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From the Globe and Mail

Canada's digital divide

Iain Marlow and Jacquie McNish - From Saturday's Globe and Mail - Apr. 03, 2010

As urban centres rush to build high-speed broadband networks to keep up with exploding demand, many rural regions are being left behind. Unreliable and expensive connections are costing outlying communities a shot at economic prosperity

Several times a day, Ian Conklin's idyllic business dream is interrupted by a beige cable the width of a small finger.

The nondescript bundle of coated wires is the very lifeline of his web design business. It connects him to customers across North America and employees in such far-flung locations as Serbia and Argentina, who constantly swap design proposals and other large computer files with him. The cable is meant to provide a high-speed Internet connection and is the reason that Mr. Conklin, 58, believed he could easily move his business from Vancouver three years ago to Olds, Alta., a town of 7,500 people that is an hour's drive north of Calgary.

His vision was a thriving modern business in a rural community that was close to his grown children and the area's verdant hiking trails and well-stocked fishing streams. The reality, however, is that his business is stalled several times a week when his broadband connection breaks down and he can't use the Internet. Lately, it has become so fragile that it seizes up several times a day, sometimes for hours.

Last Monday, his service conked out during a website presentation to a potential client who had flown in from Toronto. When he called his cable company, Shaw Communications Inc., he was told it might take two days to repair the connection.

“It was frustrating and embarrassing,” Mr. Conklin recalls. “In the web business, you can be anywhere. But you need a connection.”

Mr. Conklin's story is a familiar one in most of Canada's rural communities. As urban Canada races to build high-speed broadband networks to keep up with business and consumer demand for efficient communications, outlying regions are being left behind with slow, unreliable or costly connections.

This growing digital divide makes rural economic prosperity increasingly elusive. Canadians living in rural areas already have incomes well below their urban counterparts (14 per cent lower than the national average, according to a recent study that used earlier census data), and the earnings gap exists in every province. In areas that have an abundance of oil, potash or other key commodities demanded by the world's economic powers, fast Internet connections might not be so important, but for the rest, they're crucial to pulling in new employers. Communities that cannot plug into the high-speed digital economy cannot attract new businesses that rely on basic services such as electronic invoicing, Internet conferencing and large digital file transfers.

Rural towns and villages already devastated by the exodus of local manufacturers to lower-wage countries now face further economic marginalization if they don't build high-speed digital infrastructure. A report last year by the World Bank estimated that every 10-percentage-point increase in the availability of broadband boosted economic growth by 1.2 percentage points in developed countries. Better high-speed access may, in fact, be one of the tools Canada needs to improve its poor record of productivity growth.

The digital disparity has become such a concern that the CRTC has called for a public hearing in the fall to consider whether a new “regulatory framework” is necessary to “ensure all Canadians have access to affordable broadband service.” But the initiative provoked howls of outrage from the handful of major cable and telecom companies that dominate the industry. Executives at these companies argue that without huge government subsidies, they could never earn a profit building expensive wired connections to sparsely populated rural regions.

“It's a multibillion dollar challenge,” says Michael Hennessy, Telus's vice-president for government and regulatory affairs. “And there's no money in the federal treasury to fund such a challenge.” Indeed, Ottawa's $225-million contribution to building broadband networks to “underserved” regions is a pittance compared with the tens of billions of dollars spent on national digital programs in such countries as the United States, Britain, Australia and even such small economies as Portugal.

In the United States, for example, the Obama administration has already pledged an initial $7.2-billion (U.S.) to an ambitious broadband plan that some expect will cost as much as $30-billion. The plan calls for 100 million Americans to have access to super high speeds roughly 65 times faster than the traditional definition of “broadband.” It also offers an array of tax incentives for telecom corporations that upgrade their services.

Rob Faris, research director of Harvard University's Berkman Center for Internet and Society, says broadband Internet connections are “essential infrastructure for competitive nations.” Without access to these high-speed pipes, he says, communities “will be at a disadvantage.”

Private initiatives

Drive one hour outside most major Canadian cities and digital highways quickly turn to dirt roads filled with potholes. About 20 per cent of Canadians live in rural settings and about 60 per cent of those people have access to broadband services, primarily through satellite or wireless connections. Only a minority of these rural residents, however, actually use high-speed broadband because the services are typically too expensive or undependable.

“In rural Canada you click on a website, then get up and go the bathroom and hope that when you return the site is up,” says Christina Benty, mayor of Golden, a ski town of 4,300 in southeastern B.C. near the provincial boundary with Alberta. The town has become so frustrated with the slow Internet access that it is spending tens of thousands of dollars out of its own budget to begin building a local high-speed broadband network.

She says the upgrade is crucial for getting new businesses and residents. “When people choose where they want to live, they want to be connected,” she says.

Some of Canada's provinces have invested heavily in new rural networks, but the pace of expansion has been patchy and slow. A growing number of communities, such as Golden and Olds, are digging up the ground and laying the fibre optic cable themselves. It is a huge and risky gamble, but many believe it's necessary.

“We believe this is going to future-proof us,” says Joe Gustafson, a part-time pharmacist who helped spearhead a six-year campaign in Olds to raise millions of dollars in private investment for a fibre optic network. He says the initiative, which has received some money from the Alberta government, is crucial for attracting new businesses and professionals. “Then you'll have recreational facilities that are full. You'll have schools that are full.”

Although Canada was once ranked among the world's most advanced providers of cable and telephone line services, it has been surpassed by many other developed countries. Catherine Middleton, an associate professor at Ryerson University and a leading expert in broadband research, says innovation has been limited by Canada's small number of major telecommunications players, which include BCE Inc., Rogers Communications Inc., Telus Corp and Shaw. “They settled in a very comfortable kind of competition and they didn't innovate very much,” she says.

But telecom companies say satellite and wireless are the only economically viable technologies for delivering high-speed Internet into remote regions. However, each of these services have their limitations.

Satellite signals are available throughout most of Canada, but the service is often an expensive exercise in frustration. For simple tasks that don't consume a lot of data, such as e-mail, satellite is dependable. But streaming videos or downloading large files pushes up against strict download limits. Users who trip over the limit are typically penalized by having their access speed reduced for at least a day.

A few years ago, Andy Weilenmann invested $3,000 in a satellite dish to offer Internet access to the mostly foreign guests who stay at his small, four-cabin mountain resort near Golden. He pays $120 a month for the link, but it often shuts down because guests exceed his daily limit of 200 megabytes, the equivalent of downloading about 50 songs. “If you can't offer access to the Internet, people will not want to book rooms,” he says.

Wireless service also has its challenges. Toronto technology consultant Jim Samuel planned to work with global clients from his new home in Hastings County, Ont., when he and his wife moved there two years ago. The house was a dead zone, however, because wireless signals were blocked by 100-year-old maple trees. When Mr. Samuel, 60, needed to communicate with clients, he hopped into his car and drove 30 minutes to a parking lot in Belleville. Once there, he moved to the back of his car, plugged an Internet data stick into his laptop and began sending large files to clients as far away as Japan.

“I just kept working out of the car. I guess I was hoping the reception would improve,” he says.

When a carrier built a wireless tower closer to his home at the end of 2008, he discovered he had to dangle the data stick outside his window to connect to the Internet. And even when it worked, the service was much slower than city speeds. The problem contributed to his decision to eventually sell the house he and his wife hoped would be their retirement home.

A sign on the main street in downtown Olds, Alberta, advertises "rural high-speed" internet at a cafe. All will change come May, when the town of Olds is about to dig in and build their own fibre optic network.

Wireless woes

With no cohesive national strategy, new broadband networks have largely been left to the initiative of provinces, municipalities or ambitious, smaller private sector telecom companies. British Columbia, Ontario, Saskatchewan and some Maritime provinces have backed several broadband projects, but improvement has been slow and haphazard.

Some say this will soon change. Major telecommunications companies argue that wireless is the answer – and they say new networks will push wireless broadband coverage for more than 90 per cent of Canada's population. John Maduri, chief executive officer of Barrett Xplore Inc., Canada's largest rural provider of satellite and wireless service, says that with new satellites set to be launched in the next two years, both price and speed will improve. By 2012, Mr. Maduri says, “100 per cent of rural Canada will have access to urban-quality broadband.”

But many rural residents doubt such a vision is possible. In the country, they learn that Canada's vast and varied geography is too often an obstacle for wireless companies. And that in a fibre optic world, satellite will always leave them at a disadvantage.

For some communities, high-speed broadband is simply not going to happen without government support, such as the $110-million commitment Ottawa and the province of Ontario made to 13 rural counties and municipalities in eastern Ontario to build a high-speed network for 288,000 residents.

Brian Beaton hasn't been as lucky in the small outpost of Sioux Lookout, Ont., hundreds of kilometres north of Thunder Bay. He helps run a community development agency that provides Internet services to dozens of remote first nations communities that currently rely on satellite.

Mr. Beaton fears the communities are becoming even more disconnected as technology advances. He has been able to help attract some private sector interest to upgrade the satellite connections, but says the project can't proceed with out financial support from Industry Canada.

A decision from the department has been repeatedly delayed.

“We're out of sight, out of mind – and we get kept that way,” he says. New technologies would allow residents to access health services through video conferencing with doctors, instead of spending days flying out of their communities in a float plane for a simple check-up.

In Olds, Mr. Conklin has a similar idea. He says a new network would allow him and his international employees sketch ideas back and forth in real time, using a digital white board, something that is impossible right now. Faster connections would also spur his latest project: a portal that would allow small towns and businesses across the country to cheaply update their websites. If he can harness higher-speed connections to launch the business, it would translate into more jobs and business for the local economy.

“We would end up bringing project management, sales management – all of those types of people – into the town of Olds,” Mr. Conklin says. “I'm enthralled with the town of Olds. We've got a lot to offer.”

Broadband basics

Though it was among the first nations in the world to provide widespread broadband service to home customers, Canada is lagging other developed nations, according to a report by Harvard University. The broadband penetration rates are often lauded, but price and speed are given poor ratings. Canada also faces an urban-rural coverage gap.

The Harvard report has attracted some controversy. The big telecom players say it is based on outdated data that ignore multibillion-dollar investments. The authors, however, have repeatedly defended their findings.

Some typical Internet access speeds (in megabits per second, or Mbps) and costs:

Fixed wireless in rural areas

1.5 Mbps [...] $49 per month

3 Mbps [...] $65 per month

5 Mbps [...] $89 per month

Satellite in rural areas

1 Mbps [...] $70 per month

1.5 Mbps [...] $100+ per month

Cable in cities

10 Mbps [...] $47 per month

26 Mbps [...] $70 per month

50 Mbps [...] $100 per month

(“Broadband” speed generally refers to speeds 1.5 Mbps or higher)[-dotted-rule-]

Sources: Barrett Xplore, Rogers Communications Inc.

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