The COVID-19 pandemic has served to underscore and exacerbate the already significant inequalities between rural and urban Canada, in terms of access to reliable and fast home internet and cellular networks. With work from home orders leading to an increased requirement for network access, geography is becoming an even bigger barrier to equality of opportunity for rural Canadians. Now more than ever, Canadians are looking for solutions to fix this problem and ensure rural communities are not left behind. That is why Conservatives are putting forward solutions to end the digital divide in our country. An internet connection is an essential service in 2020. Under the current system, it is not treated as such.
The current Liberal government has set 2030 as their goal for connecting all Canadians. But we know that asking Canadians to wait until 2030 to have a reliable internet connection is not acceptable, especially under stay at home orders.
Additionally, First Nations are disproportionately impacted by this inequality of access. The First Nations Technology Council estimates that 75% of communities do not have broadband access that meets the CRTC 50/10 Mbps requirement. This is unacceptable.
This report includes feedback from stakeholders, municipalities, and our constituents on the way forward to end the digital divide in Canada.
The causes of the failure to provide all Canadians with adequate home internet and cellular network access are many, but largely result from: limited competition in the telecommunications industry, a maladaptive regulatory regime, poorly designed funding programs, and upfront infrastructure costs.
We know that rural Canada has not been prioritized with respect to fast and reliable internet access. The numbers speak clearly to this problem. The Canadian Internet Registration Authority (CIRA) found in a recent report that in April 2020 “rural download speeds were nearly 12 times slower than those enjoyed by urban Canadians.” The CIRA report also found that in that time period, “median rural download speeds were measured at 3.78 Mbps, compared to 44.09 Mbps in urban Canada – a difference of 11.7 times.” In a time when internet access is needed most, during this pandemic we have continued to see the download speeds plummet for rural customers.
One of our Members of Parliament who represents a rural riding specifically noted that the issue of speed is hindering business in his community. He highlighted that “some constituents have demonstrated how slow the speeds are by running tests and reporting them to the MP’s office.” The reports received from this were consistently slow, with downloads speeds around 5Mbps and upload speeds around 1.5Mbps. This consistency in slow speeds in parts of rural Canada is unacceptable. We know that this has only been exacerbated by the COVID-19 pandemic, which has highlighted how conducting business online, education, videoconferencing and more is just not feasible in many parts of Canada due to lack of fast and reliable internet.
Meanwhile, data found by CIRA has indicated that speeds in urban Canada have actually increased amid this crisis. These numbers demonstrate that Canada’s large telecoms companies have not prioritized rural Canada. We know that with this pandemic, more Canadians are using video conferencing technology and online services as they work from home. Now more than ever, all Canadians need quick and reliable access to the internet in the midst of this global pandemic.
Our Conservative caucus colleagues consulted across the country with their local communities and stakeholders on this important issue of rural broadband and cellular network access. We received much written feedback on this, held numerous video calls and teleconference meetings with stakeholders, and hosted virtual town halls to solicit feedback.
This report reflects what we heard from our consultations on the initial Connect Canada document that we released on May 6, 2020 and proposes solutions to connect rural Canadians by 2021.
Rural Canadian Broadband Strategy
Until now, the hodge podge of government spending has not achieved the objective of connecting rural Canadians. As such, a broader strategy is required. This strategy should be in place prior to the government spending tax dollars within the existing regulatory system, or the risk of nothing changing will persist, especially given the lack of clear and coherent broadband strategy. One municipal stakeholder made the need for a strategy like this clear, stating: “the large telcos will continue to fail us as profit is their number one goal.” We must not forget this reality of the tension between managing to consumer access, versus managing to the company’s profits and loss.
The following sections are components required for a fulsome strategy.
Government Investment and Smarter Funding
The government does have a role to play in investing in rural broadband access, especially if it is considered as a public good. That said, expenditures should be made in a system that will clearly, in a stage-gated and results-oriented framework, deliver access as defined in this document. Pouring tax dollars into a system that has not worked in the past and expecting different results is not acceptable and will continue to be ineffectual.
For years, this Liberal government has touted their goal of connecting Canadians from coast-to-coast-to-coast to fast internet access. In 2015, newly elected Prime Minister Justin Trudeau released his ministerial mandate letters. In Minister Navdeep Bains’ letter, the Prime Minister tasked him with increasing high-speed broadband coverage nearly five years ago. Yet, we continue to hear from Canadians outside of city centres that they are still not receiving adequate access to reliable and fast service.
Past attempts to fund rural and remote networks have been fraught with problems. In 2018, the Auditor General found several issues with the rollout of the government’s Connect to Innovate program. This program invests hundreds of millions with the goal of bringing “high-speed Internet to 300 rural and remote communities in Canada. In these communities, challenging geography and smaller populations present barriers to private sector investment in building, operating and maintaining infrastructure.” Some of the Auditor General’s findings included issues with program design which led to failures in outcomes:
We found that Innovation, Science and Economic Development Canada (the Department) did not implement its Connect to Innovate program for broadband improvement in a way that ensured the maximum broadband expansion for the public money spent. The program did not include a way of mitigating the risk of government funds displacing private-sector investment.
The Auditor General found that the Connect to Innovate Program did not require applicants to demonstrate that their projects would not be feasible without public funding. He also identified that Industry Canada did not “allocate funding for projects in underserved communities in areas that would otherwise not benefit from independent, private-sector investment. Instead, the Department determined that communities were eligible for Connect to Innovate funding if they were more than two kilometres away from existing fibre backbone infrastructure.”
It is important that future initiatives do not repeat the same mistakes as previous attempts to serve rural and remote communities. The underlying assumption must be that while legislators are managing to ensure universal access, large telecoms are managing to profit-and-loss. This delta must be bridged within the program design itself.
One stakeholder pointed to a broader issue that is limiting competition in awarding funding to the larger telecoms through the Connect to Innovate program. The issue of funding allocation is not a new problem that stakeholders have brought attention to parliamentarians. In a 2018 report by the Standing Committee on Industry, Science and Technology, it is noted from witness testimony that, “some stated that allocating funding mainly to incumbents can make new providers uncompetitive.” However, we continue to see that the government has given money from their programming to these incumbents.
To serve as an example of this problem, an analysis of announced Connect to Innovate projects on the government’s website for New Brunswick, shows all the funding projects in that province going to one of the major incumbents. This is only one example of the countless taxpayer dollars that the government has given to the big telecom incumbents.
Announced Connect to Innovate Projects in New Brunswick
|Province||Funding recipient||Connect to Innovate funding|
|New Brunswick||Bell Canada||$239K|
|New Brunswick||Bell Canada||$127K|
|New Brunswick||Bell Canada||$299K|
|New Brunswick||Bell Canada||$93K|
|New Brunswick||Bell Canada||$424K|
|New Brunswick||Bell Canada||$173K|
Source (as of June 5, 2020): https://www.ic.gc.ca/eic/site/119.nsf/eng/00009.html
It was pointed out to us in our consultation that funding from the Connect to Innovate program going to the telecoms incumbents is a “growing concern” and “halts smaller ISP’s from developing more network infrastructure to deliver services in rural areas.” The government should not be playing such a significant role in contributing to the lack of competition in this sector.
Some possible solutions include:
- Ensuring that government infrastructure funding purchases a stake in the infrastructure (funding as an interest-free loan perhaps) to increase accountability and ensure a measure of public input.
- Not allowing sole ownership of government funded infrastructure – instead all publicly funded infrastructure can be wholesaled.
- Public-Private Partnerships (PPP) to give the government a chance to overturn the current natural monopoly big telecoms have in broadband infrastructure by funding regional ISPs to build infrastructure or having the government build the infrastructure and wholesaling network access.
- By routing the funding through regional ISPs, we create competition that forces big telecoms to reduce their prices.
- Reviewing future government infrastructure projects like roads, pipelines, wind energy projects, etc. as possible conduits for fibre
- Expanding funding eligibility to municipalities. As of right now, municipalities are unable to access the existing rural internet program, as only existing ISPs can apply. If an ISP does not want to expand their infrastructure in a community or to connect more individuals to their existing network, there is nothing a municipality can do.
The issue of taxpayers owning government-funded infrastructure was noted by an industry member in our consultations which stated, “more is flowing and creating new telco-style businesses where the infrastructure is owned by these businesses and not the Canadian taxpayer.” Internet access is essential, and some compared it to things like roads, water and sewers. Yet, as one stakeholder stated, “government feels the need to throw taxpayer money at private entities in hopes that this somehow turns out well. Poor planning provides poor results.” The government needs to consider remedying these concerns with the proposed possible solutions above.
Furthermore, there were some concerns highlighted in our consultations regarding bureaucratic delays by the Liberal government with respect to funding decisions. We know that long wait times to hear back from the government serves to undermine business in Canada. One stakeholder from Ontario noted that “a multi-year delay in announcing which Connect to Innovate projects that were either funded or rejected brought uncertainly to the market and actually delayed investment that would have otherwise been made.” We have seen delays in funding noted in the media, with advocates signaling alarm with this. In response to recent delays regarding the Universal Broadband Fund, an advocate stated in the media that “the delay in spending is harming rural Canadians who are even more in need of internet access during the pandemic.” The government needs to ensure it is making smart funding decisions, while also being nimble in its response when needed.
We also have heard in our consultations that oversight might be required as the government invests. It was noted that “the issues seem to be the oversight once a project is announced. Moving the oversight to a federal agency that has a local presence could help.” This feedback also came with the suggestion that perhaps Community Futures offices could be used as a mechanism for conducting oversight to ensure that the local connection to the project is maintained. We know that with time, projects can change and evolve. However, this does not mean that government dollars should go out unchecked, as we know there have been cases of rural broadband promises being made and not fully delivered.
Encouraging Competition in Canada’s Telecoms Sector
Small internet service providers (ISPs) are an important fixture in many rural communities. One farmer told their Member of Parliament in these consultations that, “without them [local ISP] we would be totally cut off from any internet.” This example shows why it is important that any broadband strategy encourages more, and not less, competition in Canada’s telecoms sector.
To ensure that government funding is achieving its stated goal of creating competition, there needs to be safeguards against takeovers of smaller ISPs by large telecom companies. There is a growing concern with small ISPs who have been recipients of government connectivity program funds and sell their business to large telecoms. Additionally, there is concern that when a small company is bought out, the buyer shutdowns a service/piece of infrastructure they have bought as they deem it unprofitable.
In conclusion, funding initiatives for broadband providers is to assist with helping smaller players enter the market by diluting some of the financial barriers to entry and provide broadband access to unserviced regions. To ensure funding that was earmarked for smaller companies does not ultimately serve the purposes of already profitable big companies, granting agreements need to have conditions built in them against this behaviour.
Mandated Wholesale Access
We have also heard many concerns by ISPs considering the COVID-19 pandemic about their ability to weather this storm. Small ISPs do not necessarily qualify for federal emergency loan provisions because the scope of the service increases for customers working from home. One stakeholder in Alberta noted in their consultation that they believed this had not been addressed by the current federal government, “however many industry sectors have been impacted by COVID-19.” The government is not providing industry specific relief and should develop a plan on this immediately, for example by backstopping these ISPs.
One suggestion we heard in our consultations regarding industry specific relief for ISPs, included a means of helping these providers to recover by helping them with some upcoming potential write-offs. This is because it is believed there is a potential that consumers may be unable to pay their accumulated bills during the pandemic. We expect that the government should develop a plan to ensure that ISPs are not forced to close their business due to the challenges being experienced during the COVID-19 pandemic. Such an outcome would only diminish competition in the sector.
One way of supporting ISPs in these difficult times, could include action on the wholesale rate access dispute. The ongoing dispute related to the wholesale rates needs to be resolved as well in order to allow ISPs to have predictability in their overhead in order to set fair prices for customers.
We also heard that because incumbents are only required to allow access to a portion of their network available to ISPs (known as the “last mile”) there are significant amounts of networks that incumbents do not share which restricts smaller ISPs from expanding their networks. Additionally, potential wholesalers note that there is a lack of transparency and long delays in response from incumbents about inquiries related to accessing their networks. For these reasons, the CRTC could set a required response time and a price cap per km on infrastructure leasing by the incumbents.
It was noted by an industry member that “fiber transport installed by incumbents needs to be regulated in a wholesale model similar to the wholesale regulations applied to third parties’ access to last mile networks such as cable and DSL.” This is a crucial policy solution, as fibre and copper are not regulated in the same way.
Again, it is paramount that the government encourage more, not less, competition in Canada’s telecoms sector.
Addressing Infrastructure Concerns
One of the biggest barriers to entry for new telecom companies is the upfront costs associated with developing the infrastructure required to build a network. In rural Canada, the lack of a subscription base met with those upfront costs presents a poor business case and therefore do not incentivize new providers from expanding into rural areas.
Therefore, it is inevitable that governments will need to help finance the upfront costs if we want to achieve connectivity for all Canadians post-haste. In fact, one stakeholder in our consultation specifically noted that “the cost of entrance is prohibitive.” It was also suggested in our consultations that “infrastructure should be based on disaggregated networks where reselling is allowed when public funding is used.”
Other models that could be considered is allowing individuals to voluntarily contribute to a local connectivity infrastructure fund in exchange for a tax credit. The government could also potentially match the contribution. Regarding this model, one stakeholder in the industry noted that, “a local connectivity infrastructure fund is another great idea that needs to be realized to allow municipalities, townships, and districts to contribute funds for growth specific to their geography.”
Some jurisdictions have taken it upon themselves to deliver telecommunications service to their residents as they recognize the failings of the telecoms to meet the need. Saskatchewan was the last province in which telecommunications became federally regulated and the last province in which the incumbent communication carrier, SaskTel, is fully owned by the provincial government. Since Saskatchewan is a geographically large province but has a relatively small population – many of whom still live in rural communities, it makes sense why the government decided it needed to ensure the need was being met.
Laying fibre should always be the preference, but the government can also modify regulations around other solutions, for example easing access to spectrum that is used for wireless backhaul.
Passive Infrastructure and Red Tape
Access to passive infrastructure is often a barrier for telecom companies to build networks. For example, in Ontario many poles are owned by Hydro One or large telecoms. We heard that telecoms increase charges excessively to secondary ISPs. As such, the CRTC could set a cap on telephone pole user fees for secondary ISPs or establish a dispute mechanism. Additionally, Ontario Hydro One requires secondary ISPs to pay for a new pole ($5,000-$10,000) in order to have fibre attached. The CRTC could work with the provincial government to find a balance between the interests of the need to build networks and the electricity companies.
We also know that red tape can be a barrier in terms of building out infrastructure for rural broadband projects. Other levels of government have identified this as an issue as well. This includes the Ontario’s provincial Minister of Infrastructure, who has identified “reducing red tape and removing barriers to infrastructure expansion,” as part of their action plan on broadband and cellular service. Even Liberal Cabinet Ministers have acknowledged that red tape is a problem in terms of building out these projects and getting fast, reliable broadband to rural Canada. Former Liberal Minister of Rural Economic Development, Hon. Bernadette Jordan, said that the government needed to ensure rural communities weren’t buried in red tape, particularly with respect to broadband internet projects. Yet, meaningful action to address these concerns has not been undertaken by this government. Reducing red tape is key to speeding up the completion of broadband projects in a manner consistent with the urgent need.
Supporting Consumers – Transparency, Accountability and Simple Contracts
On May 12, 2020, the Commission for Complaints for Telecom-television Services (CCTS) released their Mid-Year Report 2019-2020 which highlighted the serious challenges and concerns Canadians have in their service providers.
One of the key findings of this report is the lack of transparency from the service providers and the misleading nature of some of the promotional information they give customers. The Public Interest Advocacy Centre stated that “most disturbing in the report is that the leading complaint category for all services (wireless, home Internet, home phone and TV) was found to be “disclosure issues.” As John Lawford said, “the main problem with Canadian communications services now is misleading the customer.”
Other consumer issues we heard is that despite advertising unlimited plans, telecoms will start throttling internet speeds once customers exceed a certain usage. There needs to be more transparency, for example requiring notification to the customer when they have reached the threshold and the internet throttling has started.
The CRTC set the benchmark of access speeds at 50 Mbps download and 10 Mbps upload. Yet, the speeds available to customers only have to be possible to achieve, not necessarily consistently available. This means that customers can regularly experience much lower speeds for which they think are paying.
Consumers should have real-time information available to them on their speeds and bandwidths. Many customers, especially in rural areas, have raised concerns about the quality of coverage and performance they currently receive; contradicting the quality they are paying for. In the interest of consumer protection and information, we propose that the government take decisive action to ensure that Canadians’ access to connectivity is independently verified and fairly reviewed.
Therefore, a broadband strategy there needs to ensure Canadians have access to accurate, real-time information regarding speed and bandwidth. Other ways to address some of these issues include:
- Reviewing the mandate, dispute process and board appointment process of the Commission for Complaints for Telecom-Television Services to ensure independence of consumer dispute resolutions.
- Reviewing performance of CRTC related to the desired outcomes and priorities of connectivity.
- Requiring ISPs to advertise average speeds, not best-case scenario speeds.
- Create a list of service standards that telecoms must uphold if they are going to receive government funding and build these into the terms of funding agreements.
Many consumers are unaware of the language used in ISP contracts. They are also unaware of the technical practices allowed and implemented. This results in many consumers becoming frustrated when they experience slower speed or limits to bandwidth that results in queuing. They then contact their ISP to be informed that fine print and jargon was agreed to when they signed their contract.
- Telecom providers must use language and details in contracts that are easily understandable for consumers. This includes describing use of traffic-shaping and list websites that are prone to it. It would also need to describe the internet terminology used such as speed and bandwidth and inform the potential consumer of what bandwidth is needed for websites/programs. This description/information would be formed/standardized by the government to ensure consistency and truth in possible conjunction with the Canadian Standards Association.
- The goal is to provide consumers with accurate, descriptive and non-bias information so they can make smart choices when signing up for internet services that reflect their personal/household needs.
Allowing telecoms to act with impunity is part of the problem of access because it sets the precedent of failing to address the needs of Canadians, which is especially concerning if these companies are receiving government monies. With organizations speaking out and reports demonstrating an inherent lack of confidence in some service providers, the time for adequate safeguards for consumers is now.
Short Term and Immediate Fixes
If the government continues to delay action but mandates Canadians to work and school from home, they need to provide immediate solutions to facilitate that. To alleviate the current bandwidth shortage in the short term to emergent situations such as COVID-19, the government could deploy portable Cell on Wheels (COWS) with a priority to those areas where residents don’t have internet.
The government should work with ISPs to ensure there is an adequate supply of these devices available to deploy under a framework for who can use them and under what circumstances. This would act as a quick mechanism to immediately deliver better service to rural communities in urgent need of access in light of COVID-19. It should be noted this is not intended to fix long term bandwidth shortages.
Through our consultations, we heard from some that this would indeed be a worthwhile endeavour to immediately address connectivity concerns in light of the necessity of broadband in light of the COVID-19 pandemic. One stakeholder in Ontario said with respect to this recommendation that,
“Most rural internet is mobile based with slow speeds and low data caps. Performance is significantly impacted during the extended summer months when seasonal residents are in their cottages or seasonal homes and visitors to the area are most prevalent. This negatively impacts businesses as well as residents. Therefore, the availability of the Cellular on Wheels “COW”, either military or commercial, solution should take this into account.”
The government must consider solutions that will quickly address the problems facing rural Canadians with respect to broadband access, while also implementing significant policy solutions that will help rural communities close the digital divide in the long term.
Cellular Network Access
Many of the sections under home internet equally apply to cellular access, particularly the sections on government investment, access to passive infrastructure, and supporting consumers. However, there are some issues that are specific to cellular network build outs that need to be specifically addressed.
Some large telecoms will claim that Canada has achieved LTE coverage over 90%, but this can be misleading as it is necessary to distinguish theoretical LTE coverage and speeds from what is actually available for customers. Anyone who has driven through rural Manitoba will know that there are large swaths of the province where a cellular network is not accessible.
In order to increase transparency around the issue, a nation-wide audit on both ‘High Signal Reception’ coverage and speed/performance should be conducted to compare with telecoms claims. This will enable us to know where dead zones are and increase transparency for consumers.
Overhauling Spectrum Auctions
There are a number of changes that can be made to the way spectrum is licensed in order to achieve the objectives needed to connect Canadians. Many small network providers help connect rural Canadians, yet they face several challenges in the current operating environment. For example, the cost of competing in the auction for spectrum can be prohibitive.
For these reasons, the government should hold a secondary spectrum auction at reduced prices and set aside spectrum for small ISPs. This will help increase the capacity of regional network operators.
Conditions can also be tied to future licenses, for example by implementing a “use it or lose it” system. Spectrum licenses can be revised to make benchmarks for offering rural connectivity a condition of use. Companies that failed to meet targets could have spectrum clawed back.
We have also heard from stakeholders in our Connect Canada consultation concerns regarding the spectrum tiers. One industry member provided a clear picture of this when they told us:
“The addition of Tier 5 areas should help in the future however the issue remains that large incumbents continue to be awarded spectrum at auction with the conditions of only servicing 30% of the population within the tier. Often in a Tier 4 area servicing a single small town will meet the license requirement leaving the rest of the tier as un-serviced. If this continues issues like the one identified for the Ottawa area will continue.”
The issue of how service areas are classified within the tier system should be carefully evaluated as well.
Mandated Mobile Virtual Network Operators
Canada’s wireless market remains highly concentrated. The top three national wireless providers continue to control 91.8% of the revenue. Additionally, Canada continues to have some of the highest cell phone bill costs in the world. Much like mandated wholesale access for home internet, mandated MVNOs may be one method for increasing competition.
The ongoing disputes around this issue should be solved quickly to increase competition in the short term. There are international examples of this working, for example in Austria mandated MVNO access led to prices dropping.
For Canada to maintain a competitive knowledge economy, our citizens must have access to high-speed broadband and cellular network access. High-speed internet allows citizens the opportunity to develop intellectual property, increases innovation and entrepreneurship; and allows our citizens access to education, telehealth, and telecommuting. It also reduces brain-drain, equalizing economic opportunity in rural communities and ensuring the sustainability of rural communities.
The Rural Broadband Working Group was struck with the hopes that we can solve this untenable divide. We do not accept that Canadians have to wait until 2030 to have equal access to this essential service. It will take smart ideas and the political will to get this done, but with enough effort we maintain this can be done by 2021. Thank you to all who participated in our consultation process.
 Certain cellular providers diminish the dead zones in their coverage maps because they use ‘low signal’ mapping. This makes a provider look like they have superior coverage; however, areas with ‘low signal’ would result in around one bar of service that can barely send a text or hold calls. This highlights the difference between theoretical and practical speeds and coverage.