Investing in the (Digital) Middle-Class

A few essential, seemingly innocuous words pop out in the newly released 2019 Federal Budget. The terms are “connectivity needs”, “broadband” and “underserved” and they direct our focus to how digitally dependent life, work and job (re)training are in today’s world.

More than $5 billion in support for regional and rural broadband is included in the 2019 Federal Budget. Starting in 2019-20, the Government of Canada will invest $1 billion, over the next 10 years, into the Canada Infrastructure Bank, which will leverage an estimated further $2 billion from the private sector, incentivizing the telecommunications industry to build out and improve broadband networks. Added to this is the 2019 Budget’s mention of the CRTC-managed Broadband Fund of $750 million that will boost the Fund by $1.7 billion over 13 years, creating what will be known as the Universal Broadband Fund. The Fund aims to extend connectivity into underserved communities. In First Nations communities, the 2019 Budget allocates $18 million over five years to support infrastructure offering more affordable electricity and connectivity. To strengthen broadband policy monitoring and evaluation processes, funds are also allocated to Statistics Canada’s household internet use data collection ($11.5 million over five years).

Why does improving broadband resonate with the so-called “hard-working middle-class” in Canada? Certainly, for households outside of metropolitan areas such as the Greater Toronto Area (GTA) internet users know firsthand that government needs to make more effort to invest in and evaluate regulatory policies that are impeding improved connectivity.

The Regional and Rural Broadband (R2B2) research project at the University of Guelph partners with municipalities across southwestern Ontario, Niagara Region, Caledon (Peel Region) and Halton Region. In southwestern Ontario alone which accounts for 10% of Canada’s population, nearly 230,000 premises do not achieve the 50/10 Mbps speed target (SWIFT, 2017). Lack of reliable, higher speed connectivity negatively affects hard working, middle-class households and businesses.

Research published by R2B2 researchers in Telecommunications Policy, reports that for households in southwestern Ontario, there are significant savings from telecommuting to work. The typical savings for the first household member telecommuting three days per week ranges from $13,980 to $17,050 per year. The second telecommuter saved $12,108 to $20,640. Daily return commute distances in the region can be as high as 115-152 km (Figure 1). Connectivity is not always available or affordable to ensure access to this telecommuter surplus. Internet speeds average approximately 13 Mbps (download) and 4 Mbps (upload) for the connection. The “ping” or average latency is 34.7 further characterizing slow throughput on the networks. Underserved households are less likely to have access to unlimited data plans. Broadband surveys of 2298 households in southwestern Ontario indicate that 57% of users have a data cap on their primary use internet subscription. The constraints for middle-class workers or those individuals who need to go online to retrain or return to school are apparent when compared to households in Toronto with unlimited 1 GB synchronous internet access.

According to our analysis, households that operate a non-farm, home-based business are particularly dependent on the internet. The internet has made the home-based business possible. Five days per week of telecommuting for these households resulted in annual savings of nearly $30,000. For the hard-working middle-class, digital work/life is already a reality. With improved connectivity economic opportunities and a better “bottom line” for Canada’s middle-class is possible.

Figure 1. Average Daily Commute in Southwestern Ontario (2017)

Table 1. Annual telecommuter surplus for various telecommuting days per week for the first reported telecommuter by dwelling types.

Source: Hambly & Lee (2018). Note: * 2, 3,4, and 5 represent the total number of days telecommuted per week. All measurements in CAD$. The “n” represents total sample size and not the total number of observations used to calculate each column because some respondents did not answer all the survey questions.

Table 2. Annual telecommuter surplus for various telecommuting days per week for the second reported telecommuter by dwelling types.

Source: Hambly & Lee (2018). Note: * 2, 3,4, and 5 represent the total number of days telecommuted per week. All measurements in CAD$. The “n” represents total sample size and not the total number of observations used to calculate each column because some respondents did not answer all the survey questions.

References

Hambly, H. & Lee, J. D. (2018). The Rural Telecommuter Surplus in Southwestern Ontario, Canada. Telecommunications Policy. https://doi.org/10/1016/j.telpol.2018.07.009

SWIFT (2017). Final Submission: Telecom notice of consultation CRTC 2017-112; 2017-2112-1 development of the Commission’s broadband funding regime. Retrieved from https:services.gc.ca/pub/ListeInterventionList/Default-Defaut.aspx?en=2017-112&dt=i&lang=e.