A regular reader and I corresponded this week and he shared some interesting thoughts related to the announcement this past weekend for the government to invest $500M over the next 5 years in rural broadband. We were also looking at the article in Tuesday’s Globe and Mail about Rural Broadband? A chicken-egg question.
What kind of capacity is reasonable for our tax dollars to subsidize? I would love to have unlimited broadband, but I would also like to see an emergency room doctor in less than 4 hours.
The Telecom Policy Review Panel described a program called U-CAN, the Ubiquitous Canadian Access Network that had two fundamental guidelines: funding based on a competitive bid process and on the basis of least cost.
Recommendation 8-13: The U-CAN program should provide subsidies to broadband network providers by means of least-cost subsidy auctions.
Recommendation 8-14: Auctions should be run for large service areas at a time, in order to increase efficiencies of service provision. These service areas should be designated in consultation with provincial or territorial governments, after assessing current and planned coverage of existing broadband network operators.
By definition, the projects that are seeking government funding are unable to produce a reasonable rate of return. As CAIP president Tom Copeland says in the Globe article:
Phone, cable and, in some cases, local hydro companies will run broadband cable wherever there are enough users to achieve an acceptable return on investment.
So how do we decide how much capacity to engineer for communities that don’t meet this test? Today, they can only access broadband over satellite connections.
It would seem that rural networks are likely to encounter more capacity limitations than those in urban centres, given the more limited (and more costly) access to internet backbone facilities in remote regions. As such, rural networks are even more at risk of having capacity exhausted by heavy users. Do we apply network management controls to ensure that the capacity is fairly distributed among all of the users in these communities?
Given the economics of rural networks it is not an acceptable answer to say that the network operator will simply have to build much larger capacity to meet the demands of all users, since this will require even more of a government subsidy.
Government funding is finite. The more government money that goes into building extra capacity, the fewer communities that can be subsidized. So it would seem to be a matter of public policy for us to agree on what should be reasonable capacity – “reasonable” being defined as something less than “unlimited”, in order to maximize the number of Canadians that can get access to any form of terrestrial broadband subsidy.
Once we have crossed over to agreement on that point, it seems that we would then have to agree on how to ensure that a few heavy users in a subsidized community should not be able to exhaust the limited resources to the detriment of the rest of the community.
As my reader wrote:
If network operators have no choice but to apply some “reasonable network management” tools to ensure that all their users have a fair chance to use the network (which the community and the public have funded for them), doesn’t that mean we not debating whether to control bandwidth-heavy usage at peak hours but rather how to do it fairly for all users, large and small?
By the end of this month, the CRTC is expected to release its decision on CAIP’s complaint about Bell Canada’s network management practices on wholesale internet.
We’ll watch to see if the CRTC launches a public notice to examine the practice by all ISPs when it releases its determination.