Investing in the Economy with Broadband
With a population growth rate 15 times slower than urban areas, rural residents account for 20% of Canada’s population. Despite this stagnation, rural Canada generates 30% of Canada’s gross domestic product (GDP), driven mainly by agriculture, mining, oil and gas, forestry, fisheries, and aquaculture. However, these industries are modernizing rapidly, and with only 53.4% of residents able to access high-speed internet, the rural economy is at risk.
A report by the World Broadband Association concluded that high-quality fibre infrastructure must be available to 100% of the population to sustain economic growth, improve quality of life and education, and fight climate change. The WBBA states that the cost of building fibre infrastructure is the number one barrier to achieving universal broadband access and urges governments, organizations, and service providers to invest more significantly in fibre broadband projects.
Why is a service as vital as broadband so scarce in rural communities? As with the other countries studied in the WBBA report, cost is the number one barrier. Laying fibre cable costs between $35,000-$45,000 per kilometre. It’s easy to justify this expense in densely populated areas, but it becomes less profitable when fewer people are connected to a km of fibre. With little to gain financially from rural infrastructure, the country’s large telcos have ignored rural Canada for decades.
Broadband access has an enormous social and environmental impact. This blog will explore the economic opportunities that high-speed internet can bring to a community.
How Will Broadband Impact the Rural Economy?
While the initial investment may be high, communities across Canada recognize the economic benefits that high-speed broadband internet can deliver.
The government of Alberta recently released a report on the province’s broadband strategy. The report highlighted the impact connecting rural Albertans would have on the economy. The report estimates that rural broadband will have the following economic effects:
- Support economic growth and recovery by returning $500 million to $1.7 billion in annual GDP growth to Alberta through improved connectivity for households and businesses.
- Create up to 1,500 jobs in Alberta to deploy and install the broadband technology needed to increase coverage.
- Create up to 2,000 service industry jobs in rural regions.
- Increase GDP in the agricultural sector by up to 5% through increased productivity and application of AgTech.
A similar report on connectivity in British Columbia also recognized the economic importance of rural broadband. It cites a study from the Monieson Centre at Queen’s School of Business, “broadband deployment promoted growth in employment and wages in rural regions across Canada by more than 1% per year.” The report also highlighted the following benefits:
- Small and medium-sized businesses in rural areas account for 10% of the province’s GDP, but only 43% of those businesses can fulfill orders online. The availability of rural internet will help grow the e-commerce sector in rural BC.
- Once known solely for its logging industry, Campbell River, BC, launched a municipally owned open-access network and saw an increase in the number of entrepreneurs and businesses in the area.
- Access to rural internet will help Iskwew Air, a 100% Indigenous woman-owned airline, expand throughout the province.
Ontario’s Up to Speed Broadband and Cellular Action Plan also recognizes the economic impact that internet access will have on the province’s rural economy. The report states that agriculture comprises 822,000 jobs and contributes $39.5 billion in GDP annually. The sector needs broadband access to remain competitive as new technologies, such as smart sensors to measure soil conditions and tracking devices for livestock, emerge.
Community Broadband Networks Create Additional Value
To start reaping these economic benefits, the federal government and several provinces have created funding to get rural broadband projects rolling throughout rural Canada. This funding means communities no longer have to rely solely on the large telcos that have already failed them many times.
A new model has emerged that allows municipalities to keep broadband profits in their community rather than diverting money to ISPs and network operators headquartered in urban centres. A community broadband network model is a carrier-neutral network solution that uses broadband technology to create long-term value for any size community. This business plan is a shared revenue model custom-designed and implemented by a consortium of best-in-class partners.
While the ROI on a rural broadband solution may not be “worth it” to a large telco, it can still offer a valuable return for small communities. For example, let’s say each household will pay $100/month for high-speed broadband. A community leader can multiply $100 x the number of homes in their area x 12 months to find the total annual revenue that’s potentially available.
Unfortunately, Canada’s rugged landscape renders the construction of fibre infrastructure impossible in some areas. However, low earth orbit (LEO) satellite connectivity can deliver fast and reliable internet to the most remote communities. A pilot project in Northern Manitoba will connect 24 Nations communities to LEO internet under a community network model.
Get Your Community Connected
Are you ready to shape the future of your community while building a revenue-generating high-quality internet solution? ROCK Networks provides an end-to-end solution to help your municipality design, build, and implement a community broadband network using fibre or satellite. Let us help you create a network that is ready for your community today and built to meet the demands well into the future.
