Industry Canada calls on small ISPs to bid on $225 million rural broadband stimulus

Industry Canada is encouraging small ISPs to compete for a share of the government’s $225 million in rural broadband stimulus money, but tight timelines and anticipated competition from wireless and satellite companies could dampen their response. Janet DiFrancesco, director general for broadband at Industry Canada, told a Toronto conference that the government will accept bids for all providers and technologies, but are particularly hoping that smaller ISPs respond. “The competitive process encourages the least cost to extend coverage to the maximum number of households,” said DiFrancesco in her address to last month’s Optimum Broadband Strategies for Cities conference. “We encourage ISPs to collaborate – collaboration and creativity in how these applications are put together will be key.” Industry Canada will be launching the competitive application process on the $225-million broadband extension program later this summer. The applicants will have eight weeks to respond, with assessments happening in late fall. “We want agreements signed with money flowing in January 2010,” said DiFrancesco. “This timeline is fairly ambitious. We are working hard on program design.” This certainly spells significant opportunity for regional ISPs. However, at the conference concern was expressed that the word might not be getting out. “This is too fast,” said Stephane Gallant in conversation with Tech Media Reports. Gallant is director of operations for NEOnet Inc, a not-for-profit information and communication technology (ICT) development organization in Timmins, Ont. “My region is fortunate we are there to provide a funding proposal. But for smaller communities with only one person on staff, these ISPs are not as sophisticated.” Gallant said this reminds him of the Broadband for Rural and Northern Development program, known as BRAND, which was concluded in 2007 and which he also felt was too hasty. However, for many people BRAND was considered a success, and DiFrancesco suggested that the present stimulus program will build on what worked. “BRAND was very much a community-based program,” said DiFrancesco. “We connected 875 communities – twice what we planned for. It showed us the real demand for rural services.” DiFrancesco said Industry Canada will be looking at bids from all providers and technologies. However, there is some concern that the government may not be taking into account developments in the ability of cellular networks to roll out mobile broadband, as well as advances in satellite technology. “At four to six households per square kilometre fixed wireless makes sense, but we can’t go much below that,” said Bill Macdonald from Barrett Xplore Corp, a provider fixed wireless and satellite internet to rural areas. “There is a still an affordability gap for high speed satellite.” Macdonald noted that a significant percentage of Canada’s underserved rural market has less than three households per square kilometre. “At that point it doesn’t make sense to go for fixed – then it is satellite. And now satellites are coming on board with different economics. We are putting this technology on requests for proposals (RFPs) at 5 megs down, but the $399 upfront cost for equipment is a bit of a stumbling block.” But do smaller ISPs putting together bids know what they’re up against? Given that Industry Canada is defining broadband at 1.5 megabits per second on download, it is worth wondering if the government has fully accounted for how regional ISPs will respond to the challenge from satellite and cellular. In particular, Rogers Communications is sending a strong message that cellular networks are coming on-stream with broadband, and that the government should consider this coverage. “There are ways of making sure money goes to the right place,” says David Robinson, VP of new business planning at Rogers. Robinson suggests that if someone says they want money to build in a particular place, existing operators could be allowed to comment and say "we already serve there, so don't give them the money." But this could complicate the bid process for regional ISPs. Smaller players will have to come up with mapping data that can match Rogers’ detailed coverage statistics. As well, Barrett Xplore can claim satellite coverage for the entire country. It is relatively easy for these players to put a bid in on short notice, but might be harder for a small ISP. “The timeline is too compressed,” says Gallant from NEOnet. “You have to identify needs, to include community players with RFPs, give them time to respond, and after that have an evaluation process. Then once that is done you have the funding request.” That said, Gallant agrees that motivating business at the ISP level is a good idea – as long as the word gets out. “This is only good if the ISPs understand it. When we started we had a lot of awareness building in order to get money for the business case.”

Industry Canada calls on small ISPs to bid on $225 million rural broadband stimulus

News | 07/02/2009 1:49 pm EDT

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