Changes in the Policy and Regulatory Landscape

Universal Broadband Fund

In its 2019 Budget, the federal government committed to the creation of a national connectivity strategy, in conjunction with additional funding for broadband projects in Canada. As well as topping up a number of existing broadband funding initiatives, including the Connect to Innovate program and the CRTC’s Broadband Fund, the High-Speed Access for All: Canada’s Connectivity Strategy also created the Universal Broadband Fund, with an initial investment of $1.75 billion over six years¹⁵⁸. In subsequent federal budgets, investments in the Universal Broadband Fund were increased to $2.75 billion. The strategy also set the goal of achieving 98% access to 50 Mbps download / 10 Mbps upload in Canada by 2026, and 100% by 2030.

Eligibility for the Universal Broadband Fund is determined using the National Broadband Internet Service Availability Map¹⁵⁹. Any project existing within a 250 m road segment that does not have access to 50/10 Mbps internet is deemed eligible for UBF funding — provided the project delivers a minimum 50/10 Mbps connection speed and provides open access to Points of Presence. As of June 2021, Alberta has received $5,303,762 in funding for broadband projects from the Universal Broadband Fund, serving a total of 12,259 households¹⁶⁰.

CRTC Broadband Fund

In Telecom Regulatory Policy CRTC 2016-496, the CRTC first expressed its intention to create a funding mechanism to support broadband infrastructure projects in Canada¹⁶¹. Through a number of subsequent public proceedings, the CRTC established parameters around its Broadband Fund — an investment of $750 million over five years in broadband infrastructure projects throughout Canada.

Money for the fund is not drawn from general tax revenue, but is redirected from funds previously collected from incumbent projects by the CRTC to subsidize telephone services in remote and rural areas. Eligible projects include Transport, Access or Mobile Wireless initiatives existing in an area deemed “underserved” by ISED’s National Broadband Internet Service Availability Map, which uses a hexagon system. Underserved, in this context, means any 25 km2 hexagon that does not have access to 50/10 Mbps for any household.

The first call for applications to the CRTC Broadband Fund was announced in June 2019 for eligible projects in Canada’s North, with eligibility opened up to all areas of Canada in March 2020. As of June 2021, no projects in Alberta have received funding through the CRTC Broadband Fund¹⁶².

CRTC Wholesale Rates Regulations

From 2015-2021, the CRTC initiated a number of impactful proceedings with respect to wholesale rate regulation in Canada. Historically, the CRTC has applied an “essentiality test” to infrastructure owned by facilities-based carriers. Where telecommunications firms own “bottleneck facilities” that are not easily or practically duplicable by competitors, but are otherwise required as an input to provide telecommunications services, the CRTC mandates that wholesale providers be given access to these networks in order to deliver internet services, thereby fostering competition in the telecommunications market¹⁶³.

Whereas large DSL and cable providers have been required to share their copper and coaxial cable networks through wholesale and Third Party ISP Access (TPIA) arrangements since the 1990s, incumbents have been required to do the same with fibre optic access networks or “fibre-to-the-home” networks since 2015¹⁶⁴.

Between 2016-2019, the CRTC undertook an extensive proceeding to investigate the reasonableness of its costing framework with respect to wholesale rates. The proceeding was spurred by filings by wholesale providers claiming the existing pricing framework allowed incumbent carriers to unjustly overcharge them for network access, thereby significantly increasing the fees they had to charge their customers.

The CRTC accepted this reasoning in 2019 and significantly lowered wholesale access rates (by as much as 89% in some cases) and mandated incumbent carriers to repay wholesale providers all overcharged rates retroactive to 2016¹⁶⁵. In response, incumbent carriers Bell and Rogers filed an appeal with the CRTC, in conjunction with initiating court proceedings to appeal the rate-setting decision¹⁶⁶.

Following a stay order of its 2019 decision while it investigated Bell’s appeal, in May 2021, the CRTC reversed its previous determination on overcharged wholesale rates and significantly raised rates on wholesalers. Met with widespread derision by wholesale providers and broadband advocates, the decision led to immediate price increases and suspensions of services by a number of wholesale providers.

At the time of writing, wholesale provider Teksavvy had petitioned the federal Minister of Innovation, Science and Industry to have the CRTC’s May 2021 rate increase overturned¹⁶⁷.

CRTC Regulatory Policy 2016-496: Universal Service Objective

On December 14, 2016, the CRTC released CRTC Regulatory Policy 2016-496 establishing the Universal Service Objective, which set an internet connection of at least 50 mbps download speed and 10 mbps upload speed, with unlimited data allowance, as a target for both residences and businesses across Canada¹⁶⁸. In addition, the decision set fixed and mobile wireless broadband internet and fixed mobile wireless voice services as “basic telecommunications services.” The regulatory policy has been significant in formalizing the CRTC’s shift in focus towards high-speed internet access.

In addition, the Universal Service Objective of “50/10” has served as the eligibility basis for all significant broadband infrastructure funding initiatives since 2016, including the Universal Broadband Fund and the CRTC’s Broadband Fund, and for the federal government’s long term innovation agenda more broadly.