Huge sums to connect isolated communities remain unspent, audit finds

A satellite at the Inuvik Satellite Station Facility painted by Ron English depicts key elements of Métis culture in the region. Emily Blake/Cabin Radio

Hundreds of millions of dollars devoted to connectivity in isolated Canadian communities are sitting unspent, the nation’s auditor general said on Monday.

In a new examination of Canada’s efforts to increase connectivity in rural and isolated areas, Karen Hogan said access was improving “but connectivity in rural and remote communities lagged.”

Hogan said federal agencies also need to make sure the current pan-Canadian target – 50 megabits per second for downloads and 10 mbps for uploads – is adjusted upward as technology improves.

Monday’s report found that only 40 percent of the funding so far made available to connect communities had actually been spent. While various federal funding packages made $2.4 billion available for use by the end of 2022-23, $949 million had been spent by January this year.



The two federal agencies audited – Innovation, Science and Economic Development Canada (Ised) and telecoms regulator the CRTC – said they agreed with the auditor general’s findings and recommendations.

Hogan’s office found that the federal government had met its target of bringing the 50-mbps standard to 90 percent of Canadian homes by 2021, but the figure dropped to only 59.5 percent of households in areas defined as “rural and remote.” The auditor general’s report said that amounted to 1.4 million “unserved or underserved households.”

The federal government was also criticized for focusing on the price of services to determine whether they were affordable or not, without including any analysis of customers’ income. “Prices alone do not determine whether a Canadian household can afford internet or mobile cellular service,” the report stated.

Nor did the federal agencies monitor or report on adoption of internet and cell services in areas that had received large investment.



Responding within the final report, Ised stated: “Once projects are completed, the department will study how adoption rates are impacted as a result of federal investments. The department will develop a project plan by 2024 to advance this work.”

The same department said it would commit to evaluating the ongoing suitability of the 50-mbps target in advance of 2026, and again before 2030.

Hogan’s report was not entirely critical. For example, there was praise for an overall level of “good governance in place to oversee and coordinate the federal government’s connectivity efforts.”

But the report said efforts to roll out cash and effect change often met unacceptable delays at the hands of bureaucrats – partly explaining why so much money remains unspent.

“Under the Broadband Fund, the CRTC originally estimated it would take approximately 10 months to make an initial decision to award funding from the date the calls for applications were closed,” the report stated as an example.

“However, the CRTC received significantly more applications to its second call for proposals than anticipated; therefore, it no longer followed that estimated timing. We found that it took the CRTC, on average, 17 months to reach an initial decision to award funding and an additional five months to grant final approval. 

“We also found that when applications to the CRTC’s Broadband Fund were on hold, not selected, or deemed ineligible, the CRTC did not notify applicants of the status of their applications. In our view, it was not a good management practice to make applicants wait for two or more years for a decision.”

Ultimately, the report stated, such delays mean “some Canadians will wait even longer for access to high-speed internet and mobile cellular connectivity.”