Alberta’s SuperNet

Alberta is home to a remarkable fibre-optic network called the SuperNet, and the provincial government is about to decide what to do with it. This post will briefly summarize how this situation came to be, and what’s at stake in the forthcoming decision about “SuperNet 2.0“.

Just a slice of the SuperNet

At the end of the 1990s, Alberta was riding high on oil revenues and the promise of internet-enabled prosperity. The provincial government decided to invest in a network that would connect government and public buildings (such as schools and medical facilities) across the province. The need for public sector connectivity was combined with the need for rural internet access, and the idea was that last-mile ISPs would be able to plug into the SuperNet as a middle-mile network to reach towns and villages across the province. Economic development would be extended beyond the cities, bridging the digital divide. In those heady days, there was talk of luring Silicon Valley businesses, like Microsoft or Cisco, to rural Alberta. Entrepreneurs and knowledge workers would set up shop in small towns, rural patients could be diagnosed through telehealth, and university lectures could be beamed into remote schools.

The 2000s followed a decade of telecom liberalization and provincial privatization, including privatization of telecom assets (AGT), so the last thing the provincial government wanted was a publicly-owned network. Science and Technology Minister Lorne Taylor (credited with leading the SuperNet’s development) made clear that running telecom networks was the business of private industry, not government. The CTO of Alberta Innovation and Science emphasized that it was definitely not a government network. Government wasn’t going to build it, wouldn’t own it, and wouldn’t manage it. The private sector would be unleashed and competition would take care of the rest. All government had to do was throw in $200 million and set the terms of the deal.

As Nadine Kozak writes, the SuperNet was a contract, and not public policy. The contract was signed without public input or legislative debate. Citizens would be consumers of the network, and didn’t need to know the details of the deal, which was complicated and confidential. The contract would have to be renegotiated after construction fell behind and private sector partners Bell and Axia had a legal fight about not living up to their respective terms. The network was eventually completed without fanfare in 2005, with Bell eating the additional costs of the delay. Following another renegotiation of the contract in 2005, Axia would run the SuperNet for thirteen years (including the three-year extension granted in 2013), and the government would have the option of assuming ownership of the rural network after thirty.

Public infrastructure in many rural communities did receive a considerable boost in connectivity thanks to SuperNet, but the province never did become Silicon Valley North, and the last mile of the network only extended to public sector clients. It was imagined that private ISPs would connect to the network and compete with each other over the last mile for residential and business customers (see below), but in much of rural Alberta this never happened. Local incumbent TELUS preferred to use its own network, even choosing to (over)build additional facilities in places where it would have been cheaper to use SuperNet.

Meanwhile, government responsibility for the network shifted or split between departments through successive reorganizations. In 2010, Premier Redford stated, “We haven’t focused on it as a priority … (It) seems to have been more of a problem between government departments not wanting to take ownership, or not knowing exactly who’s the leader”. For those who don’t have to deal with it directly, SuperNet is just another piece of the invisible infrastructure that keeps our world running, and today, most Albertans have never heard of it.

Cybera CEO Robin Winsor shows the CRTC a piece of the SuperNet – Nov. 24, 2014

There are also some people who know about SuperNet, but don’t have entirely positive things to say about it. Robin Winsor, head of Cybera, stated that “although many good things have come from the build of the SuperNet, its capacity has been vastly under-realized and under-utilized“. Axia, the company that operates the network, has long worked to counter widespread “misconceptions” about the SuperNet, like the “myth” that the network is expensive and difficult to access. Axia has often ended up as the face of the network and the target of many of these complaints, even through in many cases the faults lie in the design and execution of the SuperNet contract, for which provincial governments have been ultimately responsible.

Axia is a remarkable company in the Canadian telecom industry,  and the SuperNet contract was key to making it what it is today. Axia has since promoted or developed similar open-access fibre networks in several countries, but seems to have recently re-focused on Alberta. When it comes to the SuperNet, its prime responsibility has been to run the network (as Axia SuperNet Ltd.). In this capacity, Axia serves public sector clients, and acts as an “operator-of-operators” for ISPs wishing to connect to SuperNet for backhaul. In line with the principles of running an open-access network, Axia is not supposed to compete with the last-mile ISPs, or offer internet access to residential and business clients through SuperNet. Axia has also helped produce lots promotional content over the years about the SuperNet’s accomplishments and the “unlimited possibilities” offered by this totally amazing network.

On the other hand, Axia’s actions indicate that the company clearly recognizes the limitations of SuperNet, and has worked to address these through Axia Connect Ltd., a separate business endeavour from Axia SuperNet Ltd. (see this recent CRTC appearance by CEO Art Price on the distinction). What Axia SuperNet Ltd. cannot legally do (act as a last-mile ISP), Axia Connect can and does. Whereas Axia SuperNet Ltd. does not compete with private industry in the last mile, Axia Connect has been putting many millions of dollars into last-mile connections, focusing its efforts on deploying FTTP to parts of Alberta hereto neglected by incumbents. In the process, Axia is helping resolve the digital divide in a way that the SuperNet could not, but it is also competing with other approaches to the same problem, such as those currently being pursued through the Calgary Regional Partnership.

The distinction between Axia SuperNet and Axia Connect has kept the company compliant with the terms of the SuperNet contract, but claiming that Axia Connect’s FTTP deployments are “made possible by having access to the SuperNet” doesn’t help the public draw this distinction. Axia’s brand in Alberta is intimately linked to SuperNet, and for the first time, we are forced to consider what a decoupling might look like. This is because the SuperNet contract is once again up for renewal, except this time, Axia is not being granted a simple extension. Even if the company successfully wins the contract for the next term, the government seems to be looking at a “new vision” for the deal.

In short, the situation in Alberta is as follows: The SuperNet is legacy infrastructure, largely built or acquired from existing fibre assets in the early 2000s, and for now it should still be a valuable network with a lot of potential. Observers from other parts of Canada have sometimes looked at it with envy, but the project’s history has been troubled, and SuperNet has only achieved part of its original vision. The existing (and “increasingly-out-of-date“) contract expires in June 2018, with a decision on SuperNet 2.0 expected soon, and Axia, Bell, TELUS, and Zayo competing for the contract. Will a traditional incumbent become the government’s private sector partner? How messy would a transfer or responsibilities from Axia be, should the company lose the bid? If Axia wins, how will the deal be restructured to address the shortcomings of SuperNet 1.0? These are the big questions right now.

Meanwhile, broadband is a hot topic in rural Alberta, with active regional discussions, like an upcoming Digital Futures Symposium in Cochrane, the related Alberta Broadband Toolkit, municipal collaboration through the Calgary Regional Partnership, and broadband studies being carried out by the REDAs. TELUS has also been active with fibre upgrades, and there is a “land grab” underway as rural communities examine competing models of connectivity and decide how best to meet their needs.  Some communities are trying to convince Axia Connect to build them a local network (by demonstrating there are enough interested subscribers), while others are collaborating on a middle-mile backhaul option (skipping the SuperNet), or considering investing in a publicly-owned last-mile network (usually a choice between dark fibre, lit fibre, and wireless). It’s hardly a broadband gold rush out there in rural Alberta, but this is the most exciting I’ve seen it since I started paying attention several years ago.

Lots of dimensions here left to cover, and new developments expected. More Alberta explorations and updates to follow!

 

 

 

Essential Broadband

CRTC

The CRTC is currently in the late stages of its review of basic telecom services, intended to “examine 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“. This review has been proceeding through written submissions for the past year, but is currently wrapping up the public hearings phase. You can watch these on CPAC through the video archives, or read transcripts of the presentations and the back-and-forth with the Commissioners.

What is all of this about?

Given the scope of the review, this is not an easy question to answer.  First of all, it has become blindingly obvious that some level of internet access is required to “participate meaningfully” in society. This “self-evident truth” was expressed by CRTC Chairman Blais early on in the hearings. The question of whether broadband is a “want” or a “need” has shifted to more detailed  questions around what sorts of minimum speeds (or other performance indicators) are needed, or what kinds of networks Canadians require. Should obligations to provide a certain level of connectivity be imposed on some intermediaries, or can we make do with “aspirational targets”? If obligations are imposed, who should be obliged, where, and to what standard? How much will it cost, and who should pay for it?

There’s been a lot of talk during the hearings about reaching those populations who face persistent challenges, including rural pockets that have been bypassed by the spread of connectivity. Connectivity for low-income populations has also been discussed repeatedly, since the digital divide carves through urban areas as well as the countryside. Surprisingly, digital literacy keeps coming up in questions from the Commissioners, an area that has rarely been a focus for providers, or covered by their support for MediaSmarts. All of this is interesting because the long-standing criticism of the digital divide concept was that it was overly concerned with the technical provision of access, and failed to consider the social obstacles, such as skills (digital literacy) and ability (including cost). Well, the CRTC is certainly thinking about these things, but actually regulating in these areas would be  something new for the Commission.

Perhaps the most remarkable thing about the hearings has been the diversity of the participants. Speakers have included major and minor connectivity providers, as well other stakeholders. Since the ultimate stake is connectivity for the nation,  the entirety of Canadian society is effectively a stakeholder, and written submissions have come from far and wide. The CRTC has agreed to hear presentations from advocacy groups, consumers, campaigners, policy wonks, not-for-profits, and populations at the thin edges of our networks. Some of these participants have appealed for very broad government interventions, and been pressed by Commissioners’ to comment on specific broadband targets or implementation strategies that the CRTC might actually have a role in.

Given my Alberta roots, it was especially interesting to see Axia’s Art Price present his regulatory vision, which understandably coincides with the business model the company is already pursuing in Alberta. Alberta’s SuperNet was held up as a model for the sort of “community interconnect grid” that could be pursued elsewhere. During the question-and-answer, Price noted the provincial government’s current lack of attention to issue, and sidestepped the question of what happens when a backbone is built but no one steps up for the last mile. Cybera’s presentation earlier today led to a more mixed view of SuperNet through the questioning of Commissioner Vennard, who has some experience with the history of this project.

It’s also been good to get a chance to hear from some of the hundreds of intermediaries scattered across the country, including ILECs, SILECs, IISPs, WISPs, cablecos, satellitecos, non-profits, regional networks, and co-operatives. I’ve tried to get a good sense of the diversity of these institutions through my research, but there’s still plenty of smaller ones out there that I’m obviously not aware of (like Chebucto Community Net). The incumbents and their facilities may be key to anything that results from this proceeding (because that is where new targets and obligations really matter), but it’s important not to overlook these more local institutions that have their own particular perspectives.

One remarkable part of the hearings was CRTC Chariman Blais’s address on April 18, in which he stated that the review might be the “last best chance to get it right – a chance to create, together, a coherent national broadband strategy“, and that the CRTC would be “taking some leadership on defining the strategy“. This is the sort of leadership that has long been lacking from the federal government, and indicates a role for the CRTC beyond simply tweaking existing rates, incentives, and obligations.

So where will all of this lead?

The range of actions the CRTC could decide to take (after the Commissioners have time to digest the whole process) is nearly as broad as the scope of the review. There has been some discussion online about what authority the CRTC could use to impose obligations for new networks, but various models for a way forward have been proposed by participants in the process, and any decision by the CRTC can generate years of dispute about its basis in regulatory law. The CRTC could also do nothing at all, and may feel like it has little ability to address these problems. After all, the Commission can’t fund the infrastructure itself, or ask the federal government to do so. The CRTC gets to set the rules under which intermediaries operate, through obligations and incentives, and it has never been the role of the Chairman to develop a “digital strategy” for the nation.

While we probably won’t end up with a government-funded open-access national fibre backbone, a new crown corporation, or obligations for incumbents to extend fibre across Canada’s north, it does seem that the CRTC will at least do something that looks significant. Given the comments of the Chair, and the Commissioners’ demonstrated understanding and recognition of connectivity problems, continuing with the status quo doesn’t seem to be an option. There will have to be a move that promises to address at least some of the remaining technical (territorial) gaps in connectivity.  However, any action that’s truly ambitious here will mean the CRTC carving out a new role for itself. I think that without Cabinet support, a new national strategy or a new leadership role for the CRTC just doesn’t seem that likely.