Who should be paying the bill when the price of broadband is just too high for a household budget to afford?

This is just one of a number of questions that come to mind when looking at a Part I application filed by Matawa First Nations Management (MFNM). In the CRTC filing, MFNM is described as a not-for-profit Tribal Council representing nine First Nations communities in northern Ontario with a combined population of over 10,000. MFNM launched its own telecommunications carrier, Rapid Lynx, which is in the process of deploying a telecom network that will connect all nine of the Matawa First Nations using FTTP technology.

In its CRTC application, MFNM states:

Rapid Lynx has received funding from the Government of Canada through the Universal Broadband Fund and the Government of Ontario through the Improving Connectivity for Ontario program, but this funding is only for capital expenditures related to the network deployment and cannot be used as any form of ongoing retail subsidy for the residents of the Matawa First Nations.

According to press releases, MFNM has received substantial levels of Federal and Provincial funding – more than $130M – for its fibre project:

• $37.1M from Federal Connect to Innovate program (October 2017)
• $2.14M from Indigenous and Northern Affairs (October 2017)
• $30M from Ontario’s Broadband and Cellular Action Plan (October 2019)
• $62.7M from Federal Universal Broadband Fund and Improving Connectivity for Ontario (July 2021)

This works out to $13,000 per person in capital subsidy, or more than $30,000 per household.

It is important to note that retail pricing commitments are conditions associated with receiving funding from the Federal Government for broadband. For example, the Universal Broadband Fund Application guide states “a condition of receiving funding is that successful applicants will be required to make available broadband service(s) at the price(s) specified in their proposal for a minimum of five (5) years from the project completion date.” A similar clause appeared in the Connect to Innovate Application guide [pdf, 4.8MB].

The idea behind the capital subsidy programs is to help with the business case for constructing broadband networks. Proponents identify the costs associated with the build, which are expected to be much higher (on a per-household basis) than urban broadband projects. The business case is supposed to show planned revenues at a prescribed monthly rate, and the government program provides sufficient funding to make the business case break even with a reasonable return on investment.

Through the summer, I asked if our capital funding subsidy programs were fundamentally flawed because the programs typically don’t account for higher ongoing operating costs associated with maintenance of a rural / remote network.

While the business plans submitted as part of the funding applications should be accounting for affordability, we know that price is an issue for many households, even in urban markets. This is why Canada’s major carriers have voluntarily provided targeted subsidy plans like TELUS Connecting for Good portfolio. These are entirely funded by the private sector.

In its CRTC application, MFNM notes that it experimented “using Starlink to offer retail Internet services and saw disconnections when monthly charges proved unaffordable for residents.” MFNM proposes expanding the CRTC’s across-the-board northern subsidy to an additional 75,000 households in First Nations communities, providing each with $36 per month at a total cost of roughly $32M per year.

For more than 15 years, I have been asking if geography should be used to determine needs for broadband subsidies. Rural and remote does not equate to low-income. As I pointed out in a post at the beginning of this year, median incomes in the three territories are substantially higher than median incomes in any of the ten provinces. Doesn’t that fact help illustrate why universal subsidies based on geography would be inappropriate and unnecessary?

If we are concerned with broadband affordability, shouldn’t a subsidy be needs-based, independent of where the person lives? While prices for telecom services may be higher in certain geographies, the price of anything, or indeed everything, may be higher.

Who should be paying the bill associated with subsidies? Why would we expect the CRTC to manage a monthly subsidy for broadband service? Should the affordability of each essential item be addressed by separate regulatory authorities? Should groceries for low income households be subsidized by Canada’s grocery stores? Alternatively, shouldn’t existing government social safety nets be responsible for helping those in need, whether it is for food, housing, broadband or other essential expenditures?

I have frequently complained about the CRTC’s off-the-books social subsidies, managing wealth redistribution on behalf of the government, without it being part of the Parliamentary budget process. At what point do we look to the government agencies responsible for managing our social safety net to be paying the bill for telecom affordability as well?

Does it take a court order to improve performance at the CRTC?

That is what a recent filing by Cogeco is charging following delays in getting a ruling on a complaint that says a Quebecor internet radio station (QUB) is broadcasting over the FM airways in contravention of CRTC ownership and control rules.

A summary of the case is found in a CRTC letter to the parties from this past January. Filing jointly with Bell, Cogeco sent its complaint to the CRTC in November 2024, seeking a determination to prohibit Quebecor Media and Leclerc Communication from broadcasting QUB Radio content on Leclerc’s radio station CJPX-FM Montréal.

In December 2024, the Commission published the application and sent a letter to Leclerc and Quebecor. With all of the clearing of confidentiality claims, submissions and responses, the file didn’t wrap up until March 7, 2025. In early August, Cogeco asked for the Commission to render its decision without further delay (“nous demandons au Conseil de rendre une décision, sans plus tarder”). Two weeks later, five months after the file closed, the CRTC informed Cogeco that it can expect a decision “in the coming weeks”. The space-time continuum seems to work a little differently in the public service, so here we are, two months later, and “the coming weeks” have not yet come.

You may recall that I had a post last summer entitled “Regulatory accountability” that included a link to a [pdf] 171-page report from the Forum for Research and Policy in Communications (FRPC). Included among the recommendations in “The CRTC’s performance, 1969 – 2025: Analysis and recommendations” were calls to “improve the timeliness of its decision-making by publishing decisions concerning broadcasting, telecom and online news applications within 4 months of receiving the applications.”

The CRTC’s own plans call for 75% of “decisions on telecom and broadcasting applications [to be] issued within four months of the close of record”. I found it interesting that the CRTC’s plan shows that it achieved that target 87.5% of the time in the 2023-24 budget year, but the Commission set a target for itself of only 75% in 2024-25.

Is this “sandbagging” the objective or setting their sights too low? When the CRTC achieved the 4-month objective 7 out of 8 times one year, why lower the target so significantly? Indeed, looking at what percentage of files don’t meet the standard, the Commission is saying that its target is to double the number of files that miss, rising from 12.5% to 25%.

Perhaps the Cogeco court filing reflects a reality, but shouldn’t we be able to expect a better service standard from the CRTC? It shouldn’t require a court order to improve performance at the regulator.

Is it time to disband the CRTC? Has it outlived its purpose?

Those questions were stimulated by an article I read last week about its US counterpart, the FCC. “It’s Time to Disband the Federal Communications Commission” was authored by Mark Jamison, the director and Gunter Professor of the Public Utility Research Center at the University of Florida’s Warrington College of Business.

Why disband the FCC? Because it has become a convenient political tool, it too often abandons its independence, and the very reasons for its creation in 1934 have disappeared. As others and I have noted, the FCC was designed to regulate the old Bell telephone monopoly and to oversee the public airwaves. Independence mattered because regulated businesses needed stability across administrations to make the massive infrastructure investments needed for expanding our networks.

As evidence of the FCC’s loss of political independence, Professor Jamison cites a 2015 net neutrality decision as driven by the White House, saying that it was “widely derided for being devoid of sound economic reasoning.” You will recall that I have been critical of the CRTC’s approach to a number of internet policy decisions.

And so, we must ask: What is the FCC for today? The answer: very little. The telecommunications monopoly it was built to police no longer exists. Many of its consumer protection and equipment authorization functions could easily be handled by other agencies. Emergency services oversight does not require an independent body. International relations, homeland security, and policy analysis already overlap with other federal departments.

Professor Jamison says there are 2 remaining functions, saying that neither requires the FCC to manage: Spectrum management; and the universal service subsidy.

Should we read his article and consider whether it is also time to disband the CRTC? We should at least be thinking about what reforms are necessary, and what efficiencies can be achieved through regulatory reform.

Two and a half years ago, the government issued a Policy Direction to the CRTC. That Policy Direction refers to earlier Directions provided in 2006 and 2019 and states, “Whereas the telecommunications market and its regulation have changed since 2019 and the Governor in Council is of the opinion that new directions should be issued to the Commission as a result of those changes”.

Some of the elements in the Policy Direction should have gone without saying, such as “The Commission should ensure that its proceedings and decisions are transparent, predictable and coherent.” And, “The Commission should base its decisions on sound and recent evidence and should exercise its powers to obtain necessary evidence.” What does it mean for the federal government’s confidence in the regulator for Cabinet to believe that such statements had to be explicitly set out within legislative Policy Direction?

The Direction speaks to the need for reforms.

7. The Commission should conduct proceedings and issue decisions in a timely manner, in recognition of the need for market clarity. The Commission should consider whether adopting new processes or engaging external experts would help reach this objective. [emphasis added]

There is also language like “The Commission should revise its approach…”, “periodically review”, and “make any necessary adjustments”, among other language indicating a desire for ongoing reform.

There are considerable levels of duplicated effort at the Commission, where similar functions take place in Government departments, such as those headed by Industry Minister Joly, and Culture and Identity Minister Guilbeault. At the same time, various pieces of government “online” legislation have assigned new responsibilities to the CRTC, to distribute funds to news agencies, and to determine how to regulate streaming media services.

Returning to the question I asked at the outset, should we disband the CRTC? We need to at least consider what functions should be within the CRTC and how the agency should be structured to execute those functions.

We are coming up on the twentieth anniversary of the Telecom Policy Review Panel [pdf]. That report recommended a review every 5 years. Canada’s Telecom Act was enacted in 1993 – more than 30 years ago. The Broadcasting Act is 2 years older.

It’s long past time for a holistic review at how we guide and regulate the digital sector.

How should we measure broadband affordability?

A couple of years ago, I wrote a piece that looked at 4 different ways to measure affordability of telecom services: Income-based affordability; Expense-based affordability; Relative affordability; and, Subjective affordability. I wrote that affordability is a complex and multifaceted concept, that is dependent on the context and the goods or services being considered. I observed that economists may use one or a combination of these approaches to assess affordability in different situations.

In that piece, I also wrote:

In a 2015 report [pdf, 2.1MB], the Public Interest Advocacy Centre (PIAC) said “We suggest that communications services are “affordable” where, as a guideline, they make up about 4% to 6% of a household’s income.” In 2017, PIAC found that low income households considered home internet to be equally important as health care.

So I was very interested to see that the Federal Reserve Bank of New York released a study on Broadband Affordability last week [pdf, 634KB]. Among its key findings: “Low- and moderate-income communities pay a notably higher share of their income for broadband — 2.43% compared to 0.51% in wealthier areas — exceeding the FCC’s 2% affordability benchmark.”

I shouldn’t have to point out that for low and moderate income households, just about everything costs more as a percentage of income than it does for wealthier communities. Basic arithmetic teaches us that happens when the denominator gets bigger.

What I was interested in was how this compared to Canadian figures. As it turns out, Statistics Canada tracks a lot of this kind of information on its Telecommunications Statistics portal. The data shows that spending by all Canadians has been hovering around 1% of total expenditures, and for the lowest income quintile, broadband has remained under 2% of total expenditures.

Please note that this chart looks at broadband affordability as a percentage of total expenditures (expense-based affordability), not total income (income-based affordability). Total expenditures is almost always lower than total income, the percentage of total income would be even lower. In 2023, Statistics Canada reported the figure for total expenditures for the lowest income quintile was $42,240.

It is also interesting to look at trends in what households are spending for broadband service. We can see that monthly expenditures have increased over time, from 60 to 80%. A major part of that has been due to families choosing to subscribe to faster, most robust services. In addition, especially in lower income households, more families are now choosing to subscribe to broadband for the first time, which has the effect of increasing average expenditures.

In the CRTC’s Canadian Telecommunications Market Report 2025, the section on Prices and Affordability confirms that prices have been falling, with gigabit services down 35% and 50 Mbps services down 25% in the period from January 2020 to September 2024.

There is a lot of interesting information in the NY Fed report on broadband affordability. The first message I gleaned was that Canada is far ahead of the US for affordability and adoption of broadband, even for our most vulnerable communities.

More can always be done, but with the cost of living figuring so prominently in political debates these days, the data shows that Canada is doing much better than the US for affordability of broadband services.

Through the years, I have written a number of posts about improving network resilience. About a dozen years ago, I wrote “Cradling your eggs”, writing about me telling the Canadian president of Digital Equipment Corporation that his CIO should be fired for placing 100% of their corporate communications in the hands of the company I then worked for. “It doesn’t matter how good we are, networks can fail. When that happens, do you really want all your eggs in one basket?”

That story came to mind when I was reading a news story about the US Secret Service dismantling a hidden telecom network that had the potential to jam cellular networks, 911 emergency response centres and overwhelm networks with 100,000 simultaneous calls. The system consisted of more than 300 servers loaded with over 100,000 SIM cards, located in New York, with many of the world’s leaders participating in this week’s United Nations General Assembly.

What would have happened if emergency communications were disrupted coincident to a threat or actual disaster condition?

It got me thinking about what options would exist had the rogue network become operational. My daughter reminded me that “All good dystopian novels involve using dead technology to save the day.” Improving network resilience through old-school CB radio? Would the fax machine prove to be the real hero?

I have been an advocate of embedding the public safety broadband network within the public network, leveraging the scale and scope made possible by billions of dollars in annual investments by the private networks.

Still, in the face of all potential threats, resilience needs to be a factor when examining the architecture of networks, including planning for complete system outages.

A dozen years ago, I wrote “reliability and overall capacity can be enhanced through interoperability with commercial networks.” It is also important to recognize that all networks will fail. So, as I wrote before, “carrier diversity provides improved reliability.” Colloquially, don’t put all your eggs in one basket.