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TekSavvy opening new opportunities for Southwestern Ontario residents with fibre internet, but expansion fate rests with Cabinet

Dave Middleton is a latecomer to Stranger Things, but like many viewers he has become a fan of the precociousness of the teenage characters in the hit Netflix show as they unwind a supernatural mystery.

The series debuted on the streaming service several years ago, but Middleton, his wife Jennifer and 19-year-old son Taylor didn’t start watching until recently because they didn’t have the capacity to do so. The only internet option at their rural household in Mitchell’s Bay, Ont., a satellite hamlet of Chatham, was slow satellite service with significant usage caps.

Everything changed earlier this year, however, after they switched to super-fast unlimited fibre, newly installed in the community by TekSavvy.

“We were bumping up against our limit every month and streaming was not something we did much of because it would kill our cap too quickly,” Middleton says. “But now we’re getting more and more into it. This opens a lot more possibilities.”

Those possibilities extend beyond just streaming and entertainment. The Middletons’ new fibre connection represents the ability to take part in society that people in cities take for granted. Jennifer, who runs a long-term care facility, can comfortably work from home. Taylor can attend classes at school virtually when necessary.

If it wasn’t clear before, the pandemic has highlighted how necessary fast, high-quality internet is for work, education, and health care.

TekSavvy Ultra-fast Fibre Internet Coming Soon

Mitchell’s Bay is one of a host of underserved or completely unserved smaller communities in Southwestern Ontario finally getting online properly. TekSavvy is currently wiring residences and businesses with fibre, flipping the switch in Thamesville in August last year, followed by service completions in some areas of Wallaceburg, Stoney Point, Blenheim, Cedar Springs, Grande Point, Pain Court, Bothwell, Tupperville and Dover Centre.

As of this spring, the company has made fibre available to more than 10,000 residences and businesses in Southwestern Ontario, at a total investment of $66.5 million.

For residents like the Middletons, it’s a long overdue connection to everyday, 21st century life. The opportunities – social, economic, entertainment and otherwise – can now follow.

Climbing the ladder of investment

TekSavvy Fibre

Known primarily as a service-based internet provider, laying fibre is a new development for TekSavvy. For much of its 20-plus-year history, the Chatham, Ont.-based company has leased portions of networks owned by large companies such as Bell and Rogers on a wholesale basis to provide services to customers nationally. TekSavvy has invested in its own core network facilities and equipment across Canada to deliver services to those customers, but the “last mile” wires that connect homes remain the property of incumbent carriers.

Plans to expand beyond wholesale have been in the works for more than a decade because of an engineering mentality baked into the fabric of the company and a desire to align with government policy makers, who often encourage telecommunications businesses to invest in infrastructure themselves.

With long lead times required to set up the new operation, hire staff and plan out builds, those plans only recently became a reality. A key interim decision by the Canadian Radio-television and Telecommunications Commission (CRTC) in 2016 on wholesale internet rates also paved the way.

TekSavvy expected a final ruling on that rate process to reduce its operating costs, so it lowered internet prices for customers nationally, launched a new competitive TV service and freed up capital for the fibre build to proceed. The company in 2018 announced a joint effort with the municipality of Chatham-Kent to connect 38,000 residences and businesses in the region with fibre at a cost of $26 million to the company.

Though their total overall spending doesn’t match that of the telecom giants, smaller internet service providers (ISPs) have been proving to be more efficient in their rollouts. As Barry Field, executive director of the Ontario-funded Southwestern Integrated Fibre Technology broadband expansion project, told a government committee last year, including smaller providers in his organization’s funding grants has led to better outcomes and more contributions from the private sector in underserved areas.

For TekSavvy chief technology officer Charlie Burns, building its own network means the company is achieving the theoretical point of the wholesale model, which aims to enable a “ladder of investment” where new competitors can enter the internet service business and grow to the point where they can build their own facilities. Canadians benefit from the process throughout by having additional ISPs to choose from nationally, with competition often resulting in lower prices.

“There was always a strong undertone on the regulatory side that if you aren’t investing, you don’t matter,” he says. “That was an overarching angle to all of this that drove a lot of the decision-making process.”

Residents in the TekSavvy fibre areas are indeed starting to see the benefits of this kind of competition. Candice Malott-Benett, for one, was using a Bell internet connection at her home on what was a rural route on the southern outskirts of Chatham, but she switched to TekSavvy last fall.

She says her speeds with Bell were unreliable. The final straw was when her introductory offer ended, and the price of the service skyrocketed. Every customer agent she spoke with told her different things.

“Bell had really great rates at the beginning and then all of a sudden they wanted to cut my service speed in half for almost the same price,” she says. “That upset me, and I decided right then and there that I was done.”

Malott-Benett is happy with her new service and was impressed with the TekSavvy installers, who helped set up a new router and video streaming on her TV. “I’m really not a tech savvy person and they were really great at showing me everything,” she says.

There was always a strong undertone on the regulatory side that if you aren’t investing, you don’t matter

- TekSavvy Chief Technology Officer Charlie Burns

Jason Presement, regional vice-president of sales for Canada and Latin America at Calix ¬– which provides software platforms, systems and services to ISPs including TekSavvy – is seeing a boom in independent telecom companies building fibre networks across North America. That, in turn, is spurring competition and better services in many smaller communities.

Residents in these towns are often choosing smaller providers because their prices, ability to offer innovative products and customer service are better, and because they’re local and literally closer to them.

“There’s a preference there. Customers do what they can to stay with that local provider,” he says. “We hear stories from local service providers about bumping into their subscribers in local supermarkets and chatting about their experiences.”

All eyes on cabinet petitions

TekSavvy’s plans for further fibre rollouts have stalled, however, because of the CRTC’s ultimate decision on wholesale internet rates.

In 2019, the regulator finalized some of the interim fees set in 2016 and ordered others to be lowered significantly, which was good news for both consumers and independent ISPs planning fibre builds. The ruling would have resulted in lower retail prices for Canadians and the big companies having to repay hundreds of millions of dollars to smaller ISPs for years of overcharging during the CRTC’s review.

But, after heavy lobbying from the big companies, the CRTC last year largely reversed that decision and effectively cancelled the lowered rates and most of the owed repayments. Without that expected capital, TekSavvy cut further fibre expansions and its plans to get into the wireless market.

The company and other small ISPs have appealed last year’s CRTC decision through a petition to the federal government, due by the end of May. All eyes are now on cabinet for a response.

It really ticks me off that we as Canadians are paying these exorbitant prices when we have the ability to bring them down

- Chatham-Kent Mayor Darrin Canniff

Until then, it appears that policy makers have pulled the rungs out of the ladder of investment.

“We’re trying to do these things but at the same time the CRTC is trying to dismantle competition,” Burns says. “The current regime at the CRTC does not see value in the wholesale system.”

The petition to cabinet has received support from Ontario’s Big City Mayors, collectively representing about 70 per cent of Ontario’s population, who last year passed a unanimous motion urging Cabinet to overrule the CRTC and reinstate the 2019 wholesale decision. Affordability is a top issue across the country and Cabinet can act to lower retail internet prices and spur investment from smaller ISPs, the mayors said.

“It really ticks me off that we as Canadians are paying these exorbitant prices when we have the ability to bring them down,” says Chatham-Kent Mayor Darrin Canniff, who spearheaded the motion. “It makes all the sense in the world that we do that.”

Chatham-Kent has been underserved with broadband for years because the big companies haven’t found it economical to lay fibre, he adds. TekSavvy, however, has a vested interest beyond just economics because of its base in the region.

TekSavvy Fibre Coverage Map

Coverage areas shown above are approximate and actual coverage may vary from the Coverage Map.

“That’s why it’s so important to have local distributors who care about the community. The large ones, they’re just looking for the low-hanging fruit,” he says. “TekSavvy is stepping up in a major way in our community, in the rural area. It’s easy to do urban areas, but where TekSavvy has stepped up, it’s a wonderful thing.”

Burns hopes that TekSavvy will be able to resume further fibre expansion plans in Southwestern Ontario and thus the opening of new possibilities for residents and businesses in underserved communities. It will only happen, however, if policy makers restore proper rates that enable ISPs to compete and invest.

Smaller ISPs have been doing their part during the pandemic despite a difficult regulatory environment, he adds, so it’s time for cabinet to step up. “We have been connecting homes that weren’t connected at the start of the pandemic. We answered the call.”

For the Middletons and many other residents and businesses in the Chatham-Kent region, making these connections at a difficult time has been transformative.

“We’ve been waiting and there hasn’t been any competition. Now there is and that has really opened it up,” says Dave Middleton. “It’s way cheaper, way better.”