Prime Minister Mark Carney delivers opening remarks during the Canada Investment Summit in Toronto on Tuesday.Nathan Denette/The Canadian Press
The federal government will help finance a new internet network to provide nationwide sovereign connectivity, and introduce new tax measures to lower the cost of building fibre-optic cables, Prime Minister Mark Carney announced Tuesday morning.
Among other nation-building projects, the government will help to fund “a sovereign broadband backbone that connects Canadians from coast to coast to coast, with more direct and secure links to Europe and Asia,” Mr. Carney said during opening remarks at the Canada Investment Summit in Toronto, where the world’s top investors have gathered.
A “broadband backbone” is the high-capacity core of the internet network that carries traffic between cities and countries. Speaking with reporters later, Mr. Carney said the backbone would also include connections to the Arctic.
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Representatives for Canada’s major telecom companies supported Mr. Carney’s announcement.
“We see a clear economic opportunity for Canada in building a sovereign digital fibre route,” said Rogers Communications Inc. RCI-B-T chief executive officer Tony Staffieri in a statement Tuesday.
“We look forward to continue driving this nation-building project to keep our governments, businesses and Canadians securely connected,” he said, adding that Canada needs a “regulatory environment that encourages investment.”
BCE Inc. BCE-T spokesperson Ellen Murphy spoke favourably of the broadband project and said the company will take a closer look at the details when they are available. “A sovereign broadband backbone controlled by Canadians for Canadians is critical to ensure continued connectivity across the country and across the oceans.”
Telus Corp. T-T will also support the initiative, said CEO Victor Dodig in a statement. “Telus will collaborate with the federal government, the Major Projects Office, industry partners, and key stakeholders to ensure this national project is both technically resilient and economically viable,” he said.
Quebecor Inc. CEO Pierre Karl Péladeau also welcomed the news. “As telecom competition comes – and will increasingly come – from the sky, through American satellite companies, adequate measures must be put in place to protect Canadian sovereignty,” he said in a statement.
As Mr. Carney’s government continues to seek alternatives to reduce the country’s dependence on the United States, calls have grown to develop more networking infrastructure that would avoid routing Canadian data through U.S. internet exchanges, thereby exposing that data to potential surveillance.
The federal government previously signalled in its National Artificial Intelligence Strategy, released in June, that it planned to expand high-capacity fibre lines and satellite connectivity to improve network resilience and limit the effects of disruptions.
Doing so would provide capacity for new projects, such as AI data centres, which Ottawa has championed. The infrastructure underlying these facilities must be operated under Canadian control and Canadian law, the AI strategy says, “not dependent on platforms that can be restricted or withdrawn at the discretion of a foreign government.”
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Researchers at the University of Toronto and York University studying the journey taken by data between two points in Canada have found that, among their data sets, about a quarter of those journeys routed through American interchanges, exposing that information to access by the U.S. National Security Agency.
According to one of the researchers who studied those data sets, however, Mr. Carney’s new plan may not be the only solution to keeping Canadian data from routing through American exchange points.
Certain Canadian telecom companies sometimes send traffic through American networks even when there are domestic alternatives as a competitive measure, said Andrew Clement, professor emeritus in the Faculty of Information at the University of Toronto.
As a result, he said, one solution could be to shift that traffic to Canadian exchange points, as opposed to building a whole new national network. “If your problem is traffic going through the United States, there are a lot of things you can do without having to build fibre.”
Chris Johnson, who leads risk management firm Marsh Canada’s technology industry practice, said it’s not a question of whether Canada will need new fibre lines to keep up with demand. Telecom hardware requires upgrades every few years, and new uses, including AI compute and quantum computing, will require more capacity than what Canada currently has to offer, he said.
“Does the current infrastructure support the future? We’re going to need more, no matter what,” Mr. Johnson said.
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Mr. Carney also shared details of a new tax incentive, called the Productivity Mega Deduction, which would allow companies to immediately deduct 100 per cent of the cost of eligible new investments.
This deduction, building on a similar measure introduced last year, will now cover a greater range of asset types, including fibre-optic cable, computer equipment and software, as well as research and development.
The deduction will reduce Canada’s marginal effective tax rate on new business investment from roughly 13 per cent to 6.4 per cent, making it the lowest of major economies, the government said in a release.
Mr. Carney did not provide further details about the broadband project. However, discussions about the ownership and financing model for the project are currently being held between telecom companies and the Major Projects Office, according to two sources with knowledge of the matter.
The Globe is not naming the sources, who were not authorized to publicly discuss the matter.
Ottawa’s fibre investment and tax deduction are intended to stimulate investment in an industry where, in recent years, companies have at times cut capital expenditures in response to regulation they say discourages investment.
Earlier this year, Rogers said it planned to reduce 2026 capital expenditures by 30 per cent, in part by cancelling or delaying infrastructure projects in light of “significant regulatory hurdles.”
And three years ago, after the Canadian Radio-television and Telecommunications Commission said it would require some large telecom companies to share access to their fibre networks with competitors, Bell said it would reduce planned network investment by over $1-billion and “reduce high-speed fibre Internet expansion.”