The “Affordable Access Coalition”
Further Intervention
Telecom Notice of Consultation CRTC 2015-134 (as
amended) —
Review of basic telecommunications services
1 February 2016
Telecom Notice of Consultation CRTC 2015-134
Further Intervention of the Affordable Access Coalition
1 February 2016
TABLE OF CONTENTS
1. Introduction & Executive Summary ............................................................................... 1
Tables and Figures ............................................................................................................. 4
2. The AAC’s Main Proposals ............................................................................................. 7
Obligation to Serve ........................................................................................................ 7
Basic Service Objective ................................................................................................. 8
The BSO is a Universal Service Policy ................................................................................ 8
Which “Services” Should Be in the BSO ............................................................................10
Broadband Speed ..............................................................................................................10
The “50-80” Rule ................................................................................................................11
10 Mbps Almost Meets the 50-80 Rule Today; Will Likely Achieve that Level Soon ...........12
“Resellers” and the BSO ....................................................................................................15
How does the Broadband Deployment Funding Mechanism work? ............................. 16
How does the Affordability Funding Mechanism work? ................................................ 19
3. The Place of Voice service ........................................................................................... 22
The ongoing importance of voice ................................................................................. 22
4. The Essentiality of Broadband ..................................................................................... 26
What is the “basic” level of broadband? .............................................................................29
From a user perspective, 5 Mbps is not enough to be considered “basic” .................... 29
Other Intervenors State 5 Mbps is Inadequate ...................................................................36
The use of broadband for entertainment does not diminish broadband’s essentiality .........38
The leadership role the CRTC must play............................................................................46
5. The Need for an Affordability Supplement .................................................................. 50
PIAC Affordability Survey ............................................................................................. 52
Low-income households highly value internet service .................................................. 53
Many low-income households face challenges affording communications services ..... 55
The Need for CRTC Intervention and the AFM ............................................................ 58
6. Internet adoption does not warrant CRTC intervention ............................................. 61
(i) How big a problem is adoption? ............................................................................... 61
(ii) Should the Commission prioritize addressing adoption? ......................................... 65
(iii) Does the Commission have jurisdiction to promote internet adoption? ................... 67
Telecom Notice of Consultation CRTC 2015-134
Further Intervention of the Affordable Access Coalition
1 February 2016
7. Conclusion .................................................................................................................... 68
Appendices:
Appendix “A”: Detailed results from Environics Affordability Survey
Appendix “B”: Revised expert report of Edgardo Sepulveda: Funding support for lowincome Canadians and for Broadband Deployment
Appendix “C”: Revised expert report of Edgardo Sepulveda, in “Track Changes”
mode
Appendix “D”: Underlying data for revised expert report of Edgardo Sepulveda
Appendix “E”: Speed Advertisements by Major ISPs
Telecom Notice of Consultation CRTC 2015-134
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1 February 2016
TABLES AND FIGURES
Tables
Table 1. Revised Costs of AAC’s Funding Mechanism Proposals .............................................. 4
Table 2. Residential internet service one-month subscriber distribution, by advertised download
speed ........................................................................................................................................13
Table 3. How Low-Income Respondents Would Spend Monthly Subsidy – Detailed Breakdown
.................................................................................................................................................58
Table 4 – Updated Details of AAC’s Proposed Affordability Funding Mechanism ......................59
Table 5. Ontario Electricity Support Program’s Sliding Credit Scale ..........................................60
Figures
Figure 1. Percentage of Broadband Subscribers at 10 Mbps or Higher (Advertised Speeds) ....14
Figure 2. Ranked Importance of Various Household Expenses .................................................54
Figure 3. Monthly Communications Expenditures of Low-Income Respondents........................55
Figure 4. Low-income households’ reasons for not having desired communications services ...57
Figure 5. How low-income households would spend subsidy for communications services ......57
Figure 6. Main reasons why Canadians do not have internet service ........................................62
Figure 7. Greatest barriers to meaningful participation in digital economy: Municipalities ..........63
Figure 8. McKinsey’s 4 Barriers to Adoption ..............................................................................64
Telecom Notice of Consultation CRTC 2015-134
Further Intervention of the Affordable Access Coalition
1 February 2016
1. INTRODUCTION & EXECUTIVE SUMMARY
E1. The Affordable Access Coalition (the “AAC”), which comprises 5 organizations,1
representing users of telecommunications services consumers, and the public
interest, is pleased to provide the Canadian Radio-television and
Telecommunications Commission (the “Commission” or “CRTC”) with this further
intervention in the Review of basic telecommunications services proceeding.
E2. In TNC 2015-134, the Commission is examining “which telecommunications services
Canadians require to participate meaningfully in the digital economy and the
Commission’s role in ensuring the availability of affordable basic telecommunications
services to all Canadians.”
E3. The two central issues in this proceeding are (i) whether or not all Canadians should
have access to a baseline, “basic” level of broadband internet access service; and (ii)
whether or not funding support is necessary to support access to basic
telecommunications services.
E4. In its first intervention, the AAC reduced its position to nine key submissions:
1) Broadband has become an essential telecommunications service, if not the
essential telecommunications service. It is essential to individuals (of all ages),
to households, to businesses, and to Canada’s competitive advantage. There
should be no question that broadband should be recognized as an essential
service which all Canadians should be able to access.
2) Yet, not all Canadians are able to connect: availability and affordability barriers
persist. Regarding availability, the AAC presented evidence that not all
Canadians are able to access a “basic” level of broadband. Regarding
affordability, the AAC presented evidence that telecommunications affordability
is a challenge for low-income Canadians.
3) Market forces and targeted government funding are not solving the problem.
Areas exist where broadband services at a level needed are not available, and
household communications expenses and prices have been generally
increasing.
1
The Affordable Access Coalition (the “AAC”) is comprised of: The Association of Community
Organizations for Reform Now, Canada (“ACORN Canada”); the Consumers’ Association of
Canada (“CAC”); the Council of Senior Citizens Organizations of British Columbia (“COSCO”);
the National Pensioners Federation (“NPF”); and the Public Interest Advocacy Centre (“PIAC”).
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4) Meanwhile, other jurisdictions have taken bold steps to connect their citizens
and to address affordability barriers.
5) The Commission now has the opportunity, and the duty, to do the same.
6) The Commission should declare broadband to be a “basic” telecommunications
service, and define broadband at an appropriately functional level. According to
the “50-80 rule” the AAC articulated for defining the basic service objective,
which is really a universal service objective, the “basic” level of broadband
access should be at minimum 5 Mbps download speed. Typical Canadian
households currently use and require anywhere from a 9 Mbps to a 26 Mbps
connection, and demand and speeds are expected to continue to rise rapidly.
7) To support broadband availability, the Commission should establish a new
funding mechanism, the “Broadband Deployment Funding Mechanism”,
financed through the existing National Contribution Fund, but modified to
support broadband deployment.
8) To support telecommunications affordability, the Commission should implement
an affordability subsidy to support access by low-income households to the
telecommunications services of their choosing from the service provider of their
choosing. The AAC proposed, based on approaches taken elsewhere, an
“Affordability Funding Mechanism”, financed through the existing but modified
NCF, and capped annually.
9) The Commission should monitor its “basics services” definition yearly, and take
enforcement action in cases where timely progress toward availability and
affordability goals fails.
E5. The AAC’s BSO proposals are designed to fulfil the basic needs of all Canadians to
enable them to participate in digital society and the digital economy. To that end, the
AAC proposed two funding support mechanisms to (i) close broadband availability
gaps in certain areas; and (ii) enhance telecommunications affordability for lowincome Canadians.
E6. Since its first intervention, a number of developments have taken place to further
inform these positions:
1) ACORN Testimonials: On 4 August 2015, 298 members of ACORN filed
handwritten testimonials with the Commission, attesting to the importance of
affordable internet access. The AAC highlights some of these in this further
intervention.
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2) Federal Election: On 19 October 2015, the federal election brought in a new
government, which changed the Department of Industry’s name to the Department
of Innovation, Science and Economic Development (“ISED”). The Prime Minister
of Canada informed the ISED Minister, in a mandate latter,2 that one of the
Minister’s “top priorities” is to
increase high-speed broadband coverage and work to support competition,
choice and availability of services, and foster a strong investment environment
for telecommunications services to keep Canada at the leading edge of the
digital economy.
The AAC believes the renaming of Industry Canada to have an innovation focus,
and the Prime Minister’s emphasis on high-speed broadband coverage, strongly
suggests that all Canadians should be able to access high-speed broadband, and
that this is essential to Canada’s broader digital and economic aspirations.
3) Latest “Communications Monitoring Report”: The Commission released its
2015 Communications Monitoring Report, providing more up to date information
about the state of broadband connectivity, though not affordability. Highlights
include:
 77% of Canadian households currently subscribe to 5 Mbps
 the majority of households now subscribe to internet packages with speeds
at or above 10 Mbps
 Spending on internet services grew 10% from 2013
 Internet access service prices are increasing at accelerated rates,
compared to BDUs (cable, satellite, IPTV, pay television), telephone
services (basic local service, long-distance, other options and features,
installation and repairs), and the Consumer Price Index
 Average number of gigabytes downloaded per month by residential subscri
bers increased from 45 GB to 67 GB => 49% increase from 2013-2014
4) Updates to expert evidence: New data came to light which allowed the AAC’s
universal service expert, Edgardo Sepulveda, to revise his initial report detailing
the two new funding mechanisms proposed by the AAC. The revised Sepulveda
Report makes four main adjustments and a series of consequential changes to
the Report submitted as Appendix B of AAC’s first intervention. These changes
reflect inclusion of VRS (video relay service) funding costs, revised estimates of
eligible households for the affordability funding mechanism, and new
administrative cost estimates. The new data are then rolled into revised funding
2
Minister of Innovation, Science and Economic Development Mandate Letter, online:
http://pm.gc.ca/eng/minister-innovation-science-and-economic-development-mandate-letter
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program cost estimates, which have been revised in summary as follows. It is
important to emphasize that the overall cost of the existing and proposed funding
mechanisms is not impacted by these adjustments. The revised Sepulveda Report
is attached as Appendix “B” (for convenience, the AAC also includes the
“compared” version relative to the July 2015 Sepulveda Report using the Track
Changes feature of Microsoft Word software, as Appendix “C”), and the underlying
data, in “Excel” format, is attached as Appendix “D”. The revised bottom-line
costing of these proposals is depicted in Table 1.
Table 1. Revised Costs of AAC’s Funding Mechanism Proposals
AAC's proposed Funding Mechanisms and NCF Totals: July 2015 and Revised Sepulveda Reports
(Annual averages over the 2017-2020 period, $ millions)
Total of Existing & Proposed Funding
Total of Existing & Proposed Funding
Mechanisms, with “Baseline” version of
Mechanisms, with “Ambitious” version of
AFM
AFM
Revised
Revised
July 2015
July 2015
Sepulveda
Sepulveda
Sepulveda
Sepulveda
Report
Report
Report
Report
Existing Wireline Subsidy
$80 (cap)
$80 (cap)
$80 (cap)
$80 (cap)
Affordability
Baseline
Subsidy: $63.1 Subtotal
$70 (cap)
Funding
Version
$70 (cap)
Admin. $6.1
Mechanism:
Ambitious
Subsidy: $383.7
Subtotal
$410 (cap)
Version
$410 (cap)
Admin.:$22.6
Broadband Deployment
Subsidy: $183.3
Subtotal
$220 (cap) Subsidy: $183.3 Subtotal $220 (cap)
Funding Mechanism
$190 (cap)
$190 (cap)
Admin.: $6.7
Admin.: $6.7
VRS funding
$30 (cap)
$30 (cap)
TOTAL
Total as % of CTSRs
Contribution rate under new
NCF
$370 (cap)
$370 (cap)
$710 (cap)
$710 (cap)
0.74%
0.92%
0.74%
0.92%
1.42%
1.77%
1.42%
1.77%
5) Two rounds of interrogatories. Interested parties had two opportunities to
issue requests for information from other parties, generating a considerable
record.
6) Wholesale framework under attack. Bell Canada initiated a number of
challenges3 to the Commission’s important decision in Telecom Regulatory
3
Specifically:
1) Commission file number: 8662-B2-201512161, Bell Canada’s Application to Review and
Vary Telecom Regulatory Policy CRTC 2015-326;
2) CRTC File No. 8663-B2-201513036, Bell Canada – Part 1 Application Requesting the
Expansion of Certain Determinations from Telecom Regulatory Policy CRTC 2015-326,
Review of wholesale wireline services and associated policies; and
3) Canada Gazette, Part I, Vol. 149, No. 47, November 21, 2015 - Notice No. DGTP-002-2015
— Petition to the Governor in Council concerning Telecom Regulatory Policy CRTC 2015326.
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Policy CRTC 2015-326 - Review of wholesale wireline services and associated
policies. Wholesale access is an important issue that relates directly to the
issue of broadband availability and telecommunications affordability. These
challenges have not been ruled on at the time of this submission, and
therefore there is uncertainty over the wholesale services regime.
E7. Having reviewed the considerable evidence on the record of this proceeding, as well
as the AAC’s own research, for the purposes of this further intervention the AAC
narrows its focus to three main submissions:
1) The essentiality of broadband. Broadband, of at least 10 Mbps download, is
an essential telecommunications service for Canadians, although a higher
baseline speed will be necessary soon. A wide range of interests expressed
this view. The 5 Mbps target established in 2011 is out of date and inadequate,
as many other intervenors in this proceeding have indicated. It is irrelevant that
broadband may be used to support consumption of “entertainment” services.
The Commission did not second-guess the uses to which Canadians were
putting telephone calls when it included voice telephony in the original basic
service objective. Nor did it scrutinize the proportion of voice minutes spent on
socializing or entertainment, versus the number of voice minutes spent by
residential users on financial services or government services. The AAC’s
conceptualization of the BSO, and the AAC’s “50-80” rule, avoids the problems
of paternalism by defining a universal service objective not based on what the
majority thinks the minority should be satisfied with, but by benchmarking the
minority’s entitlement against what most in the majority have, consistent with
the Commission’s recognition of the BSO as a universal service objective. By
recognising broadband of at least 10 Mbps download speed as a basic
telecommunications service and including broadband in the BSO, and by
adopting the Broadband Deployment Funding Mechanism to support the
delivery of basic broadband service to areas that are unserved, the
Commission can ensure all Canadians, regardless of where they live, have
access to broadband internet service.
2) The need for an affordability supplement. Telecommunications affordability
is a challenge for low-income Canadians. Evidence provided by the AAC in this
intervention and in previous phases of this proceeding shows that
communications services – notably broadband internet – are extremely
important services for low-income users of telecommunications services. The
low-income respondents to the Affordability Survey were generally unwilling to
cancel any communications services—and where they did, usually cancelled
television service or wireline phone. Low-income users of telecommunications
services still struggle to afford their communications services expenses,
regularly spending a much higher percentage of their household income on
these services than the average Canadian household. Furthermore, many have
had to cut other household expenses, travel to use outside resources such as
food banks or public WiFi spaces, accumulate significant communications debt,
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or ultimately cancel services entirely. Therefore the AAC submits that the
Commission, as the telecommunications regulator, can and should turn
towards addressing the affordability challenges of low-income Canadians, a
problem that will likely grow and intensify rather than diminish in the future. The
AAC has proposed an Affordability Funding Mechanism which would provide
eligible low-income households with either a $10.50 or $20.50 per month
subsidy4 towards a telecommunications service of their choice. The
Affordability Funding Mechanism will help ensure low-income users of
telecommunications services can meaningfully participate in the digital
economy.
3) Internet adoption issues do not warrant Commission intervention. The
AAC does not deny that adoption barriers, and more specifically digital
illiteracy, is a valid concern, but questions (i) the scale of the problem; (ii)
whether the Commission has the jurisdiction to address adoption directly; and
(iii) whether the Commission is in any case the best placed to address
adoption, or if it should be government and the education system. The AAC
argues that broadband adoption is not a barrier to internet use warranting
Commission intervention in this proceeding, and certainly not one that should
be prioritized over access and affordability barriers, nor made a condition
precedent to moving forward on these issues.
E8. The AAC’s Broadband Deployment Funding Mechanism and Affordability Funding
Mechanism are workable, cost-limited mechanisms to support broadband availability
and telecommunications affordability.
E9. Although the AAC expects this proceeding to focus mostly on broadband internet
access, the AAC also takes the opportunity in this further intervention to explain how
wireline voice service, while declining in popularity, nevertheless remains a vital
telecommunications service for Canadians, and to oppose Bell Canada et al’s
proposal for a rate increase in regulated high-cost serving areas.
E10. The AAC also notes that its legal views on the obligation to serve and the BSO, and
its proposals for a Broadband Deployment Funding Mechanism and Affordability
Funding Mechanism attracted a considerable amount of interest in both rounds of
interrogatories, particularly the AAC’s legal positions on the obligation to serve, and
its practical positions on how its two proposed funding mechanisms would be
operationalized. The AAC therefore takes the opportunity in this further intervention
before addressing its three main submissions, to consolidate its positions and
summarize its funding mechanism proposals.
4
See Sepulveda Revised Report, Appendix B, at p. 2 for an explanation of these figures, which are
revised slightly downwards from the initial report due to administration costs and VRS support.
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2. THE AAC’S MAIN PROPOSALS
1.
Understandably, telecommunications service providers (“TSPs”) seek to understand
the extent of the AAC’s proposals, so that they may assess their ability to comply
with potentially new or enhanced requirements and funding obligations. The AAC
also appreciates some apparent concern about non-facilities-based service providers
being accountable for the delivery of a level of service when they do not control the
underlying facilities. The AAC also appreciates that in a large and complex hearing
like this one, the Commission may benefit from a concise restatement of the AAC’s
position on key issues.
2.
Therefore, before the AAC sets out its main second round submissions, the AAC
takes this chance to consolidate its positions on the key legal issues. The AAC also
describes how its two funding mechanisms would be operationalized.
Obligation to Serve
5
6
3.
The AAC’s discussion of the obligation to serve invited a great deal of interest in the
interrogatory phases of the current proceeding and in the previous BSO review
proceeding in 2010.
4.
The AAC’s position is that all Canadian carriers bear an obligation to serve.
5.
Canadian carriers therefore have an obligation to provide service to all who request it
along the carrier’s existing “service lines” or “supply lines”, terms which the AAC has
explained5 it used in its first intervention as substitutes for the term “transmission
facilities” – much like the Commission has used the phrases “existing facilities” and
“where the ILEC has facilities” and “existing facilities or networks” in the context of
discussing the obligation to serve.6
6.
The obligation to serve applies to all Canadian carriers, which by definition under the
Telecommunications Act, own or operate facilities. Type I and Type II competitive
local exchange carriers therefore are “Canadian carriers” and bear an obligation to
serve.
AAC(CNOC)2Nov15-4 TNC 2015-134.
See e.g., Telephone service to high-cost areas, Telecom Decision CRTC 99-16, Obligation to
serve and other matters, (19 October 1999) at para. 32; Telecom Regulatory Policy CRTC 2011291 (3 May 2011) at para. 6; Speech by Leonard Katz, Vice-Chairman, Telecommunications,
Canadian Radio-television and Telecommunications Commission, to the Annual Convention of
the Ontario Telecommunications Association (13 June 2010).
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7.
Resellers (or, more properly, “non-facilities-based carriers”), since they are not
Canadian carriers, generally have no obligation to serve.7
8.
The obligation to serve can also be applied to any telecommunications service
provider that accepts a franchise to deliver service in an area – such as pursuant to a
winning bid in an auction seeking to deliver subsidized broadband. However, once
that TSP has actually rolled out services in a franchise area, then by virtue of those
facilities, that TSP will continue to have the obligation to serve along those service
lines even after the formal franchise has ended.
Basic Service Objective
9.
The AAC detailed its vision of the new BSO in its first intervention. The AAC takes
this opportunity to expand that vision in this intervention.
The BSO is a Universal Service Policy
10.
The BSO is an expression of a universal service policy for basic telecommunications
service in Canada. The BSO represents the types of telecommunications services,
and service quality levels, that all citizens should be able to access.8 Indeed this is
the way the Commission itself characterizes the BSO.
What is the basic service objective?
The Commission established the basic service objective in 1999, which reflected the level
of service available at that time to most Canadians. The basic service objective ensures
that Canadians in all regions have access to affordable, high-quality telecommunications
services. Currently, the basic service objective consists of the following:
- Individual line local touch-tone service;
- Capability to connect to the Internet via low-speed data transmission at local rates;
- Access to the long distance network, operator/directory assistance services, enhanced
calling features
- and privacy protection features, emergency services, as well as voice message relay
service; and
A printed copy of the current local telephone directory upon request. 9
11.
7
8
9
Contrary to the positions of some intervenors, the Commission has consistently
treated the BSO as a manifestation of a universal service obligation in Canada.
AAC(CNOC)2Nov15-2.
First Intervention of the AAC (14 July 2015) at paras. 149-86.
Canadian Radio-television and Telecommunications Commission, Communications Monitoring
Report (2015), at page 166.
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12.
In Telecom Decision CRTC 97-8, for example, the Commission stated that “support
for universal access at affordable rates and, to the extent possible, competitive
equity must be maintained.”10
13.
In Telecom Decision CRTC 99-16, for example, the Commission stated
The Commission's challenge is to establish a reasonable level of service and to
determine how, in a competitive era, all Canadians may gain access to that
service. To fulfil the requirements of the Act, the Commission must balance
social policy objectives (for example, high quality, affordable service) with
competitive ones (for example, minimizing subsidies). It must weigh the cost of
any programs to improve service against the financial burden placed on those
paying for these programs. This is especially important given the Commission's
goal of ensuring affordable basic service.11 [emphasis added]
10
11
12
13
14.
In 2011, the Commission stated “the primary goal of the obligation to serve and the
basic service objective is for all Canadians, regardless of where they reside, to have
reasonable access to basic telecommunications services.”12
15.
The AAC cites some the Commission’s other previous decisions here.13 In the AAC’s
view it is settled that the BSO is a universal service objective.
Local Competition (Telecom Decision CRTC 97-8) (1 May 1997) at para. 152.
Telephone Service to High-Cost Serving Areas (Telecom Decision CRTC 99-16) (19 October
1999) at para. 22.
Obligation to serve and other matters (Telecom Regulatory Policy CRTC 2011-291) (3 May 2011)
at para. 39; see also para. 13: “In 1999, the Commission established the basic service objective,
which reflected the level of service available at that time to most Canadians.”
See e.g., Competition in the provision of public long distance voice telephone services and
related resale and sharing issues (Telecom Decision 92-12) (12 June 1992): “The Commission
considers that toll rates are higher than is necessary in order to maintain universal access at
affordable rates.” See e.g., Review of Regulatory Framework (Telecom Decision CRTC 94-19)
(16 September 1994):
Having posed these questions, the Commission stressed that any changes to the current regulatory
framework intended to enhance the efficiency and effectiveness of regulation must, at the same
time, be conducive to the attainment of the following objectives:
(1) universal accessibility to basic telephone services at affordable prices;
(2) opportunity for telephone company shareholders to earn a reasonable return on their
investment;
(3) equitable treatment of subscribers in terms of service and price;
(4) assurance that telephone companies do not unfairly take advantage of their monopoly
or dominant market positions in dealings with competitors; and
(5) encouragement of the development and widespread availability of new technology and
innovative services to respond to the needs of business and residence customers.
[Emphasis added]
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16.
However, what services and standards are “in” the BSO, how the BSO is delivered
(e.g., through regulation or market forces or a combination thereof), who must
provide services at the BSO standard and how to encourage achievement of the
BSO are issues up for discussion and debate in this proceeding.
Which “Services” Should Be in the BSO
17.
In the AAC’s view, the BSO should to be upgraded as follows. “Basic service” should
be defined as a “high quality telecommunications network connection” that provides
the functional equivalent of:
 Voice grade individual line local telephone service with touch-tone dialling,
provided by a digital switch;
 Enhanced calling features, including access to emergency services, Voice
Message Relay service, and privacy protection features;
 Video relay service14
 Access to operator and directory assistance services;
 Equal Access to the long distance network;15
 Capability to connect via broadband transmission to the internet;
 A reasonable monthly data allotment for any such internet connection before
additional charges are levied.
 On-demand access to residential directory listings should be maintained for
those Canadians, particularly seniors or persons with disabilities, who may
wish to or may need to use print directories.
Broadband Speed
14
15
18.
While the inclusion of broadband in the new BSO has been relatively
uncontroversial, the subject of what broadband speed should be considered “basic”
has engendered much debate.
19.
The AAC in its first intervention suggested that the current “basic” download speed is
10 Mbps, which will likely be 25 Mbps by 2020. Since that time, the Commission has
released its 2015 Communications Monitoring Report (“CMR”) (based on 2014 data).
See Response to AAC(CRTC)2Nov15-1. The AAC expressed its belief in the interrogatory
round that, in keeping with the Commission’s determination that VRS is a “basic
telecommunications service”, VRS should be included in the basic service objective.
The AAC notes that it did not propose that equal access be a requirement of the upgraded
BSO, pending a Commission ruling on whether equal access was in scope, however since
the Commission has confirmed equal access is in scope, the AAC believes it should be a
component of the basic service objective.
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This report and other developments worldwide and in Canada support the contention
that the current or very near-future “basic” broadband speed is 10 Mbps.
20.
The AAC’s rationale for recommending the Commission set the BSO broadband
basic speed level to 10 Mbps (download) is based in part on the legal test referred to
as the 50-80 rule. The AAC notes some interest in this mechanism from other parties
and takes this opportunity to explain the tool in more detail before outlining its
rationale for the 10 Mbps download requirement.
The “50-80” Rule
16
17
18
21.
In the AAC’s first intervention the AAC articulated a test for determining whether a
telecommunications service should be considered “basic” for the purposes of setting
a regulated universal service objective: the “50-80” rule.
22.
The purpose of the 50-80 rule is of assistance in deciding what will become a “basic
telecommunications service” and ultimately to define universal service.16
23.
The 50-80 rule is inspired by approaches to universal service objective definitions in
Europe and in the United States, and is in line with the Commission’s own
description of the basic service objective as being reflective of “the level of service
available […] to most Canadians.”17
24.
The 50-80 rule applies to all “telecommunications services”, and would assist the
Commission in determining when such services become “basic”, however those
services may ultimately be defined by the Commission.18
25.
The 50-80 rule considers a telecommunications service as “basic” for the purposes
of determining required universal service if at least 50% of households subscribe to a
service, and 80% of those subscribers do so at given speed or other measurable
quality.
26.
The AAC does not believe it wise for the CRTC to use the 50-80 rule “in reverse”, for
the purpose of removing the basic services designation from a particular service. The
test is designed to help recognize when a service has passed a threshold of adoption
where it has not previously been used as extensively. It does not take into account
See Response to AAC(Bell)14Aug15-1.
Canadian Radio-television and Telecommunications
Monitoring Report (2015), at page 166.
See Response to AAC(Bell)14Aug15-1.
Commission,
Communications
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the reliance of individual customers on an historical service, nor does it take account
of larger reliance on a legacy service by vulnerable populations.19
10 Mbps Almost Meets the 50-80 Rule Today; Will Likely Achieve that Level Soon
19
20
21
22
27.
As noted above, the 50-80 rule states that a telecommunications service level is
“basic”, for the purposes of determining universal service, if two conditions are met. 20
First, that at least 50% of all households at a national level subscribe to a service,
such as broadband internet. Second, that 80% of those subscribed households in
turn subscribe to a particular level of service, such as a given speed of broadband.
Broadband internet access at this specific speed represents a basic service under
the 50-80 rule.21
28.
According to data in the 2015 Communications Monitoring Report (“CMR”), 10 Mbps
downstream is close to becoming a basic service in Canada under the 50-80 Rule.
Moreover, 10 Mbps may in fact be a basic service by the time the Commission
renders its decision, given the length of this proceeding, the number of issues the
Commission must make determinations on, the additional time before a decision is
rendered and the pace at which technology evolves.
29.
The 2015 CMR indicates that in 2014, approximately 77% of households in Canada
subscribed to broadband internet service at a speed of 5 Mbps or higher.22 This
means the first condition of the 50-80 rule is met, as at least 50% of households
must subscribe to broadband (which the Commission considers to be 1.5 Mbps
download and faster).
Ibid.
“The Commission believes that, at this stage, Member States could be asked to consider
including broadband connections in USO where the data rate in question is used at national level
(i) by at least half of all households and (ii) by at least 80 % of all households with a broadband
connection” [footnote omitted]. COM(2011) 795 final COMMUNICATION FROM THE
COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN
ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on
Universal service in e-communications: report on the outcome of the public consultation and the
third periodic review of the scope in accordance with Article 15 of Directive 2002/22/EC, online:
<http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52011DC0795&from=EN>
(“Commission Communication”), at 10.
See TNC CRTC 2015-134, Review of basic telecommunications services, First Intervention of the
AAC (14 July 2015), at paras 176-178.
CRTC,
Communications
Monitoring
Report
2015
(October
2015),
online:
<http://www.crtc.gc.ca/eng/publications/reports/PolicyMonitoring/2015/Cmr.pdf> at 2, 10, 195.
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Table 2. Residential internet service one-month subscriber distribution,
by advertised download speed 23
Advertised download speed
2010 2011 2012 2013
2014
Lite and wideband up to 256 Kbps 0.3
0.4
0.3
0.3
0.2
Wideband 300 to 1400 Kbps
5.8
4.3
2.9
2.7
1.9
Broadband
1.5 to 4 Mbps
24.2
24.6
18.2
7.3
3.7
5 to 9 Mbps
45.3
45.6
41.3
32.8
26.9
25.6
10 to 15 Mbps
22.4
15.6
10.1
25.6
41.6
16 Mbps and higher
2.0
9.5
27.2
31.4
16 to 49 Mbps
1.8
9.2
23.5
26.3
31.9
50 Mbps and higher
0.2
0.3
3.6
5.0
9.8
Total sample
8,983.1 9,440.3 9,761.1 9,970.1 10,345.1
23
24
25
26
27
30.
To meet the second condition, 80% of broadband internet subscribers must
subscribe to speeds of 10 Mbps or higher. Table 5.3.10 in the 2015 CMR shows the
residential internet service subscriber distribution by advertised download speed.24
31.
Totalling the percentages of 10 Mbps and up subscriptions gives a total of 67.2% of
total subscribers. However, the table also includes subscribers to lite- and wideband
internet, which must be removed from the calculation, since the rule is based on
households subscribing to broadband alone.25 This results in 68.7% of total
broadband subscribers (1.5 Mbps and up) who have subscribed to 10 Mbps or
higher service. If one were to redefine broadband internet to mean exclusively
speeds of 5 Mbps and higher, then the result would be 71.4%, falling short of, but
approaching, the 80% mark.
32.
In the 2013 CMR, 38.9% of broadband subscribers were on plans of 10 Mbps or
higher, using the same set of lite- and wideband-excluding calculations as above.26
In the 2014 CMR, that number rose to 58.8%.27 For ease of reference, the AAC
2015 CMR, Table 5.3.10.
CRTC, “Table 5.3. 10 Residential Internet service one-month subscriber distribution (%), by
advertised download speed,” Communications Monitoring Report 2015 (October 2015), online:
<http://www.crtc.gc.ca/eng/publications/reports/PolicyMonitoring/2015/Cmr.pdf> at 199.
The 2015 CMR states, “Broadband is defined as any service with a 1.5 Mbps download speed or
greater.” Ibid., at page 189.
CRTC, “Table 5.3.4 Residential Internet speeds and pricing (part 1 of 2),” Communications
Monitoring Report 2013 (January 2014), online: <http://www.crtc.gc.ca/eng/publications
/reports/policymonitoring/2013/cmr5.htm> at 149.
CRTC, “Table 5.3.10 Residential Internet service one-month subscriber distribution (%) by
downstream speed,” Communications Monitoring Report 2014 (October 2014), online:
<http://www.crtc.gc.ca/eng/publications/reports /PolicyMonitoring/2014/cmr.pdf> at 185.
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reiterates that the 2015 CMR (and once again, the AAC notes, based on 2014 data)
indicates that 68.7% of broadband-subscribed households subscribed to 10 Mbps or
higher service. This number is expected to continue rising rapidly as both users and
technological necessity demand faster and faster speeds. Consequently, the AAC
expects 10 Mbps to fulfil both conditions of the 50-80 rule within the next 1-2 years
and thus to constitute the baseline for broadband basic service in Canada. Also, in
light of the AAC’s research in the first intervention round and in light of the 2015
CMR data, the AAC believes that broadband availability gaps at the 10 Mbps level of
broadband service (and even the 5 Mbps level28) will persist, and therefore that the
AAC’s Broadband Deployment Funding Mechanism is a workable, cost-limited
mechanism to address those availability gaps.
Figure 1. Percentage of Broadband Subscribers at 10 Mbps or Higher (Advertised Speeds)
Subscribers at
10 Mbps or Higher (%)
Percentage of Broadband Subscribers at
10 Mbps or Higher (Advertised Speeds)
80%
70%
60%
50%
40%
30%
20%
10%
0%
% Subscribers
33.
28
29
2013
2014
2015
0.389
0.588
0.687
Additionally, if the CMR data for residential broadband subscriber distribution in the
5-9 Mbps category were broken down, it may be possible that the number of
subscriptions to plans with minimum 6, 7, 8, or 9 Mbps already crosses the 80%
threshold, thereby meeting the 50-80 rule and constituting basic service. In any case,
the AAC submits that the Commission should still decide in this proceeding that 10
Mbps broadband is a basic service, in order to make a forward-looking determination
that will prevent setting an out-of-date threshold speed as an initial requirement,
which may worsen in the considerable time between possible basic service objective
(“BSO”) reviews.29
The 2015 CMR indicates that 4% do not have access to 5 Mbps.
Note that the AAC suggested in their initial submission that the Commission revise the BSO by
administrative order upon the release of each year’s updated CMR figures to avoid this problem.
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34.
Nonetheless, several parties in this proceeding, including major internet service
providers, have continued to argue that 5 Mbps service is all that is required to
deliver “basic” service. The AAC therefore addresses below, in its submission on the
“Essentiality of broadband”, whether 5 Mbps is enough to be considered “basic” from
a user perspective. The AAC generally concludes, like many other intervenors, that
it is not.
“Resellers” and the BSO
30
31
35.
In addition, some parties have sought to divine which TSPs should be required to
offer the new BSO as proposed by the AAC – with the implication that some
“resellers” or non-facilities-based TSPs would somehow not be required to meet the
new BSO.
36.
In the AAC’s submission, the Commission should take steps to ensure that Canadian
local exchange carriers (“CLECs”) and resellers (that is, all TSPs) are accountable
for delivering the BSO, and take steps to ensure that incumbents and other
Canadian carriers play a supporting role in non-Canadian carriers’ delivery of the
BSO.30 The AAC believes that this can be done through direct and indirect means. It
can be accomplished directly via the Commission’s jurisdiction over Canadian
carriers, including wholesale requirements, as well as via the new, direct jurisdiction
granted by section 24.131 over persons other than Canadian carriers.32 Whereas in
AAC(CNOC)2Nov15-6.
Section 24.1 reads:
24.1 The offering and provision of any telecommunications service by any person other than a
Canadian carrier are subject to any conditions imposed by the Commission, including those
relating to
(a) service terms and conditions in contracts with users of telecommunications services;
(b) protection of the privacy of those users;
(c) access to emergency services; and
(d) access to telecommunications services by persons with disabilities.
32
See Show cause proceeding and call for comments, Telecom Notice of Consultation CRTC 2015369 (12 August 2015) at para. 3:
Until recently, while the Commission had the authority under the Telecommunications Act
to impose conditions on the offering and provision of telecommunications services by
Canadian carriers,2 the Commission did not have the authority to directly impose these
conditions on non-carriers, that is, providers other than Canadian carriers (also known as
resellers).3 Instead, where it was considered necessary, the Commission directed the
underlying carriers that provide services to non-carriers to ensure through contractual
arrangements that the non-carriers were subject to these conditions.
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the past the Commission had indirectly regulated resellers by requiring Canadian
carriers to impose certain contractual conditions on non-Canadian carrier
telecommunications service providers, section 24.1 provides direct authority to
impose the new BSO as a condition of service on “any person” offering
telecommunications services (including non-facilities-based TSPs).33
37.
Indirectly, the obligation placed on all telecommunications service providers to be
capable of fulfilling the BSO should, the AAC believes, result in carriers who provide
wholesale service upgrading their networks to deliver the BSO to end-users directly,
and also through wholesale access to non-Canadian carrier telecommunications
service providers, who can then provision their own customers at the new BSO
level.34
38.
Lastly, as the Commission redefines which “services” are in the BSO, the definition
of the basic service objective in turn helps to define which parties should be required
to deliver it. In Telecom Decision 99-16, basic service was defined, in essence, as
wireline telephone service – and thus it logically applied to “local exchange carriers”.
This time the BSO could be defined as “voice telephone” (including not only
traditional wireline telephone service but also VoIP, wireless telephony and now
Voice over LTE, or VoLTE) and broadband service – at the speed and quality
mandated by the Commission. This change therefore implies that all TSPs
delivering any form of voice service or broadband internet service should deliver the
updated BSO, no matter their previous definition in relation to wireline voice
services.35
How does the Broadband Deployment Funding Mechanism work?
33
34
35
39.
The purpose of the Broadband Deployment Funding Mechanism (“BDFM”) is to
close broadband availability gaps in designated areas of Canada.
40.
The BDFM would supplement the current residential local wireline regime and the
video relay service funding.
41.
Identifying broadband availability gaps is a function of defining “basic” broadband,
and then mapping out or identifying areas where it is not available to Canadians. The
AAC(CNOC)2Nov15-6.
Ibid.
Ryan, op. cit., at §103: “The emergence of Internet Protocol (“IP”) technology has greatly
complicated the task of distinguishing the two [“facilities-based” and “non-facilities based”
services].”
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former issue is addressed by AAC later in this submission. The latter issue requires
the ongoing market analysis of broadband availability and other data. In this respect,
the AAC expects that in addition to the currently available data from the CMR, the
Commission will in time for the public hearing provide a more up-to-date portrait of
broadband accessibility in Canada.36 The AAC believes based on research from its
first intervention, and from the 2015 CMR, that broadband availability gaps persist at
the 5 Mbps level, and moreso at the 10 Mbps level which the AAC argues should be
considered “basic”.
36
42.
The BDFM is a workable, cost-limited mechanism to help service providers cover the
uneconomic portion of their costs for deploying broadband to unserved and
underserved Canadians at the level of basic service defined by the Commission.
43.
The BDFM would be instituted to provide subsidy funding to service providers to
support the provisioning of basic broadband (as defined by the Commission in the
BSO) in designated areas.
44.
The AAC has explained the operation of the BDFM, in detail, in its first intervention,
including the initial Sepulveda Report, as well as in numerous interrogatory
responses.
45.
In a nutshell, the BDFM works by expanding the NCF both in terms of the
telecommunications revenues which go into it (the tax base, to use an analogy), and
the contribution rate (the tax rate, to continue the analogy). Doing so results in
average annual subsidy funding of $183.3 million per year over the 2017-2020
period. Administration costs are estimated to average $6.7 million per year over the
same period. Overall, the BDFM is capped at $190 million per year over the 20172020 period.
46.
The BDFM could be administered via a third-party administrator (“3PA”) appointed
by the Commission.37 The BDFM 3PA would carry out the ongoing market analysis
and other work to identify the designated areas, and design the corresponding BDFM
See Response to AAC(Rogers)14Aug15-3:
As noted in the AAC’s first intervention (14 July 2015), in preparing that submission, the
AAC found it challenging to find detailed, public information on the availability of
broadband internet in communities across Canada. The annual Communications
Monitoring Reports contain only a few tables and figures, which do not provide enough
detail to understand the full scope of availability issues. Industry Canada has likewise not
provided enough detailed publicly available information.
37
See AAC(TELUS)02Nov15-1 for design considerations.
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projects that would be awarded to service providers based on a minimum-subsidy
auction approach.
38
39
40
47.
All telecommunications service providers would in principle be eligible to participate
in the auction process and ultimately receive funding if successful. In any given
BDFM project, the service provider recipient of the subsidy would be subject to
specified service requirements. Telecommunications service provider participation in
the BDFM auction process would in principle be voluntary.
48.
If a Canadian carrier offering circuit-switched voice services is required to upgrade its
network to provide broadband internet service that satisfies the BSO, the Canadian
carrier would be “eligible” to participate in the auction process. The Canadian carrier
would not in any way automatically receive a subsidy simply to upgrade its facilities.
It would have to enter the auction process and win to be subsidized. If it received no
subsidy (for example, if another carrier were offering service at the new BSO level in
an area or if another carrier “won” the auction for the area in question), then the
Canadian carrier would nonetheless be required to upgrade systems, at its own
expense, to the new BSO level. Presumably, this would be accomplished through a
service improvement plan filed by the carrier and the Commission would
allow/require a reasonable timeline to reach this level, given various factors including
the difficulty of the upgrade and the need and rights of the customers to have service
at the new basic service level.38
49.
A TSP that is not serving a community can compete in any competitive auction
process for a particular BDFM project that includes that community, as long as it
meets the corresponding eligibility requirements established by the Commission or
the 3PA.39
50.
The subsidy amount for any BDFM project, including in situations of potential overlap
between the current local subsidy regime and the BDFM, taking into account
geographical considerations and the identity of the service provider(s) in question,
would be market-determined and the result of a competitive bidding process based
on a service provider’s subjective assessment of its own business case and the
degree of competitiveness for the particular BDFM project in question.40
51.
Among the eligibility criteria that the Commission may want to consider for TSPs to
participate in a BDFM auction process is that a TSP can demonstrate that it can
deliver the level of service required by the basic service objective and any other
See Response to AAC(CNOC)2Nov15-5.
See Response to AAC(CNOC)2Nov15-12.
See Response to AAC(Rogers)2Nov-15-4.
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requirements established by the Commission or the 3PA. The retail prices could be
included as a project parameter.41 From such eligible TSPs who participated in the
corresponding competitive auction process, the subsidy will be made available to the
TSP who offers the lowest subsidy.42
52.
The type of project to be implemented under the BDFM, including infrastructure and
services, its geographic location and geographic coverage/size, will depend on a
number of project-specific steps and processes, as summarized in Section 3.6 of the
initial Sepulveda Report, and as elaborated in response to interrogatories.43
53.
Because the BSO and the standards required of telecommunications service
providers would be subject to updating, the service providers competing for this
particular BDFM project would be aware that they would also be required to upgrade
their networks as a result of a revised BSO and that they would be compensated
correspondingly.44
54.
The BDFM would be capped annually, predictable, and stable, and they would be
complementary to the operation of market forces and targeted government funding.
How does the Affordability Funding Mechanism work?
41
42
43
44
45
55.
Taking inspiration from other jurisdictions’ approaches to improving
telecommunications affordability,45 the AAC has proposed an Affordability Funding
Mechanism (“AFM”).
56.
The AFM is designed to close the telecommunications affordability gap for lowincome Canadians. Like the BDFM, the Affordability Funding Mechanism is workable
and cost-limited.
57.
The AFM would supplement and be separate from the current local service subsidy
(“LSR”) regime for local exchange service in High-Cost Serving Areas (“HCSAs”),
and the video relay service (“VRS”) funding.
58.
The AAC’s proposed AFM would provide a monthly subsidy to designated lowincome households which could be applied to any telecommunications service of
See Response to AAC(Bell)14Aug15-12.
See Response to AAC(CNOC)2Nov15-12.
See e.g., Response to AAC(JTF)2Nov15-1.
See Response to AAC(JTF)2Nov15-1.
See First Intervention of the AAC (14 July 2015); see also Response to
AAC(Rogers)14Aug15-12.
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their choosing, from any service provider of their choosing to best meet their
household’s unique needs and circumstances.
59.
The AAC presented two versions of its AFM: the “baseline” and “ambitious” versions.
The “baseline” subsidy is so-named since it represent the averages of subsidies of
low-income subsidy programs in the USA, France and Spain. The “ambitious”
subsidy is so-named since it matches the “best in class” low-income subsidy
program, the combined federal and state Lifeline programs available in California.
60.
The “baseline” and “ambitious” versions of the AFM have different financial design
objectives, which result in differences in the elements related to their overall cost.
The “baseline” AFM would have a monthly subsidy of $10.50 available to about
1.390 million eligible households, for an annual capped cost of $70 million over the
2017-2020 period. The “ambitious” version would have a $20.50 subsidy to 2.888
million households and an annual capped cost of $410 million. These capped
amounts include administration costs.
61.
The AFM should empower users of telecommunications services to make choices to
best suit their communications needs. In theory, any telecommunications service
could be eligible to be subject to the AFM subsidy, including residential fixed wireline,
mobile wireless, or broadband service, or the Commission could designate specific
services that would be eligible. In the AAC’s view, all telecommunications services
should be eligible, in light of the broad challenge of telecom affordability facing lowincome Canadians, and in light of maximising their choice.46
62.
The Affordability Funding Mechanism could be administered via a third-party
administrator (“3PA”) established by the Commission.47 The AFM 3PA would verify
participant eligibility, administer ongoing participation, liaise with service providers,
among other tasks.
63.
Service provider participation in the AFM could in principle be voluntary. With the
objective of encouraging service provider participation in the AFM, the corresponding
eligibility criteria framework should be the minimum necessary to ensure the
administration and implementation of the Affordability Funding Mechanism.
64.
Interested service providers would have to apply to the Commission to be designated
as “eligible AFM service providers” to provide “eligible AFM services”.48 The CRTC
46
See Response to AAC(CNOC)2Nov15-11.
48
See Response to AAC(CRTC)14Aug15-1, Response to AAC(CNOC)2Nov15-11
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could designate more than one service provider that would be eligible to receive
funds from the AFM.
65.
Potential eligible households would have to apply to receive the AFM subsidy
amount from the AFM 3PA. If the Commission were to adopt AFM designation
processes, only “eligible AFM services” provided by “eligible AFM service providers”
would be eligible for AFM funding.
66.
The AFM would be capped annually, predictable, and stable, and they would be
complementary to the operation of market forces and targeted government funding.
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3. THE PLACE OF VOICE SERVICE
67.
On the subject of voice services, the AAC takes this opportunity to comment on (i)
the ongoing importance of voice service note, and (ii) Bell Canada et al.’s proposals
to allow residential rates to rise in regulated HCSAs in Bands E and F.
The ongoing importance of voice
49
50
51
52
53
54
55
68.
As the AAC noted this in its first intervention of 14 July 2015, wireline voice service,
while declining in popularity, nevertheless remains a vital service for Canadians.
69.
The first Environics survey, submitted with the AAC’s first intervention, supports the
conclusion that voice communication “continues to be a critical tool for Canadians,
and one Canadians continue to support”.49 According to that survey, 85% of
Canadians subscribe to a landline home telephone service,50 and 79% find it
essential to have a telephone service at home.51 In addition, 92% of respondents
agreed that “[a]ll Canadians should have access to either cell phone or landline
telephone service no matter where they live in Canada,”52 while 96% agreed that
“[b]asic home telephone service needs to be affordable for low-income Canadians”.53
70.
What is more, Canadians believe in the essentiality of voice services to the extent
that they are willing to put their money where their mouths are: 63% of respondents
would willingly pay a small surcharge on their monthly phone bills to ensure that all
Canadians have access to telephone service no matter where they live in Canada,
as well as to ensure that low-income Canadians can afford basic home phone
service.54
71.
While use of traditional wireline voice services appears to be declining, according to
the 2015 Communications Monitoring Report, the CMR also attributes this trend to
the fact that Canadians are moving to mobile wireless services and/or Voice over
Internet Protocol (VoIP) services, and simply accessing voice services through a
different technology.55 Regarding the trend toward wireless substitution, and the use
of mobile wireless for voice, Deloitte, a consultancy, notes that while overall mobile
voice traffic has been increasing, while at the same time a growing proportion of
TNC CRTC 2015-134, First Intervention of the AAC (14 July 2015), at para 357.
Environics Survey (14 July 2015), Question 1.
Ibid., Question 5A.
Ibid., Question 8A.
Ibid., Question 8C.
Ibid., Questions 10 and 11.
Canadian Radio-television and Telecommunications Commission, Communications Monitoring
Report (2015), at page 169.
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mobile users are not using voice at all. Deloitte expects that the proportion of people
making voice calls on their smartphones will continue to fall, as options to
“communicate without speaking”, i.e., instant messaging via SMS messages, social
networking, and via apps), and email, increasingly act as a substitute, if not total
replacement, for voice calling56, especially amongst younger demographics.57
56
57
58
59
60
61
62
63
72.
However, this does not detract from the importance of traditional wireline voice
services to those who have not migrated, particularly when it comes to being able to
afford voice services.
73.
In the AAC’s second Environics survey, submitted with this further intervention, 39%
of respondents found voice calls using a landline phone “barely affordable” or “totally
unaffordable”, with 61% of respondents saying the same for conducting voice calls
using a payphone.58 In the 2015 CMR, basic local telephone service is still the most
affordable form of voice services, with prices ranging from $22-$41/month in urban
communities and $21-$41/month in rural communities, depending on provider and
province or territory.59
74.
In comparison, mobile wireless services cost anywhere from $21-$35/month for
introductory, low-usage plans (150 minutes voice service per month; no texting or
internet data), and up to $35-$95/month for smartphone-level usage in urban
communities.60 The same smartphone-level usage plans cost $50-$95/month in rural
communities across the country.61
75.
Lastly, the cost of plans designated “Level 2”, which would be closest to a traditional
landline voice service (at least 450 minutes of voice service per month, with 300
texts and no internet data), ranges from $25-$49/month in urban communities,62
(CMR 239), compared to $33-$49/month in rural communities.63
76.
All together, the evidence paints a picture of Canadians considering traditional
(wireline and wireless) voice services both essential, for themselves as well as
others, and the most affordable of currently available voice services, yet still
unaffordable for many. This evidence points to the continued need to define voice
Deloitte, Technology, Media & Telecommunications Predictions 2016 (January 2016), at page 53.
Deloitte expects that by 2016, 26 per cent of smartphone users in developed countries will not
make any traditional phone voice calls in a given week.
Environics Survey (1 February 2015), Question 8.
Canadian Radio-television and Telecommunications Commission, Communications Monitoring
Report (2015), at pages 180-81.
Ibid., at pages 239-240.
Ibid., at page 243.
Ibid., at page 239.
Ibid., at page 242.
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service as a core aspect of the new BSO. It also supports the AAC’s call for a
flexible affordability subsidy that can be applied toward any telecommunications
service, including residential fixed wireline, mobile wireless, or broadband service.
Bell’s request for a rate increase
77.
The AAC also takes this opportunity to comment on Bell’s proposal to allow
residential rates to rise in regulated HCSAs in Bands E and F. The AAC opposes this
proposal.
78.
As revealed in Bell’s response to Bell et al(AAC)14Aug15-6 TNC 2015-134, Bell has
performed no cost studies, has performed no affordability studies and nonetheless
quite baldly requests that the Commission raise ILEC rates in all HCSAs in all of
Bands E and F to $37.29 (over 3 years). Bell’s proposed rate increase therefore
attempts to reduce the subsidy in HCSAs on the backs of HCSA subscribers and
compounds this error with an exhortation to the Commission to set rates with no
evidence that the rate is just and reasonable – nor that it is affordable. Bell’s
contention that the fact that the Commission has approved the rate of $37.29 in two
Télébec Band E residential sub-bands is proof that that rate is just and reasonable
for all HCSAs in Bands E and F is neither logical nor correct.
79.
Bell cites the example of the Commission’s decision in TRP 2011-291, which
permitted the ILECs to generally raise rates in HCSAs to $30 (over 3 years).64 As
Bell well knows, in that proceeding, Bell’s argument for the increase was that the
Commission already had approved rates in some HCSAs that were above $30, and
that this fact, along with the wide variance among rates in various HCSAs, meant
that a rate of $30 both would not be the highest rate charged in a HCSA and would
also help normalize rates across the country. In this proceeding, however, Bell is
making the unjustified claim that the highest HCSA approved rate is per se just and
reasonable for all HCSAs. That is a different argument than that put forward in TNC
2010-43, which led to TRP 2011-291. TRP 2011-291 therefore does not support
Bell’s contention that if a rate is “just and reasonable” in one HCSA that it is just and
reasonable in another. As Bell notes, the average retail rate used for subsidy
calculations in Bands E and F presently ranges from $30.86 to $32.14.65 This is a
much more defensible baseline range for a just and reasonable rate for all HCSAs in
these bands going forward than one single high-water mark – unless and until proper
costs studies and a hearing on these rates could be performed.
Subscribers should not be the ones to pay for a fear of regulatory complexity or for
“shortcuts” in rate-setting. The Commission’s duty under subsection 27(1) of the
80.
64
65
Intervention of Bell Canada et al., 14 July 2015, at para. 159.
Ibid.
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Telecommunications Act is to make all rates just and reasonable. Simply because a
rate-setting exercise would require the filing of cost studies and an eventual
proceeding does not remove the Commission’s duty to set a just and reasonable
rate. Although the Commission may adopt any method to set rates under subsection
27(5), it may not “do nothing” and declare a proposed rate is just and reasonable.
That is not a “method” of determination.
81.
However, Bell has “recommended” that the Commission not undertake cost studies
and proceedings to determine the costs side of the rate-setting equation precisely as
it would be “lengthy and contentious”. Instead Bell suggests that the Commission
may set a just and reasonable rate based only on the “demand” side of the equation,
and “focus on the rate component of the calculations to reduce the local voice
service subsidy requirement and eliminate unjustified subsidies.”66 With respect, the
question of the required and appropriate level of subsidies cannot be confused with
the setting of just and reasonable rates. Rates must first be set and only then can
the subsidy required be determined.
82.
Furthermore, the Commission should not ignore the telecommunications policy
objectives in rate-setting. Bell’s proposal would call on the CRTC to avoid its duty to
consider these objectives, as required by virtue of section 47, in particular, those
found in subsections 7(a), 7(b) and 7(h).
As noted in Ryan, Canadian
Telecommunication Law and Regulation, at §604:
In setting rates, the Commission is not restricted to economic considerations
such as costs, investment, allowance for necessary working capital, rate of
return, etc. and may have regard to other considerations which are part of its
wider mandate under s. 7 of the Telecommunications Act.
83.
66
The AAC contends that in a proceeding such as the instant one, the Commission, in
setting wide policy goals and implementing that policy in part by determining rates
and subsidies, should have strong regard for the above-noted telecommunications
policy objectives as it pursues the public interest in basic telecommunications
service. The AAC contends that the Commission must have regard, as directed by
section 47, to, in particular, subsection 7(b) that rates be set allow carriers to “render
reliable and affordable telecommunications services of high quality accessible to
Canadians in both urban and rural areas and in all regions of Canada.” [Emphasis
added.] As noted, Bell has offered no evidence of the affordability of these proposed
increases, either in Bell’s own territory or elsewhere. Bell’s proposed rate increases
should therefore be rejected.
Intervention of Bell Canada et al., 14 July 2015, at para. 159
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4. THE ESSENTIALITY OF BROADBAND
84.
In its first intervention the AAC expressed its belief that there would not be much
debate over the proposition that broadband has become an essential service, if not
the essential telecommunications service, from the perspective of all Canadians.67
85.
As it turns out, most if not all interveners consider that broadband internet access is
an essential telecom service.
86.
Noted academic researchers specializing in telecommunications policy, such as
Catherine Middleton, Dwayne Winseck, and Tamara Shepherd have affirmed “the
general assumption within much academic and policy literature that digital
connectivity is essential for Canadians to be able to participate fully in contemporary
civic and social life”.68 Winseck lists effects such as individual and collective
economic growth, access to education and information, social inclusion, enhanced
civil rights and liberties, ameliorating inequality based on income and other grounds,
and reliable emergency services as some of “the undoubted benefits of fast,
affordable broadband access to the Internet”,69 while Middleton states that “the
essential enabler of telecommunications services delivery is a high quality
broadband network”.70
87.
Both ILECs and cablecos, incumbents and competitors alike, have also
acknowledged the essentiality of broadband internet. Cogeco submitted that “voice
and broadband internet access services will continue to be the foundation for
meaningful participation by Canadians in the digital economy in the foreseeable
future,”71 while Rogers stated:
It is self-evident to Rogers that broadband internet service is a basic telecom
service that should be available to all Canadians. It is required by Canadians to
access countless services including government and health services, educational
services, business services and entertainment services. ... High-speed
broadband internet access is a necessary prerequisite for Canadians to
participate in the digital economy in a meaningful way...” 72
67
68
69
70
71
72
AAC, First Intervention (14 July 2015) at para. E12.
TNC 2015-134, First Intervention of Tamara Shepherd (14 July 2015), at para 7.
TNC 2015-134, First Intervention of Dwayne Winseck and David Ellis (14 July 2015), at para 8.
TNC 2015-134, First Intervention of Catherine Middleton (14 July 2015), at 7.
TNC 2015-134, First Intervention of Cogeco (14 July 2015), at para 25.
TNC 2015-134, First Intervention of Rogers (14 July 2015), at para 3 [emphasis added].
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88.
Shaw indicated similarly:
There is no question about the important role that telecommunications play in the
lives of Canadians today. Telecommunications enable Canadians to participate
in the digital economy and facilitate access to critical services, such as health
care, education, government, public safety, and banking. We expect that role to
only grow as our lives become increasingly digitized [footnote omitted]. 73
89.
According to TELUS Communications Company (“TELUS”), “broadband is
undeniably a BTS [basic telecommunications service] in today’s digital economy,”74
and the Bell Companies state, “Broadband networks form the key underpinning of
Canada's digital economy and their role is clearly important to Canadians.”75 “The
Canadian Network Operators Consortium (“CNOC”) agrees: “Broadband Internet is
firmly entrenched in the cultural and socio-economic fabric of Canada. Accordingly,
CNOC submits that broadband internet should definitely be considered a basic
telecommunications service going forward.”76
90.
Civil society groups share similar views. The Canadian Federation of Agriculture
relates that “access to broadband internet service has become an essential tool for
primary agricultural producers in the modern economy”,77 while Cybera asserts:
“Broadband Internet is an essential component for the prosperity of Canada’s digital
economy going forward and must be considered a basic telecommunication
service—as necessary as radio and telephone connections.”78 The First Mile
Connectivity Consortium additionally notes that “[h]igh-speed, affordable broadband
has...been described as a foundation stone of modern society [footnote omitted]”.79
91.
The Elementary Teachers’ Federation of Ontario, advocating for free internet access
for all Canadians, said this:
Educators are increasingly relying on technology in the classroom. Student
access to computers and the Internet is integral to daily learning activities, both
at school and outside of school hours when students are expected to complete
assignments and to conduct longer term research in higher grades. In
elementary classrooms, students are increasingly doing group work that involves
working collaboratively outside of school hours through the online platform
Google docs.
73
74
75
76
77
78
79
TNC 2015-134, First Intervention of Shaw (14 July 2015), at para 2.
TNC 2015-134, First Intervention of TELUS (14 July 2015), at para 45.
TNC 2015-134, First Intervention of Bell (14 July 2015), at para 2.
TNC 2015-134, First Intervention of CNOC (14 July 2015), at para 38.
TNC 2015-134, First Intervention of Canadian Federation of Agriculture (14 July 2015), at para 2.
TNC 2015-134, First Intervention of Cybera (14 July 2015), at para 43.
TNC 2015-134, First Intervention of First Mile Connectivity Consortium (14 July 2015),
at para 17.
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Students who can’t access the Internet at home are missing out on the extensive
resources available to support their intellectual development. They are also cut
off socially from the diverse network of online communications that has become
the norm for today’s youth. Students whose families cannot afford to pay for
Internet services are therefore at a considerable disadvantage on many levels.
[Emphasis added]
Lack of access to the Internet at home also means that parents don’t have the
opportunity to participate in online learning with their children, an activity that can
promote literacy and numeracy development and other skills.
[…]
Alternatives to home Internet access are not universally available. Students who
live in remote and rural areas often do not have easy access to libraries or other
locations that provide free Internet. While some may be able to compensate
through cell phone usage, wireless costs are also prohibitive and therefore limit
this option for many.80
92.
Lastly, governmental bodies at all levels have commented on the essentiality of
broadband internet to people in Canada. The Grand Council of the Crees and Cree
Nation Government state, “When it comes to the public, broadband internet is a
basic communications requirement,”81 while the Province of British Columbia points
out, “What really matters is that quality, high capacity, low latency bandwidth needs
to be ubiquitously available to serve and support the requirements of all Canadians,
individually and collectively, as and when they so require.”82 The Federation of
Canadian Municipalities asserts, “Broadband Internet access has become
fundamental to modern life, and has the power to transform rural and northern
Canada,”83 and the Government of Yukon
submits that the Commission should now revise the definition of basic service to
include high-speed or broadband internet access, which is arguably essential to
the ability of Canadian homes and businesses to fully engage in the digital world,
including not only the opportunities to participate in the global marketplace of
goods and services on a competitive basis, but also to take full advantage of the
education, government, and health services/applications that are, or will become
available, as well as to fully exploit the potential to build and enhance their
identities, communities, and culture....84
80
81
82
83
84
First Intervention of the Elementary Teachers’ Federation of Ontario (13 July 2015).
TNC 2015-134, First Intervention of Grand Council of the Crees and Cree Nation Government
(14 July 2015), at page 15.
TNC 2015-134, First Intervention of Province of British Columbia (14 July 2015), at para 20.
TNC 2015-134, First Intervention of Federation of Canadian Municipalities (14 July 2015),
at para 7.
TNC 2015-134, First Intervention of Government of Yukon (14 July 2015), at para 35.
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93.
And that is not even to mention the high number of individuals who have contributed
comments in recognition of how critical broadband internet is to their daily lives. The
AAC could not agree more with the wide consensus demonstrated among
interveners in this proceeding.
94.
It would defy common sense, and ignore reality, to conclude that broadband is not a
basic telecommunications service.
95.
The more contentious issue is “What is level of broadband service is basic”? The
AAC address this question next.
What is the “basic” level of broadband?
96.
To answer the question the AAC has re-applied its “50-80” rule for defining the basic
level of broadband that should be universally available, as described above. Doing
so results in 10 Mbps very nearly being the “basic” level of broadband based on
2014 data (from the 2015 CMR), and the very strong likelihood that as of the date of
hearing this proceeding by the Commission and almost certainly by the date of a
decision, 10 Mbps will be used by 80% of broadband subscribers and thus be the
“basic service” level suggested by the 50-80 rule.
97.
Of course, the Commission retains the discretion to determine the level of basic
broadband service based on other factors than the 50-80 rule.
98.
However, as more fully described below, from a user perspective, the AAC submits
that 5 Mbps (which is a level proposed by some major TSPs) is not likely to be
sufficient for Canadians.
From a user perspective, 5 Mbps is not enough to be considered “basic”
99.
The AAC submits that a 5 Mbps download speed is insufficient, from a user
perspective, to be considered “basic” broadband service.
100. In their July 14 intervention the AAC presented its own consumer needs analyses.
101. Included in the AAC’s needs analysis was research from Nordicity and from the UK
telecoms regulator, Ofcom, as well as from the Federation of Canadian
Municipalities. The AAC believes those needs analyses are persuasive. The AAC
also notes how the needs for northern Canadians were believed to be even higher
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than average Canadians. The research and analysis cited in the AAC’s first
intervention is reproduced here for the record:
Ofcom, the UK communications regulator, for example, has demonstrated how a
household might need 10 Mbps as the “standard” level of broadband, and how
the UK Government’s target of 2 Mbps set in 2009 was out of date. 85
In a report commissioned by the Northern Communications Information Systems
Working Group (“NCIS-WG”), Nordicity, a consultancy, identified 9 / 1.5 as the
minimum recommended average target for the North, which should be achieved
by 2019 “in order to meet projected consumer, business and government needs,
while recognizing the constraints posed by the backbone infrastructure. 86
In a report commissioned by the Federation of Canadian Municipalities, the
authors concluded that “[t]he actual needs of these communities are the same as
other, larger population centres.”87
In the AAC’s own research, a standard today per household ranges from 14.7
Mbps for a one-person household with a multitasking user, to 26.2 Mbps for a
tech-savvy household consisting of three multi-tasking users.88
102. The AAC notes that some interveners would disagree with this assessment and
maintain that 5 Mbps is sufficient as a level of basic service. However, the arguments
given in support of this view largely fall short.
103. To begin with, several parties urging inaction point to the fact that no one common
internet application requires 5 Mbps to use. These parties include TELUS,89
Rogers,90 Bell,91 Quebecor,92 and Xplornet,93 some of whom rely on the application
bandwidth diagram in the 2014 Communications Monitoring Report.
85
86
87
88
89
90
Ofcom, “Ofcom outlines challenges for UK’s communication networks” (8 December 2014),
online: <http://consumers.ofcom.org.uk/news/infrastructure-report-2014/>, as cited in TNC CRTC
2015-134,
First Intervention
of
the
AAC
(14 July 2015),
at para 240.
See also Ofcom, “Infrastructure Report 2014 - Ofcom’s second full analysis of the UK’s
communications infrastructure” (8 December 2014), online: <http://stakeholders.ofcom.org.uk
/binaries/research/infrastructure/2014/infrastructure-14.pdf> at 2 and 19: “There is emerging
evidence that a typical household requires a download speed of around 10Mbit/s. Below this
level, demand is likely to be constrained.” [… ]“Below that speed, overall broadband performance
is generally impaired. Indeed, use may be constrained for broadband below this threshold,
because some applications will not work properly, if at all.”
NCIS-WG Northern Connectivity Report at 18, as cited in TNC CRTC 2015-134, First Intervention
of the AAC (14 July 2015), at para 241.
“Broadband Access in Rural Canada: The role of connectivity in building vibrant communities”
(2014) at s. 3.3, as cited in TNC CRTC 2015-134, First Intervention of the AAC (14 July 2015), at
para 242.
TNC CRTC 2015-134, First Intervention of the AAC (14 July 2015), at para 243. For the full
needs analysis examining Internet usage levels of different household configurations, see paras
111-123.
TNC CRTC 2015-134, First Intervention of TELUS (14 July 2015), at para 70.
TNC CRTC 2015-134, First Intervention of Rogers (14 July 2015), at page 23.
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104. However, the argument that because no one application requires over 5 Mbps, 5
Mbps thus suffices as a basic level of overall internet service, makes a number of
unwarranted assumptions: that every household will have only 1 person who uses
internet; that every person in a household will run little more than 1 basic application
at a time; that the person has no disability that requires data-consuming assistive
technology; or that the person may obtain internet access or the benefits of internet
access elsewhere, for instance. Remove any one of these assumptions, such as a
household full of roommates subscribing, one or more parents with children, or a
person living in isolation due to age or disability, and the service providers’ claims
that 5 Mbps is enough no longer holds.
105. As the AAC’s sample needs analyses demonstrated, a conservative estimate of
typical household usage calls for a minimum of 9 Mbps to 26 Mbps.94 The 2015 CMR
also notes that in 2014, a full two-thirds of Canadian households subscribed to
broadband speeds of 10 Mbps and higher. It is difficult to imagine that so many
would subscribe to plans beyond 5 Mbps, given the considerable expense, unless
they truly needed at minimum the level of service provided. Unlike the TSPs
mentioned above, the Commission must be cognizant of the reality of users’ lives,
and the distinction between what is possible in theory and what is in fact feasible or
tenable on a practical, everyday basis.
106. Sasktel argues that because essential public institutions such as schools, libraries,
and hospitals “have the potential to reach beyond the 5/1 targets”, it is not necessary
to ensure that people have access to the same in their own homes.95 Again, this
displays a certain obliviousness to the daily reality of, in particular, those who make
ends meet on particularly low incomes and are likely least able to afford yet most in
need of the types of services and support that reliable, high-speed, high-quality
broadband internet would provide. One only has to conduct a cursory read-through
of the testimonials provided by ACORN members, several of which the AAC cites in
this submission below, to understand this. Sasktel’s position also assumes that all
low-income people, of all ages and other demographics, would have easy, sustained,
or reliable access first to such public institutions, and then the actual computer
terminals and connectivity, which is not necessarily the case.
91
92
93
94
95
TNC CRTC 2015-134, First Intervention of Bell (14 July 2015), at paras 8-9.
Quebecor also cites the information in the 2014 CMR, arguing that as no one application requires
bandwidth about 5 Mbps, the basic level of broadband speed thus “should not exceed the current
target of 5 Mbps downstream and 1 Mbps upstream”.
TNC CRTC 2015-134, First Intervention of Xplornet (14 July 2015), at para 86.
See TNC CRTC 2015-134, First Intervention of the AAC (14 July 2015), at paras E27, 111-23.
TNC CRTC 2015-134, First Intervention of Sasktel (14 July 2015), at para 28.
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107. Bell submitted an expert report to support its claim that the FCC’s definition of
broadband as 25 Mbps does not apply in the context of basic services, and that the
Connect America Fund (“CAF”) applies a target of 4 Mbps download and 1 Mbps
upload for service areas that already have it, with new build-outs obligated to reach
10 Mbps down / 1 Mbps up.96 However, the FCC made it clear that 10 Mbps is the
new standard for minimum, basic service in the context of universal service:
Throughout the universal service reform process, we have sought to ensure that
all consumers “have access to . . . advanced telecommunications and
information services” and benefit from the historic technology transitions that are
transforming our nation’s communications services. This Report and Order
continues down that path. We adopt several revisions to Connect America Phase
II to account for changes in the marketplace since the USF/ICC Transformation
Order was adopted. In particular, we revise the minimum speed requirement that
recipients of high-cost universal service must offer. We find that it is in the public
interest to require recipients of high-cost support subject to broadband
performance obligations to serve fixed locations to provide at least a minimum
broadband speed of 10 Mbps downstream [Emphasis added; footnotes
omitted].97
108. The AAC submits that it is time for Canada to follow suit.98
109. Lastly, according to MTS Allstream, 5 Mbps is an appropriate level of basic service
because:
… with TRP 2011-291, the Commission has already set the appropriate
benchmark of 5 Mbps download and 1 Mbps upload speeds (5:1) to enable this.
As noted by the Commission in TRP 2011-291, a 5 Mbps download speed would
allow several users in a household to use the Internet simultaneously, use voice
over Internet Protocol services and other online services such as email and
banking.99
110. The use of TRP 2011-291100 by MTS Allstream or another TSP to support the
position that 5 Mbps is adequate lacks merit, for the following reasons.
111. First, the Commission decided that 5 Mbps sufficed in 2011. That was five years ago.
For context, Udacity (a popular way to earn online “nanodegrees” in computer
programming, software development, and data analysis), Lyft (rival to Uber), and
96
97
98
99
100
TNC CRTC 2015-134, “Appendix 3,” First Intervention of Bell (14 July 2015), at page 3.
Federal Communications Commission, In the Matter of Connect America Fund, WC Docket No.
10-90 (18 December 2014), at para 2.
It is also worth noting that on top of the 10 Mbps universal service standard, the FCC has also
selected several rural communities where it will fund the provision of 25 Mbps / 5 Mbps
broadband service. Ibid., at para 55.
TNC CRTC 2015-134, First Intervention of MTS Allstream (14 July 2015), at para 17.
Telecom Regulatory Policy CRTC 2011-291, Obligation to serve and other matters (3 May 2011)
[TRP 2011-291].
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Snapchat did not exist five years ago.101 Netflix had yet to venture into original
programming, was still equally known as a DVD mailing service, and in fact had only
just launched in Canada.102 Usage-based billing was still nascent as an unfortunately
household term. As cited elsewhere in the AAC’s submission, a recent report by
Deloitte explains:
Over the past 20 years, data connectivity has progressed from serving a single
device and a low-speed application, to serving multiple, ever more powerful
devices. Demand for connectivity has evolved symbiotically: as faster speeds
have become available, the range of applications supported has increased, and
the viable number of devices per person has steadily risen. 103
As average data connections get faster, we expect existing services to become
steadily more bandwidth consumptive, new formerly unviable data-intensive
services to launch, and new ‘data-gulping’ devices to come to market. Over time
many data services have consumed an increasing quantity of bandwidth, rising in
line with availability. … In addition to the bandwidth usage that is triggered by
human activity, from video-on-demand to browsing, there is likely to be a growing
volume of background data usage. Every additional device, from smartphones to
smart lighting hubs, is likely to require online updates, be this for apps or for
operating systems.104
112. Extrapolating from the 20 year-and-counting trend leads to the conclusion that what
was appropriate in 2011 would not be appropriate for 2016 as a matter of course—let
alone beyond 2016, as this proceeding is also meant to account for.
113. Second, the AAC would like to emphasize the Commission’s statement in TRP 2011-
291 that, whatever the specific speed chosen,
the Commission considers that Canadians should have access to a broadband
internet access service that allows several users in one household to use the
World Wide Web…voice over Internet Protocol services, and other online
services…over a single connection at the same time. With this type of access,
users will be able to actively participate in online discussions, take advantage of
many government services, and carry out research, to name just a few possible
applications.105
114. This determination directly counters TELUS’s claim that a downstream speed of 5
Mbps as a basic standard is “arguably higher than it needs to be
because...consumer demand for Internet applications can be shifted across time and
101
102
103
104
105
Maya Kosoff, “These 15 startups didn’t exist 5 years ago—now they’re worth billions,” Business
Insider (10 December 2015), online: <http://www.businessinsider.com/these-startups-didnt-exist5-years-ago-now-theyre-worth-billions-2015-12>.
Netflix, “A brief history of the company that revolutionized watching of movies and TV shows,”
PR.Netflix.com,
online:
<https://pr.netflix.com/WebClient/loginPageSalesNetWorksAction.do?contentGroupId=10477>.
Deloitte, Technology, Media & Telecommunications Predictions 2016 (January 2016), at page 46.
Ibid., at page 47.
TRP 2011-291, at para 74 (emphasis added).
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location”.106 Moreover, TELUS’s suggestion is in any case an unrealistic condition to
place on people, expecting parents to stay up late with a long day of work and
childcare behind and ahead, or expecting young non-office workers to run home in
the middle of the day to complete tasks online, for instance. In addition, this
argument abandons many Canadians in difficult or abusive living situations that do
not allow them to negotiate internet access shifts with others in the same household.
The idea of “time-shifting” home internet usage, when assumed or imposed from the
outside, is ignorant at best and self-serving at worst, and the Commission should
reject this notion as such when determining an appropriate level of basic service.
115. Third, some of the parties arguing for 5 Mbps now were not those advocating for a
basic service of 5 Mbps in the proceeding leading to TRP 2011-291. Instead, they
suggested that 1.5 Mbps was reasonable at the time,107 or a goal of 4 Mbps by
2020.108 Despite this, the Commission set a target of 5 Mbps, which the AAC and
other intervenors have demonstrated is not meeting present-day needs. It stands to
reason that current advocacy for 5 Mbps by the same parties, five years later, would
be a corresponding underestimate of the real needs of people across Canada today.
116. Fourth and lastly, the Commission in TRP 2011-291 set a target downstream speed
of 5 Mbps after noting that
[Canadians’] requirements for broadband speeds will grow, just as their
requirements for the processing capacity of their computers have grown. What
was an acceptable speed in one year will be regarded as slow a few years later.
The Commission expects that Internet service providers will keep pace with
these requirements. The Commission considers that the freedom to use
communications media at reasonable rates will be a primary concern for all
Canadians in the years ahead.109
117. The Commission arguably meant 5 Mbps to be a forward-looking standard, setting
the achievement and review date for 2015.110 Common sense suggests that what
was forward-looking in 2011 would not still be forward-looking in 2016, especially
given the exponential rates of technological advancement. The Commission’s
determination in this proceeding should not be a mere observation of what has
already come to pass, but a determination for what the AAC expects will come to
pass. Otherwise, this entire year-long proceeding may conclude with Canadians
already behind.
106
107
108
109
110
TNC CRTC 2015-134, First Intervention of TELUS (14 July 2015), at para 52.
See, e.g., TNC CRTC 2010-43, Obligation to serve and other matters, Final Argument of Eastlink
(12 November 2010), at para 26; and TRP 2011-291, at para 66.
See, e.g., TNC CRTC 2010-43, Obligation to serve and other matters, Final Argument of Bell
Aliant Regional Communications, Limited Partnership, KMTS, NorthernTel, Limited Partnership
and Télébec, Société en Commandite (12 November 2010), at para 58.
TRP 2011-291, at para 71.
Ibid., at para 79.
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Leading ISPs’ Advertisements Belie a Belief in Higher Speed Broadband
118. The AAC is not alone in this proceeding in arguing that 5 Mbps is insufficient.
119. Several of the major TSPs who have proffered the 5 Mbps speed as “basic”
broadband in this proceeding have effectively contradicted this viewpoint in other
parts of their own submissions and more generally in their own advertising.
120. Rogers has noted, for example, in its justification for its 25 Mbps goal for 2020, “In
terms of the most commonly-subscribed speed tier of Internet service, speeds of
between 5 and 9 Mbps download were the most common in 2010, whereas in 2014,
service with speeds of 16 to 49 Mbps download had become the most common.”111
121. Despite the assertion of the British Columbia Broadband Association’s (“BCBA”) that
5 Mbps suffices, some of their members seem to indicate otherwise. Mascon, for
instance, advertises its 25 Mbps plan as “most popular”, and deems its 10 Mbps
plan, the lowest speed available, as “Perfect for 1 or 2 people browsing the internet,
social media applications and sending/receiving email.”112 Certain other BCBA
members appear to only offer 10 Mbps as their lowest plan.113
122. The AAC also notes the obvious conflict of interest engaged by being in a business
of up-selling bigger and faster speeds yet arguing against the Commission
mandating these speeds. It seems disingenuous at best to boast about 1GB service
offerings in urban environments, and all that those connections can enable, on the
one hand, and then tell the Commission that all of that is great, but not necessary.
123. It also begs the question whether vertically integrated telecommunications service
providers (those with media assets) are losing sight of their telecommunications
function and responsibilities and instead giving more expression to their media and
entertainment businesses.
111
112
113
CRTC, Communications Monitoring Report, Table 5.3.9.
Mascon, “Packages and Pricing,” Accessed on 22 January 2016, online:
<https://mascon.ca/internet/internet-packages/>.
For example: CityWest offers 10 Mbps as its lowest plan, accessed on 1 February 2016, online:
<www.citywest.ca/internet /high-speed/>; Kaslo infoNet Society (KiN) offers 10 Mbps as its lowest
broadband plan, accessed on 1 February 2016, online: <http://kin.bc.ca/rates-and-services/>;
Uniserve bills 6 Mbps as “Perfect for browsing the Internet, and keeping in touch with family and
friends by email and social media”, while 15 Mbps is advertised as “Ideal for watching videos
online, uploading and downloading files, and staying connected”, high-definition videos don’t
make an appearance until 25 Mbps, and 50 Mbps is “Best for people who like to do everything
online,” accessed on 1 February 2016, online: <www.uniserve.com/residential /internet.html>;
and Pris sells plans from 10 to 30, 50, and 100 Mbps, accessed on 1 February 2016, online:
<http://portal. pris.ca/residential/>.
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124. Vertically integrated TSPs appear to be attempting to have it both ways by telling the
Commission one thing, then turning around and telling customers another, by going
to market with advertising and public messaging such as the following (see
illustrating screenshots of TSP websites in Appendix “E” – “Speed Advertisements by
Major ISPs”:
 Bell advertises its 25 Mbps plan as “recommended”.
 Bell advises customers to “enjoy speeds of up to 50 Mbps so you can do
everything you love to do online”.
 Rogers describes its 5 Mbps plan as “[u]ltra light” and fit for “occasional, basic”
internet access.
 It is not until getting to Rogers’s 60 Mbps plan that customers have access to
“smooth everyday surfing, streaming, downloads and apps”.
 Shaw mentions no streaming, downloading, or multimedia in what its 5 Mbps
plan is “perfect” for.
 Customers must obtain 15 Mbps from Shaw to have an “[i]deal Internet plan for
watching videos online together, uploading and downloading files, and staying
connected”.
 TELUS, it appears, does not advertise plans on its website below 15 Mbps, and
tells customers that this 15 Mbps plan is mostly “[f]or casual surfing and
emailing”.
 Customers must obtain 50 Mbps, according to TELUS, if they want internet that
is “[g]reat for streaming and gaming”.
 According to Videotron’s Internet Usage Estimate Tool, even the most ascetic
level of internet usage—one person, mobile phone-only, watching one movie or
TV show episode per week, never playing online games, video-calling friends
and family less than one hour per week, and downloading only music, no
movies—requires at least a 10 Mbps plan.
Other Intervenors State 5 Mbps is Inadequate
125. Many other intervenors have indicated that 5 Mbps is inadequate speed to meet the
needs of their constituents.
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126. The Federation of Canadian Municipalities (“FCM”), for example, submitted that 5
Mbps is “no longer sufficient to meet the minimum needs of Canadians”. It submitted
a survey of its rural and remote members which indicated that the biggest barrier to
participation in the digital economy is “Poor uploading and downloading speeds”
(40%), followed by prices and access (each tied at 23%). The majority of FCM
member—76%—surveyed also indicated that the CRTC’s current target uploading
speed (1 Mbps) and downloading speed (5 Mbps) for 100% of Canadians by the end
of 2015 is not sufficient to meet the minimum needs of your community: 23%
indicated that the target should be at least 10 Mbps; 53% indicated that the target
should be at least 25 Mbps. (15% of respondents said they were not familiar enough
with the technology, but more importantly, only 9% indicated that 5 Mbps was
sufficient.
127. The Eastern Ontario Wardens Caucus and Eastern Ontario Regional Network state
that “current basic broadband services speed targets (5 Mbps download/1 Mbps
upload) are inadequate for enabling Canadians to participate meaningfully in the
digital economy.”114
128. The First Mile Connectivity Consortium115 and Province of British Columbia116 echo
this view, as does the Government of the Northwest Territories: “The GNWT does
not believe the existing targets are adequate. Simply watching one high definition
movie can in some cases require capacity well in excess of this amount as can a 7 or
8 person skype online group video session for online learning [footnotes omitted].”117
129. The Government of Yukon was already calling for a basic standard of 15 Mbps
download two years ago,118 and Ontario’s Ministry of Economic Development,
Employment and Infrastructure notes that a given use case by the Commission
“would require a combined sustained data rate of 7.6 Mbps [footnote omitted].”119
130. According to Manitoba Keewatinowi Okimakanak Inc., their “preliminary view…is that
these standards [5/1] do not reflect the reality of use in remote communities, or in
other areas where there is a high ratio of users-to-connections to access service.”120
131. Similarly, Union des consommateurs writes: “Il est…certain que les objectifs de
vitesse du Conseil, fixés actuellement à 5 mbps, ne conviennent plus pour permettre
114
115
116
117
118
119
120
TNC CRTC 2015-134, First Intervention of EOWC/EORN (14 July 2015), at para 8.
TNC CRTC 2015-134, First Intervention of FMCC (14 July 2015), at para 71.
TNC CRTC 2015-134, First Intervention of Province of British Columbia (14 July 2015),
at para 36.
TNC CRTC 2015-134, First Intervention of GNWT (14 July 2015), at para 21.
TNC CRTC 2015-134, First Intervention of Government of Yukon (14 July 2015), at para 26.
TNC CRTC 2015-134, First Intervention of Ontario Ministry of Economic Development,
Employment and Infrastructure (14 July 2015), at para 29.
TNC CRTC 2015-134, First Intervention of MKO (14 July 2015), at para 88.
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aux consommateurs d’avoir un accès efficient à toutes les fonctions novatrices du
Web.”121
132. The technology adoption and research non-profit Cybera also stated, “The
Commission’s current target speeds are no longer sufficient to accommodate
Canadians’ demands for broadband,” citing significantly higher targets speeds in
peer jurisdictions for comparison and calling for 25 Mbps.122
133. Indeed, the Forum for Research and Policy in Communications recommends 100
Mbps as a target speed,123 and Catherine Middleton, Canada Research Chair in
Communication Technologies in the Information Society, rejects altogether the idea
of a one-size-fits-all notion of externally imposed “reasonable use” of the internet that
runs contrary to “develop[ing] a world-class communications system and
encourag[ing] participation in the digital economy”.124 Taken as a whole, the
message of the above-named interveners comes across loud and clear: 5 Mbps is
not enough.
134. The AAC expects that the CRTC’s Ekos survey and stakeholder focus groups will
shed more light on the issue of whether 5 Mbps is a sufficient basic level of
broadband service and will support our contention that Canadians consider that 5
Mbps has already been superseded by a general need for a higher speed.
The use of broadband for entertainment does not diminish broadband’s essentiality
135. The wide-scale use of broadband for video and entertainment, which the AAC itself
acknowledged in its first intervention, does not and should not diminish from the
essentiality of broadband.
136. The Commission did not second-guess the uses to which Canadians were putting
telephone calls when it included voice telephony in the original basic service
objective. Nor did it scrutinize the proportion of voice minutes spent on socializing or
entertainment, versus the number of voice minutes spent by residential users on
financial services or government services.
137. Yet this is what some of the major internet service providers are inviting the
Commission to do with submissions like these:
121
122
123
124
TNC CRTC 2015-134, First Intervention of Union des consommateurs (14 July 2015), at para 50.
TNC CRTC 2015-134, First Intervention of Cybera (14 July 2015), at paras 16 and 20.
TNC CRTC 2015-134, First Intervention of FRPC (14 July 2015), at page 4 (Executive Summary).
TNC CRTC 2015-134, First Intervention of Catherine Middleton (14 July 2015), at paras 13-25.
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Email and Web-browsing (and the plethora of activities and socio-economic
contributions that can be achieved through web browsing and email) are the services
most necessary to meaningfully participate in the digital economy. … We submit that
although of interest from an entertainment perspective, high bandwidth
applications and services are not necessary to participate in the digital
economy.125
[O]nly wireline voice is an essential service and that access to Digital Economy
Broadband Services is important, but not essential, for Canadians.126
A number of the popular Internet activities […] are most accurately characterized as
satisfying the recreational and entertainment wants of Canadians rather than
representing a basic use of the Internet that meets their basic telecommunications
needs to actively engage in the digital economy. For example, downloading and
streaming movies, television programming and music certainly allow individuals
to be entertained through online services, but these do not rise to the level of
being essential to the economic or social welfare of Canadians. In still other
cases, it is not abundantly clear whether the popular services identified represent an
individual’s basic use of the Internet because communications needs today can be met
through other online or telecommunications tools. These include accessing the Internet
to make telephone calls and engaging colleagues and friends through social
networking sites. In addition, while banking, interacting with government websites and
communicating through e-mail enhance the economic and social welfare of
Canadians, watching movies and downloading music are properly characterized as
discretionary. . . a synonym for which is non-essential.127
[W]hat Canadians expect they should be able to use the internet for would be
much more expansive than what should be considered a basic service as a
government supported policy. 128
138. Compare those comments by certain internet service providers, with compelling
comments such as the following testimonials on purposes of internet usage from
individual members of ACORN located in different parts of Canada, extracted from
the AAC’s filing of 4 August 2016:
“As a single mother to a young child it
can be very difficult to be bringing my
daughter to government offices to
receive internet access to search for
work or when I am in school to be able
to research information and study
online. It is almost impossible to do so
when she’s present. Online access @
125
126
127
128
“The medical research I access is
critically important as I have a health
issue I must keep up to date on and my
doctor sends me for the tests etc but
does not have time to discuss in detail I
want to keep up regarding the latest
break-throughs and alternative therapies.
I would feel more lost and worried
Bell Canada and its Affiliates, first intervention (14 July 2015) at para. 30, p. 38, para. 73, and
paras. 9 and 68 [emphasis added].
SaskTel, first intervention (14 July 2015) at para. 74 [emphasis added].
TELUS Communications Company, first intervention (14 July 2015) at para 50
[emphasis added].
Bragg Communications Inc., carrying on business as Eastlink, first intervention (14 July 2015)
at para. 14 [emphasis added].
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home while my child sleeps would
benefit me very much.”
without out more extensive information.
Being able to email is very important as it
keeps me connected to others and as I
have this health issue right now it al-lows
me to connect when I don't always have
the energy to go out. I hate that sickening
feeling of having to take money from
other necessities to be able to have
internet.”
“Traveling on transit is difficult without
bus route plans. The translink site is
vital to me. Impossible to keep up to
date on medical issues without access
to the Internet. Need time to explore
medical sites & do not have that time if
using computers at the library. Getting
up to date medical information is
critical to surviving a chronic illness.
Need prescription info, doctor info,
medical
conditions
&
services
available, and what is covered by BC
Medical Plan. I would not know all the
services available to someone with a
disability if I did not have the Internet.”
“In Order Of Importance I use the internet
for the following 1) Communication with
my children's school 2) Government
forms and information such as income
tax
and
income
assistance
communication 3) Community events
sign ups and contacting family and
friends 4) bills, banking and shopping. In
an effort to reduce costs and waste many
offices will no longer communicate on
paper. Even in the event that will, much
longer wait times are expected for
essential services handled by mail. This
is often due to the fact that employees
and resources are not allocated to
handle paper communications when
compared to online communication. This
includes email messages, customers
service and support and any forms to be
filled out. To give an example of this My
children's school WILL NOT OFFER the
option of getting important notices on
paper and will only communicate updates
by email. I have no recourse in this
matter and must have an email account I
can check regularly. Without internet one
cannot meet the expected level of
communication will miss out on many
opportunities. It would allow my family
equal opportunity to access information
communication and services. Its just that
simple and important.”
“Government forms (mostly for my
sons autism funding), email (mostly his
therapists, specialists and teachers),
medical research, searching and
downloading asd and learning apps for
iPad. Keeping iPad updated, gathering
pictures for PECS (communication
program), ordering special needs
equipment and resources. Without it
mine and my sons lives are greatly
“When I call THE NUMBER FOR
CANADIAN
GOVERNMENT
THEY
ALWAYS GIVE ME THE WEBSITE
ACCESSS FIRST AND THEN THE
PHONE NUMBER. LAST WEEK I WENT
TO MY NEW WESTMINSTER OFFICE
FOR HELP AND ALL THEY DID WAS
GIVE ME AN ACCESS CODE FOR THE
GOVT OF CANADA WEBSITE TO GET
THE INFO MYSELF. It is important to me
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limited and we are unable to access
nessassary resources. Currently I have
to go to the library for access when
he's at preschool as he cant handle
being in public and doesn't understand
it's a quiet place.”
because I can't get information easily
anymore unless I have access to the
Internet. This includes information from
Govt of Canada Offices. From phone
numbers to my Doctors' offices to my
Government of Canada, I'm expected to
have a computer and have access to the
Internet. When at my Govt of Canada
New Westminster branch just 2 weeks
ago they insisted they could not help me.
I asked what they say to people who
don't have a computer. Their answer was
'go to the library'. NOT 'we'll mail you
what you need'.”
“I work from home using the internet,
so it's absolutely essential for my job. I
also used it extensively for my
university academics. It's also my
primary form
of
communication
between my family/friends who are not
in the immediate area. In addition, as
someone with a disability, the internet
is essential in accessing disability
supports. The internet is often the only- contact point for companies and
venues and I need that information to
determine if they are accessible and/or
can accomodate me. Also, things like
paratransit bookings are often only
done online. Also, Online access is
pretty much the only way I have to find
out if programs/sites/locations are
wheelchair accessible. Even the yellow
pages are now online, so my only
method of finding phone numbers to
contact them is through the in-ternet. In
addition, as someone who works in an
information field, the internet and
information as a whole is integral to
both my life and my work ethic.”
“I am mostly homebound because of
CFS/ME. I have an illness that most of
my doctors know very little about. Online
access is so important to me because I
can connect with online patient support
groups—most sufferers are too ill to
leave their houses so we would never get
to meet, share experiences, hold each
other up on the worst days and keep
each other informed about new research.
It also helps me stay connected with my
family and friends that I am otherwise
iso-lated from. I need a lot of rest periods
and Netflix allows me to be doing
something without over-exerting myself.It
is a distraction from my illness. I use it for
online shopping (even just browsing local
stores so that when we go to pick
something up I know where it is so we
don't have to walk as far which prevents
me from having more severe symptoms).
My husband is a computer programmer
and he could work from home on days
that I would need him to help with meals
if our internet access was better (we
have rural satellite internet). I am nothing
but lucky that my husband has a high
paying job. If something were to happen
to him, high-speed internet would not be
an option for me as I am unable to work
and would be on ODSP. Every aspect of
life (banking, renewing health cards,
trying to find my way to doctor
appointments without google maps)
would be a struggle.”
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“Email is the most important. Jobs are
won and lost in email conversations. I
would say that checking email (now-adays) is more important than having a
phone line when applying for jobs.
There is no way NOT to have Internet
and not get a decent job. Also, what job
takes resumes in person anymore
without also sending an on-line resume
as well?? Grocery stores, coffee shops,
retail... It's all online. Also, Service
Canada is all online now-a-days. Even
Social Services is largely online. It's
hard to think of any government
service that ISN'T online. Even the
CRA keeps asking me to sign up
online! [...] Internet is more important
than phones. For un-employed people
or people with disabilities (like myself)
it's mandatory. I honestly have not got
a job without the Internet since 2003.”
“Working full time, I do all my banking on
line, check prices for groceries and any
items we need at home. My nine years
old gets most of her home work on line.
We use translation a lot as we are not
Canadian-born. It just saves so much
time and money.”
“Services bancaires (Tangerine, ma
banque, ne permet le paiement de mes
factures de gaz métro et HydroQuébec que par internet. Recherche
d'emploi. Magasinage des meilleurs
prix. Services de la bibliothèque de
Montréal. Recherche de ressources
communautaires comme les banques
de nourriture, services de santé,
support pour problèmes de santé
mentale, contactes avec amis et ma
famille dans ma ville et ailleurs au
Canada. Je consulte les services
gouvernemen-taux: renseignements,
impôts, emploi-québec, aide sociale,
assurance emploi... C'est devenu
indispensable. Ca fait quatre ans que
je ne suis plus capable de me le payer
à la maison car j'ai des prob-lèmes de
santé mentale et je ne peux que
travailler à temps partiel. Même en
travaillant à temps plein, je ne suis pas
sure de pouvoir me payer le service
internet car j'ai mon prêt étudiant à
rembourser. Je n'aurais pas à
fréquenter les bibliothèques publiques
et jongler leurs heures d'ouvertures
dans mon horaire. Je pourrais faire des
transactions bancaires et privées chez
moi.”
“I use the internet for e-mail—and Skype,
because I can't afford a landline and the
per-minute costs on my mobile phone
are high—I use it for work, for
entertainment, and my daughter uses it
for schoolwork. It's a vital service. We're
rural, and without it we would be quite cut
off from the world. We also can't afford a
newspaper
subscription,
and
our
entertainment budget is small, so an
internet connection provides quite a large
number of services.”
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“I work with a population that is low
income most are on government
assistance. this means that there is not
room in their budget for internet and if
they do choose to buy internet
something else suffers. most of our
client benefit from internet access for
communication with out of province
relatives, sending government forms,
researching health concerns, a contact
with the world when they are often
isolated due to mental health and other
trauma. it has become such a normal in
most people lives that to exclude low
income families puts them at a
disadvantage on a daily bases. oh and
I just thought now in our province they
have put prenatal classes on line. if you
do not have internet now you cannot
get prenatal information.”
139. When people such as the respondents above say that they need reliable internet
access, they mean it; the testimonials below from the same 4 August 2015 filing
were given in response to a question asking how internet access becoming
affordable would affect the person’s life. The responses illustrate a number of
sacrifices that low-income subscribers make in order to maintain even meager
connectivity, including nutritional health, medication, retirement savings, getting out
of debt, basic amenities, groceries, and heat:
“I have a young baby and to have food
for her is essential and sometimes i
would have to cancel my services just
to make it by, Rent is high enough, and
i don't see why home phones and
internet has to be high also. i had two
emergencies for my daughter where i
had to call 911 and i had to ask my
next door neighbor to use their phone.”
“I would eat better. I could use the extra
income on any number of other budget
categories such as food, and restaurants,
savings, retirement, etc.”
“I can at least buy the food I usually “I can pay off my debt.”
don't buy for my children and some
new clothes which they need.”
“I would use the extra money for “I would be able to afford more food
during the month (meaning that I wouldn't
retirement savings.”
have to ration food for the last two
weeks). I would also be able to afford to
buy things like new clothes or shoes
when I am in need, instead of waiting for
a special occasion.”
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“I would be healthy as I would be able
to afford proper nutritious food.
Imperative for good health especially
for the brain as I have a Brain Injury. I
may also be able to better afford
medications, that money is now going
for internet…which is for brain function
substitution, since mine is broken. To
be able to get the basics of life like able
to track medical items..It should not
mean that you cannot have adequate
food or medicine.”
“I would eat less hard boiled eggs, bread
etc. My diet would be a healthy one and I
would not be on high blood pressure pills
because of my nasty daily food intake at
present.”
“Food budget is the first target to
squeeze some money out for
expensive internet. I have 'No Budget'
for recreation. I have no mobile phone.
My rent exceeds $1,000/mo. after
October 2015. Financial pressure is
overwhelming. I try my best to manage
my life with my closest friends—dogs,
cat and small birds. I will protect my
little friends with my best ability. They
give me courage to live today and
tomorrow. Financial hardship may
cause termination of our lives all
together. I must do my best until then.”
“I could easily afford groceries, which is
something I heavily budget and afford to
buy other necessary products like
supplies for my first aid kit, toilet paper,
soap, shampoo, and other supplies for
school projects. Since the province has
cut all responsibly from how much my
school will cost I am growing very
concerned on being able to afford any of
these things or even rent and still have
internet.”
“I would be able to afford to heat my
apartment above 15 degrees Celsius in
the winter, I would worry less about my
food budget, I wouldn't have to
exclusively shop second-hand.”
“I wouldn't have to scrimp. I would be
able to use the money I save for my
barely affordable healthcare costs, which
are rising at an alarming rate.”
“I wouldn't have to worry about the
mounting balance and interest on the
credit card I use to pay for my internet
service. We have the cheapest
available service in our area, and it is
slow and the usage cap doesn't allow
for much -- quality service would mean
a lot to us.”
140. Members of ACORN also answered the question, “How do you feel about the current
pricing of high-speed internet?” Many responded that they found high-speed internet
pricing extremely high, but nevertheless paid for it out of need. In order to pay,
respondents reported taking money out of their budgets for food, recreation, rent,
and a number of other categories, such as clothes, medication, vitamins, and other
necessities.129
129
TNC 2015-134, ACORN Testimonials filed by the AAC (4 August 2015), at page 257.
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141. While the term “basic” obviously connotes something at the lower end of the service
availability spectrum, it must connote something that provides a level of acceptable
functionality.
142. The AAC’s conceptualization of the BSO avoids the problems of paternalism by
defining a universal service objective not based on what the majority thinks the
minority should be satisfied with, but by benchmarking the minority’s entitlement
against what most in the majority have. The AAC’s conceptualization of the BSO is
not about telling Canadians “you only need X because we think that’s what you
should be happy with”, it is about saying “this is what most Canadians have, and it is
important therefore that all Canadians should have it too”. Indeed this is how the
Commission has characterized the BSO when it describes its origin as reflecting “the
level of service available at the time to most Canadians”.130
143. The AAC does not expect that Canadians and representatives of other aspects of
Canadian society will appreciate being told what is sufficient for them, or that they
should be happy with a given speed given the great frustration expressed thus far by
a number of other organizations about the lack of affordable, usable access to
support their citizens.
144. The Commission should ensure Canadians have access to affordable, reliable
communications with enough download speed, upload speed and data allowance to
meet their needs, as individual Canadians define those needs to be, rather than
deciding for Canadians what applications are essential. It would be a mistake for the
Commission, or for service providers, to decide on behalf of Canadians what
applications and content Canadians should have access to.131
145. The AAC also notes that the Commission itself, from the outset, has taken a user-
centric approach to defining “basic service”. In Review of regulatory framework,
Decision 94-19 (16 September 1994), the Commission expressed the inescapable
conclusion that technology will inevitably change what users considered to be
essential, and how regulation must be flexible and responsive to that.132
Regulation must also be flexible and responsive to change, unencumbered by
objectives based on static definitions of markets or services. In today's
environment, even the definition of basic service is evolving and will vary
depending on the perspective of the user. At one time, plain old telephone
service (POTS) was synonymous with basic service; now, the demands of
subscribers are so diverse that a POTS infrastructure would be woefully
inadequate to serve the needs of most. Increasingly, those needs encompass
130
131
132
CMR 2015 at 166.
See Response to AAC(Bell)14Aug15-3.
In section 2(a).
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custom calling features or call management services to protect privacy and to
achieve desired efficiencies, such as those obtained through an enhanced ability
to send and receive messages any time and anywhere. Moreover, computer
communications, once considered enhanced or ancillary to the voice network, is
now an essential building block of the public infrastructure, particularly as
computers, modems and facsimile machines extend into the residence market
and as home-based businesses grow in number. As a result of modernization of
switching and signalling facilities, new and innovative services that expand
choice and produce new revenues are being introduced. As interactive or
transactional services become increasingly available, access to these and other
information services may also come to be considered essential by many
subscribers.
In brief, telecommunications today transcends traditional boundaries and simple
definition. It is an industry, a market and a means of doing business that
encompasses a constantly evolving range of voice, data and video products and
services. Telecommunications services range from basic access services
connecting subscribers within a physical area, to multi-media applications where
virtual communities that transcend geographic boundaries are created among
users with common interests. It is this evolution of telecommunications that has
given rise to visions of an information highway linking Canadians with each other
and the world.
In this context, the Commission notes that the Act contemplates the evolution of
basic service by setting out as an objective the provision of reliable and
affordable telecommunications, rather than merely affordable telephone service.
[emphasis added]
146. The AAC believes that it is appropriate in this proceeding to keep the focus on users
of telecommunications services.
The leadership role the CRTC must play
147. The Commission has appropriately consulted broadly on this important policy
proceeding, most recently fielding an Ekos survey which appears to have had a large
response rate from the public.
148. One of the questions solicits respondents’ views about “whose responsibility it should
be to ensure that a minimum standard of internet service is available to all
Canadians, particularly in rural and remote areas.” The three possible response
choices are as follows:
1 - Some people say that ensuring a minimum standard is a fundamental need
and it is up to governments to fund this directly.
2 - Others say that it is the role of the CRTC to establish a fund (i.e. that
telecommunications service providers contribute to) in order to provide this
minimum standard.
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3 - Still others say that it is up to the telecommunications service providers to
decide when to provide this minimum standard (i.e. market forces will dictate
when there is a business case to do so).
149. There is also a “Some combination of these” response choice which unfortunately
does not specify what specific elements make up the combination.
150. If the AAC were asked this question, however, the answer given would be “both 1
and 2”. Fortunately, as this is a CRTC proceeding, the Commission’s reference point
is the Telecommunications Act, and the Act gives the CRTC direction and jurisdiction
regarding what can be done with these answers.
151. Three factors should drive the Commission’s thinking on funding of broadband. First,
market forces can and indeed should dictate where there is a business case to serve
broadband. But where the business case does not exist, and the majority of
Canadians have ready access to an essential level of broadband service, while
others do not, then the CRTC has the tool for the creation of a fund to support
continuing access to basic telecommunications service (subs. 46.5 of the Act).
152. In the AAC’s view, a careful consideration of the CRTC’s mandate under the
Telecommunications Act suggests very strongly that the CRTC should act to set up a
fund pursuant to s. 46.5 of the Act to promote the minimum standard for all
Canadians in cases where market forces do not result in a business case for the
provisioning of essential telecommunications services. Indeed, laying this
groundwork would be both complementary to and inspirational to government
initiatives, and consistent with the Government’s messaging thus far on the digital
economy.
153. Further, the AAC explained extensively in its first intervention (14 July 2015) the
relevance of the telecommunications policy objectives, and how Commission
intervention in support of broadband access and affordability supports fulfilment of
the Canadian telecommunications policy objectives.
154. As the AAC noted in AAC(CNOC)2Nov15-1, the AAC believes the Commission has
from time to time recognized the need to gradually lead Canadians away from legacy
technology, in that spirit. Telecom Decision 99-16, wherein the Commission defined
the original basic service objective to include individual line service (with two- and
four-party line service no longer being sufficient) and dial-up internet access, is an
example where the Commission led the industry towards better service for more
Canadians. A more recent example can be seen in Telecom Regulatory Policy
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CRTC 2015-326133, where the Commission implied there was a need to transition
users off of legacy technology,134 despite concerns by CNOC about stranding certain
customers with certain preferences.135
155. The AAC believes the Commission has the jurisdiction, the justification and the tools
to upgrade the BSO. If it remains as is, it will be almost meaningless.
156. Regulators in numerous other jurisdictions are taking a leadership role and
articulating a vision for their county’s telecommunications markets. Canada’s CRTC
should do likewise.
157. The AAC notes Deloitte’s prediction that by 2020, the majority of broadband
connections will be Gbps service, up from about 5-10 Mbps currently, and that the
majority of these connections (70%) will be residential.
158. Deloitte explains the surge in Gbps service as follows: “The perceived reasoning
for Gbit/s service will likely evolve from identifying a single application running on
a single device that requires a gigantic pipe to meet the aggregate demand from
dozens of connected devices in a home.”136 This is consistent with the AAC’s
prediction that speeds and demand will increase rapidly. The Deloitte report
additionally states that 30 Mbps-enabling FTTx technology was “the most
common form of fixed internet access technology” by 2015.137 Not only will
demand for speeds increase as a matter of course, but so will both active and
passive (background) bandwidth consumption.138
133
134
Telecom Regulatory Policy CRTC 2015-326, Review of wholesale wireline services and
associated policies (22 July 2015) [TRP 2015-326].
See TRP 2015-326 at paras. 174 and 188:
174. Finally, ULLs are currently being used by competitors primarily to provide local
telephony services, and to a lesser extent, Internet access services, to both residential
and business customers. However, Internet speeds using ULLs are limited when
compared to those achievable through high-speed Internet access facilities, resulting in
fewer and fewer consumers accessing their Internet services through ULLs over time.
[…]
188. An important policy consideration related to the issue of whether the provision of
ULLs should be mandated is the impact that no longer mandating access to ULLs may
have on investment and innovation. A decision to no longer mandate the provision of
ULLs could lead to a greater adoption of advanced or emerging services by consumers.
For example, competitors that migrate their end-users from retail Internet access services
provisioned over ULLs to services provisioned over wholesale HSA services would enable
their end-users to access new content and applications that were previously inaccessible.
135
136
137
138
TRP 2015-326 at para. 170.
Deloitte, Technology, Media & Telecommunications Predictions 2016 (January 2016), at page 46.
Ibid., at page 47.
Ibid.
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159. If most internet users across Canada are not already at the point of high-speed, high-
data, high-bandwidth consumption in meeting their everyday social, economic, and
civic needs, then the AAC contends that they will be in short order and that the
Commission can confidently anticipate it.
160. The current proceeding is an opportunity for the Commission to ensure all
Canadians, regardless of where they live, have access to broadband internet
service, by recognising broadband of at least 10 Mbps download speed as a basic
telecommunications service, and by adopting the Broadband Deployment Funding
Mechanism to support the delivery of basic broadband service to areas that are
unserved due to high costs.
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5. THE NEED FOR AN AFFORDABILITY SUPPLEMENT
161. The AAC has argued that affordability of telecommunications services for low-income
users is critical to ensuring that Canadians can participate in the digital economy.
Telecommunications need to be affordable in order to ensure that participation in
communications is universal and accessible. As such, the AAC has proposed that
the Commission establish an Affordability Funding Mechanism in order to assist lowincome telecommunications users in Canada.
162. PIAC’s report, No Consumer Left Behind, filed as Appendix C to the AAC’s first
intervention, highlighted barriers identified in ACORN Canada-organized focus
groups in affording various communications services—many participants regularly
sacrificed other household expenditures such as food, clothing and health care in
order to keep their communications subscriptions.139 These findings were re-affirmed
by the testimonials ACORN Canada members submitted during the first intervention
round of this proceeding.
163. PIAC also found that low-income households employed other strategies in order to
access communications services, including:



Bundling their communications services or only subscribing during
promotional pricing periods;
Sharing or using public hubs for communications services such as libraries
and coffee shops; and
Using resource centres for other household expenditures, including food and
clothing banks and other charity drives.
164. Communications affordability challenges have also been raised by other parties and
individual interveners in this proceeding, including the following comments:
 The cost of living/working in the north, including telecommunications e.g. $12K-$20K
per year is simply becoming another cost we are struggling to cover but without it,
we would have no income. We are seriously considering leaving Iqaluit, Nunavut my home community - simply to reduce our living/working costs and remain
competitive. We are at the tipping point or maybe I should say the breaking point
when it comes to something as basic and simple as telecommunications.140 (Iqaluit
NU)
 We live in Southern Ontario and our ONLY option for internet on our farm is Xplornet
Satellite. This is extremely expensive and we did have it up until 3 years ago. We
were locked into a three-year contract and received great service the first year,
patchy service the second year and absolutely no service the third year. I phoned
139
140
See Appendix C to the AAC’s 14 July 2015 intervention at pp 70-79.
Intervention of Madeleine Redfern (14 April 2016), Intervention 74.
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them every day for that entire year to complain. They did give me three months free.
They explained that they had over-sold the satellite so there wasn't enough internet
service to go around. They also explained that they were launching a new satellite
that I could go on at a much higher cost. I said no. I have been forced to drive to the
town of Simcoe to use the internet at either McDonalds or the public library. As I
work from home this has been a major on-going problem. Now I drive to the office in
Elmira (an hour and a half away) once a week so that I can use good high speed
fibre internet.141 (Simcoe ON)
 For residential customers, the highest possible upload speed is 1Mbps and the cost
would be between $85 and $130 per month for these potential speeds. […] Many
people and businesses in our District can only afford basic packages ranging from
1Mbps to 1.5 Mbps download speeds with only 512Kbps to 700Kbps upload speeds
at a cost of between $40 and $55 per month or between $70 and $100 per month for
a business. These packages also include very limited monthly usage allowances
with costly charges for additional use.142 (Wells BC)
 The Manitobans we spoke with identified inequities in access to affordable, modern
services. Many comments focused on bandwidth constraints and reliability
challenges leading to an inequity between service between the urbanized south and
remote and rural communities. Similar inequities were identified among the MKO
communities with the suggestion that there are “islands of connectivity” despite most
communities having significant connectivity and reliability challenges. Financial
barriers to land lines were also noted for low income persons and newcomers:
 Long distance ends up being expensive. Pre-pay phones run out which is
concerning. Credit checks are often done when applying for phones or internet. 143
 Across Canada we continue to see a significant proportion of producers paying
upwards of $90 a month for internet, with some citing monthly costs over $400. Not
only does this negatively affect the competitiveness of many rural and agricultural
operations, it also illustrates a significant disparity with those services available to
urban residents and businesses.144
 Rappelons aussi que les éléments de notre revue de littérature indiquent que,
malgré leur importance, les services d’accès à Internet sont moins populaires,
notamment, auprès des consommateurs à faible revenu. Soulignons que d’autres
juridictions ont mis en place des tarifs sociaux pour maximiser l’accès auprès de
plusieurs types de consommateurs qui peuvent rencontrer des difficultés
financières.145
165. Finally, the Commission’s own latest Communications Monitoring Report, released in
October, reveals several communications spending patterns that tend to be unique to
the lowest quintile of Canadians. Notably:
141
142
143
144
145
Intervention of Alison Grafton (10 April 2015), Intervention 13.
Intervention of the District of Wells Mayor & Council (23 June 2015), Intervention 204, at p 1.
Intervention of the Manitoba Keewatinowi Okimakanak Inc. at para 48-9.
Intervention of the Canadian Federation of Agriculture (9 July 2015) at p 3.
Intervention of Union des consommateurs (14 July 2015) at para 33.
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1) The lowest quintile spent 8.3% of its annual income on household
communications in 2013, whereas the second quintile spent 4.9% and the
national average was only 2.9%.146
2) First quintile expenditures on wireline telephone and television tended to fall
the fastest of all quintiles between 2011 and 2014. Meanwhile, growth in first
quintile expenditures on mobile wireless and internet was highest compared
to all other quintiles.147 This suggests that low-income households continue to
be compelled to choose spending on one or two communications services
over others—and low-income users appear to be migrating towards using
wireless and internet service. However, the cost and amounts spent on these
latter services (notably wireless) have also increased significantly, 148
indicating that the affordability problem will likely grow and intensify rather
than shrink in the future.
166. The need for a regulatory solution to address the affordability of communications is
evident. In order to shed further light on the specific challenges low-income
households face in affording communications services, PIAC commissioned an
“Affordability Survey” which will be elaborated upon below.
PIAC Affordability Survey
167. PIAC commissioned Environics Research Group to conduct an online survey (the
“Affordability Survey”) during the period of December 10 to 22, 2015 targeting
respondents with annual, pre-tax household incomes of $30,000 or lower. The
results reflect data gathered from 752 online low-income respondents from across
Canada (excluding the North)—they do not reflect a random, representative sample
of all Canadians, but reflect responses from a group of low-income Canadians who
use the internet.149 The detailed results are attached as Appendix “A” to this
intervention.
146
147
148
149
CRTC, Communications Monitoring Report (October 2015), Table 2.0.3.
Ibid, Table 2.0.4.
Ibid and Figure 2.0.2.
Environics Online Methodology:
Environics hosts all online surveys using the Confirmit Horizons data collection platform.
Confirmit is the de-facto global standard in enterprise feedback management and allows
us to leverage a number of key data security and validation features which will ensure we
meet the needs of the Agency. Confirmit is supported by a team of industry leading IT
professionals and annually achieves nearly 100% uptime. More information about the
features of Confirmit Horizons can be found at http://www.confirmit.com/. Our online
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168. PIAC deliberately chose this methodology as opposed to representative telephone
survey, precisely as PIAC desired to gauge the attitudes and opinions of low income
Canadians who did use the internet and what they thought about service and their
ability to afford it. As the sample is drawn from a pool of participants rather than a
random telephone sampling, the results cannot be projected on to the general
population. However, the AAC believed that, given the trade-off of randomness and
actually reaching significant numbers of low-income persons who used the internet,
that the choice made would be the most instructive on questions about broadband
and affordability.
169. The results of this online survey may indicate two broad conclusions related to the
issues in this proceeding:
1. Low-income respondents highly valued internet service, even as much as
they valued their health care expenses; and
2. Many low-income households encounter challenges in affording their
communications services, and do not necessarily spend less than non-lowincome households on these services.
170. The AAC will expand on these two findings below.
Low-income households highly value internet service
171. The results from PIAC’s Affordability Survey indicate 76% of respondents had fixed
line internet service in their household, the highest rate of any individual
communications service. Unlike for other communications services, this number
tended to stay the same across age, gender, region and household size. The survey
also found that 84% of respondents said it was important that they had access to
fixed internet service. Both of these results make sense since the survey was
completed online by respondents who voluntarily joined the Environics polling
sample – especially compared to Statistics Canada figures, which indicate a much
lower penetration of internet service amongst the bottom ranked (by income) quintile
and decile of households (as highlighted in the AAC’s initial submission.
surveys are designed for multiple platforms and to meet Web Content Accessibility
Guidelines 2.0. All data are stored on Canadian servers. For this survey we used a blend
of the following online panel suppliers, each of which use their panels ONLY for market
research purposes. Participants are actively recruited through a variety of methods,
including targeted recruitment campaigns using client-provided lists, direct mail,
advertising (traditional and online), website intercepts and social media sources (e.g.
Facebook). Recruitment is continuous.
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172. As depicted in the following figure, low-income survey respondents ranked the
importance of internet as extremely high – third just following food and housing, on
par with health care expenses, and above clothing and transportation. While this
figure also is influenced by the same factors in relation to the survey respondent
composition as opposed to a randomly selected sample group in this income range,
the AAC contend that this result is still indicative of the relative importance of internet
access compared with other essentials and that this comparison is may indicate a
similar ranking for the general low-income population.
Figure 2. Ranked Importance of Various Household Expenses150
173. Although interveners such as TELUS have pointed to other broadband adoption
factors such as education and interest, this survey indicates that low-income
respondents who are “online” and who actively use the internet may highly value
internet service – in fact, above all other individual communications services – and
even on par with other household expenses such as health care. The AAC invite the
Commission to cross-reference this indication with its own sample results from its
recent EKOS online survey to increase confidence in seeming viewpoint.
150
Environics Affordability Survey.
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Many low-income households face challenges affording communications services
174. In its report, No Consumer Left Behind, PIAC concluded that affordability can be
assessed by several factors, notably:

Communications expenditures should not exceed 4% to 6% of a household’s
annual income; and
 Affordability is related to a household’s control and ability to control its
household budget and expenditures. Therefore, choice and flexibility are also
important elements of affordability.
175. Data gathered from the Affordability Survey indicate that many low-income
households do struggle with affording communications services.
176. For instance, according to the survey the average expenditure of respondents on
communications services was $145.90 per month. This is only about 28% lower than
the $203 that the average Canadian family spends on communications services as
reported by the Commission,151 which again highlights the importance of
communications services for all Canadians. However, this monthly expenditure
represents a much higher percentage of the low-income respondent’s annual
income, about 8.7% if their annual pre-tax income is $20,000. Moreover, 1 in 3 lowincome respondents in fact spend more than that amount each month.
Figure 3. Monthly Communications Expenditures of Low-Income Respondents152
151
152
CRTC, Communications Monitoring Report (October 2015) at p 13.
Environics Affordability Survey.
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177. A notable finding was that many respondents believed they were spending a much
higher percentage of their income on communications services – on average 18% –
than in comparable surveys such as Statistics Canada’s “Canadian Internet Use
Survey”.153 This could indicate that these low-income telecommunications
subscribers feel they have less control, choice or flexibility over their communications
budget or that these respondents do spend comparatively more on communications
than the general low-income population.
178. In addition, several findings indicate that the Affordability Survey respondents have
less control or flexibility in managing household expenditures in order to cover their
communications expenses. The survey found that 1 in 2 respondents have had to
trade off other household expenditures specifically in order to pay their
communications bills, notably:






More than 1 in 4 respondents had to buy cheaper goods or services;
1 in 4 respondents had to put off or cancel expenses such as gifts and holidays;
Almost 1 in 5 respondents had to go without other essential goods or services
such as food, medicine and clothing;
1 in 10 respondents had to use a community resource centre such as a food
bank;
1 in 10 respondents had to sell a personal item; and
1 in 10 respondents had to cancel a communications service.
179. While the number of respondents who were compelled to miss a payment on their
communications bill or accumulate communications debt was not as high (about 1 in
10 respondents for each communications service, slightly higher for mobile phone
data), where a respondent did have a communications debt, the average debt was
$446.
180. Moreover, almost 1 in 3 respondents said there were communications services they
wanted but did not have. When asked what the main reasons were why they didn’t
have that service, 84% of those respondents said it was because they couldn’t afford
it.
153
Online: < http://www23.statcan.gc.ca/imdb/p2SV.pl?Function=getSurvey&SDDS=4432>.
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Figure 4. Low-income households’ reasons for not having desired communications services 154
181. Finally, in order to test the AAC’s Affordability Funding Mechanism, PIAC asked low-
income respondents what they would do if they were given an additional $10 or $20
a month. The graph and figure below reveal the results.
Figure 5. How low-income households would spend subsidy for communications services 155
154
155
Environics Affordability Survey.
Ibid.
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182. The findings show that 1 in 2 respondents would spend the additional amount to help
pay for existing communications bills, suggesting the supplement would be used to
relieve current affordability pressures. Another 40% to 45% also stated that they
would change their plans, and 1 in 10 respondents would actually use an additional
$20 to subscribe to a new communications service. In the AAC’s view these results
indicate the importance to low-income subscribers of having control of how their
subsidy amount could be spent to solve their own particular household
communications needs in a more affordable manner.
Table 3. How Low-Income Respondents Would Spend Monthly Subsidy – Detailed Breakdown
Monthly Subsidy
I would use it to help pay for my…
Mobile Phone
Home Internet
TV Service
Landline Phone
I would change my plan for…
TV Service
(add channels or pay-per-view)
Home Internet
(increase speed or data)
Mobile Phone
(add data, minutes or SMS)
I would add a subscription for…
TV Service
Home Internet
Mobile Phone
Landline Phone
$10
49%
16%
15%
10%
8%
45%
$20
51%
20%
13%
9%
8%
40%
25%
21%
14%
12%
6%
7%
6%
2%
1%
1%
1%
9%
3%
2%
3%
1%
The Need for CRTC Intervention and the AFM
183. The AAC submits that the Commission should address the affordability challenges of
low-income telecommunications users.
184. Evidence provided by the AAC in this intervention and in previous phases of this
proceeding shows that communications services – notably broadband internet – are
extremely important services for low-income users of telecommunications services.
The low-income respondents to the Affordability Survey were generally unwilling to
cancel any communications services—and where they did, usually cancelled
television service or wireline phone.
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185. Nonetheless, low-income users of telecommunications services still struggle to afford
their communications services expenses, regularly spending a much higher
percentage of their household income on these services than the average Canadian
household. Furthermore, many have had to cut other household expenses, travel to
use outside resources such as food banks or public WiFi spaces, accumulate
significant communications debt, or ultimately cancel services entirely.
186. Therefore the AAC submits that the Commission, as the telecommunications
regulator, can and should turn towards addressing the affordability challenges of lowincome Canadians, a problem that will likely grow and intensify rather than diminish
in the future.
187. The AAC has proposed an Affordability Funding Mechanism which would provide
eligible low-income households with either a $10.50 or $20.50 per month subsidy156
towards a telecommunications service of their choice. The updated details of the
Affordability Funding Mechanism is depicted in Table 4 below.
Table 4 – Updated Details of AAC’s Proposed Affordability Funding Mechanism
(Annual averages over the 2017-2020 period)
Number of Eligible
Households
Number of Actual
Beneficiaries
Monthly Subsidy
Per Household
Total Capped Cost
Percentage of
CTSRs
Baseline Version
Revised
July 2015
Sepulveda
Sepulveda
Report
Report
1.390 million
1.34 million
Ambitious Version
Revised
July 2015
Sepulveda
Sepulveda
Report
Report
2.888 million
2.61 million
0.53 million
0.500 million
1.57 million
1.560 million
$11
$10.50
$22
$20.50
$70 million
0.14%
$70 million
0.14%
$70 million
0.82%
$70 million
0.82%
188. This type of subsidy has already been implemented in jurisdictions such as the U.S.,
France and Spain as was described by the Sepulveda Report filed with the AAC’s
first intervention, and in the Revised Sepulveda Report filed as Appendix “B”, as well
as by regulators of other services in Canada.
189. For instance, the Ontario Energy Board’s Ontario Electricity Support Program
(“OESP”) recently began operating in January 2016 following a one-year
implementation period. The OESP provides credits based on household size and
income towards the electricity bills of low-income energy consumers for two years
156
See Sepulveda Revised Report, Appendix B, at p. 2 for an explanation of these figures, which are
revised slightly downwards from the initial report due to administration costs and VRS support.
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(prior to reassessment). Households must apply for the credit using their income tax
returns or with the assistance of a social services agency.
Table 5. Ontario Electricity Support Program’s Sliding Credit Scale 157
190. Therefore, the AAC submits that an affordability mechanism is both necessary and
feasible to ensure all Canadians have affordable access to basic telecommunications
services. The AFM will help ensure low-income users of telecommunications
services can meaningfully participate in the digital economy.
157
Source: Ontario Energy Board Website.
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6. INTERNET ADOPTION DOES NOT WARRANT CRTC INTERVENTION
191. Some interveners have suggested that adoption is the main problem, rather than
accessibility or affordability.
192. TELUS, for example, “concludes that there is no evidence that an affordability
problem exists due to high prices charged in high cost areas”.158 TELUS comes to
this conclusion on the basis of asserting that “the available evidence shows that the
price of broadband is not a major deterrent to the adoption of broadband service”159
and that, rather, “age, education, and income are the primary factors that limit
broadband adoption... [with] the main reason offered by non-users of the Internet
[being] a lack of interest or no need for the service”.160
193. Similarly, Dr. Roslyn Layton argues that the Commission should focus on adoption
policies, stating: “Canada...has likely reached the limits of its basic services policy
with the focus on the supply side of the equation for broadband. ... To close the
remaining digital divide, the CRTC needs to focus on demand [emphasis in
original].”161
194. The AAC does not deny that adoption barriers are a valid concern, but questions (i)
the scale of the problem; (ii) whether the Commission has the jurisdiction to address
adoption directly; and (iii) whether the Commission is in any case the best placed to
address adoption, or if it should be government and the education system.
195. The AAC believes, therefore, that broadband adoption is not a barrier to internet use
warranting Commission intervention in this proceeding, and certainly not one that
should be prioritized over access and affordability barriers, nor made a condition
precedent to moving forward on these issues.
196. The AAC addresses these questions in turn.
(i) How big a problem is adoption?
197. In the AAC’s first intervention they noted that their research from Environics indicated
that while some Canadians simply choose not to consume certain
telecommunications services at home, and digital literacy is a barrier for some,
affordability is the major barrier limiting and preventing Canadians from being able to
consume necessary telecommunications services, including internet service.
158
159
160
161
TNC 2015-134, First Intervention of TELUS (14 July 2015), at para 120.
Ibid., at para 121.
Ibid., at para 122.
TNC 2015-134, First Intervention of Roslyn Layton (13 July 2015), at para 40.
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198. The AAC notes that by classifying the reasons respondents do not have home
internet service into categories such as “Personal choice,”162 “Poor quality,”163 and
“Don’t know how to use,”164 the survey results for home internet and cell phone can
be summarized as follows:
Figure 6. Main reasons why Canadians do not have internet service 165
Why Canadians do not have Home Internet
Poor quality,
5%
Don't know
how to use,
18%
Privacy and
security
concerns, 3%
Personal
choice, 46%
Cost, 30%
199. In the AAC’s view, these results indicate that while some Canadians simply choose
not to consume certain telecommunications services at home, and digital literacy is a
barrier for some, affordability is a major barrier limiting and preventing Canadians
from being able to consume necessary telecommunications services, including
internet service.
200. From the perspective of the rural and remote municipalities represented in a survey
submitted by the Federation of Canadian Municipalities indicates that in their view
the greatest barriers facing their communities from “meaningfully participating in the
digital economy” are (i) poor uploading and downloading speeds (40%); followed by
lack of broadband access (23%) and prices (23%). Digital literacy was identified as a
major barrier by only 5% of respondents. The results are excerpted below.
162
163
164
165
“Personal choice” includes “Not interested,” “Use at other place,” and “No time”
“Poor quality” includes “No service available” and “Poor quality of service”
“Don’t know how to use” includes “Don’t know how to use” and “Too old to learn”
Environics Survey.
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Figure 7. Greatest barriers to meaningful participation in digital economy: Municipalities166
201. A number of other interveners also made claims that suggest adoption is not a
problem. Bell stated that “Canada leads the world in broadband adoption and
usage”167 and “Obstacles to broadband use and adoption in Canada are low”.168
202. On that basis alone the AAC questions calls to prioritize adoption as the
Commission’s focus, or the calls to “solve” adoption issues before attempting to
address access and affordability issues.
203. Research by McKinsey & Company (“McKinsey”), a consultancy, asserts that the
problem of adoption is actually comprised of four barriers.




Incentives
Low income and affordability
User capability
Infrastructure (access)169
204. The AAC excerpt McKinsey’s description of these barriers, in full, as they are
pertinent to this discussion.
166
167
168
169
Annex “A” to first intervention of Federation of Canadian Municipalities (14 July 2015).
First intervention of Bell Canada and its Affiliates (14 July 2015), “Key Finding 4G”.
Ibid., at para 34.
McKinsey & Company, “Offline and falling behind: Barriers to Internet adoption”, (September 2014),
online: http://www.mckinsey.com/insights/high_tech_telecoms_internet/offline_and_falling_behind
_barriers_to_internet_adoption>.
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Figure 8. McKinsey’s 4 Barriers to Adoption170
Incentives. Despite the increasing utility of the
Internet in providing access to information,
opportunities, and resources to improve quality
of life, there remain large segments of the
offline population that lack a compelling reason
to go online. Barriers in this category include a
lack of awareness of the Internet or use cases
that create value for the offline user, a lack of
relevant (that is, local or localized) content and
services, and a lack of cultural or social
acceptance. The root causes of these
consumer barriers include the high costs that
content and service providers face in
developing and localizing relevant content and
services and their associated business model
constraints, low awareness or interest from
brands and advertisers in reaching certain
audiences, a lack of trusted logistics and
payment systems (thereby limiting Internet use
cases such as e-commerce and online
banking), low ease of doing business in
specific
regions
(thereby
impeding
development of local or localized content and
services), and limited Internet freedom and
information security.
User capability. This category includes barriers
such as a lack of digital literacy (that is,
unfamiliarity with or discomfort in using digital
technologies to access and use information) and a
lack of language literacy (that is, the inability to
read and write). The root cause of such literacy
barriers is often an underresourced education
system.
Low incomes and affordability. In this area, the
predominant barrier is the low income of
individuals in the offline population. This
barrier is exacerbated by the high costs
associated with providing access to the
Internet for these populations, which are
disproportionately rural. The low incomes
reflect the poor economic circumstances of
large segments of the offline population, often
including unemployment and the need for
economic development, employment, and
income growth opportunities in their regions.
At the same time, there is often a lack of
adjacent infrastructure (such as roads and
electricity), thereby increasing the costs faced
by network operators in extending coverage.
Several other factors can contribute to high
costs of service for device manufacturers and
network operators, including taxes and fees,
and, in the case of some countries, an
unfavorable market structure.
Infrastructure. Barriers in this area include a lack of
mobile Internet coverage or network access in
addition to a lack of adjacent infrastructure such as
grid electricity. The root causes of these consumer
barriers include limited access to international
bandwidth; an underdeveloped national core
network, backhaul, and access infrastructure;
limited spectrum availability; a national information
and communications technology (ICT) strategy that
doesn’t effectively address the issue of broadband
access;
and
underresourced
infrastructure
development.
205. The submission by Dwayne Winseck171 states under a section titled “Availability vs
adoption” that price remains a powerful barrier for many Canadians.”172
170
Ibid.
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206. The AAC believes that adoption, when conceived of as those four separate barriers,
reveals that the concerns expressed in Canada about “adoption” appear to be
concern for digital literacy.
207. The AAC believes its Broadband Deployment Funding Mechanism addresses the
infrastructure barrier, and that its Affordability Funding Mechanism addresses the
“low income and affordability” barrier, leaving just “incentives” and “user capability” to
deal with. Regarding “incentives”, the AAC believes that, for some time at least, there
will be some Canadians for whom the internet holds little value, and persons who
make the personal choice not to go online. The AAC expects that it will become
increasingly untenable for persons to take this path into the future, and that naturally
those who have access to the internet and can afford to have such access will
naturally do so.
(ii) Should the Commission prioritize addressing adoption?
208. The AAC believes that the Commission should not prioritize addressing internet non-
adoption.
209. First, non-adoption by interested users is a secondary or tertiary reason for not using
internet access services, and in any case is not and should not be a condition
precedent to addressing access and affordability issues.
210. Second, the AAC expects that as time progresses, online access will become such
an essential that demographic forces are likely to replace non-adopters with
adopters.
211. Third, the AAC believes that the educational system, supported by targeted
government program, is better placed than the CRTC to deal with internet adoption.
The educational system, after all, has a captive audience and can ensure that all
citizens have a baseline set of digital skills. The CRTC does not necessarily know
who the interested non-users are, let alone have the mandate to get them interested.
212. Also, adoption should not be used to distract the Commission from the access and
affordability issues which the AAC has explained.
213. Additionally, the AAC foresees a range of practical challenges for the CRTC in
directly promoting adoption.
171
172
The AAC notes that David Ellis whose name appeared on with Dwayne Winseck’s has withdrawn
his name from a subsequently expanded intervention. See TNC 2015-134, Reply to Procedural
Request (Letter) of David Ellis (31 August 2015).
TNC 2015-134, First Intervention of Dwayne Winseck (14 July 2015), at para 35.
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214. It is unclear how the Commission could effectively, easily or respectfully identify non-
adopters, especially the kind of non-adopters who would actually care to learn how to
go online and use internet services, that is, “interested non-users” as opposed to
“non-interested non-users. It is unclear also how the Commission could effectively
identify non-adopters whom certain intervenors suggest the Commission should
convince to use the internet.
215. When it comes to the problem of adoption, the AAC believes the education system,
supported by targeted government programs, can play a more effective role than the
Commission. This is the obverse of how some telecommunications service providers
have suggested the problem of broadband access (as opposed to adoption) and
telecom affordability should be left to the government.173
173
See, e.g., First Intervention of Bell (14 July 2015), at para 173-74:
We welcome the Commission's continuing recognition that any funding mechanism
‘should complement, and not replace, other investments from the private sector and
governments, including public-private partnerships.’ … The Commission should further
make it clear in its announcement of such funding that it is meant to be complementary to
government and private funding. It should also recommend, in its announcement of this
new fund as well as in subsequent monitoring report, that the governments continue to
work towards assisting in the deployment of broadband where there is no business case
as well as continue to provide and expand upon incentives for broadband deployment
such as the items mentioned in our answer to Q2.
First Intervention of Rogers (14 July 2015), at para 89:
[T]he Commission would be doing a disservice to Canadians by introducing a new subsidy
system for broadband internet services, and especially for service speeds above those
established in the basic service objective. … It should leave subsidy programs to
governments which have established processes, as well as the knowledge and capacity to
target funds more accurately, and with less economic distortions than the Commission.
First Intervention of TELUS (14 July 2015), at paras 102, 106-07:
Broadband availability is being addressed by market forces and Government programs at
all levels. Government programs like Industry Canada’s Connecting Canadians program
and private sector initiatives like TELUS’ broadband network expansion and increased
satellite coverage have been successful in extending broadband service to previously
unserved or underserved areas. … [I]n order to avoid inter-agency conflict and the risk of
contradictory regulation, the Commission must take into account all existing Government
programs as it considers the issues in this proceeding. The Commission’s role should be
to support the Government’s initiatives by providing, through its monitoring capabilities
and institutional expertise, the information that can underpin governmental programs.
First Intervention of Shaw (14 July 2015), at para 42:
“Shaw acknowledges that there are some markets in Canada where market forces cannot
be relied on to meet the needs of consumers. In these instances, Shaw favours the use of
precisely defined government funding programs, rather than the national contribution fund,
as a means of closing service or coverage gaps for broadband internet services.”
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216. In these cases the Affordable Access Coalition believes that if the service providers
have failed to create interest in their products, and the education system is failing
students in terms of ingraining digital literacy and digital interest, then the
Commission itself is not likely to fare better.
(iii) Does the Commission have jurisdiction to promote internet adoption?
217. The Commission lacks jurisdiction to directly address internet adoption in the
community. Section 46.5 of the Telecommunications Act only gives the Commission
jurisdiction to create a fund to “support continuing access by Canadians to basic
telecommunications.” You can lead the horse to water but not make it drink.
218. Proponents of adoption are quick to differentiate it from access.174 They are indeed
quite distinct. Legally the Commission has no authority over the general public’s
non-use of a service and only to a limited extent over public use. The Commission’s
jurisdiction is aimed squarely at service providers.
219. Even if one treats adoption as an aspect of access, the AAC notes that even the
Canadian telecommunications policy objectives – which are indeed user-centric – do
not refer to encouraging non-users to take up telecommunications services. Yet that
is precisely what the “adoption” problem is about.
220. In the AAC’s view, therefore, governments and the education system are much
better placed to put this aspect of social policy in place.
174
See, e.g., TNC 2015-134, First Intervention of Roslyn Layton (13 July 2015), at para 42; TNC
2015-134, First Intervention of TELUS (14 July 2015), at paras 121-126; and TNC 2015-134, First
Intervention of Winseck and Ellis (14 July 2015), at paras 27-35.
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7. CONCLUSION
221. There should be no question that broadband should be recognized as an essential
service which all Canadians should have access to, as well as an essential driver of
Canadian economic productivity. There should be no second-guessing of what users
of telecommunications services are using, or why. However, if the Commission
wishes to examine those uses, the AAC invites the Commission to consider the
interventions filed by individual members of ACORN, or from the Canadian
Federation of Agriculture, to get a sense of the vital importance of high-bandwidth
connectivity. That a broadband connection may be used to “entertainment”, however
that subjective term may be construed, does not diminish its importance. All
Canadians from all regions, are to be included by means of telecommunications and
broadcasting system, and therefore they cannot be excluded simply because the
service provider considers that most of what it is selling to be non-essential.
222. Because broadcasting is increasingly consumed via IP, as well, the Commission has
to consider the impact on unserved and underserved Canadians of excluding them
from the broadcasting system.
223. To help support the provisioning of basic broadband service to all Canadians, the
AAC has proposed a Broadband Deployment Funding Mechanism which the
Commission should adopt. The Broadband Deployment Funding Mechanism would
help service providers cover the uneconomic portion of their costs for deploying
broadband to unserved and underserved Canadians.
224. Regarding telecommunications affordability, the AAC has presented evidence that
affordability is a major barrier for low-income Canadians. Lower-income Canadians
have less access to essential telecommunications services, and, other than personal
choice, affordability is the next major reason why Canadians do not subscribe to
home internet service and wireless service. To help reduce this barrier the AAC has
proposed an Affordability Funding Mechanism which the Commission should adopt.
The Affordability Funding Mechanism would help low-income Canadians access
essential telecommunications services of their choosing, with a monthly subsidy
amount. Both funding mechanisms would be capped annually, predictable, and
stable, and they would be complementary to the operation of market forces and
targeted government funding.
225. The Environics survey results demonstrate that Canadians are receptive to these
ideas.
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226. As the AAC discussed in the Introduction, the CRTC’s raison d’être is to serve the
best interests of all Canadians, and the Commission is required to exercise and
perform its duties under the Telecommunications Act with a view to implementing the
telecommunications policy objectives. It is the AAC’s submission that the
Commission now has before it an important opportunity to ensure all Canadians
have access to broadband internet service and affordable telecommunications
service.
227. To ensure that the Commission keeps up with the rapid pace of change, and to
ensure Canadians are well-served by their telecommunications system, the AAC
recommends that the Commission implement mechanisms to monitor the decisions
which flow from TNC 2015-134. These measures include performing yearly progress
checks on availability and affordability of basic telecommunications service, and
taking immediate action to correct course. The AAC’s proposals are designed to fulfil
the basic needs of all Canadians to enable them to participate in digital society and
the digital economy. To that end, the AAC proposed two funding support
mechanisms to (i) close broadband availability gaps in certain areas; and (ii)
enhance telecommunications affordability for low-income Canadians. The AAC’s
Broadband Deployment Funding Mechanism and Affordability Funding Mechanism
are workable, cost-limited mechanisms to support broadband access and
telecommunications affordability.
228. The AAC looks forward to continuing to participate in this proceeding. The AAC
repeats its request to appear at the public hearing, and believes it represents one of
the largest coalition of public interest and consumer groups in this proceeding, and
can add a distinct perspective.
***END OF DOCUMENT***
Appendices:
Appendix “A”: Detailed results from Environics Affordability Survey
Appendix “B”: Revised expert report of Edgardo Sepulveda
Appendix “C”: Revised expert report of Edgardo Sepulveda, in “Track Changes” mode
Appendix “D”: Underlying data for revised expert report of Edgardo Sepulveda
Appendix “E”: Speed Advertisements by Major ISPs
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