Broadband as a basic service: the good news and the bad

CRTC raises the bar with new speed definitions but leaves affordability problem unaddressed.

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Broadband Basic Service:

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Broadband internet is now a basic telecommunications service, according to a new ruling from the CRTC.

For most Canadians – those of us who already do much of our work and play online – the announcement is something of a “no duh,” or a formalization of what we already know to be true. But for many living in rural and remote communities, where high-speed internet is only a fantasy, it’s welcome news indeed.

It means that internet providers are going to have more of a reason to get off their duffs and actually deliver proper broadband service to those constituencies.

The regulator isn’t fooling around with half-hearted goals either. It’s requiring telecom companies to roll out download speeds of at least 50 megabits per second, upload speeds of 10 Mbps and unlimited usage options. ISPs will be able to sell lesser tiers as well, but every customer will have to at least have access to those targets.

To get there, the CRTC is going to require service providers to devote a portion of their revenues to a new fund, which will accumulate $750 million over the next five years. Internet providers will be able to draw from that fund to build out into underserved areas.

It’s similar to how the universal telephone fund works, where providers chip in to ensure all Canadians have access to landlines, as well as broadband rollout programs from the federal government.

The ruling has plenty of implications – some good and some bad.

The Good:

More rural and remote Canadians are likely to get access to real broadband, although full availability is still to come. About 82 per cent of Canadians had access to 50/10 and unlimited usage in 2015, according to the CRTC. The goal is to boost that percentage to 90 within the next five years. There will still be that final 10 per cent to go.

The 50/10 speed goal is decent by today’s standards and important because it effectively establishes a new minimum definition of broadband in Canada. It’s 10 times higher than the regulator’s previous thresholds, set in 2011, and substantially higher than the 10/1 several advocacy groups had been asking for.

The new minimum definition should have positive benefits for Canadians in cities too, since internet providers may have to ratchet up all of their service speeds if they want to keep calling them “broadband” with any legitimacy.

That goes double for Rogers’ and Telus’s discounted services for low-income households, which currently have download speeds of 10 Mbps and 25 Mbps, respectively.

The Bad:

On the downside, the CRTC’s speed targets are still short of what a number of more progressive countries are doing. Sweden, for example, just okayed a plan to deliver 100 Mbps availability to 95 per cent of its households by 2020.

More poignant is the fact that the CRTC isn’t yet doing anything about affordability. Service providers may have basic speeds they must meet, but they’ll also be able to charge whatever they want for them. If history is any indicator, such services aren’t going to come cheap.

Moreover, the higher speed definitions could backfire on urban internet customers. If ISPs are forced to beef up their speeds in order to be able to keep calling them “broadband,” then price hikes will assuredly follow.

This is doubly true with another of the CRTC’s edicts, which will require wireless carriers to provide high-speed LTE service along major roads and highways. Adding cell towers and capacity will inevitably lead to higher costs for both carriers and consumers.

Put it all together and it means higher prices. In a country where telecom prices are already high, that’s going to be a painful pill to swallow.

One glimmer of hope here is that other CRTC actions may serve to blunt or even counter some of this effect.

Just this week, Ontario-based indie ISP Teksavvy announced it will lower bills for customers in January thanks to an earlier wholesale CRTC ruling that went in its favour.

The company is passing on its regulatory win to customers, which is exactly what the CRTC hoped would happen. If Teksavvy and its indie ilk can gain enough market traction with such moves, big players such as Bell and Rogers will inevitably have to follow suit and offer more competitive rates.

The CRTC will obviously need to deliver more of those pro-consumer and pro-competition rulings in order to get prices going in the right direction.

Categorizing broadband as a basic service and creating a fund to help its spread are good moves, but they need to be part of a holistic effort if any of it is going to have a positive effect for all Canadians.

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