On Monday, most parties filed their proposals in respect of the CRTC’s Consultation (2010-43): Obligation to serve and other matters. A few straglers came in late. Most of the material will be available shortly on the Commission website. In the meantime, the hyperlinks in this post will take you to a Scribd version of the referenced filings.
PIAC, representing a coalition of consumer groups, stood with the government of Saskatchewan and Sasktel as parties calling for an expansion of the current contribution regime to include a sustainable subsidy for high cost high speed internet services. The current system involves a tax on telecommunications services (other than internet services) to fund basic telephone services in high cost areas.
PIAC introduces its plan with a cautionary note, warning against doing any harm to the current system:
The Commission’s first goal in this proceeding should be to preserve Canada’s commitment to achieving universal and affordable voice (telephone) service. Therefore, whatever other adjustments are made for example to the basic service objective, obligation to serve or the local service subsidy, the Commission should ensure that such service is accounted for and protected.
Interestingly, on first review of the filings, it is hard to find service providers who support a subsidy program, even among the independent ISPs. The CRTC is urged to:
Not make any changes to the contribution regime that would increase the amount of contribution payable or result in the payment of contribution on retail Internet service revenues
and
Not introduce a high-speed Internet access element to the basic service objective
or to levy contribution on retail Internet services
This becomes one of the challenges of the universal service funding. How would the CRTC create a program to subsidize high cost broadband and avoid applying a tax on broadband internet services to fund the subsidy. If only legacy telecom services are taxed, then it artificially inflates the costs, serving to stimulate migration to IP-based over-the-top services, leaving fewer to fund the subsidy fund, raising the tax rate and thereby accelerating the migration.
How could this be considered technology neutral?
Although I did not go through all of the filings yet, it would be interesting to see evidence that there is actually a universal need to provide subsidies to all residents of high cost serving areas.
As we have observed before, rural and remote does not equate to low-income; often, there are substantial savings in housing costs that can offset higher prices for other services. Similarly, lower cost areas may still have prices for services that exceed the affordability level for some households.
Is it appropriate to artificially raise prices for economically disadvantaged households who happen to be in lower cost urban areas in order to benefit all residents of high cost serving areas?
Has anyone looked to see if there are more rural and remote residents who will be brought online by universal service proposals than the number of low income people who may be chased off the network?
Which group is representing these households?