Industry Committee on Feb. 6th, 2018

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Thank you, everyone, for being here today. This is a great discussion and a lot of valuable information is coming through it.

I'd like to start with Mr. Mitchell. As you know, the CRTC has just created a fund to help fund Internet as an essential service. They're trying to determine how best to utilize those funds. In the U.S., you have something similar, the RUS fund, the rural utilities service fund. You were mentioning that there are 800 to 900 electric co-ops. I believe all these co-ops can access the RUS funds in order to be able to build out the network, including the one there in North Dakota.

[Christopher Mitchell]

That's right. In North Dakota, it's mostly telephone co-operatives, but that RUS fund is what builds electricity to all of rural America.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

The CRTC funds are going to be essentially the same type of fund. If you had to give advice to the CRTC on how best to implement a fund such as the RUS fund to maximize the impact, what advice would you give them?

[Christopher Mitchell]

For the various funds that are available, which should also include the connect America fund, the rules are very complex, and as has been stated earlier, unfriendly to local firms on that basis. Larger companies that have many lawyers have much easier access to them. So to the extent that rules can be kept simple, that is important.

A second piece of information that I think is important is not to direct them solely to unserved areas, if you differentiate between unserved and underserved. To have a viable business model, it's important to allow a mixture. If someone is applying for funds, they shouldn't have to only serve the worst, hardest-to-serve areas. They should be able to mix that in with perhaps some higher-density areas or a population centre in the nearby region, rather than solely being able to serve the unserved. That's something we have not done in the United States, whether it's in state or federal programs, because of the power of incumbents to block any ability to use subsidization to compete.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Thank you so much for your help with that.

On spectrum, Jay, you had mentioned that it would be nice to have.

And C.J., you mentioned that it would be nice to be able to use all of it all the time.

I wonder what your thoughts are around dynamic spectrum allocation, where instead of just having focused blocks of spectrum—you have to buy it all, use it all, all the time, you're paying for it every second of the time—you have a dynamic spectrum allocation where you could dynamically reroute the spectrum depending on the needs of the different entities that are willing to rent that spectrum at a given time. That way, you could very quickly turn over spectrum on an ongoing basis.

Can you give me your thoughts on dynamic spectrum allocation?

[Ian Stevens, Chief Executive Officer, Execulink Telecom and Board Member, Canadian Cable Systems Alliance]

I can take that.

I see that as very problematic, trying to coordinate it between all the operators. Perhaps a different thought could be this. When you license spectrum, typically the conditions of licence are that 50% of the population is serviced within a period of time, but there's no requirement for the unserviced area—the area around the outside of Toronto where it's not serviced—that the service provider then must service it. Perhaps you could take that spectrum back and reallocate it out to other operators that would be willing to commit to servicing those areas.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Yes, but the technology does exist now to be able to actually do full-blown dynamic spectrum allocation where you use it when you need it and you pay for it when you need it.

[Ian Stevens]

I can't comment on that.

Perhaps you can.

[Christine J. Prudham]

We actually have looked into this in some of the matters in the U.S. I think it's Google that actually runs the computer system that would allow it to work in the United States. My understanding is that it has not been a success, and there are a number of operators that are quite unhappy with it, because the way it works essentially is that you can't plan for your peak spectrum. So how do you know how much to invest in your network when you never know how much spectrum you're going to have in order to service your customers?

It creates a real problem. It essentially forces you back to the equivalent of working in the 900 spectrum or the 2400 spectrum, which is unlicensed, because that's effectively what happens. You are contending constantly for spectrum. When it's not there, great, you have no interference and you can continue to operate. The second there's interference from somebody else, all this is doing is essentially, through dynamic spectrum allocation, is saying, “Okay, one of you gets away with not receiving interference; the other one, however, is off the air” because they didn't get that particular item.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Mr. Mitchell, I see you nodding your head. Would you like to make a comment?

[Christopher Mitchell]

I would just say that I think many of the small providers are hopeful that those bugs will be worked out, because many of the small providers are fighting very hard in a current fight related to that spectrum and whether it's going to be designed in a way that's more accessible to big carriers or small. They view that as being quite important still.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

I know another big issue for the small carriers is the cost of the spectrum, even just to rent it. In the U.S., I think they rent their spectrum at a gigabit. If my memory serves me correctly, it's about $1,650 for 10 years to be able to rent that, whereas in Canada it's $13,000 a year for a 1-gig PoP. Is that the case?

[Christopher Mitchell]

I'm afraid I don't know how to answer that question.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Okay, I just thought I'd try to get that on the record.

Finally—and unfortunately I'm running out of time and this is a big question—Xplornet gets beat up a lot because you're one of the biggest players in rural areas, and the rural areas are underserved, and you've had to oversubscribe in order to try to meet the huge need, and the fact that you don't have fibre to your PoPs. A lot of times you're doing hops from one antenna to another to another, and you can only have an antenna within a 25-kilometre radius, right? You can't have another one because of interference.

What is the solution to that, that you see?

[Christine J. Prudham]

You could have sat in our network meetings in terms of how you've done a great job of summarizing it.

The answer from our perspective is investment in the backbone element of it, which is extraordinarily important and why we have been so enthusiastic about the connect to innovate program. As the sheer volume of data increases, there's more and more pressure on the tower. You can try to deal with how you get that last mile to the customer by adding an extra ring of radios or something like that to build the capacity, but then you just have a whole pile more data at the tower. How do you get it back to the Internet connection? That's fundamental.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

But it's not just the backbone piece of it. It's going that mid—

[Christine J. Prudham]

It's that middle—

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

It's going that mid-level to the access point, because you need it at the PoP.

[Christine J. Prudham]

Exactly.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Every tower needs to have fibre. Correct?

[The Chair, Liberal, Dan Ruimy]

Thank you.

Mr. Lloyd, you have five minutes.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you for coming.

My first question is directed to Mr. Thomson.

You alluded to, in your testimony, a number of regulations and costs inhibiting the ability of companies, particularly smaller companies, to be competitive, for example the costs of hydro, the hydro pole legislation. And you alluded to paperwork. Could you elaborate on what government regulations are getting in the way of smaller companies getting into the field?

[Jay Thomson]

The reference I made to paperwork was primarily with respect to the application process for the funding programs. We have a live example of the cost of complying with requirements.

I'll turn it to Ian.

[Ian Stevens]

We were successful with the connecting Canadians project. We had several projects on the go. It took us about 80 man-hours every quarter to do the reporting to get the funding released, and for us, the project was large enough that it made sense. But some of the CCSA members, when they look at smaller projects.... When you're investing 80 man-hours to get your funding back out, you're starting to run an equation. Does it make sense to apply to a funding mechanism when there's that much overhead to maintain it? And that's just on.... During the project there's also a very burdensome application process for projects. Again, you need a certain size of project to make it make sense.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

This question goes more to Xplornet.

Something I've read is that when you have very engaged communities that work together saying they want broadband, and work with private companies and local governments, it seems to be a really successful model of getting broadband into rural areas. Can you describe some situations where Xplornet has been involved with communities to bring in rural broadband?