Extend broadband with spectrum cash: Report

In 2008 Ottawa pulled in over $4 billion from the AWS/PCS spectrum auction, which promptly disappeared into the government’s general revenues.

A Senate committee has a better idea: Spend all spectrum auction funds Industry Canada raises on spreading broadband Internet access to remote and rural areas of the country.

In addition, the committee says the government should axe the requirement of current spectrum licence holders to spend 2 per cent of their revenue on research and development and instead redirect the money for deploying broadband unserved areas.

Those are two of 18 recommendations the transport and communications committee made Wednesday as part of a report called a Plan For a Digital Canada.

The Harper government has set already aside $225 million over three years to support service providers that bring broadband to these areas. The first projects were announced last month.  

However, the committee chair has backtracked on one of the recommendations. In an interview with Network World Canada on Thursday, Quebec Liberal Senator Dennis Dawson said the report shouldn’t have said all spectrum auction money should go for rural access. “If that was the word used that was a mistake,” he said.

What the committee meant to say, he said, was that auction money should go to things like improving the digital literacy of Canadians as well as extending broadband to remote areas. He said the committee also wanted to point out the discrepancy between the government pulling in $4.2 billion in the last auction and allocating only $225 million for rural broadband extension.

Bernard Lord, CEO of the Canadian Wireless Telecommunications Association (CWTA), which represents wireless carriers, said his group hasn’t discussed how much spectrum auction funds should go to closing the digital divide between rural and urban Canadians. However, he did say the group would have no problem if some of the money is used that way.

He felt the most important recommendations would result in fairer pricing in spectrum auctions – incumbents felt the rules in the 2008 auction grossly inflated prices — and in the reduction of the annual $130 million in licence fees carriers pay Industry Canada.

Among the recommendations is that the government appoint a Minister for Digital Policy to implement “a strategy for an inclusive digital society” to bring “essential digital services” – including health, education or other online services, whether provided by the public or private sector – to every resident of the country.

While the Industry minister has responsibilities for such policies now, the digital policy minister would take that away.

The Senate report comes a month after Industry minister Tony Clement announced a national consultation to help the government create a digital economy strategy.

The Senate committee began looking into a wireless strategy for the country in 2009 when there was what it calls a “cozy ogilopoly” led by BCE Inc.’s Bell Canada, Rogers Communications Inc. and Telus Corp. It also complained that wireless data networks capable of 3G speeds hadn’t spread fast enough. But after the three leading carriers upgraded their networks to HSPA+. 3G coverage jumped from 78 per cent of the country in 2007 to 98 per cent by the end of last year. Meanwhile, eight new wireless carriers such as Wind Mobile, Mobilicity, Public Mobile won spectrum in the 2008 auction.

As a result the committee’s focus shifted to the need for a national digital strategy. Over 20 countries have one, it noted.

In creating a digital strategy, the government should not focus on super-fast broadband speeds or on certain advanced technologies (such as fibre optics), the report says. “To do so is expensive, can overlap private-sector investment and can widen digital divides. Instead, the government should determine the broadband speed required to access basic digital services (health, education or other online services, whether provided by the public or private sector), and focus government policy on bringing this broadband speed to all Canadians.”

“Canada is a vast, sparsely populated country, with extremes in climate and terrain,” the report acknowledges. “But Canada’s geography is a challenge, not an excuse.”


One of the most controversial recommendations is that incumbent phone, cable and wireless carriers open their network infrastructures to competitors as a way of encouraging competition, as is done in Europe. That would save competitors the cost of building networks.

While the report admits there have been significant improvement in competition in the wireless industry, “there are still irritants such as unexpectedly high roaming charges.”

The report also warned Ottawa not to relax its vigilance over the wireless industry, which insists competition between the big three carriers – who at the end of 2009 controlled about 95 per cent of the market – is vigorous.

The report also urges the government to make sure those incumbents don’t buy competitors, as they did in the past. In 2000, Vancouver-based Telus Corp. bought Clearnet Communications (which let it become a national carrier) while four years later Rogers bought Microcell Telecommunications Inc. and its Fido brand.

“This report is cautiously optimistic that competition can be maintained among wireless service providers, that remaining cellphone irritants can be addressed, and, of most importance, that the government can produce and begin implementing a strategy for an inclusive digital society.”

To show the country the government is serious about the importance of digital, within a year of releasing its strategy the federal cabinet should conduct paperless meetings, the report says, one of a number of ideas it has appropriated from the tiny European country of Estonia. (With a population of 1.34 million, the country is 10 per cent of the size of Nova Scotia.)

That includes creating a secure Internet platform to allow Canadians to review their government files online and giving people digital IDs so they can securely access online government data.

To take advantage of these opportunities, the report says Canada needs a comprehensive digital literacy program, “one that makes digital technology a natural part of a child’s education and one that brings digital awareness and skills to older members of society and those in marginalized groups.” It acknowledges that education is a provincial responsibility, but says that “to forge a true digital society, digital literacy must be more than an add-on to education or social programs.”

The report says Industry Canada and the Canadian Radio-television and Telecommunications Commission (CRTC) should work with the wireless carriers assocation to develop a technological procedure for informing wireless users when their airtime will push their monthly bill past a set limit.

“I think they did a good job,” said telecommunications consultant Iain Grant, managing director of the SeaBoard Group. “The things they are asking for are not unreasonable.”

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