Evidence of meeting #13 for Industry, Science and Technology in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was satellites.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Daniel Goldberg  President and Chief Executive Officer, Telesat Canada
André Bureau  Chairman of the Board, Astral Media Inc.
Sophie Émond  Vice-President, Regulatory and Government Affairs, Astral Media Inc.

9 a.m.

Conservative

The Chair Conservative Michael Chong

Welcome to the 13th meeting of the Standing Committee on Industry, Science and Technology. Today is Tuesday, May 4, 2010.

We're here pursuant to Standing Order 108(2) for a study of Canada's foreign ownership rules and regulations in the telecommunications sector.

In front of us today we have two groups of witnesses. One is from Telesat Canada and the other is from Astral Media Inc. We have Mr. Goldberg, Mr. Scott, Monsieur Bureau, and Madame Émond. Welcome to all of you.

We'll begin with an opening statement from Telesat Canada.

9 a.m.

Daniel Goldberg President and Chief Executive Officer, Telesat Canada

Thank you very much, Mr. Chairman and members of the committee. I am Dan Goldberg, president and CEO of Telesat. I am here today with Ian Scott, Telesat's executive director of government and regulatory affairs.

Thanks very much for inviting us this morning to discuss this important issue. At the outset I would like to emphasize that our comments are going to be confined to the Canadian satellite industry, Telesat is not in a position to discuss changes in the foreign investment regime for other telecom services.

The fact of the matter, as I will try to explain this morning, is that the Canadian satellite services industry is in a wholly unique position in terms of the need for reform of the foreign ownership rules. Because Canada's existing legal framework places us at a significant and unfair competitive disadvantage relative to our foreign competitors, we strongly believe the changes to the rules for Canadian satellite operators can and should be made in the near term. I'll give you a little bit of background on the reasoning behind my statement.

Telesat is a true Canadian success story. Since its inception in 1969, Telesat has brought essential and innovative satellite services to every part of Canada. Today Telesat is the fourth-largest fixed satellite service operator in the world. It employs more than 500 people in specialized high-tech jobs, more than 80% of which are in Canada. Last year Telesat had revenues of almost $800 million, which is a company record, and currently we have an asset base in excess of $5 billion.

Operated from our headquarters here in Ottawa, our global fleet of satellites is capable of serving virtually every country in the world. At this time, approximately half of our revenue comes from outside of Canada, and our desire and overriding strategic imperative is to continue to grow our business both in Canada and abroad.

Telesat is often described as a carrier's carrier because we don't provide service directly to consumers. What we do in the most basic sense is pay one company to construct a satellite and another company to launch it into space. Then we operate it in space, and for a fee we provide transmission service using the capacity on the satellite for broadcasters, telecom carriers, network integrators, and governments all over the world.

Let me now try to explain what makes the satellite industry different from other telecom services. First, satellite technology is inherently international. Like all fixed satellite service providers, our satellites are located in a geostationary orbit roughly 36,000 kilometres above the equator. Depending on their design, an individual satellite is capable of providing service to any location within an area about one-third the size of the earth's surface. Satellite technology does not respect national boundaries. This technological characteristic and the move towards free trade in telecom services over the past dozen years has led to wide open and intense global competition in the satellite industry.

In recognition of the fact that satellite services are inherently international, in 1998, as part of its commitments under the WTO agreement on basic telecommunications, Canada agreed to open its satellite services market to foreign competition. As a result, Industry Canada has authorized more than 75 foreign-licensed satellites to provide service to, from, and within Canada. Most of those satellites are owned by our larger competitors.

That's another critical and important distinction between satellite services and virtually every other Canadian telecom service: satellite services have been opened to foreign competitors. With the exception of undersea telecommunications cables, no other telecom service in Canada is subject to competition from foreign-owned carriers.

In addition to being inherently international, the satellite industry is characterized by economies of scale, meaning operators that achieve significant scale enjoy substantial competitive advantages over their smaller rivals. The competitive benefits that flow from scale are manifold. Larger operators, for example, have the ability to offer customers more varied and comprehensive geographic coverage; additional capacity to meet their expansion requirements; and higher levels of redundancy in the event of a satellite failure, which are key offerings in a field as competitive as ours.

Larger operators have greater negotiating leverages when purchasing satellites and launch vehicles, which are the two largest costs associated with our business. They can self-insure in the event of a satellite loss or failure, saving tens of millions of dollars in annual operating expenses. They have more diversified revenue streams and lower overall risk profiles, meaning that their borrowing costs are lower, which is important given how capital-intensive our industry is.

In short, the competitive advantages associated with scale in our business are enormous. Every participant in this business faces a strong strategic imperative to scale up; an operator's long-term viability literally depends on it.

In recognition of this, Telesat has been urgently scaling up over the past few years. In connection with our sale roughly two and a half years ago by BCE to our current shareholders, Canada's Public Sector Pension Investment Board and Loral Space and Communications, Telesat integrated the satellite fleet of Loral Skynet Corporation into our own larger fleet. This allowed us overnight to offer our customers global satellite solutions and to expand our satellite constellation by roughly 50%.

As I mentioned earlier, today we're the fourth-largest satellite operator in the world. Reflecting the global nature of our business and how our company is different from virtually every other Canadian telecom company, roughly half of our revenue is coming from outside of Canada.

Notwithstanding the fact that we're one of the largest operators in the world and enjoying a good measure of success of late, we have no illusions about our position in the broader industry. Put plainly, Telesat remains dramatically sub-scale relative to our three much larger competitors, all of whom have been authorized by Industry Canada to serve Canada and none of whom are subject to foreign ownership restraints by their principal regulators.

Let me say a few words about who our key competitors are so you have a sense of what we're up against. Telesat today has a fleet of 12 satellites and we have two more under construction.

Intelsat, the world's largest operator, has 56 satellites in orbit today and eight more under construction. It's based in Washington, D.C., headquartered in Luxembourg, and is controlled by a U.K.-based private equity firm.

SES, with 42 satellites in orbit and 12 more under construction, is headquartered in Luxembourg and publicly traded, principally on the Euronext stock exchange in Paris.

Eutelsat, with 23 satellites in orbit and four more under construction, is based in Paris. It's also traded on the Euronext exchange in Paris and has as its major shareholder a large Spanish infrastructure fund.

There are two ways we can try to increase our scale to close the gap between us and our much larger competitors, competitors who are two to five times larger than we are today. We can grow either organically or inorganically.

In terms of organic growth, we have invested or are investing roughly $2 billion in new satellites that have either come into service over the last 36 months or will come into service over the next 36 months. However, the problem with growing organically is that it takes nearly three years to build and launch a new satellite. We need scarce orbital locations, and we don't have orbital locations that are capable of serving the fastest growing markets in the world today, like Africa, the Middle East, and Asia. It costs roughly $300 million for each new satellite, which presents certain challenges for our business given that we don't have unlimited borrowing capacity. Canadian ownership restrictions limit our ability to access the global equity markets to finance our future growth.

In many ways, inorganic growth--which is to say growth through mergers and acquisitions--can be more desirable than organic growth. By acquiring another operator, we can grow much more quickly than the three years it takes to launch a new satellite. We can benefit from the synergies that arise from consolidating operations and functions. And we can very quickly gain access to scarce orbital positions, local market knowledge and relationships, regulatory licences and authorizations, and new customer bases. These things would take many years to put in place organically.

We expect that our industry will continue to consolidate and that our competitors--who got so big in the first place by consolidating--will keep seeking to acquire, merge, or form strategic relationships with other operators to continue to increase their scale and productivity. They may take their companies public, or, for those that are already public, they might issue secondary equity offerings to raise fresh capital to expand their operations and diversify their ownership further.

Telesat is keenly interested in remedying its sub-scale position in certain markets by acquiring other operators and gaining access to additional capital. We need the same flexibility that our foreign competitors enjoy if we're going to be successful. Given our highly skilled employees and the substantial investments we've made in our state-of-the-art Canadian facilities, we're well positioned to capture additional growth. However, the problem for Telesat is that Canada's ownership restrictions materially impede our ability to grow through acquisitions and they limit our access to capital in the global equity markets. Put simply, if we issue shares to acquire another operator or to raise new capital, we'll dilute our Canadian ownership and place ourselves in violation of the ownership rules.

In the past, sales of satellite operators have been highly competitive processes, and the larger satellite operators have been active bidders as they seek to get bigger and bigger. Our expectation is that we will be required to compete with our large competitors in these future sale processes. Because our competitors aren't subject to ownership restrictions, they'll have much greater flexibility than we will to fashion offers that are of maximum interest to the prospective sellers on the other side of the table.

I want to be clear about something. Telesat strongly supports open and competitive markets. We need open markets, given the global nature of our business and given that half of our revenues are coming from overseas markets. We compete head to head with our larger and smaller competitors day in and day out, both here in Canada and all around the world. But we must increase our scale if we are to survive longer-term. The simple truth is that Canada's current ownership rules significantly impede our ability to do so.

To address this serious situation, the government has introduced proposed legislative amendments to the Telecommunications Act that will exempt satellites from the ownership requirements. The effect of these amendments will be to permit Canadian-licensed operators to compete on a more level playing field with foreign operators and gain the skill required to be more effective global competitors.

It's equally important, though, to understand what the proposed legislative amendments will not do. The proposed amendments to the Telecommunications Act are drafted very narrowly. Satellite carriers will continue to be Canadian carriers for the purposes of the Telecommunications Act, and all other provisions of the act will continue to apply to Canadian operators. This is important to Canadian broadcasters, because the CRTC will continue to have broad authority to ensure that they have adequate satellite services for their requirements.

In addition, Industry Canada will continue to be able to advance all of its key public interest objectives by imposing licence conditions on Canadian satellite operators, which require, for instance, operators to provide satellite services to all regions of Canada, including the far north, and to ensure that there are adequate satellite services available for Canadian broadcasters. Finally, the Investment Canada Act would continue to apply to Canadian operators.

In conclusion, the satellite services industry is one of the most competitive industries in the world. Telesat is a successful Canadian company operating within that globally competitive industry, but we need to attain additional scale if we're to continue to succeed and prosper longer-term. The proposed amendments to the Telecommunications Act will remove a significant barrier faced by Telesat and other Canadian operators to achieving that vital objective. At the same time, parliamentarians can be assured that the Government of Canada has maintained all necessary measures to ensure that the interests of Canadian satellite users are protected.

That concludes our remarks this morning. Thank you very much.

9:10 a.m.

Conservative

The Chair Conservative Michael Chong

Thank you very much, Mr. Goldberg.

We'll now have an opening statement from Astral Media Inc.

9:10 a.m.

André Bureau Chairman of the Board, Astral Media Inc.

Good morning, Mr. Chair, committee members and staff. First of all, I want to thank the committee for inviting Astral Media Inc. to share its views on foreign ownership rules and regulations in the telecommunications sector.

As some of you may already know, Astral is a Canadian media corporation active in the fields of television, radio, news media and exterior signage, in both francophone and anglophone markets across the country. With our 17 television stations, we are one of the largest operators of specialty and pay television channels, including Canal D, Vrak, Family, and The Movie Network. In addition, Astral is not integrated with another cable operator or with another broadcasting distribution undertaking, or BDU.

We understand that the focus of your study is not the broadcasting industry per se. However, the problem of foreign ownership in the telecommunications sector is one to which broadcasters like ourselves can relate, since we now operate in an environment marked by the convergence of broadcasting and telecommunications. More and more, cable, telephone and wireless communications companies are offering every day a similar range of telephone, data transmission and video-broadcasting services.

We agree with comments made to the committee that the easing of foreign ownership restrictions in the broadcasting field must be examined in tandem with the impact this move would have on cable operators and other broadcasting undertakings that are subject to the ownership rules set out in the Broadcasting Act. In our view, it would make more sense to adopt a unified approach that takes into account the fact that telecommunications activities as well as BDU activities are carried out by the same integrated companies, and equally that many of these companies also operate programming undertakings.

9:15 a.m.

Sophie Émond Vice-President, Regulatory and Government Affairs, Astral Media Inc.

This highlights the importance of fully understanding the impact of liberalized ownership rules on the Canadian broadcasting sector. While the policy debate on foreign ownership in telecom focuses on issues such as access to capital, economic efficiency, and consumer pricing, the policy implications on the broadcasting side differ. In addition to industrial issues, foreign ownership in broadcasting raises fundamental social and cultural issues. Indeed, Canadian ownership and control of broadcasting companies, both BDUs and programming services, have provided the necessary conditions to enable the creation of and access to content that reflects distinctive Canadian perspectives and ideas.

This has been a key measure in attaining a Canadian cultural sovereignty within the overall North American context. It has also enabled the development of an important and vibrant Canadian economic sector. Given the current convergence of communications companies, these cultural and social policy considerations will inevitably come up as you contemplate potential changes to the foreign ownership restrictions on the telecom side, and we submit that they must be addressed.

9:15 a.m.

Chairman of the Board, Astral Media Inc.

André Bureau

Proposals for ownership liberalization over carriage, i.e., telecom and BDUs, must absolutely take into account the key role that BDUs have traditionally played in meeting the social and cultural objectives under the Broadcasting Act.

Unlike a pure common carrier, a BDU does play an active and key role in influencing the content it offers consumers. BDUs are not just pipes; BDUs make programming decisions every day. They control and decide which programming services consumers will have access to. They make critical decisions about which services to market, promote, and offer, and how much they pay to these programming services and how much they charge consumers. This BDU influence over programming services may increase, given the recent CRTC decision regarding the value for signal of conventional television stations. Therefore, any liberalization of BDU ownership restrictions could easily result in an unacceptable level of influence by non-Canadians over the television broadcasting system. This could occur even if the ownership rules for programming services remain unchanged.

So the contemplated liberalization is such a fundamental policy change that it will necessitate the adoption of minimum safeguards to offset the impact of foreign BDU control, such as the introduction of rules to prevent a foreign company acquiring control of a Canadian BDU from keeping an ownership interest in the BDU's affiliated programming services, in other words, to divest, as suggested by Rogers when they appeared before you. In addition, it may require the introduction of strengthened conduct rules for BDUs to prevent discriminatory practices or access concerns of content providers.

These measures, as you can see, are complex and could have an important economic impact. For these reasons, we submit to you that a full assessment of the implications for the broadcasting sector should be made prior to implementing any changes to the ownership rules of the telecom/BDU sector. We submit that the prior assessment we propose could be done by an independent panel of experts with public consultations. This type of panel was recently used to review the Canadian telecom policy as well as the competition policy.

In addition to the specific issue of foreign ownership restrictions, the panel could also be mandated to conduct a larger review of the Canadian broadcasting policy and regulatory framework, given the accelerated convergence of broadcasting, telecom, and new media.

9:20 a.m.

Vice-President, Regulatory and Government Affairs, Astral Media Inc.

Sophie Émond

While this suggestion is outside the scope of this committee's discussions and, we concede, has to do specifically with broadcasting matters that are the responsibility of another parliamentary committee, we wish to point out, however, that it is in line with the proposal made in the afterword of the 2006 report of the Telecommunications Policy Review Panel.

Canada is already fortunate to have a single regulatory body, the CRTC, which has a mandate to oversee both the telecommunications and the broadcasting sectors. It is time to work together on a global policy for the entire communications sector in Canada, perhaps even under the leadership of a unified communications department.

Thank you for your time. We would now be happy to answer your questions.

9:20 a.m.

Conservative

The Chair Conservative Michael Chong

Thank you, Mrs. Émond and Mr. Bureau.

We will start with Mr. Garneau.

9:20 a.m.

Liberal

Marc Garneau Liberal Westmount—Ville-Marie, QC

Thank you, Mr. Chair.

I would like to thank all of the witnesses for coming here this morning to share their views and their vision for the future.

I'd like to focus on the satellite sector, although I will have a question later on for Mr. Bureau.

Mr. Goldberg, if I understood you correctly...I'm going to try to summarize, and you can tell me if I'm going wrong. You've made it clear that for a company such as Telesat, which by the way I think is a great company, with 40 years of great success, you feel it's imperative for you to grow to achieve greater scale if you're to continue to exist. If I understand correctly, you are maxed out on foreign ownership at this point, according to the rules, and you don't want to explore the option of borrowing to grow. In other words, you don't want to take on additional debt at this point, and you see growth primarily being through acquisition of foreign carriers, but in exchange for them receiving equity, therefore increasing the foreign ownership in Telesat.

Is that a rough summary?

9:20 a.m.

President and Chief Executive Officer, Telesat Canada

Daniel Goldberg

You've nailed about 80% of it, which is better than I usually do the first time around.

Thank you for your compliments about Telesat. I share your view. It's a great company. It's a company that is actually doing quite well today. We've been growing very, very rapidly.

I believe we do have additional opportunities for organic growth, so I don't want to paint the picture that but for being able to grow through consolidation, we're never going to grow our business any further. I think we can. I think there are additional opportunities for organic growth.

We are running out of our ability to borrow more money. We do have significant debt right now. We're investing, as I mentioned, $2 billion in new satellites. I think we'll be announcing yet another. I said we have two satellites under construction today. I think by the end of this month we'll announce a third satellite that we're building for Shaw to expand their direct-to-home video platform.

But yes, the ownership restrictions do preclude our ability to grow in other ways.

It is our expectation that our sector will continue to consolidate. We need to be part of that. We are very much sub-scale relative to the other operators, and we're the fourth largest in the world. The three other guys are dramatically bigger than we are. They're going to continue to try to consolidate, and we need to be able to do that.

9:25 a.m.

Liberal

Marc Garneau Liberal Westmount—Ville-Marie, QC

As you know, there's some concern—I think to some extent justified—throughout the telecommunications sector that with convergence and with increasing foreign ownership there could be some erosion in terms of our cultural sovereignty and that some content may be at risk. You have been at pains to point out that the satellite sector is different, so I would like you to summarize very succinctly again why, in your view, this would not be a concern.

9:25 a.m.

President and Chief Executive Officer, Telesat Canada

Daniel Goldberg

Succinctly, I was listening very closely to Mr. Bureau, and we are not a BDU. Unlike the BDUs, we don't really influence—never mind “don't really”; we don't influence at all what programming is distributed up there, or in Canada, or anywhere else in the world.

Mr. Bureau said the BDUs are not just a pipe. We really are just a pipe. We provide that pipe to BDUs. We provide that pipe to broadcasters, and so do, I should say, our foreign competitors, who are also providing their pipe in Canada to customers here.

We're very sensitive to the cultural concerns that exist out there. That's why we've tried to be very tailored in the kind of request we've made to government. All we're looking for is that the ownership restrictions on our sector be relaxed.

There are other provisions that require us to make our satellite capacity available to Canadians. We aren't looking for those rules to be relaxed at all.

There are rules that require us to design satellites so that they cover all of Canada. Our competitors come in here, and as you can imagine, they just cover the most lucrative, profitable parts of Canada. We're required to cover all of Canada. We're not looking for any relaxation in those requirements.

So I do believe that we are not in a position to influence content.

9:25 a.m.

Liberal

Marc Garneau Liberal Westmount—Ville-Marie, QC

Mr. Bureau, you heard Mr. Goldberg's testimony, naturally. If I may say so, you are one of Telesat Canada's clients. Are you and your company concerned that one day Telesat Canada could be 100% foreign-owned?

9:25 a.m.

Chairman of the Board, Astral Media Inc.

André Bureau

Had that scenario been possible, we would have been concerned. Imagine an American company becoming the owner of Telesat Canada and imagine a strong demand in the United States for additional satellite space as a result of HD or 3D. Had we wanted to occupy all of Telesat Canada's satellite space, Canadian users such as Bell ExpressVu or Shaw—we are not Telesat Canada clients, but they are—could have been squeezed out because the Americans would have been willing to pay five or ten times what we currently pay to Bell ExpressVu, which in turn pays Telesat Canada, for satellite access. Theoretically, we might have risked losing the ability to continue distributing our signals by satellite.

Section 28 of the act has not changed and it continues to protect us in that regard. If there was a problem of this nature and Telesat Canada did run out of space, the CRTC could even go so far as to ask Telesat Canada to cancel contracts with foreign companies to make room for Canadian companies needing the space. Provided there is no further danger of this scenario playing out, we have no objection to what Telesat Canada has just said.

9:30 a.m.

Liberal

Marc Garneau Liberal Westmount—Ville-Marie, QC

Thank you.

9:30 a.m.

Conservative

The Chair Conservative Michael Chong

Thank you, Mr. Garneau.

Mr. Cardin.

9:30 a.m.

Bloc

Serge Cardin Bloc Sherbrooke, QC

Thank you, Mr. Chair.

Mrs. Émond, gentlemen, welcome to the committee.

I'd like to direct my initial comments to the Telesat officials. People may recall that when SIRIUS satellite radio arrived on the scene, the CRTC had not necessarily complied with Canadian content standards. You may also recall that as little as 5% of the audio tracks played by SIRIUS are francophone tracks, as compared to 22% in the case of conventional radio. Yet, the CRTC had actually agreed to these terms.

Is there not a danger that at some point, foreign ownership in the satellite sector will increase, affecting content and clientele as well? You say that existing regulations safeguard the space for Canadian companies. I have to wonder, because I spoke with someone who expressed some concern about Canada's sovereignty and even about its security should foreign ownership in the satellite sector increase.

9:30 a.m.

President and Chief Executive Officer, Telesat Canada

Daniel Goldberg

I'm not 100% familiar with the SIRIUS situation, but I think the very important distinction between what Telesat does and what SIRIUS does is exactly the point that Mr. Bureau raised earlier about the difference between a BDU and something like Telesat, which is not a BDU and owns just a pipe.

SIRIUS, unlike Telesat, actually does make programming decisions, I believe. They do select the content that is carried on their satellite system. That's not what Telesat does at all. We lease our capacity to BDUs, to broadcasters, who then themselves make the decision about what kind of programming goes on the satellite. So today, we don't make decisions about what is carried on our satellite. In the future, we won't be making decisions about what's carried on our satellites.

With respect to safeguards, I think they're exactly the kinds of safeguards that Mr. Bureau referred to. Section 28.2 of the Telecommunications Act does give the CRTC very broad authority to claw back our satellite capacity, make it available to other Canadian users, if it deems that it's in the public interest.

I would say that in addition to the broad rights the CRTC has under the Telecommunications Act, Industry Canada has licence conditions, so every one of our satellites is licensed by Industry Canada. They have very specific and very exacting conditions that we're required to meet. So I'd say there are those two safeguards—one administered by Industry Canada, the other administered by the CRTC—and again, fundamentally, I think that SIRIUS, even though they're also in the satellite industry, is in a very different situation, because unlike Telesat, they act as a programmer as well, and it's simply not what we do.

9:30 a.m.

Bloc

Serge Cardin Bloc Sherbrooke, QC

In the case of satellites such as yours, can you, for example, sell service space to foreign companies?

9:30 a.m.

President and Chief Executive Officer, Telesat Canada

Daniel Goldberg

Could you repeat the question, please?

9:30 a.m.

Bloc

Serge Cardin Bloc Sherbrooke, QC

I would think you could sell services to established foreign telecommunications companies. I'm somewhat of a neophyte when it comes to the satellite sector. I've never been in space, unlike some people who have been there, and returned. At some point, based on distribution, you would be entitled to some space in the big blue sky. Fundamentally, satellites are owned by a country, by you, but once these satellites are launched into space, there are rules governing the services that can be provided to different clients, because you cover a vast area.

Quickly please, could you explain to me the rules governing the operation of satellites? Even though you own the satellites, there are restrictions on what you can do.

9:35 a.m.

President and Chief Executive Officer, Telesat Canada

Daniel Goldberg

In the commercial satellite industry, the satellites themselves are owned by individual companies. We own 12 satellites, and our competitors, as I mentioned, have much larger fleets. In order to actually have the satellite in space, a company like ours needs to go to a country, an administration, and seek to make use of an orbital location and certain frequencies at the orbital location. So in the case of Telesat, of our 12 satellites, eight of them are operating from Canadian-licensed orbital positions. In this case, it is licensed to Telesat by Industry Canada.

The satellite itself has certain active transmitters on it called transponders. A typical satellite, the kind of satellite that we provide to ExpressVu or Shaw Direct, for instance, tends to have approximately 32 individual transponders on them, and we lease the capacity on these transponders. We provide a service using these transponders to many different companies around the world.

Today, about 54% of our revenue is coming from customers located here in Canada. Unfortunately for us, we still have more available capacity to sell. So if Astral or other Canadian users desire to have more of our satellite capacity, we are delighted to receive their calls and make more capacity available to them.

If our satellites become full, if the utilization becomes very high, we then meet with all of our customers and prospective customers and try to persuade them to help us launch a new satellite. I mentioned that I expect at the end of this month we will announce that we will be building a new satellite. This new satellite will be principally for Shaw Direct, which would give them more capacity to help Canadian broadcasters get greater distribution throughout Canada. We also expect this satellite will have other services as well. We expect it to have some capacity that the Canadian government could use, for instance. We expect it to have some satellite capacity that will be used by our customers in Latin America to bring basic telecommunications services to very remote areas in Brazil and Colombia, which is a growing part of our business.

Today with our satellites we do have more capacity for Canadian users, we do have more capacity for other users, and we are always looking. We have a sales and marketing department that does nothing but try to meet with our Canadian customers and our other customers around the world to sell them more capacity. I should also say that our competitors are also meeting with all of our customers trying to sell them their satellite capacity. So it's a competitive market.

9:35 a.m.

Conservative

The Chair Conservative Michael Chong

Thank you very much.

Mr. Wallace.

9:35 a.m.

Conservative

Mike Wallace Conservative Burlington, ON

Thank you, Mr. Chair.

I want to thank our guests for coming.

I would also like to focus on the satellite business, because I had no understanding of it until just a few minutes ago.

Just for clarification, for my education on this, you actually own 12 satellites and you get a licence for space--I don't mean space as in outer space--for you to use, in this case for most of that from the Government of Canada.

Where are the other two satellites that you have orbiting around up there?

9:35 a.m.

President and Chief Executive Officer, Telesat Canada

Daniel Goldberg

Of the satellites that we have, eight satellites are over the North American arc. Again, a satellite is capable of seeing about a third of the earth's surface. Of the others ones we have, three satellites are over the Atlantic Ocean region, and these satellites are capable of providing service to North America, Central America, Latin America--