Industry Committee on Oct. 24th, 2011

[John Carmichael, Conservative, Don Valley West, ON]

Mr. Paterson.

[Chris Paterson]

Thank you.

I think everything Mr. Weigelt said is correct. The key points there are the experiential, hands-on and more applied problem-focused approaches to learning, if you will, and working around and developing a solution in response to a problem.

One only has to have a child in the school system to understand the opportunities for using and maybe introducing technology, not just for technology's sake but for the purpose of working more collaboratively and enabling parents to become more engaged in the system.

I think for some time now any number of organizations have been engaged in promoting youth science and technology awareness. We certainly are. We've had long-standing programs focused on young women and other youth. I'm sure Microsoft does as well. We're doing it in our own lanes.

How do we create a critical mass in that regard? I think there is a perfect role for government there in coordinating a critical mass.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Paterson. I'm sorry, but I'm trying to keep it as fair as I possibly can with the time and still get the essence of the answers in.

Now on to Mr. Harris for five minutes.

[Dan Harris, NDP, Scarborough Southwest, ON]

Well, it's great to be a member of that under-35 group, and if I had 50 minutes to ask questions here, I still wouldn't get through them all.

Mr. Cochrane, you were talking earlier about new entrants in the area of mobile processing of funds. With respect to telecom and tech companies, of course they're getting into the financial side of things, and we certainly don't want cumbersome red tape. But where do you see the balance being in regulation to ensure high standards, as we have with our financial institutions, while not being cumbersome and preventing them from getting into the market?

[Ken Cochrane]

Thank you.

That's quite correct. As we look at the value chain, as you quite rightly identify, new people and new companies do come into the space and many of them are very innovative. Here I'm thinking of the telcos, of course, but also of the many product companies and technology companies. What's interesting is that they attack problems in a different way from the companies that were already there, so I think it's going to create a lot of interesting opportunities that we may not have anticipated.

At the same time, there's a need to make sure that the rule set is sound, so that we don't have cowboys but have people operating in a solid framework. That comes to the other point, which is making sure that we set standards. If we don't set standards, if people don't understand what these are, it's difficult for people to work within a frame.

Our point, really, is this. As we go into this new space with all of these new entrants—all of the different technology companies and others—it's important to have a standard framework they can work within, allowing them to deliver the innovation we all want, and hope for, and expect. At the same time, it's important that they stay within the boundaries to ensure there's a high sense of confidence in electronic business and electronic commerce. So standards are key.

[Dan Harris, NDP, Scarborough Southwest, ON]

Great.

Much has been said about the cloud today, and with respect to bandwidth—and not only mobile bandwidth. Of course, this is absolutely critical for the future. As more and more technology and more and more information are held on centralized servers and cloud computing is being served up, they vastly increase the bandwidth requirements. Certainly today, some of the more intense operations for bandwidth revolve around gaming, for instance. We see here in Canada a wide-ranging difference in quality of service, depending on where you are and when things are being served up.

Perhaps for all of you, where do you see the government coming in and investing in that infrastructure to be able to increase the quality of service? I think that's certainly detrimental to businesses that are in cloud computing, where they don't have that confidence that everything is going to be there when they need it.

Mr. Lord was talking before about the huge demand for more. With respect to antennas, I worked in northern Alberta last year where, on one construction site, we went from a 5-megabyte connection to a 100-megabyte connection within a few months and it still didn't help in getting the antennas up. We nicknamed one of the towers the “Yeti” tower, because nobody had ever seen it and it took too long to get up.

Where do you see the government coming in and pushing for that infrastructure to increase bandwidth to meet those needs three, five, and ten years out?

[Bernard Lord]

I think the role of government has to be very limited. The industry is willing to make the investments, has made the investments, and will continue to make investments. If there is one role for government, it is for remote and under-served areas—and limited to that.

I would add that when the government decides to provide support, as it has in recent years, it should be technology neutral in its approach as well, because there's more than one way to deliver the service. I don't see it as the role of the government to pick winners or losers; its role is really to support the percent of the population that is hard to reach.

Keep in mind, in Canada today wireless networks cover 99% of the population and between 17% to 19% of the territory. There's 1% of the Canadian population that lives over 83% of our territory. Economically, it may be hard to reach all of those people with mobile service. You can reach them with wireless, but it would be a different type of technology. There are ways to bridge the gap, but we must keep in mind that sometimes asking the government to do it all may be worse than doing what is in the best interest of most. Keep in mind that, of the 99% of the population that are covered by wireless, 97% have access to 3G, which means broadband mobile today, right now. So when you think of that, it's really amazing what is being done now. We have more of the world's fastest networks in Canada than any other country today. A lot has been done already without government help.

We're always concerned that when the government tries to help, it actually tries to slow things down. There are things that could be done, for instance, to ensure that there are more investments. We currently have the highest licensing fees in the G-7. If you lower those fees, the money will be invested in networks. There are ways for the government to help but it's not always by spending more tax dollars.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Lord.

Now we'll move on to the final questioner for this round, Mr. Braid, for five minutes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you very much, Mr. Chair.

Thank you to the witnesses for all the excellent contributions to our discussion that we've had from you this afternoon.

I'll start with a question to you, Mr. Lord, and this might be a good segue from exactly where you just left off.

In your opening comments, you spoke about the importance of government finding ways to reduce red tape. You've touched on a couple of examples. Are there any additional areas of red tape reduction that we should be considering, or specific examples you'd like to leave with us today?

[Bernard Lord]

In terms of red tape, the one that concerns us the most is the requirement on the licensee to invest 2% in R and D. We see that as a clear winner for the government right away. That is key. That is the most important red tape to us.

The other point is not to add any other red tape. Sometimes there's more regulation because someone feels they have to do something, and what can governments do? I've been in seats similar to yours, and I know how you can feel. There's pressure from people calling in and saying, “So what are we going to do?” Then we adopt a law and a regulation, and we end up slowing things down.

So our biggest concern with red tape is that we don't want any more. Don't set up any more obstacles. This is an area of the economy moving so quickly that, by trying to regulate too much of it, you'll end up slowing it down. If you slow it down, you will hurt consumers, you will hurt business, and you will move Canada backwards.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Great. Thank you.

Could you bring us up to date on the transition from the 3G to the 4G networks?

[Bernard Lord]

Yes.

Some of the carriers in Canada have started deploying the 4G networks and are moving very quickly. The 3G and HSPA+ networks have been in place, and you will see more deployment of 4G technology across the country from more carriers, and there will be competition in 4G. You will see manufacturers of handsets offering 4G handsets as well.

This will help satisfy part of the demand, but, at the same time, it will create more demand. As consumers realize that 4G can do more mobile things faster than ever before, they'll want to do that. As you meet some of the existing demand, by doing so, and deploying these faster networks, you will actually create more demand, which means we'll need more spectrum and more antenna sites.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Great, thank you.

Mr. Cochrane, with all due respect to IBM and Microsoft, who are also here, I want to ask you the following question. What do we have to do in Canada, from a policy and economic framework perspective, to create the next RIM?

[Ken Cochrane]

Gee, that's a very interesting question.

I guess the interesting thing is that we won't create the next RIM; the next RIM will evolve, I think. I could play off our whole idea of a digital economy and say, well, you know, the next RIM will emerge as a result of their understanding of using technology, being a global player, and working in the Canadian context, which is a very positive one.

If I just go back to the survey that Mr. Paterson alluded to earlier, which The Economist does, the one area that Canada scores extraordinarily well in is the business environment. So of all the six indicators of being a digital economy and being e-enabled, Canada is number three in the world in terms of being an environment where businesses would establish themselves. So maybe it's about a Canadian company becoming the next RIM, or some entrepreneur saying, “Let's go to Canada. Let's take our families and children and let's create a business there”. Canada sits in third place, I believe—maybe behind Singapore, and I forget who else. But I'd say we're pretty attractive.

Outside of infusing money into technology, I think that's probably the biggest thing we could do, that is, to create an environment where people want to be to build business.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you.

What is my remaining time?

[The Chair, Conservative, David Sweet]

Thirty seconds.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Mr. Paterson, tell us more about analytics, in 30 seconds.

[Chris Paterson]

Very quickly, it's about turning useless bits and bytes into new economic value, either through a new product or, frankly, through managing the enterprise in a way that gives a return on investment in one month's time of over 1,000%.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Paterson. That was very good, actually, in such a short period of time.

We're moving on to a third round now. We'll go to Mr. Richardson for five minutes.

[Lee Richardson, Conservative, Calgary Centre, AB]

Thank you.

I got halfway with my last question. I didn't have a chance to hear from Mr. Paterson and Mr. Weigelt, although in subsequent responses he reinforced where I was going, that it may simply be too big and moving too quickly for governments to be all over this and ahead of the game. And that's where I fall to my faith in the market system, simply because I think that....

You mentioned trust, Mr. Weigelt, and alluded to a quote from Bill Gates that you build trust into your products, as does IBM, I think. A lot more people vote through their pocketbooks for IBM and Microsoft than for any politician or lawmaker. If you don't retain that trust, you're toast. And I think that happens more quickly than it does to any political party.

I wanted to direct the question to Mr. Lord, simply because he's the representative of an association for this. Are you confident that competition or market is sufficient to ensure that trust and optimize integrity and the security of consumers?

[Bernard Lord]

I'm a big believer in markets as well. Companies know that consumers today are more responsive than ever before. They get more information than ever before, and they'll act quickly. If they feel they're not getting the trust level they deserve from their provider, they'll switch. And I think that is the most powerful force to ensure that businesses satisfy the needs of their customers. It is knowing that their customers can act quickly, and change. That competition exists in Canada and the information for the customer is there as well.

[Lee Richardson, Conservative, Calgary Centre, AB]

Thank you.

Did you want to comment, Mr. Paterson?

[Chris Paterson]

Fundamentally, I think your question is what is the role of government in encouraging a strong digital economy in Canada? That is the quintessential question for government.

I tried to outline a few key points in my opening remarks, but I will bring it down to one point. In terms of adopting a more liberal, progressive framework, the attention should, frankly, be on defining the standards and the outcomes. And I'm referring predominantly to issues around privacy and security. In other words, in terms of market frameworks, define the outcomes but do not define the technology.

The rate and pace of innovation is such that we'll be talking about the cloud today, and when we reassemble in two years' time, we might be talking about another platform or method. But the goal will be the same: how do we use technology to stimulate innovation and increase productivity? So I think that frameworks need to be very mindful of not defining the technology but defining the standards the government thinks Canadian individuals are entitled to.

[John Weigelt]

If I were to look at one big thing that could be done, I would recall here for you the Own the Podium effort at the Olympics and that broad, national goal. Certainly, the consultations on the digital economy expressed a goal of having a world-class digital economy moving forward. I would argue that we could go that step further and talk about having, perhaps, the most innovative economy around the world.

In looking across all aspects of innovation, I liked the Boston Consulting Group's definition of innovation. It's not only about new products but whole new marketplaces—or even more efficiencies.

I used the example earlier of carbon sequestering. What if we, as a Canadian community, imagined the Montreal Climate Exchange becoming the NASDAQ for managing that business, that whole new marketplace? Would that not support and foster some of the innovation, some of the research that's happening across the country? I know it's a sensitive issue with some regions, but it allows us a moment to imagine that whole new marketplace where Canada could strike first and then reach out and go more boldly, beyond where things are today.

[Lee Richardson, Conservative, Calgary Centre, AB]

Thank you.

Thank you, Mr. Chair.