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Helaina Gaspard and Kevin Page

June 28, 2023

Over the last few years, we’ve had the privilege of crisscrossing the country, north to south, east to west, for business and pleasure. From forests, to shield, to mountains, lakes, rivers, and oceans, the geography of this country is spectacular. What we found almost equally striking was the sporadic nature of the country’s connectivity, per the abrupt and irregular interruptions in wireless coverage. You can be driving on a dirt road with 3G, turn right, and be in a connectivity dead zone. For those of us who are “directionally challenged”, the end in connectivity means relying on maps, memory, and confidence that it is indeed that coniferous tree at which you make your next turn.

Natural beauty and unspoiled views often mean fewer people. Nearly 20% of Canadians live in rural places, and in these less densely populated parts of the country, wired connectivity at the 50/10 standard (50 megabits per second download and 10 mbps upload)is at 46% (compared to 99% in urban places), and even lower for First Nations, at 35%. Wireless coverage in both urban and rural places, however, is reported as close to 100% and 90.5% for First Nations (…a statistic which remains surprising to one of the authors).

Wired connectivity in Canada could be considered a challenge. It could also be considered a reality of a vast geography with a sparse population limiting the business case and industry incentives to build, operate, and maintain wired networks with the risk of limited returns on investment.  This is not to imply that connecting Canadians wherever they live is not an important goal. It does mean that the approaches to connecting them may vary with consideration of cost, expediency, and reliability.

The issue of how to connect Canadians is being considered by the country’s telecommunications regulator. The Canadian Radio-television and Telecommunications Commission’s (CRTC) is reviewing its wholesale high-speed access framework. There are three preliminary views presented: i) high-speed access should be wholesale and mandated; ii) fibre to the premises should be the form of connectivity; iii) this should be mandated (at least temporarily).

There are well-established economic and social benefits to promoting connectivity. The question, however, is whether a wired connection is the best or most practical option. There are three issues to consider: 1) data for informed decision-making; 2) the variability of costs in different places, e.g., urban v. rural; 3) how to assess progress on the goal of connectivity.

Community-level data on connectivity is weak in Canada, especially in rural places. There is a need to better understand and map who is connected and who is not, where, and how. The information is essential to assessing the most effective ways of fostering connectivity. While some places might have an incentive or willing community to build out fibre connectivity, e.g., O-Net in Olds, Alberta (100% owned by the town) others may be better off with multi-modal connectivity through various means. Technologies for connectivity include fibre, wireless (mobile; fixed), copper, and satellite. Fibre is one among other potential options with trade-offs on time for construction, cost, and durability.

Community-level data on connectivity is weak in Canada, especially in rural places. There is a need to better understand and map who is connected and who is not, where, and how.

The costs of building the infrastructure, operating, and maintaining it for service differ, with considerations for initial outlays and ongoing expenditures. When it comes to rural connectivity, the public-private investment requirements ranges from 2/3 public and 1/3 private to 1/2 public and 1/2 private. The public subsidies required to incentivize the buildout in sparsely populated places, are reflective of the higher costs and lower potential returns of connectivity in some places. In 2020, TELUS Communications, for instance, estimated the installation and building costs in rural areas were 2.5 times higher than in urban places, with limited opportunities for revenue recovery. To connect all Canadians through fibre, the Office of the Auditor General estimated costs to be between $40B-$50B in 2018. The variability in cost reflects the differences in urban and rural places, and the importance of considering different tools to foster connectivity in different places.

The government of Canada has committed billions to promoting connectivity through various funds and programs, although not as large as the estimated investments required to build out fibre across Canada.  For instance, the Connect to Innovate program allocated $585M (set to expire in 2023) to connect rural and remote parts of the country, the Canada Infrastructure Bank has $3B allocated for underserved and unserved Canadians, the Canadian Radio-television and Telecommunications Commission’s (CRTC) Broadband Fund will award up to $675M over five years to help improve connectivity infrastructure to support mobile and broadband connections for Canadians. These and other funding sources are intended to help close the connectivity gap, consistent with commitments to connect Canadians wherever they live.  However, the funds are insufficient (based on past estimates) to connect Canadians through fibre.

Different parts of the country have different needs and may require different approaches to fostering connectivity. Existing gaps in data and different costs reflect the need for a cohesive performance framework in Canada that considers the full cycle of spectrum allocation to the outcome of connectivity. This means considering how spectrum policy, assignment instruments and deployment conditions are linked. Such a framework does not yet exist. CRTC and ISED report much helpful data, but they are principally focused on end-user connectivity.

From two ribbons of steel to invisible highways in the sky to light carrying fibre, the tools that connect Canadians have been a symbol of nation building. Connectivity is an integral part of social and economic participation and growth. Getting it right means considering who needs what and where; who will pay; and how achievement of the goal will be assessed.

Dr. Helaina Gaspard and Kevin Page are contributing writers for Policy Magazine. They work at the Institute of Fiscal Studies and Democracy, at the University of Ottawa.