OTTAWA – Groups representing rural and remote broadband providers lauded the federal government for efforts to improve broadband connectivity in rural Canada in a Parliamentary committee on Tuesday. But they added that the government needs to adopt new rules that are more appropriate for smaller providers.
One of the big issues, particularly related to the Connect to Innovate (CTI) program, is the complex nature of the application and the extensive reporting requirements. Jay Thomson, CEO of the Canadian Cable Systems Alliance (CCSA), told the House of Commons Standing Committee on Industry, Science and Technology that a simplified application and reporting process for smaller projects would represent a big lift to CCSA members, nearly all of whom are independent network operators serving rural areas and small towns.
“If you overburden their limited administrative resources with lots of complex paperwork, you’ll knock them out of the game before they even have a chance to lace up,” he said.
While the funding application and the ongoing reporting requirements is easily handled by large companies with departments to take care of it, it’s much more difficult for smaller firms to justify this type of commitment. Ian Stevens, CEO of Execulink Telecom and a board member of the CCSA, noted that projects smaller than $100,000 may not make sense under CTI.
“It took us about 80 man hours every quarter to do the reporting to get the funding released. And for us, the project was large enough that it made sense. But some CCSA members, when they look at smaller projects, when you’re investing 80 man hours to get your funding back out, you’re starting to run an equation, does it make sense to apply to a funding mechanism when there is that much overhead to maintain it?” he asked.
Wireless spectrum, and how to enable smaller firms to acquire the much needed resource, was also raised during the meeting. The small providers said they need access to spectrum for fixed installations so they can meet the growing demand from their customers.
CJ Prudham, executive VP and general counsel at Xplornet Communications, acknowledged that mobile data use has grown significantly in recent years but added that the fixed connection to the home “continues to be the workhorse” as a result of heavy Netflix and Apple TV usage.
"Capacity and speed of rural broadband cannot keep pace without additional spectrum." – CJ Prudham, Xplornet
“Yet all significant spectrum allocations made in Canada in the last five years have focused on mobile needs. There has not been an allocation designated for fixed wireless broadband. How do we meet the growing needs of consumers if one primary input has not changed?” she asked, adding that “capacity and speed of rural broadband cannot keep pace without additional spectrum.”
The smaller providers presenting at the meeting generally agreed that the government can take steps to make spectrum more accessible to companies offering service in rural areas. Dean Proctor, chief development officer at SSi Micro Ltd., noted that spectrum set asides is a good start. So too would be lower entry level prices in the next auction. He also added the government could do some rejigging of the licence areas so rural providers could bid on spectrum that they need, in their own regions.
Stevens said that the government could implement a use or lose provision in the licence conditions relating specifically to areas that fall outside the large urban centres. Spectrum licence zones usually encompass a large area that includes both rural and urban regions. The government could perhaps adopt a two-year horizon after which the company that owns the licence has to return any unused portion.
“By requiring them to give it back, they would also be incented to subordinate it before they had to return in. So it could be an effective way to ensure that the spectrum, the scarce commodity that’s out there, is actually being used in the rural areas,” he said.
Xplornet also noted in its presentation that governments need to enable private sector investment and sometimes decisions can act as a barrier to investment. Prudham pointed to the CRTC’s deferral account decision from several years ago that put the survival of the company in jeopardy.
“As a result of that decision, which essentially put over $300 million in the hands of Bell Canada to compete with little Xplornet, almost crushed us. We could not raise private capital for 18 months after that event,” she said.
The Institute for Local Self Reliance (ILSR), a U.S.-based organization working to help local governments build broadband networks, said there are a number of efforts south of the border that are helping communities bring broadband to more citizens.
Christopher Mitchell, director of community broadband networks at ILSR, pointed to the examples of Wilson NC and Chattanooga TN as two local governments that have stepped up and built their own networks for their cities. “They have built gigabit services, very high reliability networks, low prices, they also have ambitions to serve their neighbours,” he said.
But there other models, too, including working with local electric and telecommunications cooperatives. But one, which has a Canadian connection, is gaining steam. Ting, an entirely Canadian firm operating almost exclusively in the US, is championing a partnership model. Mitchell pointed to the company’s work with the city of Westminster in Maryland as an example.
“Ting has partnered with the city to bring universal coverage at affordable rates,” he said. “And it’s a balanced partnership that we’ve identified as a model in which both the government and the private sector share in the upside and the downside.”
