OTTAWA – Canada’s largest communications companies acknowledge that high speed Internet is now critical for Canadians to participate in the digital economy, but they remain divided as to whether the basic service objective (BSO) should be amended to include broadband.
It’s already “self-evident,” according to Rogers Communications Inc., that broadband is a basic telecommunications service because Canadians require it to access government, health, education, business and entertainment services.
“High-speed broadband Internet access is a necessary prerequisite for Canadians to participate in the digital economy in a meaningful way and almost all Canadians now have access to this important service,” it writes in its submission to Telecom Notice of Consultation 2015-134.
Telus Corp. agrees that broadband is a basic telecommunications service (BTS) and adds that the Commission’s current 5/1 Mbps should be enshrined in the BSO. The company adds, though, that the CRTC must be careful in determining what services are considered basic. While banking and dealing with government may be, streaming TV and music over the Internet are not.
Telus applies the Maslow’s hierarchy of needs to telecommunications to determine what actually constitutes a basic telecom service.
“For example, whereas many Canadian consumers likely spend a significant part of their disposable income on fast food and video games, it would not be reasonable to conclude on the basis of this behavior that consumption of such items is essential in the sense that it is required for basic survival,” it writes.
Bell Canada, on the other hand, argues that the Commission doesn’t have the authority to require a telecommunications provider to deploy high speed networks in an area that doesn’t already have them. But, it adds, the CRTC could establish a fund to assist in the buildout of those networks.
The incumbents all agree that the Commission should establish aspirational goals for future broadband speeds, and suggest that 25 Mbps is appropriate.
While there is some disagreement over a broadband BSO, they also all agree that current government programs, combined with market forces and technology advancements, are doing a good job on the broadband front. They note in their respective submissions that 95% of Canadian households already have access to 5/1 Mbps service and this number could reach 99% by 2017. Therefore, they argue, a new broadband contribution fund isn’t necessary.
But if the Commission determines that there is a need to fund further broadband deployments, particularly in rural, remote and northern communities, they say targeted government funding programs such as the federal government’s Connecting Canadians is a better approach than explicit levies on telecommunications services revenue.
Shaw Communications Inc. counters suggestions from independent ISPs and consumers groups that the National Contribution Fund (NCF) is the logical place to start when contemplating how best to bridge the broadband gap.
“Funding broadband Internet services through the existing contribution regime would introduce a huge cost burden on consumers, distort prices for contribution eligible services and unfairly benefit service providers that receive subsidies under the regime,” it writes.
Rogers agreed, noting that subsidies for high-cost serving areas are a “very blunt instrument” that results in “unemployed residents of the economically challenged areas of Toronto” unfairly subsidizing “the residential local wireline bill of the bank managers, the doctors and the lawyers in Dawson City.”
The Big Three also agree that, rather than simply doling out money, it must be done in a technology neutral and competitive manner. Telus proposed that a reverse auction, such as the one used by Industry Canada in its Connecting Canadians program, is one approach.
Bell tells the Commission that it needs to look no further than to the situation south of the border to see that competitive processes are an optimal method. Rather than forcing telco providers to adhere to broadband obligations, the CRTC should adopt a competitive bidding process to award the funds. The company adds that the FCC’s Rural Broadband Experiment (RBE) is example of how competitive bidding can be much more effective than straight subsidies.
“The net result of the RBE program is that the FCC was inundated with offers to build broadband at subsidies that were more than 50% lower than the cost model's results and for speeds that were higher than assumed by the model,” it writes.
Bell also suggests that broadband funding should come from government tax revenue. It notes that given the vast pool of money generated from spectrum auctions since 2006 – some $12 billion, the government could set aside some of that for broadband deployment to remote communities.
But there are other ways that the government could stimulate investment in broadband networks in remote regions, it adds.
“It can increase the capital cost allowance for broadband network assets as an incentive to accelerate digital infrastructure investments. In fact, the latter can have such a significant impact on investment that we encourage the Commission, as part of its decision in this proceeding, to recommend that the Government do just that,” says Bell.
While many of the comments focused on rural, remote and northern communities, many ‘broadband have-nots’ also live in regions where broadband is readily available, but simply unaffordable. Telus suggests that requires a needs-based approach, where an evaluation of a host of household services is conducted.
“A rebate on the GST based on real ‘inflation-adjusted’ income is one avenue through which the Government could address affordability concerns in a more effective, efficient and equitable manner”, it writes. “It would also serve to target assistance where it is needed most.”
Phase Two of the basic telecommunications services review will include a call for comments from the Commission this Fall, where Canadians will be asked to provide their opinions on the telecommunications services they consider necessary to participate meaningfully in the digital economy today and in the future. This will be followed by hearing in Gatineau beginning April 11, 2016.
