Industry Committee on May 16th, 2019

[The Chair, Liberal, Dan Ruimy]

Welcome, everybody. Thank you for being here today.

Pursuant to the order of reference of Wednesday, May 8, 2019, the committee is studying M-208, on rural digital infrastructure.

Today, we have with us the Honourable Bernadette Jordan, Minister of Rural Economic Development, along with her officials, from the Office of Infrastructure of Canada, Kelly Gillis, Deputy Minister, Infrastructure and Communities; and from the Department of Industry, Lisa Setlakwe, Senior Assistant Deputy Minister, Strategy and Innovation Policy.

Minister, you have 10 minutes.

[Bernadette Jordan, Liberal, Minister of Rural Economic Development]

Thank you, Mr. Chair.

I would like to acknowledge that we are gathered here on the traditional unceded territory of the Algonquin peoples.

As you said, Mr. Chair, I am joined by Kelly Gillis, my deputy minister, and Lisa...I never say it right. Sorry.

[Lisa Setlakwe, Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry]

Setlakwe.

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

Setlakwe.

Thank you. Sorry.

Lisa Setlakwe is senior ADM of strategy and innovation policy at ISED.

I'd like to thank the distinguished members of this committee for the opportunity to update them on our government's efforts to bring high-speed Internet service and mobile wireless service to the millions of Canadians who live in rural and remote regions.

First, I want to acknowledge the valuable work that the committee has contributed and is contributing to our understanding of this complex and vitally important issue.

From day one, our government has been working to ensure that all Canadians have an equal opportunity to succeed no matter where they live. I know this committee shares that goal, as do all members of Parliament. The unanimous support that this House has given to Mr. Amos' motion shows government and private sector partners who are working together to address the Internet and wireless deficit across the country that there is a real commitment to get this important work done.

Since January, when I was appointed Canada's first Minister of Rural Economic Development, I have met and spoken with Canadians from all walks of life in rural and remote communities from coast to coast to coast.

From my own personal experience of living in rural Nova Scotia, I have seen how rural Canadians make our country a more vibrant and prosperous place to live and work.

Though small in population, rural communities account for roughly 30% of our country's gross domestic product. They are the drivers of Canada's natural resource and agricultural sectors, and they are supported by dedicated workers who are deeply committed to their communities.

In his mandate letter to me, the Prime Minister asked me to develop a rural economic development strategy.

Since I started travelling across this country in January, I have listened and learned, and while each community is unique and faces different challenges, the number one on most of their lists is the need to be connected.

Our rural economic development strategy is in its final stages of development, and I can assure you that it will fully reflect the concerns about broadband and wireless that I have heard repeatedly throughout my travels. We know that, when it comes to digital infrastructure, there is an urban-rural divide, and I'd like to take a moment to look at some of these disparities.

Although more than nine of 10 urban households have access to high-speed Internet service, only one in three rural households have the same access. Lack of high-speed service means that these communities lack the essential services that urban Canadians take for granted. It means that Canadians cannot sell their products and services online. They must resort to accessing government services over the phone instead of online. Many farmers with multi-million dollar agribusinesses still rely on phones and fax machines to run their operations. These realities are having a real impact on people in rural Canada and, in some cases, are leaving them behind.

It's incumbent upon us as the federal government to work with provincial, territorial and private sector partners to bridge that divide.

The divide that we're talking about shouldn't be limited specifically to the communities in rural and remote areas of our country. It exists on our roads and highways where there is no mobile wireless coverage. This lack of connectivity is a significant challenge for those working in the transportation industry, such as truckers, for example, and it is a risk to public safety, particularly for rural Canadians, who need to be able to communicate along remote roadways, fields and natural areas.

Wireless coverage is also essential to the national public alerting system, which relies on wireless service to deliver emergency alerts to Canadians.

On a more basic level, rural wireless mobile services are as important to rural communities as they are to urban communities in terms of economic development, as well as personal use. That is why we announced the accelerated capital cost allowance, which is helping telecommunications companies make investments in rural Canada. As announced by Bell, Rogers, Shaw, Telus and Xplornet, this change will connect thousands of people in their homes and provide cell coverage along unserved highway corridors across the country.

With respect to both broadband and mobile wireless access, this digital divide holds back rural Canadians from participating fully in the global and digital world. Through the connect to innovate program, we are extending high-speed Internet access to 900 rural and remote communities and an estimated 380,000 households, with more to come. That includes 190 indigenous communities across Canada. This program sets the stage for increased investments coast to coast to coast.

Since launching the connect to innovate program in budget 2016, the government has leveraged $554 million from the private sector and other levels of government for about 180 projects. These projects will improve Internet connectivity to those 380,000 households and 900 communities, more than tripling the 300 communities initially targeted. ln total, through the connect to innovate program, 20,000 kilometres of fibre network will be installed across this country.

We are connecting households and business, schools and hospitals, as well as supporting mobile wireless networks. We are establishing fibre optic connections in the farthest point north in all of Canada.

These investments show that our government recognizes that access to high-speed Internet and mobile wireless service is not a luxury; it is a necessity. We're not finished making these investments.

ln budget 2019, our government has made an ambitious new commitment to ensure that, over time, every single household and business in Canada has high-speed connectivity. As you know, we anticipate having 95% of the country connected by 2026, and 100% of the country connected by 2030.

We are investing in tomorrow's technologies, such as 5G and low earth orbit satellite capacity, today. The budget announced $1.7 billion in new broadband investments, including a new universal broadband fund and a top-up for the connect to innovate program that will focus on extending backbone infrastructure to underserved communities. For the most difficult to reach communities, funding may also support last-mile connections to individual homes and businesses.

The Canada Infrastructure Bank will seek to invest up to $1 billion over the next 10 years and leverage at least $2 billion in private capital to increase broadband access for Canadians. The CRTC's $750-million broadband fund, launched last fall, will help to improve connectivity services across the country, including wireless mobile services. Broadband infrastructure projects are also eligible for funding under the $2-billion rural and northern communities stream of the investing in Canada infrastructure program.

We understand that our success depends not only on our government's commitment to invest, but also that of our provincial, territorial and private sector partners. That's the reason we created the Canada Infrastructure Bank, which is currently exploring opportunities to attract private sector investments in high-speed Internet infrastructure for unserved and underserved communities.

Overall, budget 2019 is proposing a new, co-ordinated plan that would deliver $5 billion to $6 billion in investments in rural broadband over the next 10 years to help build a fully connected Canada.

To ensure maximum efficiency and coordination and to bring maximum benefit to underserved Canadians, officials are currently drafting a national connectivity strategy that promotes collaboration and effective investments of public dollars. This strategy will outline clear objectives and targets against which progress can be measured; provide a tool to guide efforts and improve outcomes for all Canadian homes, businesses, public institutions and indigenous peoples; and create accountability and responsibility for all levels of government to contribute towards eliminating the digital divide.

I'm proud to be part of a government that recognizes that building our nation's high-speed Internet is as important as building our nation's roads. That's how we will ensure that all Canadians have equal opportunities to succeed, regardless of where they live.

Thank you for the opportunity to address the committee. I'm happy to take your questions.

[The Chair, Liberal, Dan Ruimy]

Thank you very much, Minister.

We're going to get right into questions, starting with Mr. Longfield, for seven minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks, Mr. Chair.

Minister Jordan, it's great to have you here representing rural Canada.

I'm picturing Nova Scotia's challenges. Rural Canada also extends beyond the land onto the sea, when people are trying to communicate from ship to shore.

I'm thinking of rural Ontario. I was managing a business in Welland. I was trying to get high-speed Internet into that business and it was going to cost me $75,000 to get the last part of the line done. I was connecting to our office in Germany and our offices across the States, upgrading our technology and hiring people, and then I had this limit to growth. So we know that it's there.

Could you could speak to what working with other orders of government might provide? We have the SWIFT project that we studied here at the committee, where Ontario, the Government of Canada and private industry are trying to reach out to rural Canada. How important is it that we have willing partners at the table from other orders of government?

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

Thank you, Mr. Longfield.

You've made some very valid points with regard to how important it is for businesses to have good connectivity in order to grow. I come from a fishing community, and we know that access to international markets is extremely important, the same as it is for agriculture. We know that in rural Canada access to broadband is extremely critical in order for businesses to continue to grow and be able to compete on the world stage.

With regard to how we achieve that, we need to have all partners at the table. This would include the federal government and our provincial and territorial partners, as well as stakeholder groups. In some cases, municipalities are stepping up because they realize how important it is for them to have that connectivity. It's not going to be a one-size-fits-all solution. I think every area has to be looked at independently, but also in recognizing that this has to be done with a whole-of-government and a whole-of-country approach.

We have been very fortunate. As I've travelled across the country since being appointed in January, meeting with communities from coast to coast to coast, no matter where I've gone, no matter where I am in the country, this is the number one priority that we're hearing about. I will also say that in engagement with my provincial and territorial partners, it's their number one priority. Everyone recognizes that this is something that needs to be done, and I'm happy to say that in most cases all of our partners are on board with this and want to see us make sure that we connect 100% of Canadians.

[Lloyd Longfield, Liberal, Guelph, ON]

You mentioned the municipal partners. I'm thinking of my driving route from Welland back to Guelph: 131 kilometres to work every day. I had time in the car for hands-free calls, and I knew that as soon as I hit a certain bridge on Highway 20 that it was going to cut out, so I would have to interrupt my conversation and say, “I'm going to call you back when I get to the barn on the other side of the creek.”

I've now visited some of the farms in that area. We have egg farms that are doing amazing work with data in measuring thickness and composition of shell that relates to the feed the chickens are using, and for animal welfare in terms of watering and keeping the hens happy as they're laying eggs, but really connecting to the outside world.

The municipal partners often don't have funds. It's a small community. Just to pick a name, Grimsby, Ontario, is going to be different from Toronto, Ontario, so again, there's support back to us and our provincial partners. Could you speak to capacity-building within these small communities?

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

You're right. There are some small communities that just don't have the capacity to build it on their own, but there are other small communities that have definitely made this a priority and are budgeting accordingly. I will say that we've been very fortunate, in that the rural and northern communities fund, which is a fund under Infrastructure Canada, has allowed connectivity to be one of the areas where they can apply for funding. We've also made it easier for smaller communities to access those funds by lowering the cost of their contribution.

These are all things that I think are really important when we listen to rural communities, because it's an expensive venture to connect people, and they know how important it is for them to stay sustainable. We also need to make sure that our provincial counterparts are at the table with us. In a lot of cases, they already are. There have been budget allocations in different provinces to make sure that broadband is one of the things that they see developing. The other thing, of course, is our stakeholder telco companies. They are also stepping up, as is the CRTC. There are a lot of different funds.

I think this is one of those things where right across the country and right across the spectrum everybody is on board in making sure that we do connect rural Canada.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

In terms of your strategy development and working with other ministers, you have a new ministry, and we also have Minister Ng in a new position, a new ministry, with small business and export promotion. Minister Bains, of course, is in this area, as is Minister Bibeau, with agriculture. How do the ministers work together on developing strategies?

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

That's a very good question.

Since I was first appointed, we have been very active in going across the country and talking to our provincial and municipal counterparts, but we also recognize that this is a whole-of-government approach. Twenty-one different departments have been involved in developing our strategy and in working on national connectivity. We recognize that it's not just one area that's affected—all areas are. It doesn't matter if it's natural resources, agriculture, fishing, business development, exports or tourism. We definitely have a number of departments that have to be involved in making sure that as we build this plan for national connectivity, we build it in the right way and we make sure that we hit all of the targets we're striving for.

[Lloyd Longfield, Liberal, Guelph, ON]

As well, we have limited time. Right now we have limited time, but we also have a very limited schedule ahead of us. Hopefully we can get to a break point where that can be picked up in the future Parliament.

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

We've always been committed to connectivity, first of all with the connect to innovate program, which was announced in budget 2016. This is going to be able to connect to 900 communities, which is three times the number that we had originally anticipated. It's going to be 380,000 households.

We also have a top-up on the connect to innovate budget in 2019. Of course, the universal broadband fund that we're developing now will be used as we go forward.

Thank you.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you very much.

[The Chair, Liberal, Dan Ruimy]

We're going to Mr. Chong.

You have seven minutes.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair.

Thank you, Minister, for appearing in front of us today to talk about this important issue. I think our ridings of South Shore—St. Margarets and rural Wellington County and the rural Halton region are very similar.

I would encourage the government to focus not only on accessible Internet for rural areas, but also affordable Internet. When we say that only a third of Canadians in rural areas have access to high-speed Internet, I think that's better and more accurately termed as a third of Canadians in rural areas have access to affordable high-speed Internet. Many more than that have access to Internet, but they choose not to put it in place because it is far too expensive.

I mentioned this in the last committee meeting and I'll emphasize it again. If you're living in the city of Guelph, you can get 100 gigabytes of high-speed Internet a month for $49.99. You can get unlimited high-speed Internet in the city of Guelph for $69.99. If you live a mile outside the city of Guelph in rural Wellington County, if you want 100 gigabytes of high-speed data, it will cost you about $300 per month. If you want 200 gigabytes of high-speed data, which is not unreasonable for a family of four with kids in high school who need to access online resources to do their homework, you're paying $500, $600 or $700 a month for that. Obviously, that's too expensive and out of reach for most rural families so they choose not to put it in place, because who's going to pay $600 a month for 200 gigabytes of data? That's $7,200 a year plus tax. It's far too expensive.

I think that is the bigger issue than actual accessibility to Internet in rural areas. It's the number one complaint that I've heard in the north Halton region and in southern Wellington County. They say that yes, they can get Internet, but how are they supposed to pay a monthly bill of $500. Especially, as you know, in the Maritimes you don't have access to natural gas, and neither do we, and you're paying $1,000 a month for oil heat. The marketplace isn't working for those rural customers.

Unfortunately, we didn't do what western Canadians did and roll out natural gas across all the Prairies to every single rural residence, and we didn't do what Bell telephone did and roll out Internet access, high-speed Internet, to every single rural household when we were rolling it out in cities. Now we have this problem where most rural families don't have access to affordable high-speed Internet. As I said, who's going to pay $600 a month, plus tax, for 200 gigabytes' worth of high-speed Internet access?

I think that is just as big an issue as making sure high speed is available. I bring that to your attention because I really think that's just as important, if not more important, than actually having access to high-speed Internet.

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

Mr. Chong, you're absolutely right. We've heard that across the country. It's not only a matter of accessing high-speed Internet; it's being able to afford it, and rural Canada is disadvantaged when it comes to costs in terms of how payments are initiated.

Before I turn to Lisa to comment on this, I will say that Minister Bains has actually directed the CRTC to look at the competitiveness of telcos, and with that we would hope with better competition there would be better pricing.

I'm going to ask Lisa if she would make some comments on where that process is right now.

[Lisa Setlakwe]

Specifically on the policy direction, as you know, the minister is looking to issue a direction to the CRTC. It is in large part in response to what you've just talked about, which is affordability and competition. What we're asking them to do, as they are going to be making decisions on a variety of policy areas, is that they consider it through a consumer lens first. That's looking at affordability, consumer rights, encouraging competition and also encouraging innovation. That is in process now. We are welcoming comments on that.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Sure, and I'll add to that.

People say that there is more affordable Internet for 200 gigabytes a month than paying $600. The problem is that it's not low-latency, high-speed Internet access. The problem with satellite technology is that there's a great deal of latency in the service. The problem with direct line-of-sight radio frequency Internet access is that it's not as reliable.

Really, if you want reliable high-speed Internet access, the technology that's best suited for a lot of these rural areas is cellular high-speed mobile Internet access, which is often marketed under branded products like Turbo Hub for Bell or Rocket Hub for Rogers. That is actually reliable high-speed Internet access with low latency. The problem is, as I mentioned before, that those plans are prohibitively expensive.

Most rural customers I know, if they can't get Internet access right now through those services, are more than willing to pay $500 to $1,000 for a one-time installation fee to put up a big aerial antenna with a Yagi antenna at the top to boost the signal through a coax cable down to the Turbo Hub or Rocket Hub provided by Bell or Rogers. They're more than willing to pay that one-time fee. The challenge is that nobody's willing to pay an ongoing fee of $600-plus a month just to get some basic 200 gigabytes of data.

The affordability is the issue, then. The vast majority of households are within range of a cell tower, and if the signal isn't strong enough, they would be more than willing to pay the one-time $500 charge to get somebody to install a booster antenna on their roof. The issue is that paying an ongoing cost of $600 or $700 a month for 200 gigabytes of data is out of reach for the vast majority of families.

We can roll out more cell towers and do all that kind of stuff, but if the pricing of these plans is at that level, nobody's going to be able to afford it.

[The Chair, Liberal, Dan Ruimy]

Please give a very brief answer.

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

I have a couple of comments with regard to that.

First of all, we know that there's no one-size-fits-all solution in connectivity, but making sure things are affordable and reliable is extremely important.

We are looking at things like the low earth orbit, LEO, satellites. We're looking at fibre. We're looking at the towers. How you get connected is going to depend on where you are.

Also, in co-operation with the CRTC and what they've been directed to do, we're hoping we can bring together better affordability and better access to all Canadians.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Now we're going to move to Mr. Masse.

You have seven minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair, and thank you, Minister, for being here.

The 700 megahertz band mobile spectrum option was probably one of the most successful spectrum options in Canadian history. Brand names like Telus paid over $1 billion. SaskTel paid nearly $1 billion and Rogers paid over $3 billion. In total there was $5 billion, with $300 million allocated to the government. How much of that money, that $5 billion-plus the government received, has been directed to expanding broadband?

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

Mr. Masse, the money that is brought in from auction goes into general revenues, which actually pays for a lot of different programs. Of course, we're investing significantly in broadband and in high-speed Internet coverage.

We have $1.7 billion allocated in this budget that will be going to high-speed broadband.

[Brian Masse, NDP, Windsor West, ON]

That's for this budget, but I'm asking about the previous money your government received, the $5 billion. That $1.7 billion is actually over 13 years and it's actually legacy for another government, be it yours or someone else's.

What did your government do with the 2015 spectrum auction, which netted a sum of $2.1 billion? Where did that $2.1 billion go? Did any of that go to rural broadband?