Canada has relinquished the lead in connectivity, and other countries are developing national policies. Many are urging the government to get on the bandwagon.

Source: Ottawa Citizen

From his home in rural France, Taylor Reynolds can watch high-definition TV, make phone calls and even surf the web over one high-speed Internet connection.

The bundled services, which an increasing number of French residents are opting for every day, are thanks to a massively fast Internet connection coming into Reynolds' home. The connection, more than four times faster than what average Canadians have, costs him around $40 a month. Intense competition in the French market sees all of Reynold's entertainment and phone services, including world-wide long distance, included in that price.

"From here in France I can call Canada for free. Unlimited," he said. "To us that is a signal that something is going right with competition in France and others should be following that lead."

Reynolds is a telecommunications analyst with the Organization for Economic Co-operation and Development (OECD) and has been involved in a series of reports that call into question Canada's aging Internet infrastructure. Reynolds says Canada must do something to lower what are considered to be relatively high prices and sluggish speeds or miss out on the chance of participating in further innovation.

The next few months may tell the story. During the speech from the throne on Wednesday, the Conservative government laid out plans for several initiatives that could help spur upgrades to Canada's Internet infrastructure, including a digital economy strategy aimed at driving the adoption of new technology among Canadians, a cyber-security strategy and increasing competition among Internet providers by easing foreign ownership rules for telecommunications companies. More details about how the government plans to roll out these initiatives are expected to be announced later this year.

To many, the government's moves can't come a moment too soon. While Canada was once seen as a leader in high-speed Internet access and technologies, second to only South Korea in the early 2000s, the country's status has been steadily slipping and is now struggling to keep up with other nations around the world.

The issue of Canada's lagging Internet speeds comes at a time when numerous other countries, including the United States, are aggressively moving to ramp up the Internet connection speeds of residents. The Federal Communications Commission (FCC), the U.S. equivalent of the CRTC, will be tabling a national broadband Internet plan March 17 that will spell out how the U.S. will roll out faster Internet networks. One of the main requirements will be to provide for 100 Mbps services to at least 100 million Americans over the next decade.

However, for Google Inc., 10 years is too long to wait.

The Internet giant announced last month it would begin installing its own fibre-optic networks in communities across the U.S. in order to provide Gigabit speeds (1,000 Mbps) to Americans, a huge leap over what is being provided by the incumbent Internet providers today.

"They are throwing the gauntlet down to the Internet service providers. It (slow speeds) is hampering their business model," said Hélène Joncas, chief strategy officer at Canada's Advanced Research and Innovation Network (CANARIE). "This type of infrastructure is like roads. It needs to be there."

Canada, she said, cannot afford to be complacent because technology changes fast. The Internet has heightened international competition for jobs.

"If you think back to when the cellphone first came out, people were saying, 'Why would I want a cellphone?' "

Higher Internet speeds will redefine how people live, work, communicate and perform research in the coming years.

A recent study from Harvard University ranked Canada 19th out of the 30-member countries of the OECD when it comes to the Internet.

"Canada opened the decade as an extremely strong performer on broadband. Over the course of the decade its penetration rates have grown more slowly than those of other countries, its prices have remained high, and its speeds are low in comparison to other OECD (countries)," said the Harvard report.

"Canada continues to see itself as a high performer in broadband ... but current benchmarks suggest that this is no longer a realistic picture of its comparative performance on several relevant measures."

The average Canadian receives "high-speed" Internet connections of around 6 Megabits per second (Mbps), ranking Canada 38th out of 180 countries, according to Speedtest.net an Internet website that collects connection information from millions of visitors from around the globe on a monthly basis.

According to the website's reports, Leichtenstein, the United States, Singapore, Slovenia the Czech Republic and Latvia all rank higher than Canada when it comes to average connection speeds.

Those speeds are good enough for today's everyday tasks, such as checking e-mail and downloading movies and music. However, as more devices in a person's home share a single Internet connection those speeds become less acceptable.

The fastest Internet accounts in the world can be found in South Korea where the average citizen connects to the Internet at around 23 Mbps -- almost four times faster then the average Canadian.

Joncas argues that blazingly fast Internet connections are necessary to allow Canada to take advantage of the emerging digital economy.

"There are a lot of things that can be done but right now we are constrained by what (bandwidth) we have. So we reduce the innovation to suit what is available," she said. "That is the big problem. We need to open the tap and allow that innovation to happen."

"What do we stand to lose? Who knows?" said Joncas. "It's the opportunity cost of (seeing) innovation taking place in other regions because we don't have that. We stand to lose the evolution of an Apple or a Google or whatever."

To address the concerns of Canadian researchers that they wouldn't be able to collaborate on International projects, CANARIE offers 39,000 scientists access to a 10,000 Mbps (or 10 Gigabit) Internet connection.

The connection, funded by CANARIE, has seen some Canadian researchers jump to the front of the queue to perform research on ground-breaking projects such as the Large Hadron Collider (LHC) which aims to recreate the Big Bang in a controlled environment and NEPTUNE, a project to create a virtual Web-based environment for research purposes using data from instruments sitting on the ocean floor.

Joncas said while the CANARIE Network has been a success for researchers, it is limited to scientists.

Even under current loads, Canada's Internet networks are facing difficulty.

Internet providers such as Rogers and Bell have implemented highly controversial policies allowing "traffic shaping" or "bandwidth throttling." The networks reduce speeds to customers to lighten the loads on networks during peak hours. Companies are also using data caps on the amount of information a user can consume over a month.

There has been some movement by Canadian operators in recent months to introduce faster Internet connections to certain densely populated urban areas. Bell will begin rolling out fibre to the home (FTTH) in new Ontario home developments and in Quebec City, promising speeds of between 25 Mbps and 100 Mbps. Bell also said the faster Internet speeds would allow it to introduce TV over its Internet connections in certain Canadian cities.

Bell Aliant will offer Internet speeds up to 100 Mbps, to certain areas in New Brunswick over the coming year. Shaw, Rogers and Vidéotron have also announced various initiatives to push their advertised connection speeds up to 50 Mbps or higher in some markets. Shaw recently said it would begin tests of a 1 Gigabit (1,000 Mbps) network in April.

Still, the higher speeds are only available in certain locations across the country as the companies work to build out their networks. The new connections also come with much higher prices. Consumers will pay anywhere from $60 to $160 a month for the new offerings, prompting many to call for increased competition in Canada's Internet industry to speed up networks rollouts and lower the prices.

In a report last August, the OECD ranked Canada almost dead last, 28th out of 30, when it comes to the prices paid for Internet services. Only Mexico and Poland finished lower in the rankings then Canada did.

"They (incumbents) are really quite comfortable with how things are and are saying, 'Why rock the boat because we are really doing quite well. We don't need to go out and fight.'" said Iain Grant, managing director of telecommunications researcher the Seaboard Group.

"Their idea of competition is like (wrestling). The matches are fixed. ... I don't think it is a secret either. What we are finally getting is some speeds and the next crusade is the price."

The OECD believes a lack of serious competition in the high-speed Internet space is largely to blame for Canada's Internet woes.

Reynolds said France had similar problems to what Canada is facing until it ordered its incumbent telephone companies to open their networks to competition in 2006.

France went from having two national phone companies offering high-speed Internet to three, with the third spending $1.4 billion to pump up speeds on its networks to 20 Mbps and aggressively price its Internet offerings (around $23 per month).

"The competition in Canada hasn't been very strong from alternative DSL providers. Our prices were pretty much the same as they are in Canada. Then one company came in and they just lowballed everybody," Reynolds said.

The average connection speed for a French subscriber is 7.88 Mbps, almost 50 per cent higher than what Canadians are receiving. The country places 25th, 13 spots higher than Canada on Speedtest.net.

The OECD recommended immediately opening access to incumbent telephone carriers' fastest Internet offerings in order to spur competition in the space.

For its part, the Canadian Radio Television and telecommunications Commission (CRTC) has listened.

Last year the CRTC ruled incumbent telephone carriers must give competitors access to the same services they are providing their own customers. In other words, if Bell is offering a 100 Mbps Internet connection, it must lease its lines to competitors, at a fair price, so they can also offer the same service.

Incumbents, such as Bell, appealed the decision to the Conservative government, arguing that the CRTC put its investments at risk. They threatened to slow, if not stop, spending money to speed up Internet connections if the CRTC decision was upheld.

In December, the federal cabinet took the unusual step of asking the CRTC to re-evaluate the ruling. A new hearing will begin in May. A decision is expected by the end of the year.

At the core of the issue is the telephone line coming into a home. That line is owned by the local carrier, such as Bell. Many competitors have spent money to put their own fibre-optic networks in various communities across the country, but they still need access to the home. As it stands, incumbent telephone companies must lease the lines, at a CRTC-set rate, for slower-speed Internet services up to around 5 Mbps. There is no such requirement for higher-speed offerings.

Bell Canada has long taken issue with the OECD's Internet reports. The company questions the methodology used in the studies and claims that no other nation is like Canada, which has significant geographical challenges to overcome in order to roll out new networks. A Bell spokeswoman says the company is moving towards faster speeds, pointing particularly to its new Fibe service which will offer up to 25 Mbps downloads.

Bell plans to spend more than $3 billion on network upgrades this year. The company has installed enough fibre-optic cables to provide Fibe to more than three-million homes, a majority of which are in Toronto and Montreal. It also plans to begin rolling out fibre-optic cables to new homes in Ontario and Quebec and will start offering IPTV services (TV over a fast Internet connection) in select markets by the end of the year. The company has also recently launched a cross-country high-speed wireless network in partnership with Telus.

Julie Smithers, a spokeswoman for Bell, said, "Most other governments are significantly sponsoring broadband expansion and we are not seeing that in Canada. (Despite that) Canada is showing favourably and very strongly across the board."

© Ottawa Citizen