Finance Committee on Oct. 19th, 2009

[Eric Marsh]

That is correct.

Mr. Chairman, in the cases we have studied that are really success cases, one of the success factors in making it happen was the spread between the price a person pays for gasoline and the price he would pay for natural gas in the form of transportation fuel. When that spread widens out enough, now people can begin to.... Once you buy that natural gas vehicle, which is typically slightly more expensive than a gasoline version—a lot like a hybrid. People will begin to look at them and begin to buy them. It is the differential between gasoline and diesel and then natural gas that really has been able to stimulate people to use natural gas.

[The Chair, Conservative, James Rajotte]

I appreciate that.

I want to go next to SaskTel. You state that this province has a goal of providing all residents with broadband by 2011. Then in your recommendations generally you get very strong agreement on that. I think Mr. McKay pointed this out as well. The challenge is in how you do that, because once the federal government gets involved in any model to provide broadband, they tend to upset one or more players at the expense of other players being happy with how they choose to go.

In Alberta we have the SuperNet model, which seems to have worked well in the end. It didn't start out that well, but it worked well in the end. Is that the sort of model you are recommending here for Saskatchewan? What is the model where you wouldn't upset, perhaps, the BDUs at the expense of the telcos or be in favour of the telcos at the expense of the other companies?

[Robert Watson]

Thanks for the question.

SaskTel actually looked at the Alberta model. We also looked at the B.C. model. The Alberta model, the SuperNet, essentially took broadband to the community, and then the community was to look after the local access themselves. A lot of communities didn't do that. They just don't have the wherewithal, nor do they have the expertise, to do that.

[The Chair, Conservative, James Rajotte]

Some of them say they didn't have the demand.

[Robert Watson]

Yes, demand is another thing altogether. You're right.

The B.C. model actually took broadband to the communities and then they proactively encouraged the communities to do it, to take the local access themselves, and they found that a lot of communities did that to start with; however, they weren't able to carry on because of lack of expertise, lack of commitment and everything.

[The Chair, Conservative, James Rajotte]

When you say proactively encouraging communities to do so, how did they do that?

[Robert Watson]

They actually would go out to the communities and try to set up a program for the communities to invest in themselves or jointly invest in the local access side of it. We went to the Government of Saskatchewan with two models, actually. One was the model where we put in the backbone infrastructure and then an allotment of funds was to be set aside for individuals to deliver the local access. The other was the model where SaskTel would guarantee the delivery within a three-year timeframe to 100% of the population, and then from there we said that 70% of the total money allotted we would give out to private enterprise. But we were responsible for guaranteeing the delivery of the service. With that we've partnered with local communities and local companies to deliver access to 15 different locations where there are local companies doing it. We've also partnered with the national satellite provider in providing it to the deep rural, as we refer to it, where we know no economic model gets it—

[The Chair, Conservative, James Rajotte]

What percentage of Saskatchewan would have to be covered by satellite? Is it 5% to 10%?

[Robert Watson]

It's about 10%, we estimate.

[The Chair, Conservative, James Rajotte]

That is primarily northern Saskatchewan.

[Robert Watson]

Yes, we are talking really rural now.

With the development of this network, we are actually getting some of the mines in northern Saskatchewan, particularly the uranium mines, to look at even higher speeds. We are talking about some of the uranium mines in northern Saskatchewan that are looking at buying one gig of traffic that they need to get to run their mines, because they are going to completely automate the running. We are talking pretty rural stuff. For some of those mines we're actually going to be able to build fibre to them on a pretty economic basis because of this whole network being developed.

[The Chair, Conservative, James Rajotte]

In terms of costing, in the recommendations, do you have costing either national or for the province of Saskatchewan, either one-time or ongoing costs?

[Robert Watson]

No, we'd have to get into a dialogue.

What we are essentially saying is that we all agree we're falling behind the rest of the world in our delivery of broadband as a country. To get broadband to everybody, not only do you need a provincial strategy but also a national strategy.

Years ago we decided to do that as a country, and we said to the provinces that local-line service was essential and therefore it had to be funded differently from urban services. We're saying the types of parameters are there for us to move it forward on a broadband basis. First and foremost, the government has to say that broadband services are right, an essential service, for everybody in the province. Then there are two elements to the funding: up-front funding, and then the ongoing contribution has to be funded.

[The Chair, Conservative, James Rajotte]

I'm out of time, but I would caution about saying it's a right, because I think you do get into challenges, as Mr. McKay pointed out, with the federal government getting involved and with whether companies have a right to make a profit off it, if it's a right.

[Robert Watson]

Do you want me to comment on that?

[Voices]

Oh, oh!

[The Chair, Conservative, James Rajotte]

Sure.

I know we're in a province where crown corporations are king, but if it's a right, that takes it to an even further level.

[Robert Watson]

The only comment I'll make on that, quite frankly, is that the telecommunications industry in Canada—in fact, the communications industry—is alive and well. We're one of the few industries that has continued to invest dramatically through the recession—

[The Chair, Conservative, James Rajotte]

That's correct.

[Robert Watson]

—to create jobs and invest dramatically.

So my personal view is, don't kill the golden goose here and overregulate and overtax us.

[The Chair, Conservative, James Rajotte]

I agree.

[Robert Watson]

That's a personal comment.

[The Chair, Conservative, James Rajotte]

But that's a different task than going down the path of saying it's a right.

[Robert Watson]

Well, the mechanism was very formal where the CRTC evaluated what it would truly cost to deliver the local services in rural Canada. Therefore, the funding to subsidize that was a formula, and it had different bands applied to it. So it was done in a lot of detail back then; you had to justify your costs and therefore the funding difference.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Mr. Pacetti.