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The federal government is not sufficiently managing its plans to get rural Canadians online, according to a new report by auditor general Michael Ferguson that echoes previous calls for a comprehensive rural broadband strategy.
The report, tabled in the House of Commons on Tuesday, examines Ottawa’s efforts surrounding a longstanding issue for Canadians lliving in remote and rural areas: accessing high-speed internet.
As the report points out, access to reliable and high-quality internet services has become more and more important in recent years as it enables Canadians to participate in the 21st-century economy, have better access to health care and education, and connect with services that otherwise might be available only in urban areas.
This, the House of Commons standing committee on industry, science and technology said in 2018, prevents Canadians in rural and remote areas from participating in the digital economy and creates a “digital divide” that increases the challenges that those areas already face.
In 2018, Innovation, Science and Economic Development Canada endorsed the minimum service speed target of 50 megabits per second (Mbps) for downloading data and 10 Mbps for uploading data (50/10 Mbps) for 90 per cent of Canadians, and said it believed that the private sector and current government funding programs could achieve that level by 2020.
Just two years earlier, it was determined that overall, 84 per cent of Canadians had access to 50/10 Mbps internet speeds. But while about 96 per cent of urban Canadians had access to high speed internet, only 39 per cent of Canadians living in rural and remote areas had access to the same speeds. This amounts to 5.4 million Canadians for whom only slower Internet speeds were available.
This means, the auditor general’s office says, that for 10 per cent of the population living in rural areas, the government had no plan to deliver speeds greater than 5/1 Mbps.
The report points out that despite repeated calls for a national broadband strategy, most recently by the
CRTC in 2016 and the House of Commons standing committee on industry, science and technology in 2018, no such strategy has been achieved.
In fact, the federal government’s response to the standing committee’s April report did not mention a strategy at all. Instead, the government said that its current approach was comprehensive and that that the market-driven approach had served Canadians well.
“However (the government) admitted that certain rural and remote areas continued to have limited broadband access because of the challenging business case for private-sector deployment in those areas, and it acknowledged that more needed to be done,” the report says.
Because cost of committing to such a strategy is significant — at least $6.5 billion to achieve a speed target of 50/10 Mbps in all areas of the country and $40 to $50 billion to connect all Canadians to unlimited download and upload speeds through fibre optics — Innovation, Science and Economic Development Canada has been reluctant to sign on, Ferguson’s office suggests.
Even so, Ferguson’s report recommends Ottawa develop a strategy that defines the minimum level of reliable and high-quality internet service to be made available to Canadians, sets clear timelines for achieving this level of service and estimates proper resourcing, including financial and technical resources.
Other than reiterating the call for a national broadband strategy, the report also found holes in current funding efforts aimed at connecting rural Canadians, namely the Connect to Innovate program.
Launched in 2016, the five-year, $500-million program focused on bringing high-speed internet to 300 rural and remote communities in Canada, providing support for backbone infrastructure to institutions such as schools and hospital and backbone upgrades and for last-mile connections to households and businesses that did not have access to internet speeds of 5/1 Mbps.
Connect to Innovate had $500 million available for allocation to successful applicants — the program received 892 applications, with funding requests totaling $4.4 billion. In some cases, multiple projects covered overlapping areas.
The report found a lack of transparency in the selection criteria may have created additional workload for the applicants.
“We found that the Department did not provide key information to potential applicants for funding under the program. As a result, some applicants had to invest more effort to prepare a proposal, and all applicants lacked full knowledge of the basis for selecting funding proposals,” the report says.
The report also found the federal government did not implement its Connect to Innovate program in a way that ensured the maximum broadband expansion for the public money spent, and did not include a way of mitigating the risk of government funds displacing private-sector investment.
For example, the department aimed to double its investments by requesting provincial funding to support Connect to Innovate projects but that this approach did not maximize taxpayers’ money, as both provincial and federal funding came from taxpayers.
Moreover, when assessing projects under the Connect to Innovate program, the department also failed to ask program applicants to demonstrate that their projects would not be feasible without public funding.
Finally, the report examined radio frequency spectrum management and found that small internet service providers struggled to acquire high-quality spectrum in rural and remote areas
Wireless internet service providers need access to radio frequency spectrum bands, which are publicly owned and are regulated by Ottawa, the report explains.
But mismanagement of those bands have hindered potential for rural access, the auditor general’s office found. For example, the federal government auctioned spectrum licences for geographic areas that were too large for smaller service providers to submit bids for.
Moreover, the secondary market for unused spectrum did not function well, partly because licensees had little business incentive to make unused spectrum available for subordinate licensing. In addition, and the information on unused spectrum was not readily available to interested internet service providers.
All in all, Ferguson’s report resulted in six recommendations to government, all of which Innovation, Science and Economic Development Canada have agreed to implement.