Why telecoms struggle to provide high-speed internet across Canada
Ron Compton from Utica, Ont. founded a telecommunications business near Uxbridge, Ont. in the 1970's, which was run by his family until five years ago when they decides to sell to Rogers Communications. While it was a largely successful business and one of the first in Canada to provide video-on-demand services, and high speed broadband internet, he says, "It's a big player market now." And a market that was untenable for a small business such as his own.
The experience has left him with an in-depth understanding of the telecommunications business and the challenges that will be addressed in the upcoming CRTC #TalkBroadband hearing on high-speed internet access for Canadians. Listen to his conversation with Checkup guest host Susan McReynolds:
ON HOW THE MARKET HAS CHANGED
There are a lot of comments or assumptions being made that Rogers and all the other large cable companies in Canada are rolling in money and I think this is a fallacy. They are challenged and it's one of the reasons that drove our family to sell. It's a big players market now. It's not just in Canada—it's worldwide. Rogers is challenged by much larger companies than they are. They have a real challenge on their hands. I think the assumption is that they're making a fortune and that they have all this money available and that they could be building internet services to people without any problem—it's not true.
ON THE CHALLENGE OF CANADA'S GEOGRAPHY
I think one of the mistakes people make is to compare internet service in Canada to countries like the U.S., or ones in Asia and Europe. The comparison is just not realistic. The geographical challenges that we face are much greater than those faced by Europe and in the U.S., where they have much more dense populations to subsidize the capital costs of putting plants in. In Canada we have a lot of real estate that falls between homes which means that we have a greater cost associated with putting capital assets into the ground or on the poles. We also have a much larger overhead in order to service these locations. There's simply no way that we could build plants economically and have a return on investment the same as you would see in these other countries.
But the other fact is both consumers and corporations have to be financially responsible. In order to have a service available, we have to pay for it—but it's how we pay for it that is the challenge. Currently in our own community here, the government has granted money under a program that's trying to encourage corporations to build plants in rural areas, and I think this is a wonderful thing that the government's attempting to do. The problem is is that they attach conditions to these grants, and these grants only represent five to ten per cent of the overall capital cost of building that plant out there. Consequently, people can't turn a profit or even break even to build these plants and start providing services to consumers in remote areas.
But somewhere between being financially responsible as a corporation and trying to execute the will of the government that says that all Canadians should have access to high-speed internet, there is a formula that will work. The secret to this is the governments and the service providers sitting down and talking about some kind of a strategy that will allow them to put something in place. That will put the services in the hands of the Canadians. If the government wants to see Canadians and Canada surge ahead in the industry in the world markets today, people should have access to good broadband services—that is one of the key components for the success of Canada. So it requires the government to ante up and start to look at programs that will help that to happen because they will get a return on their investment.
Ron Compton's and Susan McReynolds' comments have been edited and condensed. This online segment was prepared by Ayesha Barmania.