Bell rural Internet plan to cost $454 million for 61,000 homes

Bell Canada and Bell Aliant’s plan to provide 112 Ontario and Quebec rural communities with broadband Internet is expected to cost $454 million, say the companies’ roll-out plan, submitted to the CRTC Feb. 26. “That’s a breathtaking subsidy,” Mark Goldberg, a telecommunications analyst with Mark H. Goldberg and Associates, told The Wire Report. “Somebody has to take a look and say, ‘Does this make sense, to spend that kind of money in order to deliver this kind of service?’” Goldberg said that in an urban centre, a home can be fully connected to fibre at a cost of $1,000. Bell’s $454 million proposal will cost about $7,500 per home to build out a HSPA wireless network and connect them. The money will come from deferral accounts, which consist of funds collected from urban phone customers during the last price cap period, 2002 to 2006. “The total accumulated balance in Bell Canada's deferral account that is available for the deferral account-funded broadband expansion program and consumer rebates is $464 million,” says the Bell companies’ Feb. 26 submission to the CRTC. CRTC regulations stipulate that incumbent phone companies cannot use the deferral funds to expand into a region where another company plans or already provides a service. Competitors such as Wind Mobile have criticized Bell when it proposed to use funds from deferral accounts to roll out a high-speed packet access (HSPA) mobile network in rural areas. Wind argues that the build out uses deferral funds to expand Bell’s wireless network, and that the services are not as fast or reliable as services in urban areas. “The Bell companies’ proposal to use money belonging to telephone subscribers in non-high-cost serving areas to provide broadband services in high-cost serving areas fails to meet the established commission criteria for the use of such funds,” Wind Mobile said in a submission to the CRTC Jan. 21. Rogers Communications Inc. is less critical of Bell’s use of the funds. “Since these are sort of public funds, and they’re building an HSPA network, it would seem appropriate to me that the CRTC should mandate that competitor carriers are allowed to roam on the network,” Ken Engelhart, Rogers’ senior vice president of regulatory affairs, said in an interview. In an email to The Wire Report, Jacqueline Michelis, a spokeswoman for Bell Canada, said that 106 of the 112 communities have little or no wireless infrastructure. "That means we have to build new towers in those communities and backbone networks to connect those towers to the Internet. This cannot be compared to costs for building HSPA in communities that already have wireless service," she wrote. According to the Bell proposal, an estimated 61,000 potential homes could have access to the rural HSPA network. At an “uneconomic cost” of $454 million—the portion that the Bell companies will pay to fund the network—it would cost almost $7,500 per home to connect to the network. “Extending coverage was never high on the political agenda,” Brownlee Thomas, a wireless industry analyst with Forrester Research, told The Wire Report. “What’s interesting about this is that Bell is signaling that if we are serious about extending broadband coverage to these smaller communities, this is the cost.” According to the Bell companies’ CRTC submission, the HSPA rural service will offer speeds of up to 2Mbps with a monthly usage allowance of 2GB. “It’s the cap that’s the problem,” Thomas said. “Once you get the infrastructure in there, why would you put a cap on it?” Thomas said the 2Mbps download speed is fine, but the download cap is too low for home users. “Two gigs won’t get you anywhere,” she said. “In my household we’re talking 40 to 50 gigs a month.” In a letter to the CRTC dated Feb. 18, the Bell companies said a number of subscribers—the percentage of which it would not identify—who used a similar service called Essential Plus, did not exceed their 2GB monthly download cap while using a 2Mbps download speed. Michelis said Bell originally planned to roll out DSL in the 112 rural communities but changed its plans when it started to work on its HSPA network. “We had originally planned to use a combination of DSL and fixed wireless (Inukshuk) technology consistent with our commercial broadband program at the time,” she wrote. “However, Bell has recently launched our new state-of-the-art HSPA wireless network, which will provide better service and coverage as well as the added benefits of mobile voice services to customers in the 112 approved areas.” Bell proposes to implement their deferral account-funded broadband program over a four-year period ending Dec. 31, 2013. jmigneault@thewirereport.ca

Bell rural Internet plan to cost $454 million for 61,000 homes

News | March 9, 2010

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Bell rural Internet plan to cost $454 million for 61,000 homes

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