Industry Committee on June 6th, 2019

[Robert Ghiz]

I think you have to look at it. Our members are not going to go out to build in communities if they're not going to price it at a level that people are going to pay for. I think you get markets that will dictate what will happen, and what you will see is, because you have the new entrants and the three national providers involved, competition is leading to lower prices. I like to point out that, if you look between 2014 and 2018, believe it or not, the price for a gigabit of data has gone down by approximately 54%. It is working, and our members want to continue to build out. They want to work with government, the CRTC and municipalities, but flexibility is going to be a key in that.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

We certainly all want to have world-class speed and access, but it's clear that, to virtually all Canadians, prices are a barrier to that access. The best coverage in the world does not mean a lot if people can't afford the service. I certainly don't want this to be an argument over these things.

How do you think we can work, government and industry, to see where we have both affordability and access to Internet?

[Robert Ghiz]

That's a great question and great point. We believe in quality coverage and affordable prices. The mechanisms that we have in place today are leading towards those lower prices, but now is not the time to pull a 180 and move in a direction that will hurt our new entrants in delivering the competition that will deliver those more affordable prices.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Mr. Masse.

You have seven minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you for being here.

Under testimony at another committee, the new Minister of Rural Economic Development has said that none of this motion will be made through either legislation or regulation. That was clarified. I was quite surprised by that, but they are important discussions that we're having. Some of these matters still have time to be done, but unfortunately, the government doesn't seem prepared to support that.

Having said that, I want to clarify something. The CRTC, with regard to your submissions today, talked about download speeds of at least 50 megabits per second, Mbps, and upload speeds of 10 Mbps. The original investment is 25 and five. Can you clarify that? You presented here today the overall of 50 and 10, but my understanding is that you've allowed 25 and five. Is this not correct?

[Christopher Seidl]

The universal service objective is 50/10 Mbps as a minimum. We want all Canadians to have that. In 2016, we indicated that some very remote regions may require incremental steps to get there. To allow for that, we'll be accepting applications that do not meet the 50/10 initially, but would be able to get there eventually.

[Brian Masse, NDP, Windsor West, ON]

That's going to create quite a problem, though, because obviously that service requirement of 25/5 is a lot less and has technical problems. Is that to rural and remote communities? Are they communities that are identified, for example, as more indigenous areas? Are they more remote? What are the sacrificed areas? Quite frankly, if you're not willing to live up to your own objectives, why would the private sector actually have any incentive to do that?

[Christopher Seidl]

The design of the fund is such that it's a competitive process, so projects will be evaluated and we will be selecting only the high-quality projects. It's not tied to any specific regions. Of the projects that come in, the projects that get selected will have the high quality, the meeting of the universal service objective at 50/10 and the quality of service aspects, and—very important—unlimited data option, as well. I would expect that we may not select anything below 50/10, but we'll have to see what projects we get.

[Brian Masse, NDP, Windsor West, ON]

If you do, at 25/5 it'll have unlimited buffering. That's what's going to be happening with the users. Quite frankly, if $750 million was announced with regard to the 2016 decision to reorient the money that's being collected, I find it hard to believe that we'd build a second-class-citizen system in place right now. What's the duration of time that an applicant will get if they can actually have their speeds right now? What's going to be the timeline to meet what the rest of Canadians are going to be delivered in terms of the 50/10?

[Christopher Seidl]

Our goal is to get everyone to 50/10, and the government has also indicated that, by 2030, it wants everybody at that particular target, and that's what we're working toward as well.

[Brian Masse, NDP, Windsor West, ON]

How long will they have from the 25/5 to the 50/10?

[Christopher Seidl]

There are people without broadband right now, and we're working to get them all there by 2030. That's the certain timeline right now.

[Brian Masse, NDP, Windsor West, ON]

This is completely outrageous. You don't even have a deadline for that. We're building a second-class-citizen system here.

I want to move to the spectrum auction coming on. Both the Conservative and Liberal governments have $20 billion of play money with regard to actually getting...and no actual cost. They have direct revenue from spectrum auction out there, and now we're going to actually build a second-class-citizen system.

I would like to move to Mr. Ghiz, with regard to the facilities-based auction. Can you outline that a little bit more? Part of this is that we've had a cash grab for the spectrum auction as a primary element, and you're suggesting a different type of auction.

I'd like you to detail that with regard to infrastructure being included as part of the bidding process.

[Robert Ghiz]

In terms of the spectrum, what I was talking about with regard to the directive was around ensuring that infrastructure is involved in there. When it comes to spectrum, you're right. We believe that the fees that are being charged to our members are some of the highest in the world. That's happening in Canada. That's money that's directly going to be charged back to customers.

[Brian Masse, NDP, Windsor West, ON]

In other words, it affects your price.

[Robert Ghiz]

Yes, it does. I think that, if we could look at a way to reduce spectrum fees, reduce spectrum auction costs, that would be something that would be beneficial in the long run, or as you've pointed out—and I've read some of your comments in the past—use that money to directly help connect Canadians.

[Brian Masse, NDP, Windsor West, ON]

I think that is the missing part of the equation that Canadians fail to understand—the $20 billion that we've received, really, for basically selling the skies and creating toll roads in the skies for consumers versus that of actually getting the infrastructure out there. The $750 million—let's be clear on this—is going to be collected from the companies as well, so that additionally will be rolled into prices for Canadians. Basically, $21 billion is out there as a public policy to collect for government revenue and for services versus actually achieving those objectives. I find, quite frankly, the CRTC's decision to do this quite offensive, given the fact that we have these opportunities.

I do want to return to the 10%. What 10% of the country is going to be left out? You said 90% by 2021. What 10% has been identified? What are those regions? We should know specifically those regions. I want to know where that 10% is located.

[Christopher Seidl]

Right now we have the information on our website; the maps indicate which regions are below the universal service objective. Part of that solution will be based on where the private sector goes; where other public funding extends the network and where—

[Brian Masse, NDP, Windsor West, ON]

I don't want the website. Tell Canadians, right now, what 10% of the country. Some of them can't even go on the website since they don't have service, so tell the country right now. What's that 10% that is going to be, basically, forsaken?

[Christopher Seidl]

Well, in a general sense, it's really in the more remote regions of Canada, in the rural regions of Canada, and we need to address that.

[Brian Masse, NDP, Windsor West, ON]

How can you address that, then? Is the mandate you have not strong enough? What was the decision for basically carving off the 10%? It seems ridiculous to not finish the last 10% if we're actually saying that we're going to have it for everybody. What are you missing as a mandate, then, to get the whole country under this type of an umbrella?

[Christopher Seidl]

We're a part of the solution. We are stepping up to the table to get the $750 million out. We're looking to get everybody at that level. It does take time to build these networks—

[Brian Masse, NDP, Windsor West, ON]

Has there been an economic analysis done to say basically what you need for that 10%? I think it's a fair question. I mean, if we want to have this goal, and we say we're going to have it as a country, what do you need to get it done?

[Christopher Seidl]

The estimates are $8 billion to $9 billion total of investment. The Internet will continue to grow and evolve. I expect that there will be more requirements. As we get to other technologies, there will be more investment requirements. This is something that we will continue to review and address as best we can.

We take affordability very seriously as well. We're reducing local subsidy...because we did support phone service with a contribution regime similar to what we're doing with broadband. As we reduce the local subsidy, we're increasing the broadband subsidy so that it's almost a revenue-neutral aspect to the carriers. Broadband is a big issue. We started off with universal service on voice service. We were spending a billion dollars at the start to extend the voice network out to everybody in Canada.

So we're starting to do that work now. The network will not be built in a short period of time. It is extensive and difficult. You get to the hockey stick in the more remote regions. That's why we want to start there, to get at those areas first, and then get everywhere else. All levels of government—

[Brian Masse, NDP, Windsor West, ON]

Well, investing in obsolescence isn't necessarily a strategy.