Evidence of meeting #94 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 access.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Pierre Collins  Project Manager, Montcalm Télécom et fibres optiques
Donghoon Lee  Research Partner, Economist, R2B2, University of Guelph, SouthWestern Integrated Fibre Technology
Louis-Charles Thouin  President, Warden, Regional County Municipality of Montcalm, Montcalm Télécom et fibres optiques
John Meldrum  Vice-President, Corporate Counsel and Regulatory Affairs, SaskTel
Geoff Hogan  Chief Executive Officer, SouthWestern Integrated Fibre Technology
William Chen  Director, Wubim Foundation

4:10 p.m.

Conservative

Dane Lloyd Conservative Sturgeon River—Parkland, AB

Does peering conflict with net neutrality in any way?

4:10 p.m.

Director, Wubim Foundation

William Chen

Peering actually supports net neutrality. I wouldn't necessarily say they're integrally related, but peering is a beneficial kind of process that ultimately is a mutual agreement that benefits ISPs. It decreases Internet transit costs and ensures that users of backbones and middle-mile connectivity tend to experience higher usability and less congestion in general. Generally, they occur within Internet exchanges.

4:10 p.m.

Liberal

The Chair Liberal Dan Ruimy

Thank you very much.

Mr. Masse, you have seven minutes.

4:10 p.m.

NDP

Brian Masse NDP Windsor West, ON

Thank you, Mr. Chair.

Mr. Meldrum, first of all, it would be remiss if I did not recognize that SaskTel was one of the leaders in providing some justice for the deferral accounts decision that took place. For the people who aren't familiar with it, this was the overcharging of customers. Some of the private sector operators took it to the Supreme Court of Canada, which affected consumers, and SaskTel was actually one of the leaders in protecting consumers, so I appreciate that piece of history.

With regard to where you are now, what specific things—low-hanging fruit—could be done to expand service into the rural areas? What's the movement now? You have an interesting situation, because you actually have others building off of your towers. Often we hear from people trying to get on other people's towers. What's the difference now in terms of trying to get to the easy access points that may not be such a large investment? What things can connect people?

4:15 p.m.

Vice-President, Corporate Counsel and Regulatory Affairs, SaskTel

John Meldrum

Our huge focus at the moment is around cellular. Having listened to other witnesses, people tend to just talk about Internet in general, but cellular can take you a long way in terms of Internet connectivity. We are working with the provincial government at the moment to try to figure out the cost or do the cost-benefit analysis of expanding cellular into the underserved areas we have in the province. So far we're seeing that it's hugely problematic. For that $1 million per cell site, which covers maybe an additional 100 or 200 people, the economics just don't work at all.

Regarding fixed wireless Internet service, we are in the process of adding 34 towers ourselves in terms of sites. We have an application in to Connect to Innovate for another 17 towers, so we're continuing to expand our fixed wireless service, as are other competitors.

I don't want to overstate the extent to which competitors use our facilities. They use them when it makes sense for them. They're more inclined to put their facilities on top of grain elevators, or any kind of high location where it's possible. They will also do a lot of daisy-chaining to then either give it to us or perhaps even to somebody else. Sometimes they will break into the national fibre thing on the railroads, where the railroads go across.

4:15 p.m.

NDP

Brian Masse NDP Windsor West, ON

You would just be one of several options, then, for the piggybacking that's taking place with the other providers.

Mr. Hogan, with regard to your access to others, especially the Bell expansion and others, how easy is it to work with the providers? Are the rules clear? To the extent that you can, could the next spectrum auction, for example, be more specific to terms and conditions, and could additional unused spectrum be made redundant rather quickly in a “use it or lose it” type of approach?

4:15 p.m.

Chief Executive Officer, SouthWestern Integrated Fibre Technology

Geoff Hogan

We are very much a fibre-only project, so spectrum really doesn't enter into our conversation.

I will say one thing, though. We've been funded through the small communities fund, and one of its requirements is that any infrastructure we fund must be open access. Facilities-based competition, which is what we have in Canada today, in my opinion does not work in rural areas. We can barely afford to put the first piece of fibre down the road, so how could we possibly get competition by doing multiple pieces? Let's make the fibre we put down the road open access so that, like our roads—in the same way that UPS and FedEx deliver packages along a public road—we can deliver Internet or over-the-top services across a piece of fibre into people's homes and get competition that way.

4:15 p.m.

NDP

Brian Masse NDP Windsor West, ON

It's interesting. As that's happening, we have a difference between communities in terms of even Canada Post now with respect to traditional carrier service.

Mr. Chen, in your experience with bundling of ISP providers, to use laymen's terms if they were working together more comprehensively, is there more room for that? Right now a lot of competition is located in hot spots. Could there be an expectation that that competition or those areas would be expanded? For example, if we're allowing that into the one area, there's almost an expectation—or part of the contracts of new spectrum, and maybe others require—that it actually include a larger geographic area.

4:20 p.m.

Director, Wubim Foundation

William Chen

Could you elaborate briefly on what you mean by bundling?

4:20 p.m.

NDP

Brian Masse NDP Windsor West, ON

Yes. Exactly, it would be making sure, when the spectrums to be auctioned off are coming up, that we have terms and conditions that are in larger zones—for example, if you want to get into the GTA area. We heard from Milton, for example. It doesn't have the same services as downtown Toronto, so we would extend competition out there as well.

4:20 p.m.

Director, Wubim Foundation

William Chen

To be honest, I don't think I can recall any kind of experience in bundling or any kind of knowledge on how that would affect market conditions, and I don't want to give you a wrong answer.

4:20 p.m.

NDP

Brian Masse NDP Windsor West, ON

That's okay. That's some of the testimony we heard on Tuesday.

That's it, Mr. Chair. Thank you.

4:20 p.m.

Liberal

The Chair Liberal Dan Ruimy

Thank you very much.

We're now going to move to Mr. Graham.

You have seven minutes.

February 8th, 2018 / 4:20 p.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

Thank you.

Welcome, Mr. Collins.

I want to congratulate you on your project. I especially want to thank you for telling the RCM of Antoine-Labelle about it, because they used your information and examined what you have done in order to carry out their own project. We appreciate that very much in our region.

I would like to address some technical questions with you.

You certainly have problems using power poles in the constituency. Can you tell us a little about the difficulties you have with using poles belonging to other companies?

4:20 p.m.

Project Manager, Montcalm Télécom et fibres optiques

Pierre Collins

Yes, we actually have supported a number of issues for the benefit of all RCMs.

In Quebec, RCMs were strong participants in the first wave of applications under the Digital Canada 150 program and the Connect to Innovate programs. Several tens of millions of dollars have been paid in grants and a number of RCMs have projects under way.

To respond to one of your questions just now, I would say that the approaches are reproducible, and they are being reproduced. Rural regions are becoming organized.

We are talking about the RCM of Antoine-Labelle, a major RCM. They have just started a $50-million project to establish a fibre-optic network to serve the homes in a very large rural area. The project will take several years.

As I was saying earlier, deregulation in Canada has happened in a very progressive and very organized way. We have all benefited. We are at the point where everything is completely deregulated, which allows us to have competitive infrastructures. That is what we are in the process of doing: we are building infrastructures in places where others do not want to go.

Our economic model needs grants. We have to reduce our capital costs in order to create sufficient cash flow to keep the companies operating. Rights of way are the final obstacle stopping us from deploying our networks. If we have no access to the structures, it is impossible, unless we dangle from clouds to get access. So we have to use the infrastructures of competing companies, like Bell Canada or other smaller local suppliers. Hydro-Québec is not actually a competitor, but it owns supporting infrastructures.

That is how we do it currently. We have to submit applications and plans. It is very organized and very structured, and the administrative processes come with very precise timelines. When the structures are in a state of disrepair and unable to take any extra load, the owner asks us, as the last group to want to install a cable, to pay all the costs of modifying, upgrading and modernizing the structures. Those costs make the project less profitable.

Let me take advantage of a forum like this one to emphasize that, at the end of the day, it is extremely important to understand that we must have access to the structures. We already have access to the capital, to the technology, and to the customer base, and that is important. When we sell a service to the people in our RCM, you can believe me when I say that they subscribe routinely and naturally, because it is a community project.

4:20 p.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

Can you tell us what it costs to connect these 7,000 homes in your RCM?

4:25 p.m.

Project Manager, Montcalm Télécom et fibres optiques

Pierre Collins

Because of the infrastructure?

4:25 p.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

Yes, because of the physical infrastructure.

4:25 p.m.

Project Manager, Montcalm Télécom et fibres optiques

Pierre Collins

There are rental charges associated with the infrastructure. Without going too much into the technical details, I'll say that renting poles is very expensive, and this directly influences the feasibility of a business model. New infrastructure is very expensive as well, but in our case, it would cost $13 million to connect 7,000 homes.

4:25 p.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

I believe you offer three services. How much do these cost to your customers?

4:25 p.m.

Project Manager, Montcalm Télécom et fibres optiques

Pierre Collins

The rate policy is yet to be defined, but it will allow us to compete. The principle behind such a policy is to be able to offer services at a reasonable price.

4:25 p.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

Are the big companies stopping you from deploying your services?

4:25 p.m.

Project Manager, Montcalm Télécom et fibres optiques

Pierre Collins

They only do so with regard to support structures.

4:25 p.m.

President, Warden, Regional County Municipality of Montcalm, Montcalm Télécom et fibres optiques

Louis-Charles Thouin

It's true that they're not stopping us from deploying our services, except with regard to access to infrastructure, for the simple reason that we choose markets that they don't cover. These markets do not have Internet access. They are leftover crumbs to these companies. They occupy the markets within town boundaries. They have a strong foothold, and compete with each other for the same customers. We take the customers that they don't want.

People quickly get on board with the model of not-for-profit organizations created and managed by the communities or public and private administrators. At the end of the day, all profits generated by our organization are redistributed to the communities. The profits don't go into the pockets of investors or shareholders, but into the taxpayers'. This is why it's easy to get people on board for a project.

4:25 p.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

Last Tuesday, a witness told us that, if we left the private sector alone, it would offer, with its own resources, rural access to Internet, and the problem would be solved. What do you think of this comment?