TORONTO – It was the best of times, it was the worst of times.
This sums up the past year for members of the Canadian Communication Systems Alliance (CCSA), who shared today some of the challenges and opportunities they have faced and continue to face in a talk on day one of the annual Canadian ISP Summit, hosted by the Competitive Network Operators of Canada (CNOC) and CCSA.
The talk, called Future forward in video and broadband delivery: Operator perspectives from across Canada, featured Ken Naylor, general manager of Mornington Communications Cooperative Limited, George Burger, co-founder of VMedia, Marie-Eve Rocheleau, executive director of Cooptel, Peter Rocca, CEO of Start.ca, Tania Cossette, general manager of Hearst Connect and Tom Zubko, president of New North Networks.
The past year was the best of times for the ISPs because the pandemic demonstrated the importance of reliable Internet services and because government subsidies have helped ISPs expand.
“The only positive aspect of the pandemic on our business is how it has made our community realize how important it is to have a reliable internet connection in 2021, to be able to work, study and socialize remotely,” said Cossette.
When the pandemic hit, Hearst Connect “immediately saw an increase in phone calls of residents asking to have our service hooked up.”
Cossette also mentioned government subsidies as an opportunity. “Now that broadband is considered a necessity and that there are government funds available for us, there are many opportunities for growth by expanding our network and by creating partnerships,” she said.
The same was true for Cooptel.
In the short-term, “the subsidy programs at all levels of government for universal broadband availability” will drive the success of Cooptel, said Rocheleau.
The past year, however, has also been the worst of times for ISPs because government subsidies, while beneficial, also bring with them several challenges, and because there has been considerable regulatory instability in the industry.
“The many broadband subsidy programs are a blessing and a curse for our industry,” said Naylor.
“It is extremely rewarding to finally be able to build fibre to the underserved, low population density areas, however, every ISP across Canada and the U.S. is doing the same thing, and the industry just doesn’t have enough material inventory to support all the projects.”
A consequence of this has been the destruction of “the just-in-time delivery model, so we have to carry a higher level of inventory for longer periods of time, which is tying up considerable cash. And that’s assuming we can find a product when needed,” Naylor said.
Rocheleau also sees the government subsidies as a double-edged sword.
“We will significantly expand our footprint as a result of these subsidy programs,” she said.
However, there is an issue with scarce resources, “both internally and subcontractors, so subcontractors are being solicited by everyone now, Covid continues to be headache for procurement and finally, with so many subsidy programs currently on the table, there will be a brick wall at some point in terms of major deployment.”
Another issue the ISPs brought up is with regulation.
“On the wholesale side, obviously the costing on wholesale is making it pretty hard to provide what Canadians want, which are higher speeds at lower prices, so hopefully we see some change in that area,” said Rocca.
“It’s been pretty turbulent over the last, especially the last few years,” he said. “I think we all need some stability, but we also need a platform that enables us to provide a competitive value to Canadians. So, I’m really hoping that 2022 has a more pragmatic and a forward-looking approach, but also I think it’s key to some stability.”
Burger indicated regulatory uncertainty is making it difficult to gauge opportunities.
“Our opportunities are a little bit opaque because of a lot of uncertainty surrounding the policy direction of the CRTC and frankly, of the Liberal government in terms of the direction that they want to take in providing competition in broadband services,” he said.
“A key element of our future has to do with the kind of access we would get to the fiber facilities of the major telcos. Access apparently is mandated, but we don’t know at what costs and, we don’t, quite know the form of it, whether it’s disaggregated or aggregated. And again, until we know that it becomes somewhat difficult to project where our business is going to be in a year.”
Today’s talk also covered how the pandemic has impacted the ISPs in terms of operations.
Zubko noted that New North Networks was “pretty lucky throughout the pandemic here in the Northwest Territory,” although they did have to close their offices for quite a long time.
Next year “is going to have some challenges, we’re certainly not through this pandemic… but it’s changing,” he said.
“So, it’s onwards and upwards.”
