From Oil to Online: How Newfoundland and Labrador Can Diversify Post-COVID
When it comes to the effects of COVID-19, perhaps you’ve heard it said, “We’re all in the same storm, but we aren’t all in the same boat.” A global pandemic reaches all corners of the globe, but some areas are hit harder than others based on the local economy, population density, and so on.
In recent months, we’ve paid especially close attention to Newfoundland and Labrador’s (NL) experience in this “storm.” The sudden halt to travel has dealt a painful blow to both the oil industry and gas tax revenues on which many NL municipalities rely. In a largely oil-dependent province, economic opportunities are hard to come by in this pandemic. Both Newfoundlanders and the Canadians leaving crowded urban centres for safer rural communities are forced to consider other provinces for more financial stability. This compounds the province’s pre-existing struggles with outward migration and job loss in the offshore oil industry.
The cumulative effects are painful and point us to a critical question: What if NL’s economy didn’t have to rely primarily on oil and gas? What if it diversified with a digital economy that could survive and even thrive in a post-COVID world? Is it possible? And, if so, how can leaders make it happen? Those are the questions we’re looking to address in today’s blog.
The State of Broadband in Newfoundland and Labrador
If there were ever a time to diversify NL’s economy, that time is now. Incentives are already in place to draw larger companies to more rural areas. Plus, remote work is on the rise. People in high-income, high-skilled jobs are leaving crowded urban centres to work in smaller communities. The better property values, excellent schools, and close communities are drawing businesses and residents to remote provinces — but only those that can provide the broadband they need to work from anywhere.
Unfortunately, NL is not ready to provide that critical service. While 98% of the province is connected, it is with obsolete technology. Most of the existing infrastructure cannot meet the CRTC speed standards of 50/10 Mbps, a standard many argue is already outdated. We believe 1000/100 Mbps is a more reliable standard to ensure rural communities don’t find themselves on the wrong side of a digital divide again in just five to seven years.
The lack of broadband infrastructure limits competition and economic opportunity when the province most needs to attract new industries and diversify the economy. But what would it look like if we solved that problem?
An Online Economy for Newfoundland and Labrador
For a moment, let’s imagine that the broadband access problem is miraculously solved overnight. Every community wakes up tomorrow with proper connectivity to conduct life and business online. What would that transformed NL look like?
Well, the province could diversify its currently oil-dependent economy with a variety of online businesses and industries to reap significant economic benefits like:
✓ An influx of high-income residents who work remotely for corporations based in urban centres, enabling a repatriation of Newfoundlanders for the first time in our history
✓ A distance learning network for K-12 and College and University students
✓ A true telehealth experience for rural Newfoundland and Labrador, enabling a higher-quality and more cost-effective delivery of healthcare services
✓ Communications for other industries, including tourism, mining, and aquaculture
✓ Improved cell phone service for both residents and businesses
✓ A state-of-the-art communications network that allows public safety workers to work more safely and effectively
✓ An estimated economic growth above 5% per year
Plus, if that broadband network were community-owned, it could provide significant revenues for municipalities currently reliant on a floundering gas tax. The average NL household already spends 20% more on communications than the Canadian average. The demand is undeniably there — residents just aren’t getting adequate speeds for their money. Plus, all the revenue from that communications spend goes to mainland corporations, sidestepping the province’s own economy.
Let’s consider the business case here. Newfoundland and Labrador is home to 219,000 homes, of which 153,000 are underserved or unserved. At the average price of internet service ($100/month), those homes carry the potential for $1.84 billion in revenue across ten years. Add in $50 per month for TV and Phone services, and you’re looking at another $920 million in revenue for a total of $2.76 billion! Even at a very conservative 60% take rate, there’s a potential for $1.7 billion in revenue every ten years.
Imagine the impact this steady revenue would have on the province’s GDP. Of course, NL can only reap these profits if they build and own their own networks. Let’s talk about what that process looks like for the province’s leaders.
How Newfoundland and Labrador’s Leaders Can Take Charge of the Economy and Future
For the most part, local leaders know the impact broadband could have on their economy and future. The question concerning broadband isn’t, “Should we get it?” but rather, “How can we get it?”
We’ve talked before about how rural provinces can’t wait for big telcos to connect them. Big corporations are accountable to shareholders and must invest in urban centres with a higher concentration of paying customers. They leave rural residents underserved or unserved. Even if they did suddenly switch course and connect rural NL, they’d take all those profits back to the mainland with them, cutting into the province’s potential revenue.
Instead, we encourage local leaders to advocate for municipally-governed community broadband networks. Whether the municipality owns the full internet service or simply builds and rents out an open-access infrastructure, they can ensure…
✓ Network revenues stay in the community
✓ Access is equitable for all
✓ Services are affordable
✓ Infrastructure is built with high-speed, future-proof technology
Now’s the time for advocacy and action. The federal government is investing billions into rural broadband, and the global pandemic has made people eager to embrace digital progress.
As Jennifer Keesmaat, the City of Toronto’s former chief planner, told Municipal Monitor, “Politicians who have the chutzpah to actually make change, and administrators, should be using this moment because there is a higher tolerance for change. We have all had to embrace change very quickly in ways we previously hadn’t anticipated.” She went on to say, “Municipalities that refuse to adapt are going to get left behind.”
We believe NL is well-positioned to adapt, embrace change, and reap the benefits of community-owned networks and a digital economy.
Our Commitment to Better Broadband for Newfoundland and Labrador
At ROCK Networks, we feel a personal call to help meet the need for better infrastructure in NL. Our CEO Joe Hickey is from the province and longs to see it built back better post-COVID. That’s why we’re committed to guiding municipal leaders through the full process of planning and building community-owned networks.
We’re also excited to announce our new ROCK Service Zone Platform for NL. This platform is a demand aggregation tool that enables municipalities to collect and measure demand for broadband and even pre-sell Internet connections. The platform can organize any target area into “Service Zones” based on community surveys, speed tests, and pre-sales. Our tool enables municipalities to strategically plan and incrementally deploy networks, maximize their take rates and ROI, and build a foundation for a diversified economy in a post-COVID world.
If you’re a leader in a Newfoundland municipality, we’re committed to serving and supporting you throughout this process. Simply call 1.877.721.7070 or email sales@rocknetworks.com to schedule a free consultation. We’ll help you bring reliable broadband to your community and ensure a bright economic future for your province — no matter what the future might hold.
