internet services in underserved areas of the Province. The initiative is intended to address the telecommunication infrastructure gaps that still exist across PEI.

According to the RFP, approximately 31,000 civic addresses are considered to be underserved. The RFP hopes to attract proposals that will improve “access to broadband internet services at speeds up to 50 Mbps for downloads and 10 Mbps for uploads”, clearly aiming at the CRTC’s broadband service objective. It is worth noting that the CBC article incorrectly refers to the CRTC targets as being “mandated”.

How will this new PEI project be paid for?

The funding support models are still under consideration, but will likely involve some award component to build out the delivery network with sufficient capacity, reliability, and scalability to fulfil the RFP objectives… Federal Government funding support has also been explored and may become a component. The [Government of] PEI has advised that the proposed solutions may not move forward without federal funding approvals.

Ten years ago, I wrote a piece (“PEI leads horses”) about the PEI government entering into a contract to make the province the first to have broadband internet service available to 100% of its residents.

At the time, I observed:

Here is the real rub. Despite having some of the highest levels of access to broadband internet, PEI has the lowest adoption of service at only 43%. Well under half the people who could have broadband internet are finding it worth paying for.

Policy makers need to look beyond the raw numbers of people who have access to DSL or cable-based broadband. We need to be concerned about the affordability of service to lower income Canadians regardless of where they live.

PEI doesn’t have as much of a problem with broadband access as it has with broadband adoption.

Since that time, broadband service adoption has nearly doubled, reported to be 83% in 2016, according to last year’s CRTC Communications Monitoring Report, moving the province into the middle of the pack, ahead of Saskatchewan, Manitoba, Quebec and Nova Scotia.

Ten years ago, I suggested “PEI may end up being a great case study of how our current approach to broadband access is leading citizens to the fountain without helping them find it worth taking a drink.”

The latest RFP might provide inspiration for development of another study: How many times will governments be called upon to subsidize broadband access projects for the same region?

Are broadband subsidies ever finite?

1 comment to Are broadband subsidies ever finite?

  • Thomas Rivington

    All rings true except that 10yrs has been a lifetime in the broadband business. I started a rural WISP in 2003, adoption in the early 2000’s wasn’t as keen as it is today. Driving thru the same rural areas where I once delivered service, most of the homes now have a fixed wireless antenna on the roof. Yes, some of this can be attributed to the improves sales, marketing and technologies but I would suggest that in the span of the last 10yrs, broadband has gone from something people want to something people need. So comparing adoption rates from 10yrs ago to what they would be today is I think difficult.

    Further, as technologies evolve and politicians are prone to making right now decisions, we continue to get investments in the “technology of the day” and it’s limitations, whether that be continued expansion of DSL, fixed wireless and even satellite. Until a government decides to invest in fibre to the premise and creates a method by which this is financially feasible (a fibre mortgage maybe, putting more responsibility on the homeowner), I’m afraid there will continue to be investments by government at every new speed and requirement threshold.