There are at last count 261 small, rural Alberta communities that could have access to world-class broadband Internet services right now, and the CRTC (the Canadian Radio-television Telecommunications Commission) firmly says “no chance, not going to happen, not possible”. And they mean it. The CRTC has been fighting right along with Telus to deny thousands of Albertans access to broadband for the last 3 years. I know, because we (my company The Internet Centre, along with Axia NetMedia) are the ones fighting for access against Telus and the CRTC, and we are currently losing. And of course, the CRTC reports and listens to Industry Canada, carrying out telecommunications policies that Industry Canada develops at the pleasure of Cabinet, and the Federal Government.

Let me explain.

Albertans have always been enthusiastic buyers and users of technology. We saw this in the early days of computer purchases in schools when, during Dave King’s tenure as Education Minister, Alberta had one of the highest per capita ratios of computers-to-students in the world. The oil and gas business acquires and uses vast amounts of data, and computing in that industry is considered a strategic weapon. We Albertans are always in the forefront in our use of technology, and; we just expect that we should be world leaders in the use of technology. As owners and managers of some of the world’s biggest resources – oil, gas, wheat and beef – we need technology to stay efficient and responsive. Alberta shoulders a lot of responsibility to the rest of Canada and the world for power and food. We don’t need the CRTC and Telus to arbitrarily get in our Alberta way of getting things done.

Recently, Alberta separated itself from all Provinces and States in North America by rolling out its visionary Alberta Supernet – a fibre optic Ethernet-based network that reaches virtually every community in Alberta. The plan for Alberta Supernet was two-fold: 1) roll out a high speed Broadband Ethernet connection to every Provincial taxpayer supported building in Alberta (schools, hospitals, registry offices, government single and multi-use buildings, etc) and then, 2) as an anchor tenant and owner, rent back to business commercial access to this hugely capable, state of the art network. No other State or Province has done this. No telephone or cable company would invest this kind of money or effort to reach these small population areas, considering that there are higher rates of return on capital for them in the more densely populated parts of the country.

But that does not mean that a business can’t make money providing services in small town Alberta. It just means that the Bells, the Shaws and the Telus’ of the world don’t see these areas as their first and best investment areas.

My little company – The Internet Centre – has been profitable for years in rural Alberta in providing dialup and DSL services. Other companies and ourselves are also profitable in supplying services to customers by connecting them to the Alberta Supernet where we can. And there is a burgeoning business in providing video conferencing gear – the next ‘big thing’ on the Internet - using this outstanding Supernet network as the glue that connects remote offices and homes to each other in high definition tele-sessions. This high definition video conferencing ‘stuff’ means less costly travel and more timely face-to-face meetings since high def is visually a ‘you-are-there’ virtual experience. In a large area Province, these time and energy saving technologies are critical to economic growth.

But recently all Albertans got the shaft when Telus quietly removed a tariff service (meaning a published, regulated service) from its service offerings, and the CRTC – which is responsible to Industry Canada –agreed. This service is called “unloaded copper” and this is what a company called CadVision in Calgary, and we in a number of cities (Edmonton, Red Deer, Wetaskiwin, Ft. McMurray, Jasper, a number of other towns) more than a decade ago, used to provide broadband DSL services to Albertans. This a couple of years before Shaw and Telus got into the broadband Internet business. 

And that is the rub.

Actually a number of rubs.

By the denial of access to these last mile phone circuits, the only other technology that is usable to connect customers to the Supernet is wireless (fiber to the home and business is mostly very uneconomic). Wireless services are more expensive to install, maintain, and unless the Provider owns or rents a particular frequency, the Provider runs the risk of having the radio frequency interfered with – making the service less reliable. Owning or renting a frequency means the radios are more expensive, but the higher power available makes for a better connection. The extra cost for these higher capability radios, however, limits the economic provision of wireless to only the more populated towns.

Simple, old style telephone wires are still the best medium for the last mile, or in places like Edmonton or Toronto, the last few hundred feet, for high bandwidth Internet delivery to businesses or homes. Telus and Bell, Manitoba Tel, Sasktel et al, are spending combined billions to upgrade all their services to urban Canadian neighborhoods by rolling out thousands of miles of fibre, but the last few feet is still copper cable….plain old telephone wire. And that is what Telus and the CRTC will not let us use to do the same thing in small town Alberta that they do in large city Canada.

That’s one of the rubs.

Another rub: For inexplicable reasons, Service Providers in Ontario and Quebec are allowed to use these copper access services, but we in Alberta and B.C cannot. The CRTC cannot give us a reason why. We’ve asked. And asked. And asked. No response. Are we in Alberta and B.C. in the eyes of the CRTC second-class, less-capable citizens? Or less deserving citizens. The obvious unfairness, the unevenness of the CRTC’s Decisions to ensure inequality between central and western Canadian somehow…..smells.

So here is the issue: The infrastructure that Albertans cannot get access to is the unused copper wires (most homes have at least 3 copper pairs, and only use one or two) that Telus owns. Although we have this terrific Alberta taxpayer funded Supernet network all around the Province, in almost every town in Alberta, we have no simple access to the ubiquitous, inexpensive and reliable infrastructure of telephone wires to connect Albertans to the Supernet. It is the equivalent of having an 8-lane highway to every town in the Province, but the streets, roads and driveways to each home or office in that town cannot access the 8-lane highway. Well… not quite true: if you pay thousands or tens of thousands of dollars to run a NEW road into your home or office, then you can get connected. So we have a taxpayer and ratepayer funded copper wire system into Albertans’ homes and businesses, but only Telus can use it. We, the consumer, paid for it. Telus in its sole discretion gets to decide who uses it.

But that’s only reasonable isn’t it – because Telus owns it and manages it – they should decide who uses it….right?

Well, not really.

When Telecom policy back a couple of decades ago changed telephone company ownership from provincial and municipal ownership to private ownership – and in most cases, shareholder ownership through the public stock markets – AGT (Alberta Government Telephones) became Telus for instance – these new giant telecom businesses were given all the opportunities possible to make as much money as they could, providing as many services to Canadians that they can think of.

BUT along with that freedom to go forth and profit came a couple of small but serious Regulatory handcuffs. Certain critical services – individual access to a fixed low cost telephone service for all Canadians, for instance – were mandated as too important to be left to the whims of for –profit telecom corporations, and so CRTC regulation, controlled by the Federal Government, enforced the price, the rules and the provision of these and other mandated services.

To encourage competition in the telecom business, another mandated service that was, and still supposedly is in place, is competitor access to giant telephone infrastructure. Industry Canada through the CRTC said infrastructure access MUST be provided by the giant phone company to competitors in cases where such infrastructure cannot be economically duplicated. Specifically, copper wires that have been installed in homes and businesses all over Canada over the past century meets that description. And in the early days, ours and other companies in Canada could access those copper wires. But not in western Canada any longer, according to the CRTC. Only in all the other Provinces in Canada. Also, for that matter (and one more rub), every State in the United States. But B.C and Alberta……nope! Public policy it seems is against us. It seems we rubes out west are simply not worthy.

You can’t blame Telus – they don’t want to give competitors access to stuff that allows those competitors to be successful if Telus can help it. Telus wants us off their network. Keeping competitors off Telus’ network kills or stifles competition. But if Telus can stop competitors and take them off their network, that can only benefit Telus shareholders….right?

Well, not really.

You see, in a regulated environment, these mandated services such as standard phone service and access to copper lines, must be billed in such a way that Telus and Bell MUST make a profit. As a national policy it would be unreasonable to force such as Telus to provide a required service, and lose money doing so. So Telus and other incumbent phone companies – Bell, Sasktel, et al – file the costs of providing mandated services along with a markup with the CRTC, and that figure becomes the wholesale and/or retail price. So if the CRTC requires Telus to provide us with access to the copper service, the CRTC forces Telus to make money doing so. So one would think that shareholders would be pleased to have Telus sell profitable services to such as us. I would expect Telus shareholders would want Telus to help us help rural Albertans. After all, some of these shareholders ARE rural Albertans. I suspect that most shareholders just clip their Telus coupons and don’t know, and haven’t asked.

And here is the irony: In 2009 Industry Canada announced $250 million in grants to Service Providers and others to promote rural broadband connectivity. We wanted to submit a proposal to wire every interested customer in all of these 261 communities to broadband Internet through Supernet. Industry Canada through this grant says “go do it”. Industry Canada through the CRTC says “not so fast”.

Industry Canada almost giveth….and then taketh away. So we didn’t file for the grant.

So Ontarians with no Supernet can get access to the last mile telephone wires, but Albertans WITH a Supernet, cannot get access to last mile telephone wires. And Telus has no plans to roll out broadband in these small rural communities, and are ensuring that we don’t have plans either. AND WE WANT TO. It’s good business for us. The whole thing seems almost diabolical. The ghost of George Orwell must be writing these Decisions. “All Canadians are equal……well except if you live west of Ontario, and then there is equal, and then there are….Western Canadians.”

So if you are an accountant or a lawyer and have a cottage in Seba Beach, and want to spend the summer there and work with clients and the office in Edmonton through online at high speed and video conferencing, The Internet Centre would love to provide you with that service. But the CRTC says “forget it”.

If you are a heart patient in your home on a Reserve, and you want to talk face to face directly to your doctor through video conferencing while he checks your portable diagnostic equipment on line, The Internet Centre can technically save you the hundred mile drive, and keep you at home with your family. The CRTC says “nyet, not happening”.

If you are a student suddenly ill for a few weeks in New Sarepta, but need to keep up your attendance at college, and wish to videoconference in the way others do, we want to help. The CRTC says “no can do”. Only people in other Provinces can do that. The CRTC thinks that’s the way it oughta be.

And finally, let’s let the good folks at Harvard  - the Berkman Center for Internet and Society at Harvard University - say a few words. The authors summarize Canada’s performance in relation to broadband services relative to other economies as follows:

“The CRTC opens its August 2009 Communications Monitoring report with a self-congratulatory reference to the fact that Canada has the highest level of penetration of all the G7 countries. While factually true, an alternative view of Canada's performance might look at several factors. In December of 2003, Canada had the second highest level of broadband penetration per 100, second only to South Korea. By September of 2008, it ranked 10th by the same measure. Its numbers on speed and price are worse. In terms of top speeds available, Canada ranked 19th in the OECD. In terms of prices, Canada ranks 21st for the lowest speeds and 23d for middling speeds. It ranks next to last in prices of high speeds (only the Slovak Republic has higher prices in that tier of service), and it does not appear in the rankings for prices of very high speeds, because there were no offerings of service speeds of 35Mbps or higher in Canada in September of 2008. Our company level pricing study for the highest- speed offers in the countries we observe here locates almost all of the Canadian companies in the cluster with the slowest speeds and highest prices. Given these benchmark measures, the lessons of the Canadian experience do not seem as positive as the CRTC report presents them. On our composite measure, Canada occupies the 22nd spot. Early aggressive facilities-based competition certainly made Canada an early starter, but it does not seem to have enabled it to maintain its standing. Indeed, the decline in its standing in its best-performing measure, penetration per 100 inhabitants, was worse over this period (2nd to 10th) than was the decline of U.S. performance by that measure over the same time period (10th to 15th).”

In other words, the CRTC has a far rosier perception of the state of broadband in Canada than perhaps a more objective observer does. And I know how, I just don’t know why.

The CRTC in a number of its recent rulings has had the effect of reducing competition in Canada by ruling against small Providers such as us, and in favour of Telus, Bell, etc. Our experience in Alberta clearly demonstrates how. The kind of connections and equipment we want to put in these small towns is a minimum of 5 Mb/s of connectivity EACH WAY to the home or business, with the ability to put in up to 100 Mb/s. Our offering would therefore exceed that of Telus and Bell DSL anywhere in Canada, but equals other offerings in Hong Kong and many centers in Europe. The CRTC argues that we shouldn’t be allowed to do this. Ridiculous.

For those wishing to fact check and can stomach reading stilted, formal Regulatorese argument, please check the CRTC site for our Part VII application made almost two years ago. We made earlier Part VI applications, which were basically ignored and are superceded by our Part VII Application. The web address for the complete submission is here:

http://www.crtc.gc.ca/PartVII/eng/2008/8622/t114_200809403.htm

This submission of ours probably cost around $40,000 altogether if we add up our internal time plus the cost of the professional writer we hired to file the petition. And for that, a year later we received, in our opinion, an incompetent, patronizing, ill-researched, and wholly ridiculous CRTC Decision. We certainly did not get our money’s worth. I wish the CRTC would be honest and just put on their website: “only central Canada folks or large telcos need apply”. Would have saved us a bunch of time and money, perhaps.

Our response to that silly Decision can be found here:

http://www.crtc.gc.ca/8740/eng/2009/t66_375.htm

Which describes how bad the Decision was, from our perspective.

Clearly, the CRTC, and it’s boss Industry Canada is doing a great job in protecting Telus from those awful little competitors like us, in Alberta and B.C. Just because little companies like ours are the innovators that started the Internet in Canada, doesn’t mean that in the CRTC’s vision, we have any rights to continue on innovating, hiring, pushing the limits of what is possible. No no. The CRTC’s current mandate, it seems, is to slow everyone to a pace that the big phone companies find acceptable.

It’s kind of sad, actually, that a big, strong, profitable company needs powerful Federal Government-level protection from us, especially since all we want to do is service customers in places that Telus believes are too small and irrelevant to warrant attention and investment. Welcome to our brave-new-not-really-current and not-really-world-class online world.

If this article makes you annoyed, then please inform both your MLA, and your MP. We will continue on and will be filing a “review and vary” Part VII with the CRTC shortly to see if we can get them to be at the very least, fair.

And if the CRTC finally does its job, quits shafting the folks in rural Alberta, then stand back and get out of our way. We have actual work to do.

Graham Fletcher

The Internet Centre