What We Can Learn From Canada’s Broadband Stimulus

Canada has a federal broadband stimulus program going on as well as the U.S. There are some elements of their broadband effort we in the U.S. should take note of as we get the long awaited rules this week. 

Last week I had the honor of chairing the Broadband Strategies for Cities conference in Toronto. Don’t let the title fool you. It was mainly about getting broadband to rural areas, though many of the presenters addressed a cross section of urban, small town and rural issues. I’ll pull out a few points that struck me as being items to note.

The first shocker was the dollar amount of Canada’s stimulus – $225 million. Not a lot compared to $7 billion, you say? True, but then look at how far they don’t have left to travel to get broadband adoption.

Canada vs US in BB adoption

Last week there were some shouts of joy about a PEW report that sites a significant increase in U.S. broadband adoption. In the general population we moved from 55% to 63% of households with broadband, while just looking at the rural US population, we’ve move from 38% adoption in 2008 to 46% in 2009.

In Canada, 93% of their total households have access to broadband, with virtually all of their urban households covered. Mainly it’s the rural areas that fall short with just 81% penetration in these households. So $225 mil isn’t a lot of money, but Canadians definitely a shorter row to hoe. We definitely want to applaud our progress in the U.S., but don’t lose sight of how far we still have to go.

Mapping before disbursement

Industry Canada, the agency handling the stimulus program, has determined that it doesn’t make much sense to hand out money without good maps, so they won’t. Gotta have maps before you get money. Provinces (similar to our states) are being tasked to take care of this as the main drivers with help from the feds.

If it weren’t for the fact that Connected Nation seems poised to do much of this in the U.S., I’d be more adamant that where appropriate we hold up grants until mapping is done where currently there is none. At least in the U.S. some states (e.g. Virginia, California, Arizona) are doing mapping on their own, and appear to be getting it done before their proposals go to D.C. As it is, I think money spent on C N is of limited value and we may as well throw the money out the door first.

The match game

Instead of paying for 80% of the broadband buildout projects, Industry Canada is doing a 50-50 split for funding. What’s more, the money’s only going to private sector companies. Since everyone admits $225 million is not enough stimulus money to get the whole job done, IC is leaning on provincial and local governments to both provide additional funds and advocating (heavily, I gather) for public private partnerships. IC is also setting zones based on size of geographic area and populations so as to induce competition.

An interesting way to tackle the fact that you believe in the private sector’s role, and you also believe local government has to have a strong hand in the process. Furthermore, the feds also believe that free market competition needs a helping hand since IC is basically saying “we’re going to make sure an area is large enough so there’s incentive for  more than one player. And to ensure this outcome…

Open access

Because there’s a lot of pressure from the public for open access and because, to quote the IC Director General giving the presentation, “this is the people’s money we’re giving away,” the IC is leaning toward an open access requirement for receiving grants. Supporting this are the provincial and local governments that set precedent by mandating open access for broadband projects already in motion.

Wow. Take all of these pro-competition rules, and if the net neutrality bill introduced last month in Canada actually becomes law on this its third introduction, Canadian consumers stand to get a pretty good shake from their broadband stimulus. Will we in the U.S. be as fortunate?

Broadband and un-served defined

IC defines broadband as technology neutral networks having a minimum speed of 1.5 mbps. The province of Nova Scotia came up with a solid definition of an un-served residential or business constituent: “an inhabited civic address with a reliable power source, accessible by road that unable to get broadband connections at prices, quality and level of service comparable to urban areas of Nova Scotia.

Hmmm, that’s good. The minimum speed requirement that IC set is, by itself, a debatable option for some folks who want a higher minimum. But coupled with mandated open access and zoning to ensure competition, 1.5 mbps allows you to raise people up way beyond where they are now, and also expect a competitive environment that forces speeds up and prices down. Then you add a definition of un-served that ties rural speeds to speeds of high-population, probably wealthier cities that you know will always get the best service, you further induce faster networks.

The role of local governments

Tim Scott, the speaker from open access network provider Axia NetMedia, stated that “local government is the primary customer of community networks. Without them there is no business case” Other speakers echoed his assessment.

I wonder how many proposals for U.S. stimulus grants will reflect this reality in their network sustainability models?

My next post looks at a pretty awesome analysis of the five most prominent business models for community broadband networks. Everyone, be sure to read this before you submit your proposals for stimulus money. Subscribe to my RSS feed.

One Response

  1. Great post, Craig. I really enjoyed it, eh. (I’m from Canada originally.) The progress and the process (that’s PRO-gress and PRO-cess in Canadianese) you’ve outlined sounds promising. I like the first things first approach re: mapping.

    The U.S. has put the cart out in front of the horse on that one in order to not delay the economic benefits associated with broadband network build-out; however, it has now delayed its stimulus spending six months by pushing back its first round of awards. That’s an ECONOMIC STAGNATION approach in 2009! At least the broadband mapping should have stayed on schedule! (*rant* over.)

    Canada has 1/10th the population of the US and is spending $16.60/capita on broadband expansion (including 50% match) while the U.S. is spending $28.42/capita on broadband expansion including its 20% match. Canada will invest more than half of the U.S.’s investment per person–despite having 1/10th the population–and it already has far better penetration, as you report. Just something else to think about.

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