CRTC’s basic broadband is more window dressing than historic

All carrot and no stick, the redefinition isn’t likely to result in real improvements.

gigabit broadband, broadband quality, basic broadband

Basic Broadband:

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“A huge win for consumers,” “historic,” “seismic” – all used to describe last week’s announcement by the CRTC that broadband internet access is now a basic service. If only it truly was – but lacking any real requirements or immediate action, it will likely be none of those things.

If you missed the news, the telecom and broadcast regulator ruled that all Canadians should have access to high-speed internet – at least 50 Megabit download speeds and 10 megabit uploads – plus unlimited monthly usage.

To help meet that goal, the CRTC is shifting mandatory contributions by telecom firms from basic phone service to a new broadband fund that is expected to tally $750 million over the next five years, plus more beyond. Telecom companies big and small will theoretically be able to draw from that fund to roll out networks into underserved areas.

It all sounds good. As I noted last week, at the very least it significantly raises the bar on what can be considered broadband in Canada.

According to the CRTC’s own measurements, only about 19 per cent of Canadians had broadband under the new download speed definition as of 2015. Getting the majority of existing subscribers up above 50 Mbps is now going to be fun to watch, never mind those 18 per cent of households that don’t yet have broadband of any definition at all.

Scratch beneath the surface, though, and the CRTC’s move looks more like window dressing than an historic event.

For one thing, the new funding mechanism isn’t exactly new. Successive federal governments have previously doled out hundreds of millions of dollars for telecom companies to expand broadband into rural and remote communities, yet a large portion of the country still remains unserved.

It’s not clear how the CRTC’s new money is going to motivate these companies when similar efforts have failed.

Smaller internet providers such as Teksavvy and Iristel believe they’ll have a good shot at accessing some of the CRTC’s funding, but whether it will actually happen remains to be seen. Large telecom companies have a history of convincing funding agencies that they’re best equipped to roll out networks – and they’re often right – only to then drag their heels once they’ve actually won the money.

The other problem is affordability. There’s a big difference between providing households with “access” to quality broadband and actually making it feasible for them to subscribe to it. Many Canadians in big cities, for example, currently have access to gigabit connections, but with services typically costing around $150, few are shelling out for it.

As Michael Geist, Canada Research Chair in Internet and E-commerce Law at the University of Ottawa’s Faculty of Law, notes in a Globe and Mail op-ed:

“The CRTC largely punted this issue, noting that ‘a comprehensive solution to affordability issues will require a multifaceted approach, including the participation of other stakeholders.’ That places much of the responsibility on the government, but the CRTC had the opportunity to push providers harder on affordability.”

If service providers do decide to roll out services in rural and remote areas this time around, they will have tremendous leeway to get around the CRTC’s intentions. There’s no prohibition on selling services slower than the required 50/10, nor are there rules against selling tiers that do indeed have usage caps.

They’ll also be able to charge whatever they want for connections, which defeats the purpose. A 50/10 internet service with unlimited usage won’t be much use to a rural household, after all, if it costs hundreds of dollars per month, which it very well could. The cynical view is that it will – but providers will be happy to sell lesser services at lower prices, as they do everywhere else.

The CRTC’s historic move is thus all proverbial carrot and none of the veritable stick, and that’s how the markets have treated it. Financial analysts called the news a “non-event” while shares of the largest telecom companies, including Bell and Rogers, have risen since. Investors clearly aren’t worried that the new regime will have any detrimental effects on the companies.

It’s possible that real change might happen, but for now the CRTC’s basic broadband shift looks like another of its well-intentioned efforts that will ultimately result in little movement forward.

In that way, it’s much like skinny basic television, the CRTC’s attempt to inject more choice and savings into the TV market that turned into a slowly unfolding joke over the course of 2016. Smaller packages and pick-and-pay channels were good ideas in theory, but without proper rules and restrictions in place it was easy to see the car wreck coming.

On the plus side, the CRTC wasn’t a complete fail whale in 2016. Its wholesale pricing decisions on broadband are resulting in lower prices from at least one internet provider, Teksavvy, so at least consumers have that to look forward to in 2017.

That might actually be more historic than the supposedly seismic shift to basic broadband.

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