Telecom Trends

Some wondering out loud today.

I wonder if the current system of supplier-side subsidies is working effectively to increase broadband adoption in Canada.

There is a higher cost per subscriber to provide services in less densely populated areas, but why does that necessarily translate into a requirement for an across the board subsidy from the government? It is as though the government initiatives for extending broadband begins with a premise that equates "rural" with "poor".

After all, many residents in unserved areas have made a conscious lifestyle choice to reside outside of an urban landscape. Fresh air, more land, fewer neighbours.

Rural residents read the store ads in the national papers and are envious of prices available to city dwellers. They are used to paying more for many staples, since there is often less competition; bread, lettuce, meat, appliances, among other essential items, often are cheaper in the city.

Still, many draw healthy salaries, and generally, rural residents tend to enjoy lower housing prices.

It is understandable that they would like to get a government subsidy for their broadband service. I would too.

But is it reasonable for government initiatives to focus on universal subsidies on the supply side? Such approaches risk anointing winners and creating losers, potentially precluding opportunities for competitive supply. And we are seeing hundreds of millions of dollars being spent without significant impact on broadband adoption.

Are the funds being spent effectively? Is there another way?

I wonder about a direct end-user incentive such as a broadband tax credit. Using the existing tax system, policy makers could apply the credit as broadly or focussed as they choose.

Perhaps the program could target lower income earners, regardless of where they live, offering $20 per month to connect to entry level broadband. Perhaps an additional amount would be available in rural areas. Maybe there could be a one-time credit to cover equipment installation - or even buying new computers.

Such an approach could create the right environment to encourage multiple service providers to enter more markets. This approach increases the pool of potential subscribers, rather than limiting the number of suppliers to a monopoly.

Such an incentive plan might fit other services like mobile phones or even a program to match Italy's approach to stimulate the conversion to digital TV. But those are subjects to be explored sometime in the future.

How will broadband figure in platforms for the next election?

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rural, broadband