Thank you, Mr. Chair, members of the committee. My name is Bernard Lord and I am the President of the Canadian Wireless Telecommunications Association.
I'm pleased to be joined by Jim Patrick, our vice-president of government affairs.
We're here today to ask you to consider two very specific recommendations to include in your report. We have circulated a short slide deck to all the members of the committee.
It is clear in the 21st century that wireless networks are a very important economic driver. Wireless networks are a major driver of economic activity in all regions of Canada across all sectors of the economy.
As I've just said, wireless is an economic driver throughout Canada, but one thing to note is that wireless data traffic is doubling every single year in Canada. If vehicle traffic were growing at the same rate on the Trans-Canada Highway, we would need to expand the Trans-Canada from a four-lane highway to a 64-lane highway in just four years. That would not be the right time to put a new tax on asphalt. Well, we don't think this is the right time to put a new tax on spectrum or to put a new tax on innovation and productivity growth.
The benefits of wireless for Canada have been recognized in an international study based on 2008 figures and produced by the international firm Ovum. In 2008, wireless communications generated a total economic value of some $39 billion for the Canadian economy, or $16 billion in terms of direct contribution to the GDP, $14 billion indirectly to the GDP and in economic spinoffs, and $9 billion in consumer surplus. The wireless industry employs nearly 300,000 people in Canada.
One of the obstacles to further and faster growth is the fact that Canada's spectrum fees are the highest in the G-7. The chart on page 3 of the slide deck shows clearly that our fees are not just somewhat higher, but a lot higher, than anywhere else in the G-7. By comparison, Canadian wireless carriers hold less than 2% of all licensed spectrum, yet pay over 50% of all the spectrum licence fees. Obviously somebody's getting a better deal than we are.
The Canadian Senate recommended taking other countries' regimes into account when setting the Canadian fees, looking particularly at the U.S. If the U.S. spectrum fee regime had been in place in Canada in 2009, instead of paying $130 million, the carriers would have paid $4 million. As the Broadband Canada program distributes $225 million over 36 months to subsidize rural broadband, Industry Canada will have taken close to $400 million just in licence fees in that same period of time.
A spectrum fee increase will not support the government's digital economy strategy objective. Just like a tax on asphalt at the outset of a national highway strategy, it would not be the right approach.
That is why we are making two very specific recommendations. One recommendation is to include in Budget 2011 a temporary accelerated capital cost allowance for broadband-network related assets, increasing the current CCA rates of depreciation to 50% for most areas, and to 100% for the hardest and most-expensive-to-serve areas of the country, as identified by Industry Canada.
Our second recommendation, and the one we feel is extremely important, is to include a recommendation in the pre-budget report that government should not increase the already excessive spectrum licence fees paid by Canada's wireless network operators. In fact, we may talk about it as a fee, and the government may want to describe it as a fee, but it really is a tax. Increasing it would be a tax on innovation and an additional tax on productivity. We don't think that's necessary as we see this sector of the economy continue to grow.
Thank you very much, Mr. Chair.
I want to thank all the committee members. It would be our pleasure to answer your questions.