How do we measure broadband affordability?
Some people think we should use international comparisons; if broadband costs more in Canada than it does in another country, can one really conclude the service is over priced and something needs to be done? A couple posts from February disproved that theory: “Letās talk seriously about affordable wireless” and “Higher? Maybe. But too high? No.”
Others look at the percentage of annual income required to pay for the average communications services bill and conclude that people in the lowest income quintile are paying a higher percentage of their income for those services than people in the higher income quintiles. Well, that is just basic arithmetic and will always be true for all services, all goods. Anything divided by a smaller number will be a bigger percentage than anything divided by a bigger number. So yes, if you make more money, you will find everything to be more affordable. In and of itself, that doesn’t mean that it isn’t affordable for people at the lower end of the income scales, but with a limited amount of income, spending priorities have to be set.
The current global health pandemic has turned everyone’s life and livelihoods upside down. Unemployment rates are levels never seen by current generations. School classrooms have been closed for weeks and will likely remain that way through the end of this school year. Most people who are still working are doing so from home and many are using internet connections to continue classes. To a far greater extent, those without home broadband internet are isolated far more than the majority of us who are maintaining physical distance, but socially connected. It is tougher to communicate with family, tougher to order necessities, tougher to maintain employment, school, social connections.
The industry has taken a number of steps to help consumers who have home internet, like raising download restrictions, and establishing favourable financial arrangements for those having trouble making ends meet.
How can we respond to those who aren’t yet online, in need of affordable home connectivity?
TELUS announced a significant expansion of its Internet for Good program [BC Announcement; and, Alberta Announcement], in cooperation with local school boards in British Columbia and Alberta.
āAt TELUS, leveraging our technology to help young people realise their full potential is fundamental to the passionate social purpose we all embrace. As classrooms remain closed in order to support important physical distancing, keeping families safe, this new initiative ensures every student can stay connected to exciting learning opportunities from their homes,ā said Darren Entwistle, TELUS President and CEO. āTELUS has a longstanding commitment to building stronger, more connected and compassionate communities, as reflected through our Internet for Good program, which provides more than 122,000 low-income Albertan families [100,000 low-income British Columbian families] with access to high speed internet and digital literacy training tools. The partnership announced today builds on this program and exemplifies our teamās passionate dedication to keeping young people safe and connected during this unprecedented health crisis.ā
School Boards working with TELUS will be responsible for identifying families in need of an internet connection at home, and will provide that family with a unique TELUS Internet for Good promotion code, which the family can use to call TELUS and register for the program. Families will also have access to free educational activities through TELUS WISE and the āLearn, Do and Shareā educational hub through a partnership between TELUS and Microsoft.
Before the Federal Government helped coordinate the national Connecting Families program, TELUS had launched its Internet for Good service in cooperation with provincial social service agencies in Alberta and BC. Yesterday’s announcements are a remarkably generous expansion of this industry-leading program.
There was an opinion piece on NNSL (Northern News Services Limited) saying “Itās time for a WE revolution in Canada ā WEB EQUALITY for Northerners”. It seeks more affordable broadband choices for Canadians living in the far north:
The logic that the 35 million people with an internet connection should pay for the national communication grid south of 60, while 109,000 Northerners pay more for the remaining third of the country is absurd. Thatās like putting a toll on the Trans-Canada Highway and charging people in Alberta and B.C. over twice as much because they live so far away from Ottawa.
There are real technological challenges in serving the north, and as a result, there really is a problem with providing comparable services at comparable prices when compared with what we have come to expect as the standard of service in our urban centres.
In the olden days – about 30 years ago – the regulator could have ordered that service in the rest of Canada would cross subsidize the north and it would just be done; when there are multiple competing service providers in north and south there are issues that arise: who should pay for the subsidy, and who should receive the subsidy?
Should the funding come from a tax on everyone’s telecom services? Should the funding come from the federal treasury? While in theory, both are taxing the same body of consumers, the government has liked to have telecom users cover various cross subsidy schemes for telecom services. The challenge with that approach is that the funding model impacts the affordability of services for all. In addition, as many services migrate to global cloud-based services, there are many substitutable services that aren’t contributing to the subsidy. The tax creates an added arbitrage opportunity to incent the growth of these services resulting in an ever shrinking pool of contributors, raising the tax rate and feeding a vicious cycle. On the other hand, the federal treasury is funded by those most able to pay and would be the least distortionary source of a subsidy.
As to distributing the subsidy, traditionally, broadband programs have tended to subsidize a selected service provider based on a proposed geographic expansion without regard to the financial need of the consumers who will be served. This also had the effect of picking a winner in each area, forever enshrining a particular service provider and specific technology. Can we find a better way, to enable the marketplace to pick winners? What if we turned that model around, to subsidize users based on need without regard to geography? I have written about this kind of approach in the past [such as “Affordable broadband isnāt just a rural issue”]
Around the world, people are depending on residential broadband more than ever before; economic uncertainty has impacted everyone. Governments at all levels are helping citizens face these challenges and telecom companies and their employees have performed admirably in managing these shifts in communication patterns, with dramatic increases in loads. There remain some households that do not have access to even a modest level of broadband service, and recall, “Isnāt some broadband better than nothing?” and “Do we offer a sip of water to the thirsty?”
As economic stimulus programs are being developed by government, should some funding be aimed at shovel-ready projects that can extend the availability of broadband services? Can direct subsidies help Canadians in remote areas afford the services needed to communicate during these difficult circumstances?