Industry Committee on Feb. 1st, 2018

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

I'll share my time with Mr. Baylis.

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

If I understand it, and we think about it in a bigger picture, both of you guys are up against the Shaws, the Rogers, these massive companies, and they're making all their money in downtown Calgary, downtown Toronto, this and that. We keep coming along and saying, “Hey, will you just go out there and help these little rural areas?” They go, “Yeah, yeah”, and they just buy up all the spectrum, whatever it costs. They make their killing in the cities.

Then we try to say, “Can you spend a bit of energy or time thinking about these other guys?” But why would they? There's no money in it for them compared to where they're making their big money.

If I understand you, Mr. Grisdale, we need to get the smaller players who say, “Okay, it's not big money for Rogers or Shaw, but for my little company, this is is enough to live on.”

Mr. Finlayson, go ahead. Do you want to add to that? Am I on the right track?

[Steven Finlayson]

Yes.

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

Okay. If we're seriously going to get this done, we can't keep looking at the big guys to do it. When they come to see us, what they do is—and here I'll be direct like you, Mr. Grisdale—they bamboozle us and say, “Don't look at it, boys. It's all being taken care of. It's all good.” Then we talk to everybody, and they're mad as hell. They don't have service.

If we were to use your concept—and this is somewhat like that idea in Africa—we give it to smaller-tier companies and say, “You're getting this area, you're getting this spectrum, and you've got a time frame to do it.” Then we're going to give them enough of a monopoly, with some limits on it, so they can make their capital back and then be profitable. Everything is good. Then you say, “You know what, now Bell or Rogers wants to buy you out, and we're going to open it up.”

That way, we have an approach to getting it into these areas by not looking to the big players. It's just does not make financial sense for these large, public companies. You have to be fair to them, too. They're public, and their shareholders don't want to hear that they're doing all of this work to help rural areas that is not paying back.

Am I on the right track here? I'd like to hear both of you explain that.

[Brent Grisdale]

I'll try to be brief. Yes, absolutely.

It's okay for big, multinational companies—

[A voice]

I don't know if “multinational“ is the right word.

[Brent Grisdale]

—or big ILECs like Telus and Bell to make money. They should do that. They have their hands full keeping up with the technology and the upgrades in the major urban centres. That is a big thing to do. They should not be criticized for it in any way. It's a huge job.

At the same time, the way I describe it is simple. It's a population-based answer, and it's a tiered communication level infrastructure that's supported. The major centres, say anything over 50,000 people, is an ILEC fight-it-out, knock-yourself-out spectrum. Spectrum has to be priced by the population.

In short, if it's 50,000, you leave that to the ILECs. That's their sweet spot—and even more so, 10,000. Let them decide where their sweet spot is and where it starts to—

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

I'm going to come back.

[The Chair, Liberal, Dan Ruimy]

You may have time later on, but we have to move on. Let's be fair. We're going to move to Mr. Eglinski again.

[Jim Eglinski, Conservative, Yellowhead, AB]

Thank you. I have a question for each one of you, gentlemen. I'll start with Mr. Finlayson.

Mr. Finlayson, the current CRTC considers download speeds of at least 50 megabytes per second and upload speeds of 10 to be the target. According to your website, your own company can provide 30 down and 3 up.

Do you feel that the CRTC target is a reasonable threshold? Is it too high or too low?

[Steven Finlayson]

I would say that's reasonable. We do actually offer 50 megabytes down.

With licensing, yes, we could obviously do more and give people faster speeds as well.

[Jim Eglinski, Conservative, Yellowhead, AB]

Okay. I'll go to Mr. Grisdale.

We were talking about a similar topic. You were talking about Wandering River and I was talking about Grande Cache and the fibre optics that go there right now.

From my conversations with Telus, it's my understanding that Telus has no intention of spending any money to supply upgraded fibre to that community because it's just not feasible for them to do it, and so the community sits there and suffers.

Can the technology out there be provided at a reasonable cost remotely, via satellite or the way your systems work?

[Brent Grisdale]

The short answer is yes, but, again, your question actually is a spectrum question. With an allocation of spectrum, both of us can provide those bandwidths easily, with the proper spectrum to support our radios.

[Jim Eglinski, Conservative, Yellowhead, AB]

Okay. Good.

Mr. Baylis, you had a question. I was kind of curious. You were starting it, and I'm going to let you take a bit of my time to finish your question, because I was interested in it.

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

I appreciate that, Jim.

I want to come back to your question on the pricing of spectrum. I'm not an expert on it, but you had mentioned that right now the model is still based on copper twisted pair.

First of all, you did say that? Am I correct? Okay.

You're saying that model should be changed in these remote areas to a spectrum based on population, i.e., tied to the potential of me making money back as opposed to the twisted copper pair.

Explain to me how the twisted copper pair works. Is it the length of laying it? Explain to me how that would work, this spectrum based on twisted copper pair pricing.

[Brent Grisdale]

Sure.

A voice line is about 56 kilobits a second, originally over a twisted pair, which is copper. It's the old phone line, POTS, plain old telephone system, delivered to your set.

What Industry Canada did, as I understand it—and as an aside, what my engineer told me to make sure I bring up—is that the pricing is based on how much 56 kilobits is used in the spectrum, and that's how the pricing is come to.

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

Okay, so basically spectrums are way over-priced because the ability to transmit is much higher, but I'm only transmitting that to one house. It's not like in the old days: if you had this much spectrum and everything was 56K, the spectrum would mean that you're getting a lot of houses in there. In this case, because the demand is so high, we need to change.

Correct me if I'm wrong here. You'd like to see the spectrum taken away from these big guys, sold to the smaller players, with a timeline for you to implement your solution so that you don't just sit on it like the big guys are doing, and price the spectrum to you based on your potential of return in the population, as opposed to this twisted pair model. Am I right?

[Brent Grisdale]

Yes.

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

Does that work for you, Mr. Finlayson?

[Steven Finlayson]

Love it. That would be great. Use it or lose it.

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

What type of time frame would a smaller company like yourselves need to build, say, a network?

[The Chair, Liberal, Dan Ruimy]

I think he took your exact example.

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

Sorry, Jim.

[Jim Eglinski, Conservative, Yellowhead, AB]

Give him an inch and he takes a foot.

[Brian Masse, NDP, Windsor West, ON]

Talk about hogging the spectrum.