Chris Seidl to the Conference and Annual General Meeting of the Canadian Association of Wireless Internet Providers (CanWISP)

Gatineau, Quebec
March 27, 2019

Chris Seidl, Executive Director, Telecommunications
Canadian Radio-television and Telecommunications Commission

Check against delivery

Thank you for inviting me to your Annual General Meeting and providing this chance to connect with members of CanWISP. Your association has consistently done an excellent job of promoting the interests of fixed wireless Internet service providers in Canada.

This is my first time speaking at your conference, but it was almost exactly one year ago today that our Vice-Chair of Telecommunications, Christianne Laizner, was here. A lot has happened since then that will have a direct bearing on the telecommunications industry and your businesses.

I recently returned from the Mobile World Congress, which provided an excellent glimpse into the future of global communications. A future that, in large part, will be wireless. The communications environment is rapidly evolving to support 5G technologies, artificial intelligence, virtual reality and augmented reality. This will lead to applications not only for consumers, but also for the industrial sector and support of smart cities. In the coming years, new innovative services should greatly assist our economy by improving Canada’s productivity and our quality of life.

This reality is the driving force behind much of what I have to say today. I’ll begin by talking about the recent trends in the telecommunications sector and the current state of the industry in this country. I’ll then outline several CRTC actions that will help ensure Canadians continue to have access to a world-class communications system.

Status of the industry in Canada

Let me start by highlighting the growth in the industry. According to the CRTC’s 2018 Communications Monitoring Report (CMR), in 2017 total Canadian telecommunications revenues reached $50.3 billion – up from $48.7 billion in 2016.

The increase was in response to Canadians’ seeming need to be increasingly connected and their insatiable demand for more data through both Internet and mobile services.

In 2017, revenues for mobile wireless services increased 5% to $25.8 billion, while those for fixed Internet services increased by 7% to $11.5 billion.

The industry’s results speak to Canadians’ growing dependence on Internet access to go about their daily lives. Access to high-quality telecommunications services is an absolute necessity in today’s world – whether you live in downtown Montreal or Melfort, Saskatchewan.

Digital technologies are now integral to Canadians’ way of life. We rely on them to work, learn, play and connect with each other. We use it for banking and shopping … to keep track of our kids or elderly parents…to apply for jobs or connect with medical professionals through e-health … and to access government programs and services. These are some of today’s uses. Looking to the future, this list will only grow in ways we cannot even imagine.

Most Canadians now have better access than ever before to the services they currently need but there is still more work to be done. The most recent Communications Monitoring Report revealed that 83% of Canadian subscribers have a mobile data plan, and that usage grew from 1.5 gigabytes (GB) per month in 2016 to 2 GB in 2017.

Similarly, 86% of Canadians households had an Internet subscription with an average speed of 68 megabits per second (Mbps). Data consumption – download and upload combined – jumped by 30% to 166 GB in the same period.

Of particular importance to the CRTC, as of December 2017, 84% of Canadian households had access to a fixed Internet service that meets the Commission’s new universal service objective of 50 Mbps download, 10 Mbps upload and an unlimited data option.

Urban centres, especially, are well served. Most urban households have access to at least 100 Mbps service. In addition to cable access, this is due to the availability of fibre-to-the-home, to which 35% of households had access in 2017. That compares to 22% in 2015.

However, as everyone in this room knows, it’s an altogether different story for Canadians living in rural and remote regions of the country. While 97% of households in urban areas have access to service that meets the universal service objective, the rate was just 37% in rural areas at the end of 2017.

That means approximately 2 million households in Canada do not have access to an Internet service meeting the Commission’s objective.

And all of these numbers are already dated due to the ongoing billions in investments by the private sector and recently announced public-supported projects.

We launched our annual survey in January of this year, soliciting the 2018 data from the industry for the next Communications Monitoring Report. Having accurate data in a timely fashion is critical as we make major decisions that affect not only your industry, but also the lives and livelihoods of millions of Canadians.

Current files

The CRTC recognizes how vital it is that all Canadians have access to broadband services that enable them to participate fully in the economy and society.

So, I now want to talk about what the CRTC has been doing to address some of the challenges confronting Canadian individuals and businesses concerning affordability, innovation and access – particularly for people experiencing the digital divide.

Wholesale high-speed access

I’ll start by outlining our current work on wholesale high-speed access services.

As you likely know, the Commission is committed to fostering competition in the broadband market. Sustainable competition is vital to ensuring that Canadians have access to reasonable prices and innovative services.

That’s why large companies must grant competitors access to their networks, including their fibre access facilities. We’re currently in the last stages of setting the final wholesale rates for aggregated access across the country, as well as the final tariffs for disaggregated access in Ontario and Quebec. These cost-based rates should enable an effective combination of service-based competition and facilities-based competition by ISPs.

We also have considered an application submitted by the Canadian Network Operators Consortium asking us to change some of the parameters of wholesale access.

To put this request into perspective, in 2015, we established a framework for aggregated wholesale high-speed access where we placed a speed cap of 100 Mbps. At the time, we stipulated that download speeds in excess of 100 Mbps would only need to be made available to competitors through the implementation of the disaggregated service. We also said the cap would be introduced within an incumbent carrier’s serving territory once the associated disaggregated wholesale tariff is approved on a final basis.

We recently issued our decision granting CNOC interim relief by suspending the implementation of the 100 Mbps speed cap for aggregated wholesale high-speed access services – pending a final decision.

Our reason for doing so is that consumers may be limited in their choice of service provider for speeds above 100 Mbps until disaggregated services are available. This could prove disruptive for consumers in a growing segment of the retail Internet services market. The CRTC believes the lowest potential disruption for consumers is in the public interest.

Wireless Review

Another development designed to better serve consumers is the recent launch of lower-cost data plans. You may recall our announcement in December 2018 that Bell Mobility, Rogers and Telus have committed to offering a broad range of lower-cost data-only mobile wireless plans to Canadians – as the CRTC had requested.

The lower-cost plans range from $15 for 250 MB to $30 for 1GB of monthly data, with a mix of prepaid and postpaid options on both the 3G and LTE networks of the national wireless providers.

The CRTC will monitor the implementation and availability of these and other plans over the coming months to ensure that national wireless providers honour their commitments.

While lower-cost, data-only plans are a step in the right direction and provide more choice for Canadians, we remain concerned about the overall condition of the market. That’s why we launched the review of our mobile wireless framework last month. The CRTC is conducting a comprehensive examination of the state of the mobile wireless market to determine whether further action is required to improve choice and affordability for Canadians.

This review is in addition to the important work of the department of Innovation, Science and Economic Development concerning availability and use of spectrum to further support the wireless market.

In the CRTC’s current proceeding, we’re seeking comments regarding whether mobile virtual network operators (MVNOs) should have mandated access to the networks of the national wireless providers until they are able to establish themselves in the market.

In launching this proceeding, the Commission noted that a sustainable retail MVNO market has failed to develop on its own. We expressed the preliminary view that a well-developed market would provide benefits to Canadians that likely outweigh any negative impacts on network investments.

Given the imminent emergence of 5G, the CRTC also is looking ahead to the future of mobile wireless services in Canada. We will be assessing whether regulatory measures are needed to facilitate the deployment of small cells and 5G network infrastructure.

We will be developing a fulsome record to inform our decisions and, given your role, we welcome CanWISP member’s views on these issues. AllCanadians are invited to participate in the process and share their input.

The CRTC will hold a public hearing next January in the National Capital Region as part of this important review.

Broadband Fund

Then, of course, there is the new CRTC Broadband Fund, which I suspect is of most interest to many of you.

It is designed specifically to improve access to mobile and fixed broadband services in those parts of the country that lack an acceptable level of access. This is an area where you occupy a very important niche in the marketplace, particularly in under-served regions of the country that larger providers don’t typically serve.

We expect that initiatives like the Broadband Fund will enable you to do even more. The Fund was purposely created to help businesses and other interested groups to move further and much faster to ensure the broadband needs of Canadians living in rural and remote areas are addressed at the same levels as they are in urban centres.

Overview

So, let me provide a quick history of the fund and its purpose. It dates to a December 2016 CRTC decision that redefined ‘basic service’ to include voice and broadband access on both fixed and mobile networks. It established a universal service objective for fixed access of speeds of at least 50 Mbps download and 10 Mbps upload.

Our goal is to achieve 90% coverage by the end of 2021 and 100% as soon as possible within the following decade.

The Commission has earmarked up to $750 million, over the first five years. Money will be available for projects that build or upgrade access and transport infrastructure to provide fixed and mobile wireless broadband Internet service. I’ll provide more details in a few minutes.

In the first year, $100 million will be available. That will be increased by $25 million annually to $200 million in the fifth year.

Up to 10% of the annual total will be provided to satellite-dependent communities that don’t have any terrestrial facilities.

I should note, as well, that the fund is technology neutral so we are open to a variety of creative technical solutions that meet the universal service objective.

Recent developments

We’ve achieved some major milestones on this file since last year. In September 2018, we announced the details of how the Broadband Fund will work, including the criteria to evaluate applications for funding. We also laid out the fund’s governance, operating and accountability frameworks.

Another key development took place last November. That’s when we published a series of maps on our website that show which regions have access to 50/10 Mbps and which do not, based on 2017 data. These regions are represented using hexagons that cover an area of 25 square kilometres.

We also published maps showing the major roads and inhabited areas that do not have access to LTE service, as well as communities without high-capacity transport and satellite-dependent communities. We will update this information as we prepare a call for applications this year.

The next milestone, in February of this year, was the release of a preliminary guide to help interested parties to complete and submit applications for funding.

The guide is meant to help applicants with all the details they will need to include in their applications. It sets out the different criteria that will be used to evaluate applications and select projects for funding. It also lists the documentation and information applicants will need to provide so we can assess their applications.

The guide explains the types of conditions that will be imposed on Fund recipients. And it outlines the online application intake system that will be launched shortly after a call for applications.

We provided a comment period on the draft application guide, which ended March 18th, to give interested parties a chance to offer their feedback. We appreciate the thoughtful comments that we received and will be updating the application guide accordingly.

Eligibility

So, let me provide more details about what exactly the Commission will be looking for. I’ll focus on the main points, only, as there is a lot more information available to you in the regulatory policy document and the application guide. Projects will be selected for funding based on a comparative selection approach through a three-step process: eligibility, assessment and project selection.

In terms of eligibility, an applicant must demonstrate that it, or at least one member of the applicant group, is eligible to operate as a Canadian carrier and has at least three years’ experience deploying and operating broadband infrastructure in Canada.

That leaves a wide array of possibilities. The applicant can be:

• a for-profit or not-for-profit corporation
• a provincial, territorial or municipal entity
• a band council or a First Nations, Inuit, or Métis government,

or

• a partnership, joint venture or consortium composed of any of above

Especially important, the applicant needs to submit a business plan clearly demonstrating that, without funding from the Broadband Fund, the project would not be financially viable. It must also invest more than a nominal amount in the project.

I need to be clear that the Broadband Fund is meant to be complementary to – but not a replacement for – existing private investment and future public funding. And, while there is no a requirement to obtain funds from other sources, applicants are encouraged to do so.

An additional requirement is evidence that the applicant has consulted, or attempted to consult, with communities affected by the proposed project.

Finally, and most crucially, the applicant can propose projects to build or upgrade access, transport or mobile broadband infrastructure.

For access projects, only those that propose to serve an area within a 25 km2 hexagon where no home or business has access to the 50/10 objective will be eligible for funding.

Transport projects must be to a community with a population of less than 30,000 located at least two kilometres away from a transport point of presence with at least 1 Gbps capacity. It must also offer a minimum capacity of 1 Gbps for new builds or 10 Gbps for upgrades.

Finally, for mobile wireless, only projects that propose to offer LTE coverage in either inhabited areas or part of major transportation roads will be eligible. These areas must not currently have access to this technology.

Any proposal can also include areas that are not deemed eligible for funding. However, the costs incurred for these areas will not count towards the total eligible costs for the project.

I realize that’s a long list of prerequisites for consideration for funding. However, the Commission needs to ensure that whatever projects the Broadband Fund may eventually support truly advance the public interest.

Assessment

When it comes to evaluating submissions, the CRTC will apply a series of assessment criteria to identify the high-quality projects among all those that it finds to be eligible.

Some assessment criteria will apply to all projects, while others will apply only to specific project types. Unless otherwise indicated in a particular call for applications, there is no specific weighting defined for each assessment criteria. They are all important and we will evaluate each project against all the applicable assessment criteria.

So, what are some of the things we want to see? First, we are looking for projects that are technically feasible as well as financially viable and sustainable.

We also will want to see that the proposed project covers areas where broadband service is most needed – regions where there is a large gap between what’s currently available and the Commission’s universal service objective.

Another important consideration will be whether the proposed project is supported by the community.

Of course, the level of service proposed … the size of the area the project would cover … the population for which service will be improved … the services and prices that the applicant intends to offer… and how much support is required from the fund will also factor in the assessment.

Selection considerations

Once all the high-quality projects have been identified through the assessment, we expect that difficult choices will still have to be made to select funding recipients. Given the size of the divide, we anticipate the demand for funding will exceed available funds.

To further narrow down our choices, we will use various selection considerations. For example, in addition to the efficient use of funds – a top priority – special consideration may also be given to:

• projects in multiple regions of Canada, so funding is not disproportionately provided to a single or small number of regions
• fixed access or transport infrastructure projects over mobile infrastructure projects
• transport infrastructure projects over fixed access infrastructure projects
• projects targeted to Indigenous or official language minority communities

Call for applications

The next step is a call for applications in the coming months. It will set out the length of the application period as well as eligible areas and the type of projects to be targeted for the first call.

For each call for applications, a corresponding set of data and maps will be published consistent with the scope of the call.

Given the importance of achieving universal service in all regions, we look forward to receiving many high-quality projects that will help close the digital divide as quickly as possible.

Other opportunities

Of course, the Broadband Fund is just one source to help businesses like yours meet the demand for better Internet services. As you are no doubt aware, the government announced in last week’s Budget a new, coordinated plan to help build a fully connected Canada. It includes $1.7 billion in new funding, with the remainder expected to come from private-sector investments.

The Government has committed to a national target that is consistent with the broadband Internet speed objective set by the CRTC.

The new Universal Broadband Fund will focus on extending “backbone” infrastructure to underserved communities. The government also announced funds for “last-mile” connections to individual homes and businesses in the most difficult-to-reach communities.

Equally important, the Budget pledged to coordinate its activities with provinces, territories and federal institutions such as the CRTC to maximize the impact of these investments.

Of course, no one should think that it is easy to solve the challenges confronting currently underserved areas of the country. It will take all parties bringing their talents, technologies and financial resources together to successfully address this critical issue.

Conclusion

But make no mistake. Broadband is vital to the lives and livelihoods of Canadians in today’s world, so bridging the digital divide is paramount. The Canadian telecommunications landscape has to evolve for the benefit of all Canadians.

There must be a robust and competitive fixed and mobile wireless market that provides a choice of affordable and innovative services to meet Canadians’ growing connectivity needs.

The CRTC is committed to doing its part and I am convinced that its decisions and actions, including the Broadband Fund, will have a measurable impact. But the Commission only holds a few of the levers. Ultimately, all of us need to work together to enable all Canadians, whatever their digital address, to participate fully in the digital economy and the digital society.

CanWISP members are an important part of the solution to the challenges facing Canadians in rural and remote communities. They count on you for affordable Internet services where access is not readily available to stay connected to the rest of the country and the world.

You are in an ideal position to make a meaningful difference as you continue to advance your Association’s goal of ensuring all Canadians have access to our interconnected world. I wish you every success as you carry on this important work.

Thank you.