Many governmental programs are a form of wealth redistribution. We tax those in the best position to pay in order to provide universal programs for citizens of all means. Think of it as a kinder, gentler, (democratically elected) Robin Hood.

Progressive tax systems involve a tax rate that increases (or progresses) as taxable income increases. It imposes a lower tax rate on lower-income earners and a progressively higher rate on those with higher incomes.

In the olden days – before telecom competition got underway 30 or so years ago – the CRTC administered such a redistribution of wealth that effectively provided subsidies to lower the price of telecom services for certain classes of users. Business customers paid more in order to lower residential service prices. Urban customers paid more in order to lower the price for rural. Long distance phone calling was seen as discretionary, so the surpluses enabled local services to be more attractively priced. In the industry, we called those surpluses “contribution”. Business service surpluses provided a contribution; the surplus in revenues over costs from urban services provided a contribution; long distance profits were considered a contribution; calling features like voice mail, conference calling, caller ID, touch tone, all provided a contribution. As an aside, touch tone tied up less equipment – and actually cost less to provide – than rotary dial, but it was originally considered a premium feature so it was expected to (you guessed it) provide a contribution.

The contribution pot was then used to fund services in high cost serving areas, helping to lower prices in rural and remote areas.

All of this could be centrally managed because we lived in a rate-regulated monopoly world. The CRTC would review capital programs and determine the reasonableness of the spending plans. Approvals were expressed as whether or not the Commission found the “Construction Program” to be reasonable – and it was often expressed in the form of a double negative (“we do not find the program to be unreasonable”). In a monopoly, rates of return were not guaranteed. Regulation was intended to provide opportunities to achieve certain rates of return. It was a very different era.

However, when competition was introduced, each of those markets with prices well above costs created arbitrage opportunities. It created challenges for central administration of a contribution fund. Local phone rates started to be rebalanced to remove many of the broader subsidy requirements. One might have thought the CRTC should exit the wealth redistribution business and leave it to the government to fund social subsidy programs out of the general tax system. The problem is, the government is somewhat addicted to having the CRTC operate an off-the-books alternate funding system. It isn’t just telecom revenues getting taxed to fund special programs. Recall, TV customers are the ones paying for the national public alert system. Most of us get those alert signals on our mobile devices, but it is the ever shrinking number of cable and IPTV subscribers who fund the system. It is all part of the CRTC’s wealth redistribution.

It was the CRTC’s Telecommunications in the Far North decision that inspired today’s post. That decision spawned a consultation to determine how to administer a subsidy for internet service in the north. As I mentioned a couple weeks ago, the first round of interventions are due February 18.

If it wasn’t obvious from my earlier blog post, I think the CRTC’s universal subsidy plan for the Far North is misguided and ill-conceived. In an Op-Ed, I referred to it as “The CRTC’s flawed Far North approach”. The Commission said that prices for internet service can be 50% higher in northern communities, but its universal subsidy plan ignores ability to pay as a consideration. Indeed, the ability to pay is ignored, not just for those receiving the subsidy, but also for those in the rest of Canada who will be paying more in order to fund the subsidy.

Median household incomes in the north are considerably higher than in the rest of Canada. However, Statistics Canada’s survey of household spending does not indicate that overall household expenditures in the territories are as disproportionate to those in the rest of Canada as the incomes, or the differences in internet prices.

The income distributions (using the 2021 Census) vary widely between the three territories (Yukon, Nunavut, NWT) and the country as a whole. Nationally, 17% of Canadians earn more than $80,000, but more than 36% of NWT residents earn more than $80,000; 27% in Nunavut and 28% in the Yukon. Nationally, 51% of Canadians earn less than $40,000. In NWT, that figure is 39%; 54% in Nunavut and 37% in Yukon.

The CRTC’s decision shrugs off use of an income-based subsidy because it is harder to do.

a subsidy that is based on household income would involve a long implementation process and would have a greater administrative burden and higher costs. Household incomes can change frequently and would need to be assessed routinely at an individual customer level. Determining eligibility based on household income would therefore require the ongoing collection of personal data and extensive cross-departmental collaboration because the Commission does not have access to, nor regulatory oversight over, Canadians’ personal income data. [paragraph 35]

It was indeed very difficult for the pioneering carriers (Rogers and TELUS) that launched these targeted subsidy programs, notably without any government funding. Those of us who were involved in the early days can recall the battles with various government departments trying to get them to assist with identifying eligible households. But, we have already cleared that challenge. We know how to do that. The CRTC ignored Northwestel’s launch of Connecting Families, a program targeting low-income households based on a system that already accesses income information while preserving personal privacy. Indeed, there is no mention of the program in the decision. I remember writing about the announcement which came during the oral phase of the CRTC’s Far North hearing.

What motivated the CRTC to ignore the existence of Connecting Families in its decision? If it wanted a broader application, it didn’t mention it. How can the decision talk about wanting to “improve affordability, especially for low-income households” but not mention the program that exists for precisely that group?

By deciding on a subsidy that will go to all service providers, and to all customers, we end up a regressive form of wealth redistribution. All customers in the far north will receive a subsidy, regardless of their financial need. All customers in the rest of Canada will fund that subsidy regardless of their financial ability to pay.

The absurdity continues in looking at the decision that all service providers, terrestrial and satellite, will participate. Starlink charges all customers in Canada $140 per month for service. The company is now among the largest internet service providers in rural and remote areas in Canada. Under the CRTC’s subsidy plan, Starlink customers in the Far North will actually pay less for their service than consumers in the south.

This makes no sense.

When there is so much effort underway to keep prices for telecom services down across the board, the CRTC’s Far North subsidy will work in opposition. The Commission’s Broadband Fund already duplicates funding programs from various federal, provincial and regional government departments.

We should be asking why the CRTC is trying to re-insert itself into the social welfare business.

It’s pretty easy to spend fifteen million dollars building broadband infrastructure. It is a lot harder to spend that kind of money wisely.

When I ran a few network organizations, I spent the company’s money like it was my own. It doesn’t appear that the CRTC takes the same care spending money it has collected from the tax it charges on the basis of our telecom bills.

The CRTC issued a release announcing “action to help bring fibre Internet to three communities in British Columbia and the Yukon”. The press release says the Commission is committing over $14M to CityWest in order to bring “high-speed fibre internet to Jade City and Good Hope Lake in far northern BC, and to Upper Liard, near the southern edge of the Yukon.

The release undersells the commitment. When I went to the actual decision [2025-30], I could understand why the amount was understated and why no customer count appears in the press release. The decision reveals the amount is actually a lot closer to fifteen million ($14,849,784) and there are “approximately” 113 households to be served. Approximately?

Jade City had a population of 30; Good Hope Lake had 41; of the 3, Upper Liard is the big community with 130 people living in 55 households. The CRTC’s estimate of 113 households is generous.

Assuming 113 households is an accurate figure, the CRTC funding works out to $131,000 per household. And that isn’t the total cost. CityWest is committing its own funds as well, and we have to assume that there will be some kind of recurring revenues in the plan. Think about that subsidy for a minute: $131,000 per household.

The CRTC says in its decision that it took into account the appropriateness of the proposed network technology and infrastructure. I have trouble believing that. Three years ago, I wrote “Building better broadband” and said that we need to be technology agnostic in picking solutions for rural and remote broadband. The CRTC was technology agnostic in its recent decision for the Far North. So why wasn’t low earth orbit satellite considered to be a viable option for residents of these communities?

Starlink retails for $140 per month. That is $1680 per year. If I took $33,600 and invested that conservatively to yield 5%, I could pay for Starlink forever, and I would still have the $33,600 investment in the bank. No customer fee; no investment from CityWest and I would have only spent a quarter of the fifteen million dollars that the CRTC just gave away.

The CRTC must have thought that it didn’t really matter since this was spending “other people’s money”. Except that it is our money. Money the CRTC collects from us by taxing telecom bills to fill up the Broadband Fund.

CityWest applied back in June of 2023, more than a year and a half ago. The Commission suggests that its way of reviewing and releasing decisions enables it “to expedite the funding approval process to address the immediate need of Canadians for improved access to broadband infrastructure.”

Eighteen months is hardly an expedited process, especially in this case. People could have had free broadband for life starting in the summer of 2023, at a quarter of the overall cost.

I said it at the top. It’s easy to spend fifteen million dollars on broadband, especially when it’s other people’s money. It is a lot harder to spend that kind of money wisely.

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[Postscript: January 31, 2025] It turns out that CRTC had already funded fibre to the home in Upper Liard back in 2020, as part of a $38.6 million Broadband Fund allocation to improve local access infrastructure in 19 communities.

This isn’t a case of two different government agencies funding two different service providers to cover the same community. In this instance, the CRTC doesn’t appear to be able to keep track of which communities it already paid for.

Is it time to modernize Canada’s outdated telecommunications rules?

That question is being asked south of the border in the wake of a decision by the Court of Appeals for the 6th Circuit Court striking down the FCC’s Safeguarding and Securing the Open Internet order.

Dr. Eric Fruits of the International Center for Law and Economics wrote a recent article “Title I for All: Time to Modernize America’s Outdated Telecommunications Rules”. In it, he suggests Congress should move telecommunications services into the more flexible Title I regime that currently governs information services, rather than “forcing modern communications into an outdated regulatory framework.”

The court’s ruling confirms that broadband internet must be classified as an “information service” under Title I because it enables users to store, retrieve, and manipulate data—not just transmit it. But this raises an obvious question: Why should traditional phone service still face stricter Title II regulation when modern telephone networks are increasingly integrated with the internet?

Consider how we communicate today. Only a quarter of U.S. households have a landline phone, down from nearly 50% a decade ago. Platforms like Zoom, WhatsApp, and Microsoft Teams have largely replaced traditional phone calls. Voice communication now routinely travels through Voice over Internet Protocol (VoIP) technology. Traditional carriers have modernized their networks to handle integrated voice, video, and data services.

The evolution of communications in Canadian households is substantially similar. As I wrote last November, in 2021 more than half of Canadian households relied exclusively on mobile phones, having gotten rid of their home phone lines.

I wonder if Canada needs to consider its own holistic update to regulating telecommunications services. With Parliament prorogued, Canada’s Online Harms Act died on the Order Paper. It was to be the third piece of legislation, to accompany the Online News Act and Online Streaming Act as part of the Liberal government’s Digital Strategy. The bill was heavy handed and was finally split into two pieces after attracting much criticism.

Let’s not kid ourselves. It isn’t as though the Online News Act and Online Streaming Act were universally acclaimed. Indeed, a paper in an upcoming issue of Canadian Bar Review questions the constitutional authority for Parliament to have implemented the Online Streaming Act. In the paper, author Michael Ryan asks “Did Parliament have the authority to enact the new legislation, or does the [Online Streaming Act] intrude in a constitutionally impermissible way on matters that fall within provincial jurisdiction?”

Canada has some silly laws on the books, like one that requires telecom companies to provide paper bills – at no charge. From the Broadcast Act:

34.1 No person who carries on a broadcasting undertaking shall charge a subscriber for providing the subscriber with a paper bill.

And the Telecom Act:

27.2 Any person who provides telecommunications services shall not charge a subscriber for providing the subscriber with a paper bill.

Both sections were enacted at the same time as part of a 2014 budget appropriation omnibus bill. Why does the Broadcast Act say “No person… shall charge” while the Telecom Act says “Any person… shall not charge”? I am certain a legal scholar can weigh in on why the two sections are phrased differently – there are pages of Talmudic discussions documenting such debates. More importantly though, in a country that wants to evolve to a digital-based economy, why does this 10-year old artifact requiring free paper billing remain in the legislation governing digital infrastructure?

A few weeks ago, AT&T introduced what it called a Customer-First Promise, a guarantee covering its wireless and fiber networks and services: connectivity; deals; and, customer support. As an observer from Canada, it is notable that this wasn’t in response to a regulator or legislation. The US does not have a “Wireless Code” or “Internet Code”. There is no equivalent of the CCTS in the US. What if Canada had a regulator and legislators willing to let the marketplace sort things out? 

When the 2006 Telecom Policy Review Panel issued its report [pdf, 1.6MB], it recommended a review every 5 years. That was nearly 20 years ago. Canada’s Telecom Act was enacted in 1993 – more than 30 years ago. The Broadcasting Act is 2 years older.

Maybe it’s time to modernize the Acts for a fresh, holistic look at the legislation guiding the digital sector.

For the past few years, I have been a supporter of the professional development opportunities from the International Telecommunications Society. The organization offers a number of complimentary webinars with speakers and researchers from around the world sharing their expertise. The sessions cover current topics of interest for professionals concerned about issues relevant to the digital economy.

Here are the first three scheduled for 2015:

• January 28, 2025: Broadband and Climate Action: Why Digital Policy is Climate Policy. This session includes Professor Dr. Monika Köppl-Turyna (EcoAustria), Dr. Wolfgang Briglauer (EcoAustria) and Joe Rowsell (TELUS) to explore how telecom can drive climate action.
  As the climate changes, broadband technology has emerged as a powerful, untapped resource for driving down carbon emissions across industries and communities. Yet, despite its vast potential to transform our approach to energy use and efficiency, the climate benefits of broadband are often overlooked.
• February 18, 2025: Satellite Technology and the Future of Space Regulation. This webinar will feature distinguished guest speaker Professor Rob Frieden (Penn State University).
  As countries and private sector entities race to capitalize on the potential of space, the need for a solid legal framework to govern activities beyond Earth has become urgent. Navigating the complex and often conflicting landscape of international and domestic space regulations is challenging, especially with jurisdictional gaps and inconsistent space policies across countries.
• March 25, 2025: Digital Connectivity and Urban Mobility: The Future of MaaS and Autonomous Vehicles. Featured guest speakers include prominent Canadian academics Dr. Betsy Donald (Queens U) and Dr. Shauna Brail (U Toronto) and award-winning journalist John Lorinc.
  As cities face mounting pressure from population growth, traffic congestion, and climate change, how can digital technologies fundamentally reshape urban mobility systems to address these challenges? The future of transportation isn’t just about moving people more efficiently—it’s about rethinking the very infrastructure that defines how cities operate.

Each webinar starts at 9:30am (Eastern) and is scheduled for an hour.

Why not start your year off with a plan for ongoing professional development? See you online at these sessions.

Last week, the CRTC issued its long overdue regulatory policy decision, Telecommunications in the Far North [TRP CRTC 2025-9]. The CRTC’s Phase II review process was launched nearly three years ago, following an initial consultation launched in November 2020. Remember the CRTC’s promise in October to “continue to issue timely and clear decisions”.

In its press release, the Commission pointed to three key actions to help improve services in the Far North:

First, the CRTC is requiring Northwestel Inc. (Northwestel), the region’s largest service provider, to automatically reduce customers’ bills when Internet services are disrupted for 24 hours or more. These credits will help address the impact of network outages on residents’ daily lives.

Second, the CRTC is making it easier for other Internet service providers to use Northwestel’s network to sell services to customers. This will help foster competition and provide more choice in the Far North.

Third, the CRTC is launching a public consultation to develop a subsidy to help improve affordability. This subsidy will help bring the cost of Internet services in the Far North closer to those in other parts of the country.

I will let others comment on whether a mandated couple dollars in bill credits (imposed solely on Northwestel) is a meaningful incentive to improve network reliability. The subject of reliability begins at paragraph 124 of the Decision.

I am also going to bypass the Commission’s approach to wholesale in the Far North. The CRTC says it will have a follow-up proceeding to determine the rates for Northwestel’s Wholesale Connect service, after waving its hands over a magical assumption that “rates for Wholesale Connect can be low enough to allow competitors to enter the market, but high enough not to harm investment” [see: paragraph 214].

Let’s open the discussion of the subsidy plan, recognizing that the Commission has just launched its “Call for comments – Implementing a retail Internet service subsidy in the Far North”. Initial interventions are due February 18 and replies 10 days later. The consultation opens with a statement:

The Far North is an exceptionally challenging region to build and maintain telecommunications infrastructure. The remoteness of communities, low population density, and geography make providing telecommunications services much more expensive than elsewhere in Canada. This has led to unaffordable Internet prices for many residents.

In last week’s Decision, the CRTC decided to offer a universal subsidy, funded by the National Contribution Fund. In other words, telecom subscribers across Canada will pay a little more, regardless of their own ability to pay, in order to provide subsidies to residents of the Far North, regardless of their actual financial need.

I recognize that the prices charged for internet services in the Far North are higher than prices for comparable services in much of the rest of Canada. I also recognize that there are some people for whom those prices are unaffordable. However, let’s also consider household income levels. According to Statistics Canada, in 2020, the national median household income was $84,000. Yukon’s median household income was $100,000; NWT was $127,000; and, Nunavut was $118,000. Half of all households in the Northwest Territories had more than $127,000 in income. None of the 10 provinces had 6-figure median household incomes. So, while prices for telecom services are higher than in the Far North, it is overly simplistic, and somewhat patronizing, to conclude that these prices are universally unaffordable.

The CRTC notes [at paragraph 14] “that residents of the Far North pay, on average, more than one and a half times what Canadians living elsewhere in the country pay for a 50/10 Mbps service”. In reply to that statement, I think it is relevant that, on average, the median household income in the three territories is more than one and half times the median household income of each of the provinces east of Ontario.

It is worth referring back to my post from May of 2023, Affordability of telecommunications services, where we examine a variety of measures of affordability. Looking at price alone is somewhat sophomoric.

Fifteen years ago, I asked “Does geography determine needs”. As I wrote then, if we are concerned with broadband affordability, shouldn’t the subsidy be needs-based, independent of where the person lives? Nearly 17 years ago I first called for the development of a needs-based subsidy program. That is what ultimately led to Connected for Success from Rogers, Internet for Good from TELUS, and the national Connecting Families program. All of these are funded completely by the participating telecom service providers.

I am somewhat surprised that the 86 page decision failed to mention that NWTel announced its participation in Connecting Families during the course of the oral hearing in 2023. That program offers eligible low-income families and seniors access to internet services for as little as $10 per month. How was that announcement completely ignored in the decision?

In addition, I need to point to the 18-page dissenting opinion filed by Commissioner Claire Anderson, appended to the Decision [pdf, 821KB]. Long time readers of my blog know that I love writing about dissenting opinions.

From her opening sentence, Commissioner Anderson is clear. “I fundamentally disagree with the majority decision in Telecom Regulatory Policy 2025-9 (the Decision) that the most meaningful and effective means of achieving affordable and accessible telecommunications services in the North is to provide a uniform subsidy to all telecommunications service providers, including international players”. She also takes issue with the majority’s finding on wholesale.

There are 12 pages in the main body of the Decision devoted to “Reconciliation in the Far North” [paragraphs 279-351]. The summary of the Decision was made available in: Inuktitut (South Baffin) [HTML and pdf], Inuinnaqtun [HTML and pdf], South Slavey [HTML and pdf], and Tłı̨chǫ (Dogrib) [HTML and pdf].

Commissioner Anderson is harsh in the closing of her dissent as she turns to the issue of reconciliation. As the first Indigenous woman (a citizen of the Taku River Tlingit First Nation) and first Yukon resident to be appointed to the CRTC, one might have expected her perspectives to carry a little extra weight around the board table. She was clearly disappointed with the outcome. “We invited Indigenous people to invest their time and efforts into making submissions on the record with the promise that we would be listening, under the premise that we would be responsive.” [paragraph 57 of the Dissent]

“Unfortunately, with all respect, the regulatory outcomes provided for in the Decision suggest that this meaningful engagement did not go both ways.” [paragraph 61]

And her concluding paragraph [63]:

We cannot say that we are advancing reconciliation or that we considered what Indigenous people had to say about UNDRIP and modern treaties. Indigenous intervenors, like Ms. Southwick, wanted to “move mountains” and asked us to create a more level playing field in which Indigenous people could participate more fulsomely in the economy. This was an opportunity for transformative regulatory change. Instead, the Commission responded by putting art on the walls.

More than four years after the first consultation was launched until the CRTC delivered its policy for the Telecommunications in the Far North. As far as the Commissioner Anderson was concerned, instead of transformative regulatory change, the Commission provided summaries in 4 indigenous languages – putting art on the walls.