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2014 budget commitment falls short of long-term solution for Northern connectivity

Posted on: 12-February-2014

While our G8 peers all developed national broadband strategies, Canada rolled out the modest Broadband Canada Program. Once again it looks like the government’s response to the digital divide is a temporary solution to a long-term problem.  A quick look at Ookla’s Net Index illustrates the scale of the problem. Canada sits 36th of 188 counties in the index - in the middle of the pack of it’s G8 and OECD peers. If you were to place Nunavut on the index, however, it would currently be somewhere between Gambia (186) and Afghanistan (187).

With the $305 million for rural and remote broadband announced in the 2014 budget, the federal government will meet the CRTC’s goal of 5Mbps for all Canadians by the end of 2015 (more likely 2016 for the Nunavut). But it is a mixed blessing. On one hand, users currently served under the Broadband Canada Program are limited to 1.5Mbps and will certainly be happy to get a slightly faster connection. Presumably the new funding will also support a larger monthly data cap, which is also an issue. How much so? The average Canadian downloads 28.4G and uploads 5.4G a month. In most Nunavut communities today, that would cost you close to $450/month. In the 3 communities with DSL, you’re still looking at $240-$355 a month. So users don’t stray far from the monthly caps, as illustrated in the graph below.

Qiniq Average monthly data usage 2010-2013, GB

However the 5Mbps target is, arguably, already out of date by global standards today let alone in 2019 at the end of the 5 year program. In comparison, a recently released report commissioned by the Northern Communications Information Systems-Working Group (NCIS-WG, a federal-territorial working group concerned with the state of Arctic communications) examines 4 different scenarios to deliver 9Mbps by 2019 (arguably only incrementally better than 5Mbps) in the three territories (which excludes other northern and remote regions such as Nunavik and Nunatsiavut). The cost estimates for all 4 options, which differ in backbone technology and degree of redundancy, were significantly greater than $305 million, ranging from $622 million to $2.178 billion.

Perhaps the funding announced in the 2014 budget is an interim solution while proceedings at the CRTC take their course. The Commission has certainly raised the profile of the North’s telecommunication woes with last year’s review of the NorthwesTel Modernization Plan. And there are 3 proceedings in 2014-2015 that will be of relevance: an inquiry into satellite transport, “a proceeding… to establish a mechanism to fund infrastructure investment in transport facilities [in the North]”, and the much anticipated review of the Basic Service Objective (BSO).

NBDC would like to see broadband recognized as an essential service under the BSO with long-term, stable and scalable funding through a portable subsidy under the National Contribution Fund (NCF). An enhanced BSO would ensure reasonable minimum service levels for all Canadians, regardless of location or the backbone technology; a portable subsidy would encourage competition and innovation, and support consumer choice.

Broadband access is increasingly a requirement of socio-economic inclusion, not an outcome of it.

While some will scoff at the cost of such investments, there are also significant costs to maintaining the digital divide: lost GDP, lost household revenue, lost tax revenue, and lost jobs. However, as noted in the 2013 Nunavut Economic Outlook, while “growth  [in Nunavut] over the next five years will likely be higher than any other jurisdiction in Canada when measured by  GDP…  turning this growth into prosperity for people and for communities is Nunavut’s next great challenge.” Simply put, broadband is an enabler to ensure that economic growth in Nunavut translates into economic development and prosperity for Nunavummiut (the people of Nunavut).

Section 7 of the Telecommunications Act sets out the objectives of Canadian telecommunications policy, including the objective “to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada”. To achieve this will take a national commitment similar to the railroad of the 19th century or the Trans-Canada highway of the 20th century. As an Arctic nation, Canada needs an information highway from coast to coast to coast for the 21st century. So while the $305 million announced for rural and remote broadband in 2014 is a much needed stop gap, NBDC is looking forward to a significant investment for northern connectivity in 2015 as part of the next phase of Canada's nation building in the Arctic.