Industry Committee on Jan. 26th, 2021

[Robert Malcolmson]

I think that goes to the frustration that your constituents convey to you and that then you convey to companies like ours. Certainly, everyone wants more broadband more quickly. I think the government recently announced something called a rapid response stream for some of the UBF money, which is designed to get connectivity money out the door faster. We're an active participant in that, and we are waiting to hear about the release of those funds.

[James Cumming, Conservative, Edmonton Centre, AB]

With that, is there anything rapid about this rapid response if you're still waiting?

[The Chair, Liberal, Sherry Romanado]

Answer very quickly, please.

[Robert Malcolmson]

I think it's been a matter of a couple of months, and these are complex allocations. However, as I said, I think we would all like to see things happen faster.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our last round of questions for this panel will go to MP Lambropoulos.

You have the floor for five minutes.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you, Madam Chair.

In order to accommodate our witness, I will be asking my questions in English.

Mr. Malcolmson, I believe that competition is a good thing across all industries, especially when we're discussing an essential service. I think that Internet has become an essential service, especially during this pandemic and especially because people are working from home and a lot of classes are working from home at the moment. Students are relying on Internet connectivity in order to participate and to receive the education that they deserve.

However, many families can't afford it and it's still a big problem, especially since the economy isn't doing so well and many people have lost their jobs. Paying for Internet isn't always the first thing that families think about. What have you done at Bell to help families be able to afford Internet during this time?

[Robert Malcolmson]

We've been active participants since the federal government's connecting families program launched. That offers $10 home Internet for qualifying low-income families. I think 82,000 low-income families have registered for the program and 52,000 of those have been served already. We provide service to just under half of those 52,000 families with that program.

That's the primary initiative we have participated in and will continue to participate in to address that gap you identified.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you.

What are your thoughts on my previous comment about competition and how it would be great across all industries because it helps protect the consumer and gives them options when things don't go very well?

[Robert Malcolmson]

I think there is intense competition in both the wire line and wireless businesses across the country. You have to ask yourself what you want competition to accomplish. I think you want it to accomplish price competition, which there clearly is. You want to create a competitive marketplace among competitors that are willing to build networks, not resell networks. You want two things: competition among network builders and competitive pricing.

If you look at current market dynamics, both of those are being achieved.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Competition also provides companies the incentive to work harder to make sure that their customers are receiving the services they ask for or that they've signed up for. I recently did a little bit of research and saw that Bell was one of the companies that has received some of the biggest numbers of complaints from consumers. Most of these have to do with their bills, such as being billed unfairly or contracts not exactly being followed.

What do you have to say about this?

[Robert Malcolmson]

Perhaps you're referring to this CCTS entity that tracks complaints. The fact that we may have the largest number of complaints.... You probably shouldn't be surprised, in the sense that we have by far the largest number of customer connections—in the range of 22 million customer connections—across all of our lines of businesses.

Certainly we've made a concerted effort, and continue to make a concerted effort, to bring complaints down. I think in the last CCTS report, we saw that we were the leading company in terms of complaint reduction. It's something in the range of 35% year over year.

We hear you and competitive dynamics also ensure that all of the players in the telecom space are actively serving their consumers and they have choices when they are dissatisfied.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

The report that I read said that your company disproportionately had a high number of customer complaints. It was in the thousands compared to Rogers, which only had 900, and other companies like Telus, which had 700.

I don't necessarily agree that it's necessarily because of the number of consumers, but we'll agree to disagree there.

I guess a lot of the complaints come from the fact that bills are extremely high and the services are not on par with what is expected. For those low-income families who are benefiting from the program at the government level, would you say that the Internet is sufficient for what they currently need to do, which is work and go to school from home?

[Robert Malcolmson]

I think more can always be done. When it comes to low-income families and affordability issues, that's where government should take a leadership position. We'd be happy to work with government on programs like that. We do now, and we'd be happy to participate in more of them.

That leadership has to come from government.

[The Chair, Liberal, Sherry Romanado]

That is the end of our first panel.

I'd like to thank you, Mr. Malcolmson and Mr. Daniels for being with us today. As you can tell, this is an issue that is top of mind for every Canadian. We appreciate your time today.

We will suspend for about two minutes just to switch out the panellists.

[The Chair, Liberal, Sherry Romanado]

We will recommence.

For our second panel for this study on accessibility and affordability, we will have the witnesses present for seven minutes each, followed by rounds of questions.

We will start with Mr. Noyes, from ACORN Canada.

[Raymond Noyes, Member, ACORN Canada]

Thank you for having us at this committee hearing.

My name is Ray Noyes and I live in Ottawa. I've been a member of ACORN Canada for the last nine years.

ACORN is a grassroots community organization that has been fighting on a range of issues that affect low- and moderate-income people. Ensuring that everyone has access to the Internet has been among our core campaigns.

We have 32,000 members in the Ottawa area, and more than 140,000 members across the country.

I must begin by saying that even to appear before this committee has been a challenge. The Ottawa ACORN staff has gone to heroic levels to get me connected today, and spent hours working on it and drove me here to the ACORN office, whereas an affluent person could just turn on their computer and get on in seconds. Therefore, I think this illustrates the point.

I've been invited to a number of Zoom meetings, but I cannot be seen or see anyone. I've also been interviewed multiple times where I've shared my personal experience and what it means to be without the Internet, particularly during the pandemic.

I'm a disabled person who lives on the Ontario disability support program, with an income of $1,169, which is well below the poverty line. As you all know, the federal government, in instituting the CERB, considered $2,000 as a living income, and the ODSP rate is far below that. I'll be turning 65 and will be off ODSP, which means I will see my income go up slightly, but it will still be below the poverty line.

ACORN did a study in 2019 and found out that many low-income Canadians found themselves in the difficult position of deciding whether to pay for home Internet or pay for basic necessities such as food, clothing or transit. A quarter of them told us they had sacrificed food in order to pay for Internet services, and almost one third have made multiple sacrifices.

I listen to CBC Radio and I have three to four TV channels through a digital antenna, but it's extremely frustrating to hear all the time on the radio and TV how important it is for anyone not to feel isolated, to have access to health information, information about the virus itself and mental health supports that are available, yet I am here with no Internet.

Until recently, we'd been asking the federal government to work with telecoms and provide $10-a-month Internet to all low-income people and seniors on fixed incomes, but the government hasn't heard us. We know that it's possible. We won the connecting families program, which I notice has been mentioned, but that program needs to be expanded to cover all low-income people and the Internet speed needs to be enhanced to 50/10, something that the CRTC itself recommends.

Recently, the U.S. has set a precedent by providing $50 a month off Internet bills to all low-income people during the pandemic. The aim of the U.S. benefit is to connect low-income households to broadband networks at affordable rates. Broadband providers will be reimbursed up to $50 per month per low-income household, and at $75 per month if the household is on tribal land. It's a time-limited fund that extends for six months after the COVID emergency ends. It's important to note that this is additional money on top of existing affordability and accessibility funds to help low-income people, called “lifeline”.

We are demanding that the Canadian federal government immediately create a $50-a-month Canadian broadband benefit, or CBB, during the remainder of the COVID-19 emergency. The CBB should be extended to all low-income Canadians, fixed-income seniors and those Canadians with job or income loss due to COVID-19. However, this must be done urgently, not in five or 10, or even two years. We need the Internet now.

We met with the then Minister of Innovation in 2017 and he announced on that day that the Internet was a right. It's past time to make this a reality.

The Canada broadband benefit must be instituted as soon as possible and backdated to January 1, 2021, and run to six months after the official declarations of pandemic emergency have been revoked, in part to make up for full ISP pricing for those months from July to December during the pandemic. A lot of existing relief and support programs could be leveraged to determine the eligibility of people.

I want to end by saying that if I had access to the Internet I would have been able to see my family during the pandemic. I would have been able to attend more ACORN meetings on video, which are important to me, access mental health support, get broad access to general health information and see my doctor's face.

Thank you once again for having us today.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Noyes, and thank you for your testimony.

I now turn to SSi Canada. You have the floor for seven minutes.

[Jeff Philipp, Founder and Chief Executive Officer, SSi Canada]

Thank you, Madam Chair and committee members.

My name is Jeff Philipp. I'm the co-founder and CEO of SSi Canada, and with me today is Dean Proctor, SSi's chief development officer. We thank you for the opportunity to contribute to the study on the affordability and accessibility of telecommunications in Canada.

SSi has been working on these challenges for the last three decades. We have achieved a lot and learned a lot, some of which I would like to share today. From our experience, even in the smallest and most remote communities in Canada, it's competition and the existence of competitors that will deliver the most lasting benefits of affordability and accessibility to Canadians.

This is not news. It's been part of Canada's telecommunications policy since 1993 and was reinforced by directions issued by the Parliament of Canada to the CRTC in 2006 and again in 2019. This committee itself recognized in 2018 the vital role of competitors to overcome the digital divide. In fact, you stated:

…incumbents tend to only invest in high density areas that are more economically profitable. However, small providers, non-profit providers or non-incumbent providers could deploy broadband Internet in rural and remote areas in an economically profitable manner should the Government of Canada adapt the regulatory framework to their means, especially with regards to spectrum and network management, along with funding allocation.

This is not theoretical. In fact, SSi's history and work with partners proves that competitors deliver benefits and that we're in this business for the long haul. If I can ask one thing of your committee, it's to continue to pressure government to support not just competition, but the competitors themselves.

By way of background, SSi is a northern company. Our headquarters are here in Yellowknife where I am today, and I heard comments of the weather—it's supposedly feeling like minus 41 this morning out there. Our team members are spread across two territories and six provinces, and we continue to grow.

We specialize in remote area connectivity and energy solutions, providing broadband and other services across Canada's north. We have also worked in Africa, Indonesia and the South Pacific, with the common thread being infrastructure and solutions to transform communities and improve socio-economic outcomes.

Some of our better-known projects include QINIQ, Nunavut's award-winning broadband network, which we built in 2005. Prior to QINIQ, even dial-up Internet did not exist in most communities in Nunavut. Sixteen years later, we are still the only provider offering an equal-level service to all 25 communities in Nunavut, no matter how small.

In 2016, we upgraded all of Nunavut to 4G LTE broadband service. I was happy to hear the previous speaker from B.C. note how innovative that was.

Two years later, we launched SSi Mobile, bringing cellular service to the vast majority of Nunavummiut for the first time ever, with packages that rival southern Canada. It's to be noted that this is delivered over satellite, which is a huge backbone cost compared to fibre.

Given the size of the territory, this achievement did not go unnoticed, and we were honoured with a national Startup Canada award that same year.

In 2019, we celebrated another first when we co-founded a new mobile telecommunications company with Eeyou Companee, which is a Cree investment firm, and Eeyou Communications Network. Eeyou Mobility Inc. is currently building out an extensive cellular network in the Eeyou Istchee-James Bay region of northern Quebec.

We're not stopping there. We're developing partnerships with Inuit and other first nations to improve and extend telecommunications across Canada. In each case, we invest alongside our partners, leveraging existing systems and expertise. This model works to deliver early and successful service launches with engaged local partners, and our model in Nunavut is no exception.

Just last week, SSi was very pleased to announce a new partnership with SES Networks, the world's largest commercial satellite operator, to deliver badly needed net new satellite capacity into Canada's north. We have crews currently in Nunavut—right now in late January—turning on that net new capacity.

To be clear, with the right partnerships and a fair playing field, we do an excellent job of delivering innovative broadband and mobile services in even the smallest, most remote communities. These are places the monopoly phone companies prefer not to go unless threatened, and this has been on example in the north since we started.

All governments can make a huge contribution to bring vital information technology to underserved areas with their significant purchasing power. Simply end single-source supply situations in telecommunications now; there is no need to delay. Where there are alternatives, you should cap the share of any single supplier to a maximum of 50% of the government’s business.

Working with multiple suppliers is a great way to benefit from better pricing, better service, customization and innovation. Just as consumers benefit when there's true competition, so does the public sector.

In the north, government is usually the biggest purchaser of telecoms. Competitors should be encouraged and sought after to supply government with these services, not single sourcing.

This is important. Government cannot just support the concept of competition. To receive the benefits, government has to support actual competitors. It makes no sense to rely on a single supplier to meet all these needs.

With that, let me turn it over to Dean Proctor to continue this presentation.

Thanks.

[Dean Proctor, Chief Development Officer, SSi Canada]

Thank you, Mr. Philipp.

Madam Chair, I'll try to be brief because there isn't much time left.

We all know the positive impact of information technology. It's vital to all citizens, governments and businesses. This has become even more evident as we cope with the COVID-19 pandemic. So it’s no surprise that we believe that broadband and mobile are must-have services everywhere.

They are essential services.

To meet and improve upon the universal service objective of 50 megabits per second, all competing service providers would need to contribute, not a single monopoly. This must be recognized and acted upon by regulatory agencies and governments at all levels.

We believe that the reason many Canadians, especially those in rural and remote parts of the country, still don't have access to affordable and high-quality telecommunications is that our regulatory system remains focused on the profitability of telephone companies—as you heard earlier—at the expense of competitors and, ultimately, consumers.

SSi is living proof that true, long-lasting and facilities-based competition is feasible in northern Canada. However, the CRTC and the Government of Canada mustn't work against competitors.

I'll stop here. I'd be pleased to answer your questions.

[The Chair, Liberal, Sherry Romanado]

Thank you.

Thank you very much.

We will start our first round of questions.

MP Dreeshen, you have the floor for six minutes.

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

Thank you very much, Madam Chair.

To all our guests this morning, thank you for your contribution.

I know when we talk about low-income Canadians and the cost of their services, and then we compare the cost for satellite service, there seems to be quite a spread.

I have a couple of comments. I know when our committee went down to the U.S. a number of years ago there was a Senate hearing on rural and remote broadband. We had a chance to talk to SpaceX, and they were talking about the rollout they had planned. Of course, now we're starting to see that happen here in Canada.

I think it's rather interesting because the project they have in mind takes us to 51.5°, and, of course, there's only one provincial capital that is further north than 51.5°, but there are three capitals in the territories.

There seems to be a bit of a gap between the south end of my riding and the territories as far as coverage in satellite is concerned.

Could the folks from SSi, perhaps Mr. Philipp, talk about the satellite coverage you have, the costs and how the competitiveness works as far as what others in Canada are paying for wireless services?

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Madam Chair, before the witness responds, I want to let you know that the French interpretation has stopped.

[The Chair, Liberal, Sherry Romanado]

Thank you, Mr. Lemire.

I will stop the clock for a moment and double-check.

Sébastien, is it working? Perfect. Thank you.

Please go ahead again, Mr. Dreeshen.

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

We know that Starlink has programs out there. They seem to be relatively expensive, and I was trying to link the costs associated with low-income Canadians and how things work out for them.

In the north and northern remote communities, SSi you have been there. You have done a lot of different things. Your broadband services are there.

I was wondering how we could get a discussion going about what is being done in the territories. What is that gap between the south end of my riding, which is 51.5°, and north of 60°?

[Jeff Philipp]

I'm happy to answer that great question. I can give you a fairly high-level summary. I will be careful. Dean may have to raise the red card if I start going outside the boundaries of an NDA, but let me try. I don't have the best filter, as you will find. I usually just tell you what I'm thinking.

For satellite-served markets, to your point, SpaceX is talking about.... Actually, they are from 47° and they may get up as high as 55° within the next six months. By this time next year, in fact, if they are fortunate with their space-based lasers, they may have the polar regions starting to deliver service.

SpaceX is the unicorn, I would say. It really solves a lot of the problems with broadband connectivity. We have worked in Africa, Indonesia, the South Pacific and every community in the Northwest Territories and Nunavut. I was born in one of those small indigenous communities of 800 people. That's where my family business started. That's where SSi started. The Snowshoe Inn is the family business.

SpaceX is going to solve a huge problem by bringing low-latency.... That is not to be lost; it's not to be missed. Latency is a huge aspect. When people talk about geostationary satellites, there is a big latency to get up and down. SpaceX solves that.

Telesat is also talking about a LEO platform, which would be out a few years later. SpaceX, by this time next year, would probably have terminals available. Telesat is talking about three years from now. SES, our newest partners as we just mentioned.... That's a huge deal. I don't think a lot of people recognize it.

I won't go quite as deep. You have current C-band capacity or geostationary capacity. Actually, let me start at fibre, which costs $2 to $10 per megabit per second, depending on where you live. Delivering a couple of megabits—and when we talk 50 down and 10 up, that's not the dedicated bandwidth; that's the burst. That's as far as your car could go. If you look at ISED's own oversubscription guideline, which is 25:1, that really means you divide that 50 down by 25, that's 2 megabits down, so about 0.4 megabits up—2.4 megabit. For fibre, its $2 to $10 a megabit, so your input costs $20 or $25 to service that. That's dark fibre—not lit up, no electronics and no support.

For the cheapest satellite, you're getting into $300 per megabit. You're going to go up from there to about $1,000 a megabit. That's going to give you unlit—the equivalent of dark fibre on the ground. It's $300 to $1,000, compared to $2 to $10. Your input cost, if you have to deliver 2.4 megabits to somebody, and your cost is $1,000 a megabit, it's $2,400 a month for that service to deliver 50 down and 10 up with ISED's 25:1.

Bandwidth prices in satellite-served markets are extremely complicated. Is that going to change? With the new partnership with SES, we started working on that some time ago because there is not enough capacity in space. We've been saying this for five or six years. Over Canada, without significant investment by the federal government to buy capacity, that won't be there.

For the satellite-served market, there is not enough capacity in space and it takes a couple of years to ramp up that capacity. It's very difficult to get ahead of it. When COVID hits, you just have a shortfall.

What are we doing right now, in January? With no federal funding, we committed a significant amount of our investment money—and I say that because my wife is the CFO—into Nunavut to be able to bring net new capacity with SES. That new capacity is being rolled out now and by the end of this month, it will be in place to support Nunavummiut, but there is no funding at this point for that.