Ottawa didn’t get much out of its rural internet fund: AG

TORONTO • The federal government didn’t get the most bang for its buck when it doled out money from its $500-million fund for rural and remote broadband access, Canada’s auditor general concluded in an audit released this week.

Innovation, Science and Economic Development Canada launched the Connect to Innovate fund in 2016, aiming to award money for projects in hard to reach places where there’s no business case for larger players to build networks.

Nearly 3.7 million Canadians don’t have access to internet speeds greater than 5 megabits per second, limiting their ability to participate in the digital economy.

As such, competition for the funding was fierce. The program received 892 applications requesting a total of $4.4 billion, demand that easily outstripped available funds and heightened the need for efficient spending.

But the Office of the Auditor General of Canada, Michael Ferguson, found ISED “did not implement the program in a way that ensured the maximum expansion for the public money spent.”

ISED didn’t ask applicants to demonstrate their projects wouldn’t be possible without public funding, according to the report. Nor was it transparent in the selection criteria.

It recommended the department consider a reverse auction process, where the government would propose a project and award it to the internet service provider that can deliver for the lowest government subsidy. It also suggested the department publicly outline how it evaluates projects so internet providers know what it’s looking for before filing applications.

The auditor general’s report comes as the Canadian Radio-television and Telecommunications Commission begins to accept applications for a separate $750-million fund for rural and remote broadband. Rural internet advocates say it’s critical for this funding to be deployed more efficiently.

For ISED’s part, Minister Navdeep Bains said he accepts the recommendations.

“Ensuring rural and remote communities are connected to the Internet is one of my top priorities,” Bains said in a statement.

The program has announced funding for 140 projects across Canada, mostly in Quebec (66 projects) and Newfoundland and Labrador (31 projects). Bains said this will eventually connect 900 communities, including 190 Indigenous communities.

But the auditor’s findings came as no surprise to Susan Church, who works to improve access to high-speed internet in Northern Ontario as executive director of the economic development nonprofit Blue Sky Economic Growth Corp.

When Connect to Innovate launched, Blue Sky Net was in the midst of 18 applications for provincial funding. These applied for national funding as well. The provincial funding was put on hold until the province learned projects got national funding, a process that took a year and a half, Church said.

“Essentially what’s been happening is there’s been no new network activity in Ontario for a long time,” she said. (Connect to Innovate has awarded funding to 10 projects in Ontario, mostly in the Ring of Fire.)

Church advocated for a regional approach to funding, so people who know the terrain evaluate projects. She also pushed for a more granular look at which properties have internet access instead of writing off an entire area because one house has access.

The auditor recommended ISED and the CRTC publish a more detailed connectivity map that respects confidentiality of internet service providers’ data.