The department managing telecommunications grants suggested offloading financial approvals and, in cases of political conflicts of interest, project selection to subordinates.

Digestible version:

  • Innovation Canada (ISED) officials managing the $2.75-billion Universal Broadband Fund program, a key mechanism to connect the entire country to high-speed internet, is being burdened by the number of applications so much that it has asked to sub-delegate some of the financial approvals.
  • The normal process is that all approvals are made by the minister of ISED — in this case, Francois-Philippe Champagne.
  • But for the UBF, according to a note to the minister, ISED officials have proposed that certain approvals be allowed to be made by the deputy minister and the assistant deputy minister because of the “administrative burden” from an increased number of applications.
  • The proposal also includes offloading the initial project selection only in the case of a perceived conflict of interest involving a project proposed in the minister’s home riding.
  • The department has two streams for the program, a fast stream for projects that can be completed by this year and a regular stream. The fast stream by itself received 576 applications, while the regular stream received 1,900 applications for projects worth $10.5 billion.
  • The UBF is also working with provinces directly to get money out of the door.

Key quote:

“The UBF program has experienced a significant increase in the volume of applications received, resulting in an increased administrative burden related to approvals.”

Note to the minister of Rural Economic Development

What this story contributes:

Innovation Canada officials suggested that certain approvals are offloaded onto lower-ranking officials because of the increased administrative burden of handling over 2,000 applications for Universal Broadband Fund money.

Support the downUP

Deeper version:

Innovation Canada is so inundated with the number of applications it has received from prospective applicants for its $2.75-billion Universal Broadband Program that it suggested it sub-delegate some of the financial approvals to lower-ranking officials, according to a note to the minister of Rural Economic Development (RED).

The program, which is expected to help connect the entire country by high-speed internet, has received 1,900 applicants for its regular stream, worth a total of $10.5 billion. It has another stream for applicants who can build out projects faster that received 576 applications.

In a June 21, 2021 note to the Rural Economic Development minister, ISED officials proposed that some of the work of approving projects be offloaded to the deputy minister and the assistant deputy minister of ISED — to a degree.

In the case of financial approvals for a project, the deputy minister would be able to approve funding for “low and medium risk” projects that have not seen significant changes to the project, including an amendment to the location of the project, its scope, timing and a need to increase federal funding from 11 per cent up to 20 per cent of the project costs.

The lower-ranked assistant deputy minister would have similar limitations to the DM, with the difference being they would only be able to approve “low risk” projects where the federal share of the project costs has not increased by up to 10 per cent.

The DM and ADM can approve project selection, which is the first phase of review and does not constitute final approval, and financing “whenever Minister RED feels that there could be a perceived conflict of interest, whether it is with a project in the Minister’s home riding or otherwise,” the note said, adding it’s the only time the two can approve project selection in particular.

The minister of RED will still approve all high risk projects, including those whose risk profile has changed and any financial approval that is “deemed to be sensitive in nature,” which can include “political” or “controversial” projects, though it’s not clear what that means.

The UBF is already a relatively unique broadband funding program. Earlier this year, for the first time, it partnered with a whole province to disburse money from the fund — 24 per cent, or just over $400 million, of the original $1.75-billion bucket (which was increased by another $1 billion in the most recent federal budget).

According to ISED officials, Quebec approached the department about a basket of projects that the province had already approved, which was greenlighted by the feds after meeting the terms and conditions of the program. Quebec’s Operation High Speed, which expects to provide high-speed internet access to the whole province by late next year, was approved with UBF funds merely a week after the program’s application deadline closed on March 15.

Quebec is in second-place nationwide for general connectivity, at 91.8 per cent, and its rural areas are the best-connected, at 65.2 per cent, according to ISED.

Ontario was next to receive $600 million from the fund for projects that are expected to provide high-speed internet access to the entire province by 2025. The process will be done through a series of reverse auctions, which means the winners are those who pitch for the lowest amount of subsidy.

How about Alberta? According to a separate note in preparation for a meeting with the province’s Deputy Minister of Service David James, Alberta had notified then-minister of RED Maryam Monsef that it wanted its “fair share” of support from the UBF. Alberta estimates that it has about 210,000 households that do not have access to download speeds of 50 Mbps and 10 Mbps upload, the federal objective and the goal of the Liberal government for the entire country by 2030.

There are still things that are unclear about the UBF program and its future, including whether the $2.75 billion is enough to connect the second-largest land mass in the world. The federal government has pointed to other funding avenues, including using loans from the Infrastructure Bank, which has allocated over $2 billion for broadband projects. That mechanism relies on the bank to entice private investors to build. It has been noted that Ontario projects may leverage the bank money.

In a heavily redacted briefing note about the program, it appears ISED had been searching for “unique” approaches that “would be done outside of the regular stream of the UBF but likely still within its broad terms and conditions,” the note said. “The terms and conditions of the UBF contain a fair bit of flexibility and could, under certain conditions, accommodate such an approach,” but that approach is redacted.

In the same note, the department also appeared concerned about project applications that would come right at the March 15 deadline.

“What should be done if smaller ISPs or municipalities apply to UBF on March 15th, as expected? Would their applications be accepted?” the document said, though it again is unclear whether this was a deadline-specific concern.

What is clear, however, is that the federal government is under tremendous pressure to get funds out the door to meet its target goals of providing the federal objective speeds to 98 per cent of the country by 2026 and 100 per cent by the end of the decade.

After many years of trying to approve and disburse all $585-million of the Connect to Innovate (CTI) program born in 2016, ISED had only delivered 54 per cent of the fund by late last year.