The federal budget indicates we are going to throw more money at the problem of universal broadband. Under the heading of “Consumers First”, the government promises to spend “$305 million over five years to extend and enhance broadband internet service for Canadians in rural and Northern communities.”
It is a politically attractive move to spend money in rural and remote markets. There will be a series of media events with grateful local dignitaries and telegenic kids receiving an oversized ceremonial cheque to urge a single service provider to extend the reach of its network.
It is the wrong approach.
Subsidies to a single service provider means the government is put in the position of picking a winner, virtually guaranteeing the end of competitive choice in the communities. One service provider ends up operating with its business plan subsidized, distorting the marketplace for the entire region, not just the “unserved” territory. The same page of the budget website includes a section that speaks of “Improving Competition in the Telecommunications Market”. The rural broadband approach represents a disconnect from the national telecommunications strategy. Why should rural markets have to settle for a monopoly service provider?
In the meantime, there is no mention of dealing with the lack of connectivity among low income households in urban markets. The Survey of Household Spending from Statistics Canada tells us that 1 in 6 households in Canada still has no personal computer, let alone internet access.
Building a Digital Canada means we have to look at both sides of the broadband adoption equation, finding solutions to increase demand as well as the supply of access. A few years ago, publicly available data showed that there were 300,000 households in Montreal that didn’t have a computer, despite having lots of broadband choices available. More than 200,000 households in Toronto; 100,000 households in Vancouver. As you might expect, computer ownership and broadband access is highly correlated with household income.
Increasing digital connectivity means finding solutions for affordability, targeting those who can’t afford the cost of getting online, regardless of where they live.
The CRTC undertook a study of broadband and released a Broadband Report in November 2011. At the time, it said “The purpose of this report is to establish a baseline from which to assess the progress that is being made in achieving this target.”
It has now been two and a half years since the “baseline” was established. Before the government spends nearly a third of a billion dollars, it might be helpful to see an update to “assess the progress.”
As I wrote at the time the CRTC Broadband Report was released, we need a digital strategy “that promotes digital literacy and leads to computers getting into Canada’s low income households. We have the plumbing in place: we need to lead more Canadians to the well and teach them how to drink.”