Tables and Figures - PIAC



866775-300990285753657602352675215265321183080645 -752475153035The “Affordable Access Coalition”Further Intervention Telecom Notice of Consultation CRTC 2015-134 (as amended) —Review of basic telecommunications services1 February 2016Table of Contents TOC \o "1-3" \h \z \u 1. Introduction & Executive Summary PAGEREF _Toc442104779 \h 1Tables and Figures PAGEREF _Toc442104780 \h 42. The AAC’s Main Proposals PAGEREF _Toc442104781 \h 7Obligation to Serve PAGEREF _Toc442104782 \h 7Basic Service Objective PAGEREF _Toc442104783 \h 8The BSO is a Universal Service Policy PAGEREF _Toc442104784 \h 8Which “Services” Should Be in the BSO PAGEREF _Toc442104785 \h 10Broadband Speed PAGEREF _Toc442104786 \h 10The “50-80” Rule PAGEREF _Toc442104787 \h 1110 Mbps Almost Meets the 50-80 Rule Today; Will Likely Achieve that Level Soon PAGEREF _Toc442104788 \h 12“Resellers” and the BSO PAGEREF _Toc442104789 \h 15How does the Broadband Deployment Funding Mechanism work? PAGEREF _Toc442104790 \h 16How does the Affordability Funding Mechanism work? PAGEREF _Toc442104791 \h 193. The Place of Voice service PAGEREF _Toc442104792 \h 22The ongoing importance of voice PAGEREF _Toc442104793 \h 224. The Essentiality of Broadband PAGEREF _Toc442104794 \h 26What is the “basic” level of broadband? PAGEREF _Toc442104795 \h 29From a user perspective, 5 Mbps is not enough to be considered “basic” PAGEREF _Toc442104796 \h 29Other Intervenors State 5 Mbps is Inadequate PAGEREF _Toc442104797 \h 36The use of broadband for entertainment does not diminish broadband’s essentiality PAGEREF _Toc442104798 \h 38The leadership role the CRTC must play PAGEREF _Toc442104799 \h 465. The Need for an Affordability Supplement PAGEREF _Toc442104800 \h 50PIAC Affordability Survey PAGEREF _Toc442104801 \h 52Low-income households highly value internet service PAGEREF _Toc442104802 \h 53Many low-income households face challenges affording communications services PAGEREF _Toc442104803 \h 55The Need for CRTC Intervention and the AFM PAGEREF _Toc442104804 \h 586. Internet adoption does not warrant CRTC intervention PAGEREF _Toc442104805 \h 61(i) How big a problem is adoption? PAGEREF _Toc442104806 \h 61(ii) Should the Commission prioritize addressing adoption? PAGEREF _Toc442104807 \h 65(iii) Does the Commission have jurisdiction to promote internet adoption? PAGEREF _Toc442104808 \h 677. Conclusion PAGEREF _Toc442104809 \h 68 Appendices: Appendix “A”: Detailed results from Environics Affordability SurveyAppendix “B”: Revised expert report of Edgardo Sepulveda: Funding support for low-income Canadians and for Broadband DeploymentAppendix “C”: Revised expert report of Edgardo Sepulveda, in “Track Changes” modeAppendix “D”: Underlying data for revised expert report of Edgardo SepulvedaAppendix “E”: Speed Advertisements by Major ISPsTables and FiguresTables TOC \h \z \c "Table" Table 1. Revised Costs of AAC’s Funding Mechanism Proposals PAGEREF _Toc442104810 \h 4Table 2. Residential internet service one-month subscriber distribution, by advertised download speed PAGEREF _Toc442104811 \h 13Table 3. How Low-Income Respondents Would Spend Monthly Subsidy – Detailed Breakdown PAGEREF _Toc442104812 \h 58Table 4 – Updated Details of AAC’s Proposed Affordability Funding Mechanism PAGEREF _Toc442104813 \h 59Table 5. Ontario Electricity Support Program’s Sliding Credit Scale PAGEREF _Toc442104814 \h 60Figures TOC \h \z \c "Figure" Figure 1. Percentage of Broadband Subscribers at 10 Mbps or Higher (Advertised Speeds) PAGEREF _Toc442104815 \h 14Figure 2. Ranked Importance of Various Household Expenses PAGEREF _Toc442104816 \h 54Figure 3. Monthly Communications Expenditures of Low-Income Respondents PAGEREF _Toc442104817 \h 55Figure 4. Low-income households’ reasons for not having desired communications services PAGEREF _Toc442104818 \h 57Figure 5. How low-income households would spend subsidy for communications services PAGEREF _Toc442104819 \h 57Figure 6. Main reasons why Canadians do not have internet service PAGEREF _Toc442104820 \h 62Figure 7. Greatest barriers to meaningful participation in digital economy: Municipalities PAGEREF _Toc442104821 \h 63Figure 8. McKinsey’s 4 Barriers to Adoption PAGEREF _Toc442104822 \h 641. Introduction & Executive SummaryThe Affordable Access Coalition (the “AAC”), which comprises 5 organizations, representing users of telecommunications services consumers, and the public interest, is pleased to provide the Canadian Radio-television and Telecommunications Commission (the “Commission” or “CRTC”) with this further intervention in the Review of basic telecommunications services proceeding.In TNC 2015-134, the Commission is examining “which telecommunications services Canadians require to participate meaningfully in the digital economy and the Commission’s role in ensuring the availability of affordable basic telecommunications services to all Canadians.”The two central issues in this proceeding are (i) whether or not all Canadians should have access to a baseline, “basic” level of broadband internet access service; and (ii) whether or not funding support is necessary to support access to basic telecommunications services.In its first intervention, the AAC reduced its position to nine key submissions: Broadband has become an essential telecommunications service, if not the essential telecommunications service. It is essential to individuals (of all ages), to households, to businesses, and to Canada’s competitive advantage. There should be no question that broadband should be recognized as an essential service which all Canadians should be able to access.Yet, not all Canadians are able to connect: availability and affordability barriers persist. Regarding availability, the AAC presented evidence that not all Canadians are able to access a “basic” level of broadband. Regarding affordability, the AAC presented evidence that telecommunications affordability is a challenge for low-income Canadians.Market forces and targeted government funding are not solving the problem. Areas exist where broadband services at a level needed are not available, and household communications expenses and prices have been generally increasing. Meanwhile, other jurisdictions have taken bold steps to connect their citizens and to address affordability barriers. The Commission now has the opportunity, and the duty, to do the same. The Commission should declare broadband to be a “basic” telecommunications service, and define broadband at an appropriately functional level. According to the “50-80 rule” the AAC articulated for defining the basic service objective, which is really a universal service objective, the “basic” level of broadband access should be at minimum 5 Mbps download speed. Typical Canadian households currently use and require anywhere from a 9 Mbps to a 26 Mbps connection, and demand and speeds are expected to continue to rise rapidly. To support broadband availability, the Commission should establish a new funding mechanism, the “Broadband Deployment Funding Mechanism”, financed through the existing National Contribution Fund, but modified to support broadband deployment. To support telecommunications affordability, the Commission should implement an affordability subsidy to support access by low-income households to the telecommunications services of their choosing from the service provider of their choosing. The AAC proposed, based on approaches taken elsewhere, an “Affordability Funding Mechanism”, financed through the existing but modified NCF, and capped annually.The Commission should monitor its “basics services” definition yearly, and take enforcement action in cases where timely progress toward availability and affordability goals fails.The AAC’s BSO proposals are designed to fulfil the basic needs of all Canadians to enable them to participate in digital society and the digital economy. To that end, the AAC proposed two funding support mechanisms to (i) close broadband availability gaps in certain areas; and (ii) enhance telecommunications affordability for low-income Canadians.Since its first intervention, a number of developments have taken place to further inform these positions: ACORN Testimonials: On 4 August 2015, 298 members of ACORN filed handwritten testimonials with the Commission, attesting to the importance of affordable internet access. The AAC highlights some of these in this further intervention.Federal Election: On 19 October 2015, the federal election brought in a new government, which changed the Department of Industry’s name to the Department of Innovation, Science and Economic Development (“ISED”). The Prime Minister of Canada informed the ISED Minister, in a mandate latter, that one of the Minister’s “top priorities” is to increase high-speed broadband coverage and work to support competition, choice and availability of services, and foster a strong investment environment for telecommunications services to keep Canada at the leading edge of the digital economy.The AAC believes the renaming of Industry Canada to have an innovation focus, and the Prime Minister’s emphasis on high-speed broadband coverage, strongly suggests that all Canadians should be able to access high-speed broadband, and that this is essential to Canada’s broader digital and economic aspirations. Latest “Communications Monitoring Report”: The Commission released its 2015 Communications Monitoring Report, providing more up to date information about the state of broadband connectivity, though not affordability. Highlights include: 77% of Canadian households currently subscribe to 5 Mbps the majority of households now subscribe to internet packages with speeds at or above 10 MbpsSpending on internet services grew 10% from 2013Internet access service prices are increasing at accelerated rates, compared to BDUs (cable, satellite, IPTV, pay television), telephone services (basic local service, long-distance, other options and features, installation and repairs), and the Consumer Price IndexAverage?number?of?gigabytes?downloaded?per?month?by?residential?subscribers?increased?from 45 GB to 67 GB => 49% increase from 2013-2014 Updates to expert evidence: New data came to light which allowed the AAC’s universal service expert, Edgardo Sepulveda, to revise his initial report detailing the two new funding mechanisms proposed by the AAC. The revised Sepulveda Report makes four main adjustments and a series of consequential changes to the Report submitted as Appendix B of AAC’s first intervention. These changes reflect inclusion of VRS (video relay service) funding costs, revised estimates of eligible households for the affordability funding mechanism, and new administrative cost estimates. The new data are then rolled into revised funding program cost estimates, which have been revised in summary as follows. It is important to emphasize that the overall cost of the existing and proposed funding mechanisms is not impacted by these adjustments. The revised Sepulveda Report is attached as Appendix “B” (for convenience, the AAC also includes the “compared” version relative to the July 2015 Sepulveda Report using the Track Changes feature of Microsoft Word software, as Appendix “C”), and the underlying data, in “Excel” format, is attached as Appendix “D”. The revised bottom-line costing of these proposals is depicted in Table 1.Table SEQ Table \* ARABIC 1. Revised Costs of AAC’s Funding Mechanism ProposalsAAC's proposed Funding Mechanisms and NCF Totals: July 2015 and Revised Sepulveda Reports(Annual averages over the 2017-2020 period, $ millions)Total of Existing & Proposed Funding Mechanisms, with “Baseline” version of AFMTotal of Existing & Proposed Funding Mechanisms, with “Ambitious” version of AFMJuly 2015SepulvedaReportRevisedSepulvedaReportJuly 2015SepulvedaReportRevisedSepulvedaReportExisting Wireline Subsidy$80 (cap)$80 (cap)$80 (cap)$80 (cap)Affordability Funding Mechanism:BaselineVersion$70 (cap)Subsidy: $63.1Subtotal$70 (cap)Admin. $6.1AmbitiousVersion$410 (cap)Subsidy: $383.7Subtotal$410 (cap)Admin.:$22.6Broadband Deployment Funding Mechanism$220 (cap)Subsidy: $183.3Subtotal$190 (cap)$220 (cap)Subsidy: $183.3Subtotal$190 (cap)Admin.: $6.7Admin.: $6.7VRS funding$30 (cap)$30 (cap)TOTAL$370 (cap)$370 (cap)$710 (cap)$710 (cap)Total as % of CTSRs0.74%0.74%1.42%1.42%Contribution rate under new NCF0.92%0.92%1.77%1.77%Two rounds of interrogatories. Interested parties had two opportunities to issue requests for information from other parties, generating a considerable record.Wholesale framework under attack. Bell Canada initiated a number of challenges to the Commission’s important decision in Telecom Regulatory Policy CRTC 2015-326 - Review of wholesale wireline services and associated policies. Wholesale access is an important issue that relates directly to the issue of broadband availability and telecommunications affordability. These challenges have not been ruled on at the time of this submission, and therefore there is uncertainty over the wholesale services regime.Having reviewed the considerable evidence on the record of this proceeding, as well as the AAC’s own research, for the purposes of this further intervention the AAC narrows its focus to three main submissions:The essentiality of broadband. Broadband, of at least 10 Mbps download, is an essential telecommunications service for Canadians, although a higher baseline speed will be necessary soon. A wide range of interests expressed this view. The 5 Mbps target established in 2011 is out of date and inadequate, as many other intervenors in this proceeding have indicated. It is irrelevant that broadband may be used to support consumption of “entertainment” services. The Commission did not second-guess the uses to which Canadians were putting telephone calls when it included voice telephony in the original basic service objective. Nor did it scrutinize the proportion of voice minutes spent on socializing or entertainment, versus the number of voice minutes spent by residential users on financial services or government services. The AAC’s conceptualization of the BSO, and the AAC’s “50-80” rule, avoids the problems of paternalism by defining a universal service objective not based on what the majority thinks the minority should be satisfied with, but by benchmarking the minority’s entitlement against what most in the majority have, consistent with the Commission’s recognition of the BSO as a universal service objective. By recognising broadband of at least 10 Mbps download speed as a basic telecommunications service and including broadband in the BSO, and by adopting the Broadband Deployment Funding Mechanism to support the delivery of basic broadband service to areas that are unserved, the Commission can ensure all Canadians, regardless of where they live, have access to broadband internet service.The need for an affordability supplement. Telecommunications affordability is a challenge for low-income Canadians. Evidence provided by the AAC in this intervention and in previous phases of this proceeding shows that communications services – notably broadband internet – are extremely important services for low-income users of telecommunications services. The low-income respondents to the Affordability Survey were generally unwilling to cancel any communications services—and where they did, usually cancelled television service or wireline phone. Low-income users of telecommunications services still struggle to afford their communications services expenses, regularly spending a much higher percentage of their household income on these services than the average Canadian household. Furthermore, many have had to cut other household expenses, travel to use outside resources such as food banks or public WiFi spaces, accumulate significant communications debt, or ultimately cancel services entirely. Therefore the AAC submits that the Commission, as the telecommunications regulator, can and should turn towards addressing the affordability challenges of low-income Canadians, a problem that will likely grow and intensify rather than diminish in the future. The AAC has proposed an Affordability Funding Mechanism which would provide eligible low-income households with either a $10.50 or $20.50 per month subsidy towards a telecommunications service of their choice. The Affordability Funding Mechanism will help ensure low-income users of telecommunications services can meaningfully participate in the digital economy.Internet adoption issues do not warrant Commission intervention. The AAC does not deny that adoption barriers, and more specifically digital illiteracy, is a valid concern, but questions (i) the scale of the problem; (ii) whether the Commission has the jurisdiction to address adoption directly; and (iii) whether the Commission is in any case the best placed to address adoption, or if it should be government and the education system. The AAC argues that broadband adoption is not a barrier to internet use warranting Commission intervention in this proceeding, and certainly not one that should be prioritized over access and affordability barriers, nor made a condition precedent to moving forward on these issues. The AAC’s Broadband Deployment Funding Mechanism and Affordability Funding Mechanism are workable, cost-limited mechanisms to support broadband availability and telecommunications affordability. Although the AAC expects this proceeding to focus mostly on broadband internet access, the AAC also takes the opportunity in this further intervention to explain how wireline voice service, while declining in popularity, nevertheless remains a vital telecommunications service for Canadians, and to oppose Bell Canada et al’s proposal for a rate increase in regulated high-cost serving areas.The AAC also notes that its legal views on the obligation to serve and the BSO, and its proposals for a Broadband Deployment Funding Mechanism and Affordability Funding Mechanism attracted a considerable amount of interest in both rounds of interrogatories, particularly the AAC’s legal positions on the obligation to serve, and its practical positions on how its two proposed funding mechanisms would be operationalized. The AAC therefore takes the opportunity in this further intervention before addressing its three main submissions, to consolidate its positions and summarize its funding mechanism proposals. 2. The AAC’s Main ProposalsUnderstandably, telecommunications service providers (“TSPs”) seek to understand the extent of the AAC’s proposals, so that they may assess their ability to comply with potentially new or enhanced requirements and funding obligations. The AAC also appreciates some apparent concern about non-facilities-based service providers being accountable for the delivery of a level of service when they do not control the underlying facilities. The AAC also appreciates that in a large and complex hearing like this one, the Commission may benefit from a concise restatement of the AAC’s position on key issues. Therefore, before the AAC sets out its main second round submissions, the AAC takes this chance to consolidate its positions on the key legal issues. The AAC also describes how its two funding mechanisms would be operationalized.Obligation to ServeThe AAC’s discussion of the obligation to serve invited a great deal of interest in the interrogatory phases of the current proceeding and in the previous BSO review proceeding in 2010.The AAC’s position is that all Canadian carriers bear an obligation to serve.Canadian carriers therefore have an obligation to provide service to all who request it along the carrier’s existing “service lines” or “supply lines”, terms which the AAC has explained it used in its first intervention as substitutes for the term “transmission facilities” – much like the Commission has used the phrases “existing facilities” and “where the ILEC has facilities” and “existing facilities or networks” in the context of discussing the obligation to serve.The obligation to serve applies to all Canadian carriers, which by definition under the Telecommunications Act, own or operate facilities. Type I and Type II competitive local exchange carriers therefore are “Canadian carriers” and bear an obligation to serve.Resellers (or, more properly, “non-facilities-based carriers”), since they are not Canadian carriers, generally have no obligation to serve.The obligation to serve can also be applied to any telecommunications service provider that accepts a franchise to deliver service in an area – such as pursuant to a winning bid in an auction seeking to deliver subsidized broadband. However, once that TSP has actually rolled out services in a franchise area, then by virtue of those facilities, that TSP will continue to have the obligation to serve along those service lines even after the formal franchise has ended.Basic Service ObjectiveThe AAC detailed its vision of the new BSO in its first intervention. The AAC takes this opportunity to expand that vision in this intervention.The BSO is a Universal Service PolicyThe BSO is an expression of a universal service policy for basic telecommunications service in Canada. The BSO represents the types of telecommunications services, and service quality levels, that all citizens should be able to access. Indeed this is the way the Commission itself characterizes the BSO.What is the basic service objective?The Commission established the basic service objective in 1999, which reflected the level of service available at that time to most Canadians. The basic service objective ensures that Canadians in all regions have access to affordable, high-quality telecommunications services. Currently, the basic service objective consists of the following:- Individual line local touch-tone service;- Capability to connect to the Internet via low-speed data transmission at local rates;- Access to the long distance network, operator/directory assistance services, enhanced calling features- and privacy protection features, emergency services, as well as voice message relay service; andA printed copy of the current local telephone directory upon request.Contrary to the positions of some intervenors, the Commission has consistently treated the BSO as a manifestation of a universal service obligation in Canada. In Telecom Decision CRTC 97-8, for example, the Commission stated that “support for universal access at affordable rates and, to the extent possible, competitive equity must be maintained.”In Telecom Decision CRTC 99-16, for example, the Commission stated The Commission's challenge is to establish a reasonable level of service and to determine how, in a competitive era, all Canadians may gain access to that service. To fulfil the requirements of the Act, the Commission must balance social policy objectives (for example, high quality, affordable service) with competitive ones (for example, minimizing subsidies). It must weigh the cost of any programs to improve service against the financial burden placed on those paying for these programs. This is especially important given the Commission's goal of ensuring affordable basic service. [emphasis added]In 2011, the Commission stated “the primary goal of the obligation to serve and the basic service objective is for all Canadians, regardless of where they reside, to have reasonable access to basic telecommunications services.”The AAC cites some the Commission’s other previous decisions here. In the AAC’s view it is settled that the BSO is a universal service objective.However, what services and standards are “in” the BSO, how the BSO is delivered (e.g., through regulation or market forces or a combination thereof), who must provide services at the BSO standard and how to encourage achievement of the BSO are issues up for discussion and debate in this proceeding.Which “Services” Should Be in the BSOIn the AAC’s view, the BSO should to be upgraded as follows. “Basic service” should be defined as a “high quality telecommunications network connection” that provides the functional equivalent of:Voice grade individual line local telephone service with touch-tone dialling, provided by a digital switch;Enhanced calling features, including access to emergency services, Voice Message Relay service, and privacy protection features;Video relay serviceAccess to operator and directory assistance services;Equal Access to the long distance network; Capability to connect via broadband transmission to the internet;A reasonable monthly data allotment for any such internet connection before additional charges are levied.On-demand access to residential directory listings should be maintained for those Canadians, particularly seniors or persons with disabilities, who may wish to or may need to use print directories.Broadband SpeedWhile the inclusion of broadband in the new BSO has been relatively uncontroversial, the subject of what broadband speed should be considered “basic” has engendered much debate.The AAC in its first intervention suggested that the current “basic” download speed is 10 Mbps, which will likely be 25 Mbps by 2020. Since that time, the Commission has released its 2015 Communications Monitoring Report (“CMR”) (based on 2014 data). This report and other developments worldwide and in Canada support the contention that the current or very near-future “basic” broadband speed is 10 Mbps.The AAC’s rationale for recommending the Commission set the BSO broadband basic speed level to 10 Mbps (download) is based in part on the legal test referred to as the 50-80 rule. The AAC notes some interest in this mechanism from other parties and takes this opportunity to explain the tool in more detail before outlining its rationale for the 10 Mbps download requirement.The “50-80” RuleIn the AAC’s first intervention the AAC articulated a test for determining whether a telecommunications service should be considered “basic” for the purposes of setting a regulated universal service objective: the “50-80” rule.The purpose of the 50-80 rule is of assistance in deciding what will become a “basic telecommunications service” and ultimately to define universal service.The 50-80 rule is inspired by approaches to universal service objective definitions in Europe and in the United States, and is in line with the Commission’s own description of the basic service objective as being reflective of “the level of service available […] to most Canadians.”The 50-80 rule applies to all “telecommunications services”, and would assist the Commission in determining when such services become “basic”, however those services may ultimately be defined by the Commission.The 50-80 rule considers a telecommunications service as “basic” for the purposes of determining required universal service if at least 50% of households subscribe to a service, and 80% of those subscribers do so at given speed or other measurable quality. The AAC does not believe it wise for the CRTC to use the 50-80 rule “in reverse”, for the purpose of removing the basic services designation from a particular service. The test is designed to help recognize when a service has passed a threshold of adoption where it has not previously been used as extensively. It does not take into account the reliance of individual customers on an historical service, nor does it take account of larger reliance on a legacy service by vulnerable populations.10 Mbps Almost Meets the 50-80 Rule Today; Will Likely Achieve that Level SoonAs noted above, the 50-80 rule states that a telecommunications service level is “basic”, for the purposes of determining universal service, if two conditions are met. First, that at least 50% of all households at a national level subscribe to a service, such as broadband internet. Second, that 80% of those subscribed households in turn subscribe to a particular level of service, such as a given speed of broadband. Broadband internet access at this specific speed represents a basic service under the 50-80 rule.According to data in the 2015 Communications Monitoring Report (“CMR”), 10 Mbps downstream is close to becoming a basic service in Canada under the 50-80 Rule. Moreover, 10 Mbps may in fact be a basic service by the time the Commission renders its decision, given the length of this proceeding, the number of issues the Commission must make determinations on, the additional time before a decision is rendered and the pace at which technology evolves.The 2015 CMR indicates that in 2014, approximately 77% of households in Canada subscribed to broadband internet service at a speed of 5 Mbps or higher. This means the first condition of the 50-80 rule is met, as at least 50% of households must subscribe to broadband (which the Commission considers to be 1.5 Mbps download and faster).Table 2. Residential internet service one-month subscriber distribution, by advertised download speedAdvertised download speed20102011201220132014Lite and wideband up to 256 Kbps0.30.40.30.30.2Wideband 300 to 1400 Kbps5.84.32.92.71.9Broadband1.5 to 4 Mbps24.224.618.27.33.75 to 9 Mbps45.345.641.332.826.910 to 15 Mbps22.415.610.125.625.616 Mbps and higher2.09.527.231.441.616 to 49 Mbps1.89.223.526.331.950 Mbps and higher0.20.33.65.09.8Total sample8,983.19,440.39,761.19,970.110,345.1To meet the second condition, 80% of broadband internet subscribers must subscribe to speeds of 10 Mbps or higher. Table 5.3.10 in the 2015 CMR shows the residential internet service subscriber distribution by advertised download speed.Totalling the percentages of 10 Mbps and up subscriptions gives a total of 67.2% of total subscribers. However, the table also includes subscribers to lite- and wideband internet, which must be removed from the calculation, since the rule is based on households subscribing to broadband alone. This results in 68.7% of total broadband subscribers (1.5 Mbps and up) who have subscribed to 10 Mbps or higher service. If one were to redefine broadband internet to mean exclusively speeds of 5 Mbps and higher, then the result would be 71.4%, falling short of, but approaching, the 80% mark.In the 2013 CMR, 38.9% of broadband subscribers were on plans of 10 Mbps or higher, using the same set of lite- and wideband-excluding calculations as above. In the 2014 CMR, that number rose to 58.8%. For ease of reference, the AAC reiterates that the 2015 CMR (and once again, the AAC notes, based on 2014 data) indicates that 68.7% of broadband-subscribed households subscribed to 10 Mbps or higher service. This number is expected to continue rising rapidly as both users and technological necessity demand faster and faster speeds. Consequently, the AAC expects 10 Mbps to fulfil both conditions of the 50-80 rule within the next 1-2 years and thus to constitute the baseline for broadband basic service in Canada. Also, in light of the AAC’s research in the first intervention round and in light of the 2015 CMR data, the AAC believes that broadband availability gaps at the 10 Mbps level of broadband service (and even the 5 Mbps level) will persist, and therefore that the AAC’s Broadband Deployment Funding Mechanism is a workable, cost-limited mechanism to address those availability gaps.Figure 1. Percentage of Broadband Subscribers at 10 Mbps or Higher (Advertised Speeds)Additionally, if the CMR data for residential broadband subscriber distribution in the 5-9 Mbps category were broken down, it may be possible that the number of subscriptions to plans with minimum 6, 7, 8, or 9 Mbps already crosses the 80% threshold, thereby meeting the 50-80 rule and constituting basic service. In any case, the AAC submits that the Commission should still decide in this proceeding that 10 Mbps broadband is a basic service, in order to make a forward-looking determination that will prevent setting an out-of-date threshold speed as an initial requirement, which may worsen in the considerable time between possible basic service objective (“BSO”) reviews.Nonetheless, several parties in this proceeding, including major internet service providers, have continued to argue that 5 Mbps service is all that is required to deliver “basic” service. The AAC therefore addresses below, in its submission on the “Essentiality of broadband”, whether 5 Mbps is enough to be considered “basic” from a user perspective. The AAC generally concludes, like many other intervenors, that it is not.“Resellers” and the BSOIn addition, some parties have sought to divine which TSPs should be required to offer the new BSO as proposed by the AAC – with the implication that some “resellers” or non-facilities-based TSPs would somehow not be required to meet the new BSO.In the AAC’s submission, the Commission should take steps to ensure that Canadian local exchange carriers (“CLECs”) and resellers (that is, all TSPs) are accountable for delivering the BSO, and take steps to ensure that incumbents and other Canadian carriers play a supporting role in non-Canadian carriers’ delivery of the BSO. The AAC believes that this can be done through direct and indirect means. It can be accomplished directly via the Commission’s jurisdiction over Canadian carriers, including wholesale requirements, as well as via the new, direct jurisdiction granted by section 24.1 over persons other than Canadian carriers. Whereas in the past the Commission had indirectly regulated resellers by requiring Canadian carriers to impose certain contractual conditions on non-Canadian carrier telecommunications service providers, section 24.1 provides direct authority to impose the new BSO as a condition of service on “any person” offering telecommunications services (including non-facilities-based TSPs). Indirectly, the obligation placed on all telecommunications service providers to be capable of fulfilling the BSO should, the AAC believes, result in carriers who provide wholesale service upgrading their networks to deliver the BSO to end-users directly, and also through wholesale access to non-Canadian carrier telecommunications service providers, who can then provision their own customers at the new BSO level.Lastly, as the Commission redefines which “services” are in the BSO, the definition of the basic service objective in turn helps to define which parties should be required to deliver it. In Telecom Decision 99-16, basic service was defined, in essence, as wireline telephone service – and thus it logically applied to “local exchange carriers”. This time the BSO could be defined as “voice telephone” (including not only traditional wireline telephone service but also VoIP, wireless telephony and now Voice over LTE, or VoLTE) and broadband service – at the speed and quality mandated by the Commission. This change therefore implies that all TSPs delivering any form of voice service or broadband internet service should deliver the updated BSO, no matter their previous definition in relation to wireline voice services.How does the Broadband Deployment Funding Mechanism work?The purpose of the Broadband Deployment Funding Mechanism (“BDFM”) is to close broadband availability gaps in designated areas of Canada.The BDFM would supplement the current residential local wireline regime and the video relay service funding.Identifying broadband availability gaps is a function of defining “basic” broadband, and then mapping out or identifying areas where it is not available to Canadians. The former issue is addressed by AAC later in this submission. The latter issue requires the ongoing market analysis of broadband availability and other data. In this respect, the AAC expects that in addition to the currently available data from the CMR, the Commission will in time for the public hearing provide a more up-to-date portrait of broadband accessibility in Canada. The AAC believes based on research from its first intervention, and from the 2015 CMR, that broadband availability gaps persist at the 5 Mbps level, and moreso at the 10 Mbps level which the AAC argues should be considered “basic”.The BDFM is a workable, cost-limited mechanism to help service providers cover the uneconomic portion of their costs for deploying broadband to unserved and underserved Canadians at the level of basic service defined by the Commission.The BDFM would be instituted to provide subsidy funding to service providers to support the provisioning of basic broadband (as defined by the Commission in the BSO) in designated areas. The AAC has explained the operation of the BDFM, in detail, in its first intervention, including the initial Sepulveda Report, as well as in numerous interrogatory responses.In a nutshell, the BDFM works by expanding the NCF both in terms of the telecommunications revenues which go into it (the tax base, to use an analogy), and the contribution rate (the tax rate, to continue the analogy). Doing so results in average annual subsidy funding of $183.3 million per year over the 2017-2020 period. Administration costs are estimated to average $6.7 million per year over the same period. Overall, the BDFM is capped at $190 million per year over the 2017-2020 period.The BDFM could be administered via a third-party administrator (“3PA”) appointed by the Commission. The BDFM 3PA would carry out the ongoing market analysis and other work to identify the designated areas, and design the corresponding BDFM projects that would be awarded to service providers based on a minimum-subsidy auction approach. All telecommunications service providers would in principle be eligible to participate in the auction process and ultimately receive funding if successful. In any given BDFM project, the service provider recipient of the subsidy would be subject to specified service requirements. Telecommunications service provider participation in the BDFM auction process would in principle be voluntary.If a Canadian carrier offering circuit-switched voice services is required to upgrade its network to provide broadband internet service that satisfies the BSO, the Canadian carrier would be “eligible” to participate in the auction process. The Canadian carrier would not in any way automatically receive a subsidy simply to upgrade its facilities. It would have to enter the auction process and win to be subsidized. If it received no subsidy (for example, if another carrier were offering service at the new BSO level in an area or if another carrier “won” the auction for the area in question), then the Canadian carrier would nonetheless be required to upgrade systems, at its own expense, to the new BSO level. Presumably, this would be accomplished through a service improvement plan filed by the carrier and the Commission would allow/require a reasonable timeline to reach this level, given various factors including the difficulty of the upgrade and the need and rights of the customers to have service at the new basic service level. A TSP that is not serving a community can compete in any competitive auction process for a particular BDFM project that includes that community, as long as it meets the corresponding eligibility requirements established by the Commission or the 3PA.The subsidy amount for any BDFM project, including in situations of potential overlap between the current local subsidy regime and the BDFM, taking into account geographical considerations and the identity of the service provider(s) in question, would be market-determined and the result of a competitive bidding process based on a service provider’s subjective assessment of its own business case and the degree of competitiveness for the particular BDFM project in question. Among the eligibility criteria that the Commission may want to consider for TSPs to participate in a BDFM auction process is that a TSP can demonstrate that it can deliver the level of service required by the basic service objective and any other requirements established by the Commission or the 3PA. The retail prices could be included as a project parameter. From such eligible TSPs who participated in the corresponding competitive auction process, the subsidy will be made available to the TSP who offers the lowest subsidy.The type of project to be implemented under the BDFM, including infrastructure and services, its geographic location and geographic coverage/size, will depend on a number of project-specific steps and processes, as summarized in Section 3.6 of the initial Sepulveda Report, and as elaborated in response to interrogatories.Because the BSO and the standards required of telecommunications service providers would be subject to updating, the service providers competing for this particular BDFM project would be aware that they would also be required to upgrade their networks as a result of a revised BSO and that they would be compensated correspondingly. The BDFM would be capped annually, predictable, and stable, and they would be complementary to the operation of market forces and targeted government funding.How does the Affordability Funding Mechanism work?Taking inspiration from other jurisdictions’ approaches to improving telecommunications affordability, the AAC has proposed an Affordability Funding Mechanism (“AFM”).The AFM is designed to close the telecommunications affordability gap for low-income Canadians. Like the BDFM, the Affordability Funding Mechanism is workable and cost-limited.The AFM would supplement and be separate from the current local service subsidy (“LSR”) regime for local exchange service in High-Cost Serving Areas (“HCSAs”), and the video relay service (“VRS”) funding.The AAC’s proposed AFM would provide a monthly subsidy to designated low-income households which could be applied to any telecommunications service of their choosing, from any service provider of their choosing to best meet their household’s unique needs and circumstances. The AAC presented two versions of its AFM: the “baseline” and “ambitious” versions. The “baseline” subsidy is so-named since it represent the averages of subsidies of low-income subsidy programs in the USA, France and Spain. The “ambitious” subsidy is so-named since it matches the “best in class” low-income subsidy program, the combined federal and state Lifeline programs available in California. The “baseline” and “ambitious” versions of the AFM have different financial design objectives, which result in differences in the elements related to their overall cost. The “baseline” AFM would have a monthly subsidy of $10.50 available to about 1.390 million eligible households, for an annual capped cost of $70 million over the 2017-2020 period. The “ambitious” version would have a $20.50 subsidy to 2.888 million households and an annual capped cost of $410 million. These capped amounts include administration costs.The AFM should empower users of telecommunications services to make choices to best suit their communications needs. In theory, any telecommunications service could be eligible to be subject to the AFM subsidy, including residential fixed wireline, mobile wireless, or broadband service, or the Commission could designate specific services that would be eligible. In the AAC’s view, all telecommunications services should be eligible, in light of the broad challenge of telecom affordability facing low-income Canadians, and in light of maximising their choice.The Affordability Funding Mechanism could be administered via a third-party administrator (“3PA”) established by the Commission. The AFM 3PA would verify participant eligibility, administer ongoing participation, liaise with service providers, among other tasks.Service provider participation in the AFM could in principle be voluntary. With the objective of encouraging service provider participation in the AFM, the corresponding eligibility criteria framework should be the minimum necessary to ensure the administration and implementation of the Affordability Funding Mechanism. Interested service providers would have to apply to the Commission to be designated as “eligible AFM service providers” to provide “eligible AFM services”. The CRTC could designate more than one service provider that would be eligible to receive funds from the AFM.Potential eligible households would have to apply to receive the AFM subsidy amount from the AFM 3PA. If the Commission were to adopt AFM designation processes, only “eligible AFM services” provided by “eligible AFM service providers” would be eligible for AFM funding.The AFM would be capped annually, predictable, and stable, and they would be complementary to the operation of market forces and targeted government funding.3. The Place of Voice serviceOn the subject of voice services, the AAC takes this opportunity to comment on (i) the ongoing importance of voice service note, and (ii) Bell Canada et al.’s proposals to allow residential rates to rise in regulated HCSAs in Bands E and F.The ongoing importance of voiceAs the AAC noted this in its first intervention of 14 July 2015, wireline voice service, while declining in popularity, nevertheless remains a vital service for Canadians.The first Environics survey, submitted with the AAC’s first intervention, supports the conclusion that voice communication “continues to be a critical tool for Canadians, and one Canadians continue to support”. According to that survey, 85% of Canadians subscribe to a landline home telephone service, and 79% find it essential to have a telephone service at home. In addition, 92% of respondents agreed that “[a]ll Canadians should have access to either cell phone or landline telephone service no matter where they live in Canada,” while 96% agreed that “[b]asic home telephone service needs to be affordable for low-income Canadians”. What is more, Canadians believe in the essentiality of voice services to the extent that they are willing to put their money where their mouths are: 63% of respondents would willingly pay a small surcharge on their monthly phone bills to ensure that all Canadians have access to telephone service no matter where they live in Canada, as well as to ensure that low-income Canadians can afford basic home phone service. While use of traditional wireline voice services appears to be declining, according to the 2015 Communications Monitoring Report, the CMR also attributes this trend to the fact that Canadians are moving to mobile wireless services and/or Voice over Internet Protocol (VoIP) services, and simply accessing voice services through a different technology. Regarding the trend toward wireless substitution, and the use of mobile wireless for voice, Deloitte, a consultancy, notes that while overall mobile voice traffic has been increasing, while at the same time a growing proportion of mobile users are not using voice at all. Deloitte expects that the proportion of people making voice calls on their smartphones will continue to fall, as options to “communicate without speaking”, i.e., instant messaging via SMS messages, social networking, and via apps), and email, increasingly act as a substitute, if not total replacement, for voice calling, especially amongst younger demographics. However, this does not detract from the importance of traditional wireline voice services to those who have not migrated, particularly when it comes to being able to afford voice services. In the AAC’s second Environics survey, submitted with this further intervention, 39% of respondents found voice calls using a landline phone “barely affordable” or “totally unaffordable”, with 61% of respondents saying the same for conducting voice calls using a payphone. In the 2015 CMR, basic local telephone service is still the most affordable form of voice services, with prices ranging from $22-$41/month in urban communities and $21-$41/month in rural communities, depending on provider and province or territory. In comparison, mobile wireless services cost anywhere from $21-$35/month for introductory, low-usage plans (150 minutes voice service per month; no texting or internet data), and up to $35-$95/month for smartphone-level usage in urban communities. The same smartphone-level usage plans cost $50-$95/month in rural communities across the country.Lastly, the cost of plans designated “Level 2”, which would be closest to a traditional landline voice service (at least 450 minutes of voice service per month, with 300 texts and no internet data), ranges from $25-$49/month in urban communities, (CMR 239), compared to $33-$49/month in rural communities. All together, the evidence paints a picture of Canadians considering traditional (wireline and wireless) voice services both essential, for themselves as well as others, and the most affordable of currently available voice services, yet still unaffordable for many. This evidence points to the continued need to define voice service as a core aspect of the new BSO. It also supports the AAC’s call for a flexible affordability subsidy that can be applied toward any telecommunications service, including residential fixed wireline, mobile wireless, or broadband service.Bell’s request for a rate increaseThe AAC also takes this opportunity to comment on Bell’s proposal to allow residential rates to rise in regulated HCSAs in Bands E and F. The AAC opposes this proposal.As revealed in Bell’s response to Bell et al(AAC)14Aug15-6 TNC 2015-134, Bell has performed no cost studies, has performed no affordability studies and nonetheless quite baldly requests that the Commission raise ILEC rates in all HCSAs in all of Bands E and F to $37.29 (over 3 years). Bell’s proposed rate increase therefore attempts to reduce the subsidy in HCSAs on the backs of HCSA subscribers and compounds this error with an exhortation to the Commission to set rates with no evidence that the rate is just and reasonable – nor that it is affordable. Bell’s contention that the fact that the Commission has approved the rate of $37.29 in two Télébec Band E residential sub-bands is proof that that rate is just and reasonable for all HCSAs in Bands E and F is neither logical nor correct.Bell cites the example of the Commission’s decision in TRP 2011-291, which permitted the ILECs to generally raise rates in HCSAs to $30 (over 3 years). As Bell well knows, in that proceeding, Bell’s argument for the increase was that the Commission already had approved rates in some HCSAs that were above $30, and that this fact, along with the wide variance among rates in various HCSAs, meant that a rate of $30 both would not be the highest rate charged in a HCSA and would also help normalize rates across the country. In this proceeding, however, Bell is making the unjustified claim that the highest HCSA approved rate is per se just and reasonable for all HCSAs. That is a different argument than that put forward in TNC 2010-43, which led to TRP 2011-291. TRP 2011-291 therefore does not support Bell’s contention that if a rate is “just and reasonable” in one HCSA that it is just and reasonable in another. As Bell notes, the average retail rate used for subsidy calculations in Bands E and F presently ranges from $30.86 to $32.14. This is a much more defensible baseline range for a just and reasonable rate for all HCSAs in these bands going forward than one single high-water mark – unless and until proper costs studies and a hearing on these rates could be performed.Subscribers should not be the ones to pay for a fear of regulatory complexity or for “shortcuts” in rate-setting. The Commission’s duty under subsection 27(1) of the Telecommunications Act is to make all rates just and reasonable. Simply because a rate-setting exercise would require the filing of cost studies and an eventual proceeding does not remove the Commission’s duty to set a just and reasonable rate. Although the Commission may adopt any method to set rates under subsection 27(5), it may not “do nothing” and declare a proposed rate is just and reasonable. That is not a “method” of determination.However, Bell has “recommended” that the Commission not undertake cost studies and proceedings to determine the costs side of the rate-setting equation precisely as it would be “lengthy and contentious”. Instead Bell suggests that the Commission may set a just and reasonable rate based only on the “demand” side of the equation, and “focus on the rate component of the calculations to reduce the local voice service subsidy requirement and eliminate unjustified subsidies.” With respect, the question of the required and appropriate level of subsidies cannot be confused with the setting of just and reasonable rates. Rates must first be set and only then can the subsidy required be determined.Furthermore, the Commission should not ignore the telecommunications policy objectives in rate-setting. Bell’s proposal would call on the CRTC to avoid its duty to consider these objectives, as required by virtue of section 47, in particular, those found in subsections 7(a), 7(b) and 7(h). As noted in Ryan, Canadian Telecommunication Law and Regulation, at §604:In setting rates, the Commission is not restricted to economic considerations such as costs, investment, allowance for necessary working capital, rate of return, etc. and may have regard to other considerations which are part of its wider mandate under s. 7 of the Telecommunications Act.The AAC contends that in a proceeding such as the instant one, the Commission, in setting wide policy goals and implementing that policy in part by determining rates and subsidies, should have strong regard for the above-noted telecommunications policy objectives as it pursues the public interest in basic telecommunications service. The AAC contends that the Commission must have regard, as directed by section 47, to, in particular, subsection 7(b) that rates be set allow carriers to “render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas and in all regions of Canada.” [Emphasis added.] As noted, Bell has offered no evidence of the affordability of these proposed increases, either in Bell’s own territory or elsewhere. Bell’s proposed rate increases should therefore be rejected.4. The Essentiality of BroadbandIn its first intervention the AAC expressed its belief that there would not be much debate over the proposition that broadband has become an essential service, if not the essential telecommunications service, from the perspective of all Canadians. As it turns out, most if not all interveners consider that broadband internet access is an essential telecom service. Noted academic researchers specializing in telecommunications policy, such as Catherine Middleton, Dwayne Winseck, and Tamara Shepherd have affirmed “the general assumption within much academic and policy literature that digital connectivity is essential for Canadians to be able to participate fully in contemporary civic and social life”. Winseck lists effects such as individual and collective economic growth, access to education and information, social inclusion, enhanced civil rights and liberties, ameliorating inequality based on income and other grounds, and reliable emergency services as some of “the undoubted benefits of fast, affordable broadband access to the Internet”, while Middleton states that “the essential enabler of telecommunications services delivery is a high quality broadband network”. Both ILECs and cablecos, incumbents and competitors alike, have also acknowledged the essentiality of broadband internet. Cogeco submitted that “voice and broadband internet access services will continue to be the foundation for meaningful participation by Canadians in the digital economy in the foreseeable future,” while Rogers stated: It is self-evident to Rogers that broadband internet service is a basic telecom service that should be available to all Canadians. It is required by Canadians to access countless services including government and health services, educational services, business services and entertainment services. ... High-speed broadband internet access is a necessary prerequisite for Canadians to participate in the digital economy in a meaningful way...”Shaw indicated similarly: There is no question about the important role that telecommunications play in the lives of Canadians today. Telecommunications enable Canadians to participate in the digital economy and facilitate access to critical services, such as health care, education, government, public safety, and banking. We expect that role to only grow as our lives become increasingly digitized [footnote omitted]. According to TELUS Communications Company (“TELUS”), “broadband is undeniably a BTS [basic telecommunications service] in today’s digital economy,” and the Bell Companies state, “Broadband networks form the key underpinning of Canada's digital economy and their role is clearly important to Canadians.” “The Canadian Network Operators Consortium (“CNOC”) agrees: “Broadband Internet is firmly entrenched in the cultural and socio-economic fabric of Canada. Accordingly, CNOC submits that broadband internet should definitely be considered a basic telecommunications service going forward.”Civil society groups share similar views. The Canadian Federation of Agriculture relates that “access to broadband internet service has become an essential tool for primary agricultural producers in the modern economy”, while Cybera asserts: “Broadband Internet is an essential component for the prosperity of Canada’s digital economy going forward and must be considered a basic telecommunication service—as necessary as radio and telephone connections.” The First Mile Connectivity Consortium additionally notes that “[h]igh-speed, affordable broadband has...been described as a foundation stone of modern society [footnote omitted]”.The Elementary Teachers’ Federation of Ontario, advocating for free internet access for all Canadians, said this:Educators are increasingly relying on technology in the classroom. Student access to computers and the Internet is integral to daily learning activities, both at school and outside of school hours when students are expected to complete assignments and to conduct longer term research in higher grades. In elementary classrooms, students are increasingly doing group work that involves working collaboratively outside of school hours through the online platform Google docs. Students who can’t access the Internet at home are missing out on the extensive resources available to support their intellectual development. They are also cut off socially from the diverse network of online communications that has become the norm for today’s youth. Students whose families cannot afford to pay for Internet services are therefore at a considerable disadvantage on many levels. [Emphasis added]Lack of access to the Internet at home also means that parents don’t have the opportunity to participate in online learning with their children, an activity that can promote literacy and numeracy development and other skills.[…]Alternatives to home Internet access are not universally available. Students who live in remote and rural areas often do not have easy access to libraries or other locations that provide free Internet. While some may be able to compensate through cell phone usage, wireless costs are also prohibitive and therefore limit this option for many.Lastly, governmental bodies at all levels have commented on the essentiality of broadband internet to people in Canada. The Grand Council of the Crees and Cree Nation Government state, “When it comes to the public, broadband internet is a basic communications requirement,” while the Province of British Columbia points out, “What really matters is that quality, high capacity, low latency bandwidth needs to be ubiquitously available to serve and support the requirements of all Canadians, individually and collectively, as and when they so require.” The Federation of Canadian Municipalities asserts, “Broadband Internet access has become fundamental to modern life, and has the power to transform rural and northern Canada,” and the Government of Yukon submits that the Commission should now revise the definition of basic service to include high-speed or broadband internet access, which is arguably essential to the ability of Canadian homes and businesses to fully engage in the digital world, including not only the opportunities to participate in the global marketplace of goods and services on a competitive basis, but also to take full advantage of the education, government, and health services/applications that are, or will become available, as well as to fully exploit the potential to build and enhance their identities, communities, and culture....And that is not even to mention the high number of individuals who have contributed comments in recognition of how critical broadband internet is to their daily lives. The AAC could not agree more with the wide consensus demonstrated among interveners in this proceeding. It would defy common sense, and ignore reality, to conclude that broadband is not a basic telecommunications service.The more contentious issue is “What is level of broadband service is basic”? The AAC address this question next.What is the “basic” level of broadband?To answer the question the AAC has re-applied its “50-80” rule for defining the basic level of broadband that should be universally available, as described above. Doing so results in 10 Mbps very nearly being the “basic” level of broadband based on 2014 data (from the 2015 CMR), and the very strong likelihood that as of the date of hearing this proceeding by the Commission and almost certainly by the date of a decision, 10 Mbps will be used by 80% of broadband subscribers and thus be the “basic service” level suggested by the 50-80 rule.Of course, the Commission retains the discretion to determine the level of basic broadband service based on other factors than the 50-80 rule.However, as more fully described below, from a user perspective, the AAC submits that 5 Mbps (which is a level proposed by some major TSPs) is not likely to be sufficient for Canadians.From a user perspective, 5 Mbps is not enough to be considered “basic”The AAC submits that a 5 Mbps download speed is insufficient, from a user perspective, to be considered “basic” broadband service.In their July 14 intervention the AAC presented its own consumer needs analyses.Included in the AAC’s needs analysis was research from Nordicity and from the UK telecoms regulator, Ofcom, as well as from the Federation of Canadian Municipalities. The AAC believes those needs analyses are persuasive. The AAC also notes how the needs for northern Canadians were believed to be even higher than average Canadians. The research and analysis cited in the AAC’s first intervention is reproduced here for the record: Ofcom, the UK communications regulator, for example, has demonstrated how a household might need 10 Mbps as the “standard” level of broadband, and how the UK Government’s target of 2 Mbps set in 2009 was out of date.In a report commissioned by the Northern Communications Information Systems Working Group (“NCIS-WG”), Nordicity, a consultancy, identified 9 / 1.5 as the minimum recommended average target for the North, which should be achieved by 2019 “in order to meet projected consumer, business and government needs, while recognizing the constraints posed by the backbone infrastructure.In a report commissioned by the Federation of Canadian Municipalities, the authors concluded that “[t]he actual needs of these communities are the same as other, larger population centres.”In the AAC’s own research, a standard today per household ranges from 14.7 Mbps for a one-person household with a multitasking user, to 26.2 Mbps for a tech-savvy household consisting of three multi-tasking users.The AAC notes that some interveners would disagree with this assessment and maintain that 5 Mbps is sufficient as a level of basic service. However, the arguments given in support of this view largely fall short.To begin with, several parties urging inaction point to the fact that no one common internet application requires 5 Mbps to use. These parties include TELUS, Rogers, Bell, Quebecor, and Xplornet, some of whom rely on the application bandwidth diagram in the 2014 Communications Monitoring Report.However, the argument that because no one application requires over 5 Mbps, 5 Mbps thus suffices as a basic level of overall internet service, makes a number of unwarranted assumptions: that every household will have only 1 person who uses internet; that every person in a household will run little more than 1 basic application at a time; that the person has no disability that requires data-consuming assistive technology; or that the person may obtain internet access or the benefits of internet access elsewhere, for instance. Remove any one of these assumptions, such as a household full of roommates subscribing, one or more parents with children, or a person living in isolation due to age or disability, and the service providers’ claims that 5 Mbps is enough no longer holds. As the AAC’s sample needs analyses demonstrated, a conservative estimate of typical household usage calls for a minimum of 9 Mbps to 26 Mbps. The 2015 CMR also notes that in 2014, a full two-thirds of Canadian households subscribed to broadband speeds of 10 Mbps and higher. It is difficult to imagine that so many would subscribe to plans beyond 5 Mbps, given the considerable expense, unless they truly needed at minimum the level of service provided. Unlike the TSPs mentioned above, the Commission must be cognizant of the reality of users’ lives, and the distinction between what is possible in theory and what is in fact feasible or tenable on a practical, everyday basis. Sasktel argues that because essential public institutions such as schools, libraries, and hospitals “have the potential to reach beyond the 5/1 targets”, it is not necessary to ensure that people have access to the same in their own homes. Again, this displays a certain obliviousness to the daily reality of, in particular, those who make ends meet on particularly low incomes and are likely least able to afford yet most in need of the types of services and support that reliable, high-speed, high-quality broadband internet would provide. One only has to conduct a cursory read-through of the testimonials provided by ACORN members, several of which the AAC cites in this submission below, to understand this. Sasktel’s position also assumes that all low-income people, of all ages and other demographics, would have easy, sustained, or reliable access first to such public institutions, and then the actual computer terminals and connectivity, which is not necessarily the case.Bell submitted an expert report to support its claim that the FCC’s definition of broadband as 25 Mbps does not apply in the context of basic services, and that the Connect America Fund (“CAF”) applies a target of 4 Mbps download and 1 Mbps upload for service areas that already have it, with new build-outs obligated to reach 10 Mbps down / 1 Mbps up. However, the FCC made it clear that 10 Mbps is the new standard for minimum, basic service in the context of universal service: Throughout the universal service reform process, we have sought to ensure that all consumers “have access to . . . advanced telecommunications and information services” and benefit from the historic technology transitions that are transforming our nation’s communications services. This Report and Order continues down that path. We adopt several revisions to Connect America Phase II to account for changes in the marketplace since the USF/ICC Transformation Order was adopted. In particular, we revise the minimum speed requirement that recipients of high-cost universal service must offer. We find that it is in the public interest to require recipients of high-cost support subject to broadband performance obligations to serve fixed locations to provide at least a minimum broadband speed of 10 Mbps downstream [Emphasis added; footnotes omitted].The AAC submits that it is time for Canada to follow suit. Lastly, according to MTS Allstream, 5 Mbps is an appropriate level of basic service because:… with TRP 2011-291, the Commission has already set the appropriate benchmark of 5 Mbps download and 1 Mbps upload speeds (5:1) to enable this. As noted by the Commission in TRP 2011-291, a 5 Mbps download speed would allow several users in a household to use the Internet simultaneously, use voice over Internet Protocol services and other online services such as email and banking.The use of TRP 2011-291 by MTS Allstream or another TSP to support the position that 5 Mbps is adequate lacks merit, for the following reasons. First, the Commission decided that 5 Mbps sufficed in 2011. That was five years ago. For context, Udacity (a popular way to earn online “nanodegrees” in computer programming, software development, and data analysis), Lyft (rival to Uber), and Snapchat did not exist five years ago. Netflix had yet to venture into original programming, was still equally known as a DVD mailing service, and in fact had only just launched in Canada. Usage-based billing was still nascent as an unfortunately household term. As cited elsewhere in the AAC’s submission, a recent report by Deloitte explains:Over the past 20 years, data connectivity has progressed from serving a single device and a low-speed application, to serving multiple, ever more powerful devices. Demand for connectivity has evolved symbiotically: as faster speeds have become available, the range of applications supported has increased, and the viable number of devices per person has steadily risen.As average data connections get faster, we expect existing services to become steadily more bandwidth consumptive, new formerly unviable data-intensive services to launch, and new ‘data-gulping’ devices to come to market. Over time many data services have consumed an increasing quantity of bandwidth, rising in line with availability. … In addition to the bandwidth usage that is triggered by human activity, from video-on-demand to browsing, there is likely to be a growing volume of background data usage. Every additional device, from smartphones to smart lighting hubs, is likely to require online updates, be this for apps or for operating systems.Extrapolating from the 20 year-and-counting trend leads to the conclusion that what was appropriate in 2011 would not be appropriate for 2016 as a matter of course—let alone beyond 2016, as this proceeding is also meant to account for. Second, the AAC would like to emphasize the Commission’s statement in TRP 2011-291 that, whatever the specific speed chosen, the Commission considers that Canadians should have access to a broadband internet access service that allows several users in one household to use the World Wide Web…voice over Internet Protocol services, and other online services…over a single connection at the same time. With this type of access, users will be able to actively participate in online discussions, take advantage of many government services, and carry out research, to name just a few possible applications.This determination directly counters TELUS’s claim that a downstream speed of 5 Mbps as a basic standard is “arguably higher than it needs to be because...consumer demand for Internet applications can be shifted across time and location”. Moreover, TELUS’s suggestion is in any case an unrealistic condition to place on people, expecting parents to stay up late with a long day of work and childcare behind and ahead, or expecting young non-office workers to run home in the middle of the day to complete tasks online, for instance. In addition, this argument abandons many Canadians in difficult or abusive living situations that do not allow them to negotiate internet access shifts with others in the same household. The idea of “time-shifting” home internet usage, when assumed or imposed from the outside, is ignorant at best and self-serving at worst, and the Commission should reject this notion as such when determining an appropriate level of basic service. Third, some of the parties arguing for 5 Mbps now were not those advocating for a basic service of 5 Mbps in the proceeding leading to TRP 2011-291. Instead, they suggested that 1.5 Mbps was reasonable at the time, or a goal of 4 Mbps by 2020. Despite this, the Commission set a target of 5 Mbps, which the AAC and other intervenors have demonstrated is not meeting present-day needs. It stands to reason that current advocacy for 5 Mbps by the same parties, five years later, would be a corresponding underestimate of the real needs of people across Canada today.Fourth and lastly, the Commission in TRP 2011-291 set a target downstream speed of 5 Mbps after noting that[Canadians’] requirements for broadband speeds will grow, just as their requirements for the processing capacity of their computers have grown. What was an acceptable speed in one year will be regarded as slow a few years later. The Commission expects that Internet service providers will keep pace with these requirements. The Commission considers that the freedom to use communications media at reasonable rates will be a primary concern for all Canadians in the years ahead.The Commission arguably meant 5 Mbps to be a forward-looking standard, setting the achievement and review date for 2015. Common sense suggests that what was forward-looking in 2011 would not still be forward-looking in 2016, especially given the exponential rates of technological advancement. The Commission’s determination in this proceeding should not be a mere observation of what has already come to pass, but a determination for what the AAC expects will come to pass. Otherwise, this entire year-long proceeding may conclude with Canadians already behind.Leading ISPs’ Advertisements Belie a Belief in Higher Speed BroadbandThe AAC is not alone in this proceeding in arguing that 5 Mbps is insufficient.Several of the major TSPs who have proffered the 5 Mbps speed as “basic” broadband in this proceeding have effectively contradicted this viewpoint in other parts of their own submissions and more generally in their own advertising.Rogers has noted, for example, in its justification for its 25 Mbps goal for 2020, “In terms of the most commonly-subscribed speed tier of Internet service, speeds of between 5 and 9 Mbps download were the most common in 2010, whereas in 2014, service with speeds of 16 to 49 Mbps download had become the most common.” Despite the assertion of the British Columbia Broadband Association’s (“BCBA”) that 5 Mbps suffices, some of their members seem to indicate otherwise. Mascon, for instance, advertises its 25 Mbps plan as “most popular”, and deems its 10 Mbps plan, the lowest speed available, as “Perfect for 1 or 2 people browsing the internet, social media applications and sending/receiving email.” Certain other BCBA members appear to only offer 10 Mbps as their lowest plan. The AAC also notes the obvious conflict of interest engaged by being in a business of up-selling bigger and faster speeds yet arguing against the Commission mandating these speeds. It seems disingenuous at best to boast about 1GB service offerings in urban environments, and all that those connections can enable, on the one hand, and then tell the Commission that all of that is great, but not necessary.It also begs the question whether vertically integrated telecommunications service providers (those with media assets) are losing sight of their telecommunications function and responsibilities and instead giving more expression to their media and entertainment businesses.Vertically integrated TSPs appear to be attempting to have it both ways by telling the Commission one thing, then turning around and telling customers another, by going to market with advertising and public messaging such as the following (see illustrating screenshots of TSP websites in Appendix “E” – “Speed Advertisements by Major ISPs”: Bell advertises its 25 Mbps plan as “recommended”.Bell advises customers to “enjoy speeds of up to 50 Mbps so you can do everything you love to do online”.Rogers describes its 5 Mbps plan as “[u]ltra light” and fit for “occasional, basic” internet access.It is not until getting to Rogers’s 60 Mbps plan that customers have access to “smooth everyday surfing, streaming, downloads and apps”.Shaw mentions no streaming, downloading, or multimedia in what its 5 Mbps plan is “perfect” for. Customers must obtain 15 Mbps from Shaw to have an “[i]deal Internet plan for watching videos online together, uploading and downloading files, and staying connected”.TELUS, it appears, does not advertise plans on its website below 15 Mbps, and tells customers that this 15 Mbps plan is mostly “[f]or casual surfing and emailing”. Customers must obtain 50 Mbps, according to TELUS, if they want internet that is “[g]reat for streaming and gaming”. According to Videotron’s Internet Usage Estimate Tool, even the most ascetic level of internet usage—one person, mobile phone-only, watching one movie or TV show episode per week, never playing online games, video-calling friends and family less than one hour per week, and downloading only music, no movies—requires at least a 10 Mbps plan.Other Intervenors State 5 Mbps is InadequateMany other intervenors have indicated that 5 Mbps is inadequate speed to meet the needs of their constituents. The Federation of Canadian Municipalities (“FCM”), for example, submitted that 5 Mbps is “no longer sufficient to meet the minimum needs of Canadians”. It submitted a survey of its rural and remote members which indicated that the biggest barrier to participation in the digital economy is “Poor uploading and downloading speeds” (40%), followed by prices and access (each tied at 23%). The majority of FCM member—76%—surveyed also indicated that the CRTC’s current target uploading speed (1 Mbps) and downloading speed (5 Mbps) for 100% of Canadians by the end of 2015 is not sufficient to meet the minimum needs of your community: 23% indicated that the target should be at least 10 Mbps; 53% indicated that the target should be at least 25 Mbps. (15% of respondents said they were not familiar enough with the technology, but more importantly, only 9% indicated that 5 Mbps was sufficient. The Eastern Ontario Wardens Caucus and Eastern Ontario Regional Network state that “current basic broadband services speed targets (5 Mbps download/1 Mbps upload) are inadequate for enabling Canadians to participate meaningfully in the digital economy.” The First Mile Connectivity Consortium and Province of British Columbia echo this view, as does the Government of the Northwest Territories: “The GNWT does not believe the existing targets are adequate. Simply watching one high definition movie can in some cases require capacity well in excess of this amount as can a 7 or 8 person skype online group video session for online learning [footnotes omitted].” The Government of Yukon was already calling for a basic standard of 15 Mbps download two years ago, and Ontario’s Ministry of Economic Development, Employment and Infrastructure notes that a given use case by the Commission “would require a combined sustained data rate of 7.6 Mbps [footnote omitted].” According to Manitoba Keewatinowi Okimakanak Inc., their “preliminary view…is that these standards [5/1] do not reflect the reality of use in remote communities, or in other areas where there is a high ratio of users-to-connections to access service.”Similarly, Union des consommateurs writes: “Il est…certain que les objectifs de vitesse du Conseil, fixés actuellement à 5 mbps, ne conviennent plus pour permettre aux consommateurs d’avoir un accès efficient à toutes les fonctions novatrices du Web.”The technology adoption and research non-profit Cybera also stated, “The Commission’s current target speeds are no longer sufficient to accommodate Canadians’ demands for broadband,” citing significantly higher targets speeds in peer jurisdictions for comparison and calling for 25 Mbps.Indeed, the Forum for Research and Policy in Communications recommends 100 Mbps as a target speed, and Catherine Middleton, Canada Research Chair in Communication Technologies in the Information Society, rejects altogether the idea of a one-size-fits-all notion of externally imposed “reasonable use” of the internet that runs contrary to “develop[ing] a world-class communications system and encourag[ing] participation in the digital economy”. Taken as a whole, the message of the above-named interveners comes across loud and clear: 5 Mbps is not enough. The AAC expects that the CRTC’s Ekos survey and stakeholder focus groups will shed more light on the issue of whether 5 Mbps is a sufficient basic level of broadband service and will support our contention that Canadians consider that 5 Mbps has already been superseded by a general need for a higher speed. The use of broadband for entertainment does not diminish broadband’s essentialityThe wide-scale use of broadband for video and entertainment, which the AAC itself acknowledged in its first intervention, does not and should not diminish from the essentiality of broadband.The Commission did not second-guess the uses to which Canadians were putting telephone calls when it included voice telephony in the original basic service objective. Nor did it scrutinize the proportion of voice minutes spent on socializing or entertainment, versus the number of voice minutes spent by residential users on financial services or government services.Yet this is what some of the major internet service providers are inviting the Commission to do with submissions like these:Email and Web-browsing (and the plethora of activities and socio-economic contributions that can be achieved through web browsing and email) are the services most necessary to meaningfully participate in the digital economy. … We submit that although of interest from an entertainment perspective, high bandwidth applications and services are not necessary to participate in the digital economy. [O]nly wireline voice is an essential service and that access to Digital Economy Broadband Services is important, but not essential, for Canadians. A number of the popular Internet activities […] are most accurately characterized as satisfying the recreational and entertainment wants of Canadians rather than representing a basic use of the Internet that meets their basic telecommunications needs to actively engage in the digital economy. For example, downloading and streaming movies, television programming and music certainly allow individuals to be entertained through online services, but these do not rise to the level of being essential to the economic or social welfare of Canadians. In still other cases, it is not abundantly clear whether the popular services identified represent an individual’s basic use of the Internet because communications needs today can be met through other online or telecommunications tools. These include accessing the Internet to make telephone calls and engaging colleagues and friends through social networking sites. In addition, while banking, interacting with government websites and communicating through e-mail enhance the economic and social welfare of Canadians, watching movies and downloading music are properly characterized as discretionary. . . a synonym for which is non-essential.[W]hat Canadians expect they should be able to use the internet for would be much more expansive than what should be considered a basic service as a government supported pare those comments by certain internet service providers, with compelling comments such as the following testimonials on purposes of internet usage from individual members of ACORN located in different parts of Canada, extracted from the AAC’s filing of 4 August 2016: “As a single mother to a young child it can be very difficult to be bringing my daughter to government offices to receive internet access to search for work or when I am in school to be able to research information and study online. It is almost impossible to do so when she’s present. Online access @ home while my child sleeps would benefit me very much.”“The medical research I access is critically important as I have a health issue I must keep up to date on and my doctor sends me for the tests etc but does not have time to discuss in detail I want to keep up regarding the latest break-throughs and alternative therapies. I would feel more lost and worried without out more extensive information. Being able to email is very important as it keeps me connected to others and as I have this health issue right now it al-lows me to connect when I don't always have the energy to go out. I hate that sickening feeling of having to take money from other necessities to be able to have internet.”“Traveling on transit is difficult without bus route plans. The translink site is vital to me. Impossible to keep up to date on medical issues without access to the Internet. Need time to explore medical sites & do not have that time if using computers at the library. Getting up to date medical information is critical to surviving a chronic illness. Need prescription info, doctor info, medical conditions & services available, and what is covered by BC Medical Plan. I would not know all the services available to someone with a disability if I did not have the Internet.”“In Order Of Importance I use the internet for the following 1) Communication with my children's school 2) Government forms and information such as income tax and income assistance communication 3) Community events sign ups and contacting family and friends 4) bills, banking and shopping. In an effort to reduce costs and waste many offices will no longer communicate on paper. Even in the event that will, much longer wait times are expected for essential services handled by mail. This is often due to the fact that employees and resources are not allocated to handle paper communications when compared to online communication. This includes email messages, customers service and support and any forms to be filled out. To give an example of this My children's school WILL NOT OFFER the option of getting important notices on paper and will only communicate updates by email. I have no recourse in this matter and must have an email account I can check regularly. Without internet one cannot meet the expected level of communication will miss out on many opportunities. It would allow my family equal opportunity to access information communication and services. Its just that simple and important.”“Government forms (mostly for my sons autism funding), email (mostly his therapists, specialists and teachers), medical research, searching and downloading asd and learning apps for iPad. Keeping iPad updated, gathering pictures for PECS (communication program), ordering special needs equipment and resources. Without it mine and my sons lives are greatly limited and we are unable to access nessassary resources. Currently I have to go to the library for access when he's at preschool as he cant handle being in public and doesn't understand it's a quiet place.”“When I call THE NUMBER FOR CANADIAN GOVERNMENT THEY ALWAYS GIVE ME THE WEBSITE ACCESSS FIRST AND THEN THE PHONE NUMBER. LAST WEEK I WENT TO MY NEW WESTMINSTER OFFICE FOR HELP AND ALL THEY DID WAS GIVE ME AN ACCESS CODE FOR THE GOVT OF CANADA WEBSITE TO GET THE INFO MYSELF. It is important to me because I can't get information easily anymore unless I have access to the Internet. This includes information from Govt of Canada Offices. From phone numbers to my Doctors' offices to my Government of Canada, I'm expected to have a computer and have access to the Internet. When at my Govt of Canada New Westminster branch just 2 weeks ago they insisted they could not help me. I asked what they say to people who don't have a computer. Their answer was 'go to the library'. NOT 'we'll mail you what you need'.”“I work from home using the internet, so it's absolutely essential for my job. I also used it extensively for my university academics. It's also my primary form of communication between my family/friends who are not in the immediate area. In addition, as someone with a disability, the internet is essential in accessing disability supports. The internet is often the -only- contact point for companies and venues and I need that information to determine if they are accessible and/or can accomodate me. Also, things like paratransit bookings are often only done online. Also, Online access is pretty much the only way I have to find out if programs/sites/locations are wheelchair accessible. Even the yellow pages are now online, so my only method of finding phone numbers to contact them is through the in-ternet. In addition, as someone who works in an information field, the internet and information as a whole is integral to both my life and my work ethic.”“I am mostly homebound because of CFS/ME. I have an illness that most of my doctors know very little about. Online access is so important to me because I can connect with online patient support groups—most sufferers are too ill to leave their houses so we would never get to meet, share experiences, hold each other up on the worst days and keep each other informed about new research. It also helps me stay connected with my family and friends that I am otherwise iso-lated from. I need a lot of rest periods and Netflix allows me to be doing something without over-exerting myself.It is a distraction from my illness. I use it for online shopping (even just browsing local stores so that when we go to pick something up I know where it is so we don't have to walk as far which prevents me from having more severe symptoms). My husband is a computer programmer and he could work from home on days that I would need him to help with meals if our internet access was better (we have rural satellite internet). I am nothing but lucky that my husband has a high paying job. If something were to happen to him, high-speed internet would not be an option for me as I am unable to work and would be on ODSP. Every aspect of life (banking, renewing health cards, trying to find my way to doctor appointments without google maps) would be a struggle.”“Email is the most important. Jobs are won and lost in email conversations. I would say that checking email (now-a-days) is more important than having a phone line when applying for jobs. There is no way NOT to have Internet and not get a decent job. Also, what job takes resumes in person anymore without also sending an on-line resume as well?? Grocery stores, coffee shops, retail... It's all online. Also, Service Canada is all online now-a-days. Even Social Services is largely online. It's hard to think of any government service that ISN'T online. Even the CRA keeps asking me to sign up online! [...] Internet is more important than phones. For un-employed people or people with disabilities (like myself) it's mandatory. I honestly have not got a job without the Internet since 2003.”“Working full time, I do all my banking on line, check prices for groceries and any items we need at home. My nine years old gets most of her home work on line. We use translation a lot as we are not Canadian-born. It just saves so much time and money.” “Services bancaires (Tangerine, ma banque, ne permet le paiement de mes factures de gaz métro et Hydro-Québec que par internet. Recherche d'emploi. Magasinage des meilleurs prix. Services de la bibliothèque de Montréal. Recherche de ressources communautaires comme les banques de nourriture, services de santé, support pour problèmes de santé mentale, contactes avec amis et ma famille dans ma ville et ailleurs au Canada. Je consulte les services gouvernemen-taux: renseignements, imp?ts, emploi-québec, aide sociale, assurance emploi... C'est devenu indispensable. Ca fait quatre ans que je ne suis plus capable de me le payer à la maison car j'ai des prob-lèmes de santé mentale et je ne peux que travailler à temps partiel. Même en travaillant à temps plein, je ne suis pas sure de pouvoir me payer le service internet car j'ai mon prêt étudiant à rembourser. Je n'aurais pas à fréquenter les bibliothèques publiques et jongler leurs heures d'ouvertures dans mon horaire. Je pourrais faire des transactions bancaires et privées chez moi.” “I use the internet for e-mail—and Skype, because I can't afford a landline and the per-minute costs on my mobile phone are high—I use it for work, for entertainment, and my daughter uses it for schoolwork. It's a vital service. We're rural, and without it we would be quite cut off from the world. We also can't afford a newspaper subscription, and our entertainment budget is small, so an internet connection provides quite a large number of services.”“I work with a population that is low income most are on government assistance. this means that there is not room in their budget for internet and if they do choose to buy internet something else suffers. most of our client benefit from internet access for communication with out of province relatives, sending government forms, researching health concerns, a contact with the world when they are often isolated due to mental health and other trauma. it has become such a normal in most people lives that to exclude low income families puts them at a disadvantage on a daily bases. oh and I just thought now in our province they have put prenatal classes on line. if you do not have internet now you cannot get prenatal information.”When people such as the respondents above say that they need reliable internet access, they mean it; the testimonials below from the same 4 August 2015 filing were given in response to a question asking how internet access becoming affordable would affect the person’s life. The responses illustrate a number of sacrifices that low-income subscribers make in order to maintain even meager connectivity, including nutritional health, medication, retirement savings, getting out of debt, basic amenities, groceries, and heat: “I have a young baby and to have food for her is essential and sometimes i would have to cancel my services just to make it by, Rent is high enough, and i don't see why home phones and internet has to be high also. i had two emergencies for my daughter where i had to call 911 and i had to ask my next door neighbor to use their phone.”“I would eat better. I could use the extra income on any number of other budget categories such as food, and restaurants, savings, retirement, etc.”“I can at least buy the food I usually don't buy for my children and some new clothes which they need.” “I can pay off my debt.” “I would use the extra money for retirement savings.” “I would be able to afford more food during the month (meaning that I wouldn't have to ration food for the last two weeks). I would also be able to afford to buy things like new clothes or shoes when I am in need, instead of waiting for a special occasion.”“I would be healthy as I would be able to afford proper nutritious food. Imperative for good health especially for the brain as I have a Brain Injury. I may also be able to better afford medications, that money is now going for internet…which is for brain function substitution, since mine is broken. To be able to get the basics of life like able to track medical items..It should not mean that you cannot have adequate food or medicine.”“I would eat less hard boiled eggs, bread etc. My diet would be a healthy one and I would not be on high blood pressure pills because of my nasty daily food intake at present.”“Food budget is the first target to squeeze some money out for expensive internet. I have 'No Budget' for recreation. I have no mobile phone. My rent exceeds $1,000/mo. after October 2015. Financial pressure is overwhelming. I try my best to manage my life with my closest friends—dogs, cat and small birds. I will protect my little friends with my best ability. They give me courage to live today and tomorrow. Financial hardship may cause termination of our lives all together. I must do my best until then.”“I could easily afford groceries, which is something I heavily budget and afford to buy other necessary products like supplies for my first aid kit, toilet paper, soap, shampoo, and other supplies for school projects. Since the province has cut all responsibly from how much my school will cost I am growing very concerned on being able to afford any of these things or even rent and still have internet.”“I would be able to afford to heat my apartment above 15 degrees Celsius in the winter, I would worry less about my food budget, I wouldn't have to exclusively shop second-hand.”“I wouldn't have to scrimp. I would be able to use the money I save for my barely affordable healthcare costs, which are rising at an alarming rate.” “I wouldn't have to worry about the mounting balance and interest on the credit card I use to pay for my internet service. We have the cheapest available service in our area, and it is slow and the usage cap doesn't allow for much -- quality service would mean a lot to us.” Members of ACORN also answered the question, “How do you feel about the current pricing of high-speed internet?” Many responded that they found high-speed internet pricing extremely high, but nevertheless paid for it out of need. In order to pay, respondents reported taking money out of their budgets for food, recreation, rent, and a number of other categories, such as clothes, medication, vitamins, and other necessities.While the term “basic” obviously connotes something at the lower end of the service availability spectrum, it must connote something that provides a level of acceptable functionality. The AAC’s conceptualization of the BSO avoids the problems of paternalism by defining a universal service objective not based on what the majority thinks the minority should be satisfied with, but by benchmarking the minority’s entitlement against what most in the majority have. The AAC’s conceptualization of the BSO is not about telling Canadians “you only need X because we think that’s what you should be happy with”, it is about saying “this is what most Canadians have, and it is important therefore that all Canadians should have it too”. Indeed this is how the Commission has characterized the BSO when it describes its origin as reflecting “the level of service available at the time to most Canadians”.The AAC does not expect that Canadians and representatives of other aspects of Canadian society will appreciate being told what is sufficient for them, or that they should be happy with a given speed given the great frustration expressed thus far by a number of other organizations about the lack of affordable, usable access to support their citizens.The Commission should ensure Canadians have access to affordable, reliable communications with enough download speed, upload speed and data allowance to meet their needs, as individual Canadians define those needs to be, rather than deciding for Canadians what applications are essential. It would be a mistake for the Commission, or for service providers, to decide on behalf of Canadians what applications and content Canadians should have access to.The AAC also notes that the Commission itself, from the outset, has taken a user-centric approach to defining “basic service”. In Review of regulatory framework, Decision 94-19 (16 September 1994), the Commission expressed the inescapable conclusion that technology will inevitably change what users considered to be essential, and how regulation must be flexible and responsive to that.Regulation must also be flexible and responsive to change, unencumbered by objectives based on static definitions of markets or services. In today's environment, even the definition of basic service is evolving and will vary depending on the perspective of the user. At one time, plain old telephone service (POTS) was synonymous with basic service; now, the demands of subscribers are so diverse that a POTS infrastructure would be woefully inadequate to serve the needs of most. Increasingly, those needs encompass custom calling features or call management services to protect privacy and to achieve desired efficiencies, such as those obtained through an enhanced ability to send and receive messages any time and anywhere. Moreover, computer communications, once considered enhanced or ancillary to the voice network, is now an essential building block of the public infrastructure, particularly as computers, modems and facsimile machines extend into the residence market and as home-based businesses grow in number. As a result of modernization of switching and signalling facilities, new and innovative services that expand choice and produce new revenues are being introduced. As interactive or transactional services become increasingly available, access to these and other information services may also come to be considered essential by many subscribers.In brief, telecommunications today transcends traditional boundaries and simple definition. It is an industry, a market and a means of doing business that encompasses a constantly evolving range of voice, data and video products and services. Telecommunications services range from basic access services connecting subscribers within a physical area, to multi-media applications where virtual communities that transcend geographic boundaries are created among users with common interests. It is this evolution of telecommunications that has given rise to visions of an information highway linking Canadians with each other and the world.In this context, the Commission notes that the Act contemplates the evolution of basic service by setting out as an objective the provision of reliable and affordable telecommunications, rather than merely affordable telephone service. [emphasis added]The AAC believes that it is appropriate in this proceeding to keep the focus on users of telecommunications services.The leadership role the CRTC must playThe Commission has appropriately consulted broadly on this important policy proceeding, most recently fielding an Ekos survey which appears to have had a large response rate from the public.One of the questions solicits respondents’ views about “whose responsibility it should be to ensure that a minimum standard of internet service is available to all Canadians, particularly in rural and remote areas.” The three possible response choices are as follows:1 - Some people say that ensuring a minimum standard is a fundamental need and it is up to governments to fund this directly.2 - Others say that it is the role of the?CRTC?to establish a fund (i.e. that telecommunications service providers contribute to) in order to provide this minimum standard.3 - Still others say that it is up to the telecommunications service providers to decide when to provide this minimum standard (i.e. market forces will dictate when there is a business case to do so).There is also a “Some combination of these” response choice which unfortunately does not specify what specific elements make up the combination. If the AAC were asked this question, however, the answer given would be “both 1 and 2”. Fortunately, as this is a CRTC proceeding, the Commission’s reference point is the Telecommunications Act, and the Act gives the CRTC direction and jurisdiction regarding what can be done with these answers.Three factors should drive the Commission’s thinking on funding of broadband. First, market forces can and indeed should dictate where there is a business case to serve broadband. But where the business case does not exist, and the majority of Canadians have ready access to an essential level of broadband service, while others do not, then the CRTC has the tool for the creation of a fund to support continuing access to basic telecommunications service (subs. 46.5 of the Act). In the AAC’s view, a careful consideration of the CRTC’s mandate under the Telecommunications Act suggests very strongly that the CRTC should act to set up a fund pursuant to s. 46.5 of the Act to promote the minimum standard for all Canadians in cases where market forces do not result in a business case for the provisioning of essential telecommunications services. Indeed, laying this groundwork would be both complementary to and inspirational to government initiatives, and consistent with the Government’s messaging thus far on the digital economy.Further, the AAC explained extensively in its first intervention (14 July 2015) the relevance of the telecommunications policy objectives, and how Commission intervention in support of broadband access and affordability supports fulfilment of the Canadian telecommunications policy objectives. As the AAC noted in AAC(CNOC)2Nov15-1, the AAC believes the Commission has from time to time recognized the need to gradually lead Canadians away from legacy technology, in that spirit. Telecom Decision 99-16, wherein the Commission defined the original basic service objective to include individual line service (with two- and four-party line service no longer being sufficient) and dial-up internet access, is an example where the Commission led the industry towards better service for more Canadians. A more recent example can be seen in Telecom Regulatory Policy CRTC 2015-326, where the Commission implied there was a need to transition users off of legacy technology, despite concerns by CNOC about stranding certain customers with certain preferences. The AAC believes the Commission has the jurisdiction, the justification and the tools to upgrade the BSO. If it remains as is, it will be almost meaningless.Regulators in numerous other jurisdictions are taking a leadership role and articulating a vision for their county’s telecommunications markets. Canada’s CRTC should do likewise. The AAC notes Deloitte’s prediction that by 2020, the majority of broadband connections will be Gbps service, up from about 5-10 Mbps currently, and that the majority of these connections (70%) will be residential.Deloitte explains the surge in Gbps service as follows: “The perceived reasoning for Gbit/s service will likely evolve from identifying a single application running on a single device that requires a gigantic pipe to meet the aggregate demand from dozens of connected devices in a home.” This is consistent with the AAC’s prediction that speeds and demand will increase rapidly. The Deloitte report additionally states that 30 Mbps-enabling FTTx technology was “the most common form of fixed internet access technology” by 2015. Not only will demand for speeds increase as a matter of course, but so will both active and passive (background) bandwidth consumption. If most internet users across Canada are not already at the point of high-speed, high-data, high-bandwidth consumption in meeting their everyday social, economic, and civic needs, then the AAC contends that they will be in short order and that the Commission can confidently anticipate it. The current proceeding is an opportunity for the Commission to ensure all Canadians, regardless of where they live, have access to broadband internet service, by recognising broadband of at least 10 Mbps download speed as a basic telecommunications service, and by adopting the Broadband Deployment Funding Mechanism to support the delivery of basic broadband service to areas that are unserved due to high costs. 5. The Need for an Affordability SupplementThe AAC has argued that affordability of telecommunications services for low-income users is critical to ensuring that Canadians can participate in the digital economy. Telecommunications need to be affordable in order to ensure that participation in communications is universal and accessible. As such, the AAC has proposed that the Commission establish an Affordability Funding Mechanism in order to assist low-income telecommunications users in Canada.PIAC’s report, No Consumer Left Behind, filed as Appendix C to the AAC’s first intervention, highlighted barriers identified in ACORN Canada-organized focus groups in affording various communications services—many participants regularly sacrificed other household expenditures such as food, clothing and health care in order to keep their communications subscriptions. These findings were re-affirmed by the testimonials ACORN Canada members submitted during the first intervention round of this proceeding.PIAC also found that low-income households employed other strategies in order to access communications services, including:Bundling their communications services or only subscribing during promotional pricing periods;Sharing or using public hubs for communications services such as libraries and coffee shops; andUsing resource centres for other household expenditures, including food and clothing banks and other charity munications affordability challenges have also been raised by other parties and individual interveners in this proceeding, including the following comments:The cost of living/working in the north, including telecommunications e.g. $12K-$20K per year is simply becoming another cost we are struggling to cover but without it, we would have no income. We are seriously considering leaving Iqaluit, Nunavut - my home community - simply to reduce our living/working costs and remain competitive. We are at the tipping point or maybe I should say the breaking point when it comes to something as basic and simple as telecommunications. (Iqaluit NU)We live in Southern Ontario and our ONLY option for internet on our farm is Xplornet Satellite. This is extremely expensive and we did have it up until 3 years ago. We were locked into a three-year contract and received great service the first year, patchy service the second year and absolutely no service the third year. I phoned them every day for that entire year to complain. They did give me three months free. They explained that they had over-sold the satellite so there wasn't enough internet service to go around. They also explained that they were launching a new satellite that I could go on at a much higher cost. I said no. I have been forced to drive to the town of Simcoe to use the internet at either McDonalds or the public library. As I work from home this has been a major on-going problem. Now I drive to the office in Elmira (an hour and a half away) once a week so that I can use good high speed fibre internet. (Simcoe ON)For residential customers, the highest possible upload speed is 1Mbps and the cost would be between $85 and $130 per month for these potential speeds. […] Many people and businesses in our District can only afford basic packages ranging from 1Mbps to 1.5 Mbps download speeds with only 512Kbps to 700Kbps upload speeds at a cost of between $40 and $55 per month or between $70 and $100 per month for a business. These packages also include very limited monthly usage allowances with costly charges for additional use. (Wells BC)The Manitobans we spoke with identified inequities in access to affordable, modern services. Many comments focused on bandwidth constraints and reliability challenges leading to an inequity between service between the urbanized south and remote and rural communities. Similar inequities were identified among the MKO communities with the suggestion that there are “islands of connectivity” despite most communities having significant connectivity and reliability challenges. Financial barriers to land lines were also noted for low income persons and newcomers:Long distance ends up being expensive. Pre-pay phones run out which is concerning. Credit checks are often done when applying for phones or internet.Across Canada we continue to see a significant proportion of producers paying upwards of $90 a month for internet, with some citing monthly costs over $400. Not only does this negatively affect the competitiveness of many rural and agricultural operations, it also illustrates a significant disparity with those services available to urban residents and businesses.Rappelons aussi que les éléments de notre revue de littérature indiquent que, malgré leur importance, les services d’accès à Internet sont moins populaires, notamment, auprès des consommateurs à faible revenu. Soulignons que d’autres juridictions ont mis en place des tarifs sociaux pour maximiser l’accès auprès de plusieurs types de consommateurs qui peuvent rencontrer des difficultés financières.Finally, the Commission’s own latest Communications Monitoring Report, released in October, reveals several communications spending patterns that tend to be unique to the lowest quintile of Canadians. Notably:The lowest quintile spent 8.3% of its annual income on household communications in 2013, whereas the second quintile spent 4.9% and the national average was only 2.9%.First quintile expenditures on wireline telephone and television tended to fall the fastest of all quintiles between 2011 and 2014. Meanwhile, growth in first quintile expenditures on mobile wireless and internet was highest compared to all other quintiles. This suggests that low-income households continue to be compelled to choose spending on one or two communications services over others—and low-income users appear to be migrating towards using wireless and internet service. However, the cost and amounts spent on these latter services (notably wireless) have also increased significantly, indicating that the affordability problem will likely grow and intensify rather than shrink in the future.The need for a regulatory solution to address the affordability of communications is evident. In order to shed further light on the specific challenges low-income households face in affording communications services, PIAC commissioned an “Affordability Survey” which will be elaborated upon below.PIAC Affordability SurveyPIAC commissioned Environics Research Group to conduct an online survey (the “Affordability Survey”) during the period of December 10 to 22, 2015 targeting respondents with annual, pre-tax household incomes of $30,000 or lower. The results reflect data gathered from 752 online low-income respondents from across Canada (excluding the North)—they do not reflect a random, representative sample of all Canadians, but reflect responses from a group of low-income Canadians who use the internet. The detailed results are attached as Appendix “A” to this intervention.PIAC deliberately chose this methodology as opposed to representative telephone survey, precisely as PIAC desired to gauge the attitudes and opinions of low income Canadians who did use the internet and what they thought about service and their ability to afford it. As the sample is drawn from a pool of participants rather than a random telephone sampling, the results cannot be projected on to the general population. However, the AAC believed that, given the trade-off of randomness and actually reaching significant numbers of low-income persons who used the internet, that the choice made would be the most instructive on questions about broadband and affordability.The results of this online survey may indicate two broad conclusions related to the issues in this proceeding:Low-income respondents highly valued internet service, even as much as they valued their health care expenses; andMany low-income households encounter challenges in affording their communications services, and do not necessarily spend less than non-low-income households on these services.The AAC will expand on these two findings below.Low-income households highly value internet serviceThe results from PIAC’s Affordability Survey indicate 76% of respondents had fixed line internet service in their household, the highest rate of any individual communications service. Unlike for other communications services, this number tended to stay the same across age, gender, region and household size. The survey also found that 84% of respondents said it was important that they had access to fixed internet service. Both of these results make sense since the survey was completed online by respondents who voluntarily joined the Environics polling sample – especially compared to Statistics Canada figures, which indicate a much lower penetration of internet service amongst the bottom ranked (by income) quintile and decile of households (as highlighted in the AAC’s initial submission.As depicted in the following figure, low-income survey respondents ranked the importance of internet as extremely high – third just following food and housing, on par with health care expenses, and above clothing and transportation. While this figure also is influenced by the same factors in relation to the survey respondent composition as opposed to a randomly selected sample group in this income range, the AAC contend that this result is still indicative of the relative importance of internet access compared with other essentials and that this comparison is may indicate a similar ranking for the general low-income population.Figure 2. Ranked Importance of Various Household ExpensesAlthough interveners such as TELUS have pointed to other broadband adoption factors such as education and interest, this survey indicates that low-income respondents who are “online” and who actively use the internet may highly value internet service – in fact, above all other individual communications services – and even on par with other household expenses such as health care. The AAC invite the Commission to cross-reference this indication with its own sample results from its recent EKOS online survey to increase confidence in seeming viewpoint.Many low-income households face challenges affording communications servicesIn its report, No Consumer Left Behind, PIAC concluded that affordability can be assessed by several factors, notably:Communications expenditures should not exceed 4% to 6% of a household’s annual income; andAffordability is related to a household’s control and ability to control its household budget and expenditures. Therefore, choice and flexibility are also important elements of affordability.Data gathered from the Affordability Survey indicate that many low-income households do struggle with affording communications services.For instance, according to the survey the average expenditure of respondents on communications services was $145.90 per month. This is only about 28% lower than the $203 that the average Canadian family spends on communications services as reported by the Commission, which again highlights the importance of communications services for all Canadians. However, this monthly expenditure represents a much higher percentage of the low-income respondent’s annual income, about 8.7% if their annual pre-tax income is $20,000. Moreover, 1 in 3 low-income respondents in fact spend more than that amount each month.Figure 3. Monthly Communications Expenditures of Low-Income RespondentsA notable finding was that many respondents believed they were spending a much higher percentage of their income on communications services – on average 18% – than in comparable surveys such as Statistics Canada’s “Canadian Internet Use Survey”. This could indicate that these low-income telecommunications subscribers feel they have less control, choice or flexibility over their communications budget or that these respondents do spend comparatively more on communications than the general low-income population.In addition, several findings indicate that the Affordability Survey respondents have less control or flexibility in managing household expenditures in order to cover their communications expenses. The survey found that 1 in 2 respondents have had to trade off other household expenditures specifically in order to pay their communications bills, notably:More than 1 in 4 respondents had to buy cheaper goods or services;1 in 4 respondents had to put off or cancel expenses such as gifts and holidays;Almost 1 in 5 respondents had to go without other essential goods or services such as food, medicine and clothing;1 in 10 respondents had to use a community resource centre such as a food bank;1 in 10 respondents had to sell a personal item; and1 in 10 respondents had to cancel a communications service.While the number of respondents who were compelled to miss a payment on their communications bill or accumulate communications debt was not as high (about 1 in 10 respondents for each communications service, slightly higher for mobile phone data), where a respondent did have a communications debt, the average debt was $446.Moreover, almost 1 in 3 respondents said there were communications services they wanted but did not have. When asked what the main reasons were why they didn’t have that service, 84% of those respondents said it was because they couldn’t afford it.Figure 4. Low-income households’ reasons for not having desired communications servicesFinally, in order to test the AAC’s Affordability Funding Mechanism, PIAC asked low-income respondents what they would do if they were given an additional $10 or $20 a month. The graph and figure below reveal the results.Figure 5. How low-income households would spend subsidy for communications servicesThe findings show that 1 in 2 respondents would spend the additional amount to help pay for existing communications bills, suggesting the supplement would be used to relieve current affordability pressures. Another 40% to 45% also stated that they would change their plans, and 1 in 10 respondents would actually use an additional $20 to subscribe to a new communications service. In the AAC’s view these results indicate the importance to low-income subscribers of having control of how their subsidy amount could be spent to solve their own particular household communications needs in a more affordable manner.Table 3. How Low-Income Respondents Would Spend Monthly Subsidy – Detailed BreakdownMonthly Subsidy$10$20I would use it to help pay for my…49%51%Mobile Phone16%20%Home Internet15%13%TV Service10%9%Landline Phone8%8%I would change my plan for…45%40%TV Service(add channels or pay-per-view)25%21%Home Internet(increase speed or data)14%12%Mobile Phone(add data, minutes or SMS)6%7%I would add a subscription for…6%9%TV Service2%3%Home Internet1%2%Mobile Phone1%3%Landline Phone1%1%The Need for CRTC Intervention and the AFMThe AAC submits that the Commission should address the affordability challenges of low-income telecommunications users.Evidence provided by the AAC in this intervention and in previous phases of this proceeding shows that communications services – notably broadband internet – are extremely important services for low-income users of telecommunications services. The low-income respondents to the Affordability Survey were generally unwilling to cancel any communications services—and where they did, usually cancelled television service or wireline phone.Nonetheless, low-income users of telecommunications services still struggle to afford their communications services expenses, regularly spending a much higher percentage of their household income on these services than the average Canadian household. Furthermore, many have had to cut other household expenses, travel to use outside resources such as food banks or public WiFi spaces, accumulate significant communications debt, or ultimately cancel services entirely.Therefore the AAC submits that the Commission, as the telecommunications regulator, can and should turn towards addressing the affordability challenges of low-income Canadians, a problem that will likely grow and intensify rather than diminish in the future.The AAC has proposed an Affordability Funding Mechanism which would provide eligible low-income households with either a $10.50 or $20.50 per month subsidy towards a telecommunications service of their choice. The updated details of the Affordability Funding Mechanism is depicted in Table 4 below.Table 4 – Updated Details of AAC’s Proposed Affordability Funding Mechanism(Annual averages over the 2017-2020 period)Baseline VersionAmbitious VersionJuly 2015SepulvedaReportRevisedSepulvedaReportJuly 2015SepulvedaReportRevisedSepulvedaReportNumber of Eligible Households 1.34 million1.390 million2.61 million2.888 millionNumber of Actual Beneficiaries0.53 million0.500 million1.57 million1.560 millionMonthly Subsidy Per Household$11$10.50$22$20.50Total Capped Cost$70 million$70 million$70 million$70 millionPercentage of CTSRs0.14%0.14%0.82%0.82%This type of subsidy has already been implemented in jurisdictions such as the U.S., France and Spain as was described by the Sepulveda Report filed with the AAC’s first intervention, and in the Revised Sepulveda Report filed as Appendix “B”, as well as by regulators of other services in Canada.For instance, the Ontario Energy Board’s Ontario Electricity Support Program (“OESP”) recently began operating in January 2016 following a one-year implementation period. The OESP provides credits based on household size and income towards the electricity bills of low-income energy consumers for two years (prior to reassessment). Households must apply for the credit using their income tax returns or with the assistance of a social services agency.Table 5. Ontario Electricity Support Program’s Sliding Credit ScaleTherefore, the AAC submits that an affordability mechanism is both necessary and feasible to ensure all Canadians have affordable access to basic telecommunications services. The AFM will help ensure low-income users of telecommunications services can meaningfully participate in the digital economy.6. Internet adoption does not warrant CRTC interventionSome interveners have suggested that adoption is the main problem, rather than accessibility or affordability. TELUS, for example, “concludes that there is no evidence that an affordability problem exists due to high prices charged in high cost areas”. TELUS comes to this conclusion on the basis of asserting that “the available evidence shows that the price of broadband is not a major deterrent to the adoption of broadband service” and that, rather, “age, education, and income are the primary factors that limit broadband adoption... [with] the main reason offered by non-users of the Internet [being] a lack of interest or no need for the service”.Similarly, Dr. Roslyn Layton argues that the Commission should focus on adoption policies, stating: “Canada...has likely reached the limits of its basic services policy with the focus on the supply side of the equation for broadband. ... To close the remaining digital divide, the CRTC needs to focus on demand [emphasis in original].” The AAC does not deny that adoption barriers are a valid concern, but questions (i) the scale of the problem; (ii) whether the Commission has the jurisdiction to address adoption directly; and (iii) whether the Commission is in any case the best placed to address adoption, or if it should be government and the education system.The AAC believes, therefore, that broadband adoption is not a barrier to internet use warranting Commission intervention in this proceeding, and certainly not one that should be prioritized over access and affordability barriers, nor made a condition precedent to moving forward on these issues. The AAC addresses these questions in turn.(i) How big a problem is adoption?In the AAC’s first intervention they noted that their research from Environics indicated that while some Canadians simply choose not to consume certain telecommunications services at home, and digital literacy is a barrier for some, affordability is the major barrier limiting and preventing Canadians from being able to consume necessary telecommunications services, including internet service.The AAC notes that by classifying the reasons respondents do not have home internet service into categories such as “Personal choice,” “Poor quality,” and “Don’t know how to use,” the survey results for home internet and cell phone can be summarized as follows:Figure 6. Main reasons why Canadians do not have internet serviceIn the AAC’s view, these results indicate that while some Canadians simply choose not to consume certain telecommunications services at home, and digital literacy is a barrier for some, affordability is a major barrier limiting and preventing Canadians from being able to consume necessary telecommunications services, including internet service.From the perspective of the rural and remote municipalities represented in a survey submitted by the Federation of Canadian Municipalities indicates that in their view the greatest barriers facing their communities from “meaningfully participating in the digital economy” are (i) poor uploading and downloading speeds (40%); followed by lack of broadband access (23%) and prices (23%). Digital literacy was identified as a major barrier by only 5% of respondents. The results are excerpted below. Figure 7. Greatest barriers to meaningful participation in digital economy: MunicipalitiesA number of other interveners also made claims that suggest adoption is not a problem. Bell stated that “Canada leads the world in broadband adoption and usage” and “Obstacles to broadband use and adoption in Canada are low”.On that basis alone the AAC questions calls to prioritize adoption as the Commission’s focus, or the calls to “solve” adoption issues before attempting to address access and affordability issues.Research by McKinsey & Company (“McKinsey”), a consultancy, asserts that the problem of adoption is actually comprised of four barriers. IncentivesLow income and affordabilityUser capabilityInfrastructure (access)The AAC excerpt McKinsey’s description of these barriers, in full, as they are pertinent to this discussion.Figure 8. McKinsey’s 4 Barriers to AdoptionIncentives. Despite the increasing utility of the Internet in providing access to information, opportunities, and resources to improve quality of life, there remain large segments of the offline population that lack a compelling reason to go online. Barriers in this category include a lack of awareness of the Internet or use cases that create value for the offline user, a lack of relevant (that is, local or localized) content and services, and a lack of cultural or social acceptance. The root causes of these consumer barriers include the high costs that content and service providers face in developing and localizing relevant content and services and their associated business model constraints, low awareness or interest from brands and advertisers in reaching certain audiences, a lack of trusted logistics and payment systems (thereby limiting Internet use cases such as e-commerce and online banking), low ease of doing business in specific regions (thereby impeding development of local or localized content and services), and limited Internet freedom and information security.User capability. This category includes barriers such as a lack of digital literacy (that is, unfamiliarity with or discomfort in using digital technologies to access and use information) and a lack of language literacy (that is, the inability to read and write). The root cause of such literacy barriers is often an underresourced education system.Low incomes and affordability. In this area, the predominant barrier is the low income of individuals in the offline population. This barrier is exacerbated by the high costs associated with providing access to the Internet for these populations, which are disproportionately rural. The low incomes reflect the poor economic circumstances of large segments of the offline population, often including unemployment and the need for economic development, employment, and income growth opportunities in their regions. At the same time, there is often a lack of adjacent infrastructure (such as roads and electricity), thereby increasing the costs faced by network operators in extending coverage. Several other factors can contribute to high costs of service for device manufacturers and network operators, including taxes and fees, and, in the case of some countries, an unfavorable market structure.Infrastructure. Barriers in this area include a lack of mobile Internet coverage or network access in addition to a lack of adjacent infrastructure such as grid electricity. The root causes of these consumer barriers include limited access to international bandwidth; an underdeveloped national core network, backhaul, and access infrastructure; limited spectrum availability; a national information and communications technology (ICT) strategy that doesn’t effectively address the issue of broadband access; and underresourced infrastructure development.The submission by Dwayne Winseck states under a section titled “Availability vs adoption” that price remains a powerful barrier for many Canadians.”The AAC believes that adoption, when conceived of as those four separate barriers, reveals that the concerns expressed in Canada about “adoption” appear to be concern for digital literacy. The AAC believes its Broadband Deployment Funding Mechanism addresses the infrastructure barrier, and that its Affordability Funding Mechanism addresses the “low income and affordability” barrier, leaving just “incentives” and “user capability” to deal with. Regarding “incentives”, the AAC believes that, for some time at least, there will be some Canadians for whom the internet holds little value, and persons who make the personal choice not to go online. The AAC expects that it will become increasingly untenable for persons to take this path into the future, and that naturally those who have access to the internet and can afford to have such access will naturally do so.(ii) Should the Commission prioritize addressing adoption?The AAC believes that the Commission should not prioritize addressing internet non-adoption. First, non-adoption by interested users is a secondary or tertiary reason for not using internet access services, and in any case is not and should not be a condition precedent to addressing access and affordability issues. Second, the AAC expects that as time progresses, online access will become such an essential that demographic forces are likely to replace non-adopters with adopters.Third, the AAC believes that the educational system, supported by targeted government program, is better placed than the CRTC to deal with internet adoption. The educational system, after all, has a captive audience and can ensure that all citizens have a baseline set of digital skills. The CRTC does not necessarily know who the interested non-users are, let alone have the mandate to get them interested. Also, adoption should not be used to distract the Commission from the access and affordability issues which the AAC has explained. Additionally, the AAC foresees a range of practical challenges for the CRTC in directly promoting adoption.It is unclear how the Commission could effectively, easily or respectfully identify non-adopters, especially the kind of non-adopters who would actually care to learn how to go online and use internet services, that is, “interested non-users” as opposed to “non-interested non-users. It is unclear also how the Commission could effectively identify non-adopters whom certain intervenors suggest the Commission should convince to use the internet.When it comes to the problem of adoption, the AAC believes the education system, supported by targeted government programs, can play a more effective role than the Commission. This is the obverse of how some telecommunications service providers have suggested the problem of broadband access (as opposed to adoption) and telecom affordability should be left to the government.In these cases the Affordable Access Coalition believes that if the service providers have failed to create interest in their products, and the education system is failing students in terms of ingraining digital literacy and digital interest, then the Commission itself is not likely to fare better.(iii) Does the Commission have jurisdiction to promote internet adoption?The Commission lacks jurisdiction to directly address internet adoption in the community. Section 46.5 of the Telecommunications Act only gives the Commission jurisdiction to create a fund to “support continuing access by Canadians to basic telecommunications.” You can lead the horse to water but not make it drink.Proponents of adoption are quick to differentiate it from access. They are indeed quite distinct. Legally the Commission has no authority over the general public’s non-use of a service and only to a limited extent over public use. The Commission’s jurisdiction is aimed squarely at service providers.Even if one treats adoption as an aspect of access, the AAC notes that even the Canadian telecommunications policy objectives – which are indeed user-centric – do not refer to encouraging non-users to take up telecommunications services. Yet that is precisely what the “adoption” problem is about.In the AAC’s view, therefore, governments and the education system are much better placed to put this aspect of social policy in place.7. ConclusionThere should be no question that broadband should be recognized as an essential service which all Canadians should have access to, as well as an essential driver of Canadian economic productivity. There should be no second-guessing of what users of telecommunications services are using, or why. However, if the Commission wishes to examine those uses, the AAC invites the Commission to consider the interventions filed by individual members of ACORN, or from the Canadian Federation of Agriculture, to get a sense of the vital importance of high-bandwidth connectivity. That a broadband connection may be used to “entertainment”, however that subjective term may be construed, does not diminish its importance. All Canadians from all regions, are to be included by means of telecommunications and broadcasting system, and therefore they cannot be excluded simply because the service provider considers that most of what it is selling to be non-essential. Because broadcasting is increasingly consumed via IP, as well, the Commission has to consider the impact on unserved and underserved Canadians of excluding them from the broadcasting system. To help support the provisioning of basic broadband service to all Canadians, the AAC has proposed a Broadband Deployment Funding Mechanism which the Commission should adopt. The Broadband Deployment Funding Mechanism would help service providers cover the uneconomic portion of their costs for deploying broadband to unserved and underserved Canadians.Regarding telecommunications affordability, the AAC has presented evidence that affordability is a major barrier for low-income Canadians. Lower-income Canadians have less access to essential telecommunications services, and, other than personal choice, affordability is the next major reason why Canadians do not subscribe to home internet service and wireless service. To help reduce this barrier the AAC has proposed an Affordability Funding Mechanism which the Commission should adopt. The Affordability Funding Mechanism would help low-income Canadians access essential telecommunications services of their choosing, with a monthly subsidy amount. Both funding mechanisms would be capped annually, predictable, and stable, and they would be complementary to the operation of market forces and targeted government funding.The Environics survey results demonstrate that Canadians are receptive to these ideas.As the AAC discussed in the Introduction, the CRTC’s raison d’être is to serve the best interests of all Canadians, and the Commission is required to exercise and perform its duties under the Telecommunications Act with a view to implementing the telecommunications policy objectives. It is the AAC’s submission that the Commission now has before it an important opportunity to ensure all Canadians have access to broadband internet service and affordable telecommunications service. To ensure that the Commission keeps up with the rapid pace of change, and to ensure Canadians are well-served by their telecommunications system, the AAC recommends that the Commission implement mechanisms to monitor the decisions which flow from TNC 2015-134. These measures include performing yearly progress checks on availability and affordability of basic telecommunications service, and taking immediate action to correct course. The AAC’s proposals are designed to fulfil the basic needs of all Canadians to enable them to participate in digital society and the digital economy. To that end, the AAC proposed two funding support mechanisms to (i) close broadband availability gaps in certain areas; and (ii) enhance telecommunications affordability for low-income Canadians. The AAC’s Broadband Deployment Funding Mechanism and Affordability Funding Mechanism are workable, cost-limited mechanisms to support broadband access and telecommunications affordability. The AAC looks forward to continuing to participate in this proceeding. The AAC repeats its request to appear at the public hearing, and believes it represents one of the largest coalition of public interest and consumer groups in this proceeding, and can add a distinct perspective.***END OF DOCUMENT***Appendices: Appendix “A”: Detailed results from Environics Affordability SurveyAppendix “B”: Revised expert report of Edgardo SepulvedaAppendix “C”: Revised expert report of Edgardo Sepulveda, in “Track Changes” modeAppendix “D”: Underlying data for revised expert report of Edgardo SepulvedaAppendix “E”: Speed Advertisements by Major ISPs ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download