Subsidy regime for rural broadband to be ‘provocative’ issue at basic services hearing

The stakes will be high at CRTC hearings on basic telecom services that start Tuesday, where one of the top questions will be whether the commission should mandate Internet access and extend its telecom subsidy regime to cover broadband connectivity in rural and remote areas. “The one provocative thing that we have suggested is that, in terms of the basic service description, the regulator should take a serious look at including broadband,” Chris Peirce, MTS Allstream’s chief corporate officer, told The Wire Report. MTS and SaskTel have submitted documents to the commission arguing that the CRTC’s subsidy regime supporting local telephone service in rural and remote areas be extended to include broadband access. The hearings, set to begin in Timmins, Ont. on Oct. 26, will review the commission’s policy on access to basic telecommunications services, including regulations on the obligation to serve, basic service objectives and local service subsidy. Obligation to serve rules would mandate universal broadband Internet access—but one of the top questions is how to fund it. In a consultation with the public in advance of the hearings, the CRTC has asked: what services should be included as part of basic telephone services; what role the commission should play in ensuring that all Canadians have access to broadband at comparable rates; whether cellphone service can substitute for traditional phone landline service; whether wireless services can substitute for landline Internet services; and what services Canadians use with their broadband access. The commission will hear from many of the country’s incumbent Internet service providers, major cable companies, and smaller players like TekSavvy Solutions Inc. and MTS. On Nov. 1, the proceedings will move from Timmins to Gatineau. All parties will have a chance to deliver oral rebuttals starting Nov. 3. David Ellis, a technology consultant and instructor at York University’s communication studies department, said in an interview that he doesn’t expect the proceedings to result in any major changes to how broadband Internet services are rolled out in rural and remote areas. “I’m confident will be addressing industry concerns because that’s what they do,” he said. “They’re not so good at addressing consumer concerns, and part of the problem is that consumers don’t know what the problems are.” Ellis said the hearings won’t affect broadband access unless the government outlines a policy objective on the issue. “They’re all running around pointing fingers and making a lot of noise about something that has not been thought out at a strategic or policy level,” he said. “This is a proceeding that is desperately in need of a policy direction … I’ll be delighted if anything positive comes out of it, but I think it will just be more of the same.” Parties participating in the hearings have already made their positions known in submissions to the commission. Incumbent phone companies Bell Canada Enterprises Inc. and Telus Communications Co. have argued they shouldn’t face a regulatory requirement to provide wireline broadband in high-cost serving areas because there is already a sufficient level of competition. A coalition of cable companies, including Cogeco Cable Inc., Rogers Communications Inc., Shaw Communications Inc. and Quebecor Media Inc., has made similar arguments. “Public and private initiatives have, and will continue, to expand the reach of broadband services to Canada’s rural and remote communities,” the coalition wrote in an April 26 submission outlining its position. “While both are important, market forces have proven to play a more significant role in advancing broadband services in Canada.” But Robert Hersche, SaskTel’s director of regulatory affairs, said in an interview that Canada should move ahead with a broadband plan that receives sustainable funding through an industry contribution regime. “We are saying there should be a system for promoting broadband in Canada,” he said. “Many people are opposed to a broadband initiative, so what we’re calling for after this is essentially another hearing, where it’s not if we are going to do a broadband initiative, it’s how.” Hersche added that he opposes a full government subsidy to roll out broadband across Canada, as is the case in Australia. The Australian government has committed $43 billion AU to a National Broadband Network that will connect 93 per cent of Australian homes, schools and workplaces to fibre-to-the-home broadband, delivering speeds of up to 100 Mbps. “What they do is they actually stimulate the digital divide,” Hersche said. “I give you some capital, you build your thing and then you walk away. How do you expand this? How do you make sure it is sustainable?” Peirce said the Canadian government doesn’t have enough money to mimic Australia’s plan and should instead follow the American model, where telcos pooled a portion of their revenues to stimulate rural broadband rollout. jmigneault@thewirereport.ca

Subsidy regime for rural broadband to be ‘provocative’ issue at basic services hearing

News | 10/22/2010 8:47 pm EDT

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