And why there’s much more to rural connectivity than funding
By Lynn Greiner
AN ADDITIONAL $1.75 BILLION for rural broadband, which the federal government announced this month, is certainly a good step, albeit delayed, in the right direction. But, it’s not enough.
“It’s not a silver bullet,” said Telus vice-president telecom policy and chief regulatory legal counsel Stephen Schmidt during the Canadian Telecom Summit’s annual Regulatory Blockbuster session on Wednesday. “It won’t work on its own… In our view, complementary spectrum policy reform is an essential companion piece that will ensure that the networks that get built with or without public funds are built out faster and further and make the public funds that are expended more efficient, responsible and impactful.”
He said Shaw, Eastlink and Videotron have allowed spectrum to go unused, having only deployed less than 20% of their rural spectrum, while Telus has already deployed around 65% of its allocation. If all license holders deployed more rapidly – over ten years, for example, rather than the permitted 30 years – it would do a lot more for the country’s connectivity challenges because “solving remote and rural will be inherently wireless.”
“I’ve got two words on this Universal Broadband Fund,” responded Samer Bishay, CEO of Iristel and Ice Wireless, “open access, open access, open access, open access – and we’re going to keep saying that over and over again.” Networks built with public funds have to be open for others to use, but Bishay worries the UBF rules are too vague to ensure that principle.
He suggested that if one applicant builds transport, it should not also provide retail as well if it plans to use government money, and vice-versa.
Bell Canada’s chief regulatory officer Rob Malcolmson didn’t agree with Bishay’s two words and instead offered a single word of his own “investment, investment, investment,” and Rogers Communications senior vice-president of regulatory Ted Woodhead took issue with prohibiting those building the transport layer from retail.
Woodhead pointed out there are many funding programs to choose from across the country and the key issue is alignment – where everyone needs to “sing from the same song sheet.” We don’t know at this point whether the CRTC’s $750 million broadband fund is in alignment with ISED’s UBF, not to mention all the other regional programs, he said.
Geoff White, director, legal and regulatory affairs with the Competitive Network Operators of Canada agreed with Bishay that open access will be the key. “I just find the whole discussion of this tension between Samer saying open access and Rob is saying investment,” he said. “The whole problem here is that incumbents are saying we need subsidy, but on the other hand, in other forums, there’s a threat to that investment, there’s a threat to indigenous communities, a threat to rural deployment if the CRTC doesn’t set (wholesale) rates in a certain way, and I just think that it’s very ironic that the industry is so reliant on the subsidies, yet doesn’t want to allow open access to (networks built by) it, and then threatens it in other forums. It’s just inconsistent messaging,” he said, speaking of the incumbents’ appeals of the CRTC’s wholesale internet rates decision.
It’s not all roadblocks though. “We’ve been fairly successful over the last couple of months in getting some funding from Quebec and Ontario,” said Leonard Eichel, Cogeco’s senior director of regulatory affairs. “And we’ve managed to receive some $37 million in funding and we are committed to extending connectivity to about around 25,000 homes. In our experience in dealing with both levels of Ontario and Quebec, there’s a good co-ordination happening between them. Contracts are very similar, the open access provisions are very similar and we have to be committed to adhering to those as well.”
However, he went on, the CRTC’s fund is a bit of grey area in that it has drawn a tremendous number of applications from providers (CRTC chairman Scott said in his Telecom Summit keynote there are over 600 applications asking for more than double the allocated funds), and no one really knows how they’ll decide on them and how they intend to co-ordinate with the UBF or the funding from the Infrastructure Bank.
“We need to think bigger. We need to think at scale. And we need to build the most connectivity as quickly as possible.” – Rob Malcolmson, Bell Canada
“As I said earlier, the priority has to be initially about increasing access; that’s the problem at hand,” Malcolmson said. “Quite honestly, the fact that Distributel is going to spend $5 million in 10 rural communities and is working on a plan to do that over time, projects like that are great, but they’re not going to solve the digital divide. We need to think bigger. We need to think at scale. And we need to build the most connectivity as quickly as possible.”
He went on, “The other thing that we haven’t talked about is all of this funding has to be accompanied by a regulatory framework that’s stable, that’s predictable, that’s certain, and that increases incentives to invest. Right now, I think policymakers have a choice to make. They have to decide between propping up resellers that live on mandated access and artificially low wholesale rates, or they have to pivot towards incenting investment, incenting footprint expansion. In the midst of a pandemic we’ve seen quite clearly, and the chair of the CRTC referenced in his speech yesterday, that when network builders are given both the resources and the regulatory climate to build networks, it happens, it happens quickly. And it can be done. ”
Distributel’s correlation of wholesale rates (and retroactive payments owed) with their ability to expand in rural regions, and Malcolmson’s dig struck a chord with White.
“The smaller competitive service providers have been waiting and waiting and waiting for refunds of overpayments for rates that were paid to incumbents that were found in the first instance by our expert regulator to be unjust, unreasonable and inflated, then by a unanimous Court of Appeal that suggested the incumbents submitted numerous arguments of dubious merit and a government that left the decision alone save for a bit of troubling language in a legally non relevant preamble,” he said.
“Incumbents are throwing the slowest moving temper tantrum in Canadian telecom history right now.” – Geoff White, CNOC
“CNOC members have investors, they have creditors, they have business plans, they have employees, they operate in communities, they build networks. It’s not just wholesale,” he went on. “They have a plan, and the incumbents are browbeating them through regulatory delay after regulatory delay after frivolous court appeal… It’s simply that incumbents are throwing the slowest moving temper tantrum in Canadian telecom history right now that is penalizing members like Distributel that would prefer to spend money on investment than on Bay Street lawyers to defend frivolous claims.”
Malcolmson called those comments “over the top,” observing it’s within everyone’s rights to appeal decisions they think are wrong, and, he said, the difference is that while Bell was appealing, it was also investing and not reselling someone else’s networks.
“If you spent half the money you spent fighting the CRTC, challenging the CRTC before court, if you spent that on customer service, maybe we wouldn’t have a clamoring for more competition,” White shot back. “It’s not unreasonable of us to say the system… is being gamed by the incumbents to slowly penalize and put a chokehold around the independents. When you put a chokehold around the independents, it’s the Canadian consumer that will suffer.”
But, Eichel said, CNOC is also guilty of causing delays, citing the disaggregation interconnection issue as one example where independents slowed things down.
“The network superpowers out there… are building 5G, are putting spectrum out there in massive quantities, and we’re kind of tinkering with yesterday’s problems, about yesterday’s networks and price-based populism.” – Stephen Schmidt, Telus
Schmidt pointed out that all of the squabbling is an unfortunate distraction for Canada. “We’re spending a lot of public and private resources tinkering with the wrong thing, while the network superpowers out there – the Chinas, the South Koreas and on and on and on – are building 5G, are putting spectrum out there in massive quantities, and we’re kind of tinkering with yesterday’s problems, about yesterday’s networks and price-based populism.”
It’s not really all the incumbents’ fault, Bishay noted. The CRTC’s lack of transparency and slow movement contribute too. “Why don’t we all sit in a room, brainstorm and work like partners to build and compete against Korea, to compete against China, to compete against the rest of the world?” he asked. (Ed note: Good question.)
A question from the audience focused the panel on the issue of utility poles and other support structures, something that is only going to grow in importance as 5G grows and thousands of small cells will need to be installed.
There are two issues here, says Woodhead: the ability of traditional telephone companies to deny or delay access to their poles, and the high cost of access to hydro and municipal infrastructure. He noted that in Ontario, the rate for attachment to hydro poles is $44.50 per attachment per year, the highest in North America, while Bell charges $12.50 to attach to its poles. Access to a Hydro utility duct costs $12 per metre, while Bell’s ducts are $0.70. This is a problem when extrapolating that to 5G, which needs many, many small cells, as well as fibre backhaul.
“The electrical regulators in the provinces are trying to kind of hide the fact that electricity prices are going up and using the telecom industry and cable industry as an ATM to pay for that and that’s got to stop.” – Ted Woodhead, Rogers
“These utility companies are in fact, monopolies. Presumably, the electrical regulators in the provinces are trying to kind of hide the fact that electricity prices are going up and using the telecom industry and cable industry as an ATM to pay for that and that’s got to stop… and we were happy to see that the OEB is going to review this with the mind to encouraging more rural broadband,” he said.
Moderator Greg O’Brien, editor and publisher of Cartt.ca, asked the other panelists if municipalities regard telcos as cash cows, and Eichel said some do and some don’t. “I think that’s one of the other issues that companies such as ourselves have is that there’s no consistent policy across municipalities for getting access to their own infrastructure in city as well,” he said.
However, he added, Bell is also under pressure to make it easier for companies to access its poles and infrastructure. “I have to admit that Bell kind of acts a bit like they’re the Titanic, and we need them to act like a cigarette boat because, frankly, that we need to get moving on this and we need to get moving on this quickly.”
“You can rest assured that we’re aware of the issue,” Malcolmson said. “I wouldn’t say we’re the Titanic, but we’d like to become a cigarette boat. But the issue of pole access is not is not simple. You have joint use poles in many cases, you have hydro safety considerations and obviously, that requires the proper procedures, permits, safety code requirements, you have a need for make-ready work in order to make sure the poles can accommodate the demand upon them. You have finite space, and taken all together, it’s a resource intensive project.”
He said that Bell is currently concentrating on Quebec, where it has had many complaints about access, and is working with the provincial government and Hydro Quebec to reduce roadblocks.
“The issue of timely access at reasonable rates to essential facilities, which is the issue with hydro poles is also the issue of CNOC members wanting access to essential facilities as well so that they can compete. There’s a parallel between the two,” White pointed out.
“The faster we sit together in a room and put all the animosity aside and figure things out as Canadians I think the more successful everybody will be.” – Samer Bishay, Iristel
Added Woodhead, “One of the things I think that needs to be done here in in Canada is, in the United States, the Federal Communications Commission launched several initiatives, including streamlining approval processes, capping application fees, limiting annual access fees to cost recovery, all aimed at reducing barriers to the deployment of networks and 5G equipment in particular. Similarly, the European Union has also made moves to enable the rapid rollout of 5G, mandating reasonable and non-discriminatory access, ensuring quick approval times, and limiting what fees can be charged.”
“Those things that are happening in the U.S. and those things that are happening in the EU, we obviously don’t see quite the concerted effort here in Canada to the same level,” Eichel observed. “So Cogeco itself has pointed out some of these initiatives to CRTC staff and is trying to get them to be a little more proactive on this. But obviously, we’ve not been as successful as we had hoped. So what’s lacking I think, in this country, is concerted action on the on the part of regulators and policymakers to get the industry together to talk about these issues… it’s critical that we need to have some kind of national leadership on this.”
At the end of the session, O’Brien asked how everyone can work together to put the swords away and connect all of Canada – and all panelists agreed this is a laudable goal.
“I think the price to pay if we don’t start collaborating soon is going to be very, very costly to not just us as companies, with shareholders, but also to Canadians,” Bishay said. “And that’s because of the simple fact is LEOs are coming, and they’re not made in Canada, most of them. And guess what, they’re going to take a big chunk of this market. The faster we sit together in a room and put all the animosity aside and figure things out as Canadians I think the more successful everybody will be.”
