Money better spent on subsidizing access rather than infrastructure, says C-Com head

The president of an up-and-coming satellite services company says the National Broadband Task Force’s recommendations are a misuse of taxpayers’ money (see story, this issue). Leslie Klein says his company is in a position today to begin bringing high-speed Internet access to Canada’s remote and northern communities at a fraction of the proposed price tag of between $2.75 billion and $4.75 billion. Klein, president of C-Com Satellite Systems Inc, says his Ottawa company is already selling two-way satellite Internet access through Hughes Satellite. Telesat Canada won’t be offering a low-cost service until its Anik F2 satellite launches in 2003. Rather than spending billions on new infrastructure, he says the feds should help subsidize the cost of Internet service for unserved and underserved Canadians. Klein even goes so far as to suggest that some BCE Inc companies, which presumably stand to be among the biggest winners if the Broadband Task Force’s recommendations are implemented, might want to follow his company’s lead and ink agreements with Hughes to provide their own resale offering. He says it will be two years before Telesat launches its own high-speed, two-way capable bird, by which time it may be too late to catch up to foreign players. C-Com has signed over 100 customers to the Hughes service since launching last month, including customers from Goose Bay to Labrador, as well as people in cottage country and tele-commuters outside major urban areas. Company figures indicate that over 30 per cent of Canadians can’t get high-speed offerings such as DSL or cable modems, a market of 10 million that Klein hopes to tap. "There is a very, very large market there," Klein told Report on Wireless, "Within two-to-three years, depending how well this market evolves and develops, you could be looking at hundreds of thousands of potential customers on this service." To get there, the 16-person company has launched an advertising campaign. The company has $3 million in the bank from an August IPO on the CDNX, and revenues from a series of mobile communications products developed in-house and now commercial. The company has had to modify the Hughes antenna to work in northern regions, where the satellite’s signal is weaker than in more densely populated regions. Still, the company is promising customers downstream speeds of 400 kbps downstream, and upstream speeds of 128 kbs, soon to be 256 kbs. Klein is anticipating speeds greater than 1000 times dial-up when Hughes launches a next-generation Ka-band satellite next year. Those speeds, he adds, will also exceed the 1.5 Mbs recommended by the Task Force. "I think that for the government to go out and give this money to the industry is kind of a waste," he says. "I think industry should do it on their own, and I think government should help consumers buy it. For example, instead of giving $1.5 billion to Bell Canada or Telesat, they should say to the Inuit, ‘how much does this antenna cost? $3000? Here’s $3,000. Just go out and buy yourself an antenna.’ It’s much cheaper than $1.5 billion." Still, the antenna is only part of the overall cost. Klein says the service ranges between $149 to $190 per month. Nonetheless, he says putting money in the hands of end consumers makes better business sense than paying for infrastructure. "I think if you look at it from a business perspective, if you want to help somebody to have broadband access, then you help him financially to get it. Don’t give the money to the guys who are going to build it for you. You know if it’s going to be ‘three years from now, and $1.5 billion’, then really it will be five years from now and cost three (billion), right?"

Money better spent on subsidizing access rather than infrastructure, says C-Com head

News | 07/09/2001 4:00 am EDT

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