Today’s post takes a look at extending broadband to unserved areas, stimulated by a recent newspaper article and a New York state news release.
In Saturday’s Toronto Star, I read what I considered to be a superficially researched article about SpaceX Starlink broadband service: “‘Crazy good’: Rural Canadians are raving over Elon Musk’s Starlink satellite-based internet service. Should Canada’s big telcos be worried?”
The bottom line, as stated by SpaceX founder Elon Musk in the final paragraph, is “I want to be clear, it’s not like Starlink is some huge threat to telcos. I think it will be actually helpful and take a significant load off the traditional telcos”.
Unfortunately, you have to read through a full page and a half of muddled messages before reaching the answer to the question posed in the article’s headline.
Should Canada’s big telcos be worried? No, they shouldn’t. The end. Of course, that would have been too short an article to merit the front page of the Saturday business section.
Unfortunately, we were left without any explanation of Musk’s comment about how services like Starlink “will be actually helpful and take a significant load off the traditional telcos.”
The article featured a graphic indicating Canada’s average monthly price for broadband in 2020 ($77) was higher than other surveyed countries other than Australia ($78). The Star didn’t mention that the Australian government has squandered tens of billions of tax dollars on its National Broadband Network and yet, Australians still pay higher prices. The article, that reads somewhat like a Starlink advertorial piece, carries testimonials from customers seemingly happy to pay $700 up front and $130 per month for Starlink service – nearly double Canada’s average broadband price. At those prices, Starlink is clearly not a solution within the affordable reach for many Canadians.
Still, Starlink, and other low earth orbit (LEO) satellite broadband systems (unmentioned in the article), are important additions to the array of technologies available to bridge the rural and remote digital divide. LEO has the ability to provide service to locations that are beyond the economic reach of terrestrial wireless (both fixed and mobile), and can provide a more viable solution than wireline technologies in many low density locations.
It demonstrates why governments need to be technology agnostic when looking to accelerate broadband adoption in unserved areas. For example, I think it is a mistake for Ontario’s most recent broadband program to specify technologies for each service area, which may limit the ability for proponents to offer more cost-effective, and perhaps more rapidly deployed service options.
Rather than causing worry among major carriers, Starlink is much more likely to pose a threat to smaller rural wireless internet service providers, especially those providing lower bit-rate services, such as 5Mbps and lower. Further, each lost customer harms the financial viability for these small ISPs to upgrade their facilities. Business cases for providing service in rural and remote areas can be very fragile, and the loss of major clients can be devastating, as I wrote last year in “Anchor institutions”.
Last week, I noticed an interesting press release from New York Governor Kathy Hochul announcing a new billion dollar ‘ConnectAll’ initiative intending to bring affordable broadband to millions of NY residents.
The initiative calls for “over $1 billion in public and private investments to connect New Yorkers in rural and urban areas statewide to broadband”, but that part of the announcement appears to be more sizzle than steak, given a reliance on private sector funding “plus hundreds of millions of forthcoming dollars from the federal Infrastructure Investment and Jobs Act”.
Still, there are a few aspects to the announcement that are worth consideration by other jurisdictions, including all levels of government in Canada:
- $30-a-month Affordability Subsidy: To further the expansion of affordable broadband, the Department of Public Service will administer efforts to ensure every eligible New Yorker can take advantage of the IIJA’s $14 billion Affordability Program to support a permanent $30-a-month broadband subsidy for low-income households. The Department will also conduct a statewide marketing program geared toward increasing enrollment in this program — which currently lags below 30 percent of eligible households in New York.
- Removing Fees, Outdated Regulatory Hurdles and Leveraging State Assets. This includes a set of reforms not limited to:
- A Build-Free Initiative for Rural Broadband Deployment – Eliminate state use and occupancy fees that hinder rural broadband deployment directing the Department of Transportation to exempt ConnectALL projects, reducing costs for program participants.
- Streamline Make-Ready Processes: Direct the Department of Public Service (DPS) to streamline the current make-ready process.
- Standardize Right-of-Way Access for Cellular and Fiber Deployments and Establish Clear Timelines: Establish clear permitting timelines for cellular and fiber deployments on state land and rights-of-way with simple and standardized forms and processes.
- Leverage Existing State Fiber Assets: Conduct a pilot to leverage existing State fiber assets to support middle-mile broadband.
In August, I asked “Is there a better approach to affordable telecom service?” Right now, affordable internet programs in Canada are fully funded by the private sector. Would a different model be even more effective?
In addition, we need to examine government fees, and regulatory hurdles are inhibiting deployment of digital infrastructure in rural and remote areas. New York’s ConnectALL initiative has some promising proposals that should be considered by all public agencies and departments in municipal, provincial and federal governments.
Are there public sector assets that be leveraged for faster and more cost effective construction of communications facilities?
Should we rethink the CRTC’s broadband fund, perhaps examining a model that subsidizes service in high cost areas? Rather than subsidizing the upfront capital expenditures for extending networks to unserved areas (like every other government broadband program), should the CRTC fund assist with the ongoing higher operating expense?
The price of service from Starlink (and other satellite providers) are beyond the reach of many households, but such services may be the most economic way to service many Canadian households. Over the past couple years, we have frequently seen broadband funding announcements exceeding $10,000 in subsidies per household (as can be determined by reviewing ISED’s summary funding chart).
Can we be more creative in finding ways to build broadband better?