Cover Story: Rural Connections: A way to bring broadband to rural Ontario - or corporate welfare?

Sunday, January 4, 2009

The Ontario government has launched an ambitious plan to bring high-speed Internet to rural southern Ontario. But its critics say that it favours large companies and involves too much paperwork

by DON STONEMAN

The province is putting $30 million into broadband Internet in rural Ontario. Companies operating outside of the cities say high-speed Internet is expanding both because of the government injection, and in spite of it.

Some new and expanded coverage is being offered by private companies operating entirely on their own. Andreas Wiatowski in Brant County is an example.

A computer consultant based in the village of Harley, Wiatowski has set up networks for client companies and needs the Internet, but was frustrated with poor Internet access from existing providers. The only high-speed access was from an expensive satellite service he said was "down 50 per cent of the time."

Wiatowski decided to provide an Internet service of his own for local rural residents, including farmers like Burford dairyman Larry Davis. Wiatowski is proud to say that "Silowireless," which locates transmitters on grain elevators, silos, towers and even the top of a 120 foot crane, is now showing a profit.

Davis, who is an Ontario Federation of Agriculture director-at-large, wonders how far the $30 million will go in putting broadband across Ontario. "It's an incentive but how far does an incentive go?"

He admires Wiatowski because he saw a business opportunity where he had expertise and took advantage of it.

East of Ottawa, Larry Bogue, based in Hawkesbury, pioneered Internet access starting with dialup service in 1995 and progressing to DSL (Digital Subscriber Line) on copper telephone lines. Bogue says that he's been doing wireless in the countryside for 11 years and has clients from Cornwall to Lachute Quebec. He hasn't applied for any of the provincial funding for wireless Internet access and refers to the big companies as "corporate welfarists."

Wiatowski doesn't have a piece of that money either.

He considered applying, but decided not to. "I may have got funding, but in the end it isn't helping anyone get broadband into their home," Wiatowski says.

For his part, Larry Bogue says his business is too small. "The government doesn't deal with small." He argues that government involvement is a disincentive to smaller companies. "We are being discouraged and overloaded with paperwork to get any money from government."

Government is certainly involved in getting broadband into rural Ontario, often at the behest of both farm groups and municipalities. Last March, Queen's Park announced plans to spend $30 million over four years, adding on to a successful program of the same name announced 10 months earlier. The Rural Connections Broadband Program aims to bring broadband, defined as access to Internet at a download speed of more than 1.5 megabits per second, to rural southern Ontario.

Leona Dombrowsky, the provincial Minister of Agriculture, Food and Rural Affairs, administers the program in partnership with the Ministries of Government Services (MGS) and Small Business and Consumer Services (MSBCS). She says that municipal partners told her broadband is "essential…in order to attract economic development."

The province aims to leverage its $30 million investment through Rural Connections into $90 million worth of infrastructure, with matching dollars raised locally and investment from Internet service providers. (A similar program has been launched in northern Ontario). In return, the Internet service provider owns and maintains all the infrastructure the money builds.

Local municipalities publish a Request For Proposal and choose a partner, using a scoring system developed by the Ontario agriculture ministry. It's this process that Bogue and Wiatowski complain about.Wiatowski says that there's "favouritism" and the program makes Internet providers into winners and losers. Bogue, virtually a one-man show, competes in eastern Ontario against big companies, like New Brunswick-based Barrett Xplornet Inc., which won competitions to get government grants and provide high-speed Internet in some markets.

Reaching 'unserved markets'
But Barrett Xplornet's Bill Macdonald isn't complaining about the provincial money. "The rural market has been neglected for a long time," says the vice-president of products and services for this privately-owned company.

"We are a national, rural broadband provider," he says, aiming at "unserved and underserved markets" in rural Canada, using both fixed wireless (towers like Wiatowski and Bogue use) and satellite services. Macdonald denies that Xplornet depends upon subsidies. "We have a viable, stand-alone business," he says, and the Rural Connections program allows expansion of broadband infrastructure into areas where sparse populations wouldn't otherwise meet Barrett's business model. Barrett has a "team" which works on Requests For Proposals to meet the needs of the Rural Connections program and determine if an expansion into an area is going to be profitable, even with the subsidy.

Bringing broadband to rural Ontario "is as important in many aspects as the electrification back in the 1940s and '50s," says eastern Ontario-based communications consultant James Joyce. He provides logos and brochures, and designs websites for companies. As a volunteer, he chaired a committee to bring broadband to the Dunvegan area in the municipality of North Glengarry Township in 2007 and the company chosen was Barrett Xplornet.

"I don't think we would have high-speed here without (Joyce)" says Linda Fraser. She and her husband Jack milk cows and cash crop in the Dunvegan area. She banks online, updates employee pay cheque deductions, and gets farm extension information on the Internet. "It's a lot faster than dialup. That's all I know."

Since the Ontario agriculture ministry closed its offices in 2000, "we have to get (information) off the website as much as we can." 

Barrett Xplornet won the competition to provide high speed service in the Dunvegan area, beating out Ottawa-based competitor Storm Internet Services. On April 1, 2008, Barrett announced that it had acquired more than 2,400 rural wireless customers and network assets of Storm and promptly began converting Storm customers over to Barrett.

"We had an agreeable business transaction," Macdonald says. "Because we were in similar areas, we chose to transition the customers off of the Storm infrastructure to the Xplornet infrastructure to reduce operating costs for everybody and make a sustainable business in those regions."

Better service promised
The conversion has been controversial, to say the least. Some former Storm customers claim they get less service for more money with Barrett, that downloads are slower and the system is less reliable.

Macdonald denies that Xplornet is more expensive.

"In general, our costs have been as good or better (than Storm's) and we've tried to be equitable with the current Storm customers as we bring them over and give them parity."

On the service side, he says: "We are still in the process of transitioning customers from one infrastructure to the other. There is still activity in that network as we bring customers on. We have to increase the capacity and performance of the network. In the transition period, it is unfortunate there are network implications that we have to manage."

Macdonald says that service will get better. He says that most companies use unlicensed spectrum to connect their radios but Xplornet has purchased licensed spectrum and the extra bandwidth capacity will help. A license issued by Industry Canada is the exclusive right to use a particular radio frequency in a particular area.

"As we get all the conversions done, hopefully this will settle down."

Silowireless's Wiatowski says a company may need licensed spectrum if it is moving into an area where there are wireless providers already. It is also a good idea where there are a lot of wireless devices such as phones and routers in homes. He says licensed spectrum is generally sold in big blocks too expensive for small companies to buy, and it takes a long time to pay off. He protects himself by arranging right of first refusal agreements with towers he uses. If another company interferes with his signal they can be shut off. There are generally fewer wireless devices in the country, where he does business, Wiatowski says. Operators who do buy licensed spectrum leave more unlicensed spectrum for him to use. A system that smaller companies could use to access licensed spectrum would help, he says.

Macdonald says that the service Barrett provides is comparable to that available in the city. But James Joyce isn't so sure. Cable Internet service for his university student son in Montreal is lightning-fast. "What we have out here is not lightning, but it is a fair bit better than it was before." Joyce would like to see "a bigger pipe."

Joyce agrees that Internet service providers are in business and want to maximize the number of customers on each tower. But when they reach maximum subscriber levels, Internet speed is affected.

Not all high speed Internet access is equal, as a Better Farming investigation discovered.

Internet users use a website called Speedtest.net to test their ISP's speed. Better Farming obtained the Speedtest.net database of more than 700 Internet service providers in Ontario and their download and upload speeds. The database shows that not all highspeed providers offer the same service. Ottawa's Storm Internet Services downloads at 2.39 megabits per second. Internet Gateway Services in Hawkesbury downloads slightly more slowly at 2.19  megabits per second. And Barrett Xplornet's speed is on average slightly above one megabit per second.

(See Figure 3, page 20. The complete list is available at  www.betterfarming.com.) The agriculture ministry's standard for high speed service is 1.5 megabits.

According to Barrett's Bill Macdonald, "you have to be careful about what the (speed test) information represents. The Storm portfolio had just the higher speed packages."

On the other hand, Xplornet offers entry level packages for users "who want an always-on-service, which is what you get with broadband and you don't get with dialup. In general, that probably brings the overall level (of average speed) down."

Not all customers want to pay the prices associated with a super-fast service, he says. "They don't want to be paying $60-80 a month." 

Moreover, there are a lot of vagaries in speed testing, Macdonald says, and some slow speeds are associated with how the signal is routed.

Respecting the 'letter,' not the 'spirit'
Barrett's critics point to something called "burst and sustained" speed. "Burst and sustained" means that, when a file is downloaded to a user's computer, only a certain volume of the file is transmitted at a high speed. After a certain volume of information has passed, the data transfer rate changes to a slower speed. This allows more users on the shared system at once. It also increases the time required for a file to be transmitted.

James Joyce now wishes that the Request For Proposal for the Dunvegan system, which Xplornet built, had specified a higher speed. He argues that the burst speed reaches 1.5 gigabits, but the sustained speed is far slower. While 'burst and sustained' may respect the "letter" of the government's Rural Connections requirements, it can miss meeting the "spirit" of these requirements, he says.

Macdonald defends the use of the 'burst and sustained' model and says that it "helps you manage how people share traffic on a shared infrastructure. We go beyond the minimum on the burst side. We give (clients) a package that is above 1.5 megabit service when it's burst and sustained."

Macdonald says that Barrett will continue to improve services for its clients coming over from Storm. "Where we have challenges we are addressing them…we are not going away."

Joyce submitted his concerns about the Xplornet service in the North Glengarry project to the Ontario Ministry of Agriculture, Food and Rural Affairs. (The report is posted on the Internet at http://www.dunveganrecreation.com/highspeed/dcbi_final_report.pdf>dcbi_final_report.pdf.) Better Farming asked agriculture minister Leona Dombrowsky if she was familiar with the report from North Glengarry and if any of the rules have been changed. "There have been some challenges," she admitted, adding: "You have identified a community where there have been some glitches. There have also been communities which have been very successful in extending services."

Meanwhile, Joyce has antennae and service for both Macdonald's Xplornet and Bogue's IGS on his rural property. One is a backup if the other fails. He can't do business without Internet service.

Barrett Xplornet certainly isn't getting all of the business. In Huron County, Comcentric, a grouping of independent telephone companies, rolled out service to customers in a "gap" area in mid-to-north Huron County, beginning in early 2008 using 11 towers. Huron County planner Carol Leeming acknowledges that this system uses line-of-sight technology and "geography, structures and vegetation" can block access. "You just don't know until you get rolling things out if it's going to work."

By contacting Internet service providers, the government services ministry has developed maps indicating areas which are serviced or unserviced by broadband. The maps are available on the Ontario agriculture ministry website at http://www.omafra.gov.on.ca/english/rural/ruralconnections/map.htm Each county has been divided into hexagons of 25 square km. The goal of the project is to serve 75 per cent of the people in these hexagons, Leeming says.

Elgin County selected Amtelecom as the partner in the Elgin Connects program, says dairy farmer Donna Lunn, who is also the county economic development officer. Community Futures grants were available to counties that were badly hurt by the failing tobacco industry. Federal and provincial grant monies were involved to develop all kinds of infrastructure in counties hardhit by the tobacco crisis. Lunn says that Amtelecom committed "a significant investment" and now owns the internet infrastructure.

The grant financed construction of a fibre optic trunk line nearly the entire length of the county with secure links into county offices, the health centre and to homes for the aged. There are also connections to three wireless transmitters: Amtelecom had a tower in the east, and placed antennae on the Cargill elevator and the West Lorne water tower.

There was a glitch. The plan was to serve the village of Rodney at the west end of Elgin via wireless. "There was a quite a ridge there that didn't show up on the maps before," Lunn says. Service couldn't be provided to farms in the west end. Lunn says. Elgin got a Rural Connections grant to extend the fibre cable to Rodney, with Amtelecom again getting the nod, and more wireless structures were also built. "Wireless technology is still fairly new and we are still learning," Lunn says. "It all depends on terrain and trees and so many factors. The key is a very stable fibre trunk line. We will just keep chipping away at where the holes are."

Lunn notes that Amtelecom has been a phone provider in the area for 100 years. "It was very good for us to go with a provider that had been in the community for that length of time." Amtelecom also provides high speed on DSL lines in eastern Elgin. There are two radio frequencies on the wireless.

Back in Brant County, Andreas Wiatowski also uses two frequencies. His site broadcasts to a radius of 5-7 kilometres, at both high (five gigahertz) and low (900 megahertz) frequencies. High-frequency transmissions at five gigahertz require that the receiver can "see" the transmitter (line-of-sight). Obstructions between the client and the transmission site reduce signal strength.

Lower frequencies penetrate foliage and obstructions more easily. Wiatowski says that wireless routers and many cordless phones transmit in the 2.4 gigahertz range and can interfere with a low frequency signal. For that reason, Wiatowski broadcasts non-line-of-sight in the 900 gigahertz range. "It gives the opportunity to penetrate a fair amount of foliage and we don't necessarily have to see the tower at the other end." BF

Sidebar: Canada falls behind in providing high-speed access

How well is Canada doing compared to other countries in providing high-speed Internet access to its citizens?

According to the Ontario Ministry of Government Services, "It's not good."

So says Barb Swartzentruber, Manager, Strategic Projects, Office of the Corporate Chief Strategist. A December 2007 survey of broadband uptake and penetration in 30 member countries in the Organization for Economic Cooperation and Development shows that Canada has fallen to tenth from second place five years earlier.

Government Services estimates that there are one million Ontarians without access to broadband "and that is probably a low number," says Swartzentruber. The provinces are taking up the challenge, she says.

The goal of Rural Connections and a similar program aimed at Northern Ontario, is to "reach just about everybody in four years," but with an important proviso. "It has to be cost effective."

Rural Connections is led and administered by the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) in partnership with the Ministries of Government Services (MGS) and Small Business and Consumer Services (MSBCS).

The Ministry of Government Services doesn't have data comparing provinces. However, British Columbia, Alberta, Manitoba and Newfoundland are going ahead with broadband expansion programs and Saskatchewan jumped in recently as well, promising $90 million to government-owned Sasktel to spread broadband across the province.

Ontario communities choose whether wireless towers or Digital Subscriber Line systems will reach most residents, but not everyone will be covered.

"There may be very, very small populations where we will be insuring there will be public access," such as public libraries. More affordable satellite technology "may be a solution for low-population areas," says Swartzentruber.

Barrett Xplornet Inc.'s Bill Macdonald would like to see current subsidies for wireless technology extended to help make satellite Internet less expensive. Barrett estimates that 10 to 15 per cent of Canadians will remain dependent upon satellite Internet, because even government-sponsored wireless connection would be too expensive to provide.

To get a Rural Connections grant, municipalities submit applications to OMAFRA and work with telecommunications companies to determine the best way to serve their area.

Municipalities select a telecommunications provider through use of their regular Request For Proposals process. Swartzentruber disagrees that the process creates winners and losers. This approach isn't about selecting one telecommunications provider to cover all of Ontario, as has been the case in other provinces, she says. The Ontario approach "ensures that all telecommunications providers have the opportunity to respond" to requests for proposals. BF