Industry Committee on March 19th, 2013

[Charmaine Borg, NDP, Terrebonne—Blainville, QC]

A lot of sound measures have been put in place, but not as part of a comprehensive strategy yet.

My next question has to do with pricing. When I talk to residents of remote regions, they often tell me high-speed Internet costs them upwards of $100 a month.

Did the Broadband Canada access initiative created in 2009 target a reduction in high-speed Internet prices in remote areas, or even lead to lower prices?

[Alain Beaudoin]

As I mentioned earlier, the purpose of the program was to work with communities and the private sector to build partnerships for areas not covered by a business plan or business case. That enabled private companies to deploy broadband services. Through the partnerships, solutions were offered to those communities, whose access to broadband services had been either non-existent or very poor. Through the program, people received viable services that they were able to pay for.

[Charmaine Borg, NDP, Terrebonne—Blainville, QC]

Did prices drop as a result of the program?

[Alain Beaudoin]

I'll have to get back to you on that. I'm not sure whether we have the figures. But, as I pointed out, the program brought broadband access to 218,000 households that did not previously have access to a minimum service speed of 1.5 megabits.

[Charmaine Borg, NDP, Terrebonne—Blainville, QC]

It's good to have access, but people still have to be able to afford it.

I have a third question. You may be familiar with a program that was implemented in the U.S. After the transition from analog to digital television, the Americans were able to use what is known as “white space” to offer wireless Internet in remote regions and regions where access had not been possible.

Have you examined that program? Would it be possible in Canada?

[Alain Beaudoin]

Let me start by saying we work closely with the Americans on those issues. White space is something we're looking at right now. For detailed information, we are going to consult the private sector.

If you like, we can follow up and provide you with more details on that.

[Charmaine Borg, NDP, Terrebonne—Blainville, QC]

Wonderful. I'd really appreciate that.

Thank you.

[The Chair, Conservative, David Sweet]

Thank you very much.

Now on to Madam Gallant for five minutes.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Chairman, through you, first of all, I'd like to speak to the 1% of Canadians who do not have high speed.

You mentioned that there were technologies and enhancements to existing lines, for example, via fibre optics. Will any of these improvements help out or be available to the 1% who don't have coverage right now?

[Pamela Miller]

I would say the technology is continually improving, and it can be expected that it will continue to make breakthroughs that will open up new possibilities.

In the cases where there are unconnected households right now, it's often a very physical aspect of geography—there is something very particular about the terrain; there is a particular configuration of mountains or valleys or a particular challenge to be overcome. One would expect that as we continue to see these quite significant advances in technology, over time that would be overcome. But we're at a very small percentage point, and I would point out that even traditional telephone lines, the wired telephone network, always had a gap of a few per cent, because simple geography does play a role.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

On the matter of simple telephone lines, it wasn't just geography; it was economics, because there are still lines with no rock to go through, permanent houses that have been in existence for 60 years for whom the telecoms just don't feel it is worth their while to provide with service. Unfortunately, they rely upon cellphones and so on where available. So the new technologies don't necessarily improve the penetration, because of the geological obstacles. It is more enhancing the features for those who already have them.

[Alain Beaudoin]

The technology is always improving, as my colleague mentioned.

I'm not an expert in the field, but one thing we know is that the upcoming 700-megahertz auction is what some refer to as beachfront spectrum, which will allow for less infrastructure, fewer towers. It will be more available to travel the large distances, and it might help with regard to broader coverage for rural areas.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

With these emerging technologies and enhancements, how does the security compare from one to the next? Are the newer technologies, the satellite, more secure than, for example, a hard line? How do they all compare?

[Alain Beaudoin]

All types of technologies will create some challenges from a security perspective, but at the same time the private sector and the government are undertaking a number of measures in order to deal with those challenges, or those threats, per se. As to the particular types of technology, satellite versus mobile and so on, I would not be in a position to comment on whether or not one is more problematic than the other. I am not the expert in the field.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you.

You had mentioned that our rates are lower than in the U.S. Were you referring to Internet or cellphone coverage?

[Pamela Miller]

It was to both. We commissioned a study with the CRTC, which is available, and some of the results are shown in the CRTC monitoring report. We have found now that both for the wire line and for the wireless, our rates are lower than in the U.S.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

What we're hearing a lot in the news is how Canadian consumers have very little choice when it comes to telecoms, insofar as the number of companies that can provide the service. They have a choice of getting either a three-year contract with a provider or pay as you go. People's circumstances change. Sometimes an individual can get a job in another country, they have just purchased a new contract for the phone, and they're on the hook for several hundred dollars. That is quite a challenge, especially for new people starting fresh out of university.

With this study, would you say that these high costs and requirements to have this three-year contract justify what the telecom companies have to invest in order to have the available infrastructure?

[Pamela Miller]

In terms of the contracts, that's a business model by which there is a subsidy for the handset that is acquired by the consumer. Instead of paying the full price for the handset when you purchase the device, you essentially pay it off over time. That is a particular business model that is used in the sector.

In terms of consumer awareness, I think it's very important. The consumer should be fully aware and informed of what that entails when they are purchasing their devices. Consumer transparency of information is extremely important.

All of those issues around transparency and consumer knowledge are being looked at right now in terms of the CRTC. They're having a hearing, a proceeding, on the whole issue of consumer wireless issues and transparency, and knowledge for consumers is one of these issues. I would also point out that competition has been a way of putting new business models into the market, such that companies are now offering different types of business models.

[The Chair, Conservative, David Sweet]

Thank you, Ms. Gallant. I'm sorry, but we're way over time and we need to be fair to everybody.

Mr. Harris, please.

[Dan Harris, NDP, Scarborough Southwest, ON]

We're over time? I can't imagine that.

I'm following up on Ms. Gallant's question. She was talking about the three-year contracts. Is Industry Canada looking at any measures to bring Canada more in line with the international norms, which are actually two-year contracts? Cell companies in other countries are making a return on that two-year contract instead of the three-year ones. Is Industry Canada looking at anything to bridge that gap?

[Pamela Miller]

As I noted, in terms of the business models in the market, there's competition that gives consumers choice as to what they would choose to purchase. In terms of the transparency of information, so that consumers are aware of what they are purchasing, that is being addressed. More broadly, the issues around wireless consumer issues are being looked at by the CRTC.

[Dan Harris, NDP, Scarborough Southwest, ON]

Moving on to LTE coverage, the graph you showed demonstrates that there was 75% coverage in LTE at the end of 2012. How much of that coverage actually exists in rural areas? How much penetration is there in the rural sector?

[Pamela Miller]

The graph isn't about LTE. Our LTE coverage is about 45% now. This graph is more a wireline coverage, referring to slide 14—

[Dan Harris, NDP, Scarborough Southwest, ON]

Yes, sorry. I got my numbers mixed up, but still, it reads two-thirds coverage at the end of 2012?

[Pamela Miller]

Yes, that's the idea. It will be at two-thirds coverage. What we expect to see.... Right now, HSPA networks have very good coverage in Canada; they are at 98%, if not beyond. We would quite expect that the telecom providers will upgrade those networks to LTE, because they're going to be getting the spectrum to be able to do that. It makes good business sense for them to do it, so we do expect that LTE coverage will be continually rolling out, continually expanding.