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CRTC makes broadband a basic service

(Photo courtesy Canada Beef Inc.)

Gatineau | Reuters — Broadband internet access will be considered a basic service in Canada, the country’s telecom regulator said Wednesday, setting a higher target for download speeds and creating a fund that could see providers paying more to help meet those goals.

The Canadian Radio-television and Telecommunications Commission (CRTC) said it was establishing a new fund that providers will pay into that will invest $750 million over five years to build or upgrade broadband infrastructure with a focus on improving access in underserved areas.

Telecom companies with revenues of $10 million or more already contribute a percentage of their profits to subsidize basic phone services. Companies currently pay about 0.5 per cent of their telecom revenue.

Internet revenues, which are currently excluded, will now be included in the calculation of what companies have to pay for the new fund, potentially chipping away at an increasingly profitable area for providers.

With consumers moving to streaming services such as Netflix, offering internet access has become more lucrative for Canadian companies than offering television services.

Canadian telecom and cable companies made $9.81 billion in revenue from the supply of internet connections in 2015, outstripping the $8.92 billion companies made from cable, satellite and internet-enabled television subscriptions, the CRTC said in October.

The CRTC also set a download speed target of 50 megabits per second, well above its previous target of five megabits, and recommended providers offer an unlimited data option for fixed broadband. The regulator did not set a price cap.

In 2015, about 82 per cent of Canadians had access to internet at those speeds.

Providers that are not able to meet those targets will be able to apply for financing from the new fund, which will be run at arms’ length from the CRTC. Only those applying for funding will be obliged to meet the targets.

Applicants will be required to secure supplementary funding from the regional or federal government and put their own investment into the proposed project.

In its budget earlier this year, the Canadian government set aside up to $500 million over five years for improving broadband service in rural and remote communities.

— Reporting for Reuters by Leah Schnurr.

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