Toronto Star: CRTC broadband Internet ruling still leaves room for high prices

Posted December 27, 2016

The Canadian telecom regulator’s declaration Wednesday that high-speed Internet is a basic service entitlement like a home phone continues to draw applause, but some observers say the underling problem remains — Canadians still pay some of the highest Internet prices in the developed world.
 
“This does not address affordability; it addresses access,” Stuart Jack, head of the telecom practice at Nordicity Group Ltd., said of the Canadian Radio-television and Telecommunications Commission’s announcement.
 
The consulting firm was commissioned by the CRTC to prepare a 2016 international comparison on home telephone and wireless Internet prices that was published in August.
 
The Nordicity report found broadband Internet prices in Canada in the middle of the pack of a sub-group of eight advanced countries when looking at lower and mid-tier performance.
 
But Canada had the second-most expensive prices — behind only the U.S. — for the top download speeds that the CRTC said should be available to residents in all areas of the country.
 
In remote communities such as the Matawa First Nations in northwestern Ontario, residents are paying far more. Matawa economic development manager Jason Rasevych said residents are paying as much as $200 per month for satellite dishes to access the web because broadband service is so poor.
 
He said the only way the CRTC’s ruling could promote affordability is if it puts pressure on the federal government to partner with Ontario to bring advanced fibre networks to the community. Jack cited a lack of competition as a reason for comparatively high-cost Internet services, along with low population density and expansive geography.
 
The CRTC, in its ruling Wednesday, said that high-speed access is a basic telecom service objective, and also mandated that carriers must contribute to a $750-million fund that will be drawn on over five years to expand networks into rural and remote communities.
 
 
The CRTC said all residents should have access to Internet infrastructure to provide health and other services, and to promote economic development, but stopped short of regulating prices, as some groups have recommended.
 
ACORN Canada, a national organization of low- and moderate-income families, for example, has asked the CRTC to mandate a $10-per-month high-speed home Internet product for families and individuals living below Statistics Canada’s low-income measure.
 
Lack of access to the Internet excludes low-income Canadians from equal opportunities to education, employment, government services and modern civic participation, ACORN Toronto spokesperson Alejandra Ruiz Vargas said.
 
“It leads to social isolation, because you can’t connect with your friends and relatives,” she told the Star. “And it leads to poverty because you can’t look for jobs or fill out job applications.”
 
A survey of almost 400 ACORN members showed 83.5 per cent felt Internet service is “extremely expensive.” Of those, almost 59 per cent said they skimped on other budget items to pay for Internet service because they need it.
 
But Jack of Nordicity said a cap on Internet prices would send the wrong signal, discouraging a new category of competitors that could be lured to offer Internet services in Canada — a market where data is being consumed in mounting volumes to stream video content from on-demand providers such as Netflix.
 
TekSavvy, a telecom reseller that is lowering Internet prices for 300,000 customers thanks to a CRTC ruling that slashed the prices incumbents charge for wholesale network access, said Internet price caps would be a competition killer.
 
“Our pockets aren’t deep enough to roll out below-cost broadband,” TekSavvy CEO Marc Gaudrault said. “Instead of focusing on heavily subsidized plans for the few, we need a framework that can achieve affordable high-speed Internet for anyone who wants it.”
 
And while he lauded companies such as Rogers and Telus for offering monthly Internet plans for about $10 to certain low-income households, he said the packages are below costs and could not be offered by smaller rivals.
 
Instead, he said TekSavvy is relying on longer-term wholesale rates that accurately reflect the cost of providing services that establish a foundation for more competition and price moderation down the road.
 
CRTC chairperson Jean-Pierre Blais said Wednesday that the commission will rely on market forces to control Internet prices and has taken steps to encourage a wholesale market that can sustain new competition.
 
Blais also noted that Innovation Minister Navdeep Bains is looking at the issue. “Right now, we’re giving a chance to Minister Bains and others to fill that affordability gap.”
 
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Article by Michael Lewis for the Toronto Star