Report wonders if higher-income Canadians willing to subsidize less fortunate
By Ahmad Hathout
OTTAWA – After concluding another study on telecom affordability and accessibility, the House of Commons industry committee released a report Tuesday that excoriates the CRTC for issuing a critical decision on wholesale internet rates that it said upsets the very issues the committee was hoping to address.
The CRTC did not, as some wished, open the large national wireless networks to any service provider when it decided in mid-April that only regional carriers with spectrum and networks can lease capacity from the big carriers. Then in May, the regulator shook the industry when it decided it would throw out the final wholesale internet rates it set in August 2019 — making permanent the higher interim rates from 2016. This was after large carrier appeals at all appeal levels — the CRTC, Cabinet, and the courts.
While the committee report called the former a “modest step” forward, it said it was “very frustrated” with the latter decision.
For that, the committee said it wants changes. The first, laid out in Tuesday’s report with 16 recommendations, is that the appeal process at the CRTC be changed so that if a decision on wholesale rates is challenged, rates equal to a maximum of 50% between interim and final rates be established until the conclusion of the process. The committee said it hopes this would eliminate the use of the appeal process for ulterior motives, such as to primarily delay the institution of the rates, which smaller service providers have alleged is the reason for the challenges.
The second change, tied directly to the rate decision itself, is for the regulator to impose a “strict time limit to issue a decision.” A large part of the reason why the CRTC did not issue new wholesale rates, however, is just that: It said it would take too long to do so when the industry needs certainty on rates to compete in network development, such as for 5G. In fact, it took the Commission more than three years to come up with the August 2019 rates.
“The Committee does not believe that, collectively, these decisions meet Canadians’ expectations of affordability in the telecommunications sector,” the report reads. “They certainly do not advance this objective as much as they should, and the Committee believes that the CRTC should do more to address affordability.
“The Committee believes that the federal government should intervene to encourage the CRTC to put in place decisions that promote specific objectives, including affordability and accessibility,” the report added.
The report also recommends the federal government “issue a clear directive on competition” and “level the playing field” with consideration for all sizes of competitors. In 2019, under then-Innovation Minister Navdeep Bains, ISED issued a Cabinet direction that spelled out the need for the CRTC to factor in telecom competition in its decisions.
The committee’s study of telecom affordability has also yielded the idea the CRTC should establish an affordability standard and force service providers to make their speeds and pricing transparent, following Conservative MP Dan Mazier’s calls for the like.
Meanwhile, the report recommends the federal government open up its broadband programs to an array of independent and “non-traditional” service providers and make the application process simple, which the federal government has said it did with its pathfinder service for the $2.75-billion Universal Broadband Fund; establish criteria to prioritize local and regional providers; set aside funds specifically for them those smaller providers; and cap the share of funds any single provider can get at 50%.
For perspective, federal programs have a percentage range for how much money a project will get, and it depends on how important the area is. Higher priority areas will get a lot more — in some cases, up to 90% in Manitoba — and the pandemic has made it easier for the feds to justify opening the purse more.
Other recommendations in the report include resurrected ideas. It asks the federal government, with the assistance of the provincial and territorial governments, to complete and implement work on a national broadband strategy within two years, which should include a strategy on spectrum management funding in rural and remote regions, access to passive infrastructure, and competition.
It also recommends other existing ideas, including open access provisions to allow more service providers to ride on existing networks, and plowing spectrum proceeds from auctions and putting them back into broadband instead of general coffers.
On support structures, the report wants the CRTC to establish “an independent inspection, prevention and enforcement mechanism with cost sharing among providers–users to upgrade the network so that it meets high efficiency and safety standards” to ensure telecoms have the access they need. The CRTC is already studying barriers to rural broadband deployment, which includes access to these structures as one of the biggest barriers.
The report also wants an examination of the utility of repurposing spectrum for flexible use, move unused spectrum to those that will use it and reimburse them for it, expand low-income subsidy programs like Connecting Families, and consider having all Canadians subsidize the less fortunate by adding a new 50-cent cost to existing telecom services.
