Private-sector investment in broadband a game-changer for small communities

The following op-ed, written by MCC President & CEO Chuck Davidson, was submitted to the Winnipeg Free Press and printed on January 28, 2020.

For many Canadian communities on the fringes or further from this country’s largest urban centres, including many in Manitoba, broadband internet access remains an elusive goal.

The Manitoba Chambers of Commerce, which represents 71 local chambers of commerce in the province, has long advocated the need for improved service in rural areas if we are to grow local economies.

Sure, there are government programs to subsidize network upgrades in some areas where there’s no broadband or inadequate service to connect to the increasingly digital world. But there are many smaller cities and towns that don’t qualify for these taxpayer subsidies.

For most communities, often the only way to ensure residents can access decent (let alone super-fast) broadband is to rely on investment by Canada’s largest telecom and cable companies — those with the ability, willingness and scale to build new communications networks.

Flin Flon is a case in point. A northern Manitoba city of 5,000 residents some 700 kilometres from Winnipeg, Flin Flon is the kind of small Canadian community that can be difficult to serve with modern communications services. Yet Bell MTS just announced an investment in the city’s infrastructure with all-fibre connections enabling Gigabit internet access.

Deploying new network technology in Flin Flon is representative of what can be accomplished by large private-sector network companies with the incentive to invest. Unfortunately for many other smaller communities across Canada, Flin Flon may soon also be an exception.

In August 2019, the Canadian Radio-television and Telecommunications Commission (CRTC) issued a decision that puts investment by Canada’s leading communications companies in smaller communities and rural areas in real jeopardy.

That CRTC decision, which facilities-based carriers big and small — including Bell, Rogers, Eastlink and Cogeco — are asking the federal cabinet to overturn, gives internet resellers — companies that don’t build new networks but instead resell services over other companies’ networks — a massive discount on the wholesale prices they pay.

It’s significant money — an estimated $325 million right up front to start — that could otherwise go to capital investments in new broadband infrastructure.

While it doesn’t look like the CRTC decision will impact Flin Flon — one assumes planning was well enough advanced — other communities are unlikely to be so lucky. Canada’s major cable and telecom operators have either confirmed they’re reducing network investment or indicated they’re reviewing their plans to expand to rural and remote areas.

Bell, which just a year ago announced it was boosting its plans for wireless internet in rural areas from 800,000 households to 1.2 million, said it was forced to reduce that target by 200,000 in the wake of the CRTC decision.

Two hundred thousand fewer households with access to high-speed internet is many times the number of homes and businesses in Flin Flon and other much smaller Manitoba communities combined.

The CRTC’s national broadband speed targets are 50 megabits per second (Mbps) for downloads and 10 Mbps up for uploads. While 99 per cent of Canadians in larger cities have access to those speeds or faster, six out of every 10 rural homes do not.

Taxpayer subsidies may help close some of that gap. Supporting a short-sighted regulatory decision that transfers capital from companies willing and able to invest in building networks in smaller communities to those that won’t will only make it worse.

Better broadband for all Canadians, including those in smaller towns and rural communities, is achievable. But only if the government encourages private-sector investment wherever and whenever possible — recognizing that the companies that can and will deliver better broadband are not the same as those the CRTC supported in its wholesale rate decision last August.

There’s no doubt Flin Flon residents welcome the better connections that are rolling out in their community. But it’s also clear that many Canadians in rural areas in Manitoba and across the country are going to continue feeling left behind if the federal cabinet allows a CRTC to maintain a decision that puts the brakes on private sector broadband investment.

 

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