By Mark Goldberg, a telecommunications consultant
The headlines were breathless – Canada’s telecom regulator is going to cut the cost of internet services for people living in the far north
What the CRTC didn’t say, and what was entirely missed in the coverage, is the regulator wants customers in the rest of Canada to pay for it.
This is the same regulator that continually chastises Canada’s internet and wireless providers for not doing enough to lower prices while pushing for more investments to connect remote areas. This, despite the federal government’s own data showing cellular and internet prices keep falling while the prices of other goods in Canada keep rising.
I’ll leave it to others to unpack two other aspects of the CRTC’s long overdue regulatory announcements – a process that began in November 2020:
First, requiring Northwestel, the region’s largest service provider, to automatically credit customers a few bucks when their internet goes down for more than a day; and second, make it easier for other carriers to use Northwestel’s network to resell internet services, waving its hands over a magical assumption that “rates for Wholesale Connect can be low enough to allow competitors to enter the market, but high enough not to harm investment.”
Got it? Simple.
But let’s dig into the subsidy plan. The commission has just launched a call for comments (due in February). The far north is “an exceptionally challenging region to build and maintain networks,” leading to “unaffordable Internet prices for many residents,” so the CRTC decided to offer a universal subsidy funded by the National Contribution Fund.
The fund, a regime established by the commission to support Canadians’ access to basic telecom services, collects a percentage of revenues from carriers like Bell, Rogers and TELUS to support various initiatives, including the Broadband Fund and Video Relay Service.
In other words, telecom subscribers across Canada will pay more, regardless of their own ability to pay, in order to provide subsidies to residents of the far north, regardless of their actual financial need. This is yet another regulatory fee and policy driving up the costs to deliver wireless and internet services.
(Editor’s note: Cartt asked a CRTC official in a technical briefing call with media on the day of the consultation’s announcement about whether it has contemplated ISPs having to pay more into the NCF to maintain a far north subsidy. The official said that inquiry will be part of what it looks at during the consultation.)
I recognize that the prices charged for internet services in the far north are higher than prices for comparable services in much of the rest of Canada. There are also some people for whom those prices are unaffordable.
However, let’s also consider household income levels. According to Statistics Canada, in 2020, the national median household income was $84,000. Yukon’s median household income was $100,000; in Northwest Territories, $127,000; and, Nunavut $118,000.
Half of all households in the Northwest Territories had more than $127,000 in income. None of the 10 provinces had six-figure median household incomes. So, while prices for telecom services are higher than in the far north, it is overly simplistic, and somewhat patronizing, to conclude that these prices are universally unaffordable.
The CRTC notes “that residents of the Far North pay, on average, more than one and a half times what Canadians living elsewhere in the country pay for a 50/10 Mbps service.” Surely we can agree, then, it’s relevant that, on average, the median household income in the three territories is more than one and a half times the median household income of each of the provinces east of Ontario.
And surely we can agree it’s ironic that the commission talks about affordability while proposing, in the same breath, to drive up the cost of every internet customer in every province.
Indeed, Northwestel had already joined the major telecom service providers in Canada in offering truly affordable internet plans (as low as $10 per month), targeting households with real financial needs.
CRTC Commissioner Claire Anderson, in her dissenting opinion, was on to something. The first Indigenous woman (a citizen of the Taku River Tlingit First Nation) and first Yukon resident to be appointed to the CRTC, summarized the commission’s approach to the north in a scathing appendix. She said the commission missed an opportunity for transformative regulatory change, that its efforts were more akin to “putting art on the walls.”
After a 50-month regulatory process, Canadians deserved more from our communications regulator than rearranging the pictures on the wall.
This piece first appeared in the author’s blog and is reprinted with permission. Photo via Northwestel.
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