Technology’s important role in bridging Canada’s digital divide

Canada is not alone in its goal to close the digital divide this decade and the pandemic has only reinforced that connectivity is essential for all Canadians to participate in a modern society. The government long ago recognized this fact, promising in 2016 to connect 98% of Canadians to high-speed internet by 2026 and 100% by 2030, including those in the hardest-to-reach places.

Canadian service providers are eager to invest and to connect, as government funding supports acceleration of these build-out plans, and various programs are in place to encourage community access. The stars have never been better aligned to get the job done. So, how are we doing?

Our CSP partners in Canada have been adopting the best technologies to use and are doing an incredible job of connecting previously unserved or underserved communities and improving service in areas across the country. However, unlike many countries tackling bridging-the-digital-divide, Canada’s sheer size as the second largest country in the world and its rugged geography, weather and terrain pose significant challenges in successfully achieving this 2030 goal. Most, if not all the subsidies are linked to fibre builds, which are not always the most cost-efficient solution. This is evidenced by the significantly higher ratio of capital expenditure to revenue for Canadian telecoms relative to their global peers.

So how can we achieve this together?

Ericsson believes that the answer lies in a winning combination of the latest technologies; fixed wireless access (FWA), satellite connectivity, and fibre. Our contribution to the journey ahead is a point of view on where current technology, along with the right support and programs should get us there faster than ever before.

• A winning combination: Three technology choices are in play for closing the Canadian digital divide Fixed wireless access 5G – a well-established application, initially deployed with 4G LTE, is becoming even more attractive due to the higher performance and capacity introduced with 5G 
• Low earth orbit satellites – represent a higher-performance alternative to existing satellite solutions 
• Fibre – replacing copper and coax infrastructure with fibre to boost performance and reliability and reduce cost of operation. The OECD noted this past summer that fibre overtook cable as the primary fixed broadband technology in OECD countries

FWA using cellular technology is growing in importance. It’s proven at scale with 4G technology and is taking a significant leap forward with 5G. With 5G, we can leverage the same cellular infrastructure for both fixed and mobile broadband services. FWA is different from fibre as it enables rapid buildouts and has a variable cost structure that scales with subscriber growth, rather than the fixed coverage-driven profile for fibre-to-the-premises. In addition, it enables adjacent connectivity in the same geographies for a myriad of applications beyond FWA.

Increasing 5G capacity, allowed by greater spectrum allocations (low-, mid-, and high-band) and technological advancements, is driving higher network efficiency in terms of the cost per delivered gigabyte. Innovations within 5G mmWave, enhanced further with extended range, will further the coverage capability of this spectrum from a few hundred meters to several kilometers. These innovations, together with the proven scale of the 3GPP ecosystem, offer new opportunities to use the current network infrastructure grid to make 5G a future-proof technology for large scale FWA deployments. Moreover, a variety of terminal types (fixed wireless terminals for outdoor and indoor deployment) allow us to tailor solutions for addressing last-mile requirements. 

The rising cost of connecting the tail of households and businesses may require satellite solutions. Low earth orbit (LEO) satellite systems, of the four different types, are in play as an option either as the direct connectivity solution or as a hybrid, working as the backhaul for FWA as the economics dictate.

The exact crossover points between fibre, FWA and satellite remains variable. Reaching the first 30% to 50% of households and small business buildings with fibre this decade is within reach. The last per cent will require satellite for fixed and mobile broadband. 5G is an attractive bridge serving the other ends of the remaining divide. 

In the U.S., FWA has been shown to be used to connect many rural areas where fibre builds are too costly due to geographical challenges. FWA has been dominating the US broadband market for most of 2022 – and that momentum has continued through the third quarter with FWA accounting for 95% of fixed broadband net adds among the top 6 providers. Based on where we are today and the size of the gap, we need all three technologies to play their part.

Ericsson and UScellular have found innovative ways of avoiding the cost, time and complexity of delivering broadband services through a world-first commercial offering of 5G mmWave extended-range FWA to target areas in rural America. The two companies leveraged existing assets such as macro sites and radio towers, using common components to deliver high-speed broadband services to UScellular’s previously underserved consumer and enterprise markets.

Mobile networks can deliver both fixed and mobile broadband services over the same infrastructure. Fibre is perceived as a more consistent technology but geographic challenges, and the requirements to dig over significant kilometers make it a challenging financial option. FWA presents a strong and economically viable 5G option.

Closing the Canadian digital divide this decade

Penetration of fibre-based broadband is moderate in countries covering large landmasses, e.g., Canada (21.8% in 2021 according to OECD), Australia (23.3%), and the U.S. (21.8%). The starting point combined with low single-digit growth rates makes it challenging for fibre to reach all Canadians this decade. 

The current broadband plan for Canada targets 50/10 Mbps fixed broadband services as a baseline. 68% of the Canadian population had access to broadband according to this threshold in 2021 Q1, towards the targets set of 90% in 2021, growing to 95% in 2026 to achieve 100% by 2030. 

The importance and support for closing the digital divide are significantly higher today than a few years ago – a reality driven by three significant shifts.

The demand side has shifted from consumer interest in Internet access for various entertainment services to being seen as a vital infrastructure requirement, akin to electricity and water for society at large. We have seen access to broadband during the pandemic enabling working-from-home, remote learning, and virtual healthcare. This applies not just for consumers but also small businesses and anchor institutions. To the point where communities without good broadband go from missing out on digital economy growth to struggling to participate in the community and our economy overall. 

Telecom providers have continued to invest in fixed and mobile broadband infrastructure to meet more robust demand. The Canadian telecom sector invested $12.3B to expand and build on infrastructure, representing an average of approximately 19% of revenue in 2021, which is higher than the 14% of revenue average across peer telecom providers in the G7 and Australia. Every provider is engaged to address the needs in their respective service areas, and there is a commitment in addressing the needs of our communities.

In addition to many other provincial and local initiatives, the Canadian government has allocated $2.75 billion to closing the digital divide. All levels of government are aiming to address these challenges, with initiatives such as the Universal Broadband fund (UBF) and leveraging public-private partnerships. 

These substantial factors lead us to conclude that the stars are well-aligned for closing the Canadian digital divide this decade. 

Wireless vs. Wireline? What makes broadband different from electricity and fixed telephony infrastructure?

A common perception for broadband infrastructure is that it must be wired and wired the entire way to homes and businesses—in the same way we deployed infrastructure for electricity and fixed telephony. Without a doubt, fibre plays a vital role as a last-mile access solution in urban and sub-urban areas and central parts in larger municipalities. Fibre is a great option to upgrade underserved areas and plays a crucial role in the middle mile network, connecting towns and villages and even mobile towers themselves. Long distances with aerial fibers or areas where the cost of digging is shared by few subscribers make alternatives attractive.

Deployment segmentation drives execution of technology, not the opposite.

When analyzing the cost for deployment Ericsson found four distinct segments in rural areas: 

• Central parts of towns
• Villages along major highways 
• Outskirts of rural areas 
• Remote households

To determine what technology to use, in which scenario, we need to assess the business case. In some cases, fibre is the best choice based on geography. In other cases, FWA is clearly a more viable option. All these technologies provide great mobile broadband connectivity.

Fixed wireless access is an attractive alternative when there is a need for a more variable cost structure, rapid time to market, and low overall cost for challenging deployment scenarios. In addition, FWA is attractive, strikingly, as you can provide two multiple services, mobile and fixed, from the same infrastructure. 

There is a meaningful amount of activity happening across the industry, and in provinces all over Canada. Every telecommunications company has prioritized bridging the digital divide in rural territories by answering RFPs, working with governments and by proactively working with remote communities. 

Let’s get it done

The road to closing the digital divide relies on multiple technologies. Canada has leading technology providers that can address requirements for FWA, Fibre and Satellite. Ericsson and its partners have been at the forefront of connecting Canadians for almost 70 years and with the support of all levels of government and communities and the right combination of technology to cover Canada’s vast geography, 2030 will be a year to celebrate achieving the important goal of connectivity for all.

Next steps and additional sources of information 

Ericsson has developed a few assets to support you as an essential stakeholder that can contribute to closing the Canadian digital divide this decade: 

• Close the American digital divide this decade - a point of view paper describing the issues raised here in more detail 
• Bridging the digital divide with FWA - UScellular and Ericsson lead the way
• The Fixed Wireless Access handbook - an industry reference for anything related to fixed wireless access deployments.
• The Ericsson Microwave Outlook - Insights on how Microwave transmission can support you to solve middle mile challenges where there is now fiber