Industry Committee on Aug. 7th, 2009

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you.

I have one other question. You made reference today to concerns about our national security, which any nationalist...and you obviously are a proud nationalist, and we're pleased to see that. I think we all recognize that this is a concern for each and every Canadian. Do you have any specific information, other than general terms or thoughts, as to where specifically this type of technology either will be and/or can demonstratively be proven to be a threat to our national security?

[Mike Lazaridis]

First of all, much of this again is covered in our brief in detail.

What I think is important and what we're suggesting again is that it is very important to us to make sure that we do due diligence on what has happened here and make sure that we understand all the implications and future implications of this transaction as it has been consummated or announced. That's what's important, because it's very natural--it's almost standard procedure in other countries--to check for these things on transactions of this magnitude that especially include fundamental R and D and technology that's going to be used in future international standards, that is going to be deployed widely within the country, and we need to understand what the implications are.

Again, I want to bring back something I said before. When we bought Certicom, a Canadian company buying another Canadian company in the same province, 100 kilometres away, it was still subject to the approval of the U.S. under national security concerns. So if that transaction was important to them, how come this is not important to us?

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Are their national security concerns based on international standards or based on simply domestic standards?

[Mike Lazaridis]

It was on international standards. Certicom technology was going to become the future international standard. Elliptic curve technology was the future.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Okay. Totally hypothetical here, if this situation were reversed and you were buying Ericsson, how do you think Sweden would be reacting to this, from your perspective, based on the international standard?

[Mike Lazaridis]

The scrutiny would have been intense.

[The Chair, Conservative, Michael Chong]

Thank you very much for those very good questions.

We're now going to go to Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I'm hoping you can confirm or clarify this if it's not correct. One of the things—I think I understand it correctly—with regards to SR and ED credits and going back to Nortel's ramp-up of investment into LTE in the last year, despite not being able to take advantage of the credits, is that I understand you can actually carry forward those tax credits to another year of profit and go back and apply them later on. Is that correct or is that wrong?

[Mike Lazaridis]

That is correct.

[Brian Masse, NDP, Windsor West, ON]

Now, was there any discussion with regards to Nortel? Is that part of the package you guys had discussed: access to those tax credits?

It would have been an interesting question to ask Nortel at that time—just thinking of it now—whether or not that's even part of the Ericsson deal, as to whether or not those tax credits are transferrable. Do you have any knowledge of that?

[Mike Lazaridis]

I'm not a tax expert, but what I can tell you is that if they were available, of course, we would try to obtain them, as any business would. I don't know if they're part of this. I don't even know what the status of those tax credits is.

[Brian Masse, NDP, Windsor West, ON]

Okay.

Maybe, Mr. Chair, I can add that question to your previous question for the researchers to bring back to the committee: the eligibility of access to the ownership of those tax credits.

[The Chair, Conservative, Michael Chong]

We'll get the researchers and the Library of Parliament to look into it and let members of the committee know.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

I'd like to switch again, Mr. Chair, back to the potential human loss of this.

What has happened, in terms of RIM, in terms of spinoffs? What has come out of your company from having the research and development at its core institute? What has that meant to other types of Canadian businesses? Can I have some snapshot of that, please?

[Mike Lazaridis]

Well, the first thing that happens when you have the kind of growth that we've been blessed with—I mean, you're talking about more than a decade where your average growth is 80% a year—of course, is that it really helps the local economy, and then it starts generating taxes to help the entire country. I think that's important.

The second thing that happens is that all the local businesses and suppliers and then all the suppliers in that country find themselves in a position to be supporting and supplying. Remember, we also manufacture a large number of our BlackBerrys here in Canada, which is quite unique in this business, in this industry, and it helps that environment. But we've also had lots of spinoff technologies. You know, there have been companies, there have been individuals, just like at Nortel, who have left the company and started their own. We've witnessed a number of those. We're also witnessing a lot of other companies who have found that building on top of the BlackBerry platform has been very, very successful for them.

And then, of course, you know—I think this is something we forget—the cellular pioneers in this country, who bet on BlackBerry ten years ago or more, have had great success in the wireless digital age that we find ourselves in today. I mean, a lot of other countries and a lot of other carriers would be envious of the kind of success they've had.

So it has definitely supported the widespread industry in Canada.

[Brian Masse, NDP, Windsor West, ON]

Okay.

I want to switch to one other gear here again, because I have limited time. I do want to find out about the LTE technology, as it's rolled out.

Can you explain how that would take place or whoever that's going to take place with? I can imagine it's going to be an incredible advantage. Will this device create a pent-up need? Will it be difficult for any provider to keep up with demand? Will it be rolled out to, I guess, a prioritization? What will happen, as it starts to break through and emerge, not only to the consumer market but also to government services and other operations that governments provide?

[Mike Lazaridis]

Well, this wireless technology, and BlackBerry specifically, is already playing a very important role and has found itself in widespread use for law enforcement and government use as well as industry use and personal use. So that's already happening.

Today's 3G networks, which by many standards would be seen as early—you know these are just the early days—are already succumbing to the incredible demand for capacity and use. So we're already at a position where we realize we are underestimating the potential take-up of these digital wireless services for all services, whether they're personal, whether they're e-commerce, or whether they're law enforcement, military, or government. We underestimated the need for the capacity.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Lazaridis.

[Mike Lazaridis]

I have just one last thing.

[The Chair, Conservative, Michael Chong]

Go ahead, very briefly.

[Mike Lazaridis]

That is why we need fourth-generation technologies, and LTE gives us an opportunity to meet those needs in future.

[The Chair, Conservative, Michael Chong]

Thank you very much.

Mr. Lake.

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

I just want to come back to a couple of things you've talked about.

First, you mentioned at the end of your testimony that you thought there should be a four-way discussion among the government, Nortel, Ericsson, and RIM. You've obviously had extensive discussions with Nortel, and Nortel has had 13 meetings with government officials.

Now, when was the last time you met with the minister or the government?

[Mike Lazaridis]

Which minister is that?

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

The Minister of Industry, regarding this issue.