The Berkman Center’s final broadband report to the FCC – Next Generation Connectivity – was released this week. I’ve skipped right to the section on Canada (pp. 247-57) – and the news looks every bit as bad as it was in the first draft last October.
Canada’s broadband performance
(Final Berkman Report, p.247)
As the chart shows, the rankings are for the 30 OECD countries, but the data are from several different sources, including TeleGeography, Speedtest and Akamai. We also see Canada is in the lower quintiles on every metric except household penetration. As Berkman states (p.247): “Canada’s broadband penetration rates are often lauded, but the country is a poor performer on price and speed and a declining performer in penetration.”
Is broadband competition in Canada a dead duck?
The study suggests that both the CRTC and the Federal Cabinet have made several decisions in recent years that are favorable to the incumbents and harmful to new entrants. These decisions include pricing local loop unbundling in a way that has created the highest monthly rates for local loop access in the entire OECD:
“As of September 2008, for example, the monthly price of an unbundled local loop in Canada, excluding prices for remote areas or the most dense downtown areas, in terms of purchasing power parity, was roughly 70% higher than in South Korea and Denmark, almost 50% higher than in Italy, 30% higher than in Japan, France, or Norway, and 25% higher than in Finland or the UK” (p.255).
In some cases, the Commission has attempted to ease market entry burdens, only to have its decision overturned by Cabinet – as occurred with CRTC Telecom Decision 2008-117, in which the Commission chose to extend unbundling rules to fiber infrastructure, but was rebuffed by Cabinet in December 2009 (p.251). Berkman also cites the exercise of forbearance as a form of deregulation that has been a “victory” for Canada’s five broadband incumbents (p.252). In this particular case, dating back to 2007, the Commission said it would forebear from regulating telecommunications markets where at least two carriers provide service to 75% of residential customers. This isn’t exactly what I would describe as a promising threshold for vigorous competition.
In this report, the Berkman team says it has looked carefully at criticisms of its earlier work and claims to have rectified many slips of the pen:
“The primary changes between the original draft report and the final are: the inclusion of a new, extensive, formal literature review of the quantitative and qualitative literature on open access, in particular unbundling, and broadband performance and investment; expansion of the price and actual speed measurement benchmarking, as well as a slight refinement of assessing 3G growth; a new, compact review of the critiques of penetration per 100 measurements and responses to them that replaces the original focus on the density critique alone; new extensive case studies of the voluntary models of open access in the Netherlands and Switzerland; and a variety of discrete responses to useful comments we received on specific country studies” (p.8).
My question for Minister Clement: Does he feel that broadband deregulation, the market forces framework and the allocation of $225 million for connecting rural Canadians are together producing satisfactory results?