Our broadband nation | September 3, 2002
By Glenn Drexhage
FOR A GROWING NUMBER OF CANADIANS, HIGH-SPEED INTERNET IS A SIMPLE FACT OF DAILY
LIFE.TAKE SIMON VINCENT'S HOUSEHOLD, FOR EXAMPLE. FAST access is like a household appliance for his kids. It's one that helps them do homework, chat online and play interactive games. But they don't see it as an unusual technology—rather, it's almost as if they are "opening a refrigerator in the kitchen," said Vincent, vice-president of marketing for consumer solutions at Telus.
"It all speaks to the kind of experience that we didn't have growing up." Not all Canadians can afford such a casual attitude. While only South Korea has better broadband penetration than us, more than half of all Canadian Internet users still rely on poky dial-up connections. However, the gap is narrowing.
According to a recent study by Ipsos-Reid, 48 per cent of Canadians with a home hookup had broadband access—double the rate from just two years ago.
But the issues around pumping fast access to all Canadians are complex, and have wide-ranging implications for businesses, governments and communities, which often move in different directions and at different rates. While the opportunities are considerable, so too are the challenges.To make sense of the situation, Backbone examined some of the key topics determining the state of broadband in our nation.
More than e-com
Vincent is one broadband believer who thinks consumers are pointing the way forward. "The evolution of the lifestyle in homes has driven a lot of the (business) awareness of the benefits of adopting high speed."
Yet on the business side, many Canadian companies aren't buying the message, and as a result they remain stuck in the Internet's slow lane. And that's a problem many people—from industry insiders to government bureaucrats—want to fix. "When businesses get [broadband] they open up to the possibilities that are driven by the applications and broadband becomes a de facto standard," said Pierre-Paul Allard, co-chair of the Canadian e-Business Initiative (CeBI) and managing director of Cisco Systems Canada.
Firms looking to join the e-biz game should consider fast access, said Gaylen Duncan, president and CEO of the Information Technology Association of Canada (ITAC). "I don't think you can have e-business without high speed." But that means perceptions must also change. As Allard said, "The Internet's not just the Yellow Pages or e-commerce." Rather, there are many broadband applications that increase productivity, reduce costs and strengthen ties with suppliers and partners, such as supply chain management and e-procurement.
The SME situation
Certainly, not all businesses are the same. Canada's big firms, armed with heavyweight networks and inhouse tech departments, have taken advantage of high-speed hookups to take care of business locally and around the world. But it's the smalland medium-sized enterprises (SMEs) that have proved reluctant, and these smaller players generate the majority of the country's economic activity. Nearly one million firms have between one and 99 employees; of those, more than 70 per cent use dial-up Internet connections, according to IDC Canada.
That's why the business sector remains the next battleground for high-speed providers, whether they're cable companies such as Shaw Communications and Rogers Cable, or telcos such as Telus and Bell Canada that offer DSL, a high-speed telephone-based system.
Their biggest challenge is in winning converts, especially smaller firms that are more concerned with simple survival.
"[Small businesses] have other things to do," said Mark Quigley, research director at The Yankee Group, Canada. "They don't often see that the implementation of an Internet solution, for example, is a good way to reduce their costs or to generate more business."
Part of the problem, he said, is most high-speed sermons have been preached to consumers. "The messaging doesn't speak to [business imperatives]. It's all very warm and fuzzykind of stuff."
Lawrence Surtees, senior telecom analyst at IDC Canada, also sees room for improvement. "Various DSL and cable providers didn't start addressing the small-business market until last year."
Certainly, the prospects are enticing, owing to the sheer volume of potential clients. Plus, providers could bundle their offerings, combining high-speed access with Web hosting, wireless offerings and more. The money is there; according to IDC Canada, the national small- and mid-sized business market (including firms with up to 499 employees) spent more than $12 billion on IT last year. "I think that when all of [the providers] take a look at that marketplace they find that it still does present a tremendous market opportunity," Quigley said.
The providers are doing more than just looking, and have made various efforts to address this segment. However, the task isn't an easy one. "The market is a little more difficult to penetrate than consumers—you have to make sure the small business owner understands the value he's getting," said Fiu Giulione, vice-president of Bell ISP marketing at Bell Canada in Toronto.
Just crowing about connectivity isn't enough. Providers need to show compelling business cases for adopting broadband and must share success stories. Despite the challenges, many feel the payoff will be worth it. "If we have a thriving SME market in Canada, that will make us a much more prosperous and globally strong nation overall," Allard said.
The feds are also keen to get involved. "We will be pushing [SMEs] very aggressively in the next year or so" to get connected, said Michael Binder, assistant deputy minister for Industry Canada."We believe we can close the gap."
High-speed politics
The business segment is just one facet of the federal strategy.
Indeed, the government has long touted its coast-to-coast broadband vision, summarized in the National Broadband Task Force Report released in June of 2001 before Brian Tobin was replaced by Allan Rock as minister of Industry Canada.
Just as the Canadian Pacific Railroad linked the land in the 19th century, broadband would provide this century's instalment of the national dream, proponents said.With the help of federal funds and private sector involvement, all Canadian communities—especially those in remote locations—would have broadband services by 2004. Estimated costs for the project, to be shared by private and public participants, ranged wildly, sometimes exceeding more than $4 billion. However, it was deemed necessary, as an estimated 79 per cent of Canadian communities have no broadband access.
The strategy sounded good, and it provided great sound bites. During a speech in Oxford, England, in January 2001, the media-savvy Tobin said Industry Canada "has become, in effect, Canada's Department of the New Economy."
But then reality hit. Following the Sept. 11 terrorist attacks in the U.S., high-speed Internet access—along with every other policy topic not related to security—was shoved to the side of the government's agenda. In the December 2001 budget, Tobin was hoping $1 billion would be earmarked for the broadband plan.
Instead, the government allocated $35 million a year for three years and bumped the timeline to 2005.
Many viewed the move as necessary, given other urgent commitments.
"Nobody wanted to hear anything except security, security, security," Binder said. "So if you come up with a budget, what do you think the budget's going to be about?
Surprise! Security." He also noted that more than $1 billion did get earmarked for other tech projects, including online government and school initiatives, and a high-speed research network.
Yet politics may have played a role in the rapidly shrinking vision. It was no secret that Tobin harboured Liberal leadership aspirations, as does Finance Minister Paul Martin. So why would Martin hand over easy money to the broadband project, which could end up being a potent campaign booster? Shortly after the release of the budget,Tobin left the political stage.
Although IDC Canada's Surtees said he was somewhat disappointed with the budget, he said it wasn't surprising "because of the backroom aspects to it." Industry Canada's Binder, meanwhile, doesn't buy this. He said the outcome "was a pure policy issue"and added that the press always likes to "see a battle."
Perhaps the truth lies somewhere in-between, although Canadians may never know for sure. "I guess at the end we'll just have to wait and see until Paul Martin finally retires and writes a book," quipped Yankee Group's Quigley.
Regardless of the motives, some felt let down. ITAC's Duncan said the initiative was derailed by a preoccupation with costs and Canada ended up as a "secure, visionless country.The use of broadband never got picked up by the media, and therefore never got picked up by the politicians."However, he also said the plan is "coming back on the agenda very quickly." Binder echoed this sentiment, claiming the initiative is a major component of the recently released Innovation Strategy. "The vision is unstoppable, in my opinion."
Making an effort
That vision, if realized, isn't about downloading music and playing games.
Rather, it's about providing high-speed access to deliver education, health care and other services in a timely, efficient way. "I'm not naïve enough to think that this will solve all the problems of the world," Binder said. However, he said that without the necessary infrastructure, remote locales will miss out on vital business and community services.
In some areas, the cost savings could be considerable. For example, high-speed access could allow for remote medical diagnoses, rather than having to fly a doctor in or ship a patient out.
According to Surtees, it costs $10,000 each time a patient is transported on a chartered plane with nursing or doctor support.
That's just one example and the overall effect could result in more Canadians staying in their rural communities rather than being forced to relocate to larger, urban centres.Without this, smaller spots across the country could devolve into modern-day ghost towns. So the myriad uses of broadband—rather than the medium itself—need to be promoted. "The focus has got to be on the applications," Duncan said.
At the provincial level, some governments have spearheaded their own initiatives. In Alberta, for example, there's the SuperNet project (see Backbone, January 2002), which aims to provide affordable high-speed access to rural communities.
Other provinces and territories have also taken steps (see next page), and many find these efforts encouraging. "Anything that federal, provincial or municipal governments can to do encourage individuals, corporations or organizations at large to get broadband will make Canada better off," said Alek Krstajic, senior vice-president of sales and marketing at Rogers Cable.
In addition, providers have been spreading their reach. Shaw Communications, for example, recently launched high-speed Internet access for home users in Agassiz, B.C. and Saprae Creek, Alta. "What's motivated us to connect small communities has been legitimate business and competitive reasons," said Shaw president Peter Bissonnette. "We're in this business to acquire customers, and those customers don't necessarily all live in 2000-suite multi-dwelling units in concentrated areas."
And he isn't concerned about the impact of the recent federal budget.
"Frankly,we didn't care, because we were driving broadband ourselves. So it had no impact on us."
Networking First Nations
Ken Thomas, too, is moving forward. He's the architect of the connectivity strategy for the Assembly of First Nations (AFN) and the technology advisor to AFN National Chief Matthew Coon Come. Leading up to last December's federal budget,Thomas—who is also the CEO of Neegan Burnside, a First Nations engineering and technology company—had high hopes. After all, the broadband task force had set as a priority the linking of "all First Nation, Inuit, rural and remote communities to national broadband networks using the appropriate technology."
But the plans were scaled back, and Thomas said there was "grave disappointment" with this outcome. However, his goals remain. Proposals are being put to the federal government for consideration, according to Thomas, and the AFN is examining provincial initiatives, such as SuperNet, to connect its communities in a cost-effective way. It's also working with First Nations that have made connectivity a priority.
Much still needs to be done. Out of Canada's 635 First Nations communities, Thomas estimates only 25 have highspeed Internet access. In addition, he's concerned that various initiatives being carried out across the country could result in incompatible networks.
Yet there are success stories. K-Net, which has worked with public and private sector partners for years, offers broadband services to six First Nations and one tribal council in north western Ontario.
According to Brian Beaton, K-Net's services coordinator, 11more First Nations will be connected by early summer.
The benefits of broadband for First Nations, many located in remote areas, are considerable. Health and education applications could bolster local lifestyles, and the cost savings could be big as well."We're confident we can achieve payback on the whole First Nations connectivity piece just on e-health alone in five years," Thomas said. (Last year, shared costs for a First Nations broadband network were estimated to be $508 million; now, due to ongoing developments, costs could end up being about half that amount, according to Thomas.)
E-commerce and enhanced buying clout could also pay off.
For example,Thomas said the First Nations Buying Group, which includes more than 500 members in Manitoba and Ontario, has been able to save millions of dollars by aggregating purchases for various products."Now think of setting up that kind of a network nationally," he said.
"All of a sudden you've created real savings."
Perhaps most importantly, such a network could help foster "a sense of community online," Thomas said. "There's a range of subjects that First Nations share only amongst themselves."
And their cultures could benefit. For example, videos of a community and its history could be posted on the Internet.
"Connectivity isn't a panacea for all the social ills that affect us," Thomas said. But a First Nations portal with meaningful content could lead to community and economic development.
"It creates hope. It minimizes the sense of isolation."
Given the complicated state of broadband in Canada, such a clear-cut view comes through loud and clear.
W e b c o n n e c t i o n s
Assembly of First Nations http://www.afn.ca
Bell Canada http://www.bell.ca
Canadian e-Business Initiative http://www.cebi.ca
IDC Canada http://www.idc.ca
Industry Canada http://www.ic.gc.ca
ITAC http://www.itac.ca
K-Net http://www.knet.on.ca
Rogers http://www.rogers.ca
Shaw http://www.shaw.ca
SuperNet http://www.albertasupernet.ca
Telus http://www.telus.com
The Yankee Group http://www.yankeegroup.com
