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Is it Enough? How Government Funded Solutions to the Digital Divide Miss the Mark

Opinion by Georgia Evans. This article is part of the Corporations and Competition, a series by Georgia Evans on Canadian Telecommunications policy.



When the market fails, the government should step in. The digital divides related to access and affordability in Canada are a market failure, full stop. The telecommunications and internet markets cannot efficiently allocate resources to cover rural, remote, and Indigenous communities. The pandemic has brought to the forefront the digital inequities that have persisted and widened, as people are forced to work and learn from home. Canadian governments have recognized this. They are stepping in, both federally and provincially, to get rural, remote, Indigenous, and low-income communities the access they need through several publicly funded initiatives.


Provincial funds


There are several provincial initiatives to bridge the digital divide across the country. In British Columbia (B.C.), for example, the Connecting B.C. program provides funds to local, regional, and national internet service providers (ISPs), local governments, First Nations and First Nations organizations, and registered not-for-profits that are active in BC. At the end of its third phase, the Connecting B.C. program will have seen $100 million invested into connecting the province [1]. The program has helped several communities and First Nations connect, including Haida Gwaii [2].


In mid-July, the province of Alberta committed $150 million for high-speed internet connectivity in rural, remote and Indigenous communities, as 12% of the Albertan population do not meet the Universal Service Objective of 50 megabits (mbps) download and 10 mbps upload [3]. The province is looking to the private sector and the federal government to secure more funding to close the digital divide for good in the province [4].


The government of Ontario is investing in broadband capable networks through provincial funds and public-private partnerships (P3s). It has committed almost $4 billion to connect all residents by the end of 2025 [5]. The Up-to-Speed program is a $150 million broadband and cellular network investment, launching in 2020-21[6]. The Improving Connectivity for Ontario (ICON) program will provide up to $14.7 million for high-speed internet infrastructure across the province [7]. The Ontario government has also provided funds to the non-profit Southwestern Integrated Fibre Technology (SWIFT). SWIFT has several projects to improve connectivity in Southwestern rural Ontario through partnerships with various ISPs [8]. SWIFT is but one example of Ontario’s investments in partnerships to accelerate the growth of broadband and cellular networks.


The Government of Quebec has agreed to match the federal government’s investment of over $400 million for broadband networks. Quebecor-owned Videotron and Cogeco will both receive hundreds of millions of dollars in subsidies to connect more than 35,000 houses to high-speed internet. Additionally, Bell will receive $161.5 million (despite having $5.3 billion in available liquidity at the end of Q2 of 2021 [9]) [10]. These are just a few examples of provincial initiatives to connect Canadians.


Federal funds


Telecommunications and internet infrastructure is primarily the domain of the Canadian Radio-television and Telecommunications Commission (CRTC) and Innovation, Science and Economic Development (ISED) Canada. Both entities administer funds for organizations, communities, and families seeking to improve their connectivity. Through the 2016 and 2019 budgets, ISED was able to establish a $585 million fund called Connect to Innovate [11]. This fund was created to create new backbone infrastructure, such as fibre-optic and satellite connections, in rural and remote areas, as well as last-mile connections [12]. The last mile refers to the connections to the end-users that actually provide the internet service to be used by households and businesses.


The CRTC also has a $750 million Broadband Fund to upgrade and build infrastructure to help achieve the Universal Service Objective. The fund has been made through large Canadian telecommunications service providers’ contributions [13], and it supports broadband transport projects, internet access projects, and mobile wireless projects [14]. It is important to fund different portions of the network across the country to improve both capacity and access.


In 2020 and 2021, ISED released and accepted applications for the Universal Broadband Fund (UBF). When it was initially announced in November of 2020, it made $150 million available for rapid response to the digital divide [15]. Through other announcements and Budget 2021, the Fund will sit at $2.75 billion to fund high-speed Internet access across the country [16]. The federal government’s goal is to connect ninety-eight percent of Canadians to the Internet that meets the Universal Service Objective by 2026 and achieve 100 per cent connectivity by 2030 [17].


However, while these funds address the access divide, they do not remedy the affordability divide. As such, in 2017, ISED announced a five-year investment of $13.2 million for the Connecting Families Initiative, which aimed to provide low-income families with high-speed Internet packages for ten dollars a month, as well as distribute up to 50,000 computers to low-income households [18]. And on August 11th, 2021, Ministers Champagne and Schulte announced the Connecting Families 2.0 initiative to provide high-speed Internet and 200GB of data to low-income households for twenty dollars a month [19].


Is it enough?


While the government’s efforts to get Canadians connected are commendable, they are flawed. There is about $8 billion available in funds for broadband today. It’s estimated that the cost of building out networks that work for all Canadians – meaning networks that connect every single Canadian, are reliable, and meet the Universal Service Objective – will cost anywhere from $6 billion to $50 billion [20] [21]. The reality, however, is that these funds are throwing money at a problem without addressing the systemic and structural challenges of connecting Canadians to what is now critical infrastructure.


So far in this series, we’ve seen that there are several policies in place that maintain the market power of major ISPs in the country. These government funds are routinely received by the same major ISPs that have failed to connect rural, remote, and Indigenous communities [22] [23]. Why should Bell, a company with over five billion dollars of liquidity and has one of the highest average revenues per user in the world, receive taxpayers’ money to solve a problem they had a hand in creating?


These funds maintain the status quo of market dominance by the Big Three and an everlasting game of catch-up for competitive network providers [24]. As Andy Kaplan-Myrth of TekSavvy shares on Twitter, while it is critical for people to be able to afford internet services, the Connecting Families initiative is simply a “bandaid solution” for the real problem: a lack of competition in Canadian telecommunications [25]. If the government wants Canadians to have affordable access, the solutions are there: reverse the CRTC decisions from this spring, stop the Rogers-Shaw merger, end facilities-based competition, and make it easier for small ISPs to compete. The funds are a starting place to remedy the digital divide, but they will mean nothing to Canadians without real action to introduce meaningful competition in the telecommunications and internet industries.

 

  1. British Columbia, “Connectivity Funding Programs,” British Columbia, 2021 https://www2.gov.bc.ca/gov/content/governments/connectivity-in-bc/connectivity-funding-programs

  2. Northern Development, “Connecting British Columbia: Success Stories,” 2021, https://www.northerndevelopment.bc.ca/connecting-british-columbia-success-stories/

  3. Canadian Press, “Alberta commits $150M to boost rural high-speed internet, seeks private and federal support,” Global News, July 22, 2021, https://globalnews.ca/news/8052415/alberta-rural-high-speed-internet-funding/

  4. Ibid.

  5. Government of Ontario, “Up to Speed: Ontario’s Broadband and Cellular Action Plan,” 2021, https://www.ontario.ca/page/speed-ontarios-broadband-and-cellular-action-plan

  6. Ibid.

  7. Government of Ontario, “Ontario Expanding Access to High-Speed Internet Across the Province,” 2021, https://news.ontario.ca/en/release/1000596/ontario-expanding-access-to-high-speed-internet-across-the-province

  8. SWIFT, “Approved Projects,” 2021, https://swiftruralbroadband.ca/projects/approved-projects/

  9. Bell Canada, “BCE reports second quarter 2021 results,” News Wire, August 05, 2021, https://www.newswire.ca/news-releases/bce-reports-second-quarter-2021-results-848426238.html

  10. Canadian Press, “Federal, Quebec governments to spend $826 million to expand high-speed internet,” CBC, March 22, 2021, https://www.cbc.ca/news/canada/montreal/trudeau-quebec-high-speed-internet-1.5959741

  11. Government of Canada, “Connect to Innovate,” Innovation, Science and Economic Development Canada, Date Accessed August 24, 2021, https://www.ic.gc.ca/eic/site/119.nsf/eng/home

  12. Ibid.

  13. Canadian Radio-television and Telecommunications Commission, “Broadband Fund,” Date Accessed August 24, 2021, https://crtc.gc.ca/eng/internet/fnds.htm

  14. Ibid.

  15. OpenMedia, “Government’s Universal Broadband Fund finally announced,” OpenMedia, November 9, 2020, https://openmedia.org/press/item/governments-universal-broadband-fund-finally-announced

  16. Government of Canada, “Universal Broadband Fund,” Innovation, Science and Economic Development Canada, Date Accessed August 24, 2021, https://www.ic.gc.ca/eic/site/139.nsf/eng/h_00006.html

  17. Government of Canada, “High-speed Internet for all of Canada,” Innovation, Science and Economic Development Canada, Date Accessed August 24, 2021, https://www.ic.gc.ca/eic/site/139.nsf/eng/h_00000.html

  18. Government of Canada, “Connecting Families,” Innovation, Science and Economic Development Canada, 2019, https://www.ic.gc.ca/eic/site/111.nsf/eng/home

  19. Government of Canada, “Affordable high-speed Internet for low-income seniors and families,” Innovation, Science and Economic Development Canada, August 11, 2021, https://www.canada.ca/en/innovation-science-economic-development/news/2021/08/affordable-high-speed-internet-for-low-income-seniors-and-families.html

  20. Brian Stewart, “How Covid-19 worsens Canada’s digital divide,” CBC, September 27, 2020, https://www.cbc.ca/news/canada/british-columbia/covid-19-highlights-urban-rural-digital-divide-1.5734167

  21. S. Ashleigh Weeden & Wayne Kelly, “The Digital Divide Has Become a Chasm: Here’s How We Bridge the Gap,” Centre for International Governance Innovation, July 26, 2021, https://www.cigionline.org/articles/the-digital-divide-has-become-a-chasm-heres-how-we-bridge-the-gap/

  22. Amanda Oye, “Large ISPs winning big from UBF,” Cartt.ca, July 07, 2021, https://cartt.ca/large-isps-winning-big-from-ubf/

  23. S. Ashleigh Weeden & Wayne Kelly, “The Digital Divide Has Become a Chasm: Here’s How We Bridge the Gap,”

  24. Ibid.

  25. Andy Kaplan-Myrth, “[Tweet] So the first problem with Connecting Families is that it’s a bandaid solution that ignores underlying structural problems. Fixing telecom competition – restoring the wholesale market, advancing access to fibre – would reduce prices everywhere immediately. 9/16” Twitter, https://twitter.com/kaplanmyrth/status/1425871310920499208




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