Search Results for: affordable

What do we mean when we talk about affordable broadband?

As I discussed earlier this week, the CRTC’s latest wholesale policy is intended “to ensure that Canadians benefit from affordable access to high-quality Internet services.” But, the CRTC didn’t define what it considers to be affordable. I wrote that the Commission is misusing the term “affordable” as a euphemism for “lower prices.”

If you search for “affordable” on my website, you will find more than 200 different blog posts.

There really isn’t an easy answer to the issue of affordability. The knee-jerk reaction by some is that lower prices are the answer. Drop prices across the board and the service becomes affordable for all, right? Such an approach would certainly be popular. Who among us wouldn’t want lower prices for anything? For everything! Doubly so for a service that sends a bill each month. But in reality, lower average prices simply won’t solve the issue of affordability for the most vulnerable households. These homes need special targeted programs for a variety of essential services, including broadband services.

As I wrote 3 years ago, there are a wide range of options available for affordable broadband services. As that post describes, some service providers have broadband options as low as $15 per month for service operating at the CRTC’s service objective speed.

Cutting prices to that level across the board simply isn’t economically viable. As I wrote last year, affordability is a complex and multifaceted concept. Affordability varies depending on the context and the goods or services being considered. Last November, I wrote about a report examining the affordability of wireless and wireline services in Canada.

We all want to see universal adoption of today’s advanced communications services. Through the operations of various affordable broadband programs, we have learned there are factors beyond price that inhibit some from getting online.

The communications industry stepped up and introduced targeted affordable broadband services despite government resistance, as described in Ted Woodhead’s post last week. The industry-led (and industry-funded) program is not subject to the political vagaries we see in the US Affordable Connectivity Program.

It was wrong for the CRTC to set an objective for “affordable access to high-quality Internet services” without a more complete discussion or definition. The way the term was used in the wholesale broadband policy strikes me as an attempt to score political points. The Commission might consider investing its attention to the more serious challenge of identifying the non-price factors inhibiting adoption of digital connectivity.

Frequent readers of this page know that the issue of affordable broadband is one of my special interests, and has been for more than a decade.

There was a new report that landed on my desk last week from the National Governors Association, seeking to expand the affordability of broadband services, with strategies characterized as having “emerged among leading best practices”:

• Providing direct customer assistance;
• Incentivizing affordable rates through grant programs;
• Expanding service options; and,
• Investing in infrastructure and community anchor institutions.

The report cites data from Pew Research Center that “show adults making less than $30,000 annually are half as likely to report having home internet access as adults making $75,000 or more, with only 57 percent of low-income households reporting access in 2021.”

While only 57% of low-income households report having home internet access, the same survey indicates 86% of low-income households are using the internet. Nearly 30% of low-income households are using the internet without having access at their own home. In 2005, just 7% of low-income households had home internet access while 49% used the internet.

Pew Research is a data rich source of information for strategic policy development. Canadians should be envious. I’ve often said that we need more data to help with decision-making, especially in the delivery of communications services to under-served populations.

In early September, Environics Institute released “Lessons Learned: The Pandemic and Learning from Home in Canada” [pdf, 4.6 MB]. The report is based on a survey conducted in late November / December of 2020.

Keeping in mind that this was from a year ago, during some of the darkest days of the pandemic, I found this excerpt to be troubling:

Canadians are more likely than Americans to express concerns about the affordability of their internet or cellphone connections.

Not surprisingly, the level of concern in Canada about internet and cellphone affordability is much higher among those with lower household incomes.

Keep in mind that compared to our neighbours to the south, Canada appears to have higher levels of adoption of connectivity among lower income households, despite the availability of direct government funding for Lifeline communications services in the United States.

There isn’t an easy answer to the issue of affordability. The knee-jerk reaction by some is that lower prices are the answer. While it would be popular – who doesn’t want lower prices for everything? – in reality, lower average prices simply won’t solve the issue for the most vulnerable households, who need special affordability programs for a variety of essential services.

To date, in Canada those targeted programs have been initiatives created (and funded) by the private sector.

The Environics report had a thought provoking section with “Concluding reflections”:

One of the great strengths of Canada’s systems of public education has been their ability to promote equality of opportunity. Through publicly funded education, students from different backgrounds can benefit from well-trained teachers and well-equipped classrooms. For many students, the short term effect of the COVID-19 pandemic, through the switch to online learning, has been to effectively “privatize” our educational infrastructure, as families have had to rely on their own resources to provide the spaces, tools and connections needed for ongoing learning.

Could or should government be doing more with direct social services funding for services and devices?

What new approaches should be considered for more equitable delivery of digital government services?

It was pretty gratifying to read yesterday’s announcement of the launch of what is being called “Connecting Families 2.0”, effectively an upgraded version of the basic low-income broadband service launched in 2018 by telecommunications service providers across the country, expanding the program to low-income seniors and significantly increasing the speeds to provide a 50 Mbps down / 10 Mbps up for just $20 to qualifying households. The original program will continue to be an option, offering 10/1 service for just $10.

Connecting Families 2.0 is introducing significantly faster speeds and increasing the data usage amount. At 50/10 megabits per second (Mbps), the download and upload speeds will be five and ten times faster respectively than Connecting Families 1.0, with 200 GB of data usage for $20 a month. This new phase will also broaden eligibility from families receiving the maximum Canada Child Benefit (CCB) to include low-income seniors. The previous Internet plan offering under Connecting Families 1.0 will also remain available. Access Communications, Bell Canada, Cogeco, CSUR, Hay Communications, Mornington, Novus, Rogers, SaskTel, Tbaytel, TELUS, Vidéotron and Westman Communications are all participating in offering improved Internet quality, coverage and price to eligible Canadians.

Some service providers have even more options available, such as Rogers portfolio of Connected for Success services, with 25 Mbps for $10; 50 Mbps for $15; 75 Mbps for $25 and 150 Mbps for $35, all of which offer unlimited usage. Rogers Connected for Success was launched in 2016, as was TELUS Internet for Good, and have been models for the national roll-out by service providers.

As long time readers know, I take a certain amount of pride in talking about Connecting Families and its kin.

Still, I wonder if there is another approach that we should be exploring to ensure affordable mobile services for Canada’s most vulnerable populations? Can the government do a better job on the issue of telecom service affordability?

While the US has specific programs such as Lifeline and the Emergency Broadband Benefit that provide targeted subsidies for communications services from common funds, Canadian programs are currently funded completely by participating service providers and on a completely voluntary basis. The FCC’s Emergency Broadband Benefit, rolled out during the early days of the pandemic, is being replaced by a permanent program known as the Affordable Connectivity Benefit funded by the US Government’s infrastructure bill.

Contrast the direct government subsidy in the US with Canada’s Connecting Families, which coordinates the offer of “low-cost Internet service packages from Internet service providers that voluntarily participated without government subsidy.”

And what about mobile services?

In its recent Review of mobile wireless services, the CRTC set specific characteristics for a “low-cost” mobile plan, but the Commission did not tie it to a means test (such as limiting the plans to members of lower income households), and it did not attach a funding mechanism, whether from industry revenues or the federal treasury. While the CRTC said “an important issue raised in this proceeding is whether lower-income households and other Canadians, seniors notably, are being priced out of the market”, it did not restrict its low-cost plan to these groups.

Specifically, these plans are expected to

• be offered at a monthly rate not exceeding $35;
• allow customers to bring their own device; and
• include
  • unlimited Canada-wide incoming and outgoing calls and SMS messages,
  • the ability to send and receive MMS messages, and
  • a minimum of 3 GB of data per month.

This approach may create aggressively priced options based on the marketplace in the spring of 2021, but how will these specifications be viewed in 2 years time?

Do we actually know if the particulars of this low cost plan actually addresses the question of “whether lower-income households and other Canadians, seniors notably, are being priced out of the market”?

Doesn’t it seem somewhat patronizing for a central body to arbitrarily determine that this single set of characteristics will suit the needs of everyone in the market for a low-cost plan? How does this plan help a low-income Canadian who needs more than 3 GB of data per month?

Should Canada consider creating programs that provides a portable voucher to targeted groups to enable the consumer to get a discount off of whatever plan they might choose?

Are there structural problems between agencies and departments (ISED, CRTC, Social Services, Finance, Federal-Provincial, etc.) that inhibit the development of a more holistic approach? Can the validation systems created for Connecting Families be repurposed or reused for a directed funding program?

Is there a better approach to affordable telecom service for vulnerable Canadians?

“The programs need to be put in place now, not tomorrow. Now.”

That was the broadband affordability message from Bob Murphy, Chair of the Weston Chapter of ACORN Canada, in a deputation to Toronto’s Executive Committee last Wednesday evening.

ACORN members represent those people for whom the term “affordability” is serious. Bob Murphy delivered a heartfelt message. “When I talk about affordability, we bounce that word around at all committees… When I am speaking here about affordability, I’m talking about affordability for low income…Internet is more important now because of COVID… I have to spend money for internet before I spend money for food. This is not just an issue with me; it’s an issue with many Ontario Disability recipients. We have too many low income circumstances that have to prioritize internet before food. Internet before food. Can anybody here, sitting on this long day, imagine yourselves having to decide ‘Shall I pay for Internet or shall I have food and nutrition.'”

That speaker’s deputation resonated with me. How could it not? There is an immediate need. “These programs need to be put in place now, not tomorrow. Now.” But, despite the City calling its project “Affordable Internet Connectivity for All – ConnectTO”, a city owned fibre program fails to serve the level of urgency that was clearly stated.

No matter how much broadband prices fall, there will always be an affordability issue for many vulnerable Canadians. Canadians who have to choose between paying for internet or paying for food.

That is what affordability means.

Unfortunately, in recent weeks, we have seen the term “affordable broadband” hijacked and applied to alternate agendas, such as those ISPs seeking to bypass wholesale broadband access with taxpayers footing the bill for capital investment.

Now, I have no doubt that people want to pay less for their telecommunications services. I want to pay less for my telecommunications services, just as I want to pay less for my kosher meat, my dairy products, my property taxes. I want to pay less for everything. There are some things that I simply can’t afford. There are cuts of meat that I don’t buy unless they are on sale. I drive an 11 year old Hyundai.

But I don’t have to choose between paying for my internet and putting a nutritious meal on the table. I eat mac and cheese when I want to, not because I have to. The overwhelming majority of Canadians can afford their broadband service. I think it is important to differentiate between those who gripe about their monthly bills (it is part of our national birthright) and those who can’t afford a device, let alone the service to connect it online.

At the City of Toronto Executive Committee meeting, Bianca Wylie spoke about what she called applying a product management approach, and what I call systems engineering, defining requirements. She recounted an experience in an earlier job: “I used to be part of a company that built software. And one day when we were working on the software I asked if something was possible. My colleague told me to reorganize my question. They told me to say what I wanted, rather than asking what was possible. This is called requirement writing. Define the things you want then build them.”

Nearly 12 years ago, I wrote “A systems engineering approach to broadband”, saying “Most people define problems in terms of solutions. Many people say that they need nails when what they really need is to hold two pieces of wood together. The difference between defining problems in terms of requirements versus preordaining a solution.”

There are some well intentioned folks who likely believe they are helping with development of an affordable broadband solution, by endorsing a municipal fibre network, but that solution misses a key product requirement. The ACORN members at the meeting were pretty clear. They demanded, not requested, $10 per month broadband, immediately. “These programs need to be put in place now, not tomorrow, now when we have our families that rely on the internet every day.”

ACORN representatives told Toronto that the organization has been working on affordable broadband since 2016. As followers of this blog are aware, many of us have been working on this issue since 2008. Indeed, in partnership with Toronto Community Housing, Rogers launched Connected for Success in 2013, years before ACORN started thinking about the issue. Connected for Success offers residents of Toronto Community Housing 25/5 broadband service with no overage charges for just $10. And it’s been available for some time and is available now. Not tomorrow, but now.

In the years that carriers like Rogers (with Connected for Success) and TELUS (with Internet for Good) have been offering broadband to disadvantaged households, we have learned a lot about the challenges of driving broadband adoption in disadvantaged communities. People don’t just need an affordable connection. They need devices. They need digital literacy training. They need to learn about online safety. They need to build trust. These are issues that need the involvement of social service agencies.

As I wrote a little over a week ago, there were serious flaws in the study used to support Toronto establishing a city owned fibre network. Toronto is no broadband backwater. It is one of the most connected cities in the world. It is simply not true that 40% of Torontonians do not have broadband service that meets the CRTC objective.

Toronto doesn’t need a city-owned fibre network. The city will not be adding any connectivity to any place that doesn’t already have gigabit service available.

Not one.

As currently proposed, ConnectTO is bound to be a billion dollar broadband boondoggle.

But most importantly, the ConnectTO plan fails to meet the most fundamental requirement: the need to provide service now.

Not tomorrow. Now.

How do we measure broadband affordability?

Some people think we should use international comparisons; if broadband costs more in Canada than it does in another country, can one really conclude the service is over priced and something needs to be done? A couple posts from February disproved that theory: “Let’s talk seriously about affordable wireless” and “Higher? Maybe. But too high? No.”

Others look at the percentage of annual income required to pay for the average communications services bill and conclude that people in the lowest income quintile are paying a higher percentage of their income for those services than people in the higher income quintiles. Well, that is just basic arithmetic and will always be true for all services, all goods. Anything divided by a smaller number will be a bigger percentage than anything divided by a bigger number. So yes, if you make more money, you will find everything to be more affordable. In and of itself, that doesn’t mean that it isn’t affordable for people at the lower end of the income scales, but with a limited amount of income, spending priorities have to be set.

The current global health pandemic has turned everyone’s life and livelihoods upside down. Unemployment rates are levels never seen by current generations. School classrooms have been closed for weeks and will likely remain that way through the end of this school year. Most people who are still working are doing so from home and many are using internet connections to continue classes. To a far greater extent, those without home broadband internet are isolated far more than the majority of us who are maintaining physical distance, but socially connected. It is tougher to communicate with family, tougher to order necessities, tougher to maintain employment, school, social connections.

The industry has taken a number of steps to help consumers who have home internet, like raising download restrictions, and establishing favourable financial arrangements for those having trouble making ends meet.

How can we respond to those who aren’t yet online, in need of affordable home connectivity?

TELUS announced a significant expansion of its Internet for Good program [BC Announcement; and, Alberta Announcement], in cooperation with local school boards in British Columbia and Alberta.

“At TELUS, leveraging our technology to help young people realise their full potential is fundamental to the passionate social purpose we all embrace. As classrooms remain closed in order to support important physical distancing, keeping families safe, this new initiative ensures every student can stay connected to exciting learning opportunities from their homes,” said Darren Entwistle, TELUS President and CEO. “TELUS has a longstanding commitment to building stronger, more connected and compassionate communities, as reflected through our Internet for Good program, which provides more than 122,000 low-income Albertan families [100,000 low-income British Columbian families] with access to high speed internet and digital literacy training tools. The partnership announced today builds on this program and exemplifies our team’s passionate dedication to keeping young people safe and connected during this unprecedented health crisis.”

School Boards working with TELUS will be responsible for identifying families in need of an internet connection at home, and will provide that family with a unique TELUS Internet for Good promotion code, which the family can use to call TELUS and register for the program. Families will also have access to free educational activities through TELUS WISE and the ‘Learn, Do and Share’ educational hub through a partnership between TELUS and Microsoft.

Before the Federal Government helped coordinate the national Connecting Families program, TELUS had launched its Internet for Good service in cooperation with provincial social service agencies in Alberta and BC. Yesterday’s announcements are a remarkably generous expansion of this industry-leading program.

There was an opinion piece on NNSL (Northern News Services Limited) saying “It’s time for a WE revolution in Canada – WEB EQUALITY for Northerners”. It seeks more affordable broadband choices for Canadians living in the far north:

The logic that the 35 million people with an internet connection should pay for the national communication grid south of 60, while 109,000 Northerners pay more for the remaining third of the country is absurd. That’s like putting a toll on the Trans-Canada Highway and charging people in Alberta and B.C. over twice as much because they live so far away from Ottawa.

There are real technological challenges in serving the north, and as a result, there really is a problem with providing comparable services at comparable prices when compared with what we have come to expect as the standard of service in our urban centres.

In the olden days – about 30 years ago – the regulator could have ordered that service in the rest of Canada would cross subsidize the north and it would just be done; when there are multiple competing service providers in north and south there are issues that arise: who should pay for the subsidy, and who should receive the subsidy?

Should the funding come from a tax on everyone’s telecom services? Should the funding come from the federal treasury? While in theory, both are taxing the same body of consumers, the government has liked to have telecom users cover various cross subsidy schemes for telecom services. The challenge with that approach is that the funding model impacts the affordability of services for all. In addition, as many services migrate to global cloud-based services, there are many substitutable services that aren’t contributing to the subsidy. The tax creates an added arbitrage opportunity to incent the growth of these services resulting in an ever shrinking pool of contributors, raising the tax rate and feeding a vicious cycle. On the other hand, the federal treasury is funded by those most able to pay and would be the least distortionary source of a subsidy.

As to distributing the subsidy, traditionally, broadband programs have tended to subsidize a selected service provider based on a proposed geographic expansion without regard to the financial need of the consumers who will be served. This also had the effect of picking a winner in each area, forever enshrining a particular service provider and specific technology. Can we find a better way, to enable the marketplace to pick winners? What if we turned that model around, to subsidize users based on need without regard to geography? I have written about this kind of approach in the past [such as “Affordable broadband isn’t just a rural issue”]

Around the world, people are depending on residential broadband more than ever before; economic uncertainty has impacted everyone. Governments at all levels are helping citizens face these challenges and telecom companies and their employees have performed admirably in managing these shifts in communication patterns, with dramatic increases in loads. There remain some households that do not have access to even a modest level of broadband service, and recall, “Isn’t some broadband better than nothing?” and “Do we offer a sip of water to the thirsty?”

As economic stimulus programs are being developed by government, should some funding be aimed at shovel-ready projects that can extend the availability of broadband services? Can direct subsidies help Canadians in remote areas afford the services needed to communicate during these difficult circumstances?