CRTC chairman calls for new speed target for universal broadband

GATINEAU—Canada will “fall behind” if it doesn’t set a target for broadband speed, access and affordability, CRTC chairman Konrad von Finckenstein said Monday at the commission’s basic services hearing. “Other nations are setting much loftier goals of 4 Mbps, 10 Mbps, 100 Mbps … I think it’s very key that we at least have a goal, and hopefully the competitive forces from the market will get us there,” he said. Monday was the fourth day of a two-week CRTC hearing reviewing the commission’s policy on access to basic telecom services. A particularly thorny issue is whether broadband should be included in the commission’s definition of basic services—which is further complicated by industry disagreement on what speed should define broadband. The CRTC has traditionally used 1.5 Mbps to define a minimum speed for broadband services, but the U.S. Federal Communications Commission (FCC) has adopted 4 Mbps in its National Broadband Plan. Von Finckenstein said Canada may have to set a moving target that would be reviewed every few years to reflect improvements in technology. The proposition was reflected in a suggestion from Union des consommateurs, a Quebec consumer advocacy group that has said the objective should be reviewed every two years. But Accelerated Connections Inc. (ACI), Radiant Communications, SSI Micro Ltd. and TekSavvy Solutions Inc., an ad hoc coalition of Internet service providers (ISPs) appearing at the hearing, said the CRTC shouldn’t set a speed target just for that reason. “Targets established by regulatory fiat rather than market developments can actually lead to sub-optimal investment outcomes,” said Christian Tacit, a lawyer with Tacit Law in Ottawa who is representing ACI. Cable carriers Cogeco Cable Inc., Rogers Communications Inc., Shaw Communications Inc. and Quebecor Inc., which appeared at the hearing Monday, said they are in favour of setting a deployment target. But they do not support making broadband a basic service because it is already widely available, they said. “If the commission is of the opinion it would be beneficial to establish a broadband target, we propose the following: that Canadian service providers and governments commit to make available within five years Internet speeds of 100 Mbps to 75 per cent of the population, 10 Mbps to 90 per cent of the population and 5 Mbps to 100 per cent of the population,” Dennis Béland, Quebecor’s senior director of regulatory affairs, told the commission. Béland said cable carriers now offer speeds of 30 to 50 Mbps to about 75 per cent of the households they cover. “What we would need to do then to achieve our target here is to push fibre, in particular, further in our networks and expand capacity,” he said. “We think that’s a reasonable objective over five years.” But Béland said reaching the 100 per cent objective for 5 Mbps would require cable carriers to turn to wireless and satellite technologies, adding that public subsidization may be necessary. Right now, 56 per cent of Canadians don’t have access to broadband at speeds above 5 Mbps, according to CRTC statistics released this year. CRTC vice-chairman of telecom Leonard Katz expressed concern the cable carriers’ proposal would create a “have” and “have not” disparity between those with 100 Mbps broadband and those without. But Béland said the plan is “pragmatic” and reflects the costs and technical challenges involved in providing broadband to remote areas. David Ellis, a technology consultant and instructor at York University’s communication studies department, said by email that the commission could set a minimum speed of 4 Mbps as an initial target for rural areas. But Ellis said new speed targets must be accompanied by a review of download caps. “Speed targets will be ruinous unless the commission takes care of the caps problem—since the more the speed, the faster your burn rate, thus defeating the whole purpose,” he said. Ellis added that the commission should consider affordability in its strategy. Last week, Bell Aliant, Barrett Xplore Inc. and EastLink told the commission they did not support a regulatory framework that would set broadband as a basic service because it is already available in most rural regions thanks to satellite coverage. “What is the object of a new obligation to serve, at the very point the market is poised to offer 100 per cent coverage along with extensive broadband mobility?” Michael Hennessy, Telus’ senior vice-president of regulatory and government affairs, told the CRTC. But von Finckenstein said satellite service comes with high customer connection costs, in some cases ranging above $700. Hennessy also said Monday that the commission has yet to define its conception of affordability. “The CRTC has never in its history defined what is affordable,” Hennessy said. He added that affordability has traditionally focused on limiting price increases rather than affordability for the lowest income household. “The regulatory policy is kind of like healthcare. Everybody gets sort of the same thing and it should be pretty good,” he said. Although Telus opposes a new regulatory framework, the company said it supports the CRTC in setting an ambitious national broadband target that focuses on improving digital literacy and income disparity. But MTS Allstream said last week that regulation is necessary to ensure rural and remote regions can have access to broadband. The company put forward a $7-billion, 10-year plan to meet a universal broadband objective with minimum speeds of 4 Mbps. In order to raise the $700 million per-year necessary for the plan, MTS suggested the CRTC increase the contribution telecom companies pay into the commission’s subsidy fund. Telcos currently contribute 0.73 per cent of voice services revenues to fund access to basic phone services in rural and remote areas through incumbent local carriers. Internet services, excluding voice-over-IP (VOIP), aren’t included in the subsidy regime. MTS suggested this percentage be increased to about 2.7 per cent, and be expanded to include new services including text messaging. The company also said the increase will likely be passed along to consumers in the form of rate increases. But ISPs appearing at the hearing Monday said increasing their contributions could mean the end of small ISPs operating in competitive markets. “ ability to increase the prices for retail services to recover a contribution tax levied on them from their end users is either non-existent or extremely limited,” Tacit said, speaking on behalf of small providers. “Attempts to do so would lead to significant market share losses in favour of the incumbents that have much greater financial strengths.” The ISPs added that their ability to raise capital would “disappear” if the contribution rate was raised above three per cent—adding that only incumbents could survive. They said a broadband plan would be feasible if funded by general tax revenues. The hearings continue Tuesday in Gatineau. kfournier@thewirereport.ca

CRTC chairman calls for new speed target for universal broadband

News | November 1, 2010

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