December 21, 2016 2 years 10 months ago

BASIC SERVICE OBJECTIVE: Commission launches new $750 million fund to get to 50 Mbps down, 10 Mbps up, everywhere

GATINEU – The CRTC today declared that broadband access is now considered a basic telecommunications service for all Canadians, that it is setting new speed targets while also creating a new fund that will invest up to $750 million over and above existing government programs.

Further to its legislative mandate, the Commission has set the following targets for the basic telecommunications services that Canadians need to participate in the digital economy:

  • speeds of 50 megabits per second (Mbps) download/10 Mbps upload for fixed broadband Internet access services. In 2015, 82% of Canadians already had access to speeds of 50 Mbps download/10 Mbps upload for fixed broadband services.
  • an unlimited data option for fixed broadband access services (a.k.a., not wireless)
  • the latest mobile wireless technology available not only in homes and businesses, but also along major Canadian roads.

The CRTC is also establishing a new fund to support projects in areas that do not meet these targets. Applicants will be able to submit funding proposals in order to build or upgrade infrastructure for fixed and mobile broadband Internet access services. The fund will:

  • make available up to $750 million over the first five years;
  • be complementary to existing and future private investment and public funding;
  • focus on underserved areas; and
  • be managed at arm’s length by a third party.

There is no timeline yet for the fund's launch as further hearings will be held first.

According to the press release, the CRTC wants Canadians “to have access to the tools and services they need to empower themselves regarding fixed Internet access services. No later than six months from today, service providers should ensure that contracts are written in clear and plain language, and should make available online tools so consumers can easily manage their data usage,” it reads.

Also, all wireless service providers will have to offer and publicize, no later than six months from today, mobile service packages that meet the needs of Canadians with disabilities.

During its consultations with Canadians, the Commission also identified further gaps regarding the adoption of broadband Internet services in Canada that are outside its core mandate so, today, the CRTC is submitting a report to the Innovation Agenda, as encouraged by the Minister of Innovation, Science and Economic Development Canada, on the availability and adoption of broadband Internet services in Canada. This report includes information on access gaps resulting from infrastructure, affordability and digital literacy issues, as well as barriers to connectivity in Indigenous communities.

The decision issued today complements the Government of Canada’s Innovation Agenda, reads the release. Looking ahead, the CRTC will contribute in ways appropriate to its mandate. However, all stakeholders have a role to play to ensure that broadband Internet service is universally available and barriers to adoption are removed.

It’s worth noting that the $750 million fund will come out of the bills Canadians pay for their telecom services, as do other funds for telecom and TV.

While the incumbent telcos have yet to officially respond, David Watt, senior vice-president of regulatory at Rogers Communications said in a statement: "High-speed internet is a must for Canadians to connect with their friends, families and communities and participate in the digital economy. While there are still many details to be worked out, we are encouraged by this reasonable plan to help increase access to Canadians in hard to reach areas of our country. At Rogers, we already offer speeds twenty times faster than new target and have unlimited plans everywhere we offer internet.” 

Bell also offers a  top-end 1 Gbps internet package (with 100 Mbps upload) and unlimited internet, as does Cogeco (1 Gbps down and up, unlimited data), Telus (150/150, unlimited add-on). Videotron offers 120 Mbps down and 20 up, with unlimited data and Shaw offers 150 down, 15 up and 1 TB of monthly data.

Of course, all of those packages are generally available in cities and towns. The challenges will come in rural and other regions such as reserves and the far north where infrastructure is not as advanced. In Yellowknife, for example, Bell division Northwestel's best broadband package offers 125 Mbps download and 6, up with a data limit of 400 GB. As well, Xplornet, which has a national footprint, just launched a new satellite which will boost its capacity towards a 2020 target of 100 Mbps everywhere which CEO Allison Lenehan set back in 2015.

So, while change will have to happen beyond cities and towns - and will, thanks to the new funds - the industry is already well on its way past the CRTC's new targets of 50/10 and unlimited data.

Barclay's analyst Philip Huang had a muted reaction to the decision: "We are relieved that the CRTC's decision did not include any regulated pricing or 'skinny broadband service'," he wrote in a note to investors, "which we believe were the two most feared outcomes ahead of the decision. In addition, the ruling did not outline any specific build out requirements/timeline. While the $750m figure may appear to be a huge burden, we do not believe it is financially material for any one player in the industry."