Intervention: Eastern Ontario Wardens Caucus (EOWC) and the Eastern Ontario Regional Network (EORN) (Intervenor 217)

Document Name: 2015-134.223915.2393477.Intervention(1f@th01!).html

Please find attached a joint submission from the Eastern Ontario Wardens Caucus (EOWC) and the Eastern Ontario Regional Network (EORN)Raisons pour comparaitre / Reasons for appearanceEORN/EOWC would like to further discuss the experience and priorities of rural residents in Eastern Ontario with the CRTC to ensure that their requirements are understood and acknowledged. The experience and perspectives of rural residents of Eastern Ontario gained from deploying the EORN project. Specific Details include: internet as a basic telecom service for rural residents; funding for rural broadband infrastructure delivered through municipal governments; convergence of fixed and mobile broadband; private public partnerships as a solution to deploying broadband infrastructure in conditions of market failure; mobile broadband infrastructure as a mandatory requirements for effective public safety.

Intervention: Eastern Ontario Wardens Caucus (EOWC) and the Eastern Ontario Regional Network (EORN) (Intervenor 217)

Document Name: 2015-134.223915.2393336.Intervention(1f@pk01!).doc
Regarding CRTC Review of Basic Telecommunications Services
Telecom Notice of Consultation CRTC 2015-134, 9 **** 2015, and CRTC 2015-134-1, 3 **** 2015.
Eastern Ontario Wardens’ Caucus/Eastern Ontario Regional Network (EOWC/EORN)
· By submitting this intervention we indicate our intent to become a party to this proceeding.
· We request to appear at the public hearing.
Insert address/email
Eastern Ontario Regional Network
C/O County of Peterborough
470 Water St.
Peterborough, ON *** ***
This submission has been prepared under the direction of EOWC/EORN by Dr. **** Rajabiun, Ted Rogers School of Information Technology Management, Ryerson University.
This document and policy recommendations it offers in this matter have been approved by the Eastern Ontario Wardens Caucus (EOWC) and Eastern Ontario Regional Network (EORN):
**** Duncan
**** Burton
Monday, July-13-15
Monday, July-13-15
Name & Position
Name & Position
**** Eric ****
**** Burton
Chair EOWC
Chair EORN
Executive summary

1. This intervention regarding the Review of Basic Telecommunications Services (CRTC 2015-134) is based on the experience in Eastern Ontario with the development of what is today the most basic form of telecommunications service used by Canadians: High-speed/broadband Internet connectivity. Residents, businesses, and other stakeholders in Eastern Ontario already consider reliable and affordable broadband Internet connectivity as a basic telecommunications service critical to their ability to participate meaningfully in the digital economy. We submit that the Commission should align the federal regulatory framework with the technological and economic reality created by the convergence of other telecommunications services and broadcasting to the Internet.

2. As the Eastern Ontario experience demonstrates, private sector incentives to invest in addressing coverage and capacity gaps in relatively higher costs areas of the country can be particularly weak (or non-existent). Market forces have been insufficient to meet growing demand for connectivity by residents, businesses, and the broader public sector in Eastern Ontario, generating demand for innovative policy solutions. To address this vital infrastructure gap municipalities in the Region have taken the lead in identifying underserved communities, securing public and private funding commitments for network improvements, and establishing the Eastern Ontario Regional Network (EORN) as a vehicle for executing our Regional digital infrastructure strategy.

3. The Eastern Ontario Wardens’ Caucus (EOWC) works on behalf of 13 County and Single-Tier municipalities to investigate common concerns, promote regional economic development, and to ensure that conditions are in place to make Eastern Ontario the best place in the world to live. EOWC member municipalities work as a team to research, advocate, and address policy concerns on behalf of more than 700,000 residents, businesses, public sector organizations, and other stakeholders across the Region.

For more than a decade our stakeholders have highlighted concerns about limited access to reliable and affordable Internet connectivity in Eastern Ontario to elected representative and municipal administrations. In response, the EOWC has conducted a series of independent technical assessments of the magnitude of telecommunications infrastructure gaps, defined improvements to fixed and mobile broadband Internet access services as a strategic economic development priority, and created EORN to achieve this objectives across the Region.

4. As of January 2015, EOWC/EORN’s efforts have extended coverage and connectivity speeds available to more than 95% of homes and businesses in under-served areas we have targeted. EORN has promoted significant private sector investment in access and transport network facilities across Eastern Ontario, while increasing competition and reducing prices for end users. The EORN experience illustrates that open access transport facilities and strategic subsidies to stimulate private sector capital expenditures can be effective in overcoming rural market failures and reduce the rural-urban digital divide. Funding commitments by local, provincial, and federal governments have been essential to EOWC/EORN’s efforts in stimulating private investment and competition in the provision of broadband access services in Eastern Ontario.

5. Despite past funding commitments and progress in terms extending access to basic broadband services in Eastern Ontario, substantive digital infrastructure gaps remain that raise concern for EOWC/EORN stakeholders. These include closing remaining coverage gaps (particularly to northern communities), further improving service quality in terms of download/upload speeds, and addressing mobile network coverage and capacity gaps we have identified. In the longer term, EOWC recognizes that despite demand by residents and businesses in the Region, private sector incentives for deploying next generation fiber-to-the-premises (FTTP) networks are likely to lag significantly behind those in urban Canada. This will constrain the ability of our residents, businesses, and public service delivery organizations to deploy more advanced Internet applications that require symmetric connectivity speeds and minimum service quality guarantees (e.g. cloud computing, multimedia, IPTV, eHealth, eEducation, Internet of Things (IoT), etc.) Mobile network coverage and capacity gaps represent a particular concern for the delivery of emergency services and public safety, as well as the competitiveness of the Region as a tourist destination.

6. As the Eastern Ontario experience demonstrates, without strategic public funding commitments the business case for extending access to basic fixed and/or mobile broadband connectivity services can be limited in relatively higher cost/less densely populated communities. A sustainable regulatory framework and funding model by the federal government would support efforts by lower levels of government across the country, including EOWC member municipalities, to enhance the pace of progress in digital infrastructure development. Consequently, we submit that enhanced commitments by the federal government are required for rendering “reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada”, as mandated under Section 7 (b) of the Telecommunications Act.

7. EOWC submits the Commission should reconsider the current policy framework and vary its decision in Telecom Regulatory Policy 2011-291 by reclassifying high-speed Internet connectivity as a basic telecommunications service. To support efforts by lower levels of government trying to meet growing demand by residents and businesses for network intensive applications, the Commission could further increase its broadband speed targets, make them more symmetric, and set up a sustainable and transparent funding mechanism for reaching these targets.

8. CRTC’s current basic broadband services speed targets (5 Mbps download/1 Mbps upload) are inadequate for enabling Canadians to participate meaningfully in the digital economy. Starting with the objective of providing basic services of at least 10/1 Mbps to 85% of the Region, demand for higher speeds has enabled EORN to extend the reach of services offering 10/1 Mbps to more than 90% of Eastern Ontario. While exceeding our original basic service targets, we recognize this is not sufficient for meeting the needs of our residents and stakeholders in the future. Advanced Internet applications businesses and households demand increasingly require symmetric connectivity speeds and service quality guarantees not available on legacy broadband platforms (e.g. copper/DSL, cable, 3G mobile). Instituting a federal regulatory and funding model that supports advanced fiber and mobile deployments in high-cost areas prone to market failures will be critical for achieving CRTC’s statutory objectives under Section 7 (b) of the Telecommunications Act.

Part I - Intervention

9. Eastern Ontario and the ****’s Caucus: Including Ottawa and a number of separated cities, Eastern Ontario is home to nearly 2 million people representing around 16% of Ontario’s population.

Around 730,000 people reside in 13 counties and upper tier municipalities represented in the Eastern Ontario ****’s Caucus (EOWC). Since the late 1990s when the provincial government devolved more responsibilities to lower levels of government, we have been working together as a team to research and advocate on behalf of residents, businesses, and the broader public sector in the Region to promote regional economic development and ensure that Eastern Ontario remains an attractive place to live, work, and visit.

Competitiveness of the Region’s social and business infrastructure, including telecommunications services, represents an important concern for EOWC stakeholders. EOWC has therefore defined improving the Regions’ fixed and mobile network infrastructure as a strategic priority and established the Eastern Ontario Regional Network (EORN) to achieve its digital infrastructure development objective.

10. Relevance of this proceeding for Eastern Ontario: The CRTC has issued a Notice of Hearing (CRTC 2015-134; hence the Notice) stating that it intends to “examine which telecommunications services Canadians require to participate meaningfully in the digital economy and the Commission’s role in ensuring the availability of affordable basic telecommunications services to all Canadians”. The CRTC Notice appears to recognize that Canadians who live and work in rural areas remain concerned about their access to reliable and affordable telecommunications services (par. 31). The extent to which this recognition will translate into new policies that render “reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada” (as required under Section 7(b) of the Telecommunications Act), will depend partly on decisions by the CRTC in this proceeding.

11. Scope of the proceeding: The Notice of Hearing further states that the Commission is willing to consider various regulatory and industrial policy options relevant for the provision of basic telecommunications services (par. 34-35), including defining Internet access as a basic telecom service and modernizing the National Contribution Fund (NCF) to subsidize local services in high-cost areas (par. 16-19). It is important to note that the CRTC’s wholesale regulatory regime also creates particular concerns for rural communities prone to under-investment, but third party access and interconnection issues appear to be beyond the scope of this proceeding.

In addition to general policy questions about the classification of high-speed/broadband Internet connectivity as a basic telecommunications service, the CRTC has inquired about potential funding and fund allocation mechanisms that will be required to achieve Canada’s Telecommunications Policy Objectives under Section 7 of the Telecommunications Act and the 2006 Policy Direction.

12. Legal v. technological perspectives on basic services: The 2006 Policy Direction requires the CRTC to “rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives” (S.1.a.i). In Telecom Regulatory Policy 2011-291 the CRTC interpreted this Policy Direction to conclude that it is not appropriate to consider broadband Internet access as part of any basic service objectives under the Telecommunications Act. As a practical matter however, with the convergence of traditional communications services and broadcasting to Internet Protocol (IP) based network infrastructure, high-speed broadband Internet access has become the most basic form of telecommunications service upon which everything else is delivered. Incorporating this practical reality into the federal regulatory framework would send a strong signal about the credibility of Canada’s commitments to developing a world class digital infrastructure.

13. Eastern Ontario stakeholders have long recognized that access to reliable and affordable Internet connectivity of high quality/speeds to be essential to their ability to “participate meaningfully in the digital economy”.

Through consultations with residents, businesses, and other stakeholders in the Region, the EOWC has already incorporated this demand for a world class digital infrastructure in our policy priorities.

We submit it would be in the interest of all Canadians if the Commission would recognize the basic nature of broadband Internet connectivity in the federal regulatory framework for basic telecommunications services.

14. Basic services and the digital divide: More than 80% of Canadians live in urban areas where competition among multiple infrastructure operators is economically feasible and benefits consumers by imposing some competitive discipline on providers (i.e. reducing costs and/or increasing quality of service). The current regulatory classification of Internet connectivity may not matter that much for urban centres in which competition among, and between, fixed and mobile operators is relatively more intensive than in higher cost suburban and rural areas of Canada. However, the manner in which the CRTC decides to define Internet access services as part of this proceeding has important implications for the 20% of Canadians that live and work in relatively high cost rural and remote communities of the country. The prospects of platform competition to promote investments in next generation fixed and mobile network in higher cost rural areas is likely to remain limited without innovative public policies that improve the business case for such investments. The EOWC/EORN experience demonstrates that the private sector business case for investments required to address coverage and capacity gaps we have identified in the provision of both fixed and mobile infrastructure can be very weak, or non-existent (i.e. negative Net Present Value). A combination of policies that promote cooperation in the provision of essential facilities and strategic subsidies in components of the network that are prone to under-investment/market failures have been critical to creating the right incentives to close these gaps in relatively high cost communities across Eastern Ontario. Strategic subsidies to transport and access network operators have been required for stimulating private sector incentives to extend network coverage, deploy new technologies, and install additional capacities necessary for meeting our basic service objectives.

15. Federalism and basic services: Higher levels of government tend to have more financial and administrative resources, but are further removed from the day-to-day demands of residents and business communities relative to municipalities and the provinces. Furthermore, under Canada’s constitutional arrangements telecommunications regulatory authority lies with the federal government while provincial and municipal governments are responsible for delivering public services such as education and healthcare, attract business investment, and promote economic development. Consequently, lower levels of government tend to have stronger incentives to care about the quality of fixed and mobile network infrastructure that is available to their communities, but have fewer resources to address potential concerns.

Recognizing that private sector incentives to invest in advanced network infrastructure are not always sufficient, over the past decade municipal, provincial, and federal governments have implemented a variety of initiatives to extend access to basic broadband connectivity to rural and remote communities around the country.

16. Broadband availability versus network quality: However, a 99% “availability” rate as indicated in this CRTC Notice should not be interpreted by the Commission as evidence that Canada’s digital infrastructure problems have been resolved. Although the vast majority of Canadians have access to some form of broadband connectivity, the quality/speeds of broadband connection in Canada remain substantially below those of leading countries (around 2 to 3 times lower in terms of download speeds and 8 to 10 times lower in terms of upload speeds).

All Canadians might benefit if the Commission were to define higher service quality targets that motivate operators to improve the quality of services they deliver by upgrading their networks and installing sufficient capacity to meet growing demand for network intensive applications. The ability of the 20% of Canadians that live in higher cost rural areas to access more advanced broadband technologies (e.g. fibre-to-the-premises (FTTP, 4G) that deliver higher and more symmetric speeds will partly depend on the availability of public funds to improve the business case for investing in them. Without a sustainable regulatory and funding framework at the federal level, lower levels of government will face significant challenges in responding to demands from residents, businesses, and the broader public sector for reliable and affordable Internet access services of a high quality.

17. Municipal and provincial leadership: While federal authorities have not yet recognized that most communications channels have already converged to Internet Protocol (IP) based physical infrastructure and high-speed Internet connectivity is the most basic form of telecom service, lower level governments responsible for delivering public services and economic development have had to take the lead on this issue. Notable provincial examples include those in Alberta and British Columbia where the governments have tried to promote rural connectivity with public subsidies in open access transport facilities.

Other provinces have primarily focused on subsidizing local access networks in under-served communities or targeted public-private partnerships such as EORN. A number of rural and urban municipalities have already deployed next generation FTTP networks.

Nevertheless, in general terms the diffusion of next generation fiber networks designed to deliver ultra high speed and symmetric connectivity (with lower operating costs than legacy copper and cable network) remains very low both in urban and rural Canada.

Enhanced commitments by the federal governments to decentralized efforts by lower levels of government would be the in the interest of rural areas such as Eastern Ontario where private sector investment incentives in fixed network assets are limited. EOWC submits decentralized solutions led by lower levels of government will minimize potential interference with market forces, tends to be more cost effective, and would be in the interest of Canadians in both rural and urban parts of the country.

18. The EOWC/EORN strategy: EOWC consultations over the past decade have highlighted significant concerns by citizens, businesses, public services delivery organizations (e.g. schools, emergency services, healthcare providers), and other stakeholders about coverage and available connectivity speeds offered by private sector providers in the Region. Since the late 2000s EOWC/EORN have taken the lead in mapping broadband availability and to secure public and private investments required to improve the Regional network. In partnership with provincial and federal governments, the EORN model includes strategic subsidies for the incumbent to deploy and/or upgrade its fiber transport facilities around the Region and to open local points of presence (POPs) it operates to third party providers EORN has contracted to extend broadband access and improve service quality/speeds (with an investment of $10 million from the 13 **** tier Municipal Governments). As documented in Table 1, by identifying and targeting gaps in both transport and access network facilities at the local level the EORN model has been able to allocate scarce public resources to improve rural connectivity in a relatively cost effective manner. The cost effectiveness of the EORN model is particularly notable because our initiatives have targeted delivering substantially higher speeds than programs implemented by higher level of government (10/1 Mbps up/downlinks for EORN versus 1.5Mbps/384 Kbps for the federal program for example).

Table 1. Average rural connectivity subsidy
EORN cost for households served in all zones
EORN cost for per Northern households
Rural Connections (Ontario)
Connecting Rural Canadians (Federal)
Source: EORN, Rajabiun & Middleton (2013) note 9.

19. Rising standards of basic service: Original contracts with EORN targeted bringing broadband connections with speeds of 10Mbps download and 1Mbps upload to at least 85% of the Region. According to our latest network mapping exercise to assess gaps that remain, this objective was achieved by the end of 2014. Furthermore, during the implementation process we recognized that end users tend to demand substantially higher speeds than standards initially defined by EOWC/EORN per CRTC existing service targets of 5/1 Mbps. Consequently, we have worked with our public and private sector partners to increase connection speeds beyond the national targets to 10/1 Mbps to about 90% of the Region and several broadband providers are now offering 25/5Mbps packages in rural Eastern Ontario as a direct result of the EORN project. We are currently trying to address remaining gaps in terms of both coverage and connectivity speeds in order to have a basic standard of service available across Eastern Ontario. Table 2 provides an overview of availability and remaining gaps in the Region. Most of the remaining gaps are in less densely populated northern zones of Highlands, Haliburton, Dorset, Ottawa Valley **** and **** North, and as expected in the Satellite target area.

Table 2. Broadband coverage and remaining gaps in Eastern Ontario
(at 10 Mbps up/1 Mbps downlink, as of January 2015)
Zone Group
Total Household Count
Total HH Unserved
% HH Unserved
Northern Zones
Satellite Target Zone
**** Zones

20. Demand for symmetric connectivity/sustained speeds: A vast range of advanced Internet residential and business applications require symmetric connectivity speeds with minimum service guarantees between 2.5 and 10 Mbps (e.g. cloud computing, multimedia, Internet of Things (IoT), etc). Reaching these higher basic service standards may not be possible on legacy copper/DSL and cable platforms prone to localized congestion, which will require the diffusion of next generation fiber and hybrid fiber/mobile networks. In the longer term, EOWC/EORN plans to meet rising service standards by working with public and private partners to ensure that Eastern Ontario does not fall behind in the adoption of advanced broadband technologies designed to meet growing demand for network resources, consistent and reliable speeds, and symmetric connectivity.

21. Fixed/mobile convergence: Diffusion of mobile devices and growing demand for mobile connectivity increasingly allow end users to switch between fixed and mobile connections in order to optimize the price/service quality combinations available from different operators. Although fiber networks of the future still represent the best long term option in terms of reliable fixed connectivity at very high symmetric speeds (as well as lower maintenance and operation costs than legacy copper/DSL and cable networks), industry forecasts indicate that demand for mobile network data resources is supposed to grow more than 5 times at the global level over the next 5 years.

In **** America, estimates suggest that average data usage per smartphones will grow from 2.4 GB to 14 GB by 2020.

In less densely populated areas where deploying next generation fibre-to-the-home (FTTP) networks is not an economically viable option, advanced mobile platforms (e.g. 4G LTE) can further offer a technological alternative for end users to access Internet content and applications that require high-speed and symmetric connectivity.

Consequently, growth in demand for mobile network resources in rural areas may be higher than the global and **** American forecasts. In addition to sustained investment in mobile network capacity required to meet this demand, simultaneous use of multiple connected devices within households increases utilization of fixed broadband access and transport networks that aggregate traffic from local access networks. In relatively high cost rural areas incentives for deploying capacity required to meet demands on local links and backhaul facilities exists, but tends to be lower than in urban/suburban environments where the fixed costs of new technologies and capacity upgrades can be spread across a larger number of end users. Without public policies that improve the business case facing private operators of fixed and mobile networks, the urban-rural digital divide in terms of availability of more advanced technologies and service quality/speeds is likely to grow further.

22. Mobile infrastructure gaps in Eastern Ontario: Growing concerns by residents, businesses, public service workers (e.g. emergency services/public safety), and other stakeholders about mobile network coverage and quality in the past few years have led EOWC/EORN to commission an engineering assessment that maps the state of the cellular network in the Region. The results of the assessment validate concerns by stakeholders about access to mobile connectivity in specific areas of Eastern Ontario. Building on this mapping we have further developed a financial model to analyze the likelihood that private operators will have incentives to make investments required to close the gaps that have been identified and meet projected growth in demand. Our analysis indicates the business case for competing infrastructure operators to make such investments is limited and the gaps are likely to persist (i.e. negative Net Present Value). Given the extent of gaps and the importance of access to mobile networks for economic development, public safety, and tourism, the EOWC has identified a cellular network improvement project as a key strategic priority for 2015/6.

23. Emergency response/public security: Gaps in the Regions’ mobile infrastructure represent a barrier to the ability of residents and visitors to reach emergency services and for public service delivery organizations to deploy advanced applications that make their jobs easier and can save lives. Gaps in communications and delays in the delivery of emergency services can have disastrous consequences. Although cellular network gaps are a broader problem across the Region, unreliable access to 911 along the U.S. broader represents a particular concern for residents, visitors, emergency workers, and the EOWC. For example, residents have pointed out that 911 calls from the Canadian side of the boarder can be picked up by U.S. towers and 911 operators, who are not necessarily able to locate the accident and dispatch assistant in a timely manner.

EOWC requests the Commission explores potential solutions to this problem, for instance through collaboration with U.S. regulators and operators. We suspect other Regions of Canada along the border with the U.S. might be facing the same problem and a nationally coordinated solution might be needed to address this issue in a systematic manner.

24. Proactive network planning: The Eastern Ontario Cell Coverage and Capacity Analysis maps locations across the Region where mobile network operators have failed to provide adequate coverage or capacity to meet minimum service quality standards required for deploying advanced mobile services by individuals, businesses and public service workers.

The analysis indicates that, even if operators were to deploy their 700MHz spectrum assets in a timely fashion in the next few years, sizable capacity gaps will persist. Furthermore, as more end users adopt advanced mobile devices and demand for data services grows, the magnitude of the capacity gaps is expected to grow in under-served areas of Eastern Ontario. Table 3 provides an overview of the size of the gaps in mobile infrastructure we are currently trying to address in Eastern Ontario by building partnerships with higher levels of government and the private sector.

Table 3. Magnitude of Current and Projected Mobile Infrastructure Gaps in Eastern Ontario
% sub-hexes
% HH
% HH Res.
% HH
% Farm
% Bus.
% Multi Res.
A. Current Gaps
Inadequate Coverage
Adequate Coverage
Inadequate Capacity
Adequate Capacity
B. Coverage and Capacity Gaps after 700 MHz deployment
Adequate Coverage
Inadequate Coverage
Adequate Capacity
Inadequate Capacity
C. Projected Capacity Gaps under Future Demand Conditions (by 2020)
Adequate Capacity
Inadequate Capacity

25. Spectrum deployment and basic services: While we recognize that spectrum issues are not within the scope of this proceeding or the CRTC mandate, incentives of providers to deploy public spectrum assets is important for connectivity in rural communities such as Eastern Ontario. Estimates detailed in cases B and C of Table 3 above assume that providers in Eastern Ontario will deploy the 700 MHz spectrum they have recently purchased from the federal government on existing towers. Given concerns about the speed by which certain operators have deployed their spectrum assets, this is an optimistic assumption and it is not yet evident how quickly operators in Eastern Ontario will take advantage of the coverage and capacity enhancements afforded by their advanced spectrum assets. EOWC/EORN supports federal policies that encourage operators with advanced spectrum assets to deploy them in a timely manner. The Eastern Ontario Regional Cell Gap Analysis indicates that even after potential 700 MHz deployments on existing towers significant coverage gaps will persist and capacity gaps across the Region are likely to grow due to rapidly growing demand for mobile data services.

26. National roaming regulation and rural market failures: In Telecom Regulatory Policy 2015-177 the Commission determined “that it is necessary to regulate the rates that Bell Mobility, RCP, and TCC charge other Canadian wireless carriers for domestic Global System for Mobile communications (GSM)-based wholesale roaming, primarily in light of its finding that wholesale roaming is not subject to a sufficient level of competition.” Although EOWC/EORN recognizes the importance of this decision for encouraging competition, investment, and consumer choice, mandated roaming can have an unintended consequence on the incentives of operators in rural areas such as Eastern Ontario. For example, there is some risk that carriers may delay investment in new sites if they believe another carrier may build. This is because the initial site development cost may be very high relative to the costs the carrier would need to bear to have its subscribers roam onto the other carrier’s sites. With mandated roaming there is an opportunity to reduce the public funding requirements of addressing coverage and capacity gaps if incumbent operators jointly contribute to the project and share towers and backhaul facilities in under-served areas. Under this scenario, each could share the cost of new towers and use common radio equipment to provide the service. Public funding that encourages operators to invest in relatively high cost/low return areas of the country through infrastructure sharing may prove necessary to create the business conditions needed to address this “gridlock” scenario.

The Eastern Ontario experience and EOWC/EORN recommendations: Although residents, businesses, and the broader public sector in Eastern Ontario have basic telecommunications needs that are similar to those in urban Canada, our experience over the past decade demonstrates that the business case for deploying fixed network assets in relatively higher cost parts of the Region can be limited (or nonexistent). Our experience further suggests that, depending on local circumstances some measure of public subsidies are required to induce service providers to invest in fixed and mobile network assets in under-served parts of the Region. Due to rapidly growing demand for high-speed and symmetric connections fixed and mobile connectivity, Eastern Ontario municipalities have no option but to design and implement innovative policies that promote the development of a world class communications infrastructure in order to meet the needs of our residents, businesses, public sector organizations, and visitors. We urge the Commission to design policies that support efforts by lower levels of government such as EOWC to address concerns about access to reliable and affordable communications services of a high quality. Specific recommendations detailed below in response to the questions raised by the Commission in the Notice of hearing outline how the CRTC can support ongoing efforts by EOWC/EORN to improve fixed and mobile Internet connectivity in Eastern Ontario.

27. Part II – Response to specific questions and issues to be examined
Canadians’ evolving needs for telecommunications services

28. Demand: As detailed in the last section, EOWC/EORN have gained significant experience identifying and addressing evolving telecommunications service needs of our residents, businesses, public service delivery organizations, and other stakeholders in Eastern Ontario. The experience from Eastern Ontario confirms broader national data documenting that Canadians are on the leading edge of digital literacy and have strong demand for more advanced Internet applications for personal and business use (e.g. cloud computing, multimedia, IPTV, etc.). A wide range of new applications are designed to reduce the costs and enhance the effectiveness of delivering public services (e.g. healthcare, education, emergency, support services, etc.). Due to demand for connectivity by our residents and stakeholders that the EOWC/EORN has identified improving the Region’s fixed and mobile telecommunications infrastructure a strategic economic development policy priority. To help the Commission better understand the extend to which broadband/high-speed services have become a basic and essential element of our social and economic infrastructure, Table 4 provides some evidence from EOWC stakeholder consultations from 2014 we employed in developing our Regional economic development strategy. Broadband access infrastructure now represents an essential business input, on par with capital and innovation services.

Notably, Canadian business now places a higher priority on their access to broadband infrastructure relative to public goods traditionally considered to be essential to social and economic development (e.g. transportation/roads, education/workforce skills).

Table 4. EOWC Economic Development Strategy Consultations
(key business priorities, n=142)
Access to capital/financing
Innovation services
Youth attraction and retention
Broadband/high-speed Internet
Workforce skills/education
Advocacy with higher levels of government
Transportation infrastructure
Facilities for start ups/incubators
Workforce pool expansion

29. Supply: However, the ability of end users to deploy 2nd generation Internet applications depends on the availability of symmetric connections with sustained minimum service quality/speeds (of 5-20 Mbps range with low latency, depending on application). At the same time the rapid rise in the number of mobile devises in homes and places of work means that a larger number of end users are sharing fixed broadband links on the edge of the Internet. Legacy fixed and mobile broadband technologies (e.g. copper/DSL, cable, 3G) may be able to provide the necessary download speeds on a best effort basis, but are not designed to deliver the upload speeds or service quality guarantees required by 2nd generation of Internet applications. In the long term technological change to next generation fixed (FTTP) and mobile (4G) will be enable Canadians to meaningfully participate in the digital economy. Growing demand for mobile devices, applications, and network resources has led to significant investment in both fixed and mobile digital infrastructure, in Canada and around the world. While private sector incentives to deploy advanced fibre and wireless technologies closer to end user tend to be stronger in urban areas, lower population densities in rural areas limit the business case for investing in fixed network assets. In this Review of the basic service framework, we submit the Commission adopts a long term perspective that recognizes the importance of promoting basic Internet access services with policies that support efforts the adoption of next generation technologies required to meet Canadians’ rapidly growing demand for ultra-high speed and symmetric connectivity. Although the needs of Canadians that live and work in both urban and rural areas tend to be similar, market incentives for meeting their demand tend to be lower in relatively higher cost area.

30. Service standards: Demand for advanced applications, proliferation of connected devices, and the Eastern Ontario experience indicate that the Commissions’ current speed targets are both too low and too asymmetric to ensure that Canadians can participate meaningfully in the digital economy. For example, in terms of download speeds having multiple end users connected to a fixed access link degrades service quality, which is why EORN has increased download speeds of 10 Mbps to around 85% of the Region (see Part I of this intervention above). In terms of upload speeds, the 1 Mbps target speeds the Commission adopted in Telecommunications Regulatory Policy 2011-291 remains significantly below the 1.5 Mbps symmetric connectivity speeds recommended by the National Broadband Task Force (NBTF) in 2001. In terms of international competitiveness, the Commissions’ current upload and download target speeds continue to be substantially lower than those adopted in other high income countries, including U.S., the EU, and various countries in Asia. By adopting more ambitious service quality targets in this proceeding, the Commission could play a more active role in leading market expectations and motivating private providers to better meet the evolving telecommunications needs of Canadians. Such a federal regulatory strategy would support efforts by lower levels of government responsible for delivering social and economic infrastructure that ensures Canada develops a world class digital infrastructure.

The Commissions’ role regarding access to basic telecommunications services

31. Regulatory classification of broadband/high-speed connectivity: As a matter of fact, the convergence of traditional telecommunications and broadcasting to IP enabled networks has made access to reliable and affordable Internet connectivity of a high quality/speed the most basic telecommunications service Canadians require. As documented in Table 4 above, consultations in Eastern Ontario clearly indicate that broadband/high-speed connectivity is an essential element of the social and business infrastructure our stakeholders expect EOWC to prioritize and deliver. Recognizing this reality in the federal regulatory framework would help align the interests of federal policymakers with citizens, businesses, and the broader public sector trying to utilize a wide range of current and emerging over-the-top applications.

32. The digital divide: How the Commission chooses to define basic service standards in this proceeding may not matter that much for the 80% of Canadians living and working in urban settings where competition is feasible and incentives of private operators to invest in network capacity/quality might appear sufficient to the Commission. However, in rural Canada it is often imperative for lower level governments to take the lead in promoting private sector incentives to deliver access and transport facilities required for public sector consumption, residential access, and to retain/attract business, jobs, and visitors. To promote economic development and deliver public services, municipalities in Eastern Ontario simply have no option but to consider broadband Internet connectivity a public good, much like traditional public infrastructure goods such as roads, education, electricity, water, and healthcare. As in the case of traditional social and economic infrastructure also prone to under-investment and market failures, EOWC recognizes that fixed and mobile networks will require continued attention and upgrades in the future in areas such as Eastern Ontario where the business case for private provision can be weak (or non-existent) without some form of public policy intervention. While federal and provincial governments have tried to counteract this problem with targeted subsidies, establishing a sustainable funding mechanism at the federal level would support future efforts by lower levels government to increase the pace of progress in network development by stimulating private sector investments in essential telecommunications facilities. Such a decision would help reduce the scope of the urban-rural digital divide and the likelihood of achieving Canada’s statutory policy objectives as per Section 7(b) of the Telecommunications Act.

33. Technological and competitive neutrality: To ensure technological and competitive neutrality, we submit the Commission applies any basic service standard/obligation it chooses to adopt simply in terms of expected service quality and/or prices, without regard for the underlying platform technologies used in delivering the service. A technologically and competitively neutral basic services regime would minimize the likelihood that the policies the Commission adopts to promote rural infrastructure development interfere with the operations of market forces, as mandated under the 2006 Policy Direction. While both fixed and mobile connectivity should be included in the framework, due to their technological differences the Commission could specify higher standards for fixed than mobile connectivity.

34. Basic service obligations versus standards: Residents and households demand basic service standards that are substantially higher and more symmetric than the aspirational speed targets the Commission outlined in Telecommunications Regulatory Policy 2011-291. However, imposing a legally binding basic service obligation on service providers and returning to a variation of the traditional subsidy regime has certain drawbacks. The traditional model for financing fixed telephone networks in rural areas supported universal service obligations with a combination of price regulation and regulatory barriers to entry. Obliging operators to provide basic Internet connectivity services may require policymakers to offer the incumbents additional protections form competition, which would have adverse effects on consumers in both urban and rural areas. Furthermore, the market for Internet connectivity is complex and differentiated. This makes the market very information intensive to regulate and will require a significant expansion of technical and economic expertise in CRTC/Industry Canada. Even with sufficient information and public resources to implement any binding obligations in a credible manner, the differentiated and evolving nature of the market for Internet connectivity creates the risk of policy errors with a potentially unpredictable results in terms of consumer welfare and innovation incentives.

35. EOWC/EORN’s proposal: To balance the need to subsidize high cost areas and limit some of the undesirable features of the traditional funding model, we submit an alternative: The Commission and Industry Canada can establish a sustainable funding model that raises revenue from large operators that dominate low cost urban markets (in order not to distort competition and entry incentives), but instead of obliging these operators to serve rural Canada the cross-subsidies should be allocated to lower levels of government. This decentralized approach to the problem will ensure that the new subsidy regime does not become a barrier to investment and competition, while providing a sustainable source of infrastructure funds for increasing the pace of progress in network development in rural and remote communities prone to market failures. As evidence provided in Table 1 illustrated, municipal and regional administrations can also be more cost effective in identifying and addressing concerns about access and quality of connectivity than higher level of government. Due to their proximity to end users lower levels of government often have unique information about local concerns and emerging market failures, reducing the information problem associated with top-down regulatory models of the past. Requiring lower levels of government to employ open bidding processes and to impose open access obligations on providers that ultimately receive public subsidies would further enhance competition and investment incentives in under-served communities.

36. **** regulation: As the Commissions’ experience with wholesale regulation documents, regulating retail prices in a complex and fast evolving market such as Internet access would be indeed very challenging and prone to errors. Furthermore, some providers may respond to attempts by the Commission to impose pricing restrictions by simply reducing service quality levels they offer end users in markets with relatively limited competition. Such responses would not be in the interests of consumers in rural or urban Canada. It could also counteract attempts by the Commission to impose binding service quality standards or targets for the future. One way of engaging in price regulation that would minimizes these risks could be to extend the model the Commission employs in broadcasting for basic TV packages to the retail market for Internet access services (i.e. one basic package with a price/quality level specified by the CRTC). This would minimize the potential interference with market forces as end users will remain free to select from a variety of other packages on offer by the operators at price/quality combinations determined by supply and demand conditions in regional and local markets.

37. Action against providers for not achieving CRTC targets: While the CRTC stated that it will monitor progress towards achieving the speeds it specified in Telecom Regulatory Policy 2011-291, the service quality targets in the policy were constructed as aspirational goals, rather than a binding universal service mandate. Furthermore, in 2011-291 the Commission concluded “that it would not be appropriate at this time to establish a funding mechanism to subsidize the deployment of broadband Internet access services.” Unless there are specific funds that have been allocated via contractual arrangements to operators who have failed to reach their specific coverage and/or performance target commitments, then it is not clear what type of legal action the Commission can take regarding soft targets and unfunded mandate it adopted in Telecom Regulatory Policy 2011-291. Some entities that have received subsidies in the past and have failed to perform could be excluded from bidding processes for the subsidies in the future, but even this punishment might be counterproductive. Due the high degree of structural dominance, some of the entities that have not met the Commissions’ targets may be large incumbent operators that control essential access and transport facilities around the country. Some form of cooperation and participation by these entities is often required for addressing rural market failures. Consequently, it might be in the public interest to instead of allocating blame the Commission learns from the mistakes of the past by adopting more credible/harder performance targets for the future and institute a funding mechanism that ensures these targets are achieved. If certain parties have received public funds and have not delivered on their promises, the Commission and/or Industry Canada should use all legal means available to recover the subsidies and allocate them to the sustainable funding model of the future we hope is adopted at the conclusion of this proceeding.

38. Transport facilities: Although we do not have any specific comments with respect to issues relating to Northwestel’s territory, we have extended connectivity to many Northern and remote communities in **** Ontario. A lack of access to transport facilities has been one of the key challenges EOWC/EORN has had to solve in extending broadband access and improving speeds in Eastern Ontario. As in British Columbia, we have done so by providing strategic inducements to the incumbent to deploy new transport facilities, upgrade its capabilities, and open its local POPs to other providers willing to serve communities across the Region. Although this approach may not be appropriate everywhere, it has helped increase both investment and competition in Eastern Ontario (i.e. lower prices/higher service quality). For example, under certain conditions it might be economically efficient to build duplicate transport infrastructure that competes with that of the incumbent (e.g. if coverage and capacity of the existing network are limited, the operator does not commit to investments in under-served communities or to interconnect with third party access providers who are willing to invest in small and remote communities at a reasonable price, etc.).

Regulatory measures for basic telecommunications services

39. Changes to basic services obligations/objectives: Based on our mandate to advocate for the interests of citizens and other stakeholders in Eastern Ontario, as well as the evidence detailed above, the EOWC submits the Commission should incorporate broadband/high-speed Internet access services as part of the federal basic services framework. This reclassification would help align the federal regulatory framework with technological and economic reality created by the convergence of voice, video, broadcasting, and demand for relatively more network intensive 2nd generation personal and business Internet applications. With such a mandate the Commission would support efforts by lower levels of government to enhance private sector incentives to serve Canadians in under-served rural communities to participate fully in the digital economy.

40. Minimizing the costs of basic services standards/obligations: In imposing such an obligation and funding its implementation, it is imperative that the Commission considers the drawbacks of returning to particularly inefficient elements of the traditional cross-subsidy model for providing universal telephone access before the rise of the Internet. Obliging incumbent operators to extend access in high cost areas to specific service standards the Commission deems appropriate might create incentives to erect additional regulatory protections against competition and entry, which will have compensating negative implications in terms of consumer welfare in both urban and rural Canada. Furthermore, regulating retail prices and service quality levels of operators can be extremely information intensive and error prone. If the Commission chooses to engage in retail price and/or quality of service regulation, it might be best to adopt a minimalist approach by simply requiring providers to offer just one standardized/basic package that meets the price/quality combination the Commission considers appropriate. This will minimize potential interference with market forces as service providers can continue to offer packages with price/service quality combinations that vary from the basic service standard package as defined by the CRTC.

41. EOWC/EORN proposal: In order to create a sustainable funding mechanisms for addressing Canada’s digital divide (as mandated under Section 7(b) of the Telecommunications Act), while minimizing the potential that the revised basic services framework becomes a barrier to market forces and investment (as mandated under the 2006 Policy Direction), we recommend an alternative: Instead of channelling the subsidies to operators, the funding mechanism should be employed to support efforts by lower levels of government around the country to promote digital infrastructure development. Provinces and municipalities are responsible for delivering social and business infrastructure Canadians demand, giving them stronger incentives to ensure that any available funds are employed in a cost effective manner to achieve (or exceed) federal basic service obligations the Commission may choose to adopt in this matter. To ensure this the Commission and Industry Canada could then impose open bidding and open access obligations on any entities that are to receive public funds from the subsidy mechanism.

42. Fixed-mobile convergence: In order to minimize the potential of the new basic service framework to distort competition and technological change, it should be applied to both fixed and mobile connectivity regardless of the underlying technological platform. The Commission can set different service and price standard for a “basic” Internet access package on fixed and mobile networks, but both should be eligible for potential subsidies from the federal government. As detailed earlier, in rural communities such as Eastern Ontario coverage and capacity gaps in mobile infrastructure can be substantive and the business case for filling these gaps can be very weak (or non-existent). Increasing transport capacity and reducing its costs is also an important consideration in meeting growing demand by Canadians that live and work in relatively higher costs, and therefore should be eligible for potential subsidies.

43. Funding the obligations: To minimize the potential for the proposed regime to become a barrier to competition and entry, we submit that any funds should be collected from a relatively small number of very large providers in Canada. Specifically, there are three national fixed and mobile providers that continue to enjoy federal regulations that protect them from international competition and takeover attempts by activist investors. These protections allow the entities to generate supernormal returns and generate equity yields that are some of the highest in the world (due to relatively large revenues per user in urban Canada). Participation of operators with more than 90% of the retail market revenues of the Canadian market will be critical to building a sustainable cross-subsidy regime that support rural infrastructure investments in new technologies and capacity upgrades.

· By submitting this intervention we indicate our intent to become a party to this proceeding.
· We request to appear at the public hearing.
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� For example, 911 access on the Canadian side of the border remains problematic in certain areas due to a lack of coverage by Canadian carriers and U.S. towers picking up Canadian 911 calls. The consequent delays in the delivery of emergency care caused by this problem can have critical consequences and represent a particular concern for EOWC/EORN stakeholders.

� For a more detailed Regional social and economic see Appendix A, Eastern Ontario’s Economic Development Strategy, 2014. � HYPERLINK "" ��� � See e.g. Future Directions Report, 2002: � HYPERLINK "" ��� � See EOWC Annual Priorities (2009-2015): � HYPERLINK "" ���

� A review of wholesale access issues (CRTC 2015-551) was completed in December 2015. At the time this submission was prepared and approved by EOWC, a decision in the matter of wholesale access services by the CRTC had not been issued. Design of Canada’s wholesale access obligations to access and transport facilities are of critical importance of the ability of local communities to address market failures in rural areas such as Eastern Ontario.

� Preamble to the CRTC 2015-134 Notice of Hearing.
� See note 5.

� Rajabiun, R., & Middleton, C. A. (2013). Multilevel governance and broadband infrastructure development: Evidence from Canada. Telecommunications Policy, 37(9), 702-714. � HYPERLINK "" ��� � For an analysis of rural program design strategies that have helped extend access to 1st generation broadband see: Rajabiun, R., & Middleton, C. (2013). Rural Broadband Development in Canada’s Provinces: An Overview of Policy Approaches. The Journal of Rural and Community Development, 8(2), 7-22. � HYPERLINK "" ��� � See � HYPERLINK "" ��� , � HYPERLINK "" ���

� With direct investments in a province wide backbone in Alberta and using procurement guarantees in British Columbia. See note 11.

� For notable examples of municipalities that are leading Canada in promoting the development of next generation fiber networks see Olds Alberta (� HYPERLINK "" ���), where Internet connectivity speeds are around 10 times higher than the rest of Canada; see: � HYPERLINK "" ��� or Coquitlam Optical Network Corporation (QNet) in BC: � HYPERLINK "" ��� Incumbent operators with relatively older copper/DSL plants are also decommissioning them in some rural areas and deploying fiber. See eg. Bell Aliant: � HYPERLINK "" ��� Despite these efforts, it is important to point out that FTTP diffusion rates in Canada are 2 to 3 times lower than in the U.S. and 5-6 times lower than average for high income countries. See � HYPERLINK "" ��� � According to the latest comparable international statistics, FTTP diffusion in Canada is between 2 to 3 times lower than in the U.S. and 5 to 7 times below the OECD average. See � HYPERLINK "" ���� It is important to note that in 2001 the National Broadband Task Force (NBTF) recommended a symmetrical 1.5 Mbps target speed for broadband across the country, but this was not adopted by the federal governments in subsequent decision to define broadband connectivity. The 2001 targets proposed by NBTF in terms of upload speeds still remain higher than the 1 Mbps upload speed the Commission expects should be available to all Canadians. This partly explains why the 99% availability data point noted by the Commission in the Notice of this hearing.

� Depending on the costs and quality of service from broadband satellite providers, deploying fixed and/or hybrid fixed/wireless to very remote end users may not be justified as costs per HH covered increase sharply. Although higher income end users might be able pay for connecting themselves to available POPs or afford purchasing satellite connectivity at market prices, providing coverage for lower income communities in more remote locations will require increased commitment by the federal government to funding subsidized satellite and/or fixed wireless solutions designed for serving relatively remote and sparse communities (e.g. first nations and other remote communities across the Region).

� Cisco Visual Networking Index (VNI): Forecast and Methodology, 2014-2019. � HYPERLINK "" ��� , � � HYPERLINK "" ���

� For an analysis of the interplay between fixed and wireless networks see: Kolydakis, N.; Tomkos, I., "A techno-economic evaluation of different strategies for front-/back-hauling of mobile traffic: Wireless versus fiber based solutions," 16th International Conference on Transparent Optical Networks (ICTON). doi: 10.1109/ICTON.2014.6876350� Eastern Ontario Wardens’ Caucus (EOWC), 2015 Priorities. Available at: � HYPERLINK "" ��� � As a letter to the CRTC by an Eastern Ontario resident who witnessed such an incident, dated 28 October 2013, indicated: “In the middle of an emergency when you get a 911 operator who doesn’t know where **** Ontario is, does it occur to you that you have reached 911. No.. You are too busy doing CPR.” � 1.5 Mbps symmetric connections.