Chris Seidl to the Standing Committee on Industry, Science and Technology

Speech

Ottawa, Ontario
May 30, 2017

Chris Seidl, Executive Director of Telecommunications
Canadian Radio-television and Telecommunications Commission (CRTC)

Check against delivery

Thank you, Mr. Chair, for this opportunity to talk about broadband Internet services and the recent regulatory action taken by the CRTC to increase access in rural and remote areas.

My name is Chris Seidl, the Executive Director of Telecommunications at the CRTC. With me today is my colleague, Alastair Stewart, Senior Legal Counsel. We welcome this chance to outline the Commission’s recent decision concerning modern telecommunications services.

All Canadians – no matter where they live – should have access to broadband Internet services, on both fixed and mobile wireless networks. That commitment was made clear in the CRTC’s December 2016 announcement that, in addition to voice services, broadband Internet access is now also a basic telecommunications service.

This decision confirms that modern telecommunications services are fundamental to foster innovation. Broadband will play a pivotal role in Canada’s future economic prosperity, global competitiveness, and social and democratic development. A broadband Internet connection is as crucial today as electricity was to the industrial revolution. So access to these networks is vital to Canadians from coast-to-coast-to-coast.

This is a major departure from our previous approach, which focused primarily on telephone voice services.

The CRTC has now established a universal service objective which underlines our belief that broadband Internet access is vital in today’s digital economy.

Under this ambitious new objective, Canadians should have access to broadband speeds of 50 megabits per second (Mbps) download and 10 Mbps upload for fixed Internet services. This is 10 times faster than the targets set back in 2011 – a reflection of the rapid rate of technological change and the need to keep pace with our international competitors.

More than 8 in 10 Canadians already have access to the new speed targets. We expect that they will be available to 90% of Canadian homes and businesses by the end of 2021, with the remaining 10% available within 10 to 15 years.

To foster innovation, we expect service providers to offer an unlimited data option for fixed broadband Internet services. Canadians need to be able to access the applications of their choice and not feel limited by concerns over data usage.

Equally important for Canadians is the mobile wireless broadband Internet access service. Currently, the latest mobile wireless technology, Long-Term Evolution (or LTE), is available to 97% of the population. The Commission has decided that the latest generally deployed mobile wireless technology should be available not only in homes and businesses, but also along as many major Canadian roads as possible.

However, as Committee members are undoubtedly aware, there are areas across the country that currently fall short of these standards. Fast, reliable, affordable Internet is often out of reach for approximately 18% of households, which are typically located in rural and remote regions of Canada. They are lagging behind their urban counterparts, at great cost to local social and economic development.

To help bridge the gap, the CRTC is establishing a fund to support projects in areas that do not meet these targets. We are making up to $750 million available over five years for upgrades to existing infrastructure and new construction to provide fixed and mobile broadband Internet access services.

Where will the $750 million come from? The Telecommunications Act gives the CRTC the ability to require telecommunications service providers to contribute to a fund to support access by Canadians to basic telecommunications services.

Telecommunications service providers currently provide a small percentage of their revenues to support residential local voice service in rural and remote areas. Contributions to this local voice subsidy, which are approximately $100 million per year, will be transitioned to the new broadband fund. The CRTC has launched a public consultation to set out the details of this transition away from local voice subsidy.

The new broadband fund will be technology neutral. This means that Internet service providers will be able to submit proposals featuring the technology they think will best meet the needs of the community. Our objective is to make sure that rural residents have comparable service to that available in urban centres and that the solutions will support the evolving requirements.

A key feature of the proposed fund is that applicants will need to secure a minimum level of financial support from some level of government – federal, provincial, regional, municipal or Indigenous – or community groups and non-profit organizations. And they will be required to contribute a minimum investment toward their projects.

The fund will rely on a competitive bidding process, based on similar programs, to minimize the contribution from the fund and maximize the outcome.

Recipients for this funding will need to demonstrate how they will deliver the targets set by the CRTC in terms of speeds, capacity, quality of service, levels of government funding and private investment.

To the greatest extent possible, the fund will be managed at arm’s length by a third-party administrator, based on objective criteria, and will be administered in a manner that is transparent, fair, and efficient. The CRTC will retain oversight of the fund, approve projects and appoint a fairness monitor.

The new CRTC broadband funding regime will be designed to complement – and not replace – existing and future private sector investments and government funding within the broader funding ecosystem. This includes the government’s Connect to Innovate program.

I would also like to indicate that we currently work closely with Innovation, Science and Economic Development Canada (ISED) in the collection and sharing of data concerning the state of broadband deployment. In addition, we fully expect the Connect to Innovate program and the new CRTC funding regime to complement each other, leading to a significant improvement in broadband access across the country.

The details surrounding the CRTC’s broadband funding regime are still being finalized. We have launched another public consultation to develop the new regime. The consultation is examining how the fund will work and other matters related to its establishment. We are seeking input on the funding framework, including the eligibility and assessment criteria for proposed projects and the governance, operating and accountability framework.

Anyone can comment on the issues set out for consultation. Stakeholders in the fund, such as Internet service providers and public funding bodies at all levels of government, and Canadians are encouraged to provide their comments. All parties have until June 28th to submit their interventions.

Given that the consultation is ongoing, I would note that we are limited as to what further details that we can provide you at this time.

We expect to issue a Decision in early 2018, after which the third-party administrator will be established and the broadband funding regime will be implemented. It is expected that the fund will be operational in 2019.

As promising as these developments are, Mr. Chairman, it is important to understand that availability of broadband Internet access services is just one aspect that helps Canadians to participate fully in the digital economy. The Commission has identified further gaps regarding the adoption of broadband Internet services that are equally critical, but outside its core mandate.

In our report to support the government’s Innovation Agenda, which was submitted last December, we outlined affordability and digital literacy as barriers to connectivity in many communities – especially among Indigenous communities and across Canada’s North.

The government’s most recent Budget outlined two new programs to tackle these gaps: one to teach basic digital skills and another to help service providers offer low-cost home Internet packages to low-income families.

Extending broadband coverage to underserved households and businesses will require investment from the private sector and, in some more difficult cases, public-sector support. There is much work to be done. The efforts to close these gaps require a shared leadership and collaborative approach between all parties.

The CRTC’s universal service objective can only be achieved with the help of different levels of government – including municipal and Indigenous governments – the telecommunications industry and non-governmental organizations.

One thing is certain: closing the gap will be expensive. Our estimates show that many billions of dollars will need to be invested to fully address the broadband Internet access service availability gap in Canada.

There is no denying this will be daunting task. The CRTC’s new universal objective is one of the most ambitious in the world and a country the size of Canada, with its varying geography and climate, faces unique challenges in offering similar broadband Internet access services to all Canadians. So we don’t expect to get to the 50/10 Mbps standard in one leap. Providing access in the more difficult underserved areas is expected to be accomplished in incremental steps.

The Commission was careful to provide enough flexibility in its regulatory framework to support the efforts of other parties with a contribution to make. We want to encourage the continued development of private and public-sector initiatives.

Given the importance of broadband to Canadians’ participation in the digital economy, we are confident that together we will be successful in meeting this important challenge.

We would now welcome any questions you may have.

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