Small cable and satellite prepare to move on Ottawa’s latest broadband promise

Regional Cablesystems Inc and satellite service providers could be among the main beneficiaries of a new federal mandate to bring broadband Internet access to rural and remote communities. With high-speed Internet well on its way to becoming the norm in larger centres, Industry Canada is anxious to ensure that the 15 to 20 per cent of Canadians outside the reach of DSL and cable are not left behind in the nation’s rush to get connected. Regional has been on an aggressive acquisition spree for the past two years. For most of this year, it has worked on integrating the 23 companies and about 200 systems it acquired since November 1998. Its six-month reprieve from buying more systems ended this month with the purchase of four more cablecos – two in Ontario, one in Quebec and one in Newfoundland. In all, Regional acquired 4,500 additional subscribers for just over $5 million.Following the Oct. 16 announcement that a National Broadband Task Force would be stuck to study the issue, Regional’s president/CEO was on the phone to the new Industry minister’s office and the task force’s chair expressing his company’s interest in participating in the project. "We are obviously encouraged by the announcement," Brendan Paddick told Canadian Communications Reports. "Operating out of 1,200 rural communities, we feel we are positioned in that we have the last mile, which most of the other companies are finding to be the most difficult part. Our issue has always been interconnecting all those last miles together so that you can pool the backbone traffic and make a viable business case." Paddick is hopeful that following the release of the task force’s report at the end of March, the government will make federal funds available to offset the cost of bringing broadband links to smaller communities. The government has yet to attach any price tag to its community broadband promise. The chair of the new task force, University of Waterloo president David Johnston, says the group’s main priority will be to identify where there are service gaps in broadband coverage, and to suggest how those gaps may be filled by the 2004 deadline. "I think we will try to identify the areas of most acute concern ... and try to develop some sense of the speed at which broadband is being rolled out," he says, adding, "we will probably be identifying gaps and government roles. Will we attempt to put a cost estimate on that? I’m not sure." Regional operates cable systems in every province except Nova Scotia, PEI and New Brunswick, and has already launched high-speed Internet in most of its larger systems. In the smaller communities – where as few as 200 homes may be connected to a single headend – it’s not the last mile link that’s the problem, Paddick notes. "Basically, you have really tiny towns that just don’t warrant the capital costs to ever essentially turn a profit or pay off your debt," he explains. "Our average town size is around 200 homes. A router to provide those customers is probably in the $20,000 to $50,000 range for each town. If you could link these towns together and pool them on one router, then the economies of scale kick in. But that network doesn’t exist yet to pool them all back to one router." That’s where Paddick says the government can step in. "(It) should be able to bridge that financial gap between what’s feasible in the larger markets and the interests of the community at large, and marry those two together." Using satellites to fill the gaps Satellite communications will likely play a major role in helping the government meet its 2004 deadline, with the main players expected to be Bell ExpressVu, Star Choice Communications Inc, and Telesat Canada. Bell ExpressVu and Star Choice currently provide one-way digital television service to 526,000 and 465,000 subscribers respectively. The launch of a new two-way multimedia satellite in 2002, combined with a national footprint, opens the possibility of these companies moving more aggressively into high-speed Internet. "We already have DirectPC, a high-speed service that uses satellite one way, but the return link is by telephone line. It’s an excellent start," says Chris Frank, VP of government relations and corporate development at Bell ExpressVu. He maintains that using satellite is the most cost effective way to deliver high-speed Internet to underserved areas. "In some areas of Canada, there is no way to economically extend cable. So satellite will be the answer. Bell ExpressVu hopes to have high-speed two-way satellite access (to rural areas) in place by 2004. "I think it is natural to assume," he adds, "that DTH will eventually have high-speed services. Our competitors – MDS and cable – have high-speed two-way Internet systems. It’s pretty safe to say that DTH will follow suit, probably using the Ka or Ku band." The company that’s helping to bring these new satellite technologies to Canada is Telesat Canada. Paul Bush, Telesat’s VP corporate development, says using satellite makes sense for the most remote regions of Canada. The questions will be defining what level of service should be provided, and who should pay. "I think the issue is going to come down to a couple of levels of service," says Bush. "You have to have a basic level of service that’s available, whether that’s at the post office, the library or at the school. The second level of service would be someone who wants to be online in their home or in their business." Bush agrees the 2004 deadline can be met, at least from a satellite perspective. In 2002, Telesat will launch its Anik F2, which will allow for two-way broadband Internet. Planning has already begun for a third satellite, which would include DBS and more Ka-band capacity.

Small cable and satellite prepare to move on Ottawa’s latest broadband promise

Broadcast | October 26, 2000

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