Canada’s internet is slow, costly and under-used

Canada seems to be missing the boat when it comes to participation in the Internet economy.

Canada seems to be missing the boat when it comes to participation in the Internet economy.

We have high prices and low-speed Internet access, key parts of the country are unserved or seriously under-served, and we are not making the investments we need to be a leading digital-age economy.

Our government has been promising a digital strategy for several years, but we still don’t have one.

The importance of the Internet for the economy is well illustrated in a report earlier this year from the McKinsey Global Institute in Washington.

As the report says, “it has become obvious that the Internet is changing our lives — the way we work, shop, search for information, communicate and meet people.”

More than two billion people are connected to the Internet and that number is growing by 200 million each year.

Not only is the Internet big and keeps on growing, but it is still in its infancy, as the report says.

Yet it is an increasingly important source of economic growth, accounting for 10 per cent of GDP growth in the advanced economies over the past 15 years — and with its role rapidly increasing.

It is an important source of new jobs and contributes significantly to rising living standards.

For companies, for example, it is an important way to hold down costs, by accessing a wider range of suppliers, targeting customers and expanding a business’s reach into new markets, as well as facilitating new business models and enabling the emergence of innovative entrepreneurs.

Yet according to the McKinsey report, while Internet activity contributed 6.3 per cent to Sweden’s GDP in 2009, 5.4 per cent to the British economy and 4.6 per cent to the Korean economy, as well as 3.8 per cent to the U.S. economy, it contributed just 2.7 per cent to the Canadian economy.

Between 2004 and 2009, it contributed 33 per cent to Swedish economic growth, 24 per cent in Germany, 23 per cent in Britain and 15 per cent in the U.S. but just 10 per cent in Canada.

The latest statistics from the Organization for Economic Co-operation and Development show that Canada lags in many areas.

For Canadians, the basic cost of using the Internet, measured as megabits per second, is one of the highest in the OECD. The average download time is one of the slowest.

We rank 13th out of 35 countries in household penetration. And when it comes to wireless access to the Internet, we rank 26th out of 34 countries. We have a long way to go. Moreover, the average download speed in Canada is 20.8 megabits per second, compared to 85.6Mbps in Sweden, with Canada ranking a low 22nd in Internet access speed.

Yet many new possibilities for the Internet will depend on high bandwidth of 50-100Mbps by 2013 and even higher bandwidth by 2020.

For example, video on demand, cloud computing, virtual sport, telecommunications, patient monitoring, remote diagnosis, analyzing X-rays and grid computing.

In many instances, the potential of the Internet will only be realized through fibre into the home.

Yet despite years of consulting, our government has yet to deliver its promised digital nation strategy. The last we heard was in April 2010 when then-Industry Minister Tony Clement release a discussion paper, Improving Canada’s Digital Advantage, with a deadline of Aug. 31, 2010, for submissions. We are still awaiting the promised strategy.

Other countries are not waiting.

Australia’s National Broadband Network plans to deliver 100Mbps Internet access to 93 per cent of its population over fibre by 2021, Denmark is striving to deliver 100Mbps to 100 per cent of its population by 2020 while Finland hopes bring 100Mbps to almost all of its population by 2015. Germany’s goal is to provide 75 per cent of its population with download speeds of 50 Mbps by 2014. Other countries, such as Korea, Britain, Sweden and Japan, have similar goals.

Achieving these goals will not be easy. Major investments are required to upgrade networks for much higher speeds and to bring fibre into the home, as well as to extend the reach of high-speed broadband to unserved or under-served communities. This will require both private and public sector investment.

But other countries seem headed in the right direction, while Canada is still figuring out what it wants to do and how. The danger is that we will be left behind at as others invest in a digital future.

Economist David Crane is a syndicated Toronto Star columnist. He can be reached at crane@interlog.com.