Who Should Pay for Affordable Broadband in Canada?

The question of who bears the cost for affordable broadband access becomes increasingly urgent as Canada faces the challenge of connecting rural and remote communities. This issue was recently raised in a Part I application filed by Matawa First Nations Management (MFNM) with the Canadian Radio-television and Telecommunications Commission (CRTC). MFNM, a not-for-profit Tribal Council, represents nine First Nations communities in northern Ontario and has been working through its telecommunications carrier, Rapid Lynx, to deploy a fiber-to-the-premises (FTTP) network that promises to bring high-speed internet to over 10,000 people. While the project has secured over $130 million in federal and provincial funding for capital expenditures, questions remain about long-term affordability for residents.

The Funding Disconnect in Broadband Affordability

Federal and provincial subsidies have played a key role in building the Rapid Lynx telecom network, with funding coming from programs such as the Universal Broadband Fund and the Improving Connectivity for Ontario program. However, these funds are strictly for capital costs and do not cover ongoing operational expenses or retail subsidies. MFNM revealed in its CRTC submission that affordability remains a significant barrier for many households, particularly in First Nations communities. Though the network infrastructure received an investment equivalent to $13,000 per person or over $30,000 per household, ongoing service costs remain prohibitively high for many individuals, as evident from failed trials with Starlink internet services.

One of the conditions tied to federal funding is the commitment to offer broadband services at specified, affordable retail prices for at least five years. However, as the costs of maintaining and operating telecom infrastructure in remote areas are significantly higher than in urban regions, the sustainability of such pricing models is questionable. This situation raises fundamental questions about the effectiveness of Canada’s subsidy programs and their ability to address the real issues of broadband affordability.

Should Subsidies Be Needs-Based?

A critical debate surrounding broadband subsidies is whether they should be based on geography or individual financial need. While rural and remote areas undeniably face higher infrastructure costs, not all residents in these regions struggle financially. For example, median incomes in Canada’s territories surpass those in the provinces, highlighting that a location-based subsidy framework may not equitably address affordability challenges. Programs that focus solely on geography risk allocating resources to those who may not need them, while still leaving many low-income households in other areas without sufficient support.

In contrast, companies like TELUS have introduced targeted assistance programs like the ‘Connecting for Good’ initiative, which offers subsidized broadband plans for low-income households. Such private-sector-led efforts demonstrate the potential for targeted, needs-based models but also raise the question of whether similar initiatives should be government-led or regulated through the CRTC. MFNM has proposed expanding the existing northern subsidy program to include an additional 75,000 First Nations households, with $36 per month allocated per household. While this would cost approximately $32 million annually, it underscores the need for a broader conversation on subsidy strategies.

The Role of Government and Regulation in Funding Affordability

Should broadband affordability be managed by the CRTC or integrated into Canada’s broader social safety net? The current model of capital funding, combined with off-the-books social subsidies managed by regulatory authorities like the CRTC, often results in fragmented and unsustainable solutions. Critics argue that broadband subsidies, like those for food or housing, should fall under government social programs rather than regulatory bodies. This approach would ensure greater transparency and accountability, aligning telecom affordability with other public welfare initiatives.

The affordability debate also calls attention to the pressing question of shared responsibility. Should telecom providers bear the long-term costs of maintaining affordable broadband services, akin to how grocery stores might be expected to subsidize low-income customers? Or does the responsibility lie squarely with government agencies tasked with social welfare? As Canada continues to expand its broadband infrastructure to underserved areas, finding the right balance between public funding, regulatory oversight, and private-sector involvement will be essential to ensuring that affordable internet becomes a reality for all citizens.