An Angus Reid study released this past summer found that nearly one half of online Canadians surveyed said they would give up television service before they would give up Internet or phone service. The survey shows, that for many Canadians, a connection to the internet is no longer a luxury, it’s a necessity.

The exponential growth in the use of the internet over the last decade and a half has meant that Canadians now require more robust internet connections. In the early days of dial-up, it wasn’t uncommon to wait several minutes before logging on to the internet and then even longer for web pages to download or email messages appeared on our screen.

As websites became more complex and emails began to contain attachments, Canadians became frustrated with dial-up opted to pay more for “always on” DSL or Cable internet connections. Today, Digital Home owners will often spend a $100 or more per month for some of the fastest plans that telephone or cable companies have to offer.

While the new plans are a quantum leap over what was available just a few years ago, many leading edge Digital Home owners are still finding their internet connections congested. The primary reason for the slowdowns and congestion on the information superhighway is the growth in the number of devices connecting to the internet and the growth in video on demand (VOD) traffic. According to Cisco, VoD traffic is expected to quadruple between 2010 and 2015 while the number of devices connected to the internet is expected to double.

In Canada, this explosive growth in traffic is forcing the big Internet Service providers to block or restrict service on their networks in order to provide an acceptable level of service to all of its customers. For example, Rogers Cable restricts upload speeds on its $60 a month “Extreme” internet package to just 1 Mbps upload speed and a bandwidth cap of 100GB per month. In addition, other types of internet traffic such as online gaming and peer-to-peer file sharing are capped at a dial-up modem era speed of 80 kbps.

In hearings with the CRTC, Rogers and other Internet Service Providers (ISP) say their networks are simply not capable of providing a high level of service to all customers without implementing these types of rationing measures.

Fibre to the Home

The good news is there is a technology that is now being implemented in many parts of the United States and a few parts of Canada which promises faster downloads, faster uploads, less congestion and higher bandwidth capacities.

The technology is called Fibre to the Home or FTTH. As the name implies, FTTH uses Fibre (also spelled Fiber) optic cable instead of copper telephone or cable wires to deliver high speed internet service to the home. By using light instead of electricity to carry a IP packets, current fiber optic technology can provide two-way transmission speeds of up to 100 megabits per second.

While unknown in much of Canada, FTTH is well established in the industrialized countries of South East Asia. For example, FTTH penetration is now over 50% in South Korea over 30% in Japan and Hong Kong.

The numbers in North America are considerably lower but are growing quite rapidly south of the boarder. According to Market Research firm RVA LLC, almost one in five homes in the United States (18 percent) had FTTH capabilities at the end of April 2011. RVA says there are now more than 770 providers of FTTH in North America with Regional Bell operating companies in the United States (primarily Verizon) representing almost three out of four (73%) of all North American FTTH connections.

Thanks to faster speeds and less congestion, FTTH providers considerably higher levels of customer satisfaction. In a survey of several thousand broadband subscribers in the U.S., RVA found that 74 percent of FTTH users were “very satisfied” with their service compared to 54 percent for cable users and 51 percent for DSL.

FTTH in Canada

In Canada, the implementation of the next big thing in internet connectivity has been quite limited. The percentage of homes with access to Fibre optic connections is likely less than 2% and is restricted to areas of Manitoba and Atlantic Canada.

The largest FTTH provider in Canada is Bell Aliant which operates in Atlantic Canada. Branded as FibreOP, Aliant expects to have FTTH service available to over 600,000 homes and businesses by the end of 2012. Aliant says that when the roll-out is complete customers will be able to sign up for premium Internet service with download speeds of up to 170 Mbps and upload speeds of 30 Mbps.

Another early adopter of fibre to the home is Manitoba’s MTS, which last year, announced plans to spend $125 million over the next five years as part of an accelerated deployment of its FTTH network which it calls FiON. By the end of 2015, MTS expects to deploy fibre to about 120,000 homes in close to 20 Manitoba communities.

Related: Myth: Bell Fibe TV is Fibre to the Home

Unfortunately for consumers in Canada’s most populous provinces (Ontario, Quebec, British Columbia and Alberta), the roll-out of FTTH has been virtually non-existent. In Alberta and British Columbia, Shaw and Telus have announced several FTTH trials over the last four years but have yet to make any major announcements. In Ontario and Quebec, Bell has said it plans to have Fiber to the building (FTTB) in 1,600 condominium and apartment buildings in Ontario and Québec by the end of 2012 but no significant FTTH initiatives have been announced.
The primary reason for not building FTTH networks in Canada’s big provinces is cost. FTTH installation costs per subscriber are typically in the $1,000 to $1,500 range. With over 8 million households in Ontario and Quebec, a complete FTTH roll-out could cost $8 to $12 billion!

Unfortunately, while Fibre to the Home is the future of Internet Connectivity, Canadians may be required to wait a while!

Related Forums for further discussion about FTTH and IPTV in Canada