Rural communities frustrated by high costs of wireless, and lack of it

As the CRTC prepares to hold hearings in October that will look at telecommunications services in underserved areas, Canadian rural communities are expressing frustration about access to wireless and broadband, and its high costs. “We have no coverage,” Steven Gould, who provides IT support for the Town of Churchill, Man., said in an interview. “We do have MTS Allstream providing Internet, but there are no hotspots and no cell towers.” Churchill is an interesting example. The community is small, with only 900 residents, and has no road into it. Yet it draws a significant number of tourists who want broadband access, but can’t get it. MTS has announced that wireless coverage is coming, but Gould said he isn’t holding his breath. “Last year the rumour was October. Now it’s April,” Gould said. “We used to have a community-based wireless company, which was financed by a loan program. But the system ran into problems with equipment breaking and the cost to replace it.” Observers are looking for long-term technological viability, given that the 2005 Inukshuk Wireless partnership between Bell Canada and Rogers Communications—a joint venture to build WiMAX wireless infrastructure throughout Canada—is giving way to discussions about how to extend broadband coverage over HSPA networks and, later, Long Term Evolution (LTE). The sticky point has become cost and pricing. “There is wired broadband to most communities in New Brunswick,” Chris Spear, treasurer and deputy clerk of the municipality of St. Andrews by-the-Sea, NB, told The Wire Report. “But in the rural areas, we have to rely on satellite, which is slow, or a USB stick off of a cell network, which is expensive.” The CRTC has announced a proceeding to review access to basic telecommunications services and other matters, with hearings set to begin Oct. 25, 2010. A major part of the review will be determining how access is paid for in areas where broadband delivery is uneconomical. “We were not surprised by this,” Mirko Bibic, senior vice president of regulatory and government affairs at Bell Canada, said in an interview, referring to the October hearings. “The big issue for this proceeding is the contribution regime for local subsidy. We are fully in favour of a review.” Bell, Rogers Communications Inc., and Telus Communications Company have said that local service subsidies have become costly and should be reviewed. Established in 2000, local service subsidies require telecom service providers whose revenues exceed $10 million to subsidize smaller telecommunications companies serving high-cost rural areas. Though Bibic did not provide a number to The Wire Report, he said the subsidies cost a substantial amount of money, and that Bell is the single biggest payer. “Our position is that the marketplace is evolving and the technology is evolving as well,” Bibic said. He referred to the USB sticks that provide Internet access to laptops and other portable devices through mobile wireless networks. “We are delivering broadband to many more communities now than we imagined three years ago. Part of this is the evolution of turbo sticks,” he said. The capability is now being built into devices and, with the expected shift from HSPA and HSPA+ to LTE, devices should be able to deliver wireless broadband from cellular networks. That is, however, assuming communities have any coverage at all. “We have Rogers and Bell Aliant, and broadband pricing is similar, as is wireless,” Norval Godin, administrator of the Town of Bereseford, NB. “But for a local individual in these parts, to spend $50 a month is quite a lot.” The Wire Report asked Rogers by email whether pricing would be the same across the country as new and potentially expensive network capacity rolls out. “ appear to be forward-looking/speculative in nature,” Rogers spokeswoman Ashleigh Blackmore said in response. “Future strategy and pricing information is considered confidential.” Deferral accounts are also available to help fund rural broadband. Higher charges collected during the previous price cap period (2002-2006) go into the funds, which may be used to subsidize the cost of providing services to rural and remote areas. Rogers and new entrant Wind Mobile have not been shy in suggesting that Bell is inappropriately using deferral accounts for the build out of a general HSPA+ cellular network in underserved areas—not to build ADSL landline broadband capacity. “Those accusations are completely false,” Bibic said. “There were 102 communities that were approved for build out, and now there are 102 communities that have broadband that didn’t before.” A Supreme Court decision has backed Bell’s move, and the long-term viability of LTE suggests its strategy may be the best way to get broadband to hard-to-reach places. The problem is that the build out will take a few years, and there is no telling how many people will have to pay for the service. “In our area the turbo sticks are the equivalent of BlackBerry data charges. It may be OK for business, but it’s too expensive for most individual Internet users,” Spear said from St. Andrews. The big players, he added, have an obligation to provide affordable service. “They were given such a monopoly for so many years. Now they have to reinvest back into the communities.”

Rural communities frustrated by high costs of wireless, and lack of it

Brief | February 5, 2010

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