Budget 2019 aims too low with broadband infrastructure funding

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Yesterday, Investing in the Middle Class Budget 2019 was released, and there was a slight emphasis on broadband infrastructure funding, but not quite as much as I had hoped.

Here are a few lowlights:

  • New Infrastructure Funding for Local Communities Through a Municipal Top-Up

    • Budget 2019 proposes a one-time transfer of $2.2 billion through the federal Gas Tax Fund to address short-term priorities in municipalities and First Nation communities.

    • Broadband is listed as infrastructure eligible for funding

  • 50/10 Mbps – which is the new dial-up, remains the target of the government because the CRTC says so, and CRTC says so because it is such a low bar ILECs can get under it easily. This target will have the effect of widening the digital divide as many urban Canadian residents receive 1 Gbps with the promise of 10 Gbps in the near future. And there is no appreciation by the government for how dismal 50/10 Mbps is for business.  There was almost zero consultation with Canadians by either the CRTC or the government in setting 50/10 Mbps standards, while almost 100% of the consultation was with telecom service providers who remain the only people picking the broadband winners and losers in Canada.

Accordingly, “Canada’s Commitment: Universal High-Speed Internet for Every Canadian in Budget 2019, the Government is announcing its commitment to set a national target, in which 95 per cent of Canadian homes and businesses will have access to internet speeds of at least 50/10 Mbps by 2026 and 100 per cent by 2030, no matter where they are located in the country. This is in keeping with the broadband internet speed objective set by the Canadian Radio-television and Telecommunications Commission (CRTC) for Canadian households and businesses across Canada,” proudly boasts the government on page 95 of the Budget.

Meanwhile, in the real world of OECD countries, Canada ranks 27th on fibre penetration to the premises, 10 slots below the average and falling farther behind year-over-year. Leading OECD countries are delivering 1 Gbps Internet for about $30 USD per month today to 96%+ of their populations and all leading nations are aiming for 100% ubiquity of Fibre-To-The-Premises (FTTP) in the next few years.

  • Connect to Innovate and new Universal Broadband Fund

    • “To help every Canadian gain access to high-speed internet at minimum speeds of 50/10 Mbps, Budget 2019 proposes to invest up to $1.7 billion in new targeted initiatives that will support universal high-speed internet in rural, remote and northern communities. These investments would include:

      • Up to $1.7 billion over 13 years, starting in 2019–20, to establish a new national high-speed internet program, the Universal Broadband Fund. The Fund would build on the success of the Connect to Innovate program, and would focus on extending “backbone” infrastructure to underserved communities(“backbone” is the central channel used to transfer internet traffic at high speed—the internet equivalent of a major roadway or railway spur). For the most difficult-to-reach communities, funding may also support ‘last-mile’ connections to individual homes and businesses.

        • Included in the $1.7 billion commitment to the Universal Broadband Fund, the Government will look to top-up the Connect to Innovate program and to secure advanced, new, low-latency Low Earth Orbit satellite capacity. This process will be launched in the spring 2019 and will help bring reliable highspeed internet access to even the most challenging rural and remote homes and communities in Canada.

      • Up to $11.5 million over five years, starting in 2019–20, for two Statistics Canada surveys to measure household access and use of the internet and business online behaviour. This will enhance understanding of how digital issues are impacting Canadians, and help inform next steps.

      • Harnessing Partnerships With the Canada Infrastructure Bank In partnership with the Government, the Canada Infrastructure Bank is examining opportunities to apply its innovative financing tools to stimulate private sector investment in high-speed internet infrastructure in unserved and underserved communities. Working to maximize the contribution of private capital, the Bank will seek to invest $1 billion over the next 10 years, and leverage at least $2 billion in additional private sector investment to increase broadband access for Canadians. In helping to make publicly funded dollars go further, the Bank will contribute to Canada’s long-term ambition of bringing high-speed internet to every Canadian.”

Regarding CTI and the Universal Broadband Fund, this means the government has not been listening to Canadians and the status quo of broadband policy, programs and funding is maintained to the benefit of telecom providers and to the detriment of consumers as investing in 50/10 Mbps and satellite Internet is putting lipstick on a pig, particularly when compared with our competitor nations who are investing in building fibre everywhere for FTTP and 5G backhaul.

The silver lining may be the Canada Infrastructure Bank $2 billion in available debt financing, which will depend on how many non-dominant telecom providers avail themselves of it. If all or most of this debt financing goes to the incumbent providers, like all the rest of the funding has been to date, then the status quo will be maintained.    

One can only hope the Statistics Canada survey is structured to find out what Canadians’ experiences really are and what they really think about incumbent telecom providers in terms of coverage, services, performance and rates and not designed to tell the government and the telecoms what they want to hear so they can once again aim low and claim victory.

It's time to let our MPs and Minister Navdeep Bains, Minister of Innovation, Science and Economic Development, François-Philippe Champagne, Minister of Infrastructure and Communities and Bernadette Jordan, Minister of Minister of Rural Economic Development, know what we really need…

We need 1 Gbps symmetrical Internet access for every Canadian household by 2025 so each of us have equitable access to the Internet, because equitable access to the Internet is a determinant of one’s equal access to healthcare, education, government and marketplaces.  Equitable means the same price and performance of the Internet connection regardless of one’s geographic location or demographic characteristics. Canada’s competitiveness in the world depends on it.

Campbell Patterson