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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.

The CRTC released its strategic plan last week. It is subtitled “Connecting Canadians through technology and culture”.

To be blunt, the strategic plan is light on details. In my view, it reads more like a preliminary outline than a plan.

There are three broad headings:

• Promoting competition and investment to deliver reliable, affordable, and high-quality Internet and cellphone services;
• Modernizing Canada’s broadcasting framework and creating the bargaining framework for the Online News Act; and
• Investing in the CRTC to better serve Canadians.

Under that first heading, it is interesting that the CRTC only refers to “internet and cellphone services”. Personally, I prefer to refer to “mobile services” in order to better capture the breadth of devices. More importantly, the idea of fixed telephone services is absent. Why wouldn’t the CRTC address a multi-dimensional approach, referring to voice and data, fixed and mobile?

The CRTC will continue to:

• Implement a renewed approach to Internet and cellphone competition, which includes ensuring the rates that competitors pay to access the networks of the large Internet and cellphone companies are just and reasonable.
• Monitor the markets for Internet and cellphone services to ensure the right balance between increased competition and continued investment in high-quality networks.
• Work with government partners to help connect rural, remote and Indigenous communities to high-speed Internet, including by: approving projects as part of the Broadband Fund’s third call for applications; launching a process to create an Indigenous stream of the Broadband Fund; and issuing a decision to help improve the reliability, affordability, and competitiveness of telecommunications services in the Far North.
• Support and protect consumers, including by: making cellphone use more affordable when Canadians travel internationally and within Canada; making shopping for Internet services easier; enhancing protections for outages; and consulting on new measures to help reduce online spam and nuisance calls.
• Work with provinces, territories and municipalities to help support the implementation of next-generation 9-1-1.

At least one industry veteran observed “It appears to be essentially doing tomorrow what it was doing yesterday.”

Indeed, the press release for this year’s Strategic Plan links to last year’s Areas of Focus (2023), a document dating back at least 17 months (according to the Internet Archive).

Headlines have been updated, but the three themes remain intact. “Promote competition to deliver reliable and high-quality Internet and cellphone services to Canadians at lower prices” became more balanced with “Promoting competition and investment to deliver reliable, affordable, and high-quality Internet and cellphone services”. “Modernize Canada’s broadcasting system to promote Canadian and Indigenous content” became “Modernizing Canada’s broadcasting framework and creating the bargaining framework for the Online News Act”. “Improve the CRTC to better serve Canadians” changed to “Investing in the CRTC to better serve Canadians”. (That last one sounds like a warning it is going to cost more money.)

In the new plan, “Actions” have become more detailed and the CRTC sets out desired outcomes for each of its areas of focus. It is likely helpful for us to have a clear understanding of the outcomes being sought by the regulator. Perhaps it is precisely the increased details in the plan that gives me pause.

The Commission should resist the temptation to follow a path of centralized management of the communications industry. That is an approach that might have been better suited to what was once called a ‘Soviet-style monopoly’ era.

We have seen an increased level of regulatory micro-management of the telecom sector as I described a few weeks ago. At the beginning of 2024, I had a post asking “Can light touch regulation benefit consumers?”

Last year, we read “The CRTC will make faster and more transparent decisions”. This year, “The CRTC will continue to issue timely and clear decisions; address the historical backlog of Part 1 applications and post new ones as they are received; and inform Broadband Fund applicants of the status of their application once a decision has been made.” It sounds like a wordier way of promising the same thing.

As the CRTC moves to execute its strategic plan, it should consider increased regulatory humility and understand the potential consumer benefits to arise from a lighter hand on the market.

Who knows? Maybe it will be result in making faster and more transparent decisions.

Maybe it’s the time of year. Last October, I wrote “Regulators regulate”, saying “If the only tool you have is a hammer, it is tempting to treat everything as if it were a nail.”

Regulators feel the need to regulate. They can’t help themselves.

That was the impression I had reading last night’s press release from the CRTC, issued after the markets closed.

Roaming fees for Canadian travelers are often inflexible, causing consumers to pay a flat fee of $10 to $16 per day regardless of how much they use their cellphone. The CRTC’s priority is to ensure that Canadians have the flexibility to choose an affordable plan that best meets their needs.

The CRTC doesn’t mention that consumers have access to plans that include roaming to many of the most popular destinations. My personal plan includes US roaming. Others in the family have plans with US and Mexico.

As TD Securities wrote,

Canadian consumers have multiple options for roaming outside Canada, including a plethora of plans that include free U.S. roaming. Furthermore, wireless pricing overall has never been better for consumers. We see no big problem to be fixed, and we expect minimal impact from this review.

The CRTC addressed its letter to Bell, TELUS, and Rogers, saying “Roaming fees for Canadian travelers are often inflexible, causing consumers to pay a flat fee of $10 to $16 per day regardless of how much they use their cellphone. The CRTC’s priority is to ensure that Canadians have the flexibility to choose an affordable plan that best meets their needs.”

Freedom Mobile has plans available that include data as well as unlimited talk and text for roaming in 92 countries. There are add-on passes that provide similar access for up to 101 countries for as little as $30 for 30 days.

TD’s report concluded with an admonishment to the CRTC, saying that roaming isn’t an area where intervention is required. “Consumers who do not want to shop around for better wireless rates neither need nor deserve regulatory protection, any more than consumers who choose to pay premium prices for the similar food at a specialty grocery store.”

A couple recent papers crossed my desk that examine bridging the digital divide. The papers try to help understand factors that limit adoption of residential broadband.

Former CRTC Chair Ian Scott released a paper via IRPP (the Institute for Research in Public Policy), “Conquering the Next Frontier in Bridging the Digital Divide” [pdf, 478 KB]. The paper sets out recommendations for improving internet access in underserved communities.

He observes, “Low-income Canadians, regardless of where they live, struggle to afford the technology and internet plans needed to take full advantage of the digital economy.”

The September 2024 issue of Telecom Policy includes an article examining the US Government’s Affordable Connectivity Program (ACP). “Understanding uptake in demand-side broadband subsidy programs: The affordable connectivity program case”.

The results of this study suggest several opportunities for adjusting ongoing initiatives and designing new direct support programs for broadband that should be of interest to policymakers at different administrative levels (federal, state, county and even more local) as well as to other stakeholders. The positive correlation between ACP enrollment and areas with a large share of households in severe poverty underscores the social dimension in ACP enrollment decisions. Since not all eligible households were enrolled in ACP, it is likely that “early adopter” households conveyed information through local networks about the program’s benefits. This may have encouraged other low-income households to enroll sooner than they might otherwise.

The researchers found that local housing policies may help encourage families to subscribe to low-cost internet programs. The paper notes that the FCC established a pilot program to fund ACP outreach through local housing authorities and housing advocacy organizations. The authors also observed a positive association between the presence of public libraries and ACP enrollment rates, indicating that anchor institutions may facilitate enrollment.

On September 24, IRPP will be hosting a lunchtime seminar (in Ottawa and online via Zoom). “The Next Frontier in Canada’s Digital Divide” is being promoted as a conversation about digital connectivity across Canada.

Indigenous and northern communities are still behind the rest of Canada in terms of the availability of internet at speeds needed to take full advantage of essential services such as health care, education and remote work. Low-income Canadians also struggle to afford the technology and internet plans needed to participate in the digital economy, including government services and information, banking, health care, education and employment. To overcome these gaps, governments should pursue new approaches that address the needs of underserved communities and improve the affordability of the internet.

In “Mapping the digital divide”, I wrote that it isn’t enough to have affordable broadband at everyone’s doorstep. Do we even agree on what “affordable broadband” means. I have frequently called for more research to understand those factors that inhibit adoption. There are populations with access to broadband, even where targeted affordable options are available.

Do we need to invest more in developing digital skills?

How do we develop strategies to overcome digital phobias among underserved populations?

It can be easy to lose focus, to lose sight of the prize. In early July, I wrote “Keeping priorities in order”, trying to prepare my regular readers for a summer with far fewer posts than usual. I typically write a couple posts per week but as I warned, I’ve had 5 higher priorities visiting for much of the summer. I kept my priorities in order. So here we are, August 19, with my first post this month.

Maintaining sight of the prize seems relevant to my impression of last week’s CRTC decision. In “Competition in Canada’s Internet service markets”, the CRTC’s summary begins with a single concise statement. “The Commission is taking action to ensure that Canadians benefit from affordable access to high-quality Internet services.”

That is a reasonable objective: “affordable access to high-quality Internet services.”

Note, the CRTC did not say the prize was counting the number of competitive internet service providers (ISPs). From the outset, we are told the target is consumer focused. “Ensure that Canadians benefit from affordable access to high-quality Internet services.”

It is through this lens that Canadians should read Telecom Regulatory Policy CRTC 2024-180.

How does the Commission envision us getting there? Indeed, how does one define affordable access? What I consider affordable is different from what other people due to a wide range of factors. I suspect the CRTC is using the term “affordability” as a euphemism for lower prices. In reality, that doesn’t solve the problem of affordability for the most vulnerable households, but wins political points for a wide range of consumers (voters).

What qualifies as a “high-quality internet service”? What utility to I get from my connection? What are the household financial circumstances? How many people share the connectivity? Is it used for business and personal use? What kind of devices do I plan to use for connectivity?

I couldn’t find answers to any of these questions in the decision.

There are some interesting statements set out as facts that should have greater supporting arguments. For example, at paragraph 17 we read

17. Since that time, the industry has continued to develop. The Commission observes the following:
    • Consumers have fewer choices when buying Internet services: in recent years, competition has been declining. By the end of 2022, independent ISPs served significantly fewer customers than they did at the start of 2020. At the same time, several of the largest independent ISPs have been purchased by incumbents.
    • The incumbents are using wholesale HSA services: various incumbents or their affiliates are increasingly using wholesale HSA services both inside and outside their traditional serving territories. This is different than in the past, where independent ISPs accounted for substantially all use of wholesale HSA services.
    • Not all Canadians are connected to higher-speed Internet services: while more than 83% of households and businesses reached by the incumbents have access to at least one gigabit-speed Internet connection, ISPs must continue to deploy and upgrade networks to ensure all Canadians can benefit from these services.
18. These facts suggest that the Commission’s prior regulatory approach, which prioritized facilities-based competition, has not brought about sustainable competition that delivers more choice and more affordable services to Canadians, nor has it resulted in universal access to higher-speed Internet services. The Commission must therefore set objectives that continue to incentivize network investment and facilities-based competition while supporting increased choice and greater affordability for Canadians.

I could devote an entire blog post to paragraph 18 and the factual flaws contained within. It appears to be policy-based fact making, rather than the other way around.

Considering the objective of affordable access to high-quality internet service, I found it somewhat strange to find no mention of Connecting Families, or any other affordable connectivity initiative to be found in the CRTC’s policy document. Ted Woodhead recently wrote an excellent post, “The FCC’s Affordable Connectivity Program ending in the United States”. His post talks about the key differences between the American government-led initiative, and Canada’s innovative carrier-developed and funded programs. Ted and I were there from the beginning.

I am sure I will return to paragraph 18 at a later date.

For now, let’s look briefly at the “facts” set out in paragraph 17. The CRTC says “Consumers have fewer choices when buying Internet services”. I’m not convinced. It isn’t as clear to me that there are fewer choices or, for that matter that competition is declining. Prices are in decline and service providers are investing billions of dollars in network upgrades. The second bullet seems to contradict the first one: “various incumbents or their affiliates are increasingly using wholesale HSA services both inside and outside their traditional serving territories”. The exit of smaller, wholesale-based ISPs in favour of better capitalized “incumbent” affiliates could be celebrated as providing greater choice and bundled services.

The decision refers to the Competition Bureau observation, “while any bundling by the incumbents could be a barrier to entry for smaller ISPs, the competitive benefits of an incumbent accessing wholesale HSA services outside its footprint likely outweigh the risks.”

As the decision notes:

55. In setting out its regulatory framework, the Commission seeks to create opportunities for innovative competitors to differentiate themselves and bring new choices to consumers. Importantly, this is not the same as guaranteeing that one type of competitor can profitably compete without risk. In respect of wholesale HSA services, the Commission enables wholesale access at just and reasonable, cost-based rates. It is then up to competitors to find commercial strategies that deliver an attractive value proposition that responds to consumers’ needs.

Too often, people lose sight of the prize. The wholesale framework is a means to an end, not an end in and of itself. It is not the CRTC’s role to preserve the independent wholesale-based competitive ISP industry. We do not guarantee “one type of competitor can profitably compete without risk.”

The target is to ensure Canadians benefit from affordable access to high-quality Internet services. And, despite what the CRTC said in paragraph 18, that is where the industry has been heading.