Sask Tel Network Investment Plan

Commentary, Disruption, Les Routledge

Yesterday, Sasktel announced  a plan to invest in network upgrades across Saskatchewan.   While some media reports focused on the plans for the province’s nine major cities, the plans announced offer a combination of urban and rural commitments.

Over the next 7 years, SaskTel intends to invest $670 million in their broadband broadband access program.  Under this program, the intent is to replace legacy twisted pair copper networks with fibre optics that can support much higher speeds and virtually eliminate problems of network congestion.  The initial speeds for the new network will be 200 Mbps download and 50 – 60 Mbps upload.  Over time, the network has the ability to reach or exceed 1 gigabit per second speeds.  By 2017, SaskTel intends to have 100% of homes served in 9 cities passed by this network.

The company also intends to increase the capacity of network services available in more than 200 towns.  The plan calls for an upgrade of download speeds to 5 Mbps.  While that performance is significantly lower than what will be available in the cities, it is still an improvement.  Hopefully the company deploys the technology in a manner that avoids the problems with congestion that are present in networks operated by Bell and some Cable company networks.

For wireless services, the company announced plans to proceed with a major investment to upgrade cellular service to what is called 4G, a system that can support download speeds up to 21 Mbps.

The plan includes a rural infrastructure focus that will result in the extension of their wireless system.

SaskTel’s plans are quite a contrast to the position of Bell that is still committed to using UBB for their customers and imposing volume based billing at the wholesale level of operations.  As indicated in the SaskTel announcement, the deployment of the next generation fibre system can significantly reduce network congestion problems and hence the need to employ punitively high variable usage rates.

At a high level, the SaskTel plan could lead to increased calls in other parts of the country to move to public sector ownership of broadband infrastructure.  While the situation in Saskatchewan is unique in Canada, Bell and other private operators will be challenged to match SaskTel’s performance benchmark or risk having public opinion support government intervention in the market.  That intervention could take the form of direct investment like the Australia National Broadband Network or structural or functional separation of local monopoly networks from competitive services like the UK with OpenReach. An alternative mode of intervention would be encouraging the emergence of community owned networks through public sector funding and regulatory support.

In terms of details, the SaskTel announcement begs some questions to be asked how competition will work in the future.  Will SaskTel facilitate timely and affordable wholesale interconnection with third party networks that are prepared to delivery higher performance services in towns and rural areas?  Will competition and choice of value-added services be supported by SaskTel’s plans through net neutrality policies or will SaskTel attempt to pursue a walled garden approach like Apple?

The SaskTel announcement will put wind in the sails of people who call for public sector ownership of broadband infrastructure.  They now will have an example of a crown company that improves services instead of employing punitive usage fees to limit demand.  Bell and other incumbent ISP’s would be well advised to place more focus on improving network capacity and the customer experience instead of playing regulatory games intended to hobble competition.