Telecom Trends

I was struck by a story about PEI's agreement to provide funding to Aliant to make broadband internet available to 100% of the residents of the island province.

The agreement calls for the provincial government to give Aliant $8.2M to help with the cost of serving areas that were presumably beyond the cost-effective reach of Aliant's network.

I think it is great that Canada will have a province with 100% broadband access.

But PEI may end up being a great case study of how our current approach to broadband access is leading citizens to the fountain without helping them find it worth taking a drink.

I started doing some arithmetic. According to recent Statistics Canada figures, there are about 50,000 households in the whole province. The most recent CRTC monitoring report [ pdf] indicates that PEI already enjoys among the highest broadband rankings in Canada with service available to about 95% of the households. The Monitoring Report also shows that PEI already had the highest level of availability of broadband in rural markets.

So that means that the $8.2M is actually going to subsidize making service available to fewer than 5000 households - a subsidy of more than $1800 each, assuming that every home will be reachable: the backgrounder to the press release indicates that Aliant is committing to providing service to any Islander who wants it.

In the announcement, the premier is quoted justifying the sole source procurement, saying that 25% of Islanders are without access to broadband service, seemingly contradicting CRTC numbers.

It is estimated that more than 25 percent of Islanders and rural businesses do not have access to high speed internet

An Aliant press release issued 6 years earlier that shows that even in 2002, 80% of the Island had access, which doesn't include any that might be covered by any of Aliant's competitors or continued investment in recent years. The numbers just don't jive.

Here is the real rub. Despite having some of the highest levels of access to broadband internet, PEI has the lowest adoption of service at only 43%. Well under half the people who could have broadband internet are finding it worth paying for. What is going on with PEI adoption rates?

Despite news reports that pricing in rural PEI will match the prices in what PEI considers to be urban areas, adoption rates seem to indicate that regular prices aren't good enough to get people excited about getting connected.

Using 2006 census data, we can see that PEI has a higher percentage of households (89%) receiving government transfers than the national average (84%). The average transfer per household ($8000) amounts to double the national average ($4000). As such, I wonder if the problem in PEI may be affordability.

Policy makers need to look beyond the raw numbers of people who have access to DSL or cable-based broadband. We need to be concerned about the affordability of service to lower income Canadians regardless of where they live.

PEI doesn't have as much of a problem with broadband access as it has with broadband adoption.

I think it is going to require a new approach to get Islanders to go online.

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Bell Aliant, PEI