Rural Internet : Lack of Measurable Results for Tens of Millions of Dollars of Public Funds

By: Alexandre Boudreau (Thursday, October 7, 2021)

The Acting Auditor General of New Brunswick, Janice Leahy, deplores the lack of verification mechanisms and targets to be achieved in the funding provided by provincial agencies to develop internet access in rural areas.

Without these guidelines, it is difficult to judge whether the public funds spent by the province are being used wisely, she said.

Some $39 million in public funds have been invested to improve internet access in rural areas since 2003, but in 2019, 36% of rural New Brunswick households (67,000 households) still did not have access to the internet, according to the auditor’s report tabled Thursday in the Legislative Assembly. She also notes doubts about a recent project to upgrade rural connectivity in the province.

The province has already contributed $8.2 million to the first phase of this project through Opportunities NB and has announced that this phase has been completed, without checking whether the objectives have actually been achieved, according to Leahy.
The auditor believes that this is a lack of transparency and accountability since the guidelines for both phases of the project appear to have changed along the way and the cost of some elements of the project has increased.

A funding agreement has been signed for the second phase of the project, but construction has not yet begun. The public funds that will be used for this part of the project, but construction has not yet begun. The $40 million in public funds that will be used for this part of the project all come from the federal government.

The auditor determined that the province has not independently assessed rural connectivity needs, making it difficult to measure the balance sheet of Xplornet Communications Inc., the only company to which the government has provided public funding to develop this project.

She explains that the two bodies responsible for distributing provincial funding for this project, Opportunities NB and the Regional Development Corporation, instead relied on Splornet itself, which had the luxury of setting expectations for the results it was expected to achieve.

«By allowing Splornet to do the needs assessment itself, there is a risk that it will adapt it to its business strategy and objectives rather than to the needs of rural New Brunswickers», the report reads.

«Questionable» practices
Janice Leahy explains that while Opportunities NB was responsible for providing funding for this type of project, the task of developing internet
access in rural areas was not one of Opportunities NB priorities dictated in its mandate letter.

The auditor says this is in contrast to the strategy employed by Nova Scotia, which has given this mandate to a Crown corporation responsible for achieving certain rural connectivity objectives.

It also notes that Opportunities NB’s assessment practices for funding applications were «questionable» throughout this file, and that the Crown Corporation paid $5.1 million for «costs not eligible under the contract», namely maintenance costs and licenses to use wireless spectrum.

However, David Kelly, communications officer for the provincial government, says that Opportunity NB only reimbursed Xplornet for these funds after reviewing the company’s claims in detail to ensure that they complied with a letter of offer that served as the funding agreement between the parties.

The second phase of the project, however, includes controls, a budget and a scope of work, which Leahy says is encouraging. The project is expected to be completed in 2024, with a final report from the provincial government to the federal government in 2027.
The Auditor General has made a number of recommendations to the government to bring more clarity to the whole process. Some of these recommendations have already been implemented.
The rural

Internet file will now be assigned to the Office of the Chief Information Officer of the Department of Finance and Treasury Board, according to the government’s response to one of the report’s recommendations.

It also states that the office has initiated a process to identify gaps in rural Internet connectivity.

The company responds
Johanne Sénécal, VP of government relations and public affairs at Xplornet Communications, denied the Auditor General’s version of events.

“Unfortunately, a number of comments and conclusions in the Auditor General’s report are simply not accurate,” she wrote in an email.

She also claims that Xplornet has exceeded its first-phase project goals by providing Internet coverage to 11,000 rural households.

Sénécal says the auditor confused the two phases of the rural Internet upgrade project, which led to “a lot of incorrect assumptions and assertions.

She admits to delays in the Phase 1 rollout, but says they were caused by the procurement of network equipment that did not exclusively involve her company.

She also laments that the Auditor General “never requested information directly from Xplornet” to clarify certain elements of the report.


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