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The Canadian Radio-television and Telecommunications Commission is conducting a review of what constitutes basic telecom services, with a hearing planned for next April. How to address the challenge of rural Internet access will be a central issue.Yvonne Berg/The Globe and Mail

As Canada begins a review of whether high-speed Internet access is a "basic telecom service," controversy has erupted in Nova Scotia over one company's move to impose usage caps on rural Internet use that customers say is already intolerably slow.

Halifax-based cable company Eastlink plans to cap its "Rural Connect" service – which is available in some rural southwestern parts of the province for a base price of $46.95 – at 15 gigabytes per month and charge $2 for each GB beyond that to a maximum of $20 in overage fees.

The decision has attracted harsh words from local and provincial politicians and sparked a petition to stop the caps that has garnered more than 2,300 signatures.

Eastlink's Nova Scotia rural Internet service was rolled out as part of a government program to expand broadband access and was meant to provide an option that would give customers download speeds of 1.5 megabits per second (Mbps). Eastlink, which declined to comment for this story, said in a recent regulatory filing it has faced increased capacity demands in recent years and the service cannot keep up with the usage needs of today's customers, which include video streaming and gaming.

Curtis Jeffery is an Eastlink customer and started the petition.

Mr. Jeffery says his average download speeds range between 0.3 Mbps and 0.6 Mbps, far slower than speeds city dwellers rely on and only inconsistently meeting the minimum 0.5 Mbps broadband speed necessary to stream videos on Netflix. He said he was inspired to start the petition by those who work from home to take care of their children and have to travel to nearby towns to use reliable WiFi services. "This just really isn't fair for those stay-at-home parents who rely on their Internet connection to make a living," Mr. Jeffery said in an e-mail.

Reza Rajabiun, who researches broadband infrastructure issues at Ryerson University, said the situation in Nova Scotia is "a good example of a more general problem with the manner in which rural subsidy programs have been designed in a lot of the country. "As traffic goes up, you need increasing scalability of networks," he said.

Eastlink said it received $2-million in government funding to build the service as part of a program launched in 2007 to expand broadband Internet to almost 100,000 rural households (another provider won a contract to supply the northeastern part of the province). The company said it first estimated the project would cost $11-million, but complications due to challenging geography meant it spent more than $30-million to build the "fixed wireless" service, which uses cell towers to send signals to receivers installed in customers' homes or businesses.

The terms of its contract with the province meant it could not increase prices beyond the $46.95 base rate, but that expired at the end of last year and Nova Scotia Minister of Business Mark Furey said in an interview the government has no legal recourse to stop Eastlink from imposing the usage caps.

The Canadian Radio-television and Telecommunications Commission (CRTC) is conducting a review of what constitutes basic telecom services, with a hearing planned for next April. How to address the challenge of rural Internet access will be a central issue. Although satellite and cellular services can fill the gaps in underserved regions, those are expensive options.

Mr. Rajabiun argued in favour of building shared infrastructure at the local level that could be opened to competition from multiple players and suggested turning to all levels of government as well as industry to fund that shared investment.

Large telecom players, on the other hand, suggest the best approach is a combination of market forces (without forcing private enterprise to contribute) and targeted government funding, such as the $305-million Connecting Canadians initiative announced last year. The federal government is announcing the recipients of that funding through a steady stream of local events this summer.

As one example from submissions filed this month as part of the CRTC proceeding, Telus Corp. noted that broadband services with download speeds of 5 Mbps or greater were available to 95 per cent of households in British Columbia in 2013, 97 per cent in Alberta, and 94 per cent in Quebec (three provinces where Telus operates an Internet business).

"The small pockets of households unable to connect to broadband are mostly in rural areas with very small populations," Telus stated, pointing to the Connecting Canadians program, which aims to support delivery of services meeting a 5 Mbps download and 1 Mbps upload target to 98 per cent of households by 2017. "The data cited … confirm that the market is working very well to provide basic telecommunications services to the vast majority of Canadians, including broadband services that are required to participate meaningfully in the digital economy," Telus said.

Eastlink, which is a subsidiary of Bragg Communications Inc., supports a similar model as Telus, but said in its filing that the Nova Scotia example "highlights how a project with specific, mandated requirements, and which cannot accommodate the actual usage by customers over time, can fall short of customer expectations."

Mr. Furey, the Nova Scotia minister of business, said the government has no immediate plans to make another financial investment in rural broadband, but says he has been speaking with other service providers and municipalities in recent weeks to get a sense of possible ways forward.

"I think there are going to be multiple solutions to addressing the overarching issue of Internet access and quality of service," he said. "We have to explore all of those opportunities and solutions to find the answer."

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