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The Multi Billion-Dollar Question

December 18, 2020

Policy & Regulatory Blog

Last May, the CBC told the story of Nancy and Jeff1, a couple with four children who struggled to connect to online learning, make Zoom calls with loved ones and watch Netflix. They live in a small community outside of Hamilton, Ontario. They asked the nearest telecommunication company – and their only option to getting internet at home – to pull fibre 100 metres from its existing infrastructure to their home.

The price tag was $27,000. Sadly, Nancy and Jeff’s story is not exceptional.

Why the steep cost? Typically, internet cable to the house will need to be buried underground, which is very expensive to do, like laying a new hydro or sewage line.  Throw in hills, rocky terrain and woods and it gets even more complicated.  In smaller, more rural communities, the cost is spread across very few homes, which makes the business case difficult for a company to shoulder alone.

Nancy and Jeff’s story points to the challenges we face as a country in connecting all of us, given Canada’s massive geographic footprint. To put it into context: you could fit five UKs, plus five Germanys, plus five Frances into Canada and still have room to spare. Moreover, depending on where you live, there are only five to eight months a year in which temperatures are above freezing, making for a short construction season, especially in the north.2 These elements create unique challenges for network builders to provide connectivity across our vast landscape.

The Canadian telecommunications industry invests billions of dollars each year to provide world-class high-speed internet to Canadians, irrespective of where they live. For instance, in 2019, the industry invested nearly $12 billion3, most of it towards broadband.

But we are not alone. Governments of all stripes are also investing massively in telecom infrastructure – indeed, “broadband” is listed amongst the top priority for most, if not all, political parties in our country. The launch of the federal government’s $1.75 billion Universal Broadband Fund4 to advance rural and remote connectivity is a recent example and is an important step in fulfilling their commitment to provide $6 billion of combined funding5 to connect all Canadians to high speed broadband. The provincial governments have also announced millions in funding, such as Ontario’s Up to Speed: Ontario’s Broadband and Cellular Plan6.  We very much welcome those announcements. 

Yet, approximately 1.5 million households in Canada still do not have access to high-speed internet – that is more than 10% of our country. In rural Canada, this number climbs to 45%.7 The current extraordinary circumstances that we are all living in right now just exacerbates the issue.

So how, and when, are we going to get to 100% of Canadians connected to high-speed internet?

The first part of the answer is that industry and governments will need to continue to make massive investments in our country’s infrastructure. While it is difficult to arrive at the specific number needed to get all of Canada connected, our estimates put that figure in the range of $15 to $40 billion, depending on the technology deployed, among other things. 

Secondly, in order to further extend networks across the country, the industry needs access to physical structures, like utility poles and street furniture, to attach its equipment. Delayed and costly access to this infrastructure has negative impacts on deploying networks, slowing down expansion, particularly in areas of Canada with limited or no access to such networks. We recommend that the federal telecommunications regulator, the CRTC, assume authority for setting fair rates and ensuring quick resolution of requests for access.

We also believe that we may need more than one solution – a combination of initiatives will get all of Canada connected. The ongoing and expected launches of low-and mid-earth orbit satellites will no doubt help fill the gap in areas where current technology makes it almost impossible to reach.8

The path ahead is not simple. All players, including the industry, governments and new technology operators, will need to partner to ensure that all Canadians participate equally in the digital economy. Now is the time to take the big, tough steps forward to meet that goal.

Mark Irvine is Vice President, Service Expansion

[3] Figure 8, 2014-2019, 2020 CRTC CMR