Industry Committee on March 19th, 2013

[Alain Beaudoin]

Right now, it is estimated that 99% of the population has access to a minimum broadband speed of 1.5 megabits.

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

Very good.

We hear a lot about mobility. You said that everyone these days walks around with a cell phone, a tablet or what have you. But what I'd like to know is what happens when you leave a city where access is available. Say someone is working in the natural resource or forestry sector in a more remote region and has to use wireless services to communicate? Does the network coverage allow that person to communicate with their home base, which could be in Timmins or Rouyn-Noranda?

[Pamela Miller]

Thank you for that question.

Yes, we already have broad coverage called

HSPA networks. It has very good coverage of the wireless networks, up to 98%. In the 700-megahertz auction that is coming up, there is a condition by which if a company acquires two blocks of that spectrum, there will be requirements to deploy in rural areas as well.

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

Is there any guarantee that companies will buy two blocks? If no company buys two blocks, there is no longer a reason to deploy in rural areas, is there?

[Pamela Miller]

That would be an outcome of the option. That was one of the considerations in the option design, that it would be one of the outcomes, to have access to two blocks. It could be either acquiring the spectrum directly or having access to two blocks.

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

Very well.

In your document, you've included a graph that shows Australia, Canada and other OECD countries. I was fascinated to see that the curve for Australia rises sharply.

I'd like to know the percentages of private and public investment respectively in Australia's case.

[Pamela Miller]

In Australia's case, the investment was mostly public.

The graph shows both: public and private investments. It's not just private sector investments.

For Australia, they are actually investing up to $43 million in their broadband networks, of which, at this point, the majority would be from the government.

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

What I find fascinating about this is the fact that Australia's geography and economy are fairly similar to Canada's. Why, then, did Industry Canada decide not to follow that model, given the similarity between the two countries? Australia is a continent, but Canada is as big as one. Why wasn't that model favoured when the Industry Canada rules were being developed?

[Pamela Miller]

It's actually due to the lack of competition in Australia. There, the dominant company is Telstra. There isn't enough private sector investment. It's a deficiency in the Australian market.

In Canada, on the contrary, just as in the United States, we do have very good competition between the cable companies and the telcos. As you can see, we've had a total of over 22% of capital investment as a percentage of revenue. That wasn't happening in Australia. They did not have competition and they did not see that type of investment that was coming from their private sector.

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

Thank you kindly.

[The Chair, Conservative, David Sweet]

Now we go to Mr. Braid for seven minutes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you very much, Mr. Chair.

Thank you to our departmental officials for being here this afternoon. I certainly appreciate your presentation. I found it very helpful.

I'll stay on this notion of investment in telecommunications infrastructure. In Canada we've had a predominantly private-sector-led investment in our telecommunications infrastructure. Has that approach worked? How does our telecommunications infrastructure in Canada compare to other countries?

[Pamela Miller]

We have a very good telecommunications infrastructure compared to other countries. If you look at what we consider to be 30-megabit coverage, for example, we are in fact at the very top of the OECD in that coverage. We're ahead of the U.S. in that coverage. We're ahead of most of Europe in that coverage. This was 2011 data. We are at 76%, which is far beyond the OECD average for that type of coverage.

In terms of the LTE coverage, again, we are doing very well. We are at the top of the pack for deployment of LTE coverage. The U.S. is ahead of us, but we are anticipating to have new figures coming out this year showing our latest investments for 2011-12, which will push us from what we have today at 45%, probably to 66%.

You will have seen from the other chart that we are on par with the United States in terms of the 99% of 1.5 megabits. When you get into higher speeds, we're on par or in some cases slightly ahead. I think by international standards we are doing well in terms of our network performance.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Great. Thank you.

I note as well that with respect to the LTE network, it works particularly well with the new BlackBerry Z10, which is lightning fast.

Leaving the telecommunications sector specifically, Monsieur Beaudoin, I'll ask a question at a higher level, if you will. Generally speaking, why is it important for Canadian business to invest in digital technology?

[Alain Beaudoin]

Ultimately the decision to invest or not in digital technologies lies within the firm making its investment. At the same time, for them to increasingly invest in digital technologies is critical for their competitiveness and their ability to innovate, and also in their ability to penetrate new markets as competition is becoming increasingly fierce.

When we compare ourselves to the United States, for example, our firms, as I mentioned in my presentation, invest approximately 58% of what U.S. firms invest in digital technologies. As such, the government recognized that there were some opportunities to work with the private sector, to try to incite them to invest more in digital technologies.

Minister Paradis, for example, in November 2011 announced a digital adoption program, which is managed by NRC-IRAP. NCR-IRAP has specific industrial technology advisers, experts in the field working with firms to try to identify what types of solutions they require for their own specific issues, making sure they have customized solutions to meet their specific needs. Since the inception of the program, more than 600 firms have used the advisory council, and they have also received some specific funding to support them in their efforts.

That's why the BDC has put forward significant efforts to help small and medium-sized firms increase their web presence or establish a web presence, because it's so critical for their ability to compete and to be found. If you take, for example, just a small tourism operator, a transportation company, people do their search online.

That's one thing they're trying to do to work with those firms.

Because a challenge was identified in the ability of these firms to acquire the kind of equipment they require, the BDC also set aside $200 million specifically for loans to help those firms acquire those technologies, given that it's so important for their overall competitiveness and ability to innovate, but as I said as well, it's increasingly to penetrate markets.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

When you talk about the importance of penetrating the markets, these are markets both nationally and internationally, aren't they?

[Alain Beaudoin]

Absolutely. And we want to make sure our firms in Canada, in all sectors of the economy, are competitive and also have the ability to penetrate, in some cases, the markets that they may not be traditionally in. As I mentioned, they tend to be largely present in the United States and the European Union, but as I referred to earlier in my presentation, when you look at overall growth, we know that in some cases it will take place in emerging economies.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

In terms of the quick advancement of the evolution of new technology, the presentation mentioned fibre to curb, fibre to home. In a previous study at this committee, and it might even have been in the previous parliament, I remember hearing about this issue of the “last mile” to getting connectivity to the home. Do any of these new technologies assist with that dilemma? Are we further down the road, so to speak?

[Pamela Miller]

I would say the mobile broadband certainly is giving a whole new way for people to access broadband. The traditional technologies of cable and telco upgrading to fibre to the node are still able to get very high speeds going into the home, using cable and the telco equipment. But now we do see, with the high-speed satellites and mobile broadband, a whole new possibility of applications that could never have happened before in terms of just opening up possibilities of new business models. In terms of opportunities for Canadian businesses, this certainly offers a lot of potential for new services, new products that couldn't have been done before.

[The Chair, Conservative, David Sweet]

Thanks, Ms. Miller.

Now on to Madam Sgro for seven minutes. Welcome.

[Judy Sgro, Liberal, York West, ON]

Thank you very much.

Thank you for the information. It's especially good to see where we fit when it comes to the U.S., and that we are as comparable as we are, according to your charts. I'm glad to see that we've made that much progress.

Are you planning to put limits on the amount of spectrum, though, that a company can hold?

[Pamela Miller]

The auction rules for the 700 auction were announced. Those rules are designed so that there will be a cap. One block will be available to a new entrant. The government is also going to be consulting overall on its approach to transfers of spectrum. We just introduced a consultation on that issue, and it will be closing on May 3. I'll be seeking views on how we would treat the overall concentration of spectrum when companies seek to transfer their licences. I would also point out that in the past the government had a set-aside in the AWS auction, which set aside a considerable amount of spectrum for new entrants.

[Judy Sgro, Liberal, York West, ON]

According to the notes, there seems to be some uncertainty around the rules when it comes to regarding the transfer of sale of spectrum and being able to attract foreign investors. If Mobilicity or Wind or some of these others that are interested are not able to get the capital, do you have a plan B?

[Pamela Miller]

I would say that the government took action last year to liberalize the foreign investment restrictions for companies with less than 10%. We've opened up the market in terms of creating greater access to capital, and the market will be responding accordingly. As I noted, we do have the consultation, which is now under way, and we'll be seeking views. We'll be publishing the results of that consultation in May, or shortly after the consultation closes.

[Judy Sgro, Liberal, York West, ON]

Where are you with the thought process on including the issue of m-health? It was suggested that there could be 5% to 10% savings in health care costs if you included, in the whole spectrum allocation, m-health.