Evidence of meeting #92 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was spectrum.
A recording is available from Parliament.
3:35 p.m.
Liberal
The Chair Liberal Dan Ruimy
Welcome back, everybody, to the Standing Committee on Industry, Science and Technology. This is meeting number 92. Which hockey player is 92?
Nobody?
3:35 p.m.
Liberal
The Chair Liberal Dan Ruimy
Crosby, there we go.
Pursuant to Standing Order 108(2), we are continuing our study of broadband connectivity in rural Canada.
Today we have two witnesses. From Rigstar Industrial Telecom, we have Brent Grisdale, founder and vice-president of business development. Then from NetWisper, we have Steve Finlayson.
Did I get your name right?
February 1st, 2018 / 3:35 p.m.
The Clerk of the Committee Mr. Michel Marcotte
It's “whisper” without an “h“: NetWisper.
3:35 p.m.
Liberal
The Chair Liberal Dan Ruimy
Okay. We're going to start with Mr. Grisdale. You have about seven minutes to give us a presentation, then we'll move on to NetWisper, and then go into questions.
Go ahead, sir, the floor is yours.
3:35 p.m.
Brent Grisdale Founder and Vice-President Business Development, Rigstar Industrial Telecom
First of all, thank you very much for the opportunity to address the Standing Committee on Industry, Science and Technology. I always just want to call it Industry Canada, so you'll have to forgive my age.
Rigstar Industrial Telecom was originally called Rigstar Communications, and we were an oil and gas upstream technology provider for drilling rigs. We formed in 1998, and as we moved along, in order to provide services to our clients, we constantly had to find ways around the ILECs to provide services and communications services, where we could control the outcome. The end result of that was that Rigstar bought a data centre, partnered with Verizon. We bought an out-of-business asset called FlexiCom that was on rooftops in downtown Calgary. It was using the old Harris radios, and 2.4 gigahertz, I think, that had blistering speeds, at the time, of three megabits per second. Of course, back in 1998, that was cutting-edge technology. I'll come back to why I bring that up in a moment.
We have a small WISP called ABnet, Alberta Networks, that is east of Calgary. This might sound a little crass. We didn't know a lot about wireless infrastructure at the time, and we wanted to learn and cut our teeth on clients who were paying $39.95 a month as opposed to $5,000 a month. We have been operating that since 2003.
We've recently rebranded as Rigstar Industrial Telecom to reflect our overall non-dominant carrier status within Canada. We provide services now that are voice. We provide entertainment packages to remote camps. We provide satellite. We provide private LTE networks. We build towers and we create infrastructure.
We're heavily involved with the Van Horne Institute here in Calgary. We also attend the conferences around the same types of discussions around broadband and the rural communities.
The rural communities right now are really struggling, as everybody knows, in getting the speeds up. My presentation will be around what we can do differently from what we're currently doing to service those.
Whenever any new technology was introduced, and this was the same for Canada, the country was carved up into individual sectors. In the original case it was divided up amongst the provinces. Those provinces had exclusive rights to build the infrastructure within the province, and they had the ability, under those guidelines, to recover their capital infrastructure costs, get cost certainty to their investment, and everybody was serviced to the point where twisted pair was provided to every farm. It's known as the last mile, of course, because that's basically the longest distance a signal will travel over copper wires, about a mile.
I will just say that I think the privatization of telecom has been a disaster in Canada. Any time I drive by three towers side by side, I know that one is Rogers, one is Telus, and one is Bell. It just drives me crazy, the amount of money that has been spent to provide threefold communications infrastructure to people in Calgary, whereas rural communities do not get that same service because the economic return is not guaranteed or in any way planned.
This leads to ad hoc programs, like “let's throw $500 million at it.” But even when you throw $500 million at it, you're asking me to design the network to submit to the Government of Canada in the hope that the grant might come through. The return on investment is not even guaranteed for the design work that we put in, nor for the meetings we put in. We sit down with the counties and we do all kinds of work and infrastructure to support these people, and then it's not approved, and they come to us and ask the simple question, “Why?” Well, the simple answer is that if there's no infrastructure and no capital return laid out by the governing body, then the risk is not worth the capital investment and nobody will make the investment.
In Alberta, this has really sprung up, as the counties now have taken the lead and have decided as they know they cannot get these services from the major telcos or the ILECs. They've now resigned themselves to the fact that to get the service that they and their clients need, they're going to have to fund this themselves. With the help of the Government of Canada, they're allocating their capital projects to build tower infrastructure instead of building a road. They're using creative ways to meet their own needs because the needs are not being met by the free market. The free market is flawed, just flawed.
We're working hard to help those communities leverage the capital grants, but my recommendation at the end of the day, in a really simple form, is that you can use the county outlines for who and where the services are being recommended and you allocate that infrastructure build to one company. Those companies build that infrastructure. They run it for a period of, say, five years. Once their capital has been returned, it's opened up to the free market. Then you have a natural amalgamation of services, not unlike what happened with the cable companies when cable first came out.
Paramount, of course, was the owner of the coax cable technology. The CRTC would not let a foreign entity control a technology such as coax cable for deployment and told Paramount that they needed to get that into Canadians' hands. Paramount turned to the theatre owners across the country and asked who wanted to have the rights for the technology in their area. All the Paramount owners who owned theatres either accepted the technology and went to the banks to invest in the technology or not, but they had defined areas, even in Calgary. When Calgary first started this, the south was Shaw Cable's, and the north was for Rogers', because there were two Paramount theatres in Calgary.
There's been a natural amalgamation of those services over the last 30 years. Now you have cable TV service for everybody, including from Shaw, for where those defined areas were. The cable companies have recovered their capital, and they're doing great.
That concludes my presentation.
3:40 p.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much for that.
We're going to move on to you, Mr. Finlayson. You have up to seven minutes.
3:40 p.m.
NetWisper Inc.
We're a new company in our infant stages here. We fired up about a year ago. We do rural wireless Internet, fixed point to point. We started up on a budget. We're still on a budget.
Like everybody else, what we see in these areas is that with the current options, rural Internet is unusable in most cases. Actual speeds aren't even coming close to the advertized speeds. Also, the coverage is not that great. We're trying to focus on that and expand our coverage.
There are a lot of things that could be done on the government side to initiate this and to make things a little easier for getting rural Internet out there. An example would be expanding beyond the five gigahertz range. That's the free range that we and most other wireless Internet service providers operate in. That would have a big benefit.
On grant money, we've been digging around for the past year and just been banging our heads against the wall trying to find out where this grant money is. From everyone we've talked to, we just get a runaround. We just get “talk to somebody else, talk to...”. It just never ends. That's why I contacted our MP, John Barlow, and it's the reason we're at this meeting today.
There are a lot of issues with rural Internet, as we all know. I think that if we all work together in the industry, it's going to be more beneficial in the long run. The big telcos have their hub solution, which is a great solution in most cases, as long as the towers don't get overloaded, but they do have the data caps. At NetWisper, we don't do data caps. We focus primarily on customer service. We just try to keep our speeds to what we have advertised them as and keep our customers happy.
That's about it for me.
3:40 p.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you.
We're going to go right into questioning. We're going to start off with—drum roll, please—Mr. Baylis.
You have seven minutes.
3:40 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Welcome, gentlemen. Thank you for joining us.
Mr. Grisdale, I'll start with you. You clearly have an in-depth knowledge of how things have evolved both with the cable companies and the free market with cellphones. You stated that it doesn't work, and you just left that statement hanging. Do you have thoughts on a different way? Was there something you wanted to express in that regard about what you think would work?
3:45 p.m.
Founder and Vice-President Business Development, Rigstar Industrial Telecom
I think what you're asking me about is defined areas, using the counties as an example. When you're dealing with a new country, say, like.... I've been around this business for 20 years, and this is an example that was brought up by a friend of mine. It's about an African country where they were just deploying cellular technologies.
They divided the country into five segments and allocated the carriers to look after just their segment until they fully and completely had built that network out. Once they had returned the capital on the project and the services were rendered really efficiently, they opened it up to where you could buy the neighbouring service or you could buy this other one and get the amalgamation. There is a problem there, in that they didn't think about making sure that roaming agreements between the five carriers were carried and agreed upon beforehand. Because they didn't, people would end up carrying two or three cellphones, depending on what part of the country they were in. Nothing is perfect, as you know.
Here's my really big cautionary tale about right now and where we are. As a private company, you always have to make this decision: when do I invest in the next level of technology so that I'm going to have the longest opportunity for return on my capital investment before it goes out of style? We've seen that 4G really has not been successful. Everybody knows that 5G is 20 times faster than 4G, so they say they'll wait until 5G comes out before they're going to invest in their network, prior to 3G.... I completely agree with that. It makes sense, right? I don't want to spend money and then have 18 months where I have to do a return on investment. It just doesn't work unless I have some predefined time period of capital investment, and then the recovery of the capital.
Other than that, honestly, I don't think it works anywhere else. If it did, the private industry would find a way to do it and they would build it. That's what private industries do. If they've existed for 25 years and they haven't built it, they haven't figured out a way to do it.
3:45 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
You've touched on an important point, which is probably the difference between rolling out the phone system and rolling out the cable system. There's a tremendous rate of change in Internet speed, access, and demand, as we even saw when Netflix came on just a few years ago and changed the demand curve tremendously as well.
You've just alluded to my next question. Do you see a flattening out of the technology? Let's say we hit 5G or what comes after 5G. Are you seeing that your customer base is slowly being satisfied, or are you still always chasing your tail trying to keep up?
3:45 p.m.
Founder and Vice-President Business Development, Rigstar Industrial Telecom
No, I don't see that the technology will be always chasing its tail.
There are two levels or flows of technology that have been going concurrently. The first is the increased bandwidth. We've been able to increase the amount of bandwidth that we've been able to shove down the pipes and provide to the people. My God, when I got 3G, I remember in 1998 reading an article about Korea launching their five-megabyte phone service. It was a huge flop because nobody used it except for making phone calls. Nobody had developed an app or a smartphone yet. There was this infrastructure that was built way ahead of what the technology, on the one side, was able to use. Then the phone came in and overwhelmed the broadband capability for how much was required.
The parallel I'm talking about is that at the same time as you had speeds increasing, you had people working very hard on codecs to reduce the video compression technology. They were using less and less bandwidth at the same time as the growth. As for a gigabyte of data, I don't know, but I can't imagine right now how one would use a gigabyte of streaming data. I just can't imagine it. I think that if you had a gigabyte up and down, there would just.... I can't imagine what you would use to take up that much bandwidth. I just can't imagine it.
3:50 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Thank you.
I don't have much time, but I'll drop that same question over to you, Mr. Finlayson. Do you see technology catching up? Do you have any thoughts in that respect as you're building your networks?
3:50 p.m.
NetWisper Inc.
I think it's something that we're always going to be battling. As things develop on the Internet, a web page that worked on dial-up years ago.... Everything evolves so much. I think we're always going to have to stay at the forefront. Falling behind is not going to give people, the end-users, the results they need.
3:50 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
You mentioned some of the challenges in getting grant money. Have you had those challenges with respect to expanding the capabilities of your network? Has that been a challenge?
3:50 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Not the speed, but just with expanding the coverage, what happened that prevented your from getting access to that money?
3:50 p.m.
NetWisper Inc.
Everywhere we phoned, we were referred to other people to call or email. We were offered loans and those kinds of things, but we were specifically looking into the grants that were being offered.
3:50 p.m.
Liberal
3:50 p.m.
Liberal