Evidence of meeting #60 for Industry, Science and Technology in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was connectivity.
A recording is available from Parliament.
3:30 p.m.
Conservative
The Chair Conservative David Sweet
Good afternoon, ladies and gentlemen.
Good afternoon, everyone.
Welcome to the 60th meeting of the Standing Committee on Industry, Science and Technology. Today we're studying broadband and Internet access across Canada.
We have with us today, from the Canadian Chamber of Commerce, Scott Smith, director of intellectual property and innovation policy. He will begin his remarks.
Mr. Smith, I think you're familiar with the way the committee works—
3:30 p.m.
Liberal
3:30 p.m.
Liberal
Geoff Regan Liberal Halifax West, NS
Hon. Geoff Regan —I wonder if we could set aside 10 minutes for a chat, preferably after 4:30, to talk about what's happening when we come back. We've had two meetings that didn't happen. Basically, we've missed two meetings, and I'm anxious to see that we will be hard at work and kept busy when we return.
3:30 p.m.
Conservative
3:30 p.m.
Conservative
The Chair Conservative David Sweet
That's great.
Thank you, Mr. Regan.
Mr. Smith, you can go ahead for six to seven minutes. Then we'll have alternating rounds of questions.
3:30 p.m.
Scott Smith Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce
Thank you very much.
Good afternoon, everyone, and thanks for the opportunity to address this committee.
My name is Scott Smith. I was retained as the director of intellectual property and innovation policy at the Chamber of Commerce last November.
l'd like to preface my remarks by saying that while the chamber is always happy to address Parliament and assist in your deliberations whenever we can, the short notice for this appearance has limited our capacity to provide the analytical depth through briefing materials that we would normally come prepared with—so my apologies for that. My hope is that what I have to say will offer some fruit for future discussion and the opportunity to collaborate more fully on these ideas.
That said, I'll start with a provocative statement. Canadian business is not online. This is despite the fact that Canada has some of the most advanced and available telecommunications infrastructure in the world.
A recent study of G-20 countries by The Boston Consulting Group indicates that Canada is behind in the adoption of technology by business and in the size of our Internet economy. The study concludes that this gap will widen over the coming years, meaning that Canada will lag behind its global competitors even more. The $4.2-trillion opportunity represented by the Internet will pass Canada by. This gap exists across the economy, across sectors, regardless of the size of the entity.
The story I want to tell you is one of adoption, or lack of adoption, not about barriers to access.
With our relatively small population and huge land mass the Canadian market is essentially California with a distribution challenge. Yet Canadians continue to be among the first users in the world to benefit from next-generation networks. Over 50% of Canadians already have access to long-term evolution—or LTE—networks at prices that are in line with those in other advanced economies. Right now over 99% of the population have basic wireless coverage and 98% have coverage for advanced wireless networks that support smart phones and similar devices.
For wire-line penetration, Canada ranks 13th out of 34 OECD countries and number one in the world for time spent online, with an average of 45.6 hours per month. According to the “Connectivity Scorecard” report, which is overseen by University of Calgary business school dean Leonard Waverman, Canada ranks eighth in useful connectivity, which reflects the world-class network available to Canadians. This is a good-news story.
But Mr. Waverman also notes deficiencies in the adoption and usage of broadband, and investment in information and communication technologies generally, across the economy. Corporate spending on IT services is comparatively low, as are the estimated levels of ICT spending by government, health care, and educational sectors.
Canadian businesses need the right incentives, such as tax incentives and continued improvements to the scientific research and experimental development program, SR and ED, in order to keep investing in next-generation infrastructure if Canada is to rise to the very top of the international rankings and most effectively lever broadband for competitive advantage.
Further, while both wire-line and wireless broadband are critical infrastructure and the cornerstone of economic growth, addressing the availability of broadband is not sufficient without a broader focus on adoption and use of information and communications technologies. Government policy must also ensure access extends to rural communities and do its part as a major user to stimulate demand.
Across the economy, as a large user of information technology the government can play a significant role by mandating online interactions for its partners, for citizens, and for suppliers. Already, tax returns can be filed online. Like any large user, by undertaking a commitment to online commerce and the related technology governments can defray costs for suppliers and provide valuable incentive to adopt technology.
To this end the government should design initiatives to drive demand and adoption among key user groups, such as small and medium-sized enterprises. As the Competition Policy Review Panel noted in its June 2008 final report, the Internet is also a force for productivity growth because it promotes the more efficient use of business resources.
In northern and remote communities where other infrastructure projects lack the market forces necessary to implement, the productivity growth potential of broadband telecommunications offers a model of how government might work with the private sector to meet public policy goals for infrastructure by providing sustainable incentives and public-private partnership options in remote areas.
I noted earlier that Canadian business lags. The fact that Canadians themselves are highly engaged online and are some of the most active consumers in the world of online services, social networking, online video, and other Internet services should be a signal to governments and to business that the additional focus on Internet innovation can result in significant uptake and success with consumers. Such focus needs to be brought to bear, and we, as the chamber, believe the federal government has a significant role to play here.
Our recommendations are as follows.
The federal government should lead by example and provide all of its services online. Almost every transaction Canadians can make with the government should be possible to complete online.
The government should accelerate investments in next-generation networks by amending tax policies to stimulate investments on a geographically and technologically neutral basis.
The federal government should continue to rely on private sector investment and competitive market forces to drive the rollout of broadband networks and facilities in Canada.
The government should ensure that any initiatives designed to help facilitate access to broadband facilities in Canada and by Canadians in rural and remote areas, where market forces are not sufficient, are introduced in the least market-distorting manner possible by working with relevant not-for-profit organizations, utilities, and service providers.
The government should promote digital literacy as a critical aspect of skills development.
The government should increase engagement with the private sector to accelerate e-business adoption among small and medium-size enterprises, especially given the increase in growth rate in this sector.
That concludes my remarks. Thank you for your indulgence. I'm happy to take any questions.
3:35 p.m.
Conservative
The Chair Conservative David Sweet
Thank you very much, Mr. Smith.
Now we'll move to the rotation. I'm going to try to stay tight to the time, so the greatest number of people can participate in the meeting.
Mr. Lake, you have seven minutes.
3:35 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Thanks, Scott, for coming today.
You mentioned Canada being eighth in useful connectivity.
3:35 p.m.
Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce
That's correct.
3:35 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Perhaps you could elaborate on that a little bit. What do you mean by useful connectivity? It sounds like a good stat, but what does it mean?
3:35 p.m.
Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce
Essentially it's a measure of how effective the connectivity is. You have an infrastructure of broadband networks, for example. How well is it being used?
3:35 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
If you're a business operating in Canada today, you have the infrastructure there, by and large. We've made the investments in infrastructure. The infrastructure is there, but then the other stats you were quoting tell me that, for some reason, businesses aren't using the infrastructure that exists.
3:35 p.m.
Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce
It's not being used to its potential. That's what they mean by useful connectivity. The number of businesses that are conducting transactions online, the volume of e-commerce, the....
3:35 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
You talk about all of the different things government can do, different programs the government might run or put in place, or whatever. There's lots of discussion, of course; it's something we're seized with. But you would think businesses would see that opportunity for themselves.
Why is it that Canadian businesses aren't taking advantage? We've built this useful connectivity. Why is it that it's not actually being used?
3:35 p.m.
Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce
That's a really good question. It's something we haven't studied to a great degree at this point, but we have a few theories.
As an example, Canadian companies typically don't export significantly. There seems to be a strength in companies that have inserted themselves into global value chains and which have the certainty of that global market to be able to invest in additional ICT.
3:40 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Has there been any research done among your members in terms of best practices, companies that do it right, not specifically tech companies, because that's a no-brainer, but mainline companies that have maybe been around for a while, that have transitioned from an old model to a digital model in terms of their work, in terms of their delivery, in terms of their marketing, or whatever the case may be?
3:40 p.m.
Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce
I don't have one that I could point to right now, but I could certainly dig some up. I don't have any with me now.
3:40 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
I'm sure Peter could find us a few in his area, in the Kitchener—Waterloo area.
What is the chamber doing within its own organization to promote the greater use of this connectivity, the greater use of technology, among members across the country?
3:40 p.m.
Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce
Typically the chamber is primarily an advocacy organization, but we do produce papers, for instance. We have several that we've done on this subject matter, on the value of entering the global value chain and the value of the adoption of new technologies. That's something that we circulate and promote within our own network.
3:40 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
You've talked about the promotion of digital literacy. What does that look like? You've tossed around the words “digital literacy”. Many people have come to us and there are different studies talking about the government's role in promoting digital literacy. What does that mean to you? What does that look like to you? What does a successful strategy look like? How might the business community or the chamber partner with government in that? What's the role of government? What's the role of the private sector organizations that are out there?
3:40 p.m.
Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce
I think that means investing in training, and that's something the chamber can certainly help facilitate. The training needs to be there, first and foremost.
If you look at our “Top 10” release, which all of you I think have now seen, I think you'll see that the number one issue concerns skills. That is where both government and industry can work together to help build that skill set.
3:40 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Right, but again, to sum up what you've said in your remarks, it's interesting that we're actually undertaking a broadband study, a study of broadband Internet. We've talked about the idea of doing a study on digital issues following out of this. It sounds like what you're saying is that we're connected, by and large, that we've actually done a really good job in terms of building the infrastructure, but really, the area we need to look at is the use of that infrastructure—
3:40 p.m.
Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce
Yes, absolutely.