Or should we consider broadband like roads or sewers?
GATINEAU – If the CRTC is going to implement a subsidy to support the rollout of broadband in rural and remote area, it already has an established approach, the Canadian Cable Systems Alliance told the Commission on Wednesday. It’s called the National Contribution Fund for telephony in high cost service areas.
Chris Edwards, vice-president of regulatory affairs at the CCSA (pictured in a CPAC.ca screen cap), noted that this approach would encourage network investment by smaller providers – the companies that serve rural and remote communities. “Such a subsidy model would be efficient in that it would leverage the existing resources, skills and networks of local providers who already serve or are adjacent to many underserved or unserved communities,” he said.
The subsidy would represent a major financial support mechanism for smaller providers such as Cable Cable. The company is currently building out 8.5 km of fibre in the Kawartha Lakes region in Ontario that includes a triple play bundle offering to 300 homes. Without a subsidy, the payback on the investment would be 12.5 years (152 months). The subsidy reduces this payback to 6.75 years (81 months).
“The improved pay-back on investment that results from subsidy would encourage investment, accelerate projects and improve smaller providers’ access to third party project financing,” added Edwards.
While the organization believes this type of subsidy approach would work, its first priority is to get access to transport facilities on reasonable terms and prices. CCSA suggests the CRTC approach transport facilities through discoverability, access and pricing lenses. On the latter point, the small cable companies raise rate re-regulation as a possibility if competition is lacking.
“Our presentation said that we thought that re-regulation where those markets are non competitive would be an answer. I guess we’re not certain that that’s practically available as a regulatory response,” said Edwards in response to a question from commissioner Candace Molnar.
“Somehow we have a view that a community should have running water, should have natural gas, should have power.” Broadband should be seen the same way. – Arthur Price, CEO, Axia NetMedia
“In theory, if there is no competition in a market and those facilities are not becoming available as a result or are not equitably priced as a result, then yes rate re-regulation would be only thing to do,” he added.
Alberta’s Axia NetMedia Corp. suggested a completely different approach to bridging the broadband gap in under-served and unserved communities. The company, which is best known for its pioneering work in building a fibre network to all rural communities in Alberta, argued that broadband infrastructure should be seen in the same light as other social infrastructure like roads, electricity, energy, water and sewers.
“Somehow we have a view that a community should have running water, should have natural gas, should have power,” said Arthur Price, CEO of Axia, noting that that cost isn’t thrust on the community. Broadband should be seen the same way, he added.
The Axia chief executive said that the Alberta SuperNet project – each and every rural community in the province was connected to that fibre network – was built for a total of $250 million. With a network like that done in a particular community or a number of communities, the next phase would be to establish an approach that would allow end users to be connected either through wireless or fibre to the premise.
Once the backbone is complete “you set a framework which allows the fibre to the premise and the wireless guys to stretch broadband coverage as far as you can go without financial support. And it can go quite a ways if it has the first part.”
Axia’s model doesn’t preclude the buildout of competing transport facilities, it’s just that future networks wouldn’t be able to avail themselves of any government funding.
Rogers Communication and MTS are among the witnesses on Thursday.
