Rural broadband solutions

A couple of weeks ago, I saw two articles by academics writing in the Hill Times, each looking at rural broadband solutions. Each presented a different perspective.

In “Tackling the ‘wicked’ rural broadband gap”, by Professor Gregory Taylor of University of Calgary, the subtitle says: “Policymakers must resist the temptation to throw up their arms in frustration, or—worse—leave the entire problem to the whims of Elon Musk.”

“Towards a new Canadian broadband future?” was written by Professor Erik Bohlin, the Ivey Chair in Telecommunication Economics, Policy, and Regulation at Ivey Business School at Western University. The subtitle on his article reads “We will need to face the reality that the fundamental competition now is not primarily between the telecom carriers, but with other value systems.”

Professor Bohlin writes about “Canada’s lagging productivity and weak investment climate, especially around broadband infrastructure, which provides a foundation for a thriving digital economy… Long-standing gaps with the United States in both labour productivity, and information and communications technology investments have been identified by the Organisation for Economic Co-operation and Development”

In the past two months, we have seen two major corporate transactions among Canadian telecom operators. Bell announced a $5B acquisition of US-based Ziply Fiber. adding 1.3M addresses to its fibre footprint. Rogers invested $4.7B to take majority control of Maple Leaf Sports and Entertainment. Each deal represents investment in businesses that are independent of Canada’s telecom policy framework.

Earlier this month, the UK moved closer to approving the merger of mobile operators, Three and Vodafone. The Competition and Markets Authority set out a remedy package that would permit the deal to go through, taking the UK down to 3 carriers in a market with 93 million mobile subscribers in a land area a quarter the size of Ontario.

My immediate reaction to the Bell transaction was that this is another indictment of Canada’s telecom regulatory and policy framework. I wasn’t alone with this line of thinking. TD Securities wrote “Having some diversification into the U.S. could be useful if Canadian market conditions do not improve, and we like the flexibility to allocate less capex to Canada and more to the U.S. if future government/regulatory policies do not reward investment in Canada.”

Professor Bohlin points to the CRTC’s mandated wholesale access to fibre networks as “pivotal for investment incentives.” He notes that for 25 years, the European Union “followed a primary emphasis on mandated access in telecoms, and has lower rates.” The EU identified a telecom investment gap in the order of 200-billion euros required to achieve connectivity targets for 2030. An EU white paper [pdf, 555KB] calls for an increased focus on investment incentives for advanced communications infrastructure.

Incentives to invest is a common theme on this blog. Professor Bohlin calls for “increased dialogue between industry and government about the fundamental objectives for developing a strong, viable Canada, and the enabling role that telecom infrastructure may play in achieving that vision”.

I read the Taylor piece with a more critical eye, given that he erroneously states “most telephone service of the 20th century was provided by public provincial, and, in some cases, municipal services — MTS, SaskTel, Alberta Government Telephones, Edmonton Telephone, and BC Tel — which had to step in when the private sector came up short.” (One of those companies – BC Tel – is not like the others.)

Professor Taylor’s article complains about the number of rural Canadians who still lack access to broadband services that meet the CRTC’s national objective.

It has been eight years since the CRTC made the bold 2016 objective that “Canadians in urban, rural, and remote areas can access affordable, high-quality telecommunications services,” and set 50 megabits per second (Mbps) download and 10 Mbps upload as the ambitious targets to qualify as the required speeds. That audacious goal doubled the 2015 Federal Communications Commission (FCC) target when the American regulator set benchmark speeds at 25/3 Mbps. However, this once-bold policy stand is starting to look increasingly timid in 2024. In its recent 2024 Broadband Deployment Report, the FCC raised its fixed speed benchmark for broadband to 100 Mbps download and 20 Mbps upload.

I have written before that when some Canadians are wanting for any kind of affordable broadband, it takes a measure of arrogance to proclaim that 50 Mbps isn’t good enough.

The latest CRTC’s data is nearly two years old. At year-end 2022, 93.1% of Canadians had access to broadband exceeding the objective. That blended average is composed of 99.4% urban and 67.4% rural. So the focus on rural connectivity is understandable. Still, it is unclear why Professor Taylor used even older 2021 data in his article, saying that only 62% of rural households had access to the broadband objective. We can see a significant improvement was made between 2021 and 2022, growing from 62% to 67.4%. More work needs to be done, but 5.4% represents more than 350,000 people, a substantial achievement.

In the coming weeks, I am working on a post that takes an in-depth look at technology adoption and affordability. Watch for it on these pages

Professor Taylor’s article concludes with a reference to wholesale access to fibre networks, somehow seeing increased competition as a regulatory initiative promoting investment. The CRTC itself recognizes the deleterious impact of mandated access on investment incentives and its decisions attempt to mitigate those concerns.

A few years ago, I wrote “Isn’t some broadband better than nothing?”. For people without access, the best rural broadband solutions are the ones that can be delivered now. Three years ago, I wrote, “Le mieux est le mortel ennemi du bien.”

In developing rural broadband expansion, it is impractical to restrict solutions to universal fibre access. It is better to get some broadband service to unserved areas rather than wait for so-called future-proof connectivity.

We can’t wait for a perfect solution for broadband for all Canadians. But we can strive to do a lot more, a lot better, and a lot sooner.

That means improving the conditions that promote investment in advanced digital infrastructure.