Industry Committee on Oct. 24th, 2011

[The Chair, Conservative, David Sweet]

Good afternoon, ladies and gentlemen.

Good afternoon everyone.

Welcome to the ninth meeting of the parliamentary Standing Committee on Industry, Science and Technology. We're dealing with e-commerce and electronic payments.

We have four witnesses before us today.

Before I introduce the witnesses, I'll do a bit of committee business ever so briefly.

I need a motion from the floor for our budget for this study. Right now we're going to budget $8,450 for it. There's no guarantee that we will actually have to spend that much, but we need to make sure that we budget this amount in order to deal with expenditures for witnesses.

Could I have a member make a motion in that regard?

Thank you, Mr. Braid.

Seconded by Mr. Thibeault.

All in favour?

(Motion agreed to)

Thank you very much.

Now I will introduce the witnesses. We have from the Canadian Wireless Telecommunications Association, Bernard Lord, the president and chief executive officer; from KPMG, we have Ken Cochrane, a partner in advisory management consulting; from IBM, we have Chris Paterson, director of government programs; and from Microsoft Canada Inc., we have John Weigelt, the national technology officer.

Gentlemen, we'll give you six minutes for your opening comments and then we'll go to a regular rotation of questions. I'll follow the order that's before us in our orders of the day, so we'll begin with Mr. Lord.

[Bernard Lord, President and Chief Executive Officer, Canadian Wireless Telecommunications Association]

Thank you, Mr. Chair.

I also wish to thank the members of Parliament who are here today.

I thank all the MPs for enabling us to be here today and I'm looking forward to answering your questions.

I want to start with a few facts and talk about all the good stuff that is happening in wireless, here in Canada, and how that leads to e-commerce. In Canada, we have wireless coverage for 99% of the population. About 97% of the population is covered by 3G or faster. We have more of the fastest networks in Canada than any other country in the world.

We have seen that, in various areas, Canada is progressing very well compared with other countries.

There are more wireless connections in Canada than wired connections. Canada is a world leader when it comes to wireless tablet use, and tablet purchases are expected to grow by 100% in 2012.

Canadians are among the world's fastest adopters of smart phones. We expect 100% penetration by 2014, which means that electronic communication in Canada equals mobile communication, and that electronic commerce equals mobile commerce.

The overall contribution of wireless to the Canadian economy is over $41 billion. This is according to an Ovum study that was done this year, based on 2009 numbers. There are over 261,000 people employed in Canada as a result of the wireless industry.

Massive investments have been made by the wireless sector in recent years—over $10.8 billion since 2008—even though we've been in a severe recession.

What does this mean?

There's significant growth in the wireless sector. A smart phone will consume 24 times the bandwidth of a traditional-feature phone. A tablet or laptop will consume 100 to 500 times more. So we have more users than ever before—more smart phones, more bandwidth.

Some of our networks are growing at 5%—not 5% a year, but 5% a week. One of our networks in Canada has the largest concentration of smart phones of any network in the world. All that is to say that Canadians are using this technology. They want to use this technology—for talk, text, culture, and commerce.

Who is using mobile commerce to reach Canadian consumers? The answer is, basically everyone in Canada.

What are Canadian consumers doing with mobile commerce? Companies such as EnStream are at the forefront of the smart phone payment systems, using leading-edge, near-field communications technology to turn smart phones into mobile wallets. The Google Wallet is expected in Canada in 2012. More than 80% of Canadian industry players feel that mobile wallets will be mainstream in this country within the next four years.

I hope my colleague from KPMG will confirm that.

[Voices]

Oh, oh!

[Bernard Lord]

We're quoting your study.

[Ken Cochrane, Partner, Advisory Management Consulting, KPMG Canada]

Yes, for telco industry, that's correct.

[Bernard Lord]

Since 2009 the Mobile Giving Foundation in Canada has raised more than $1.2 million, mostly through five- and ten-dollar donations for 120 registered charities, via text-to-donate campaigns.

These facts are just to say that mobile commerce is going to be mainstream. In Canada, for e-commerce to function, it will have to ride on mobile networks. Canadian industry and Canadian consumers are leaders in mobile commerce. We feel that Canada and Canadian governments at all levels could do more to keep up: governments should be a model user, governments should reduce red tape. To maintain Canada's leadership position, the wireless industry requires policies that support and encourage future investments in networks, greater predictability in long-term planning, and timely access to antenna sites to sustain the growing networks.

Those were my comments, Mr. Chair. I look forward to your questions.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Lord.

We'll now give KPMG an opportunity to actually confirm that.

Mr. Cochrane, for six minutes.

[Ken Cochrane]

Thank you, Mr. Chair, and committee members, for asking KPMG to come here today and share some of our insights with you.

Prior to the meeting I did distribute in both languages our 2011 report for Canada on mobile payments. I believe members should have that report as well.

The survey that we did was global in nature. We had approximately 1,000 executives from around the world, representing financial services, telecommunications, technology, and retail industry organizations, provide us with their insights on the barriers and opportunities to moving forward with mobile payments. So it's quite an extensive study. I'll briefly share with you the four different types of mobile commerce components that we were talking about.

One is M-banking. M is mobile, so it's about M-everything. M-banking provides you with direct access to a subscriber's bank services on a mobile device.

M-ticketing, which many people will likely be aware of, is where you actually purchase, let's say, airline tickets, and a boarding pass arrives on your mobile device and you can scan it in to gain access to a flight.

M-commerce really is about payment over the Internet. Unlike the banking side, it actually uses service providers like PayPal and Google Checkout, which have your banking information and will complete the transactions for you.

There's a new type of capability that is emerging that we call M-wallet, which is really a chip embedded in your mobile device that will have near-field communications capability. In other words, when it's close to a retail device in a store, it can actually communicate and share that payment information. The M-wallet, however, can also contain a lot of information in addition to banking information. You could have a range of credit cards, debit card information, and possibly driver's licence and other information on the mobile wallet. So there are some very interesting developments beginning to occur in that space.

What we heard from executives around the world is that they believe that mainstream adoption is somewhere between two and four years away. In the Canadian context we're hearing that. It's actually our position that it will be sooner than that; we believe that we'll see mainstream adoption within two years. Looking at our report and seeing the level of activity in this country right now in this space, we believe that it will occur just that much faster. We think we're really at a tipping point now.

When you look at our global study, you'll see that Asia is definitely leading in the adoption of mobile commerce, followed by Europe. While Canada is not leading, we're following the same pattern, wherein there are cards out there today like debit cards and credit cards that have near-field capability that you can touch and tap. We have seen one of the banks, the Bank of Montreal, put a sticker on the back of a mobile phone that lets you touch and tap and do a credit card-type transaction. Now we're beginning to see those chips actually embedded inside of mobile devices. We're moving down that trail as well.

We have some examples in the report that are actually quite interesting. For example, in Malaysia we see Maxis FastTap, where Maxis works together with a bank and a cell phone company, Nokia, and a terminal company that actually does the reading of the transaction at the retailer to actually complete the transaction. There's a full virtual capability in place in Malaysia.

We're seeing something a little different too. We're seeing what we call carrier billing. The example we use in the report is in Kenya, and we're seeing it emerging in Afghanistan as well. A company called M-PESA, a telecommunications company, is basically enabling the subscriber of the telephone to do banking transactions with his or her phone. This is without a bank account; this is using the telecommunication carrier's account. So you can roll up your payments basically through the telephone system and pay the telephone company directly. They have over 13 million subscribers currently in Kenya and are basically the dominant bank, in effect, from a retail perspective.

You can see how the world can change very rapidly with different entrants in the markets.

When we asked executives about the drivers behind this market—what's going to cause people to go over the edge and actually use these products and services--the primary items they focused on were on convenience of adoption. If it's easy to use, people will actually adopt it.

What is interesting is that this result is a little different, or somewhat contrary to an earlier study that we did, in which consumers said that security and privacy were the big issues for them. So here we're seeing global executives who are likely a little more comfortable with technology and who've had a little more time with it saying yes, but at this point we think we can solve those issues. It's all about convenience. If it's easy and fast to use, then people will begin to use these capabilities and services.

The other thing that we look at is the overall value chain. Mobile payments are in fact changing the value chain and so they are, in many ways, disruptive to the way things are today. If you look at the current value chain in the industry, in the credit card and the payment industry, we have very specific players today. We have the merchants; we have the credit card providers; we have the credit card companies; and we have the banks that actually play a role by issuing credit or handling the transaction. With mobile payments, we now see some new entrants, in particular the telecommunications companies, as well as technology companies, with all of these devices. So there are lots of changes afoot.

When you start to look at that, you have to say that we need to be well aware of those changes and determine how those players can play in the space and make the space work effectively.

There are lots of positive things emerging now, and about to emerge, in the Canadian context. As we stop and look at this overall, we are finding that there are really three ways to move into this space. One is through collaboration, and I use the Malaysian example, or Maxis FastTap, and the group of companies that have worked very closely together to produce a solution. There's the service provider model, such as M-PESA in Kenya, which is one implementation. And then we have joint ventures, such as the one that Rogers and Visa are now looking at in Canada.

I think one of the challenges here is that many complexities could arise if different approaches and different implementations come out of this. I think it's very important that we watch carefully and make sure we don't end up with a smart phone for every credit card that we own. We don't want as many smart phones in our pockets as we have cards today. So the whole concept of working together is key.

We come back with three recommendations.

First, develop a standards framework to make sure that this kind of commerce will flow very smoothly in this country and with other global players, which is very important overall.

Second, really focus on policy. Given that we have these new entrants--the technology companies, the telcos--it's very important that we enable innovation and not stifle it with tight rules and tight regulations that won't allow those players to play. So there is a balance between these two things.

Third, we need really solid education for businesses, consumers, and citizens in Canada to ensure they understand what they're doing when they're using these types of capabilities, as well as to really drive adoption, because we think, at the end of the day--

[The Chair, Conservative, David Sweet]

Thank you, Mr. Cochrane. I gave you an extra minute there, but I had to draw it up.

We're now on to Mr. Paterson for six minutes, please.

[Chris Paterson, Director, Government Programs, IBM Canada]

Thank you, Mr. Chair, and members of the committee.

On behalf of my colleagues at IBM Canada, we are pleased to have the opportunity to provide input on your consideration of the e-commerce marketplace in Canada. With a view to being brief, there are really three key points that I want to put forward today—and I'm sure we could follow up on them in answering questions.

The first is that our understanding of electronic commerce needs to evolve beyond the notion of transactions, given the sheer transformation of the Internet and the means by which businesses, consumers, and government interact over it. Indeed, at IBM we increasingly talk about and see an Internet of things, in which anything—any device, physical or natural; system; or ecosystem—can communicate with another and create the basis for a new economic or public policy strategy.

The second point is that this transformation is spawning the evolution of what we believe is smarter commerce, rather than electronic commerce, the former broadly defined as the capacity to translate immense flows of data into intelligence, and intelligence into new economic value.

The third, and here I am getting to the public policy level, is that Canada's comparative advantage in the digital economy, we think, will be contingent upon the ability of our businesses and governments to create value and advantage out of superior intelligence and insight.

Jumping ahead just a bit, Mr. Chair, we would suggest that our thinking on electronic commerce and the government's consideration of it should really give way to the idea of a smarter commerce agenda. At the core of this agenda is the intelligent enterprise. While these enterprises are doing many things, we find that there are two core building blocks they are leveraging in becoming intelligent enterprises. The first is their ability to leverage an increasing array of software and related technologies to turn instinct and intuition into insight and intelligence. IBM refers to these tools—and frankly we're not alone—and technologies as analytics, or the use of information to find patterns, create scenarios, make predictions, and to identify new possibilities.

The second is the adoption of emerging services-oriented models for accessing necessary technology, be it networking, infrastructure storage, applications, and business processes. The most prominent and compelling model to emerge is cloud computing. In very simple terms, cloud computing is a new model for accessing and delivering information technology and business services. Its relevance to policy is its potential to reduce the opportunity cost of investing in technology. Cloud computing helps to reduce costs, complexity, and management resources—several of the conventional barriers to IT adoption and use by SMEs.

These options are increasingly available to businesses in Canada to help them become intelligent enterprises and leaders in smarter commerce. Government can take several positive steps to facilitate and advance this agenda. I highlight some of the following.

One, we believe that public support to stimulate business investment in information and communications technologies needs to be flexible and focused on innovation outcomes as opposed to specific technology inputs. Support should facilitate innovative and, most likely, services-oriented approaches to developing an increased capacity for business intelligence.

Two, government should develop an intelligent infrastructure road map for Canada that is premised on a comprehensive vision for digital advantage—instrumented, interconnected, and intelligent. Investments in digital infrastructure create multiplier effects as good as or better than investments in bricks and mortar. Thus, investments in smarter energy grids, intelligent transportation systems, and smarter health systems, among others, are investments in innovation platforms for SMEs to build on.

Three, a research, innovation, and collaboration strategy should be pursued that will position Canada as a global leader in the development and export of intelligent technologies and solutions. We have a significant opportunity in this space, and with the right partnership we can export the technology that governments and industries around the world will need to make their businesses and infrastructure intelligent and innovative.

Four, just as the foundation for smarter commerce is an intelligent enterprise, the foundation for a smarter and more competitive Canada could be considered intelligent government. Without minimizing the scope of the challenge, clearly there are opportunities for federal and provincial governments to consider smarter spending and deficit reductions strategies.

As I wrap up, Mr. Chair, I would like to highlight IBM Canada's shared interest and sense of common cause in this discussion. IBM began operations in Canada in 1917. We have been in Canada for almost all of the 100 years that we have been a company. Our roots in Canada are as deep as our investment is extensive. Our continued ability to attract, retain, and grow our substantial R and D investment in Canada is directly linked to our combined capacity for innovation.

This discussion is an integral part of that broader effort. On behalf of my colleagues, we appreciate the opportunity to comment.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Paterson.

Mr. Weigelt, for six minutes, please.

[John Weigelt, National Technology Officer, Microsoft Canada Co.]

Good afternoon, everyone.

It is indeed a pleasure to be here to represent Microsoft Canada on this important topic.

As the national technology officer, I have the opportunity to work with businesses, government, and education and health care leaders, in looking three to five years ahead to seize the opportunities of technology and to avoid unintended consequences by making sure that privacy, security, accessibility, and availability are built into businesses and their technologies.

Today I'd like to talk to you about reimagining e-commerce, in the broadest sense of the word, to look across the economy more broadly than the digital economy and perhaps reimagine our economy digitally. Take a look at the transformation that's happening on a global scale. We heard from the other representatives that a tremendous transformation is happening. How do we get ahead of this transformation, using some of that advantage we have from the economic crisis to take the lead and seize the opportunity? Finally, I'll talk to you about adjacent innovation, harnessing the skills for those things we know best, and projecting Canadian know-how and expertise through the use of the web around the world.

I looked through the rich set of questions that inform this conversation and this exploration, and it is indeed an important place to look. When I look at recent studies, they continue to assert that Canadian businesses underutilize the potential of Internet communication and lag behind innovative Internet retailing and its respective logistics. If we think about that for a moment, we quite clearly see that it's beyond the technology side; we see the logistics side and the expansion into other parts of our economy.

When I talk with entrepreneurs and innovators in Canada, I often discuss the consultations on the digital economy that Industry Canada led last year. These were world-leading consultations, government 3.0 types of activities, where we consulted online and voted for the best ideas and whatnot. Outside a small community of technology people, normal business operators in Canada weren't aware of this technology. It was the digital economy consultation.

You might ask yourself why it's important. Let's consider for a moment the contract drilling operations in northern Alberta. We think of the rigs, we think of the trucks, and we think of the people wrestling with this big equipment. But did you know a server at that site not only handles the exploration aspects but all the aspects of HR and administration also?

Let's come a little closer to home. When we look at a construction site here in Ottawa, we see those white trailers outside the site. What's in those white trailers? It's more than a coffee machine. It's more than a water machine and a lunch table. A server is actually there so that the plumbers and electricians can review electronic blueprints.

It's clear that technology is having a transformative effect across all of our sectors. It's perhaps important that we look beyond consultations on the digital economy and look at consultations that reimagine our economy digitally. Broadening the conversation in this manner will help to engage stakeholders across the Canadian economy and extend the opportunities not only to all businesses but also to skills development, as we look at educating our young people for the next wave of innovation.

This is more than wordplay, as it recognizes that technologies play a key role in supporting innovation across Canadian industry. Opportunities project Canadian expertise worldwide. I say this because Canada is what's called a “spiky region”: people want to live here, they want to locate here. How do we take that innovation and those skill sets and project them around the world?

As my colleague from IBM noted, we're seeing a technology transformation equal to that of the Internet, where businesses can now obtain computing resources, commonly known as the cloud. Not only does cloud computing promise to provide almost limitless capacity and world-wide reach on demand, but it also frees organizations from the obligation of paying for infrastructure, so they can only pay for what they need and focus the rest of the money on innovation.

To provide these services at a low cost, there have to be world-wide economies of scale to be able to access these services wherever and whenever they're required. When you look at the supply-and-demand side of things, it's important for Canadian businesses wanting to get into this field to have the largest addressable audience.

Canadian businesses, unfortunately, are reluctant to move to the cloud. Recent Angus Reid polls suggest that only 47% of Canadian businesses are using cloud services, compared to 70% in the U.S. and 68% in the UK. We actually hear stories of emerging marketplaces where entrepreneurs are wholly using cloud computing instead of investing in IT infrastructure. They're putting all their money into that innovation. When we look at the delivery of cloud services, it allows entrepreneurs and innovators to focus on innovations without having that sunk cost.

We unfortunately see many misperceptions on the use of cloud computing. In January 2010, the trilateral committee on transborder data flows reported that organizations were losing out on opportunities because they weren't sure of the policy and legislative frameworks that applied to them and were nervous and reluctant to do so.

From a services perspective, people often look to Canada and say that Canada is a cold place with lots of green energy and lots of space. Why aren't data centres located there?

You'll recall that I mentioned this is an economies of scale business reaching out to the broadest population possible. If you cannot serve the world from your data centres, you're not going to be able to make those economies of scale. So we're still seeing legislative frameworks on a worldwide basis hindering that adoption and opportunity to project that Canadian know-how around the world.

Since the e-commerce economy is predicated on scale, we really need to look at policy frameworks that support the scale of that business.

It was mentioned earlier in regard to the “Internet of things” that the cloud represents one transformational trend. The other trend is that wide variety of connected devices. We see health-related devices--including blood glucose meters, peak flow meters, weight scales--changing the way we deliver wellness to Canadians, changing that equation and that conversation around how we deliver health care.

When we look at the connected home, at smart meters and smart appliances, not only can we manage our energy use but we can also figure out what groceries we need to pick up.

When we look at the smart vehicle and the connected vehicle projects that are under way in smart corridors in the province, there is the opportunity to avoid accidents through the use of these smart technologies and the cloud, and also to streamline logistics flows as we bring in goods from overseas and ship them across North America.

So there are great opportunities there as we look at how these different devices are connected and we look to different telecommunications channels. White spaces and the analog television networks promise to invent a whole new marketplace for how these devices communicate and share information with one another.

History demonstrates that adjacent innovation is perhaps the way that inventors come up with new ideas, by picking something they have expertise in and then linking it with another smart idea. So as we look to reimagine Canada's economy digitally, we should look to all segments of Canadian excellence and to extend them by harnessing the potential of technology.

With that, I thank you.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Weigelt.

Now we'll go on to our first round of questioning of seven minutes, and Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I could use my seven minutes just listening to you talk more about the opportunities that exist.

Mr. Cochrane, you didn't quite have a chance to finish your opening comments. Was there anything else you wanted to say?

[Ken Cochrane]

No. I prepared a rather elaborate statement because of the nature of the studies, so I rushed through it. But what I really wanted to do was to focus on the end, on the three areas that we think require real attention.

As the other speakers have indicated, at the end of the day, it's really important that the whole economy works smoothly—and payments are a key element in the movement of money and the movement of information. The movement of money and commerce is a key element, so I think that environment has to be very, very smoothly established with a lot of collaboration among parties.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Okay.

There are so many different places to go, based on the opening statements. But I'm actually going to stick with you, Mr. Cochrane.

You talked about Canada not leading the way. It sounds like we're following closely, taking up technology that other countries have led the way on. And here, I'm curious about two things.

First, why are we not leading? Is it simply due to the size of our markets, for example, or population size? Maybe it's easier to lead in other areas with bigger populations.

And the second part of the question is this. For those countries that are on the leading edge, have the security issues they have faced been resolved before we get a chance to adopt the technology? In other words, is there an advantage to being just behind?

[Ken Cochrane]

I think those are both very good questions.

If you look back at Canada in the last ten years, we've made major investments in infrastructure, major investments in Internet accessibility. As my co-speaker Bernard Lord indicated, I believe over 90% of Canadians have access to high-speed Internet capabilities.

If you compare us with other countries, what you'll see is that Canada has a very solid infrastructure that enables people to do e-commerce from their homes and workplaces very effectively. So mobile devices were not used as much for commerce in the last number of years.

I know I can go home and do banking at home with great ease, with very little difficulty. With the chip card technology and the debit card technology that has been in place in Canada for a long time, I've been able to swipe a card and make those payments very easily in Canada for a long time. We have a very sound, stable infrastructure that enables this.

But this is now disruptive and here we are with our existing infrastructure. This creates a disruption. So we're watching other countries very quickly move into mobile technology, while Canadians are still quite comfortable that they have the capabilities they need at their fingertips. That's why, when you ask executives about Canadians and what will cause them to switch, they say that it has to be really easy—even easier than using the debit card of today.

So we're in a different space from what we see in Europe, and certainly different from Asia, from that perspective.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I'm going to move to John for a second. Several witnesses talked about the cloud, but you talked about the reluctance of Canadians to move to the cloud. Personally, I can relate to that. From a personal standpoint, I think about all of my family photos, videos, and things like that, which take up a ton of space on my computer. It would be easier to have those things stored on the cloud somewhere, but I don't know where that is, so I'm reluctant to put my home videos out, who knows where?

It seems to me, though, that those same hesitations and similar ones would, from business perspective, lead to great opportunity for Canada because of the issue of trust. I would think that Canada would have a huge opportunity in terms of our brand worldwide and people's willingness to have faith in our ability to secure that information, if we were to have those data centres here.

Am I correct in assuming that might be the case? If so, would you elaborate a little bit on what we need to do to build that market?

[John Weigelt]

Sure.

I think on the first question about the consumer idea of confidence, we've heard from the businesses and from consumers around they need to have reassurance about the cloud services. Their service provider needs to be there to make sure that the pictures are there, that the other content is there, when they require them and that these will be safe for them.

It's a little paradoxical when you start to look across different services and you ask people, “Are you concerned about your privacy?” and they say “Yes.” “Are you concerned about location?”and they say “Yes”. “Do you know the location of your service providers?”, and they say, “No”. So how do you balance that type of conversation with individuals and determine how much risk they're actually accepting, the risk that is there, and the safeguards they are putting in place? It is a question of safeguards, because there are no legal prohibitions going across the community.

I think when we start to look at the business side, there are impediments around access to information and data that exist within cyberspace. So when we look at anti-terrorism legislation in Canada, and in the United States, and even in the U.K., for that matter, they all provide the ability to access data that are of interest to national security. So as you look to establish one of these capabilities within your region, people from outside the region will be concerned about the local governments being able to access their data using some of these lawful access procedures.

I have had conversations with other nations looking to establish themselves as world leaders around the provision of cloud services, and they look very closely at local legislation. They've asked, “How did your privacy legislation attract jobs or businesses to your region?” Unfortunately, there are no statistics kept on how PIPEDA or the Privacy Act have brought industry and businesses to the region.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Great. I may come back to that a little later.

Mr. Paterson, I have a quick comment. Your four recommendations for government steps sounded very similar to the recommendations in the Jenkins panel report. I don't know if you've had a chance to read it, but if you have, do you have any comments?

[Chris Paterson]

I have had a chance to read it, probably about as much as everybody else has. It's a fairly lengthy report. My observation at this point is that it's a really good start. I think it recognizes that much more needs to be done to stimulate business investment and innovation. I think it acknowledged that, as a public policy lever, direct investment as opposed to incentives, at the very least, is what other nations are adopting.

Given that there are some questions as to our capacity for innovation, perhaps there's something to be looked at there. It focuses very much on the question of small- and medium-size enterprises. We're very supportive of that. As one of Canada's largest and, frankly, most research-intensive companies, we'll continue to have discussions about how very large-scale R and D investments can be brought to Canada.

I'm intrigued by the comments on the National Research Council. Maybe--

[The Chair, Conservative, David Sweet]

Thank you, Mr. Paterson. I'm sorry, but I have to be fair to all the members and we have to abide by the clock.

I'll now go to Mr. Thibeault for seven minutes.

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you, Mr. Chair.

I echo the comments by my colleague, Mr. Lake. It's great having the four of you today to talk about such an important issue.

Each of you talked about the importance of technology. We're looking at how technology is making our lives easier. When you look at the systems that are going into place to make our lives easier, they are actually getting more and more complex. I have heard the comment or statement a couple of times that we are close to a tipping point. We are very close to that tipping point where e-commerce and mobile payments are going to tip, and they're going to go right across the country. Whatever gets Canadians using mobile payments and e-commerce, it's exciting. But at the same time we're also going to have to look at those systems. What are we doing to ensure that we're protecting consumers? What are we doing to ensure that we're protecting small- and medium-size businesses, especially when it comes to some of the regulations that we have heard about?

More specifically, what I would like to talk about are the interchange fees for credit cards. We did a study in the industry committee in the last Parliament that discussed how small- and medium-size businesses are being impacted by interchange fees. Now, if we see smart phones and Google Wallet, for example, utilizing MasterCard and Visa.... We all know there is an issue right now with financial literacy, and if we put digital literacy on top of financial literacy.... Some of us are still trying to figure out how to get the clock from flashing on the VCR. We're trying to bring people forward.

I make light of that, but maybe I will start with you, Mr. Cochrane, on that question. Are we doing enough in relation to e-commerce and mobile payments to ensure there are protections out there for consumers? I will just leave it at that and we'll go from there.

[Ken Cochrane]

I would draw your attention to the work being done by the payments task force launched by the Minister of Finance. I am not intimately aware of it, but I understand that many similar recommendations to what we have talked about will be embodied in that group. There is a broad set of potential policy issues here.

In many ways, if you look at some of the protections today.... In the physical world, you can lose something very easily; you can lose a wallet. I know that in the electronic world, if I take this device here and I have to properly protect it, I may have some of the same contents in the wallet, but I can have this shut off. I can call Rogers and ask them to disable it right away. So in some sense, the technology can give us potentially greater protection than what we have today in the physical sense.

As you note, when we start talking about mobile payments, we are not only capturing the payment but there's also the fact that while these payments were done in the past via credit card or cash, they can now be captured at the retailer. A cash transaction would be done there by a mobile device, so you do have more information about the behaviour of an individual. So it's important that we have regulations. And I think we likely have them, but it's clear to all, including consumers—which is why we talk about education—that they understand that when they tap their mobile device to complete a $30, $40, or $50 transaction, the retailer will be familiar with the types of transactions they are conducting at their location.

Some considerations need to be put in place. A big part of it is education.

[Glenn Thibeault, NDP, Sudbury, ON]

Great.

Mr. Lord, correct me if I'm wrong, but I believe it was you who stated we would see Google Wallet arrive here in Canada in 2012 and that within four years it would become mainstream. That was something you were quoting from the KPMG study.

Would you be able to comment on the infrastructure of our current wireless mobile infrastructure? Is it advanced enough to provide for point-of-sale payment via cell phones or smart phones ? Should we be monitoring that right now?