Industry Committee on Oct. 31st, 2011

[John Maduri]

The rules have to change. It doesn't make sense, if I want to serve the area around Ottawa or around Calgary, that I also have to spend on the 94% of the population I don't want to serve. I don't want to serve downtown Calgary. I don't want to serve downtown Toronto. I want to serve the rural regions, but I have to buy that spectrum, warehouse or inventory it, and incur that cost, to capture the spectrum for the 6% of the population that I want to serve.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Maduri.

Mr. Regan, I'm sorry, but the time has run out.

Now we go to Mr. McColeman for five minutes. We're in a new five-minute round.

[Phil McColeman, Conservative, Brant, ON]

Thank you, Chair.

Mr. Glick, I want to commend you as well for your initiative to get business online. I believe it was with RBC, as you mentioned. I'm sure it's mutually beneficial. I guess my first question is, how many are there in Brantford?

[Jacob Glick]

I thought you'd never ask. There are 118 businesses that have signed up for the program, and 27 that have gone through to publishing websites.

[Phil McColeman, Conservative, Brant, ON]

Fantastic.

It makes me think about the marketing or psychological barriers that all of you have concurred about, which are perhaps among the major hurdles to getting people online. The one statistic—and I'm not sure which of you mentioned it in your presentation—is that although we are perhaps falling behind in some ways, the adoption and use of online banking is a bright spot in the way Canadians do e-business.

I wonder if perhaps all of you would like to comment on the question of those psychological barriers. Whose responsibility is it to perhaps get a cultural change—which I would call marketing from a business perspective? Who is responsible for the marketing to people, to individuals, to get them to change their behaviour? Was it the banks' responsibility? What were the lessons learned there? Was it the banks that did a really good job in saying, here it is and it's convenient, and there was all of a sudden an awakening and a light bulb lit up in people's minds that they didn't have to stand in line any more and talk to a teller, etc.? What were the lessons learned?

And perhaps this is the broader issue that I'd like you to comment on. Who is really responsible to change that cultural or psychological barrier that exists?

Perhaps we could start with you, Mr. Maduri.

[John Maduri]

It's education, and I think industry and government have a role to play in education.

We run sessions in the communities, when we launch service, on how to use the Internet and how to be secure on the Internet. So we take it seriously, knowing that if we're going to move the market, if we're going to invest in a rural community with broadband and to drive its adoption, we have to communicate and make people aware that broadband is available. That is a challenge in its own right. We have to get them comfortable with using broadband and have them understand the applications available to them.

In fact, I know that when we started this business, there was always a concern from investors about the age demographic in rural communities. But in fact, we've turned that into an advantage, because how many grandparents wouldn't want to use Skype to communicate with their grandkids?

So I think it's incumbent upon government in terms of how it conducts its business to be able to move as much as it can online; and it's about industry educating; and it's about the education system in its own right. We all have a role to play.

[Phil McColeman, Conservative, Brant, ON]

Would anyone else like to comment?

[Ante Rupcic]

I'll jump in.

I think it's also about innovation and interoperability. Being the new entrant or new player on the wireless scene, I've noticed that the incumbents are very slow to innovate. Some of that also has to do with their unwillingness to interoperate—for example, with IP interconnection.

So I think that we service providers have an obligation to promote, to innovate, and to agree on interoperability standards that the mass market can get behind. If we're all doing things in a different way, it's hard to develop brand trust, M-commerce trust, or what have you. As an industry, we need to agree on the simplest ways and interoperate and agree on those standards.

[Phil McColeman, Conservative, Brant, ON]

Anyone else?

[Gordon Reed]

Certainly industry as a whole has a role to play, but individual companies also need to step up to the plate, using things like third-party validations and making it easy for their consumers.

I read a study a while ago from McKinsey, I believe, that indicated that something like 89% of people buying online will be influenced by the use of security and the ease of making a return if their purchase is unsatisfactory. And companies have to get their heads around that and make it easy for people to trust them, and make it easy to do business with them.

[Jacob Glick]

I'd just add to what the panellists have already said insofar as to say that fundamentally, the businesses that are providing platforms or services online have to demonstrate a compelling value proposition to the other businesses they're trying to get to come online.

What Google says to companies is this: Get your business online and we think you're going to see returns, we think you're going to drive traffic, we think you're ultimately going to increase your business. And if you don't, and we're wrong, then nothing ventured, nothing gained. In other words, nothing has been lost.

[The Chair, Conservative, David Sweet]

That's right, Mr. Glick. Thank you very much.

That's also all the time we have. Thank you, Mr. McColeman.

Now on to Madame LeBlanc pour cinq minutes.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Thank you, Mr. Chair. I want to thank all our guests and all the witnesses who are providing us with a lot of information. My first question is for Mr. Glick.

In the document on the digital economy strategy you submitted to the government, you recommend—and you repeated this during your presentation—that the government avoid adopting regulations that would involve intervention in the market.

However, as you know, the government did intervene twice in a very significant way over the last few years to reverse the CRTC's decisions, especially when it came to Internet usage billing. How did those government interventions affect the market?

[Jacob Glick]

I don't want to opine on the particulars of the government decisions in regard to those CRTC decisions, but I will say in general that the structure of the Telecommunications Act, which allows the cabinet to intervene and substitute its own decision for the CRTC's in certain circumstances, is proper. Fundamentally, the CRTC, in many of these cases, is making quasi-political policy decisions. And, ultimately, those decisions rest with government.

I think the current structure of the act makes sense, but I don't want to opine on the particulars of the decisions that were made.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

I will now address Mr. Rupcic.

Wind Mobile and Mobilicity recently launched a public campaign, calling for the next sale of spectrum licences to allow new players in the telecommunications market to bid. What kind of consequences would there be for the telecommunications market if the bidding was completely open, that is, if all the players could participate?

[Ante Rupcic]

Wind Mobile has a specific amount of spectrum in the AWS band now, and that spectrum has allowed us to get started. We have a little bit more in Toronto, as you might expect, and a little bit less in the other cities. That spectrum allows us to launch 3G-plus services. Essentially we can attain speeds in the 20 to 25 megabit-per-second range, mobile broadband speed. Of course, those are shared speeds, so average users wouldn't realize this.

Where I'm going with this is to say that we do need more spectrum to be able to compete against the incumbents for the 4G offering, or LTE, as it's also known. The reason we need more spectrum is that we need to be able to attain higher speeds to compete with the incumbents and to offer a lot of the same mobile broadband services.

Currently there is a limited amount of spectrum, for example, in the 700 megahertz range, so the competition for the spectrum will be very intense. We feel that we will not be able to get a fair shake and a sufficient amount of spectrum to be able to offer decent 4G services because there is a minimum required to offer decent 4G services.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

That has been discussed a lot. How will that bidding affect the adoption of e-commerce by small- and medium-sized Canadian companies?

[Ante Rupcic]

It has to do with the e-commerce offerings we plan to have on 4G. It has a lot to do with the voice and data and commerce-like services—or interoperability.

As a typical example, if I am trying to buy something at a store and I don't have my significant other with me in a store, in the future I may wish to have an avatar of myself with my suit on, and I may wish to video share this with my wife, for example. She may not like the colour or the stripes, or what have you, but I need that bandwidth to be able to transmit the picture of myself—and of course, I'll look better in the avatar.

[Voices]

Oh, oh!

[Ante Rupcic]

This is a use case, or example, that I can think of.

[The Chair, Conservative, David Sweet]

Madame LeBlanc, that's really all the time we have. Excusez-moi.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

That's fine.

[The Chair, Conservative, David Sweet]

Now we go to Mr. Richardson for 5 minutes.

[Lee Richardson, Conservative, Calgary Centre, AB]

Great, thanks. This has been a good meeting. Thank you all for appearing.

I'm curious, Mr. Maduri, about your pitch and what the advantage is from a consumer point of view. You opened by saying that you wanted to create an opportunity for privately funded, competitive, sustainable rural broadband. How's that any different from what we have now? Who in the game isn't privately funded and competitive? It's only competitive in relation to you and your interest. Why is it more competitive for the consumer? Once you've bit on broadband, then isn't it all the same for the consumer when he or she gets it, and that's it?

[John Maduri]

First and foremost, the rural market is a competitive market. We have competitors in the rural market. I'm here, as I've been invited, and I hope you'll invite some of our competitors in the market. They face the same challenge, which is how to get access to the spectrum. How does it impact the consumer?

We have markets in Canada where I have capital. I don't want to speak to specific examples, though I could if that would be helpful. Others also have capital. We have 4G technology. I'd be delighted to invest in that market without a government subsidy, but I can't. Why? Because I don't have spectrum. Without spectrum, there's no value in putting up towers, having equipment on those towers, or investing in the technology. I can't operate without spectrum.

I think that's always hard to get across. There's so much focus in the marketplace on the mobile opportunity. At least 15% of Canadians will get their broadband, not through wires but through satellite and wireless, because of low population density and geographic challenges. Without having access to spectrum to deploy wireless technology, those Canadians will neither get the service nor be able to. As their demand and need for real-time entertainment or complex applications grows, they will not be able to get a service that meets their needs.