Public Interest Advocacy Centre
Global Internet Liberty Coalition Conference
I would like to begin by commending GILC and the organizers of this conference on broadening the focus of our discussion beyond traditional concepts of free speech, liberty and fundamental human rights, and including the more difficult, but equally important and relevant issues of access, privacy and consumer protection.
These issues are more difficult because their resolution calls for restraints on the free play of market forces – something that, in this day and age, is not popular. Nor is it, on its face, consistent with what is often seen as the primary message of cyber-rights activists to governments: “Stay out of our lives!”.
There is, however, no inconsistency between calling for more market freedom in some respects and less in others. Indeed, both are required for a just society. Unfortunately, many people don’t appreciate the integral link between access and free speech – the fact that the right to free speech online is pretty hollow for those individuals who can’t even get online.
Universal access to the information highway is one of those things that can’t be achieved without government intervention. Market forces just can’t do it. Indeed, market forces barely exist in some of the places where access is most needed. Left to its own devices, the market would provide amply for those of us with lots of money, but would offer limited access, if any at all, to those living in poverty. (This has been referred to as “dollar democracy”.) It would provide abundant and cheap service to urban dwellers, but would offer limited and expensive options to rural and remote dwellers. The evidence of this disparity in access is most stark at the international level (See Appendix 2 of Sid Schniad’s paper), but it is also present domestically.
Clearly, if one of our goals is to have everyone connected to the public telecommunications network, there is an important role for government to play, in extending connectivity to rural and remote areas and to those who can’t afford the market price, wherever they happen to live.
Before the widespread adoption of telephone service, we recognized the value of affordable access to a public means of universal communication – the postal system. Having replaced postal service as the primary method of distance communication, telecommunications deserves the same treatment: equitable and affordable access for all.
I would like to speak for a few moments on some solutions to this problem of unequal access.
For ordinary citizens, there are two elements of access: first, access to an underlying telecommunications network, and second, access to the Internet itself.
Access to the Telecom Network
Let’s start with the basics: a phone line. For most people, this is a prerequisite for basic Internet access. Other options (via cable television) are being developed, but it looks like telephone access will remain the most economical means of linking to the Internet for some time.
Affordable Service to Low Income Canadians
Even in Canada, one of the most connected nations in the world, with some of the lowest rates for phone service, there are thousands of households without basic telephone service because they can’t afford it. This problem is expected to grow, as basic local rates rise in order to pave the way for competition and lower long distance rates. Yes, the introduction of competition in Canadian telecommunications has led to higher rates for local phone service. Many Canadians, especially those in the lower income brackets who make minimal use of long distance service, were actually better off under the regulated monopoly.
At the same time, access to telecommunications is more important than ever.(1) It is particularly essential for disabled and elderly persons with limited mobility, for unemployed persons seeking a job, for low income families with limited transportation options, and for those living in rural and remote areas. Yet these are also the same people who have trouble affording the higher rates brought about by market forces.
After losing the battle against “rate rebalancing” (i.e., the raising of local rates in order to permit lower long distance rates), Canadian consumer groups realized that something else had to be done to maintain universal affordability of phone service. In a proceeding some three years ago, a broad coalition of anti-poverty, seniors and consumer groups published a “Blueprint for Action”, which called for a seven-point plan:
- Define “basic telecommunications service”, and establish a process for updating this definition as technology and market demand evolves.
- Establish an “affordability benchmark” – a monthly rate above which affordability for lower income households is jeopardized.
- Ensure that basic monthly service is provided to lower income Canadians at a price no higher than the affordability benchmark.
- Establish policies, such as instalment payment options, to ease the burden of lump sum charges on customers in need.
- Examine security deposit and disconnection policies to ensure that they do not pose unnecessary obstacles to affordability.
- Require that telephone companies offer options that allow customers to better control their bills – options such as the blocking of calls which attract usage charges.
- Establish a Fund for the subsidization of basic service provided to self-certifying households with incomes below the poverty level.
The targeted subsidy aspect of this approach was strongly opposed by local phone companies, who instead proposed “budget” service options consisting primarily of limited usage for a lower price, and pay-per-use calling above a certain threshold.
Consumer groups pointed out that these “budget” options, while attractive to high income professionals, who use their office phone for personal calling, were completely unresponsive to the needs of low income Canadians, who if anything need to use their home phone more than average – to seek employment, to contact health and social service agencies, to stay in touch.
In the end, the CRTC decided that neither approach should be adopted, yet. Based on high overall penetration rates of phone service in Canada, the regulator determined that affordability was not yet a serious problem, but that should it become a problem, a targeted subsidy was the appropriate solution. In the meantime, the CRTC ordered that penetration rates and other affordability indicators be monitored. In spite of the urgings of consumer groups, the CRTC refused to define “basic telecommunications service”.
High Cost Serving Areas
Since that decision, the long distance market in Canada has been deregulated, the local market has been opened to competition, and a new price cap form of regulation has replaced earnings regulation for incumbent local service providers. The profit margins on long distance and urban business service that used to sustain below-cost prices in rural and remote areas are rapidly being depleted. But the cost differences remain: it is far more expensive to serve some areas than it is others. Without maintaining some kind of subsidy for these high cost areas, the goal of universal access will be lost from sight.
Public interest and consumer groups have again banded together to call for a new, competitively neutral subsidy designed to improve and maintain access to telecommunications services in high cost areas, at quality and price levels comparable to those in urban areas. We have drafted a “Consumer Charter for a Connected Canada”, which calls on the government to take the necessary actions to ensure that the benefits of competition flow to all Canadians, not just those in urban centres.
We are proposing that a national fund be established for this purpose, with monies collected through a revenue-based levy on all telecommunications service providers. The subsidy would be portable, in that any local service provider meeting pre-established price, quality and availability requirements would be eligible to receive it for those customers that it serves in the high cost area.
The CRTC is considering this and other similar proposals right now. In the interim, it has set up company-specific funds into which long-distance service providers pay (a per minute contribution) and out of which local service providers withdraw, in order to subsidize below-cost prices.
In Canada, almost everyone agrees: in the absence of direct government intervention, some kind of competitively-neutral, explicit, regulated subsidy scheme is necessary in order to maintain universal access to basic telecommunications service. I am confident that our government, given its commitment to being the most connected nation in the world, will support a regulatory solution to this problem.
That’s just the first part – access to basic phone service. We still have the rest of the equation to deal with: Internet access.
Access to the Internet
As part of their proposal in the high cost area proceeding, consumer groups are calling for toll-free access to the Internet, and minimum transmission speed capabilities. Specifically, they are proposing that companies who want to receive the subsidy must offer toll-free access to a location with at least one ISP. I don’t know if this proposal will fly, but the important point is that consumer groups are now including Internet access as part of their definition of basic telecommunications service.
Another coalition of public interest groups in Canada has been pushing our government to adopt a model of public space community networking, and to provide the necessary funding to sustain this non-commercial initiative. As you heard this morning, we seem to be having some success. The Canadian government is working hard to spread Internet access points across the country, and to encourage Canadians of all ages and backgrounds to use the Internet for personal and business gain. In addition, we have succeeded in convincing a major broadcast carrier in Canada to reserve a few of its licensed broadband channels for non-profit, local community purposes such as health, education, and literacy.
Yet, only 28% of Canadians have Internet accounts. Not surprisingly, this rate is much higher among lower income households. At the same time, more and more information and services are offered over this medium, and more communication is conducted over the Internet. A recent publication of the NTIA in the United States shows that, despite significant growth in computer ownership and Internet usage among Americans, the “digital divide” persists, and is in fact widening. According to the NTIA’s survey, there is an even greater disparity in access among income and racial groups than there was three years ago. In other words, we are becoming a society of information haves and have-nots, despite our best intentions.
So, how do we improve this situation?
The effective approach is, I think, a multi-pronged one:
- Allow competition to flourish where it can best achieve the goal of affordable pricing. Governments should vigilantly guard against anti-competitive behaviour and harmful mergers in the markets for computer hardware and software, as well as Internet service provision.
- Use regulation to address systemic market inadequacies. Companies who wish to receive subsidies for service provision should have to meet certain access requirements.
- Provide direct financial and other support to establish public access points in communities, schools and libraries, and to train citizens in Internet usage.
- Support the development of not-for-profit community networking initiatives. If electronic democracy is to be realized, we must protect public space on the Internet, space that is unsullied by commercial interests and that permits the free flow of individual ideas and communications.
To sum up,
- The right to free speech on the Internet is one thing, but it’s pretty hollow for those who lack access to the medium in which this free expression can occur. A truly democratic cyberspace is one to which everyone has access.
- In order not to exacerbate existing social disparities, we must make special efforts to ensure that the Internet advantage is brought to those who are starting off at a disadvantage. Schools and libraries are a good place to start, but ultimately, it’s access to the home that we will all need.
- Without diminishing the tremendous value of Internet access, we must not forget that many of our fellow citizens are still struggling to afford basic telephone service. With increased competition and deregulation of telecommunications, this problem could get worse. In the enthusiasm for expanding Internet access, let’s not ignore the prior and more immediate need for basic phone access.
1. In a recent survey, 97% of Canadians viewed telephone service to the home as essential, while only 39% considered Internet access to be an essential home service.