Feds get kudos as broadband stimulus program opens call for applications

Canada’s $225-million rural broadband stimulus plan – which began accepting funding applications last week – may pale in comparison to billion dollar initiatives in Australia and the United States, but it’s still getting positive reviews here at home where one analyst suggested spending more would distort the market. “That is a sizeable amount of public capital going to private operators,” says John Maduri, CEO of New Brunswick-headquartered Barrett Xplore Inc, which delivers a combination of fixed wireless and satellite technologies. “We have reviewed it internally, and as best as we can see the structure is competitive and fair.” Launched in July as part of Canada's Economic Action Plan, the program puts Industry Canada in charge of the development and implementation of a strategy to extend and improve broadband coverage. The initiative has been positively received by some analysts, too, in large part because it is relatively modest, and designed to get the most value for the money. This is a far cry from initiatives in other countries, like Australia’s commitment to spend C$10 billion on a C$40-billion National Broadband Network, or the C$7.7 billion set aside for broadband grant and loan programs in the US stimulus package. “The Industry Canada program didn’t need to be in the billions of dollars,” says telecom consultant Mark Goldberg of Mark H. Goldberg & Associates Inc. “That would have been inappropriate – it would have distorted the market.” Goldberg suggests the government has done a decent job in mapping where broadband is most needed throughout the country. The initiative also allows providers to make a business case in order to bring pricing in line without overlapping competition. “You don’t want operators competing against their own tax dollars,” says Goldberg. “The initiative is also technology neutral, which means that the government is looking at who is going in at the lowest cost to the taxpayer.” Previous concerns that the mapping was haphazard, and that smaller ISPs would be rushed, appear to have dimmed now that the application process has opened. Applications are due to Industry Canada by Oct. 23, and winners will be announced either late this year or early next year, with projects set to begin in 2010. “On the mapping side Industry Canada has done a vastly better job than in the US in terms of putting the rules together,” says Maduri. “I am quite confident you will see the Americans connect with the folks at Industry Canada to see how they did it.” Under the plan, winners will get federal government support at up to 50% of cost for network equipment purchases and hardware/software upgrades, as well as long-term network capacity investment costs. As well, Ontario recently announced that the provincial government will provide up to one-third of the eligible project costs of approved plans. One persistent concern is that broadband access is often looked at in isolation, but actual usage is tied into more complex cultural and economic issues. “Just because a community has broadband doesn’t mean people are using it,” says Goldberg. “If you don’t have a computer, you won’t be subscribing to broadband. We need to increase the household penetration of computers.” The debate then becomes less about how many households have access to broadband, and more about those households that have no computing resources at all. “We as a country have to start understanding what the other factors are that have kept people from connecting,” says Goldberg, noting that Nova Scotia has close to 100% broadband coverage, yet lower penetration than in other provinces. But that isn’t the focus of this Industry Canada initiative, which is solely about get as much coverage as possible for the least amount of money. In this regard it is not surprising that Barrett Xplore is enthusiastic about the application process, given that satellites can offer 100% coverage. And they are doing it with improving technology and, increasingly, competitive pricing. “Below six to ten homes is where satellite makes sense,” says Maduri. “Our basic satellite package is $50 to $65 a month.” The challenge is that satellite capacity is limited, upfront costs are higher, and it is slower on the uplink. But that may be about to change. “In mid 2011 we will have more satellite deployment in North America, and at Barrett we will see satellite and wireless retail pricing get very close. From mid 2011 to mid 2012 we expect satellite to grow ten-fold.”

Feds get kudos as broadband stimulus program opens call for applications

News | September 8, 2009

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