Large telecoms emphasize need for mobile wireless projects
By Ahmad Hathout
OTTAWA – Service providers are providing mixed responses to the CRTC’s proposal to use the Broadband Fund to subsidize the ongoing cost of operating networks it helps build, with responses ranging from not expanding its use beyond its current boundaries and allowing for its use for that purpose.
The CRTC launched a proceeding in March to broaden the scope of the $750-million fund supported by telecom revenues, from which three rounds of funding had been opened.
The commission – surveying the influx of other federal broadband programs since the emergence of the fund in 2019 – proposed that it change direction with the fund to allow for maintenance of networks in remote areas, improvements to network resiliency and having a separate funding stream for indigenous-focused projects.
In submissions made public this week, the telecoms had varying opinions as to what the commission should do about the various proposals.
Operating costs
Rogers said in its submission that the fund should remain focused on helping build networks in areas that are otherwise economically hard to justify; broadening the eligible costs to include maintaining builds will narrow the range of the fund’s network-building potential, Rogers argued.
“The Fund’s resources are best spent on ensuring that as many Canadians as possible have access to sufficiently fast broadband Internet speeds rather than operational considerations,” Rogers said, adding that it believes the commission should maintain the current practice of providing operational funding for satellite transport costs in satellite-dependent communities and to provide training to remote community staff without year-round road access.
If the commission decides to greenlight such funding, it should not increase the amounts that providers pay into the fund and instead pull back funding for other types of projects. Further, a project getting operational funding should be one that was eligible for Broadband Fund money to build it in first place, Rogers said.
Rogers added that those costs should go to helping cover Innovation Canada’s annual spectrum licencing fees for wireless projects, traffic transport builds covering fibre and satellite networks, transport network and access maintenance and repair and utilities, such as powering points of presence and generators.
The cable company noted that the fund should emphasize mobile wireless projects that will deliver next-generation 5G technology.
Cogeco argued that the fund should not be subsidizing operational expenses, as that would “represent an imprudent deviation” from the fund’s framework that prioritizes market forces to connect underserved communities, it said.
Because the fund’s importance has diminished in the shadow of other broadband fund at different levels of government, its focus should be narrowed exclusively to connecting rural and remote communities, Cogeco said.
It added there needs to be more coordination with other federal entities and programs, a point Eastlink agreed on its own submission.
Bell said in its submission that operational costs should only be for wireless projects intended to serve major transportation roads, wireless projects meant to serve communities with no wireless services by service provide, satellite transponder costs, and certain resiliency projects.
The telco said the commission should fund over 10 years a maximum of 90 per cent of the cost of redundancy projects – which provides for a backup route for telecom traffic in case the main line goes down – because these types of builds do not lead to additional revenue to recover costs.
Quebecor argued for the need for financial assistance to operate and maintain the network for affordability.
“We believe that at this stage, where many of the underserved communities are very remote, sparsely populated and spread over vast territories, government grant funds should not only cover the full cost of construction, but also a part of the operating costs incurred by ISPs to enable them to offer quality service at reasonable costs,” Quebecor argued in its submission.
Telus, on the other hand, said the CRTC should not support operational expenses from the fund because the “potential administrative complexity” and “timing issues in disbursement” may lead to a delay in reaching broadband coverage objectives.
The Vancouver-based telecom said the commission should increase its focus on mobile wireless services together with ISED’s Universal Broadband Fund, which has a focus on mobile wireless primarily for indigenous projects.
It also said the CRTC should take into consideration the increasing impact of inflation on broadband costs as providers wait for funding, implying the devaluation of the money by the time its disbursed. It also said the commission should consider making the application portal more user-friendly and facilitate digital literacy to encourage maximum uptake of internet services.
Eastlink said it was of the preliminary view that operational funding support for rural and remote areas could help with very high cost areas.
“In many remote areas performing maintenance or upgrades to infrastructure may include the need to fly in a technician to the area to perform the work,” Eastlink said. “Additionally, significant pole attachment fees in these areas where homes are very far apart pose ongoing cost challenges.”
But Eastlink warned about requiring more contributions from the service providers to fund those initiatives, as those costs could be passed on to customers.
Xplore has also warned against expanding the scope of the Broadband Fund for the purposes of funding operational and replacement equipment costs. Such subsidies, it said in its submission, “disincents those same TSPs from improving their processes and building a more efficient network which can provide sustainable and competitive prices to the consumer in the long term.”
The rural service provider said if any additional costs must be programmed into the fund, it should be “make ready” costs to prepare hydro poles for fibre line attachments. “That approach creates usable infrastructure for multiple TSPs, thereby enhancing the opportunity for competition today and in the future,” it said.
The Public Interest Advocacy Group said in its submission that it supports an operational subsidy, which should be delivered based on a reverse auction model. A reverse auction, which has been used by the U.S. Federal Communications Commission for its Rural Digital Opportunity Fund, awards applicants who need the least amount of government dollars to build.
The public interest group also supports build and operational funding for mobile wireless projects along major transportation roads and for projects in satellite-dependent communities – as the first round of the fund went to support – but not at the expense of funding fixed broadband infrastructure.
Resilient networks
Xplore was a bit of an outlier among telecoms in terms of whether the fund should support redundant networks. In fact, the telecom flatly stated that it would like to see an “end to institutionalized funding of broadband” and that it was concerned about the CRTC funding to compensate for poor network designs or execution.
However, it stated that if the commission leans toward using the fund to subsidize backup infrastructure, it should “wait until significant rural construction projects scheduled for completion in 2025 through 2027 are completed…to ensure funds are used judiciously.”
Otherwise, the largest telecoms said the commission should prioritize redundancy in areas that are more prone to extreme weather or environmental events.
In supporting that funding pipeline, Rogers said the CRTC should ensure the resiliency money doesn’t go to another point of presence in an otherwise ineligible community.
Telus said it’s onside on funding resiliency projects so long as they are “meaningful” and avoid overbuilding. “Even if there is a duplication of network facilities, if they are not strategically located, the duplication of networks will not ensure resiliency,” the telecom said.
Quebecor similarly agrees with a need for resiliency. “Encouraging the deployment of overlay networks by facilitating access to subsidies would allow non-facilities-based providers to better compete with incumbent bidders, introduce geographic redundancy to an existing transmission network, and build their own set of transmission infrastructure,” it said.
PIAC agreed to the funding of resiliency projects, with priority given to “distant geographic areas with harsher climates.”
Broadband Fund money collection
Late last year, Bell filed an application to restrain the CRTC from collecting any more money for the Broadband Fund. The argument went that the commission has only disbursed a fraction of the money it has collected, yet it is continuing its scheduled collection at the tune of an additional $25 million each year for the five years until it collects the full amount.
In its March proposal, the CRTC said it will cap that amount to $150 million for the time being – including this year – and canceled Bell’s Part 1 application.
But the telecoms reiterated their frustration with the collection process.
Bell said the amount collected should be capped at half of the $150 million – $75 million.
“Since the Commission has never disbursed even a third of the collected amount ($50M) on a yearly basis, we believe [$75M] will provide more than enough funds to accommodate projects, even when taking into account the proposed expanded scope of funding available to the Broadband Fund described in this Intervention,” Bell said, adding the commission should return money not disbursed annually as it does with other programs.
Bell also recommended the commission reduce its contribution up to 50 per cent for costs suffered in the prior year due to damage suffered due to major weather or environmental events.
Rogers said the overcollection indicates “the need for better stewardship of the Fund” and that the CRTC should “commit to enhance Fund administration” and reduce “evaluation and award timelines.”
Xplore agreed, saying the amount already collected should be used before any additional collections and that the $150 million should be reduced.
Cogeco said money already committed should be sufficient to meeting the fund’s objectives.
Telus said it should stop collecting any additional contributions for the fund until it has concluded the proceeding and should recalibrate the amounts collected and disbursed going forward.
Eastlink agreed.
