The CRTC released its much anticipated Talk Broadband ruling yesterday, declaring Internet access a universal service objective, shifting the local voice service subsidy to the Internet, and setting much-improved speed targets of 50 Mbps download and 10 Mbps upload. The decision sparked a wide range of responses: Open Media labelled the decision historic, but business analysts largely shrugged, calling it “immaterial” and “neutral” for the telecom carriers. How to reconcile the competing perspectives?
From a big picture perspective, those that have advocated for a forward-looking Canadian digital policy that places universal Internet connectivity as the foundation have good reason to be pleased. The CRTC’s recognition of Internet access as a basic service is an important development that is long overdue. While critics downplayed the importance of the formal recognition for years, updating Canadian policy to include access to broadband Internet services provides an important signal to the market and the basis for further regulatory and policy steps if needed.
Moreover, after years of middling broadband targets, the CRTC has stepped forward with a broadband target worthy of a country that wants to see itself as an innovation leader. The target of 50 Mbps download and 10 Mbps upload changes the Canadian conversation on broadband. Indeed, when Bell appeared before the CRTC as part of this hearing, it defended the previous 5 Mbps download/1 Mbps upload target. Bell executives warned that the company can’t even offer that speed in some markets, telling the Commission that “If a 5/1 basic service was mandated, we might have to withdraw our internet service from those markets, removing an option for consumers.” With this decision, the days of discussing 5/1 as a reasonable target are thankfully over.
The decision also marks a fundamental shift from voice to the Internet for Canadian communications regulation. Shifting the local voice service subsidy to broadband is absolutely the right thing to do as it takes the essence of a policy designed to ensure that all Canadians have basic connectivity and updates it to reflects how Canadians communicate today. The $100 million from the local voice service subsidy will help address the broadband access issue, though the Commission itself acknowledges that more money will be needed.
While these are all exciting, important developments, digging deeper into the details suggests that this is a small piece of a much bigger puzzle.
It may be important for the regulator to acknowledge the centrality of Internet access, but most Canadians are already there. Similarly, Bell may be content to argue for 5/1 service, but the CRTC’s own data indicates that 82% of Canadians already have access to 50/10. The CRTC wants 90% of Canadians to have access to those speeds by 2021 with the remaining 10 percent of the country getting there within 10-15 years. Expanding access to an additional 8 percent of the population over five years helps, but it isn’t transformative. In fact, given the ongoing investments from various providers, it is worth asking whether Canada might reach that target with or without the CRTC’s efforts. The real challenge remains the last 10% in rural and remote areas and for that the CRTC has no easy solution given that it sets a target of 2031 for achieving universal access.
The CRTC’s five year broadband target is within reach, but many other broadband goals are not. Affordability goes hand-in-hand with access, yet the CRTC largely punts on the issue, noting that “a comprehensive solution to affordability issues will require a multi-faceted approach, including the participation of other stakeholders.” That places much of the responsibility on the government, but it was open to the CRTC to push the providers harder on affordability. It points to innovative solutions from some companies (presumably Rogers and Telus), but does not go further by setting goals or targets for the obvious laggards in the industry.
The CRTC’s approach on data caps also avoids strict regulation, settling instead for more information and tools for consumers to monitor and manage their data usage. Some ISPs already provide those tools and others will be required to do so within a matter of months. These requirements will be helpful for some, but they eschew tougher regulatory options.
The CRTC’s proposed funding model – $100 million per year from the local voice subsidy and another $250 million over five years from telecom revenues that include Internet services – creates a useful source of funding, particularly when combined with the $500 million promised by the federal government. Moreover, the additional funding is relatively modest as a percentage of overall telecom revenues, especially when contrasted with the five percent Internet tax sought by some groups in the digital Cancon consultation. Yet even the CRTC admits that more money will be needed, telling ISED Minister Navdeep Bains that “meeting the nation’s broadband challenges will require billions of dollars over many years to come.”
Given that the CRTC largely avoids imposing regulatory requirements in this decision, more than just money will be needed to meet the broadband challenge. The Commission could have gone much further in mandating broadband obligations, addressing affordability, and curtailing data caps. It calls this decision “Modern Telecommunications Services – The Path Forward for Canada’s Digital Economy” and while it sets the target for modern telecommunications services, the path for getting there will still require much work.