Industry Committee on June 13th, 2013

[Michael Johnston]

I think in many ways we're all part of the near shore trend. None of us can win on price on the global stage, so we compete on the specialized value we can bring.

A lot of the competitors in my space don't build finished product. We're services players that offer a specialized skill in the supply chain. For one client I'll build a very specific video delivery platform, but ultimately, the end client puts the final wrapper on that and sells that to its customer.

I think, honestly, there are a lot of companies in Canada with whom I compete that do similar things. We find our specialized niche and can sometimes partner, and sometimes we have to acknowledge we're head to head. But realistically, we're paying similar salaries, we're working on similar technology bases, and we speak the same languages.

In many ways, yes, we do compete head to head; and sometimes it comes down to the specialized skill we can offer and the last two projects we did in our portfolio that are relevant. Honestly, most of our discerning clients only really care about the last couple of things we did that they can build on to move their business forward.

[John Carmichael, Conservative, Don Valley West, ON]

You're obviously an entrepreneur, you've been successful in your business, you've got a highly specialized workforce, and you know where you fit in your food chain, if you like, as you compete in the marketplace. Based on your comments, am I right in assuming then that, as you run your business, there are competitors out there that would compete directly with you, or can you move that anywhere you want to move it, if you were so inclined?

In other words, the geography doesn't matter. We're now doing cloud computing. We're dealing with a higher level of technology and new technology, and it strikes me that outside of the cost of infrastructure and where it's located, it's portable and it's competitive wherever it's located.

[Michael Johnston]

Yes and no, honestly.

We have a couple of different lines of business. One, we're building original product ourselves, games that are our IP, in which case, yes, I fully agree with you. Finding the right cost base for the infrastructure we use, it doesn't matter where we find that.

But we're also a services business, and I think what's made us successful is the quality of the people, and that's hard to move. That is a unique Canadian value-add that I haven't been able to find anywhere else in the world. We have the kind of people here who go the extra mile, think on their feet, ask the right questions; they're well educated, can solve problems and do so with a smile and a kind of loyalty to the client first. My people are more loyal to the client and the project than they are to me sometimes, and that's a wonderful factor in our success. That's made us competitive.

[The Chair, Conservative, David Sweet]

That's all the time we have.

Now to Madam LeBlanc for five minutes.

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

Good afternoon, Mr. Johnston. It's a pleasure for me to talk to you about the beautiful province of Nova Scotia.

My father was born in Nova Scotia. So I was lucky enough to spend my summers there. I also studied in Nova Scotia. Strangely enough, I am less familiar with Halifax, as my father hails from southwestern Nova Scotia. I know that the province is dotted with wonderful villages along the coast. They're very beautiful.

Based on your expertise, what kind of Internet access is available in those villages, especially when it comes to small and medium-sized companies? Those villages do have a number of small and medium-sized businesses operating in various fields of activity, such as fishing and tourism.

Are many of your clients located in Nova Scotia and the Maritimes? Could you give us an overview of the situation with regard to Internet access, the costs involved and the level of computer literacy in small and medium-sized companies?

Thank you.

[Michael Johnston]

I may not have the most concrete answers in that regard. Most of our clients are outside the region, most of them are large international companies in major urban centres. Speaking from my perspective, I moved back here 13 years ago—as old as my firstborn—and we couldn't get an Internet connection 15 minutes outside of Halifax. That's a dozen years ago. It almost made us pack up and move to Toronto after all, before we unpacked the moving truck. In the end we installed a satellite dish. It was complicated and it wasn't that long ago. You know, it's something we take for granted now.

I know that provincially here in Nova Scotia there have been issues about getting Internet connectivity across the province. I think that's absolutely essential. I mean, the notion of not having high-speed Internet available in every corner of the province seems unfathomable to me at this point.

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

I would like to discuss another issue, Mr. Johnston, as your answers are always very good and detailed.

We recently learned that the famous auction of the 700 MHz spectrum would be postponed to January 2014. Will that have any repercussions on your company?

After all, the 700 MHz spectrum is the equivalent of beachfront property in the area of broadband, as it makes it possible to overcome obstacles and serve larger regions.

[Michael Johnston]

For the sort of direct services work I do for media companies, no. It may have a trickle down effect for me, but not directly.

For the gaming projects that I'm part of and the original IP, yes, I think so. Most of our growth is in mobile. Almost every project we get asked to bid on has a mobile component. Every game we build has to target mobile first. There is a voracious demand for mobile access and connectivity. That's only going to skyrocket in terms of bandwidth and cost and competitiveness in that landscape. The number of devices has grown exponentially and their capabilities are skyrocketing. We need to have a lot of bandwidth if we're going to stay relevant, much more than I think anyone is probably estimating at this point.

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

As my colleague mentioned briefly, we are still waiting for a Canadian digital strategy. We are talking about a digital economy strategy because our study concerns the adoption of technologies by small and medium-sized companies. We see that as a way to help our economy grow and prosper.

Do you think Canada should adopt a digital strategy, as a number of OECD countries have done? Such a strategy would establish major guidelines and make the Internet more accessible in the regions. That kind of a roll-out would help highlight programs that could help small and medium-sized companies like yours provide even more services and grow.

[The Chair, Conservative, David Sweet]

Very, very briefly, Mr. Johnston, please.

[Michael Johnston]

Yes, absolutely. As I mentioned earlier, every company in every sector uses IT at some level. The more ready the access those companies have to cloud services, to other options to help them drive and grow their business, the more readily they'll be able to experiment and build efficiencies and grow. You know—

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Johnston. We appreciate your time here today. I'm sorry that I've had to be very diligent in keeping everybody to the time, but we greatly appreciate your being with us and we appreciate your very fulsome and informative answers.

We're just going to pause for a moment and then go into camera for some brief committee business, colleagues.

[Proceedings continue in camera]