The state of Canada's telecommunications

Connectivity is key to Canada’s economic growth and to addressing inequalities. And yet, telecommunications policy continues to be inconsistent and cumbersome.

by Leonard Waverman
Originally published on Policy Options

Consider the name of Canada’s telecommunications regulator: The Canadian Radio-television and Telecommunications Commission (CRTC). This name itself tells us that the federal government’s primary focus of regulation in this space is broadcasting. Telecommunications is still a secondary consideration. In fact, the CRTC’s mandate was expanded to telecommunications only in 1976 and the first modern telecommunications regulatory act was not enacted until 1993.

Broadcasting is important for Canadian content and to express who we are as a nation. But broadcasting in the internet age is not a purveyor of technological change, innovation and economic growth – telecommunications and the internet certainly are. Unfortunately, telecom policy has not been given the consistency and political firepower that it deserves, at a time when connectivity is essential to economic growth and equality.

Inconsistent and vague policy direction

The pandemic highlighted just how critical investment in telecommunications infrastructure is, because a reliable connection determined access to work and to education for millions of Canadians. Meanwhile, the rollout of 5G networks, the next generation of mobile services, will allow Canadian businesses across multiple sectors to innovate and expand. But federal policy has been preoccupied with the affordability of broadband and increasing competition, rather than on infrastructure deployment. Indeed, the government’s focus on telecommunications infrastructure has been inconsistent, not unanimously held across all ministries, and vague.

Take as an example the 2019 CRTC order to lower the wholesale high-speed access rates charged by the larger infrastructure providers (i.e.. Bell, Shaw, Cogeco) to the smaller internet service providers. The large telecom companies objected that these regulated rates were far too low, and appealed to cabinet. In August 2020, then-Industry Minister Navdeep Bains said cabinet was “concerned that these rates may undermine investment in high-quality networks, particularly in rural and remote areas.”

An Order- in-council directed the CRTC to review its decision, but did not immediately direct a change in rates. In fact, the order made the government’s policy even murkier, by supporting seemingly contradictory priorities: “improved consumer choice and competition, further investment in high-quality networks, innovative service offerings and reasonable price.” How are Canadians to sort out where the government stands?

Challenges to overcome

Beyond the inconsistency and cumbersomeness of government policy formulation, there are number of other challenges that are undermining investment, the rollout of new infrastructure, and the government’s credibility.

A second critical challenge is that decision-making at the CRTC is incredibly slow. Telecommunications and the internet are fast-paced innovative industries, yet regulatory decisions can take up to three years, are subject to appeals and to cabinet decisions to vary, remand or accept CRTC rulings. This process is incompatible with the needs of a dynamic industry.

Third is the tragedy of rural broadband. In 2009, the federal government invested $225 million in rural broadband infrastructure over three years, noting that only 81 per cent of rural households had access to high-speed internet (as it was defined at the time). The CRTC reported that in 2019, 12.6 per cent of Canadians did not have high-speed internet – with only 45.6 per cent of rural communities having access to fast broadband. In the modern Internet age, the inability to have fast broadband means that these households are not connected to quick information or to markets.

The government indicated two years ago that 98 per cent of households would be connected by 2030. This year, it predicted it would reach its goal by 2026. But even five more years from today is simply too long. Meanwhile, there is not enough co-ordination between federal programs that seek to advance connectivity, and the provincial programs that don’t dovetail with the federal ones. Potential providers of rural broadband facilities and services must make separate applications for help. We desperately need one-stop shopping, so these businesses have only one form to fill out rather than several complicated incompatible forms.

Another challenge is the federal government’s apparent unwillingness to throw its weight around. In decisions in 1989 and in 1994, the Supreme Court ruled that telecommunications are a federal responsibility as telecommunications goes across airwaves and is therefore not a provincial responsibility. However, the federal government has not acted to impose its regulatory authority across all jurisdictions. For example, some provinces and municipalities are attempting to regulate the location of the small antennae required for 5G access, and impose taxes despite the fact they do not have the constitutional authority to do this. This is slowing down the rollout of this critical technology, as companies are forced to negotiate for implementation of the network town by town.

Finally, the federal government’s process for awarding spectrum (the frequencies over which mobile telecommunications is transported) is fraught with problems. The spectrum auctions have been shown to lead to higher prices, and the slow pace of the process is yet another reason that Canada lags behind other countries in 5G . Speed is of the essence, to match other countries’ rollout so that we’re not at a disadvantage.

We’ve been discussing a digital telecom strategy for decades. There have been two major federal reports on telecommunications policy in 2006 and 2020. It is time for Canada to embrace the future and not be mired in old processes and old rules. We might not know exactly where we are at in the internet age, but it’s clear we haven’t even reached the midpoint. There are a vast number of new services and applications that will emerge, which will add to efficiency and economic growth. But we seem to have the brakes on – and that will ultimately make us uncompetitive and will exacerbate inequalities.

This article is part of the Digital Connectivity in the COVID Era and Beyond special feature.

This article first appeared on Policy Options and is republished here under a Creative Commons license.