Industry Committee on May 30th, 2017

[Pamela Miller]

Certainly. In general, the Canadian approach to spectrum management is called “fast follow”, given that we are adjacent to the United States and they have the market. They have the critical size of the market. We can't afford to have our own rules and regulations in Canada, so we very much look at it on a North American basis. Our typical approach to any spectrum issues is, as I said, the “fast follow the United States” approach.

We don't try to carve our own Canadian approach. We look at it in an integrated, holistic North American market approach.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

One of the issues you mentioned.... Coming from a rural and remote area of Canada, when you're driving into town, you're probably going to lose the cell coverage two or three times. These are the kinds of things rural Canadians see. If you happen to be on the main lines.... I noticed this in some of the discussions we had, and we'll make sure we have those main roads covered, but there is a lot of Canada that is not on the main roads.

We're looking at telehealth, distance learning, and agricultural usages. We've had discussions about how companies like John Deere actually make more money on their data than they do on their steel. These are the kinds of things that the future is going to have. That's where these machines are being used. It becomes more and more important that we have programs that are going to allow for that.

I guess part of why we are having this study is to come up with some of the concerns and issues that people have and present this to you before September 2018, or whatever it is, when you determine what the policies are going to be. The hope is that we will be able to give the information to you and that, as we study this, there will be the flexibility that's required.

I have just a couple of other questions. Have you done a lot of work on rural communities to see what the advantages are of improving the speed and coverage that are required, from an economic perspective? Does anybody discuss that with you?

[Pamela Miller]

Yes, very much so. In fact, as we put together our programs and our gap assessment, a critical part of it is to know the benefits and how people need the technology. We use a couple of different types of sources. There is economic literature, which will point to increases in employment, investment, and economic spinoffs. Based on some of our past programs, we also have case studies and examples of where there has been success in terms of having broadband availability. Having a need and having the benefits for the community are very important aspects of this.

Looking to the new program, I think we are looking for even better benefits, because we're going to be getting high-speed capacities. It's going to be a high-speed backhaul right into the community. We haven't done that type of program before. I think we're looking to get even higher benefits—more bang for the buck, you could say—out of that approach.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

What has been your communication strategy with rural communities? Do you have different organizations that are able to come to you, or do you go to them so that you can determine what the needs are? How is that structure set up?

[Sue Hart]

I also want to comment on your earlier question. With the connecting Canadians program, as some of those projects are now being completed, we will be doing some case studies to see what some of those benefits are in the communities. One example was the goZoom in Renfrew that I mentioned in my opening remarks.

I agree with you. For the design of this program we focused our analysis on the gaps in communities. You're quite right in that our analysis showed that many communities across the country are far from a backbone network, which is why, through our consultations, we heard loud and clear the confirmation that where we needed to focus the new programs was on backbone networks to bring the big pipes to communities, which will facilitate and complement a continued expansion to the last-mile networks. In terms of the communication, we have an ongoing working relationship with the provinces and territories to talk about priorities and how things are going.

I'm not sure if that answers your question.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you very much.

[The Chair, Liberal, Dan Ruimy]

Mr. Masse, you have seven minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you for your presentations today.

The first thing I'll start with is a definition of “access” and “measurement”. I think in general a lot of this is coming down to a societal question as to the cost, what a consumer should get, and their rights with regard to speed and type of service.

Taking over from Mr. Dreeshen's discussion about the rural community, for farming, for example, if we're all going to pay through service programs, in an area like mine, you have a number of people who decided to leave the city because they don't want to pay taxes for bus service, taxes for water treatment facilities, or for a number of things, and went to other municipalities that had lower taxes because they didn't have to pay for services in a city. Is there an analysis of how much goes to connect a place like cottage country, where we're worried about Buffy and Zane getting Netflix on their boat, versus someone in a farming field who actually uses a link to their tractor? What are the decision-making processes to determine if there's a differential between the two, and how is that measured with regard to results?

[Sue Hart]

When we look at the applications, the assessment of applications looks at what the benefits to the community are and what the level of improvement to the community would be. Something that is a project for cottages will not fare as well as a project that is going to help bring high-speed Internet access to a community that is dependent entirely on satellites and they will use it to connect to a hospital, to telehealth, and maybe tele-learning. We would be looking at that in terms of the assessment of the applications.

[Brian Masse, NDP, Windsor West, ON]

Is that overseen by the minister? Who sets those regulatory assessments in terms of prioritization?

[Sue Hart]

As part of the program, we've set criteria for assessment.

[Brian Masse, NDP, Windsor West, ON]

Who's “we”?

[Sue Hart]

I'm sorry, with ISED, the Department of Innovation, Science and Economic Development.

[Brian Masse, NDP, Windsor West, ON]

Okay, I have an idea of where it's coming from. I'm glad about what you're saying. I just want to try to think about how the decisions are being made.

Lastly, connected to that, for example, if you have to do that project, do you set and test a single site that now receives service or do you test the entire region? How do you measure the assessment of the services coming in, in terms of providing a project, and the circumference around it that is applied? Are there multiple target zones in a target area that's been selected that starts the evaluation? Is there a conclusion measurement to see whether it's worked or not?

[Sue Hart]

Luc is the director of engineering, so I'll turn it him.

[Luc Delorme]

In terms of connecting Canadians, which was mostly a household-based project, it is area-based. We keep maps of coverage of existing networks that we share with our colleagues at the CRTC, and they provide us a lot of information on the wire line, and we have information on the wireless. We have a fairly comprehensive database of existing services and speeds and costs, since you mentioned affordability. We keep all that, and we identify where the gaps are.

In terms of the new projects, when we evaluate them, our goal is to fill those gaps while trying to minimize overbuilding existing service, obviously. Once the projects are in progress or nearing completion, we actually do some site visits and we will do some measurements and see the deployment and how that's been built.

In terms of the new program, connect to innovate, it's based on bringing fibre to communities. In many cases the distribution network already exists, but the big pipe, as Susan mentioned, isn't there. That is actually easier to keep track of, because you really need to bring it to one point in the community and then everyone benefits from that. We also plan to be doing some site visits as the projects are completed to ensure that follows through.

[Brian Masse, NDP, Windsor West, ON]

With this goal of affordability, we're now increasing the amount of content that can be funnelled to a consumer, either a business or an individual. That means greater incurred costs for the Internet service providers, in terms of the consumer. They'll charge more because more data is now flowing to the consumer.

What do we do with this type of issue? For example, where I live I'm very familiar with the border situation, because we have roaming charges and there is the whole battle for consumers over roaming charges. I can be up to two kilometres away from the United States border and my device will pick up an American signal and that could lead to roaming charges, and so forth.

Here is the thing: we're growing the availability of it, but the providers are the real beneficiaries as we move more product through a subsidized system, which they then charge fees to. Again, when Netflix movies become more high definition, that means there is more data; more data means that people have more costs, and so forth. What do we do about that in terms of fairness for consumers?

I'll finish with this. The CRTC's great example was the basic cable package. We saw the response to that, which I thought was a fair way to approach cable, but they went out and it became a significant problem. Without going into details, the same thing can be happening here. We subsidize the expansion, the expansion leads to the flow of more product for the private sector, the private sector then charges more to the consumer, and it's an incurred cost from there on. I can tell you, if you have a teenage daughter and the Wi-Fi goes down, it's like Armageddon.

I'll stop there, but the end result is more consumer costs.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We're going to move to Mr. Baylis.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Thank you.

I'm trying to understand something about coverage and what we are and are not getting done. My riding is in Montreal. When this was first brought to my attention, I didn't know there was an issue, because I don't have any rural constituents.

When I first looked into it, I got maps, such as the one presented here that we're looking at, which says, for example, that 99% of households are covered at 1.5 megabits and 96% are at 5 megabits. I said, “Well, it seems to me that we have pretty much most of the heavy lifting done.” It's a very small part—4%—of our huge country that has to be done. Then, every time I spoke to members of my caucus who were in rural ridings, they were up in arms about the lack of service, so there's a dichotomy here.

There's a dichotomy in the numbers I'm seeing and what I hear from my colleagues, and in fact even in your statements. I'd like to point it out, and I'd like to try to understand it.

For example, Mr. Seidl, you said in your testimony that in 2011 your objective rates were 10 times less. You have 50-megabit rates now, which is your goal, so 10 times less is 5 megabits. In 2011, 5 megabits was your goal, and I look at that here, and we have 96% done, so it's actually pretty good.

However, when I look at the questions and what I hear through the testimony.... You gave the example of Renfrew. Renfrew is 100 kilometres from our nation's capital. It's not a small town. It's 8,000 people plus, and you're giving that as a great example of how we were able to help Renfrew. Well, it doesn't add up to saying that 96% of the country is covered if we're giving an example of a decent-sized town 100 kilometres from our nation's capital and saying to look at what we have been able to do for them. There's something wrong there.

Also, then I hear that we have 900 applications asking for $4.4 billion in our latest program. Well, again, if we have 96% covered, where's that demand coming from? I hear that the CRTC wants to put in a $750-million fund, and you're hoping to leverage that to get a heck of a lot more out of it. Where I'm struggling with here is to understand these numbers I'm given here and what's clearly not in line with what I'm hearing from my colleagues and even in your examples.

Finally—and I'll start with you, Mr. Seidl—you said in your testimony that for approximately 18% of households service is out of reach. Again, I don't see the 18% here. The only place that has 18% is that 82% have 50 megabits. Is that what you are referring to?

[Christopher Seidl]

Exactly. We set the target back in 2011 that by the end of 2015 everybody would have 5 megabits down and 1 megabit up. It was an aspirational target. We didn't put any funds towards that, and we figured government and private sector would achieve that. With the infrastructure that's out there and the wireless capabilities, we pretty well got to the high nineties for that capability.

With regard to our last review, which culminated in the decision in December, there really was a very explosive growth on broadband in both fixed and mobile requirements. The commission set an aspirational target of 50 megabits per second down. The upload is very important as well for businesses and other applications, so we said 10 megabits per second up, whereas before it was 5 megabits down and 1 up. That is where we're at right now. We're at around 82% right now. You could equate that, essentially, to wherever you have cable or a DSL/fibre connection into the household.

Outside of those regions, where you're basically relying on satellite or fixed wireless connections, or slower-speed DSLs—digital subscriber line technologies—you don't have the 50 megabit per second service offering. That's where the 82% kicks in. That's really in the main urban centres across the country. Anything outside of the main urban downtown core or suburbia area does not have the 50/10, and that's where the gaps are. It's not far from—

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

That's where the complaints I'm hearing are coming from.

[Christopher Seidl]

Exactly.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

It's the 18% to 20% of people who live outside of the core big cities.

[Christopher Seidl]

Also, if you go to the satellite-dependent communities, it's obviously just exacerbated in terms of what they can get. Daily usage is obviously a very important aspect, because they are limited in how much they can use. We heard tremendous testimony at the hearing we had last April, which was three weeks long. It was the longest telecom hearing I've been involved in. We heard that we have larger households in the north, satellite dependency, and a high cost of that capacity. It's really affecting people's ability not just to connect but to actually have devices that are up to date.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

So it's fair to say that when you first started this six years ago, that seemed like a nice number. Then Netflix happened, is that what—