The federal government is considering a proposal that would claw back Internet services from hundreds of thousands of rural Canadian households, including 31,000 in Eastern Ontario, in favour of providing enhanced coverage in urban areas.

The proposal now being considered by Innovation, Science and Economic Development Canada would take broadband spectrum used by rural wireless providers and auction it off for 5G wireless that would be used mainly in the big cities. With 5G, the urban providers could offer enhanced wireless that could accommodate such innovations as self-driving cars.

In a submission to ISED, which wrapped up public consultations on the spectrum auction in mid-August, Internet provider Xplornet warned that the government’s proposal would have dire consequences for rural Canadians.

“Since there are no alternative spectrum bands available to which Xplornet and other providers can move their rural customers, the result of the options proposed will mean the reduction or disconnection of service to 200,000 or more rural households, with Xplornet alone forfeiting between 25 to 66 per cent of its spectrum in the 3500 MHz band,” the company told ISED.

“This will leave rural Canadians, who currently lack other options, with less robust Internet services and force them to once again be left behind in the digital economy.”

The Eastern Ontario Regional Network (EORN) and the region’s wardens have also expressed alarm at the government’s proposal.

EORN told the government that it is “extremely concerned” by the spectrum clawback, adding that it would affect up to 31,000 households and businesses in rural Eastern Ontario,

“There are no other terrestrial broadband alternatives available for these residents and we have no hope or expectation that the reallocation of 3500 spectrum for 5G would provide broadband services to all of these residents at any time in the near future based on past experience,” it said in one of its two briefs to ISED.

The EORN and the wardens also argue that taking the spectrum away from rural Eastern Ontario would cost the federal and provincial governments about $11.9 million invested in EORN.

The proposed clawback would make that investment “worthless,” EORN warns, adding the $11.9 million doesn’t include the money invested by the private sector.

Lisa Severson, who speaks for EORN, said the network wants the government “to do no harm.” If it needs spectrum for 5G, it should not take away rural service to get it.

Severson was reluctant to characterize the issue as an urban-rural divide, saying the government has to make hard decisions on allocating spectrum.

“It’s a balancing act,” she said.

But James Maunder, Xplornet’s vice-president of communications, said the spectrum clawback is absolutely an urban-rural issue.

“The urban-rural divide has been an issue that companies and governments at all levels have been trying to address for a long time,” Maunder said.

He described the government’s proposal to claw back services to rural Canadians as “unprecedented.” The government has reallocated spectrum use among companies before, but it has always provided alternative spectrum to the existing users, he said. In this case, the government proposal simply would reduce service to rural Canadians without providing alternatives, he said.

In its brief, Maunder’s company said ISED “proposes to undo much of what has been accomplished in the last decade to connect Canadians and bring Internet services to those living outside Canada’s urban centres.”

The proposed policy “disproportionately favours the interests of large, urban mobile providers at the expense of Internet users in rural Canada,” the company says.

Severson said EORN wants the government to break up the spectrums into smaller chunks so that urban centres don’t dominate the areas.

In granting the right to use broadband, the government imposes conditions on the companies to meet certain coverage thresholds, she said. When the areas are large and include urban centres, the companies often can meet the coverage requirements by serving the cities and pay little attention to the surrounding rural areas.

The solution, according to EORN, is to break up the areas into small pieces or make rural-only areas, she said.

ISED started its consultations on the spectrum clawback in June and completed them last month. A decision is expected sometime this fall.