CRTC head, carrier spar over rural broadband target

It’s okay to set an unenforceable broadband speed target for carriers serving rural Canada to try to achieve, a phone company has told a telecommunications regulatory hearing — but in no way should they be forced to do it.

Being told to make broadband one of the basic services telephone providers have to meet would be an expansion of “old school regulation,” Dennis Henry, the vice-president of government affairs at Bell Aliant, told the first day of two weeks of hearings by the Canadian Radio-television and Telecommunications (CRTC) into reviewing the rules covering basic telecommunications services.

Aliant, controlled by BCE Inc.’s Bell Canada, is the incumbent local exchange carrier (ILEC) for much of the Maritimes, northern Quebec and Northern Ontario.

Among the basic residential phone services ILECs have to provide subscribers is dialup Internet access. However, with some 95 per cent of Canadians having access to higher speed broadband access, the commission is considering upping the dialup requirement to broadband – although at a yet undefined speed – at the very least in unregulated rural areas.

But Henry said any return to regulation could damage the telecommunications industry because small ILECs would need a subsidy that would be paid for by the customers of larger carriers.

The federal government, through a recent $225 million plan to help carriers spread broadband to underserved areas through existing Internet providers, and several provinces already have programs to extend rural broadband, he said.

“The model in Canada of private investment supported by targeted government programs continues to work remarkably well,” he said.

In addition, he added, the CRTC doesn’t have the legal power to order carriers to spend upgrading their facilities to broadband.

But Henry’s determined objection puzzled commission head Konrad von Finckenstein. We’re only talking about the six per cent (of Canadians) who don’t have access to broadband, he said, “Why are you so vigorously opposed?”

Many industrialized countries the CRTC has looked at, including the United States, Austria, Australia, France, Germany, Italy, Finland and Denmark have set broadband targets, he said.

“All recognize this is something a modern economy needs.” But von Finckenstein noted broadband hasn’t spread to a number of rural areas in this country.

Henry insisted the private sector is best at determining the spread of technology, with the government limited to targeted programs. In addition, he added, new technologies such as satellite and wireless are becoming available in outlying areas that customers can chose from.

However, von Finckenstein noted that wireless Internet services today don’t compare to the landline Internet service offered by phone and cable companies. They are either more expensive or have download caps.

The gap between wireless and wireline broadband service is closing, Henry replied.

Eventually, Henry agreed with a suggestion from the chairman that the CRTC set could an “aspriational” broadband goal for rural areas.

In pre-hearing written submissions, many other carriers including Bell, Rogers Communications Inc., Shaw Communications Inc. and Telus Corp. have also said the commission shouldn’t set a mandated minimum Internet access speed carriers have to meet.

Even John Maduri, CEO of Barrett Xplore Inc., which focuses on providing wireless and satellite service to rural Canada, urged the commission to let the private sector do its work.

When the CRTC issues its annual state of telecommunications in the country it always excludes satellite broadband coverage, he said. But, he added, “we cover every nook and cranny of Canada with our current satellite footprint. Regulatory intervention is not required to extend coverage.”

In December, Barrett will launch a new, faster terrestrial wireless network followed by a new satellite network next year, he added.

But von Finckenstein said he found it strange Maduri objects to the regulator to even set an “aspirational” target. “I would have thought it would be valuable to establish at least set a minimal goal for the nation.”

Maduri replied that investors “freeze” when regulators set targets, afraid to put money into companies seeking funding particularly if the targets are seen as “wild.” However, he agreed that low speed broadband target wouldn’t be so objectionable.

Paul Flaherty, CEO of Bell-owned Northwestel Inc., an ILEC which services some 96 small communities across the Northwest Territories (NWT), Yukon and Nunavut, also didn’t want to face a broadband obligation, in part because of the pressures the company already faces.

In one NWT village with 51 subscribers, Northwestel pays $6,000 a month for power for its satellite receiver, while getting $2,300 in revenue.

The hearing is also looking at subsidies small ILECs are paid to subsidize the high cost of phone service in outlying areas, monies paid for by large carriers. Flaherty said that the subsidy regime will have to be increased to reflect what he said is the unique high cost nature of the north.


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