Industry Committee on June 4th, 2015

[Annick Papillon, NDP, Québec, QC]

Yes, that could be a partner. I find it very interesting that you are raising this point today.

Ms. Dubé, in your PowerPoint presentation, you indicated that the cost of access to the Internet and to cellular networks was too high and was affecting Canada's economic vitality.

How does Canada compare to the rest of the world in that respect?

[Jacqueline Dubé]

I am trying to remember a quote. We are sort of like the third world, because the cost for Internet usage in Canada is one of the highest in the world. Unfortunately, I don't have the numbers, but if you are interested, we can send you the information.

Right now, there are changes. The federal government has just adopted measures to ensure that there are more players and competition. However, it is still very expensive. Furthermore, it is very unequal. We are still talking about five megabits for high speed, but that's outdated. That is enough for individuals, but it's not enough for a company that wants to act. The very high speed is still not accessible everywhere in the regions, across Canada. The cost will be very high.

[Annick Papillon, NDP, Québec, QC]

Since it is a matter of changing our way of thinking, I would like to direct the question to others, so that they can share their ideas with us as well.

[The Chair, Conservative, David Sweet]

We're out of time, Madam Papillon.

[Annick Papillon, NDP, Québec, QC]

Okay.

[The Chair, Conservative, David Sweet]

I'm sorry, it happens to everybody.

Mr. Carmichael, for eight minutes.

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

I join my colleagues in welcoming all of our witnesses today. It has been a fascinating discussion. I, too, have been looking forward to today's session.

Eight minutes goes by in a hurry, so I'll be brief in the hope that each of you might support me and be brief as well so we can get through a few questions. I may be a little overly aggressive here, trying to do too much.

Madam Gagné and Ms. Vollmerhausen, I wonder if you could speak briefly to the cost structure. You mentioned the cost of the particular prosthetic that you demonstrated. What was the timeline, the cost structure and the engineering that was ingrained in the development of that product? Can you give us an idea? How did that change from the status quo?

[Claude Gagné]

On the cost itself, in fact, there are major costs to the development of a suitable design for a prosthetic. This is ongoing. This is why it's great that there is an ecosystem worldwide of researchers who keep working on this. I did have to absorb this. I had access through the Internet to a design that had been experimented on with many people before, so for me, the cost was really the cost of buying the material.

The material is filament. In fact, it's resin that is used in a 3-D printer. The filament, maybe I used $10 worth. As for the cost structure, it's very difficult to say because a lot of it is embedded in the design.

Then I needed access to 3-D printers. I was fortunate that I could access a free one. I didn't want to buy one, because they are too expensive for an individual citizen to buy. This is why we're advocating a sharing economy where expensive tools are available and can be shared.

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

On the timeline though, how long did it take from beginning to end for what we saw demonstrated on the screen?

[Claude Gagné]

On the exact timeline, I was contacted on August 14, 2014, and it took some time to go to the library and so on. Delivery of the end product was on October 21 in Waterdown, Ontario.

It took all that time, but in between I travelled and I did a number of things. I contacted many, many people and knocked on many doors to get, in fact, the know-how, and also to be able to produce that prosthetic. It takes a very long time to print also.

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

No, it doesn't sound like a lot of wasted time. Thank you very much. That was very impressive.

Dr. Sullivan, when we began these discussions with universities on technology, R and D, and moving through the development stage to commercialization, I remember talking with a number of your colleagues over the years—and this goes back several years now—trying to find the right formula of how to share IP. How do we get to a place of who owns it, and how do we create great incentive and motivation in terms of coming to a commercialization of products?

You talked about the open campus, the labs, access, and whatnot. I wonder if you could speak briefly and expand on anything you might have missed in talking to the issue of how your formula is truly stimulating success.

[Dr. Pearl Sullivan]

The intellectual property policy at Waterloo allows the creator to own it. If a professor or a graduate student work on a project together, they co-own it. If one of them decides to commercialize, they sit together with the help of our commercialization office and decide how any profits and revenues from the project will be split. Not everyone wants to be an entrepreneur, but there's a lot of interest in creating new knowledge, so that's what's good about it.

In the case of start-ups, many of our undergraduate students, and increasingly more of our graduate students, are starting companies from their theses. We support them and provide them, again from the WatCo office, the Waterloo commercialization office, with opportunities for them to work. They do a project with industry. There are opportunities for agreements to be set up between the professor and his or her group together with companies.

In the field of technology, you don't really have to buy all IP, you need to license it because it's changing. In two years it's probably obsolete. What professors do is they license the IP for a number of years, and then they can license it to multiple different companies. The platform technologies can have different applications, so the core may be the same, the source may be the same, and you can just change it with applications.

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

Thank you very much, Dr. Sullivan.

Mr. Horgan, I'd like to finish my time, if I can, with you. I appreciated your comments when you talked about some of the comparatives between Silicon Valley and Canadian talent, some of the advances, etc. You sound very passionate in your delivery of Canadian success.

On the adoption of advanced technology, it contributes to higher productivity; however, there is a feeling that Canadian firms lag behind U.S. firms in adopting these technologies. I wonder if you could speak to that. Given that IBM obviously has plants on both sides of the border, how do you manage that and how do you draw business to the Canadian side? What's the incentive?

[Patrick Horgan]

One of my insights is I was the chair of the Canadian Chamber of Commerce two years ago and immediate past chair. I really spent time on that question, wondering why Canadians were lagging and all the statistics showed that. My company was one that was sort of an outlier.

I do think it had something to do with the last 20 or 30 years when the dollar was at one time very reasonable, so people could just buy their services from us, and we didn't have to innovate necessarily that much, or we were becoming very much more resource-oriented, and although there's some technology advancement required for that, it's not as much as there is in other places.

If you did not believe that you knew where your competition was coming from—by the way, as the rest of the world believes—and if you did not know what the next technology wave was going to be—by the way, as the rest of the world really believes—you would be more motivated to make the change necessary. In other words, my premise is that if we stay in place as Canadians for the next five years, we're farther behind. You need to think about how you have to think in a more creative way, in a different way than before. This is why disruptive technology and adoption is really important.

I think that, as we were asking around the country, my comparative would be that in the States they believe very strongly that it needs to happen—by the way, even more so in Asia—and in Canada maybe a little bit less. We even have some empirical evidence that showed it.

That would be my answer.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Horgan and Mr. Carmichael.

Mr. Cash, you have eight minutes.

[Andrew Cash, NDP, Davenport, ON]

Mr. Chair, this has been just a fascinating discussion.

Thank you all for being here.

I'd like to talk about the importance of cybersecurity in the context of emerging disruptive technologies. Maybe we could start with Mr. Horgan, and if I do interrupt, forgive my rudeness but you know we don't have a lot of time.

[Patrick Horgan]

Sure. In which way do you want to chat about that?

[Andrew Cash, NDP, Davenport, ON]

Well, I want to know whether we're on track in Canada to providing Canadian businesses with the—

[Patrick Horgan]

Here's a little-known fact. The best cybersecurity knowledge has been coming from Canada. Q1 Labs in Fredericton, which you may have run into in your time, is now an IBM company, but it runs our cybersecurity around the world, which is, in many circles, known as top-notch. One of the reasons is not a perimeter defence; it goes back to this point that it's not about putting up walls. It's actually understanding every day on every interaction and in real time what's going on in your network. It's also the realization that cyber-intrusions are happening every day; they're already there, and there's nothing you can do about them, even as interesting individuals. The average time that a cyber person is inside your walls is about a year before they exfiltrate the information they like, because they're looking around for more. That's a quick road that has taken place.

For briefness I'm just going to slow down now and talk about the more comprehensive steps which Q1 Labs have taught us about. They have this Q1 radar that actually overlooks all of your environment and sees anomalies, as you would in police work, and understands the anomalies in real time and then is able to circle the anomalies and eventually take them out of your system. That's the kind of cybersecurity you're interested in having, and frankly, I think it's really one that is world leading and you can take advantage of it. Once you start to take some of those steps, you'll be much more interested in saying, “Let's now open up our data and really encourage ourselves to go to the future.”

[Andrew Cash, NDP, Davenport, ON]

I'm wondering, Dr. Sullivan, if you have some comments around the larger question of data security in Canada.

[Dr. Pearl Sullivan]

I do think there are a lot of habits and ways we do things as a country. This is something we're all going to have to be extremely concerned about as we are moving into an era of the Internet of things. If it's true that our personal health, in the era moving forward...and I think there are a lot of economic benefits to monitoring and tracking elderly and vulnerable Canadians, people who are sick. Part of that is to make sure there's embedded security in all the systems. I think there is quite a bit of work being done in Waterloo. While I do not know what's happening across the country, I do know that in Waterloo, the areas of quantum cryptography and quantum information systems and security are very important. These areas are now being worked on by the Institute for Quantum Computing, the faculty of mathematics, school of computer science, and the department of electrical and computer engineering. In fact, I would say all researchers and users are highly alerted and the area of cybersecurity is front and centre for them.

I also want to talk a little bit about BlackBerry. I think the BlackBerry operating system is still the most secure in the world. It truly is. I think for instance that years ago they also purchased a QNX system, which is used right now in automotive applications and, in fact, right now in transportation systems. QNX is seeing a lot of applications, more than just the cellphone. That security will be the differentiator for the industry.

[Andrew Cash, NDP, Davenport, ON]

Both of you, Dr. Sullivan, and Mr. Horgan spoke a lot about and we share the concern about retaining talent in Canada. During the debates around Bill C-51, a number of business leaders wrote an open letter raising alarms around Bill C-51. I want to quote a small bit from the letter:

Most importantly we ask for data security. We know that many of our clients, including our government, will only host services in Canada because of the invasive privacy issues in the U.S. The U.S. tech industry has already lost billions in revenue because of this, and we don't want it to happen here.

Is there a concern here in Canada around the sorts of invasive technology breaches we're seeing in the U.S? Is there a concern here in Canada around this and its impact on exactly what we're talking about here, retaining talent and building disruptive technologies?

[Patrick Horgan]

What's being referred to is not so much cybersecurity of data but the Patriot Act.

[Andrew Cash, NDP, Davenport, ON]

Absolutely.

[Patrick Horgan]

Some of my peers do not have a presence here in Canada. They have sales offices. We actually have a number of centres here where all the data stays in the country.

Now, there's a worldwide flow of data, there's no question. If you are somebody who has to be protected, you need to think about having a presence here, and some people are starting to build a presence so that they don't close off the ability for them to do business in a different way.