Why is Internet more expensive in the rural areas of Canada?

This is a great question, and there is an easy comparison to show this.

To bring fast reliable broadband speeds to rural areas, Internet Service Providers (ISPs) must use point to point spectrum licensed from ISED (Innovation, Science, and Economic Development) – which is the federal government jurisdiction.

  • In the USA, a point to point link has a cost of $610 for TEN years.
  • In Canada, the same point to point link has a cost of $2,400 PER YEAR.

Yes, you read that right! The USA is $610 while Canada ISPs pay a cost of $24,000 – for those 10 years!!

That is 4,000% higher rates that we are paying in Canada, and that is also a major factor for cellular telephones too.   Wonder why our cellular costs are higher?  Similar rules apply –  there is also another factor, which is density of people.  There is 10x the population in the USA than there is in Canada, plus Canada has much more land area to cover.

For example, in Canada, there is no difference in the cost model for operating in rural Manitoba with 200 people per square mile or operating in downtown Winnipeg with 4000 people per square mile. 

If there is a cost of $2,400 spread across 200 people that is $12 per person – but with a higher density of 4000 people, then the cost drops to $0.60.  Yes, that is 200x more expensive to operate in rural Manitoba than Osborne village for this example – and why there is lower cost Internet in Winnipeg or Steinbach than there is outside of Petersfield or Starbuck.

It is economics.  If there are less people but higher costs, that equates to all around higher costs for people.