Canadians Deserve Better (Affordable) Internet

By: Darren Chu

Definitely Not in Kansas Anymore

The Internet market is perhaps not what you’d expect. Let’s go visit the Wizard and pull back the curtain, shall we?

To foster competition in the market, the Canadian Radio-television and Telecommunications Commission (CRTC) mandates that large incumbents, like Shaw and Telus, sell wholesale access to their networks to smaller competitive Internet Service Providers (ISPs), such as Q Wave. The incumbents, in turn, are expected to invest the wholesale revenues into infrastructure.

This market structure is important for consumers as competitive ISPs typically retail their Internet plans at more reasonable prices. Competitive retailers also offer a wider variety of Internet plans that encompass all types of Internet users, not just those who turn their noses down at 5 Mbps speeds.

In 2019, the CRTC drastically lowered the wholesale rates incumbents could charge smaller competitors for network access. Rates were to be reduced by as much as 72%! The CRTC's decision to push for more competitive wholesale high-speed access rates is incredibly vital for consumers.

Pay No Attention to the Telcos Behind the Curtain!

Despite having the curtain drawn back, many of the large incumbents are still pulling at the proverbial levers, and have appealed this decision. As a result, the reduced rates are currently on hold at the interim prices due to a Federal Court of Appeal decision. This means competitive retailers are operating at a disadvantage in the Internet market.

An example of the impacts of this can be seen in a recent decision made by TekSavvy, a competitive ISP, to post a price increase on its Internet plans amid the COVID-19 pandemic. According to TekSavvy, this decision was mainly due to the interim wholesale prices, which are forcing small retailers to maintain slim margins in order to provide customers with more choice.

This is especially pertinent at a time when customers are facing job losses, reduced income, and when internet access has become an essential part of everyday life.

Turning the “Titanic on a Dime”

Back in mid-March, the Government of Alberta ordered all K-12 schools to suspend classes and close to students. Teachers moved their classes online using programs such as Google Classrooms and Microsoft Teams to continue providing education to Alberta's students.

But it was not easy, and teachers maintain there are still problems with what they argue should not be called "online teaching." As one teacher put it, they turned the "Titanic on a dime" to help Alberta's approximately 741,802 students adjust to their new normal.

Now consider that this is only a single facet of Canada’s current situation. Businesses of all shapes and sizes are facing similar issues in their transition to a work-from-home model. Those who were able, scrambled to coordinate a virtual work experience for their staff.

As hard as this has been for the teachers and business owners who are breaking their backs trying to keep our education system and their organizations afloat, it has been immeasurably difficult for families who don't have access to reliable Internet. At the height of the pandemic, it wasn't uncommon to see stories about families who needed to ration their Internet usage so that parents and their children could continue to work and learn remotely.

This pandemic has revealed the massive economic disparity between those who can afford to be quarantined at home, and those who cannot - especially as it related to Internet access. This inequity has become a hot topic on social media and is best summarized by Sheldon Eakins, who stated in a recent professional development session, "If we're grading right now, we're grading privilege."

And the reason for this inequity? A lack of internet infrastructure in rural and remote areas, as well as large Internet Service Providers (ISP) who charge disproportionate rates for basic Internet access. We know the infrastructure required to support Internet access of any kind does not come cheap, but we also know that to leave rural customers without reliable Internet access is to exclude them from participating wholly in our (digital) society.

The current trend for large ISPs is shifting towards fibre optic services because they're newer, faster, and more attractive from a marketing perspective. Despite being the latest and greatest, these plans don't address the basic needs of many Albertans, namely those in rural and remote areas.

The Need for (Less) Speed

When it comes to internet speed, if you consider what the big ISPs are offering, it's overkill, plain and simple. Suppose your Internet needs for your small family include browsing social media, googling answers, and streaming Netflix. At most, you need 150 Mbps (megabits per second), but you could probably get away with 75 Mbps. With these speeds, you might be looking at plan prices between $50 and $65 a month.

Now imagine that your only choice is the fibre optic plan offered by an incumbent ISP, which has a minimum speed of 750 Mbps. This could run you over $100 a month. Why should you pay double the price for bandwidth you'll never use, especially at a time when every penny counts?

Here's an analogy to help. Think of your Internet speed and usage as a cup of coffee, where the cup represents the Internet plan you purchase, and the coffee inside the cup represents your actual Internet usage. It makes sense to buy a cup that is proportional to the amount of coffee you like to drink each day. If we apply this analogy to the large ISPs, you might only need a shot of espresso, but they're charging you for a venti latte.

The Digital Divide

According to the CRTC, roughly 16% of Canadian households do not have access to a broadband Internet connection that the federal government deems sufficient to engage in the modern digital economy (50 Mbps download and 10 Mbps upload).

In rural areas, that number rises to 60%. In many areas, residents rely on local schools and libraries to access the Internet.

In an attempt to close the digital divide, the Canadian Government committed $500 million by 2021 under their Connect to Innovate program. This program is focused on providing rural communities with the funds they need to invest in infrastructure and help them take advantage of the "opportunities afforded by the digital age." At present, the funding that has been allocated in Alberta has gone to local businesses, creating jobs and supporting local economies.

Moreover, in their 2019 budget, the Government of Canada promised an additional $5 billion to $6 billion for their Universal Broadband Fund (this is different from the CRTC’s Broadband Fund, in which they have also committed $750 million). Their goal is to ensure that by 2026, 95% of Canadian households will have access to speeds of 50 Mbps, and to reach 100% by 2030. But for many rural Canadians, this is too little too late. Ten years is a long time to wait especially in our “new normal”.

Without Internet access, small businesses are completely unable to participate and contribute to local economies, and it is highlighting the need to declare it an essential service; the pandemic has laid that bare and clear for all to see.

Here's How You Can Help

Speak up! Tell our federal leadership that you are tired of overpaying for Internet service, something that is quickly proving to be an essential service for both work and education.

Consider shopping local for your Internet services and supporting small businesses. In our last blog post, we examined how net neutrality keeps consumer choice at the forefront of our digital economy. Q Wave, and its parent company, Utility Network & Partners Inc. (UTILITYnet), are committed to providing customers with excellent customer service at great low prices from a small, family-owned business. By switching your Internet services to a competitive ISP, you are sending a clear message to the CRTC and the Government of Canada that the incumbents cannot maintain a monopoly on digital access.

At Q Wave, our focus is also to provide you with the information you need to make informed decisions about your utility services. We will never oversell you on Internet speed, and we don't hide our fees in oversimplified pricing schemes. Don't believe us? Read through some of our other blog posts where we explore the nuances of the Internet market and how we can help you keep more money in your pockets while supporting local businesses.

We are also partnered with several Energy Marketers in Alberta, each of whom has a unique story. By signing up with one of them for your electricity, natural gas, and Internet utilities, you are supporting local charities, funding local economies, and generating jobs for Albertans. Bundle all three services and you'll find yourself with more savings in these difficult times.