Choice: Canada’s dysfunctional Internet market

Canada was recently named one of the world’s most advanced nations, second only to Finland.

If only we had the Internet market to match. The harsh reality of our digital landscape is that many Canadian customers — especially rural residents — are unable to access affordable and reliable broadband. The size of Big Telecom has knocked the market off-balance, and as a result, Canadians are suffering.

For subscribers in most regions, big providers like Bell, Rogers, Telus, Shaw, and Cogeco are the gatekeepers of the Internet. Their offerings include fibre, DSL, or cable connections for those within their service area, but not a kilometre beyond. These ISPs have an iron grip on the broadband market. Their popularity, however, isn't rooted in cutting-edge offerings. These companies have the clout to take over smaller providers and maintain unfair advantages over the market; the residential Internet market share of large incumbent providers was 91% in 2014. The result is expensive and lackluster options for customers inside the coverage area, and the threat of digital blackout for the rest of us.

Choice Is Key

Canada's Internet marketplace is widely viewed as a duopoly, meaning that in any major market you have a choice of one or the other ISP. What we’re left with is poor competition between companies. If a company does not have to compete for its customers, they have no reason to keep Internet prices competitive, or speeds up-to-date. To maintain the leisure of an uncompetitive market, they will buy up independent or regional providers in the area. This severely limits customers’ options. Put bluntly, Canadians frequently subscribe to Big Telecom’s Internet service because they have no other choice.

If we want fair and accessible Internet, independent providers must be able to enter the market and thrive. This is impossible under the status quo. Independent ISPs — without the chequebook and stature of established companies — have a much harder time keeping their heads above water. The cost of access to Canada’s network infrastructure is a financial burden for many small providers, who are plagued with anti-competitive tactics from the large telecom operators.

Why Municipal Broadband Is the Fix

Luckily, with municipal broadband, municipalities can level the playing field. By offering Open Access to infrastructure that they have constructed, such as a citywide fibre optic grid, indie providers are given the same opportunity to use the grid as Big Telecom. Municipal broadband removes the cost of building infrastructure, and protects the small providers from having their networks bought out. It will also bring more players to the game, and therefore, more choice for customers.

Municipal-owned networks also ensure service upgrades for communities telecom considers to be rural, remote, and low-priority. For a single provider, bringing fibre optic Internet to every farming town in Alberta would cost billions to undertake. The potential profits just aren’t substantial enough for most ISPs to take the plunge.

However, if a municipality shoulders the upgrades and sells network capacity to private companies, residents and businesses will enjoy faster and cheaper service than ever before. In communities like Olds, Alberta, — population 8,617 — the introduction of an Open Access town-wide network dropped fibre into the laps of rural subscribers. Before O-Net, the community’s sluggish Internet connection forced businesses to consider relocating. Infrastructure that was built by the municipality is now available for all providers to access, ensuring that residents aren’t left behind in the digital era. Municipal broadband projects like O-Net can overcome the challenge of bringing up-to-date technology to rural communities, and keeps prices fair by maintaining competition between ISPs.

Hope Springs Municipal

Communities are sick and tired of waiting for Big Telecom to make a move. Because urban centers are more profitable for ISPs than rural areas, Canada suffers from a serious digital divide. 100 percent of urban Canadians have access to broadband, compared to an average of only 85 percent for their rural counterparts. In the remote north, which thousands call home, less than 1 in 3 Nunavut communities can connect to the Internet.

Lack of access to modern broadband alienates entire regions and privileges population-dense areas. As technology advances at a blistering pace, the underserved are left in the dust. If we mean to close the digital divide in Canada, it’s up to municipalities to take the first step. Communities already publicly manage sewage, water, electricity, roads, and other staples of our daily lives. Why not our Internet?

A municipality’s investment in fibre infrastructure means better quality of life for residents; in terms of potential, it’s in a league of its own. The high capacity of fibre ensures that once the network has been built, there’s no need to build another. Open Access encourages multiple ISPs to use the same infrastructure. And best of all, they each have an equal shot at a piece.