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Canada's Digital Divide Likely to Widen Due to Access and Adoption Failures

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Wednesday April 10, 2013
The state of Internet access in Canada has been the subject of considerable debate in recent years as consumers and businesses alike assess whether Canadians have universal access to fast, affordable broadband that compares favourably with other countries. A new House of Commons study currently being conducted by the Standing Committee on Industry, Science and Technology offers the chance to gain a better understanding of the strengths and weaknesses of Canadian high-speed networks and what role the government might play in addressing any shortcomings.

The study is ongoing, yet my weekly technology law column (Toronto Star version, homepage version) notes that two issues are emerging as key concerns: access and adoption. 


The access issue is no surprise as there are still hundreds of thousands of Canadians without access to broadband services from local providers. While this is often painted as an urban vs. rural issue (with universal access in urban areas vs. sparse access or reliance on pricey satellite services in rural communities), the reality is that there are still pockets within major cities in Canada without access to either cable or DSL broadband service.

Many of these communities are described as "uneconomic", since the costs associated with building broadband networks are viewed as too expensive given the expected return on investment. The government has funded some programs to foster improved access, however more may be needed to finish the job. This could include direct subsidies funded from revenues obtained through the forthcoming spectrum auction or tax relief for community-based broadband initiatives.

Interestingly, the committee heard opposition to such investment from Xplornet Communications, a satellite Internet provider focused on rural communities that appears to view public support for universal access as competition. It told the committee that the repeated efforts to help support broadband access in rural communities was the "definition of insanity" and that it was better for the government to stop "distorting the market" by allocating funding to communities that are otherwise viewed as uneconomic for service providers.

Even if those pleas are rejected, the committee will face the challenge of addressing a second, less discussed, problem with Canadian broadband: adoption. Policies aimed at achieving universal broadband access have typically adopted a "Field of Dreams" style approach in which it is assumed that "if you build it, they will come."

Yet the Canadian consumer and business experience to date suggests that this is not always true. On the consumer side, there are millions of Canadians with access to broadband networks, but who choose not to subscribe. The adoption failure is likely the result of many factors, however, the data indicates that there is a strong correlation between income and adoption.

Statistics Canada reports that 97 percent of Canadians in the top income quartile have access to the Internet in their homes, but that number drops to 54 percent for those in the bottom quartile. In other words, nearly half of all Canadians with incomes of $30,000 or less do not have ready access to the Internet and programs aimed at closing this gap are sorely missing in Canada.

An oft-overlooked problem is the poor adoption performance of Canadian businesses.  The Canadian Chamber of Commerce told the committee that 70 percent of small and medium sized businesses in Canada do not have a website. Moreover, Canadian firms are investing in technology at rates that are nearly half of those in the United States.

The government has acknowledged the concern (though it disputes the Chamber's figures), but has done very little to address it.  For example, a federal program aimed at helping get businesses online has a target of supporting only 600 firms with the hope that those companies might share their experiences with others through word-of-mouth.  Further, when asked about targets for adoption within the next two years, officials were unable to cite a specific figure.

The commonality between the shortcomings of access and adoption by both consumers and businesses is that the government has failed to articulate a digital strategy aimed at solving these problems. Until that happens, it seems likely that the Canadian digital divide will continue to expand. 


Comments (5)add comment

Paul said:

content is king
Our biggest problem with adoption is you have to want it. To want it, there has to be something there for you. The source of this is two fold.

1. Suppliers of goods in Canada make it very difficult or impossible for online only retailers to exist. This means that there are very few online options for any particular type of good. This is one of the reasons eCommerce, even from a giant like Amazon is lacking here in Canada.

2. Restrictive (geographical) copyright. Google announced their music service going online in a long list of countries yesterday. Canada is still absent from that list. The Netflix catalog is sad and pathetic here compared to the US. Even on Youtube, you bump up against "Sorry, this video is not available in your region" all the time.

Until there is a reason for people to want or need to be online, they will not.
April 10, 2013

mrG said:

I can't speak for ALL of Canada but ..
In my little neck of the woods, here's what went so horribly wrong: yes there was that tariff imposed on the telcos that amassed an impressive fund expressly for building out infrastructure to the geographically difficult areas ... and in the interim local entrepreneurs built out long-range WiFi into many of those areas and not inconsiderable financial risk, and with, I might add, absolutely no cooperation from any levels of government. But it sort of worked and brought people online, grateful people. I was one of them; I had given up all hope prior to discovering their service.

Now slip ahead a few years, someone in Ottawa decides it is time to spend that massive accumulated fund. Cheers all-round ... until we learn *how* the money is to be spent: it is handed *back* to the big telcos it was skimmed from, and they, surprise surprise, take the money with great promises of rural connectivity, and then, surprise surprise, they announce the problem was not actually doable, although they keep the money, and expand into the already-serviced areas, with a few token forays into low-hanging fruit areas that threaten the business of those few entrepreneurs who were resting on those subscribers to fund the less profitable ventures.

Now, *given* that the big providers have this history of taking money and then screwing off with it, *given* their history of overcharges, confusing 'plans' and absurd fees, even in places where they *do* reach, unsurprisingly the conversation comes up on community boards with the same subject line: "fed up with big provider X, looking for *any* alternatives" to which the unfortunately answer is all too often "go fish".
April 10, 2013

Crockett said:

...
Harper is more interested in building oil pipelines than ones for data. Sure we are a resource based economy, but that is only because we have squandered our technological potential because of it. Resources run out, innovation goes on forever.
April 10, 2013

surprised said:

Out of context much?
Hey Geist - how about putting in full quotes and context on what ISP's are saying in the proceedings vs just tidbits used as filler within a sentence. Otherwise, it's misleading!
April 10, 2013

Ole Juul said:

Re: content is king
@Paul.
I agree that content is the key. But would like to add that an important type of content is information. However, I notice that many people don't have any particular interest in finding much content on the net. They don't have an area of interest that involves information and doing a net search is beyond their current skill level anyway.

I disagree that shopping content is lacking though, and I think that
on-line shopping will increase as people get tired of paying greedily
high prices locally. I live in a rural area and shopping on-line is important to me because I don't have the gas money to travel 4 hours to a city large enough to have even electronics components and computer parts. Even if I could afford it, I still wouldn't relish spending an hour on the phone and then driving around to some place during hours specified by them. I can find things on-line in minutes, and they will arrive in my mailbox some days later. Also, Canadian on-line businesses have a disadvantage. The Canadian Post office charges much more than the US Post Office does. That makes it so that it is generally cheaper to buy the same item from the US when the item is similarly priced.

I personally make an effort to support local stores, but when I see them charging tens of times more than the Chinese on-line stores, then I will buy the exact same item from China. Greed is not a value added ingredient in my books. Like I said earlier, I believe people will start to come to the same conclusion and start relying on the internet.
April 11, 2013

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