Peter Menzies at the Canadian Association of Wireless Internet Service Providers (CanWISP) 2017 Conference and Annual General Meeting
February 15, 2017
Peter Menzies, Vice-Chairman, Telecommunications
Canadian Radio-television and Telecommunications Commission (CRTC)
Check against delivery
Thank you for inviting me back for a second time to take part in your Annual General Meeting. I’m happy to pick up where our conversation left off last year, when the Commission was in the middle of the Let’s Talk Broadband process.
A lot has happened since then. We moved from consultations that drew responses from roughly 50,000 Canadians, to a public proceeding held in April, to our groundbreaking December 21 decision which established a new universal service objective.
The Commission’s objective with this decision is that all Canadians – whether they live in urban, rural or remote areas – have access to similar voice and broadband Internet access services, on both fixed and mobile wireless networks.
We have declared that all of these services are basic telecommunications services that all Canadians require to participate in the digital economy. Broadband is now an essential service, no matter where the person lives.
We’ve set ambitious targets to make sure this objective is achieved.
The first is that Canadians should be able to access fixed broadband Internet speeds of at least 50 megabits per second (Mbps) download and 10 Mbps upload.
Second, subscribers should have the option of a plan with an unlimited data allowance.
And, third, the latest mobile wireless technology should be available not only in Canadian homes and businesses, but also on as many major roads as possible in Canada.
These targets catapult Canada ahead of most other countries.
Compare our targets with those of Ofcom in the UK, which is working with the government on a plan to give everyone the right to request a 10 Mbps service by 2020. Or the Federal Communications Commission, which set 25 Mbps as the goal for the minimum download speed in the United States. In Australia, the goal is for all households to have access to 25 Mbps as soon as possible.
We’re aiming high and planning long term because broadband is as essential today as electricity was to the industrial revolution. Fixed and mobile wireless broadband Internet services are catalysts for innovation in today’s connected, interactive world. They are crucial to Canada’s economic prosperity, global competitiveness, social development and democratic discourse.
In fact, they are now vital to just about everything people do – from online banking to distance education, telehealth, government services, business development, shopping, entertainment and social networking. Many online activities today demand faster speeds – and more are expected to do so in the future.
Being able to download quickly isn’t the only consideration. Equally important for commercial interests is the ability to upload content. This is especially true for Canadian content creators – musicians, film and television producers – who want to upload Canada to the world. But it’s also true for all businesses seeking new markets for their products and services globally.
So we want to make sure that, no matter how small or remote their community, Canadians all across the country can be active in the digital economy and enjoy a higher quality of life.
The vast majority of Canada’s population – 82% – already has access to 50/10 speeds. That’s in large part due to the significant investments made by the Canadian Telecommunications Industry over the past decade or more.
However, most of the people benefiting from these speeds reside in urban areas.
We believe that all Canadians should be able to access at a minimum these speeds. But, right now, roughly two million Canadian households – or 18% – cannot. The CRTC expects this gap to be reduced to 10% by 2021 and down to zero in the next 10 to 15 years.
New funding mechanism
While our decision sets out a vision for connecting Canadians, we don’t expect Internet service providers to continue to do it on their own.
The most notable part of our decision is the creation of a new fund that will make up to $750 million available, over its first five years, to support projects in areas that fall short of the new universal service objective.
Both upgrades to existing infrastructure and new construction will be eligible for funding. In addition, up to 10% of the total annual limit will be allocated to satellite-dependent communities for the first five years of the fund’s operation.
The source of revenue for broadband Internet services will be similar to the regime that has been used to subsidize local landline telephone services. I should point out that the Commission will also begin a proceeding that will look at how to phase out that existing subsidy.
Telecommunications service providers will pay a small percent of their revenues, including Internet services, into the new broadband fund. As before, only telecommunications services providers with annual revenues over $10 million will pay into it, so some of you will likely be exempt from contributing.
The Commission has provided an early indication of what could be expected from ISPs in order to take advantage of the broadband fund. Keep in mind that these are only preliminary views.
To be eligible, applicants will need to show how they will deliver the targets set by the CRTC in terms of speeds, capacity and quality of service. Speaking of quality of service, a CRTC Interconnection Steering Committee will be proposing objectives for latency, jitter and packet loss. I encourage you to participate in this working group.
Other important factors in assessing requests for funding could include prices, scalability and levels of government funding and private investment. Applicants will need to secure a minimum level of financial support from some level of government – federal, provincial, regional, municipal or Aboriginal – or community groups and non-profit organizations. And proponents will be required to contribute a minimum amount of investment for their projects.
We also believe more consideration should be given to requests that propose to improve mobile wireless coverage in addition to fixed broadband Internet access service.
The fine details of the new fund still need to be worked out. A follow-up proceeding will be initiated shortly to determine, among other things, the final eligibility and assessment criteria.
I encourage you to take part in that process to help flesh out the details of the new broadband funding regime. It will be important that your views are taken into account in any final decisions.
While there are still some unknowns at this stage, what I can say is that the fund will be managed at arm’s length by a third-party administrator. It will likely take at least one to two years before the funding mechanism is in operation.
Of course, even once it’s in place, the new fund will only cover a portion of what’s needed to realize the 50/10 targets.
It may take tens of billions of dollars to eventually provide all Canadians with a wide array of technological solutions that meet the CRTC’s objectives. Just as it has already taken tens of billions of private sector dollars to build Canada’s amazing telecommunications system.
There’s no question, it’s a daunting task, given our country’s vast size and climate. But, rest assured, we don’t expect to get there in one leap. Canadians didn’t build the national railway overnight and achievements of this scale take time. We’re fully aware that progress towards our targets will happen gradually as ISPs continue to invest in upgrading and enhancing their networks.
Extending coverage to currently underserved households and businesses will require much more investment from governments and the private sector.
There are a number of federal programs, which will help increase broadband Internet access for Canadians, as well. For instance, last December, Innovation, Science and Economic Development Canada (ISED) launched a new program called ‘Connect to Innovate’ that aims to bring broadband Internet access to 300 rural and remote communities across Canada. The program will invest up to $500 million by 2021.
Beyond ISED, Infrastructure Canada has initiatives to support investments in rural broadband. So do Indigenous and Northern Affairs Canada and CanNor, which offer programs promoting connectivity for Indigenous and Northern communities. The testimony of First Nations communities during the proceeding underscored that they remain among the most disadvantaged communities in the country regarding broadband access. There are tremendous opportunities in addressing the needs of those communities.
And the federal government isn’t the only game in town when it comes to funding. Provincial, territorial and municipal governments across the country are also devoting financial resources to broadband Internet access services.
You will need to pursue any and all opportunities to secure additional financing from these various sources. Our new CRTC fund complements their offerings, but it certainly will not replace them or duplicate them. It’s really just about giving a leg up where market forces are unable to go on their own to complete connectivity at the levels Canadians will require to enjoy equality of opportunity – culturally and commercially.
The CRTC expects the fund to be in operation by 2019 so you won’t have a lot of time to wait if you are interested in accessing this fund to supplement your investment.
For those of you who may not have done this sort of thing in the past, I encourage you to learn from the experience of your fellow CanWISP members.
Implications for CanWISP members
So where does the CRTC’s decision leave you?
As you know, it focuses on increasing Internet access in communities where distance, geography, and limitations to existing technologies pose connectivity challenges.
Your members occupy a very important niche in underserved regions of the country that larger providers have generally ignored. Our decision provides new financial incentives to escalate those efforts by building the necessary infrastructure.
And you certainly have a lot working in your favour.
CanWISP members are primary service providers in the areas most likely to be eligible for the new fund.
You know your customers like no one else does.
You already understand both the challenges and opportunities involved in serving dispersed populations over vast terrain and you have proven that you are nimble and can capitalize when others leave a vacuum. You know how to leverage economies of scale and entrepreneurial ingenuity.
And many of you already work closely with provincial and municipal governments, - a valuable benefit given the CRTC requirement that projects involve participation with governments or public agencies.
Our decision makes it clear that we heard your concerns about overbuilding. When assessing applications for funding, we’ll strive to minimize building new infrastructure over existing infrastructure.
The competitive bidding process puts you on equal footing with the large companies. CanWISP members have been successful in obtaining funding previously and there’s no reason to think you won’t be as effective in this case.
Ultimately, it will take a combination of investment, advances in technology, innovation and entrepreneurship to achieve the kind of broadband solutions our country needs.
That has always been your strong suit as CanWISP members. You have a proven track record of developing innovative ways to serve your customers in even the most difficult to serve areas.
It will take all sectors, working together, to successfully enable Canadians to participate in the digital economy and the digital society. Our recent decision will help that process along.
CanWISP members have consistently demonstrated their commitment to being part of the solution. I wish you every success as carry on this important work. Thanks you for building a better Canada.
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