Toronto just approved a wild plan to build a public internet network priced lower than Bell or Rogers -- will it work?

Thestar.com
Feb. 8, 2021
Christine Dobby

Maize Blanchard pays Bell Canada $198.76 every month. She can easily tell you the precise figure -- slowly emphasizing each number -- because she has spent hours on the phone with the company trying to negotiate a lower price for her television and internet service.

Blanchard, who is 69 and lives alone in a one-bedroom apartment on Jane Street north of Finch Avenue West, gets by on a pension from Old Age Security. After paying close to $1,000 in rent, her Bell bill and other fixed expenses, she has about $300 left each month for food, medicine and everything else.

“Sometimes I get some help with groceries, but I didn’t last month. The food bank I volunteer with didn’t get much food,” she said. She’s considering switching to a cheaper internet service, but she relies on the fast connection she has now to stay in touch with her church community during the COVID-19 pandemic, attending meetings and teaching Sunday school over Zoom. “I keep telling Bell, I’m just a pensioner, I can’t continue to pay this amount of money. It’s not feasible.”

Jennifer Favorite, a PSW lives near one of the proposed pilot areas for the City of Toronto's new broadband internet project. 'The cost of internet is very heavy. It is,' Favorite said. 'And every time you turn around, they ask you to put up five dollars more.'

Just a few blocks away on Driftwood Avenue, Jennifer Favorite says she can manage her internet bill but she worries about neighbours with small children at home who can’t make it work. “It’s not easy. It’s not easy on me either, but I’m alone, my kids are grown,” said Favorite, 65, a personal support worker who runs her own business online. Both women are members of ACORN, an anti-poverty group that has been calling for more affordable internet.

“The cost of internet is very heavy. It is,” Favorite said. “And every time you turn around, they ask you to put up five dollars more.”

It’s stories like these that have prompted city staff in Toronto to recommend an audacious plan: the city should build its own high-speed broadband network.

Unlike in many rural areas and Indigenous communities, it’s not that Torontonians don’t have access to high-speed internet --the city is blanketed with fast connections. The cost is just too high for some, who either cut back on essentials like food or go without internet access.

If the city’s plan works, it would help residents in priority neighbourhoods get high-speed access without the high prices charged by Toronto’s two major internet providers, Bell and Rogers. The proposal calls for pilot projects in three low-income areas, Jane-Finch in North York and Malvern and the Golden Mile in Scarborough and Toronto’s chief technology officer Lawrence Eta said residents there could see service by the end of this year.

“There’s this notion out there that we have great internet. That’s great for those in certain economic brackets -- $70, $80, $100 a month to have very fast speeds is not an issue, right? But if you’re in parts of the community where you’re underserved and vulnerable, you’re not likely to be able to afford it,” Eta told the Star in an interview.

“We’re trying to ensure that the city has a strong voice and we’re not just leaving it to the private sector to dictate where they’re going to invest and which communities they go and serve,” he added, noting that there are some parts of the city without access to the fastest internet speeds. “To be transparent, we wouldn’t need to get into this space if access and affordability wasn’t an issue.”

What Eta wants to do is build a municipal broadband network, something that many communities across North America have done. The small town of Olds, Alberta, spent millions to build a non-profit fibre-optic network that offered gigabit speeds when it came online half a decade ago. (Fibre-optic technology sends communications signals over tiny strands of glass at the speed of light, much faster than older copper cable and telephone wires.)

In the U.S., many say the model of municipal broadband is Chattanooga, the fourth-largest city in Tennessee, where the electrical company started delivering gigabit speeds to the whole community in 2010, offering residents lower prices and more choice and attracting business and investment to the area.

“There are hundreds of municipal broadband programs now in the U.S. and they’re doing really, really well,” said Gigi Sohn, a distinguished fellow at the Georgetown Institute for Technology Law and Policy in Washington D.C. But there haven’t been any success stories in truly large urban centres, she added, noting that proposals in San Francisco, Seattle and Los Angeles have fizzled out. “In a lot of ways, the (city of Toronto’s plan) would be unprecedented to the extent that no big city has tried this yet.”

Elliot Noss, the chief executive officer of Tucows Inc., a Toronto-based company that operates fibre networks in almost a dozen U.S. towns, is skeptical about the city’s plans.

“Every city in North America has a problem with the digital divide,” Noss said, adding that well-meaning municipal broadband plans often end up providing subsidized network access to incumbent telephone and cable operators.

“Until I see more, it feels like magical thinking to me.”

For Eta, the magic is in “unlocking the value” in assets that are already at the city’s disposal. The proposal calls for the city to use existing public fibre-optic cables -- owned by entities such as the TTC, the Toronto Public Library, schools, the police or utilities -- to create a network that private-sector internet service providers (ISPs) would pay to tap into.

The city would have to build some additional fibre connections to neighbourhood hubs, such as community centres or libraries, and from there, the ISPs would build the “last-mile” connections to residents and businesses. Depending on their plan, they could use more fibre or other technologies, such as wireless connections, to hook up their customers.

The city’s network would connect to the backbone of the internet at connection points such as the Toronto Internet Exchange at 151 Front Street West, an unassuming midrise brick building that houses a major hub where communications companies from around the world link up and hand off traffic.

Eta says there are a number of players the city could work with, some of which are active in the telecom space but not household names. (BAI Communications, the company that built cellular and Wi-Fi access for Toronto’s subway system, said it is “enthusiastic to participate and invest” in the city plan.)

He said it is too soon to discuss pricing details but that private-sector partners selected to work with the city would have to include “equity, access and affordability” in their business plans.

There is also no overall budget for the project yet, but the staff proposal, which city council approved on Friday, will see the city spend $350,000 on a detailed plan and begin negotiating access to fibre assets to create its network

“If I was running a major city, this is the first thing I would be looking at doing,” said Christopher Mitchell, director of community broadband networks at the U.S. non-profit advocacy group Institute for Local Self-Reliance. He said many large metropolitan areas are sitting on kilometres of “dark fibre,” which are cables that have been laid in the ground -- often along major roads, transit or rail routes -- but are not being used.

Tucows’ Noss points out that the city would have been in a better position if it weren’t for the sale in 2008 of 400 km of fibre owned by Toronto Hydro Telecom to Cogeco Communications Inc. for $200-million.

Still, Eta, who joined the city three years ago, says Toronto has to do something to help struggling residents.

Two per cent of households in the city have no home internet connection and almost half cited cost as the reason, according to a report by the Ryerson Leadership Lab and Brookfield Institute for Innovation and Entrepreneurship. (The report, funded in part by the city, was based on a November survey of 2,500 residents and the authors said it is considered accurate within plus or minus 2 percentage points, 19 times out of 20.)

And cost causes anxiety even among those who do subscribe: More than half of survey respondents from low-income households, with annual incomes under $30,000, said they worry about being able to pay internet bills over the next few months.

“Toronto is Canada’s largest city, home to the fastest internet infrastructure in the country. People don’t think of it as having internet access issues,” said Sam Andrey, director of policy and research at the Ryerson Leadership Lab and one of the report’s authors. “But there are other barriers. Can people afford the service at the speed that they need, do they have the devices to connect, the confidence and skills to do so?”

Internet costs vary based on speeds and providers but for plans with download speeds of 50 megabits per second, Torontonians paid between $50 and $93 per month in 2018, according to the Canadian Radio-television and Telecommunications Commission. The CRTC says it wants all Canadians to have access to internet connections with speeds of at least 50 MBps, which allows for easy Netflix streaming and quick downloads, but can come under strain with multiple devices connected at the same time.

“Over one-third of residents in Toronto have speeds of less than 50 MBps,” said Mr. Andrey, noting that figure grows to more than 50 per cent for low-income households and seniors. “Those numbers were higher than I expected and I think they are indicative of a problem that still needs to be solved.”

“It’s surprising that a city as well connected and as well heeled as Toronto is trying to solve a problem that is directly within the domain of the CRTC,” said Matt Stein, CEO of Distributel. His company is part of a group of smaller ISPs that say the city’s problem is something that should have been solved long ago by federal regulations meant to spur competition and improve affordability.

The CRTC, which regulates the telecom industry, requires large cable and telephone companies to sell access to their networks to smaller players who then resell the service to retail customers. In 2019, the commission set new, lower rates for what the independent ISPs, players such as Distributel and TekSavvy, must pay for access.

Large telecoms revolted, with Bell threatening to cut back on rural investment and joining up with big cablecos, including Rogers, to launch a series of appeals in the courts, to federal cabinet and with the CRTC itself. Some small ISPs initially cut their retail prices, but had to raise them again when the new rates were put on hold amid the appeals. So far none of the appeals have succeeded, but the industry is still waiting for a new ruling on the issue from the CRTC.

“The last 10 years have been all about regulatory delay,” said Andy Kaplan-Myrth, vice-president of regulatory affairs at TekSavvy. “The longer (big telecoms) can delay it, the more they win. They maintain the high rates, they maintain a monopoly on high speeds, they create more uncertainty and they weaken competitors.”

Both Stein and Kaplan-Myrth said Toronto’s broadband proposal was interesting, but that they need more details to determine if their companies could partner with the city.

In response to questions for this story, Bell and Rogers emphasized investments they have made in Toronto’s internet coverage.

“Rogers high-speed internet is available to virtually all homes and businesses in the GTA … We are continuing to make significant investments to meet growing demand and continue providing reliable connectivity across all parts of the city,” said spokesperson Andrew Garas.

“Internet is a competitive market and we offer service plans to meet every budget.” said Bell’s Marc Choma, noting, “Bell has invested more than $1.5-billion to bring all-fibre connections to more than 1.1 million homes and businesses in Toronto, about 80 per cent of all locations in the city.”

The companies also pointed to voluntary charitable programs that offer $10-per-month internet to low-income Canadians who meet certain criteria.

A TekSavvy billboard on the side of a truck outside Toronto City Hall. The truck drove around downtown last week calling attention to the high prices of internet services in the city.

Eta, the city’s CTO, praised those programs and extra support the companies have provided during the pandemic, but noted that “donations are not a sustainable business model.”

And critics, such as ACORN, have argued those initiatives don’t serve all low-income people. Some requirements for the $10-per-month programs include living in subsidized housing or receiving the maximum Canada Child Benefit, which excludes seniors and single people.

ACORN has commended the city for its proposal and wants to see it include guaranteed access to $10-per-month programs for all low-income people plus free Wi-Fi in public spaces.

At a meeting of Toronto’s executive council in late January, Mayor John Tory lent his support to the proposal but also tried to temper expectations.

“There was a lot of mention about ‘free’ tonight and that is a big issue we’re going to have to come to grips with,” he said. “We have assets that we’ve already paid for that we’re going to use in this venture, which is what makes it attractive and exciting ... but none of this is going to be free. Somebody has to pay for it.”

Mitchell, who has worked on numerous municipal broadband projects in the U.S., says if Toronto goes ahead with its project, it will need to be very clear about what it is trying to achieve, which could range from better affordability to a more connected city, better prepared for the smart-city future.

“If the city doesn’t work very hard to shape public opinion about what success is, probably people will just evaluate success based on whether there are enough leases so it generates more revenue than it cost.”