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Beyond the wire

Industry Spotlight
|Written By Jeremy Hainsworth

With recent Canadian Radio-television and Telecommunications Commission decisions that Internet service providers must meet the increasing needs of broadband users as well as provide accessible services for declining landline phone users, telecommunications sector companies are looking for ways to find a happy medium.

Indeed, the situation has left telecom companies facing challenges as they work to balance the demands of business with the needs of consumers across a huge landmass. And for businesses that serve huge sections of Northern and Western Canada, those needs are at times significantly different than those facing companies serving the rest of Canada.

It’s a complex situation, but the goal is clear, according to the new federal minister of industry, Christian Paradis: the government needs to do its part to focus on strengthening and growing Canada’s telecommunication industry. “Our government considers a digital economy strategy to be one of its most important objectives,” Paradis told the Canadian Telecom Summit in Toronto on May 31.

The CRTC has set targets that all Canadians must have access to broadband speeds of at least 5 Mbps download and 1 Mbps upload by the end of 2015. “A well-developed broadband infrastructure will serve as a gateway for Canadians to participate in the digital economy,” CRTC chairman Konrad von Finckenstein said in a May 3 statement. “The target we have established is the minimum speed we believe consumers in rural and remote areas should be able to receive. The industry is actively responding to market demands, and we have every confidence in its ability to meet the target.”

Von Finckenstein noted that 95 per cent of Canadian households today have access to download speeds of at least 1.5 Mbps through telephone, cable, or fixed wireless networks. Over 80 per cent of households already have access to download speeds of 5 Mbps or higher. The CRTC chairman anticipates that this target will be reached through private investments, targeted government funding and public-private partnerships. That said, the CRTC sparked outrage with a decision that essentially imposed usage-based Internet billing on small service providers.

However, says Industry Canada spokesman Michel Cimpaye, the CRTC is re-examining the issue of usage-based billing to ensure that consumers and small Internet service providers are protected.

“Canadians have been very clear that they have concerns with earlier UBB decisions and the government expects the commission to take those concerns into account,” he says. “The CRTC proceeding is underway and we await its result in December.”

Major Internet service providers sell capacity to smaller resellers. In a bid to encourage competition in the technology marketplace, major telecom operators that have already made infrastructure investments are required to lease network bandwidth to smaller providers. Major providers charge customers extra if they download more than the monthly limits they set, typically between 20 and 60 gigabytes. Some small providers, however, offer plans with 200-gigabyte ceilings and even unlimited use.

The CRTC has also mandated that large telephone companies must continue to offer residential subscribers a basic telephone line at a “reasonable rate.” However, that rate can be gradually increased over the next three years to a maximum of $30 per month.

But, the CRTC is cognizant that the landline will become a thing of the past sooner rather than later as their number decreases, due to the increasing popularity of affordable wireless plans and Internet-based phone services like Skype and other VoIP services.

With both broadband and phone use issues in mind, Paradis says while government has a role to play in regulatory issues and encouraging telecom investment, change will be driven by private-sector telecom companies responding to consumer demand.

On the wireless side, Paradis says the government is playing its part. “Our government has opened the door to greater competition by setting aside advanced wireless spectrum, opening the airwaves to new entrants such as Public Mobile, Mobilicity, Videotron, and Globalive,” he says, adding leading wireless operators like Rogers, Bell, and Telus are upgrading their networks to provide the fastest mobile data speeds commercially available in North America.

But Canadian businesses and consumers are demanding access to mobile broadband. “To ensure that additional spectrum is available to meet the needs of emerging broadband services and to fuel the growth of next-generation wireless, I can confirm that the government will be auctioning off 700 megahertz spectrum and 2,500 megahertz spectrum,” says Paradis. “ As part of an integrated regulatory approach to the spectrum auction, we continue to examine tower sharing and roaming and foreign investment.”

MTS Allstream is a subsidiary of Manitoba Telecom Services Inc., with two million customer connections spanning business customers across Canada and residential consumers throughout the province of Manitoba. Its national broadband and fibre-optic network spans almost 30,000 kilometres.

Chief corporate officer Chris Peirce tells InHouse the business is divided into the incumbents such as MTS, Bell, and others who have established presence, and competitors — the more recent arrivals in the telecom scene.

Peirce says the government is on the right track in its digital economy plans and agrees with usage-based billing. But, he says, what is holding the industry back to a degree is the lack of access to capital that foreign-ownership restrictions put in place. And, he’s hopeful a majority government will be able to deal with that. “It’s time to remove foreign investment restrictions,” he says. “We need access to risk capital.”

Peirce also says the plans to auction off 700 MHz spectrum is good for the industry and allow for greater Internet access for rural Canadians and further the digital economic strategy. “Seven hundred is ideal for wireless broadband deployment,” he says. “It allows more coverage with less build-out.” Also, he added, the government might consider adding rural deployment conditions to licenses.

He does, though, have a minor criticism of the basic landline setup. “They should have redefined that basic service objective to include high-speed broadband,” he says. “In today’s 21st century, it’s hard to imagine communication without high-speed broadband.”

Curtis Shaw is vice president of consumer and small business for NorthwesTel Inc., which provides telecommunications and television services throughout Yukon, Northwest Territories, Nunavut, northern British Columbia and northern Alberta. He says government subsidies remain important for the provision of service in the four million square kilometres of remote areas NorthwesTel serves. “Government programs fill in the broadband gap,” he says. “We’ve been really focusing on bridging the digital divide, improving our footprint, improving Internet speeds.”

Shaw says that includes installing thousands of kilometres of fibre-optic cable at a cost of $40 million. In addition to the company’s 140 digital microwave towers, 95 must have their own power generation, which involves barging in fuel or slinging it to the tops of mountains. That, he says, is where the issue of usage-based billing is important to his company. It’s something NorthwesTel has been doing in one form or another since 2001, he says.

“Someone’s got to pay for the $40-million fibre,” he says. “Usage-based billing has been one lever we have to continue that investment. I don’t see a realistic way for it to go away.” Indeed, he says, without it, rates could rise 30 to 50 per cent.

Prince Rupert, B.C.-based CityWest Cable and Telephone Co. services northwestern British Columbia. With its sole shareholder being the City of Prince Rupert, the business is a fully integrated digital communications company. But, says CEO Bill Craig, smaller companies outside the large urban centres tend to be forgotten and have to “rely on the good graces of the giants” for their broadband wireless needs.

He says CityWest wants to provide full service to its customers and be able to offer cellular reception outside the city’s limits. Indeed, he says, the company has found itself having to go to CN to ask if it can get power from rail lines to power cell towers to use the frequencies it does have.

So Craig suggests regulators need to be sensitive to the fact that local companies should be given a share of the pie.

“The problem is, the major guys have all the frequencies,” he says. “There’s no consideration given to the wastage and lack of utilization of frequencies,” he says. “The minister has to sort all of this out. It’s a Canadian challenge.” To put it simply, says Craig, “It’s frustrating.”

He is, however, hopeful that the 700-MHz auction will be beneficial. The government’s strategy could be realized with more wireless available across the board. He says it could lead to people living healthier lives outside urban centres and possibly even decrease crime as a result. “In the Internet economy, you are where your laptop is,” he says. “If we want the economy overall to be less polarized, that would be a great way to level it out.”

All agree, however, that the CRTC is worth retaining — albeit with a tweak here and there. Peirce says undergoing years of review of how the agency operates is unneeded. “I think there is recognition that there’s an important role for regulators,” he says. Without them, he says, “monopolies win out. Regulation is important and pro-competition regulation is important.”

Shaw agrees. “They’ve recognized some unique differences [for the North],” he says. “The regulatory environment is required.”

And, Peirce adds, “It’s a truly substantive job and you’re unlikely to win friends on every decision you make. As patronage jobs go, you wouldn’t call it a plum.” 

  • Engineering Consultant

    Ron Van Holst
    As important as telecommunications is, that is only one part of the digital economy. Whether it is wired or wireless, it is simply transporting bits. These bits are stored somewhere and processed somewhere. If we in Canada only focus on bit transport, we will use the compute clouds of other nations, we will not be the keepers of valuable bits or the processors of bits. This is where the money is in the digital economy, but so far Industry Canada does not get it.

    The public consultation on Canada's digital economy strategy included a computing proposals, one which scored the highest ranking. Over a year has passed, yet nothing has been done with this. Other nations are making national computing infrastructure part of their digital economies, if we don't, we'll be left behind.

    Yes everyone in Canada should have fast access at a fair price, but if it's only to consume more US content, that's a shame.
  • So Shaw is losing money?

    Its been clearly stated that UBB has been largely responsible for rising profit margins(now at 47 percent, far above the developed nations average), and that it is killing cloud computing as well as other technologies(and that canadian taxpayers heavily subsidize their networks). So Shaw(as well as other telecoms) should stop complaining about its false lack of money, when its shareholders are enjoying very healthy gains, as is the company(heavily off taxpayer based subsidies). Lets get some real competition in the market in Canada, not the current cartel.