Telecom industry divided on need for broadband plan

Few in the Canadian telecom industry would argue with the U.S. communications regulator declaring that “broadband is a foundation for economic growth.”

However, when the Federal Communications Commission unveiled an aggressive 360-page national high speed Internet plan Tuesday vowing to ensure every American has “affordable access to robust broadband service,” experts here were wildly divided on whether we should follow suit.

“Of course” we should have a national broadband policy,” said Robert Yates, co-president of the Montreal telecommunications consultancy Lemay-Yates Associates Inc.

A number of other industrialized nations including Britain, France, Japan and Australia have one, he said. Meanwhile, “we’re just sitting on the sidelines.”

Tom Copeland, chairman of the Canadian Association of Internet Providers, which represents a number of small ISPs, agreed. “I think they are headed in the right direction,” he said. “They’re trying to ensure Americans have the 21st century tools they need.”

Among other things, the FCC wants the creation of a fund to pay for a network with at least 4 Megabits per second actual download speeds that all Americans can access. In addition, it wants to set a goal that at least 100 million U.S. homes should have access to networks with at least 100 Mbps download speeds by 2020.
(For details on how the FCC plan would help bring broadband to rural communities, click here)

Others here are leery of increased government regulation to achieve broadband leadership.

“I think what Canada needs is a national digital strategy,” said Mark Goldberg, who heads a telecom consultancy bearing his name based in Thornhill, Ont. Such a strategy would not only cover rural access to broadband but also encompass copyright and ways to encourage the Canadian presence in new media.

Canada is further ahead of the U.S. in deploying wireline and wireless broadband, he also said.

Iain Grant, managing director of the SeaBoard Group, a Montreal-based telecommunications consultancy, agreed “I’m not sure we have a national broadband problem,” he said.

On the other hand, he said the nation does need a broadband “vision” that, rather than having set action items, would see the government offer incentives to the private sector to achieve certain goals.

Similarly, Michael Hennessy, senior vice-president of government and regulatory affairs at Telus Corp., said if we create a broadband policy it has to be part of an overall information and communications technology strategy. But that strategy should be set by Ottawa, not by the Canadian Radio-television and Telecommunications Commission (CRTC), the FCC’s counterpart up here.

John Maduri, CEO of Barrett Xplore Inc., a wireless broadband provider that focuses on serving rural areas, also shied away from the creation of an enforceable plan. The country already has a plan for serving underserved parts of the country, referring to a number of federal and provincial initiatives.

According to the OECD, as of 2007 88.9 per cent of Canadian households had access to DSL broadband from telcos compared to 82 per cent in the U.S. In terms of cable, 93.4 per cent of households have access to cable broadband compared to 96 per cent in the U.S. On the other hand, the U.S. is further ahead of Canada in extending ultra high-speed fibre to homes and businesses. By the end of 2007 13 per cent of the U.S. had been wired for fibre.

However, the broadband subscription rate in both countries tells a different story. The FCC report estimates that for all of the access, one-third of American households don’t subscribe to broadband. According to the CRTC, at the end of 2008 only 52 per cent of Canadian households subscribed to landline broadband.

However, these figures don’t account for the number of small communities across the country that are still stuck with dial-up Internet service, only have one service provider or don’t have the option of wireless service.

It also doesn’t measure what Goldberg said is a major problem, the number of people who don’t want or can’t afford broadband.

While the FCC plan is fairly thorough – although much of it still needs legislation, assuming Congress goes along – many of those interviewed say similar issues are already being looked at by institutions here:

–In last year’s federal budget the Harper government set aside $225 million to extend broadband to rural areas. The fund, to be paid out over three years, will paying up to half of the infrastructure costs. Industry Canada had intended to start announcing which communities had won grants by now, but it was caught off guard by getting 570 applications. It hopes to make announcements shortly.

–During last month’s throne speech the government promised to “launch a digital economy strategy to drive the adoption of new technology across the economy.” In addition, “to encourage new ideas and protect the rights of Canadians whose research, development and artistic creativity contribute to Canada’s prosperity,” it vowed to strengthen intellectual property and copyright laws, which Liberal and Conservative governments have been studying for years

–On May 31 the CRTC will start a one-week hearing into whether high-speed access should be one of the essential services telecom providers have to offer phone subscribers.

It’s part of a cabinet-ordered second hearing of a CRTC ruling that incumbent phone companies have to offer wholesale buyers of its services the same Internet speeds the incumbents sell to their retail customers. That applies not only on a telco’s old copper networks, but on its new fibre optic networks as well.

Incumbent telcos are fighting this, saying the ruling is a disincentive to invest in new networks. ISPs argue that if they can’t match the fastest speeds the incumbents offer, they’ll go out of business.

The cabinet suggested the commission’s decision should consider whether it is giving proper incentives for continued investment in broadband infrastructure, encouragement to competition and innovation, improving consumer choice.

–On Oct. 25 the commission starts a two-week hearing into the broader issue of a exactl what services a telecom provider is obliged to offer subscribers. The CRTC has set a number of services, including basic dial-up Internet access, that phone companies must offer. Whether in light of changes in technology that list should be lengthened or shortened will be the heart of the hearing.

There is already a phone subsidy available to local providers in small communities. Among the issues to be discussed is whether that subsidy should be available for broadband service.

In addition, the commission has added to the agenda the question of whether it should continue refusing to regulate wireless data. Small wonder that Telus’ Michael Hennessy has described Canada’s broadband policy as “ad hoc.”

Why has the FCC authored a national broadband strategy? Because Congress asked last year for a plan to create a plan to ensure every American has access to broadband capability.

In its report, the FCC said a high speed network could help deliver medical services, better education to schools, lower energy costs and help police and emergency response organizations.

It drafted a blizzard of recommendations, including publishing benchmarks on broadband pricing and competition, forcing providers to disclose information so consumers have enough information to chose the best provider, freeing up wireless spectrum for more competition, lowering rental rates for access to telephone poles, creating a mobility fund to ensure states don’t lag behind the national average for 3G wireless coverage and launch a national digital literacy corps to help expand digital literacy skills.

Key to the plan are its six long term goals:

–At least 100 million U.S. homes should have affordable access to actual download speeds of at least 100 Mbps (also called 100 million squared);

–The U.S. should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation;

–Every American should have affordable access to robust broadband service and the means and skills to subscribe;

–Every American community should have affordable access to at least 1Gbps broadband service for hospitals, schools and government buildings;

–Every emergency first responder should have access to a nationwide wireless broadband public safety network;

–Every American should be able to use broadband to track and manage their energy consumption.

These “aspirational” goals are admirable, Goldberg said, particularly helping people get the skills to subscribe to broadband. “Too many Canadians, like Americans and others, have access to broadband but don’t subscribe. Is it an affordability question? What’s the right approach to that? Is it a digital literacy issue? Do people understand the value of being connected? To what extent are there applications that merit providing broadband connectivity to people because of social service delivery systems such as home energy or health care monitoring.”

“These kinds of targets I think help [a country] have a sense of where you’re going,” Yates said, “which we certainly lack.”

One advantage the FCC has in coming up with a national broadband plan is that it controls many more things than the CRTC does, he added. For example, it licences wireless companies, an authority which is split between the CRTC and Industry Canada. That makes it harder for one agency to be the driver of such a plan.

Not to Iain Grant. “There are all sorts of things Industry Canada is already on top of,” he said. “We’ve got a department which is entirely aware of the need to look at new frameworks.”

Unfortunately, he added, the “political level” of the ministry has been more concerned with looking after the ailing auto industry over the last year than the telecom industry.


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