Thank you, and good morning, all. We really are pleased to be here today.
Thank you for inviting us to discuss access to broadband Internet across Canada.
As the chair mentioned, my name is Pamela Miller, and I am the director general of the telecom policy branch at Innovation, Science and Economic Development Canada.
I am going to speak to the deck that you have, “Broadband in Canada”, giving the overall overview, and then Sue Hart is going to describe in more detail the programs that our department has available for broadband.
As you know, telecom and broadband connectivity play an integral role in our country's economic prosperity, as well as in our everyday lives. Internet access is an essential service, whether it be to look for employment, register for government services, or do banking online. For Canadian businesses, the Internet is a doorway to global markets, cloud-based services, and remote workers. Governments are investing in digital infrastructure as it is also an opportunity to support economic growth, innovation, and social inclusion, particularly for indigenous peoples.
A wide variety of research has linked broadband to a number of positive economic outcomes, including GDP growth, productivity and efficiency gains, improved research and innovation, and enhanced opportunities for local communities. I don't think I have to convince you; you are all here and want to study this topic because you know how very important it is.
I just want to take a brief moment to talk about the technologies that play a role in providing Canadians across the country with broadband access. With constant advances in technology, broadband Internet services have been made available over a variety of platforms. Wired networks include fibre optics, digital subscriber lines, and cable networks, which can typically achieve the highest speeds. These networks have good coverage of urban and suburban areas. Almost 90% of Canadian households have access to at least one wired network.
Fixed wireless networks provide access using towers and wireless radios, with subscribers using antennas fixed to their residence to receive the signal. They are typically used in lower-density regions, such as rural areas, to provide broadband service where the distance between households makes it unaffordable to run wires.
Mobile wireless networks have a national footprint, helping to keep people connected no matter where they are. Satellite networks offer national coverage and are typically used in rural and remote areas that are the most challenging to reach.
In Canada, the principal driver of telecom investment is the private sector, which has made considerable investments—over $13 billion in 2015, which is very impressive. The government has taken actions to support broadband by establishing marketplace frameworks to foster competition and investment, effectively managing the spectrum to encourage the availability of mobile broadband, and providing funding for rural and remote broadband network expansion, which we'll talk more about shortly.
I am pleased to report that there has been good progress. There are certainly gaps that remain, but we have also made progress. Over the past several years, market-led development supplemented by government programs has made significant improvements in broadband coverage and speed. Virtually all Canadians have access to some form of broadband. Broadband coverage at 5 megabits per second is available to 96% of Canadians, and it is anticipated to reach 98%.
The most dramatic jump has been in the availability of higher speeds, sometimes referred to as next-generation networks. In 2015, for example, 75% of Canadians had broadband speed of 100 megabits per second, a jump from just 28% in 2011.
These improvements have been primarily due to cable network upgrades and telco investment, which are bringing fibre closer to customers' homes in large urban markets. Service providers are also making some big investments in gigabit networks. A gigabit is equal to 1,000 megabits. For example, Bell and Telus each have announced $1 billion of investment in Toronto and Vancouver, respectively, and Rogers has expanded gigabit Internet to its entire network footprint of four million customers.
Internationally, Canada performs strongly at speeds such as 100 megabits per second, and we are in fact second in the G7.
Canada is also doing very well when it comes to mobile coverage. Over 99% of the population has access to a mobile network, and 4G LTE, which allows even greater speeds, is available to 97% of the population.
As I mentioned investment, an important indicator is telecom investment, as it provides insight into how much capital is going into network improvements and upgrades. In this regard, Canada performs well in terms of investment for both wire line and mobile compared to our peers. Total telecom investment in Canada as a percentage of revenue is over 20%, which is above the OECD average of 15%.
If you look at the progress, there have been gains in rural and remote access as well. In 2011, 87% of Canadians had access to 5 megabits. Now it is 96% of Canadians, and it will reach 98%. New technologies, such as next-generation high throughput satellites, have also come on line, providing more capacity for users reliant on satellite connectivity.
Despite the strong progress, as we all know, there are still broadband gaps in certain parts of the country, particularly in rural and remote areas. These areas typically have lower population densities, making the business case for private sector investment more challenging. For example, 99% of Canadians in large urban areas have access to speeds of 50 megabits per second. In rural areas, only 29% of Canadians have access to these speeds.
Canadians living in rural and remote areas, such as Swan Lake first nation or La Tuque, Quebec, expect to have the same access to high-quality, affordable broadband services as Canadians living in Calgary or Montreal. They want a broadband service that meets their needs, that allows them to fully participate in the digital economy.
The north in particular is a challenge, as there are nearly 100 communities that are completely reliant on satellite technology. Many of these communities are very difficult to serve, as they can lack access to a permanent road network or the electrical grid.
Turning to adoption of the Internet, Canada does well in terms of the percentage of households that subscribe to broadband, with 85% of households reporting that they use the Internet. However, adoption rates are lower for low-income Canadians. For example, only 63.5% of Canadians in the lowest income quintile subscribe to broadband compared to over 98% in the highest quintile.
I'm now going to turn to my colleague, Sue Hart, who is going to describe the connecting Canadians and connect to innovate programs.
The connecting Canadians program was launched in 2014 to enhance broadband in rural areas and the north.
That program, which targets last-mile networks, has a goal to reach 280,000 households in Canada. That said, we expect to reach about 300,000 households.
The north, specifically Nunavut and Nunavik, is a separate component, as they are entirely dependent on satellite for all their communications. Back then, time was of the essence, as the satellite leases were set to expire in 2016. Today, there are 86 connecting Canadians projects under way. There are projects in every province and territory. There are 12 that are now completed, and many more will end by March 2018. All projects will finish by March 2019, when the program ends.
As an example, for the Internet company goZoom, in Renfrew County, Ontario, the connecting Canadians program allowed them to put in three new wireless towers and increase services to households. It also enabled a local sawmill in Renfrew to do real-time monitoring of its operations.
The connect to innovate program, which was launched on December 15, 2016, will invest up to $500 million by 2021 to provide reliable high-speed Internet services to Canada's rural and remote communities.
This program is focused on new backbone infrastructure and will also connect institutions such as schools, hospitals, first nations band offices, and others. As well, and as a result of our consultations, upgrades, resiliency, and last-mile infrastructure are eligible.
In designing the program, we conducted extensive consultations over the spring, summer, and fall of 2016. This included all provincial and territorial governments. It included private sector service providers, municipal organizations, and first nations organizations. We spoke to some mayors and councillors, other departments, and industry associations. We also held several information sessions with MPs, some of whom are in this room, as well as with the digital caucus and the rural caucus.
The application period closed on April 20, and we had an unprecedented, incredible demand of close to 900 applications to the program, requesting over $4.4 billion. These are from coast to coast to coast. Applications are currently being reviewed, and we expect that the will select projects by the end of the summer.
I'll turn it back to Pam.
I now turn to slide 12, on affordable access.
We are also moving forward with initiatives designed to help increase broadband adoption.
Budget 2017 proposed to invest $13.2 million over five years in a new affordable access program that will facilitate access to low-cost home Internet packages. As computer cost is also a barrier for some families, we have a target of providing 50,000 refurbished computers through the existing computers for success Canada program to families along with the low-cost Internet packages.
Budget 2017 also proposes $29.5 million over five years starting in 2017-18 for a new digital literacy exchange program. This program will foster more inclusive Canadian Internet literacy by supporting initiatives that teach basic skills including how to use the Internet safely and effectively to certain groups that are affected by digital divides including seniors, low-income Canadians, indigenous peoples, and those living in northern and rural communities.
Looking at other actions to support broadband, we have also consulted on a streamlined licensing framework to support the development of next-generation satellites. These initiatives are complementary to actions being taken by other government departments and agencies such as the CRTC. Chris Seidl from the CRTC is here to speak in more detail. I will just mention that in December, 2016, the CRTC established broadband as a basic service and set national broadband targets of 50 megabits per second down and 10 megabits per second up and announced a new $750-million regulatory fund to achieve them. This fund is complementary to our connect to innovate program and we will work closely with the CRTC to identify opportunities for partnership. Infrastructure Canada is also proceeding with its $2-billion rural and northern communities fund where connectivity is an eligible category. ISED has also been working with our provincial-territorial partners to leverage available funding and local expertise.
Looking ahead, we anticipate the private sector will continue to lead the way in terms of broadband investment. This approach has served Canada to date and we expect this to continue. We will be supplementing private sector investment where the business case does not exist.
As technology and competition evolve we foresee new broadband technologies coming online offering Canadians even faster speeds and more robust services. For example, we expect the wire providers to keep deploying fibre deeper into their networks and to provide higher-speed offerings.
In mobile we have seen the widespread emergence of advanced mobile wireless networks such as long-term evolution, LTE, and we expect to see continued improvement in the future. Now 5G, fifth generation, wireless technology, is the next big thing and Canada is well-positioned to be on the leading edge. The satellite industry is also making dramatic improvements with a new generation of satellites providing significant increases in capacity.
Going forward, our role will be to continue to ensure the right frameworks are in place to encourage competition, investment, and innovation. We will also continue to evaluate the need for future programs to expand broadband services and continue to work with our federal, provincial, and territorial counterparts in this regard.
Thank you very much.
Thank you, Mr. Chair, for this opportunity to talk about broadband Internet services and the recent regulatory action taken by the CRTC to increase access in rural and remote areas.
My name is Chris Seidl, and I am the executive director of Telecommunications at the Canadian Radio-television and Telecommunications Commission, or CRTC. With me today is my colleague Alastair Stewart, senior legal counsel. We welcome this chance to outline the commission's recent decision concerning modern telecommunications services.
All Canadians, no matter where they live, should have access to broadband Internet services, on both fixed and mobile wireless networks. That commitment was made clear in the CRTC's December 2016 announcement that, in addition to voice services, broadband Internet access is now also a basic telecommunications service.
This decision confirms that modern telecommunications services are fundamental to foster innovation. Broadband will play a pivotal role in Canada's future economic prosperity, global competitiveness, and social and democratic development. A broadband Internet connection is as crucial today as electricity was to the industrial revolution, so access to these networks is vital to Canadians from coast to coast to coast. This is a major departure from our previous approach, which focused primarily on telephone voice services.
The CRTC has now established a universal service objective, which underlines our belief that broadband Internet access is vital in today's digital economy. Under this ambitious new objective, Canadians should have access to broadband speeds of 50 megabits per second download and 10 megabits upload for fixed Internet services. This is 10 times faster than the targets we set in 2011 and is a reflection of the rapid rate of technological change and the need to keep pace with our international competitors.
More than eight in 10 Canadians already have access to the new speed targets. We expect that they will be available to 90% of Canadian homes and businesses by the end of 2021, with the remaining 10% available within 10 to 15 years.
To foster innovation, we expect service providers to offer an unlimited data option for fixed broadband Internet services. Canadians need to be able to access the applications of their choice and not feel limited by concerns over data usage.
Equally important for Canadians is the mobile wireless broadband Internet access service. Currently, the latest mobile wireless technology, long-term evolution, or LTE, is available to 97% of the population. The commission has decided that the latest generally deployed mobile wireless technology should be available not only in homes and businesses, but also along as many major Canadian roads as possible.
However, as committee members are undoubtedly aware, there are areas across the country that currently fall short of these standards. Fast, reliable, affordable Internet is often out of reach for approximately 18% of households, which are typically located in rural and remote regions of Canada. They are lagging behind their urban counterparts, at great cost to local social and economic development.
To help bridge the gap, the CRTC is establishing a fund to support projects in areas that do not meet these targets. We are making up to $750 million available over five years for upgrades to existing infrastructure and new construction to provide fixed and mobile broadband Internet access services.
Where will the $750 million come from? The Telecommunications Act gives the CRTC the ability to require telecommunications service providers to contribute to a fund to support access by Canadians to basic telecommunications services. Telecommunications service providers currently provide a small percentage of their revenues to support residential local voice service in rural and remote areas. Contributions to this local voice subsidy, which are approximately $100 million per year, will be transitioned to the new broadband fund. The CRTC has launched a public consultation to set out the details of this transition away from local voice subsidy.
The new broadband fund will be technology neutral. This means that Internet service providers will be able to submit proposals featuring the technology they think will best meet the needs of the community. Our objective is to make sure that rural residents have service that is comparable to that available in urban centres, and that the solutions will support the evolving requirements.
A key feature of the proposed fund is that applicants will need to secure a minimum level of financial support from some level of government—federal, provincial, regional, municipal, or indigenous—or community groups and non-profit organizations, and they will be required to contribute a minimum investment toward their projects. The fund will rely on a competitive bidding process, based on similar programs, to minimize the contribution from the fund and maximize the outcome.
Recipients for this funding will need to demonstrate how they will deliver the targets set by the CRTC in terms of speed, capacity, quality of service, levels of government funding, and private investment. To the greatest extent possible, the fund will be managed at arm's length by a third-party administrator, based on objective criteria, and will be administered in a manner that is transparent, fair, and efficient. The CRTC will retain oversight of the fund, approve projects, and appoint a fairness monitor.
The new CRTC broadband funding regime will be designed to complement—and not replace—existing and future private sector investments and government funding within the broader funding ecosystem. This includes the government's connect to innovate program.
I would also like to indicate that we currently work closely with Innovation, Science and Economic Development Canada in the collection and sharing of data concerning the state of broadband deployment. In addition, we fully expect the connect to innovate program and the new CRTC funding regime to complement each other, leading to a significant improvement in broadband access across the country.
The details surrounding the CRTC's broadband funding regime are still being finalized. We have launched another public consultation to develop the new regime. The consultation is examining how the fund will work and other matters related to its establishment. We are seeking input on the funding framework, including the eligibility and assessment criteria for proposed projects, and the governance, operating, and accountability framework.
Anyone can comment on the issues set out for consultation. Stakeholders in the fund—such as Internet service providers and public funding bodies at all levels of government—and Canadians are encouraged to provide their comments. All parties have until June 28 to submit their interventions.
Given that the consultation is ongoing, I would note that we are limited as to what further details we can provide you with at this time.
We expect to issue a decision in early 2018, after which the third-party administrator will be established and the broadband funding regime will be implemented. It is expected that the fund will be operational in spring 2019.
As promising as these developments are, Mr. Chairman, it is important to understand that the availability of broadband Internet service is just one aspect that helps Canadians to participate fully in the digital economy. The commission has identified further gaps regarding the adoption of broadband Internet services that are uniquely critical but outside of its core mandate.
In our report to support the government's innovation agenda, which was submitted last December, we outlined affordability and digital literacy as barriers to connectivity in many communities, especially for those among indigenous communities and across Canada's north.
The government's most recent budget outlined two new programs to tackle these gaps, one to teach basic digital skills, another to help service providers offer low-cost home Internet packages to low-income families.
Extending broadband coverage to underserved households and businesses requires investment from the private sector in some cases and, in more difficult cases, public sector support. There is much work to be done. The efforts to close these gaps require a shared leadership and collaborative approach between all parties.
The CRTC universal service objective can be achieved only with the help of different levels of government, including municipal and indigenous governments, the telecommunications industry, and non-governmental organizations.
One thing is certain: closing the gap will be expensive. Our estimates show that many billions of dollars will need to be invested to fully address the broadband Internet access services availability gap in Canada. There is no denying this will be a daunting task. The CRTC's new universal objective is one of the most ambitious in the world, and in a country the size of Canada with its varying geography and climate, there are unique challenges to offering similar broadband Internet access services to all Canadians.
We don't expect to get to the 50/10 Mbps standard in one leap. Providing access in more difficult underserved areas is expected to be accomplished in incremental steps.
The commission was careful to provide enough flexibility in its regulatory framework to support the efforts of other parties with a contribution to make. We want to encourage the continued development of private and public sector initiatives.
Given the importance of broadband to Canadians' participation in the digital economy, we are confident that together we will be successful in meeting this important challenge.
We would now welcome any questions you may have.
With this goal of affordability, we're now increasing the amount of content that can be funnelled to a consumer, either a business or an individual. That means greater incurred costs for the Internet service providers, in terms of the consumer. They'll charge more because more data is now flowing to the consumer.
What do we do with this type of issue? For example, where I live I'm very familiar with the border situation, because we have roaming charges and there is the whole battle for consumers over roaming charges. I can be up to two kilometres away from the United States border and my device will pick up an American signal and that could lead to roaming charges, and so forth.
Here is the thing: we're growing the availability of it, but the providers are the real beneficiaries as we move more product through a subsidized system, which they then charge fees to. Again, when Netflix movies become more high definition, that means there is more data; more data means that people have more costs, and so forth. What do we do about that in terms of fairness for consumers?
I'll finish with this. The CRTC's great example was the basic cable package. We saw the response to that, which I thought was a fair way to approach cable, but they went out and it became a significant problem. Without going into details, the same thing can be happening here. We subsidize the expansion, the expansion leads to the flow of more product for the private sector, the private sector then charges more to the consumer, and it's an incurred cost from there on. I can tell you, if you have a teenage daughter and the Wi-Fi goes down, it's like Armageddon.
I'll stop there, but the end result is more consumer costs.
I'm trying to understand something about coverage and what we are and are not getting done. My riding is in Montreal. When this was first brought to my attention, I didn't know there was an issue, because I don't have any rural constituents.
When I first looked into it, I got maps, such as the one presented here that we're looking at, which says, for example, that 99% of households are covered at 1.5 megabits and 96% are at 5 megabits. I said, “Well, it seems to me that we have pretty much most of the heavy lifting done.” It's a very small part—4%—of our huge country that has to be done. Then, every time I spoke to members of my caucus who were in rural ridings, they were up in arms about the lack of service, so there's a dichotomy here.
There's a dichotomy in the numbers I'm seeing and what I hear from my colleagues, and in fact even in your statements. I'd like to point it out, and I'd like to try to understand it.
For example, Mr. Seidl, you said in your testimony that in 2011 your objective rates were 10 times less. You have 50-megabit rates now, which is your goal, so 10 times less is 5 megabits. In 2011, 5 megabits was your goal, and I look at that here, and we have 96% done, so it's actually pretty good.
However, when I look at the questions and what I hear through the testimony.... You gave the example of Renfrew. Renfrew is 100 kilometres from our nation's capital. It's not a small town. It's 8,000 people plus, and you're giving that as a great example of how we were able to help Renfrew. Well, it doesn't add up to saying that 96% of the country is covered if we're giving an example of a decent-sized town 100 kilometres from our nation's capital and saying to look at what we have been able to do for them. There's something wrong there.
Also, then I hear that we have 900 applications asking for $4.4 billion in our latest program. Well, again, if we have 96% covered, where's that demand coming from? I hear that the CRTC wants to put in a $750-million fund, and you're hoping to leverage that to get a heck of a lot more out of it. Where I'm struggling with here is to understand these numbers I'm given here and what's clearly not in line with what I'm hearing from my colleagues and even in your examples.
Finally—and I'll start with you, Mr. Seidl—you said in your testimony that for approximately 18% of households service is out of reach. Again, I don't see the 18% here. The only place that has 18% is that 82% have 50 megabits. Is that what you are referring to?