Connected Communities in BC - including the 2018 Connectivity Benchmarking Study

Connected Communities in BC Including the 2018 Connectivity Benchmarking Study: Why Broadband Matters Prepared for Northern Development Initiative Trust

August 2018

kpmg.ca

Disclaimer This document has been prepared by KPMG LLP (“KPMG”) for Northern Development Initiative Trust (“Client” or “Trust”) pursuant to the terms of our engagement agreement with Client dated May 25, 2018 (the “Engagement Agreement”). KPMG neither warrants nor represents that the information contained in this document is accurate, complete, sufficient or appropriate for use by any person or entity other than Client or for any purpose other than set out in the Engagement Agreement. This document may not be relied upon by any person or entity other than Client, and KPMG hereby expressly disclaims any and all responsibility or liability to any person or entity other than Client in connection with their use of this document.

Our role was to outline certain matters that come to our attention during our work and to offer our comments and observations for the Trust’s consideration. Our procedures consisted solely of inquiry, observation, comparison and analysis of Trust-provided information augmented by publicly available information sourced as footnoted. We relied on the completeness and accuracy of the information provided. Such work does not constitute an audit. Accordingly, we express no opinion on BC’s broadband landscape and information contained in this document.

Table of Contents 01

Executive Summary

04

Understanding this Document

08

Connected Communities

09

What is a Connected Community?

10

The Connected Communities Framework

12

Leadership & Support

14 Connectivity 16

Digital Capability

18 Sustainability 20 23

Community Wellbeing BC’s Broadband Connectivity Performance

23 Introduction 25 Access 34 Affordability 41 45

Speed Broadband Internationally

48 Australia 49

United Kingdom

49

United States

4

Connected Communities in BC

Executive Summary In today’s world, those with the greatest connectivity – people, communities, cities, or countries – are positioned to reap the greatest benefits from an increasingly digital world. A compelling case for broadband lies in the concept of Connected Communities – those that leverage connectivity, amongst other foundational elements, to achieve sustainability, wellbeing, prosperity and resilience.

Especially for residents in rural areas, broadband access can be transformative to the way people live their day-to-day lives.

Noting that broadband empowers people as citizens, creators and consumers, the Canadian Radio-television and Telecommunications Commission (CRTC) set a Universal Service Objective of 50 Mbps download/10 Mbps upload speeds in 2016.1 To support the new target, CRTC also established a $750 million fund to support broadband infrastructure projects in underserved areas.

The Province of British Columbia (BC), the focus of this document, is continuing to make strides in its broadband connectivity. It has progressed in some areas due to the high concentration of BC’s population in the large urban centres of the Lower Mainland: 92% of its households have access to the CRTC target of 50 Mbps speeds and its residents receive the highest download speeds of all jurisdictions compared in this document. However, there remains substantial room for improvement. BC falls short of its peers on broadband coverage at lower speeds (1.5, 5 Mbps), which is necessary to access basic online services. Additionally, the proportion of plans subject to data caps (monthly data allowance an Internet Service Provider, or ISP, provides users) is above the sampled average, curbing consumers’ monthly internet use.2

It tends to be rural areas that lack access to broadband services comparable in speed, capacity, quality and price to those offered in urban centres.3 The 92% of BC households with access to CRTC target speeds are largely urban. Only 30% of rural BC communities have access to these speeds.

This also underperforms the national average for rural households (41%).4 BC’s population distribution, combined with its diverse geography, make building and maintaining broadband services expensive as ISPs incur higher costs to serve lower population densities. This is reflected in broadband plan affordability, where residents of rural BC continue to pay more for a comparable data allowance than urban dwellers. As well, they are restricted by the size of their data caps, which are lower on average in rural than in urban areas.5 Broadband is a key enabler for building a Connected Community and unlocking an area’s social and economic potential. The persisting digital divide between urban and rural areas heightens the risk of further isolating lagging communities, as there are pockets of BC residents who cannot effectively participate in the digital economy. This gap affects quality and accessibility of healthcare and education, level of safety and security, access to government services, and more. There is a cost associated with bridging that divide. Meeting the CRTC target will require a concerted and collaborative effort by all players to determine the appropriate level of investment and technologies needed to deliver high speed and affordable internet to every household in BC. As BC works to diversify its economy and become a leading technology ecosystem6, it is vital that broadband connectivity be a focus, and that rural regions do not get left behind.

1. Telecom Regulatory Policy CRTC 2016-496.

2. Based on broadband plan data collected from a sample of ISPs across select jurisdictions in June 2018.

3. Telecom Regulatory Policy CRTC 2016-496.

4. Innovation, Science and Economic Development Canada (ISED), CRTC 5. Based on broadband plan data collected from a sample of ISPs across select jurisdictions in June 2018.

6. BC Technology Report Card, 2016. 2018 edition is in progress at time of writing and scheduled for release in fall 2018.

Connected Communities in BC

1

Highlights Since 2017, under the invitation of the Northern Development Initiative Trust, KPMG has worked to compare BC’s broadband connectivity performance with that of peer jurisdictions. In this document: –– The concept of Connected Communities is introduced and a framework is proposed for BC communities to become more connected as well as to unlock key social and economic benefits where broadband connectivity plays a fundamental role. Communities should not lose sight of the need to develop and integrate other foundational elements if they are to progress on their paths to becoming truly connected. This can be seen in action through several case studies later in this document.

–– Understanding the criticality of broadband, this document looks at how BC performs relative to its peers across three dimensions – access, affordability and speed. What advertised speeds can residents access? What speeds do they actually receive? How much do they pay?

–– The document concludes by comparing Canada’s connectivity progress on the world stage and identifying lessons learned from its peers.

Analyzing data from the CRTC’s Communications Monitoring Report and sampling internet service providers on their service offerings, this document brings into focus BC’s broadband connectivity performance.

At a glance – BC’s broadband connectivity performance Vs. CDN peers

Performance Metrics

Urban

Vs. US peers

Rural

Access Affordability Speed Better than most

Comparable

Worse than most

n/a Data not available

Note: Urban and rural breakdown were not available for all metrics. For example, access metrics included in this assessment were on a jurisdictional basis only.

Summary: BC has made progress across all three dimensions since the previous year. However, there is further opportunity to lessen the urban-rural divide as ever higher bandwidths become available to urban residents while many rural communities have yet to meet the new CRTC target speeds.

2

Connected Communities in BC

Progress in BC but gaps remain BC has continued to make progress towards connecting both rural and urban areas and bringing “last mile” connections to many communities, including First Nations communities, through a number of partnerships and initiatives. 92% of households in BC have access to the CRTC target of 50 Mbps, though access underperforms other jurisdictions at lower speeds (e.g., 1.5, 5 Mbps), indicating potential for further improvement.

–– Demand for broadband is robust in BC. As of 2016, 88% of BC’s households subscribe to basic broadband (1.5+ Mbps), which is the highest subscription rate among peer jurisdictions. From 2011 to 2016, internet access spending in BC also grew by nearly 50%, which suggests residents are purchasing higher speeds or higher data cap plans. The CRTC noted for example, that the percentage of subscribers to 300+ GB plans grew from 25% to 39% from 2015 to 2016.7 –– At CRTC target speeds, BC outperforms other Canadian provinces in providing access. Due to a higher population density in the Lower Mainland, 92% of BC households have access to broadband speeds of 50+ Mbps, meeting the CRTC target set out in 2016 and exceeding all other Canadian provinces. Considering the minimum speed required to reap the benefits of internet-intensive devices and services in today’s world, this achievement is reflective of the quality of existing broadband infrastructure in BC. However, areas that currently don’t meet this target tend to be rural and remote areas, leaving room for improvement.

–– Access to lower speeds in BC trails that of its peers.

BC underperforms Québec, Ontario and Alberta on access to speeds (5 Mbps) necessary to use internet services such as videoconferencing and remote education without significant internet quality challenges. At 10+ Mbps broadband speeds, BC is on par with Ontario but lags Alberta, with 4% of BC’s households (more than 75,000 households) lacking access.

Digital divide exists between urban and rural areas In order to fully participate in the digital economy, high speed internet needs to be not only available, but also affordable.

Providing the same level of access, quality and affordability in rural areas as seen in urban areas continues to be a key challenge BC faces.

–– Rural BC lags urban BC for access to target speeds and pays a higher minimum price for that access. ISED and CRTC data shows that while an average of 41% of rural households have access to 50 Mbps speeds in Canada, only 30% of rural BC communities have that same access.

Additionally, the minimum price for a 50 Mbps plan is $60 in rural BC, versus $50 in urban BC. –– On a data cap basis, rural BC receives less data at a higher cost compared to urban BC. With a sampled average data cap of 126 GB, rural BC ranks last relative to its Canadian peers. For both 1–199 GB and 200+ GB data cap plans, rural residents in BC pay a premium of nearly 25% compared to their urban counterparts. The relative unaffordability of data impedes rural BC communities’ ability to realize the benefits of meaningful broadband access that fully enables participation in the digital economy and access to modern digital health services and education.

–– Urban-rural divide exists in BC for actual download speeds received by end consumers but the size of the divide is not as dramatic as seen in other provinces.

Overall, BC leads Canadian peers in terms of actual median download speed received by a household. Looking deeper, the difference between download speeds for urban and rural areas is not as significant as in Ontario and Alberta.

7. CRTC Communications Monitoring Report 2017

Connected Communities in BC

3

Understanding this Document Purpose of this document This document provides an objective analysis of BC’s residential broadband landscape relative to select comparable jurisdictions, information about the social and economic benefits of Connected Communities, and a proposed framework and roadmap highlighting the foundational elements required for communities to progress towards realizing the full benefits of becoming a Connected Community.

KPMG LLP (KPMG) was engaged by Northern Development Initiative Trust to collect quantitative data to perform an objective analysis of BC’s broadband connectivity against its peers, using a range of metrics to describe the availability, affordability and speed of broadband. It should be noted that this document focuses on existing broadband delivery methods such as Digital Subscriber Line (DSL) and fibre-optic cables, and does not include detailed analysis on mobile infrastructure. KPMG was also asked to explore the concept of Connected Communities in relation to remote and rural BC. Built from leading Smart Cities practices and adapted to the needs of BC communities, the document introduces a framework and case studies integrating information from BC community interviews. KPMG performed field work, research and analysis from June 4 to July 19 of 2018.

Methodology KPMG collected quantitative and qualitative data from government and other sources. KPMG also interviewed 12 communities and organizations across BC to understand the specific challenges and benefits for communities to become more connected.

broadband distribution – and these traits naturally vary from country to country. Although international comparisons are insightful in providing context as to where Canada stands relative to other Organization for Economic Co-operation and Development (OECD) nations, the benchmarking analysis conducted in this document focuses on Canadian and US jurisdictions that are similar to BC, using attributes such as population, population density, geography, and climate.

Furthermore, the UK, US, and Australia were used as case studies for the purpose of capturing market trends, policies, and key learnings that are applicable to BC and Canada.

Resources used KPMG relied on a number of resources to complete this document. Resources include, but are not limited to the following: –– Australian Broadcasting Corporation –– Canadian Internet Registration Association –– Canadian Radio-television and Telecommunications Commission –– US Federal Communications Commission –– Gov.uk –– Huawei Global Connectivity Index –– M-Lab –– Network BC –– Northern Development Initiative Trust –– Statistics Canada –– The Economist –– The Globe and Mail

Challenges associated with benchmarking

–– The United Nations

Benchmarking broadband quality, particularly with an international lens, is difficult; factors such as geographic area, population, urbanization, climate, culture and government can play critical roles in the relative ease and expense of

–– UN Broadband Commission

4

Connected Communities in BC

–– US Telecom

Glossary of broadband terminology Three main parameters for measuring broadband are: access, affordability and speed.

–– Access: Access is defined by the percentage of households with access to certain download and upload speed thresholds.

–– Affordability: The affordability of residential internet service plans can be considered both in absolute terms, and as a proportion of income.

–– Speed: Internet speeds are measured in bits per second, and are broken out by download and upload speed. Download speed is the speed at which data (e.g. files, pictures, and movies) is being delivered from the internet to you. Upload speed is the speed at which data is travelling from you to the internet. Here, a common unit is “Megabits per second” or Mbps, which is a million bits per second.

It should be noted KPMG relied specifically on data from CRTC, US FCC, StatCan and M-Lab, for quantitative broadband data (e.g., metrics pertaining to access, affordability and speed) and did not verify the accuracy of the data. The quantitative analysis performed in this document reviews residential broadband connectivity only. It therefore does not assess connectivity strengths or weaknesses for commercial plans. This was done because data collection agencies typically gather residential data only, and commercial plans will have much less representation in rural areas where

there is relatively limited business activity. However, the benefits of broadband are explored both from a residential and a commercial perspective in this document.

To increase consistency in analysis, urban areas are quantitatively based on StatCan’s definition as areas with over 400 people per square kilometer. Similarly, rural areas are described as areas with fewer than 400 people per square kilometer.

Regulatory landscape The CRTC, which is ultimately held accountable to the Parliament of Canada, is the main government agency involved in regulating Canada’s broadband landscape. Due to the competitive nature of the Canadian broadband market, the CRTC “does not intervene in the rates, quality of service issues, or business practices of internet service providers as they relate to retail customers.”8 The CRTC’s mandates primarily focus on – but are not limited to – regulating the wholesale customer market, setting national broadband targets and providing funding to improve broadband access to achieve its mandated targets. Each province may have its own provincial ministry or agency that focuses on improving broadband connectivity via provincial and/or federal funding programs outside of the CRTC. For example, in BC, Network BC’s (part of the Ministry of Citizens’ Services) primary mandate is to focus on bridging the connectivity divide between urban and rural areas.

8. CRTC, Internet – Our Role, 2017

Connected Communities in BC

5

What is “broadband”?

Broadband internet, or the combination of “broad bandwidth”, is wide bandwidth transmission that is always on and always faster than dial-up technologies. Broadband internet can be delivered through an array of technologies, including: DSL, fibre, fixed wireless, and cable.

A guide to broadband speeds Average Speed 1 GBps

Enabling Infrastructure 5G-enabled receivers and transmitters

100 Mbps Connection to fibre optic cable backbone 50 MBps

Business Use Cases

Personal Use Cases

Internet of Things, Smart Cities, Precision Agriculture

Virtual/Augmented Reality, autonomous vehicles

Real time data collection, supercomputing, backup

Digital medical image consultation/lag-free online gaming

HD video conferencing, fast download/upload or large files

Telehealth, distance education, HD streaming services, online gaming

6 MBps

Coaxial cables (TV cables)

File share, video conferencing

Standard definition streaming, basic telehealth

1 MBps

Digital Subscriber Line (phone lines)

Email, basic web browsing

Music streaming, basic web browsing

Source: The Globe and Mail, How 5G will change your life; Engadget, How much internet speed do you really need?

Fibre-optic broadband Fibre-optic broadband delivers high internet speeds. Its name comes from the use of plastic or glass cables, which allow for faster data transfer compared to the standard copper wires used in regular broadband connections.

The high transfer speeds that fibre-optic cables provide enable bandwidthintensive services such as HD video conferencing and distance education.

For rural communities, tapping into BC’s fibre-optic cable backbone lays the foundation for becoming Connected Communities.

6

Connected Communities in BC

5G and precision agriculture 5G is the fifth generation of wireless technology, promising capacity and speed that will allow for technologies such as sensor-enabled farming – otherwise known as “precision agriculture”.

In today’s digital economy, data is increasingly seen as a valuable asset, and the agriculture industry is leveraging this data. Precision agriculture is the knowledgedriven management of farms, using data to measure, assess, and analyze crops in real time, improving resource allocation and crop yields.

For example, farmers can leverage satellite imagery, miniaturized weather stations, and soil sampling to inform decisions around the optimal irrigation system for different plots. 5G gives farmers the capacity and speed to quickly turn sensor data into actionable information.

Similar technologies are also being applied in other industries such as forestry and mining which are key to BC’s economy.

Challenges to broadband investment in BC Providing underserved communities with broadband connection can be incredibly impactful. “Last mile” connectivity in rural BC makes services such as emergency rescue teams and basic telehealth available. Collaboration and co-investment between government entities and the private sector can go a long way in delivering this impact.

Distribution of high speed internet access across BC At time of writing, 30% of rural BC communities have access to 50 Mbps speeds compared to 99% of urban BC communities.

BC faces significant challenges to improving broadband connection for two main reasons: 1. BC’s rugged and dynamic terrain makes wireline infrastructure expensive to build and maintain.

Additionally, wireless infrastructure is less effective due to poor penetration in forested and mountainous areas.

2. Not only is BC’s population density relatively low (at approximately 5 people per square kilometre, it is nearly one-third that of Ontario)9, the relatively higher degree of population dispersion makes it difficult to share the expense of infrastructure over a meaningful number of residents in these areas.

These factors make it difficult for ISPs to create a sound business case to connect rural and remote areas.

Note: This heatmap depicts estimated coverage.

Source: ISED, CRTC

9. StatCan

Connected Communities in BC

7

Connected Communities Telehealth

Distance education

Intelligent transport

Skilled workforce Tsunami early warning system

Digital Inclusion 8

Connected Communities in BC

Digital Integration

What is a Connected Community?

A Connected Community applies a digital mindset to reimagine itself in today’s interconnected world.

Digitally-empowered Connected Communities purposefully integrate technology into all aspects of community development to improve livability, workability and sustainability, while leveraging existing resources in new ways to achieve greater economic, social and environmental outcomes.

Enhanced wireless coverage

Quality of life

Emergency first responder

Economic diversification and innovation Environmental sustainability

Digital Innovation

Connected Communities Connected Communities in BC

9

The Connected Communities Framework Connected Communities unlock key benefits The world is going through a digital transformation.

Connected Communities integrate digital innovation into all aspects of community development to improve well being.

Communities do not become digitally-enabled by chance; it happens by design. Stepping up their digital bench-strength, communities are capitalizing on emerging digital opportunities in health, education and economic development.

Connected Communities are using a fresh digital lens to integrate technology into all aspects of community development including building dynamic cross-sector partnerships, engaging citizens in novel ways to tap local problem-solving capacity, and assessing local resources.

This integration has the potential to unlock key benefits that can greatly enhance community life including how people earn a living, access public services, learn, and engage in their communities. They open opportunities for communities to move from geographic and social peripheries to the world stage.

Broadband is the key enabler Digital infrastructure and broadband access are key enablers and accelerators for communities to become connected and realize the potential benefits.

Broadband access is a necessity in every community looking to improve its quality of life, sustainability, and resilience in the ever-changing digital economy. Communities that are not well-connected run the risk of becoming even more isolated and unsustainable.

Communities need a strong foundation Unlocking the full benefits of Connected Communities requires five strong foundational elements that extend beyond broadband and technology: leadership & support, connectivity, sustainability, digital capability, and community wellbeing.

This document introduces each foundational element within the framework (as shown on the right), so that communities can support future development and advancement.

10

Connected Communities in BC

Layers of benefits unlocked –– Digital Inclusion: Basic communication provides inclusion and access to vital services such as first responders.

Limited connectivity restricts a community’s ability to benefit from a digital economy.

–– Digital Integration: Moderate connectivity supports most business and community needs, fostering greater integration and access to improved services.

–– Digital Innovation: Good connectivity and digital capability supports a knowledge workforce and attracts talent that drives innovation and growth opportunities.

–– Connected Communities: A truly connected community is at the forefront, continuously evolving and innovating.

Connected Communities integrate digital innovation into all aspects of community development to improve well being and achieve greater economic, social and environmental outcomes. It’s a thriving community and a place where people want to live, work and play.

“To become truly connected, communities

need to embark on a journey of digital inclusion, integration and innovation.”

— Chris Sainsbury, National Lead for Smart Cities, KPMG LLP

Leadership & Support Successful communities need strong leadership to drive forward the digital agenda: digital champions serve as leaders and catalysts for change.

Champions can come from a local, regional or First Nation government, a nongovernment agency, or the business community. They provide the vision upon which supporting strategies help achieve better outcomes.

Digital transformation touches numerous stakeholder groups with different perspectives – all playing key roles in supporting communities’ ongoing development and transformation. Connected Communities of the future will enable greater coordination and collaboration between key stakeholders to align efforts, leverage opportunities and better position themselves to access the right resources and funding that support their vision.

12

Connected Communities in BC

“The role of municipalities has changed to be

much more than just providing basic utilities and services.”

— Andy Adams, Mayor, City of Campbell River

Collaborative partnership driving Nelson’s digital transformation

Communities joining digital forces through a Connected Coast In January 2018, the federal and provincial governments announced a combined investment of $45.5 million to lay new subsea fibre-optic cable to bring new or improved high-speed Internet to 154 rural and remote areas, including 44 First Nations communities along the entire BC Coast, by 2021.10 This showcases what can happen when key stakeholders including First Nations and all levels of government coordinate and collaborate for a common cause. The City of Campbell River, due to its strategic investment in fibre as part of downtown revitalization, is positioned to play a regional role as connectivity expands via the Connected Coast project.

The Nelson and Area Economic Development Partnership (NAEPD) is a collaborative effort between the City of Nelson, Community Futures Central Kootenay, the Nelson & District Chamber of Commerce, and RDCK Electoral Areas E and F to jointly, efficiently, and effectively pursue local and community economic development opportunities.

Guided by an Advisory Committee consisting of members from the various entities and local businesses, the area plans to build a digital economy and become a Connected Community. With funding set aside by local governments and a clear vision spearheaded by an Execution Committee, the community has started building connectivity infrastructure, fostering innovation, retaining and attracting talent, and promoting digital equality. Nelson was named one of the world’s Smart21 Communities in 2017, along with cities including Moscow, Queensland, and Edmonton.

10. Connected Coast Project, 2018

Connected Communities in BC

13

Connectivity Broadband access is the cornerstone of Connected Communities – unlocking the benefits that come with connectivity and transforming the way residents in rural areas live their day-to-day lives.

Connectivity is composed of three dimensions: access and coverage; high-speed broadband to support high-technology industries; and affordability from an end-consumer point of view.

The ability to interact and capture data through smart devices and sensors is essential in the age of the data economy. The future of communities is based on the capture and consumption of data, whereby open data platforms encourage innovation, support smart technologies, and improve citizen services and experience.

14

Connected Communities in BC

“It’s not pen and papers, it’s not pictures, it’s

being online, it’s being connected … so if our community isn’t accessible that way, people can’t find us anymore.”

— Brenda Andersson, Finance Officer, Village of Granisle

Municipal Broadband Network in Campbell River A series of paper mill closures in Campbell River, on Vancouver Island’s east coast, had a huge impact on the local economy. This prompted the community to redesign its strategy for the future, building a more diversified economy supported by a healthy innovation eco-system.

Bringing last-mile to Granisle With only 300 people, the village of Granisle, in the province’s northern interior, faces the classic challenges of small rural places: decline in its main industry of mining and a population of aging retirees on fixed incomes. In response to these challenges, the community decided to develop internet connectivity to meet its current and future needs and to serve as the platform on which to build its economy. When fibre was laid along Hwy-118, Granisle worked with the government and TELUS to bring the last-mile to the village, and used wireless to distribute internet service. In addition to wired infrastructure, the village’s network includes four wireless towers to ensure access for more homes and hotspots at local campgrounds and lodges, to increase tourism.

To attract the businesses and workforce of the future, the city of Campbell River invested in a progressive Municipal Broadband Network (MBN) that completed its first phase in November 2017. Current entrepreneurs and future technology start-ups now have access to affordable and reliable enterprise-level internet connectivity, enabling them to better compete in today’s knowledge-based economy. The municipal government views the MBN as a foundational element to building its economic eco-system, coupled with network opportunity and mentorships to support and attract businesses and talent. Since its implementation, the MBN has attracted attention from various parties interested in doing business in Campbell River, positioning the community for a sustainable future.

For a small community like Granisle, resources are often constrained. The village leveraged broadband connectivity to address the challenge. Broadband enables the use of smart technologies to provide the necessary community services in a highly effective way. With remote sensing and monitoring, the Village was able to consider a biomass heating facility to replace its former heat sources. Reduced operating burden on staff made the facility feasible, which reduced heating costs and created a small revenue stream from sale of excess heat.

Connected Communities in BC

15

Digital Capability Digital capability is key to the reinvention and transformation of knowledge-based communities.

Greater capability spawns greater innovation that drives business opportunities and improves livability.

A focus on digital literacy, adoption and skills development for personal and business benefit is fundamental to building capability. From distance learning programs, to local training and college partnerships, it goes beyond simply training and developing skillsets, but extends to supporting and fostering innovation and tapping into the opportunities that come with it.

16

Connected Communities in BC

“Distance education provides equal access to

education for everyone.”

— Brian Naka, Principle, EBUS, an online education community in Vanderhoof, BC

Community-based skills development in action in Trail With rapid technology advancements and ever-changing business needs, Trail recognizes the need to proactively develop the labor force to meet the skills requirement. The community has taken on a few initiatives including:

Distance learning empowering students in Skidegate The Connected North education program partners with schools in remote Indigenous communities across Canada to foster student engagement and enhanced education outcomes. The program is made possible through the use of Cisco’s high definition, two-way TelePresence video technology to deliver immersive and interactive distance education services right into school classrooms. Sessions range across curriculum areas including math, art, science, social studies, health promotion, language and culture, and have introduced teachers and students to inspiring guest speakers and virtual field trips that expand learning opportunities beyond the classroom walls.

–– Working with local clubs/organizations such as MIDAS, Robotics Club and Technology Club to create training programs around digital technology; –– Educating teachers on digital technology and getting their buy-in so they can pass on the learning; –– Partnering with Selkirk College to introduce a new twoyear diploma program on digital technology.

Coastal First Nations (CFN), an alliance of nine BC First Nations living on British Columbia’s North and Central Coast and Haida Gwaii, has worked with Cisco to bring the Connected North program to BC with a pilot project in Skidegate. Many CFN communities still struggle with poor broadband service or a lack of access. Investment and support to build last-mile infrastructure is needed to support more programs like Connected North.

Connected Communities in BC

17

Sustainability A healthy, sustainable community is rooted in a diversified, green, resilient economy.

Connectivity is having a transformational impact across rural BC, allowing communities to re-envision and reinvent themselves, to diversify their economies in ways that respect, support and leverage community values. This leads communities to relevancy, growth and competitive advantage.

The need to adapt, grow and innovate requires workforce attraction, support structures and programs for entrepreneurs and sensitivity to the pristine environments and responsible lifestyles that many entrepreneurs seek. Accelerator programs and incubators, mentorship and co-share workplaces are all integral to the innovation eco-system.

18

Connected Communities in BC

“It is imperative that the rural communities find

their unique story.”

— Terry Van Horn, Executive Director of Lower Columbia Initiatives Corporation

Developing the Metal Tech Alley competitive advantage The Lower Columbia Initiatives Corporation (the economic development agent for West Kootenay) understood that the Trail/Rossland areas’ greatest strengths lay in metallurgy and technology with Teck Resources’ local operations, as well as the highly-skilled support service and labor force.

Economic diversification with sustainability in mind in Tofino “Living within the means of the environment” is the guiding principle for economic development activities in Tofino. Situated within a UNESCO Biosphere Reserve area, Tofino has been consciously moving away from resource extraction, and is mindful of over-tourism. The community diversified its tourist offerings – for example, providing courses and learning experiences with West Coast Nest, an initiative which helps share knowledge and develop mutual understanding to build a more resilient and sustainable community.

The communities decided to develop the region into a competitive location for business and overall livability, hoping to attract the global business and innovation clusters that are leading economic change. To accomplish this, it has invested energy, money and entrepreneurial spirit into building the Metal Tech Alley - a metals technology corridor with companies in metallurgical and intelligent materials science, industrial matter recycling, and the Industrial Internet of Things.

Instead of letting industrial byproducts leave the region, the communities work with local firms to re-develop and commercialize them, leveraging resources such as the MIDAS Fabrication Lab (3D design/printing skills) and the i4C Innovation Center.

A great success of the initiative has been bringing together municipalities and businesses from the entire region around a common vision and shared story.

Connected Communities in BC

19

Community Wellbeing Healthy and sustainable communities support quality of life. Citizen and business engagement is central to shaping and building community wellbeing.

Connecting communities enable social inclusion and interconnectivity, and help citizens work together to shape a future identity. Building the social fabric that underpins Connected Communities – a shared quality of life and wellbeing requires a citizen-centric approach.

20

Connected Communities in BC

“Smart technology can be a big enabler in care

for chronic and acute diseases.”

— Dr. Anurag Singh, Medical Director, Kidney Services, Northern Health

Being “Wave Safe” in coastal communities

Tele-Kidney-Care improving quality of life in Northern BC Residents in many rural and remote communities in BC have limited access to specialist care. This issue is especially prevalent for chronic conditions such as kidney disease, where early identification is very important.

Tele-Kidney-Care, a program launched by Northern Health, leverages real-time video conferencing technology between Northern Health facilities and Prince George Regional Hospital to provide virtual care for patients living in rural and remote communities. It provides these patients with equitable access to specialist team-based care, and saves them from expensive travel for specialist services, enabling them to live and stay engaged in their communities.

Since its launch, the program has been very successful and is now serving over 25 communities in Northern BC. The goal is for Tele-Kidney-Care to be incorporated into daily workflows to provide quality care for chronic and acute kidney diseases.

Tofino is a small, close-knit community with 1,932 year-round inhabitants. Through tourism, the community numbers grow exponentially during the summer months and winter storm season, with up to 25,000 visitors every year. The Pacific Rim region where Tofino lies is prone to earthquakes and tsunamis. Being a rural community away from urban centres with single highway access, it is critical that Tofino develop a resilient natural disaster notification system and response mechanism that can take care of both the local residents and the visitors.

In response, Tofino has improved its disaster warning systems. Together with adjacent First Nations and partner communities, it created “Wave Safe”, a suite of tools to improve safety, including multi-hazard technology as well as increased safety preparedness for earthquakes and tsunamis. The tools are designed to be applicable and scalable to other coastal communities in Canada and around the world.

Tofino, Ucluelet and five adjacent First Nations communities are collaborating to collectively improve coastal safety and increase resiliency and long-term sustainability. None of this would have been possible two years ago when Tofino had no access to the high-speed fibre broadband network the “Wave Safe” tools will depend on.

Connected Communities in BC

21

22

Connected Communities in BC

BC’s Broadband Connectivity Performance Introduction BC continues to improve overall broadband connectivity to its 4.6 million residents, while also enhancing performance for unserved or underserved households, typically in rural areas. Its varied landscape and population density are a sampling of challenges that the province faces when advancing connectivity to all of BC.

BC’s population density relative to peer jurisdictions Washington

BC’s relatively lower population density in conjunction with its high population dispersion outside of its urban centres impacts both access and affordability.

Oregon Ontario Alberta Québec BC 0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Population density (population / square km) Source: StatCan, US Census

The following section assesses BC’s broadband connectivity performance on three dimensions: access, affordability and speed. The purpose of this exercise is to help identify areas of focus to help strengthen BC’s connectivity landscape and enable more BC residents to unlock the various benefits of internet connectivity.

Please note that for some metrics examined, data was available only on a provincial basis. Respective rural and urban performance may differ.

Connected Communities in BC

23

Selecting peer jurisdictions This document compares BC’s broadband connectivity performance against three Canadian provinces and two US states, given that they exhibit similar characteristics to BC in terms of geography, population makeup and broadband ecosystem. As such, they face many of the same challenges and conditions as BC when advancing connectivity.

Geography

Population

–– Terrain –– Landmass –– Proximity to BC

Broadband Ecosystem

–– Demographics –– ISPs –– Density –– Competitiveness –– Indigenous presence

Québec Ontario Alberta Washington Oregon

At a glance – BC’s broadband connectivity performance Vs. CDN peers

Performance Metrics

Urban

Vs. US peers

Rural

Access Affordability Speed Better than most

Comparable

Worse than most

n/a Data not available

Summary: BC has made progress across all three dimensions since the previous year, and has continued to outperform its peers on access to higher download speeds (50+ Mbps) as well as actual download speeds. However, much work is still needed to close the digital urban-rural divide. Rural BC lags urban BC for access to CRTC target speeds. Significant disparity exists in terms of affordability by data cap, limiting rural BC’s ability to participate in the digital economy.

24

Connected Communities in BC

Access High-speed internet is a basic service necessary to support the quality of life of all Canadians. – CRTC

Broadband access is a fundamental enabler for participation in the digital economy.

It unlocks opportunities that may not exist otherwise – for example, connecting students to remote education, citizens to government services, and businesses to distant consumers. When access is unavailable, businesses, including those in rural and remote areas, are unable to unlock internet-based benefits, and are forced to operate in a slower, more confined marketplace. This limits the growth of those businesses and their socioeconomic impact.

The CRTC recognizes this and has set a target of at least 50 Mbps for downloads and 10 Mbps for uploads for all Canadian homes and businesses.

Three key components of access are examined including: service availability by speed category11, data caps on broadband plans, and subscription rates to available plans.

Comparison of access metrics12 Vs. CDN peers

Vs. US peers

Access metrics Basic broadband access (1.5+ Mbps) (2016) Standard broadband access (5/10+ Mbps) (2016) Higher broadband access (25/50+ Mbps) (2016) % of plans without data caps13 (2018) Subscription rates (2016) % of population with access to 2+ ISPs (2016) Better than most

Comparable

n/a Worse than most

n/a Data not available

11. All speeds referred to in this section are advertised speeds, which may not be the same as the actual download speeds received by the end consumer – actual speed is discussed later on in the Speed section.

12. CRTC notes that increases in broadband service availability by speed categories in 2016 are partly due to the higher accuracy of the pseudohousehold methodology. The increase in availability due to migration to the pseudohousehold methodology is as follows (in percentage points): 0.7 for 1.5 to 4.9 Mbps, 1.0 for 5 to 9.9 Mbps, 1.4 for 10 to 15 Mbps, 1.7 for 16 to 24.9 Mbps, 1.8 for 25 to 29.9 Mbps, 2.7 for 30 to 49.9 Mbps, 2.9 for 50 to 99.9 Mbps, and 3.6 for 100+ Mbps.

13. Due to sampling variation introduced by changes in the list of ISPs available in surveyed jurisdictions and the number of plans offered, year-over-year comparison of the percentage of plans without data caps has not been included.

Connected Communities in BC

25

Highlights –– Uneven performance: At lower speed thresholds, BC is in line with provincial averages, indicating potential for improvement. BC fares better at higher speeds, where its penetration rates are above the Canadian provincial averages.

Households with access to various download speeds, 2016 (BC and Canada) 100 Percentage of households (%)

Areas with a lack of access to higher speeds tend to be disproportionately rural.

80 60 40 20 0

1.5+ Mbps

5+ Mbps

10+ Mbps

25+ Mbps

BC

50+ Mbps

Canada

Source: CRTC Communications Monitoring Report 2017

–– Disparity in target speed access: 30% of rural BC communities have access to 50 Mbps speeds, lagging the national average at 41% of rural households.

–– High broadband demand: BC continues to exhibit one of the highest subscriber rates for broadband among its peers, demonstrating the province’s appetite for internet when it is made available.

At 1.5+ Mbps...

Basic email browsing Basic web browsing

Access to basic broadband (1.5+ Mbps) BC continues to improve in access to basic broadband IIn BC, 98% of the population has access to 1.5+ Mbps broadband download speeds, in line with the Canadian provincial average. It is expected that the remaining 2% will gain access through satellite technology.

Households with access to 1.5+ Mbps broadband, 2016 (Canada and US)

SD video download

Canadian average at 1.5+ Mbps

Percentage of households (%)

100 98 96 94 92 90 BC

Québec

Ontario

Alberta

Oregon

Washington

Source: CRTC Communications Monitoring Report 2017; FCC fixed broadband deployment and staff block estimates by census tract, 2017

26

Connected Communities in BC

Basic remote education

File sharing

Basic telemedicine

Access to standard broadband speeds (5 / 10+ Mbps) BC lags its peers in access to 5+ Mbps speeds, but surpasses the Canadian average for 10+ Mbps A broadband speed of 5 Mbps enables more sophisticated internet activities.

Access to 5+ Mbps in BC has improved to 97% of BC’s households. While in line with the Canadian average, it underperforms its US peers.

BC achieved a comparatively greater improvement in access to 10+ Mbps. Reaching 96% of BC’s population, it has surpassed the Canadian provincial average (94%).

Households with access to 5 / 10+ Mbps broadband, 2016 (Canada and US) Canadian average at 5+ Mbps Canadian average at 10+ Mbps

Percentage of households (%)

At 5+ Mbps...

100 95 90 85 80 75 70 BC

Québec 5+ Mbps

Ontario

Alberta

Oregon

Washington

10+ Mbps

Source: CRTC Communications Monitoring Report 2017; FCC fixed broadband deployment and staff block estimates by census tract, 2017

DID YOU KNOW? The internet helps people access content that may be otherwise unavailable.

For rural areas that may lack training and travel resources, this access can deliver training to teachers faster and at potentially more affordable prices.

For students, internet makes possible online homework submissions, live chats, and emails, increasing the quality of remote instruction. Students in rural and remote areas can tap into course curricula that may be formerly only available in urban settings.

Connected Communities in BC

27

At 25+ Mbps...

Richer remote education 4K video streaming Enhanced telemedicine

Access to higher broadband speeds (25 / 50+ Mbps) BC continues to exhibit leading accessibility to 50+ Mbps speeds in Canada In the province, 93% of the population has access to broadband speeds of at least 25 Mbps, an improvement over previous years, when access rates were between 85% and 90%. This may be due in part to the investments ISPs have made in fibre optic technology in response to increasing demand in Canada for faster internet services.

While tied with Ontario for second place, BC has yet to reclaim its first place standing in Canada (a position it has held until 2014). Its lower population density and challenging topography suggests that it will be difficult to add incremental internet access in a cost-effective manner, compared to other jurisdictions.

Percentage of households (%)

Households with access to 25+ Mbps broadband, 2012–2016 100 95 90 85 80 75 70 2012

2013 BC

2014 Alberta

2015 Ontario

2016

Québec

Source: CRTC Communications Monitoring Report 2013 – 2017

At 92%, BC performs the strongest against its Canadian peers for access to 50+ Mbps speeds and is well ahead the Canadian average of 86%.

Households with access to 50+ Mbps broadband, 2015–2016 Percentage of households (%)

100 95 90 85 80 75 70 BC

Ontario 2015

Québec 2016

Source: CRTC Communications Monitoring Report 2016 – 2017

28

Connected Communities in BC

Alberta

However, while growth in this area has been strong in 2016 (up 4% from 2015), BC continues to lag Oregon and Washington. Connecting the remaining 8% of BC’s population, concentrated in rural and remote areas, will require overcoming challenges in geographic location, topography and low population densities.

Households with access to 5 / 50+ Mbps broadband, 2016 (Canada and US) Canadian average at 5+ Mbps Canadian average at 50+ Mbps

Percentage of households (%)

CRTC and ISED data shows that only 30% of rural communities in BC has access to target speeds. This lags the Canadian average of 41% (rural households). (refer to heatmap on page 7)

100 95 90 85 80 75 70 Alberta

Ontario

QuĂŠbec

5+ Mbps

BC

Oregon

Washington

50+ Mbps

Source: CRTC Communications Monitoring Report 2017; FCC fixed broadband deployment and staff block estimates by census tract, 2017

Data cap Monthly data allowance an ISP provides users.

Exceeding a data cap may require users to pay additional fees and/or otherwise experience slower data speeds (throttling).14

Access to higher data caps When broadband is available, BC sees a significant discrepancy between broadband data caps in urban and rural areas Given that exceeding data caps results in overage fees or throttled speeds for users, they influence all three metrics: accessibility, affordability and speed. In contrast, unlimited plans (i.e., plans without data caps) give users full advantage of their broadband connectivity, for example, by connecting to the internet through multiple devices without regulating internet use.

Practical guide to monthly data caps 10 GB

200 GB

300 GB

Email

1,000

10,000

20,000

Video Conference

40 hours

400 hours

800 hours

Video Streaming

10 hours

100 hours

200 hours

Source: SaskTel, Xplornet

14. Internet Traffic Management Practices, CRTC.

Connected Communities in BC

29

BC has the second lowest percentage of plans without data caps KPMG sampled more than 900 broadband plans across peer jurisdictions and found that Ontario has the most plans without data caps (i.e., unlimited), at 49%.

In comparison, 36% of BC plans have no data caps, below the average of 41% and second to last out of all peer jurisdictions.

Broadband plans with and without a data cap, 2018 (Canada and US) Canadian average for plans without a data cap: 41%

Ontario

49

Washington

48

Oregon

40

Alberta

40

BC

36

QuĂŠbec

31 0

20

40

60

80

Percentage of plans (%) Plans without a data cap

Plans with a data cap

Source: Broadband plan data collected from a sample of ISPs across the selected jurisdictions in June 2018. Figures do not include applicable taxes. Conversion from USD to CAD based on USD/CAD 1.3 exchange rate from the Bank of Canada.

30

Connected Communities in BC

100

The weighted average usage of high speed internet subscribers in Canada was 128 GB per month in 2016. – CRTC

Average size of data caps Rural BC has one of the lowest data caps compared to other jurisdictions BC’s rural communities have one of the lowest data caps among all peer jurisdictions, averaging 126 GB per month. The same is true in urban BC, where the average data cap is 223 GB. This limits the quality of internet services that subscribers can access without incurring additional fees or experiencing slower speeds.

Average size of limited data caps, 2018 (Canada and US) 386

Alberta

362 273

Ontario

BC has lower than average data caps in rural areas which limits the quality of internet services that subscribers can access without paying penalties.

229 261

Washington

521 169

Québec

139 126

BC

223 112

Oregon

583

0

100

200

300

400

500

600

Data cap (GB) Rural

Urban

Source: Broadband plan data collected from a sample of ISPs across the selected jurisdictions in June 2018. Figures do not include applicable taxes. Conversion from USD to CAD based on USD/CAD 1.3 exchange rate from the Bank of Canada.

Connected Communities in BC

31

Access to ISPs Despite a high number of ISPs, 30% of BC residents are served by only 1 or 2 ISPs The number of ISPs in a jurisdiction provides a good indication of the health of the broadband market. A high number of ISPs means there is strong demand for broadband and, more importantly, a compelling business case for ISPs to compete.

BC’s broadband ecosystem has approximately 80 ISPs, which is almost double the amount in Alberta; however, this does not necessarily translate to better service and/or lower rates.15 This is in part driven by geographic constraints that prevent ISPs from competing in neighbouring communities, as well as the trend that sees larger telecom providers acquiring many smaller ISPs. The market in BC exemplifies this problem, as 30% of the population has access to two or fewer ISPs. BC’s topographic diversity, coupled with low population density, are two possible drivers for this uneven distribution of ISPs, especially for rural areas. It is difficult for rural areas to sustain a competitive environment which would place downward pressure on prices. As a result, rural parts of BC see less competition and further market fragmentation, translating to less affordable pricing.

Among its peers, BC has the largest % of population with access to three or fewer ISPs, suggesting a relatively fragmented broadband market.

Access to number of ISPs, 2016 BC

Québec

Ontario

Alberta 0

20 1 ISP

40 2 ISPs

60 3 ISPs

80 4 ISPs

100 5+ ISPs

Source: Data collected from Connect to Innovate eligibility map. Data analyzed by Network BC (Ministry of Citizens’ Services).

15. Data collected from Connect to Innovate eligibility map. Data analyzed by Network BC (Ministry of Citizens’ Services)

32

Connected Communities in BC

Subscription rate Percentage of population that purchases internet when it is made available.

Subscription rates BC leads peer jurisdictions in subscription rates to basic broadband Subscription rates reflect the affordability, reliability and accessibility of available offerings. At 88%, BC has the highest subscription rate to basic broadband, even against US counterparts with 100% access coverage. This highlights BC consumers’ appetite for broadband connectivity and additional capacity for subscription.

Subscription and availability rates at 1.5+ Mbps, 2016 (Canada and US) Canadian average subscription rate: 82% 100

Washington

88 100

Oregon

84 100

Alberta

87 99

Ontario

84 98

BC

88 98

QuĂŠbec

80

0

20

40

60

80

100

Percentage (%) Population in each jurisdiction covered by fixed broadband Subscription rates to fixed broadband Note: US state subscription rates are based on 200+ Kbps speeds.

Source: CRTC Communications Monitoring Report 2017, FCC Internet Access Services: Status Document as of December 2016.

Connected Communities in BC

33

Affordability Improved broadband access rates and speeds do not guarantee that more residents and businesses will purchase internet services. To bridge the digital divide and enable in particular remote and indigenous communities to thrive in the digital economy, internet also needs to be affordable.

Most jurisdictions rely on a market-driven model where the service providers are the primary agents for broadband infrastructure development. In urban areas where population is denser, ISPs are able to serve more households with less wireline infrastructure. The ease of distribution and resulting competitiveness of the broadband market places downward pressure on prices.

However, the cost of connecting rural or remote areas, where the population density is relatively lower than in urban areas, can make for a risky and difficult case for investment. When the infrastructure is built, costs incurred by the ISP are transferred onto the end-consumers over time. The urban-rural divide is partly due to this dynamic. Often, the government is needed to intervene (i.e., funding mechanisms) to reduce the high capital and operating costs necessary to provide internet to these communities.

The metrics outlined below examine affordability from an end consumer’s point of view, which includes household internet access spending, and broadband plan prices by speed thresholds and by data cap limits.

50

50

40

40

30

30

20

20

10

10

0

BC

Québec Population density

Alberta

Oregon

Ontario

Washington

0

Percentage of rural population (%)

Source: StatCan, US Census

Highlights –– High internet spending: BC’s internet access spending growth is higher than recorded in comparable jurisdictions, and outpaces that of inflation.

–– Urban-rural price difference: For rural BC, the minimum monthly price for a 50 Mbps plan is $60, which is $10 (20%) higher than for its urban counterparts.

34

Connected Communities in BC

Percentage of rural population (%)

While comparable to other provinces in % of rural population, BC has the lowest population density of its peers. This may be indicative of greater dispersion of rural residents in BC, and subsequently, challenges in providing affordable broadband.

Population density (population / square km)

Population density and percentage of rural population

Comparison of affordability metrics Vs. CDN peers

Vs. US peers

Affordability metrics

For a 50 Mbps plan

For plans with data caps of 1–199GB and 200+ GB

Better than most

Minimum price in urban communities (2016)

n/a

Minimum price in rural communities (2016)

n/a

Rural and urban minimum price comparison (2016)

n/a

Rural and urban maximum price comparison (2016)

n/a

Average monthly prices in urban communities (2018) Average monthly prices in rural communities (2018) Price difference between urban and rural areas (2018) Comparable

Worse than most

n/a Data not available

Connected Communities in BC

35

Internet access spending In BC, internet access spending grows at a faster rate than in peer jurisdictions At 6.6%, BC’s median household income has grown at a comparatively high rate since 2010, reaching nearly $70,000 in 2015. Internet access spending is far outpacing income growth. Having risen over 50% during the 5-year period since 2011, internet access spending outpaced that of peer jurisdictions. From 2015 to 2016, CRTC reported a further 5% increase in BC’s internet access spending, reaching a yearly figure of $633.

Household internet access spending, 2011–2016 Internet access spending (2016 $)

700 650 600 550 500 450 400 350 300 2011

2012 BC

2013 Alberta

2014 Ontario

2015

2016

Québec

Source: CRTC Communications Monitoring Report 2017

BC residents were spending 0.85% of their income on internet access in 2015, up from 0.60% in 2010.

Yearly household internet access spending as a percentage of income

Percentage of income (%)

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 BC

Ontario 2010

Québec

Alberta

2015

Source: CRTC Communications Monitoring Report 2017, StatCan Survey of Household Spending 2011, 2016

36

Connected Communities in BC

Broadband plan prices The minimum monthly price for a 5 Mbps plan in BC’s rural communities has nearly halved Since 2015, the minimum monthly price for a 5 Mbps plan has stayed the same for BC’s urban areas. However, in rural areas, the minimum monthly price has dropped by nearly half, from $59 in 2015 to $30 in 2016. This indicates a positive trend for BC’s rural residents, who may now access (via a 5 Mbps plan) core online health and education services at a more affordable price. Alberta is also seeing similar pricing trends.

Minimum price for a 5 Mbps plan in urban communities, 2014–2016

Monthly price (2016 $)

35 30

31 25

25

25

20 15 10 5 0 2014 BC

2015 Ontario

2016 Québec

Alberta

Source: CRTC Communications Monitoring Report 2017

Minimum price for a 5 Mbps plan in rural communities, 2014–2016

Monthly price (2016 $)

70 59

60 50

50

40 30

30 20 10 0 2014 BC

2015 Ontario

2016 Québec

Alberta

Source: CRTC Communications Monitoring Report 2017

Connected Communities in BC

37

The minimum monthly price for a 50 Mbps plan is $10 (20%) more expensive for rural BC than for urban BC Comparing minimum-priced monthly 50 Mbps plans across provinces, there is a $10 difference between urban and rural areas in Alberta and BC. The 20% premium means it is more unaffordable for rural residents to access target CRTC speeds.

Rural and urban minimum price comparison for a 50 Mbps plan, 2016 70

Monthly price ($)

60 50 40 30 20 10 0 BC

Ontario Rural

Québec

Alberta

Urban

Source: CRTC Communications Monitoring Report 2017

The maximum monthly price for a 50 Mbps plan is $135 in urban BC, higher than rural BC’s $88. This trend of higher maximum prices in urban areas is similarly reflected in Ontario and Alberta.

Rural and urban maximum price comparison for a 50 Mbps plan, 2016 140

Monthly price ($)

120 100 80 60 40 20 0 BC

Ontario Rural

Québec

Alberta

Urban

Source: CRTC Communications Monitoring Report 2017

DID YOU KNOW? Telemedicine — the use of video conferencing to remotely connect healthcare specialists with patients — has brought personalized, urban medical services to rural and remote locations. Today, it is becoming a reality for some connected rural communities. As higher speeds become more affordable to rural communities throughout the province, BC has an opportunity to apply the multiplier effect to these successful applications where telehealth becomes the norm, not the exception.

38

Connected Communities in BC

Broadband plan prices by data cap Data usage increased by over 23% for resident internet services from 2015 to 2016.16 This number will continue to grow as connected devices proliferate and information online grows denser. For consumers, broadband plans not only need to stay affordable but also keep pace in terms of increasing data caps.

At $82/month, BC has the highest prices among peer jurisdictions for rural broadband plans with 1–199 GB data. This highlights the complexity of providing affordable internet to rural and remote areas. ISPs charge a premium over urban offerings in order to recoup the infrastructure costs incurred to connect rural areas.

However, with BC’s comparatively lower household income, even if broadband is available, residents may lack the financial resources to purchase the plans. The low expected subscription rate, in turn, dis-incentivizes ISP investment.

Average monthly price (2018 CAD $)

Prices for a 1–199 GB data cap plan in rural communities, 2018 (Canada and US) 120

100,000

100

80,000

80

60,000

60 40,000 40 20,000

20

0

Median household income (2018 CAD $)

ISPs recoup infrastructure costs by passing them onto end-consumers, but the low expected subscription rate due to relatively lower income may dis-incentivize ISPs from pursuing investment.

0 Alberta

Québec

Ontario

Average monthly price

BC

Oregon

Washington

Median household income

Source: Broadband plan data collected from a sample of ISPs across the selected jurisdictions in June 2018. Figures do not include applicable taxes. Conversion from USD to CAD based on USD/CAD 1.3 exchange rate from the Bank of Canada. StatCan Survey of Household Spending 2011, 2016

16. CRTC Communications Monitoring Report 2017

DID YOU KNOW? Technology advancements will continue to drive demand for computerspecific skills, such as software coding, especially as BC’s tech sector blooms. Skills such as computer coding are becoming essential for many employment opportunities. Unfortunately, a lot of the resources necessary to develop these skills are internet-based, bringing a disadvantage to the rural and remote locations with limited internet connectivity.

Connected Communities in BC

39

There is nearly a 25% price difference between BC’s urban and rural areas for both data cap thresholds The CRTC notes that service offerings in rural communities tend to have lower data caps than in urban areas.17 This means, generally, plans with a similar data cap will be more expensive rurally. BC’s prices reflect this trend. BC’s prices reflect this trend. Monthly prices for 1–199 GB data cap plans in BC’s urban communities are the lowest amongst Canadian peers at $62, but the highest in rural areas at $82.

Across all peer jurisdictions, the $20 price difference is the second highest sampled.

Price comparison for plans with 1–199 GB data caps, 2018 (Canada and US)

Average monthly price ($)

120 100 80 60 40 20 0 Alberta

Québec

Ontario

Rural

BC

Oregon

Washington

Urban

Source: Broadband plan data collected from a sample of ISPs across the selected jurisdictions in June 2018. Figures do not include applicable taxes. Conversion from USD to CAD based on USD/CAD 1.3 exchange rate from the Bank of Canada.

At higher data caps, BC’s rural communities see the highest monthly prices among all peer jurisdictions, at $92. The $21 difference with urban prices is also the secondhighest among the Canadian peers.

Price comparison for plans with 200+ GB data caps, 2018 (Canada and US)

Average monthly price ($)

120 100 80 60 40 20 0 Alberta

Québec Rural

17. CRTC Communications Monitoring Report 2017

40

Connected Communities in BC

Ontario

BC

Oregon

Washington

Urban

Source: Broadband plan data collected from a sample of ISPs across the selected jurisdictions in June 2018. Figures do not include applicable taxes. Conversion from USD to CAD based on USD/CAD 1.3 exchange rate from the Bank of Canada.

Higher upload speeds are important for businesses that rely primarily on the internet to get work done.

Higher download speeds are important for residents ince they primarily pull information from the internet.

Speed Advertised speed thresholds often differ from the speeds users experience in real time, which impacts the types of content and services they can access. The CRTC cites numerous reasons for this, including the number of devices being used, router distance, site traffic, time of day, and more. Analyzing speed metrics rounds out BC’s connectivity performance assessment.

Speed is one component of assessing the quality of internet access. The analysis is limited to actual speeds, since internet quality metrics such as latency, jitter and others are not provided on the granular level required to conduct a robust analysis by province and state.

Highlights –– Leading download speeds: At 16 Mbps, BC’s median broadband download speed leads that of all peer jurisdictions, indicating the quality of existing broadband infrastructure.

Comparison of speed metrics Vs. CDN peers

Vs. US peers

Speed metrics Download speeds (2017) Upload speeds (2017) Download speed difference between urban and rural areas (2015) Better than most

Comparable

n/a Worse than most

n/a Data not available

Connected Communities in BC

41

Actual download and upload speeds BC leads in download speeds but can improve in upload speeds M-Lab’s 2017 speed test data shows BC’s download speeds have improved since 2015, now exceeding that of Washington and ranking first of all peer jurisdictions.

However, BC has room for improvement when it comes to upload speeds. At a recorded median of 4.2 Mbps, it places third among peer jurisdictions.

Median broadband download and upload speeds, 2017 (Canada and US) 18.0

16.3

15.6

15.2

16.0

Speed (Mbps)

14.0 11.6

12.0 10.0

9.3

8.6

8.0 6.0 4.0

2.8

3.6

4.8

4.1

4.4

4.2

2.0 0.0 Alberta

Ontario Upload speed

Source: M-Lab data as of June 2018

42

Connected Communities in BC

Québec

Oregon

Washington Download speed

BC

Difference between download speeds in urban and rural areas BC’s download speeds in rural areas are comparable to other provinces, while the urban-rural divide is not as prominent in BC as it is in other provinces While US data is not available, a Canadian comparison of actual download speeds between urban and rural areas reinforces the notion of the urban-rural “divide”.

Using data collected from the Canadian Internet Registration Authority, the urbanrural difference is especially prominent in Ontario and Alberta with a difference of 7.6 Mbps and 7.7 Mbps, respectively. For BC, the difference between urban and rural is not as dramatic, at 6.1 Mbps. There is room for improvement for download speeds in BC’s rural areas, but the province is mainly in line with its provincial counterparts.

Average rural and urban download speeds, 2015 25.0

23.4

20.0 Speed (Mbps)

BC’s rural areas rank in the bottom half of the pack for average download speeds. However, the disparity of download speeds between BC’s urban and rural areas is not as prominent as that of its peers.

18.2

15.0

16.4 14.1

14.0

15.8

12.1

10.0 6.3 5.0 0.0 Alberta

BC

Rural download speed

Québec

Ontario

Urban download speed

Source: Canadian Internet Registration Association as of December 2016.

Connected Communities in BC

43

44

Connected Communities in BC

Broadband Internationally To put this document’s benchmarking analysis into perspective, it is important to look at Canada’s internet performance relative to the global stage. The Economist (in partnership with Facebook.com) ranked Canada as having the tenth best internet connectivity in the world (out of 86 countries) in 2018.

Global ranking in 2018

Country

1

Sweden

2

Singapore

3

United States

4

Denmark

5

South Korea

6

France

7

United Kingdom

8

Chile

9

Poland

10

Canada

11

Japan

12

Germany

13

Spain

14

Netherlands

15

Austria

Note: The Economist’s ranking includes mobile internet connectivity in their scoring. Scores are assessed on “availability, relevance, and readiness”.

Source: The Economist, The Inclusive Internet Index: Measuring Success 2018.

Connected Communities in BC

45

Why the following countries were selected for comparison with Canada with respect to access, affordability and speed:

US

UK

Australia

The United States is similar to Canada in geographic size and diversity. Our analysis also compares select west-coast states with BC and similar Canadian jurisdictions.

The UK exemplifies strong and effective government action to increase broadband connectivity, and is similar to Canada in government structure.

Australia has similar geographic features, native population, population density, and is a case study for government intervention in broadband connectivity.

The following illustrative diagram shows Canada’s internet performance against the US, UK, and Australia. The UK, a small, densely populated nation, showcases dominant internet access over Canada, with better connectivity infrastructure and higher percentage of connected population. Internet service in the US, although more expensive than Canada, offers superior speed and access. Australia (amidst a challenging national broadband initiative) demonstrates the weakest connectivity, showing strengths in access only.

Canada’s ranking on key internet performance dimensions vs. select leading countries, 2018 It is the combination of these three dimensions that drive the economic and social value that can be unlocked through connectivity.

Access

Affordability

Speed

1

UK

Canada

US

2

US

US

Canada

3

Australia

UK

UK

4

Canada

Australia

Australia

Source: The Economist, The Inclusive Internet Index: Measuring Success 2018.

46

Connected Communities in BC

According to the Economist’s ranking, Canada is second among the four selected countries with its number of fixed-line broadband subscribers. At 37.3 per 100 inhabitants, it represents a slight increase from 2017.

Fixed-line broadband subscribers, 2017–2018 Subscribers (per 100 inhabitants)

50.0 40.0 30.0

36.4 37.3 27.9

30.4

37.7

39.2

31.5 32.4

20.0 10.0 0.0 Australia

US 2017

Canada

UK

2018

Note: EIU Data for access measures such as access to different broadband bandwidths are not available.

Source: The Economist, The Inclusive Internet Index: Measuring Success 2018.

The average fixed broadband download speed in Canada saw the largest increase over 2017, bringing Canada to second place in the group (36.6 Mbps).

Average fixed broadband download speeds, 2017–2018 50.0

46.2

Speed (Mbps)

40.0 29.8

30.0 20.0

36.6

33.7

36.1

25.9

18.8 19.2

10.0 0.0 Australia

US 2017

Canada

UK

2018

Source: The Economist, The Inclusive Internet Index: Measuring Success 2018.

Connected Communities in BC

47

Similarly, Canada’s average fixed broadband upload speed experienced a year-overyear increase of 85%, narrowing the gap with the US, who leads in internet speed.

Average fixed broadband upload speeds, 2017–2018 25.0

Speed (Mbps)

20.0 15.0 10.0 5.0

16.7

15.5

7.5

7.9

12.0

9.7

8.3

4.1

0.0 Australia

US 2017

Canada

UK

2018

Source: The Economist, The Inclusive Internet Index: Measuring Success 2018.

Australia In 2007, Australia kicked off an ambitious telecommunications infrastructure project called the National Broadband Network (NBN), dedicating $43 billion Australian dollars to increase the nation’s quality of and access to broadband, connecting communities all across Australia.18 The NBN used a mixture of infrastructure to connect Australians to a fibre-optic backbone, with mixed success. Poor placement of fibre-optic connections created highly variable access quality across the country, with remote communities getting the short end of the stick.

Then in 2013, after a change in government, most of NBN’s Board of Directors was asked to resign and the budget was cut from over $70 billion to a range of $46 – $56 billion.19 The new government was concerned about the mounting cost of the project and believed its citizens prioritized affordability over speed.

Fast forward to the present day, and the NBN was unsuccessful in meeting its objectives. NBN could have lifted Australia into the upper ranks of internetconnected countries, but instead, it highlighted the risks of large scale projects, misaligned strategies, and inadequate planning.

Lessons learned: To improve chances of a successful outcome, government could help ensure infrastructure projects have a tightly defined scope and a decisionmaking body able to see the project through to the end.

18. Australian Broadcasting Corporation, NBN promises past and present explained, 2016.

19. Ibid.

48

Connected Communities in BC

United Kingdom

United States

Government initiatives play a significant role in setting the direction for growth in the UK. UK policy makers treat broadband as a utility, with both the public and private sectors benefiting from improved connectivity and access to digital services.

In the US, 30.7% of the rural population lacks access to 25 Mbps connection, compared to 2.1% in urban areas.23

In March 2017, the government introduced its Digital Strategy, aimed at harnessing the power of digital technology to drive innovation and productivity, and making the UK the best place in the world to start and grow a digital business. The Strategy also recognizes the importance of digital infrastructure, with the UK government introducing a £1 billion program to speed up the deployment of full fibre and make the UK a worldleader in 5G mobile technology.20 The UK government introduced a universal service obligation (USO) that came into effect in April 2018, providing British homes and businesses the legal right to request speed of at least 10 Mbps by 2020.21 In addition, it pledged to make fibre-to-the-premises (FTTP) broadband connections available to 15 million homes in the UK by 2025, and put a full national FTTP network in place by 2033.22 Lessons learned: Government can advance digital development by creating the right environment, developing a broader understanding of both supply and demand-side issues, and adopting a cross-sectoral policy approach.

The government recognizes the keys to solving the issue include stimulating private sector investment, encouraging competition through performance standards and competition regulations, as well as targeted and efficient public sector support.

The FCC (Federal Communications Commission) recently opened its Connect America Fund II, dedicating $2 billion over 10 years through reverse auction to support new broadband infrastructure in rural areas throughout the country.24 The private sector has invested $1.6 trillion in the last 20 years to build and maintain broadband networks across the US.25 In addition to investments by traditional ISPs, major technology companies, such as Microsoft, Google, and Facebook have also actively invested in innovations in this space, such as Microsoft’s Rural Airband Initiative and Google X’s Project Loon.

Lessons learned: Governments should encourage innovations in local markets and in next generation technologies to heighten competition and investment among infrastructure competitors.

20. Gov.UK, UK Digital Strategy, March 2017 21. UK Parliament Commons Library Briefing, June 2018 22. Gov.UK, Chancellor Speech: CBI Annual Dinner 2018, May 2018 23. Federal Communications Commission, 2018 Broadband Deployment Report 24. Federal Communications Commission, Connect America Fund, Connect America Fund Phase II Auction 25. US Telecom, Broadband Investment, 2016

Connected Communities in BC

49

50

Connected Communities in BC

kpmg.ca

This document has been prepared by KPMG LLP (“KPMG”) for Northern Development Initiative Trust (“the Client”) pursuant to the terms of our engagement agreement with the Client dated July 11, 2017 (the “Engagement Agreement”). KPMG neither warrants nor represents that the information contained in this document is accurate, complete, sufficient or appropriate for use by any person or entity other than the Client or for any purpose other than that set out in the Engagement Agreement. This document may not be relied upon by any person or entity other than the Client, and KPMG hereby expressly disclaims any and all responsibility or liability to any person or entity other than the Client in connection with their use of this document. © 2018 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 20500 The KPMG name and logo are registered trademarks or trademarks of KPMG International.