Rural service providers respond to satellite fee cut for remote and rural Canada

Friday, May 8, 2015

by JIM ALGIE

A new Industry Canada plan to cut satellite fees for Internet service providers in remote and rural areas has received wide support from the industry, although not everyone believes it significantly advances information technology needs in key agricultural areas of southwestern Ontario.

In a May 5 statement, Industry Minister James Moore announced a cut in satellite fees he said should bring “high speed Internet to an additional 280,000 homes in rural and remote communities.” The changes will make Canada more competitive with other jurisdictions such as the United States and the United Kingdom and attract investment from new and existing service providers, the Industry Canada statement says.

The reduced fee structure is to take effect, April 1, 2016, and includes lower costs for satellite license fees for spectrum used by Internet, wireless, mobile and broadcasting services. As well the government has adjusted license application procedures to reduce paperwork for an estimated cost savings of $1 million annually to industry participants.

New Brunswick-based Xplornet Communications Inc. claims to be the country’s largest rural broadband service provider and has criticized the government in recent years over urban-focused, communications policies. The company welcomed new satellite fee reductions announced, May 5, by Industry Minister James Moore.

Bill Macdonald, Xplornet sr. vice-president of strategic business development, said in an interview, today, the government has listened to comment from rural service providers during consultations over the past three years.

“It’s a simpler structure and a simpler approach . . .  it’s good for us and others,” Macdonald said in an interview from his office in Calgary. “We have new satellites coming on in 2016 which would have implications for us if an additional fee structure would have applied.”

Government announcements this week should allow the company to “keep our pricing as aggressive as we are able to keep it,” Macdonald said.

Even so, a leading information technology advocate in southwestern Ontario says that region’s future depends not on satellites but access to fibre optic cable.

“Fibre optics is really the only available technology infrastructure that’s scalable to meet the demands of the future,” said Grey County Information Technology director Geoff Hogan in an interview. In addition to his work for Grey County, Hogan is technical lead on SWIFT (SouthWestern Integrated Fibre Technology), an ambitious, municipal government proposal to extend fibre optic conductivity to every home, farm and business in southwestern Ontario.

Hogan described the federal government’s May 5 satellite fees announcement as a relatively “easy” move and a “very good short term gap for the next one to five years.” He also said the future for satellite Internet service is relatively short.

“Five years from now, satellite is going to go the way of the dodo bird,” Hogan said. “It is a really short-term thing, which is not a bad thing for the federal government to be doing; but I really, honestly, believe they need to be taking a more proactive approach in getting fibre optics out to the community faster and cheaper,” Hogan said. As technical lead for the not-for-profit, SWIFT project, Hogan has advised leaders of 15 rural municipalities in southwestern Ontario since they began work in 2013 on a $240 million proposal to extend fibre optics throughout the region by 2020.

Business planning for the project wound up in 2014 and now awaits a response from the Ontario government on $160 million in proposed grant financing. The project has sought support through the provincially-administered, New Building Canada Fund, which is jointly funded by both the federal and provincial governments. As well, participating Internet providers and municipalities are to contribute start up funds.

Xplornet was critical of government proposals during an earlier phase of its consultations on communications policy for rural Canada. At that stage of the consultations, company President Allison Lenehan cited a “fundamental disconnect” between government statements and actual proposals which favoured cell phone over Internet.

Macdonald said, Friday, the government “has listened” to his company and others in the industry on issues of spectrum for Internet as well as the satellite licensing process. As well, Macdonald defended the need for satellite services for the foreseeable future for more than 2.5 million Canadians living in low-density, rural areas of the country.

“The future of satellite is just as important as the future of fibre optics,” Macdonald said. “It’s the right technology for the right markets,” he said.

“To plow fibre into very low density regions, it’s just not cost effective,” he said. Xplornet continues to invest in both terrestrial, fixed wireless – piggy-backed on fibre and broadcast – as well as new satellites to reach customers across Canada and boost speeds, he said.

“Our speeds and prices on satellite while they may be a step behind at times than urban, they’re catching up,” Macdonald said. “We’ll continue to launch satellites to deliver services to rural Canada,” he said.

“It’s not a temporary solution while other technologies catch up. There will always be the need for those various levels of broadband services to rural Canada,” Macdonald said. BF