Canada's biggest Internet companies are urging the country's telecom regulator not to set up new subsidies to help close the digital divide, arguing that the resources already exist but need to be properly managed.
During the second week of a three-week hearing on "basic telecom services," the Canadian Radio-television and Telecommunications Commission heard from Telus Corp., BCE Inc. and Rogers Communications Inc., which together have Internet customers virtually across the country.
All three advised against setting up industry-funded subsidies to extend high-speed Internet service to the 4 per cent of households that still do not have access to minimum download speeds of five megabits per second (Mbps) and upload speeds of one Mbps.
However, while advising against implementing new funding regimes, the companies seemed intent on striking a helpful note and proposing solutions after CRTC chairman Jean-Pierre Blais delivered an unusual mid-hearing statement on Monday urging the industry and governments to work with the commission to develop a coherent national broadband strategy. His loud call for a joint approach came more than a year after the CRTC first began consulting on the issues in this proceeding.
"In the spirit of working collaboratively, we believe the commission should co-ordinate with the government by reporting on the state of broadband connectivity and giving advice to the government on how to invest the $500-million," Jonathan Daniels, vice-president of regulatory law at BCE, said on Tuesday, referring to funding Ottawa pledged in the recent federal budget to help expand rural broadband.
BCE argues that the CRTC should prepare a report first to help guide the government in its spending decisions, but Mr. Daniels added, "If the commission does choose to act now, it could do so by redirecting existing voice contribution funds to broadband without increasing contribution beyond current levels."
The existing contribution fund supports the delivery of basic services such as land line telephone in hard-to-reach areas. Telecom operators with annual revenue of more than $10-million pay a percentage of various revenues into the fund, but retail Internet revenues are not included in that. The companies oppose extending the fund to Internet revenues, but say the money could be spent on broadband initiatives instead.
Several previous intervenors have argued that the CRTC needs to establish new funds and take a percentage of Internet revenues to do so. The Affordable Access Coalition has proposed a fund capped at $190-million per year to support expanded access in rural and remote areas that lack access or are currently underserved as well as a "baseline" affordability subsidy that would give low-income households $10.50 per month to spend on any telecom service. It says that program would be available to about 1.4 million households and be capped at $70-million a year. (An "ambitious" program would offer $20.50 a month to up to 2.9 million households and would be capped at $410-million.)
Rogers executives proposed a "multi-stakeholder advisory council" on Thursday, suggesting that a committee of "government, industry, consumers and non-governmental organizations" could oversee a national broadband strategy.
"I think everyone realizes that something of this nature needs to be done to address this problem properly," David Watt, senior vice-president of regulatory affairs at Rogers, said when asked if he thought that other industry players would be willing to participate.
He said Rogers had not yet spoken with other industry players because the company began thinking about such a strategy only on Monday when Mr. Blais made his statement indicating that the CRTC alone could not be responsible for these issues.
"Thanks for your submission and your constructive approach," Mr. Blais said to the Rogers executives at the conclusion of their testimony on Thursday. "It's not that we agree with everything, but it was constructive."
The big providers also oppose new subsidies to help address issues of affordability for low-income Canadians who struggle to pay for Internet access. They point to issues of mismanagement and fraud in the U.S. Lifeline program, which the Federal Communications Commission recently extended to subsidize broadband services.
"The commission has limited ability to address income problems through price reductions for the services it regulates, and such policies, if implemented, are likely to be costly, difficult to administer, and ultimately of limited impact because the problem of poverty is far vaster than the price of any one good or service," Ted Woodhead, Telus senior vice-president of regulatory affairs, said on Monday.
Rogers recently extended a pilot project offering $10 monthly Internet packages to residents of low-income housing and Telus said it is in the planning stages of a similar project for low-income families receiving the Canada child tax benefit.
"You've seen what Rogers has done. You've heard about what we're doing. … And you know, if those are all driven by the industry … outside of any government compulsion to do something, then I would say, yeah, the chances are good that the industry could come up with something," Mr. Woodhead said.
He also suggested that the CRTC could play a role in "figuring out a way to roll out" a program offering low-income families a reduced monthly rate. "The intent was to do this nationally, based on the fact that poverty is a national problem. And potentially we could do this with the rest of the industry and address this issue."
Commissioner Peter Menzies said that while he understood Telus might eventually want the commission to be involved in monitoring or facilitating such a program, he would like to see industry take action independent of any direction to do so. "If people want to be kind to the poor, they don't need to come to us for permission."
Yet, without some direction, it is not clear that all Internet companies would voluntarily establish such programs.
The Rogers and Telus projects are both corporate responsibility initiatives and Mr. Watt emphasized on Thursday that the low-price plan is highly subsidized by the company.
For its part, BCE said it has chosen to direct its social-responsibility spending toward mental-health and digital-literacy initiatives.