CCSA Comments on Canada 3.0, Digital Economy

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Soumis par Canadian Cable Systems Alliance Inc. (dclark) 2010–07–12 10:29:01 HAE
Thème(s) : L'infrastructure numérique, La croissance de l'industrie des TIC, L'innovation grâce aux technologies numériques

Sommaire

The Canadian Cable Systems Alliance Inc. represents small and independent communications companies across Canada. Those companies provide broadcasting, telecommunications and Internet services to communities outside the larger urban centres across Canada.

Although CCSA member companies are prepared to make the required investments to bring more advanced services to the communities they serve, many barriers remain to their introduction of new digital services, including:

  • Limited or cost–prohibitive access to backbone infrastructure;
  • Limited or cost–prohibitive access to support structures and rights of way;
  • Limited access to both capital and skilled labour; and
  • Regulatory burdens.

The main reason that many remote communities currently lack access to High Speed Internet and other digital services is that there is little or no access to affordable backbone infrastructure. Especially as Canada moves toward an environment based on Internet Protocol as the dominant distribution mechanism for all forms of digital communication, new funding should focus on extending the practical, affordable reach of backbone infrastructure to support delivery of advanced digital services to all Canadians.

In addition to direct subsidy programs, the Federal Government should provide significant corporate tax incentives to companies that are willing to invest in backbone infrastructure subject to open access requirements.

Most rights of way are controlled by municipal governments. The Federation of Canadian Municipalities has, for many years, viewed these assets as a new potential source of revenue. They have attempted to impose recurring fees for access and continue to lobby for this right. That initiative should not be allowed to proceed. Rather, this key public resource should be used to ensure that communities have access to the most advanced services at the lowest cost rather than to subsidize other, unrelated municipal services and coffers.

The smaller entrants need greater access to capital in an environment in which Canada's lending institutions are extremely conservative in the lending practices they apply to small enterprises.

Finally, those smaller companies need access to a skilled labour force. It is particularly difficult to attract technical skills to rural areas or to be able to match the salaries paid in the urban centres.

Those small and medium–sized enterprises need incentives and they need a reduction in red tape that they are ill–equipped to handle. Elimination of unnecessary regulations would greatly assist those companies by allowing them to focus their limited resources on bringing new, competitive services to smaller, more remote communities.


Soumission

The Challenge for Rural Canada

1. The Canadian Cable Systems Alliance Inc. ("CCSA") represents small and independent communications companies across Canada. Those companies provide broadcasting, telecommunications and Internet services to communities outside the larger urban centres across Canada.

2. None of CCSA's member companies is publicly traded. Most are family–owned businesses or community co–operatives.

3. The communities they serve include many that are very remote and very small, including a number of Northern and Aboriginal communities.

4. All of those companies have invested in upgrading and expanding their networks to provide new digital services: many now offer digital video services, High Speed Internet and competitive telephone services.

5. Despite those investments and existing federal and provincial subsidy programs, many rural communities that CCSA member companies serve still lack access to advanced digital services.

6. That is because those communities are either too small or too remote to make the investments feasible. While government programs have provided some funding assistance for projects in smaller communities, such programs have tended to favour the larger, incumbent service providers.

7. Although CCSA member companies are prepared – and often eager – to make the required investments to bring more advanced services to the communities they serve, many barriers remain to their introduction of new digital services, including:

  • limited or cost–prohibitive access to backbone infrastructure;
  • limited or cost–prohibitive access to support structures and rights of way;
  • limited access to both capital and skilled labour; and
  • regulatory burdens.

Access to Backbone Infrastructure

8. The main reason that many remote communities currently lack access to High Speed Internet and other digital services is that there is little or no access to affordable backbone infrastructure.

9. While Alberta has invested in such infrastructure, it has not generally been made available to other providers for the full range of digital services.

10. In other regions, regional or provincially–based telecommunications providers have been subsidized with funding through either Telecom Deferral Accounts or direct government grant programs to build backbone infrastructure. While these programs generally include open access obligations, access to the infrastructure is not being made available to other providers at affordable rates.

11. In many smaller communities where broadband services are available, they are still provided on a monopoly basis by the large telecommunications companies. As a result, consumers in those communities are unable to benefit from the lower prices and more advanced services that competition would bring and that their urban counterparts already enjoy.

12. As the backbone infrastructure required to reach these communities has often been financed with public funds, it makes sense to guarantee competitors access to that infrastructure this backbone so that the public can benefit from competitive delivery of digital communications services. Indeed, Recommendation # 14 of the recent Senate Report on the Digital Society directly addresses that requirement.

13. To date, government subsidy programs have been insufficient to cover any more than a small percentage of the needs for infrastructure funding and have not focused on backbone development. Rather, funding consistently has been directed toward "in community" investments in areas and communities where the private sector is already prepared to invest.

14. Especially as Canada moves toward an environment based on Internet Protocol as the dominant distribution mechanism for all forms of digital communication, new funding should focus on extending the practical, affordable reach of backbone infrastructure to support delivery of advanced digital services to all Canadians.

15. In addition to direct subsidy programs, the Federal Government should provide significant corporate tax incentives to companies that are willing to invest in backbone infrastructure subject to open access requirements.

16. Such an approach would be much easier to administer than existing grant program models under which the Government is unavoidably called upon to pick winners and losers. Moreover, a focus on development and extension of backbone infrastructure would reduce the risk that funds end up being used by larger, incumbent, urban–based service providers to overbuild areas in which small, rural service providers already offer services.

Barriers to Access

17. Even where CCSA member companies are able to invest, financially, in advanced digital services, there are many other practical barriers to actually getting the job done.

18. All telecommunications support structures — including poles, ducts, easements and rights of way — are owned by provincial and municipal hydro utilities and telecommunications companies. Many of the owners of those support structures have increased, or intend to increase, rates to access those necessary facilities.

19. There is no standardization of rates or procedures for access to support structures. Some support structure owners are regulated by the CRTC, others by provincial Energy Boards and still others by municipal administrations1.

20. As well, many of those companies impose restrictions on the types of infrastructure that can be installed, what it can be used for, who can install it and the types and levels of plans and certifications required to do so.

21. The owners of the support structures are in a position to — and, in fact do — demand extra "make ready" fees to access support structures or, alternatively, simply deny access altogether.

22. The significant incremental costs and procedural delays involved in gaining approvals for support structure access make investments by smaller communications companies less feasible and delay those companies' introduction of new digital services.

23. Most rights of way are controlled by municipal governments. The Federation of Canadian Municipalities has, for many years, viewed these assets as a new potential source of revenue. They have attempted to impose recurring fees for access and continue to lobby for this right.

24. That initiative should not be allowed to proceed. Rather, this key public resource should be used to ensure that communities have access to the most advanced services at the lowest cost rather than to subsidize other, unrelated municipal services and coffers.

25. Much progress has been made in how telecommunications providers and municipalities cooperate to preserve these resources, including development of a guideline for Right of Way Agreements based on CRTC Decision 2001–23, "The Ledcor Decision".

26. That guideline includes standardized cost recovery models for one–time administrative fees and a clear ongoing process to apply for future Rights of Way access within a municipality.

27. To allow the Federation of Canadian Municipalities initiative to proceed, regardless of the guideline can only stall further private investments in new communications facilities within municipalities. That is because telecommunications providers will view the placement of their facilities in these rights of way as a future liability that is extremely difficult to quantify.

28. That is especially true in rural communities where the population density is extremely sparse. That results in greater physical infrastructure footprints and significantly higher per–customer costs than in more densely populated urban communities.

29. If Canada is to grow a successful digital economy and avoid perpetuating a "digital divide" between urban and rural Canadians then all three levels of government — and the various agencies within each level — must remove such barriers to building new digital infrastructure as quickly as possible.

30. Affordable access to support structures has been recognized by some of Canada's largest trading partners, including the United States and Britain, as a critical component of achieving national digital strategic goals.

Access to Capital and Skilled Labour

31. The Government of Canada has recognized that the key to fostering innovation is to ensure competition in all areas of the economy. Competition drives companies to introduce new services, to enhance existing services and to make the investments required to remain competitive.

32. The cable television distribution sector has now competed with Direct–To–Home satellite providers for many years and, more recently, with wireless service and IPTV providers. The result of that robust competitive environment has been an explosion of new digital video services, high definition television offerings, Video–On–Demand and digital video recorders.

33. Similarly, in the provision of High Speed Internet, telephone and cable companies have competed vigorously to provide higher and higher speeds, more reliable networks and access to more and more digital content.

34. However, in the telecommunications sector, competition is largely limited to urban centres. Most of rural Canada is still served by single providers.

35. For smaller entrants, many barriers to entry remain, including the substantial investment required. The investments required to bring broadband Internet to smaller communities are significant and risky.

36. The smaller entrants need greater access to capital in an environment in which Canada's lending institutions are extremely conservative in the lending practices they apply to small enterprises.

37. Finally, those smaller companies need access to a skilled labour force. It is particularly difficult to attract technical skills to rural areas or to be able to match the salaries paid in the urban centres.

Regulatory Burdens

38. Often, small and medium–sized businesses can operate much more efficiently that their larger counterparts. They have lower overheads, more flexibility in their labour deployment and more rapid decision–making ability. Generally, they can apply project funding far more directly and efficiently than their very large, administratively–laden competitors.

39. Outside the urban areas, it is those small businesses that will drive the digital economy. They are also best placed to understand the needs of their customers and to tailor services to meet those needs.

40. While many are willing to take up the challenge of bringing new digital services to rural areas, they lack the resources to manage the daunting complexity of the required regulatory and business arrangements.

41. Those small and medium–sized enterprises need incentives and they need a reduction in red tape that they are ill–equipped to handle. Elimination of unnecessary regulations would greatly assist those companies by allowing them to focus their limited resources on bringing new, competitive services to smaller, more remote communities.

Conclusion

42. CCSA member companies are ready and willing to partner with the Government of Canada to ensure that the full benefits of the digital economy reach the many smaller and more remote communities across Canada that they serve.

43. Nonetheless, smaller companies frequently are overlooked when national strategies are developed even though, often, they are best positioned to make the most effective use of the scarce resources available.

44. The most effective ways to motivate and assist those companies is to provide incentives and remove barriers to enable them to do what they do best; provide innovative, cost–effective delivery of services to their local communities. They have always done their part and will continue to do so in the right environment.

45. CCSA appreciates the opportunity to comment on this matter and thanks the Industry Canada for that opportunity.

Sincerely,

Christopher J. Edwards
Vice–President, Corporate & Regulatory Affairs


1 Could this be turned into a more specific request to revise the Telecommunications Act , section 43 to give the CRTC jurisdiction over access to all support structures?

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