The federal government has delivered only 54% of allocated Connect to Innovate money through 2020

Last updated on March 18, 2021

It took Innovation Canada an average of 243 days to sign agreements with successful Connect to Innovate applicants

Got a tip? Click here to email me.

Digestible version (full story below):

• Innovation Canada has delivered only 54 per cent of Connect to Innovate money as of late October, according to government data
• Out of the roughly $253 million allocated for distribution by end of 2020, the feds have held onto $116 million since 2018
• In total, out of the $585 million allocated to the program for rural and remote broadband, only 28 per cent has so far been distributed
• It also took an average of roughly 243 days from receiving applications to signing successful applicants for the program, announced in 2016
• To date, only 28,000 households across the country have been connected using CTI program funds
• The announcement of the Universal Broadband Fund in November includes an accelerated timeline that 98 per cent of the country — up from 95 per cent — will have access to the universal speed objective of 50 Mbps download and 10 Mbps upload by 2026

Key figures:

What this story contributes:

New analysis and figures about the Connect to Innovate program: (a) an average of 243 days from initial application to signing contribution (money) agreement, and (b) $116 million undelivered from 2017 through 2020. The analysis offers another glimmer — how much money is actually moving — into the relatively slow progress of the program.

Deep version:

The federal government has a goal of providing access to internet speeds of 50 Mbps download and 10 Mbps upload to 98 per cent of the country by 2026, and it hopes to do so in the face of a lagging older broadband program that averaged 243 days to sign agreements and left $116 million undelivered over the past three years.

Innovation, Science and Economic Development (ISED) officials have said the department has learned some lessons and instituted some improvements for the newer $1.75-billion Universal Broadband Fund (UBF), which includes services that will help guide less experienced applicants to meet the necessary application requirements to rush dollars out of the door quicker.

Speed is apparently so crucial to the government’s broadband goals that it has pledged to ram through up to $150 million to project proponents that can deliver their subsidized services by November next year.

But the federal ministry has yet to disburse all the money allocated for each of the fiscal years the older Connect to Innovate program has been open, since 2017. That’s because signing agreements with successful applicants — which took an average of 243 days, according to downUP math — doesn’t mean the project work gets completed. That fact adds a larger time spread to see the money bear fruit.

According to an analysis by this publication of government data provided in response to questions from NDP MP Brian Masse, as of late October, the feds have left $116,474,308 undelivered over the past three years. In the 2019-2020 fiscal year, it left undelivered $111,575,755; over the 2018-2019 period, it withheld $4,752,984; and for 2017-2018, it kept $145,569. Over the 2020-2021 period, it has allocated $230,675,510 and has so far paid out $16,125,494.

About 31.5 per cent, or $152,474,616 out of a possible $483,498,940 allocated through to the end of next year, has so far been distributed. Allocated for the final fiscal year of 2021-2022 is $64,058,350. The rest of the money will go toward administrative expenses.

Under the CTI program, non-repayable funds are delivered through contribution agreements, meaning recipients are reimbursed when they submit receipts showing that work has been done. Timelines for project completion are detailed in the contribution agreement, ISED says.

There are still 29 contribution agreements under negotiation, 69 are in the planning, design and construction phase, and seven are now considered operational, according to the government website.

In total, the government has so far paid out 28 per cent of the $585-million program, which was announced in 2016 and was initially intended to last until 2021. In budget 2019, the federal government added $85 million to the $500 million it pledged four years ago.

Conservative MP James Cumming, who is the party’s shadow minister of industry and the vice-chair of the House of Commons Industry Committee currently studying broadband accessibility and affordability, said in a phone interview that the fact the program has so far only connected 50 communities, or roughly 17 per cent, out of the original CTI goal of 300 communities by 2021, is a troubling sign. The government has since expanded its goal to connect 975 communities by March 2023.

“The dollars aren’t getting out…it just strikes me it will be nearly impossible to connect those 300 communities by the end of 2021,” Cumming said.

So far, the Liberal government has managed to connect 28,000 households on the program. It said it expects to connect 100 communities, or 35,000 households, by the end of this year. Those figures ramp up dramatically to 750 communities by the end of next year, or 250,000 households, and then to 975 communities, or 390,000 households, by March 2023.

Cumming said part of the reason why the industry committee undertook its affordability and accessibility study is because connectivity wasn’t happening fast enough.

When asked how achievable the government’s new timeline of connecting more Canadians by 2026 to the benchmark 50/10 speeds, Cumming said: “Unless there’s a technology breakthrough, not at the current trajectory, no.”

Echoing what the Public Interest Advocacy Centre has suggested — and that MP Masse alluded to — in a previous industry committee meeting, Cumming said there should be one entity that will hold the different broadband programs accountable to complete objectives.

ISED takes a hands-on approach to ensuring that successful applicants can deliver on their promise of bringing high-speed connectivity to the worst-connected regions of the country. That process consists of step-by-step reviews of feasibility and criteria eligibility and negotiations at the money delivery stage, where money is drip-fed. These factors can greatly prolong and complicate the process.

The Conservatives, the NDP, and even Telus have presented their own plans to shorten the timelines for broadband deployment. Former Conservative shadow minister of industry Michelle Rempel launched an ambitious proposal to provide the universal speeds of 50 Mbps download and 10 Mbps upload to all of Canada by the end of 2021. NDP MP Brian Masse put forth the party’s own plan to provide high-speed internet access to the entire country within four years.

Telus recently proposed a plan to release unused spectrum held by carriers to unlock access to the universal speed objective to all of Canada by 2025, five years sooner than what the federal government hopes.

Masse couldn’t be reached for comment.

For a while, ISED was determined to push through $30 million to a project in Northern Manitoba, but it fell apart at the last minute because of what the government described as slow progress. (The project was plagued by politics — a competing First Nation broadband group was claiming it had the only right to deploy broadband in the region.)

In fact, during a technical briefing related to the UBF in November, a federal official said the government had yet to notify all CTI applicants of their status. That can be because the government waits until situations like the Manitoba problem fully manifests to redirect money to other applicants.

Listed in the data reviewed by this publication are two outstanding applicants that have yet to receive a response to their application, suspending their hopes by more than 1295 days since they applied in 2017.