Public Accounts Committee on Feb. 21st, 2019

[David Christopherson, NDP, Hamilton Centre, ON]

Hear, hear!

[The Chair, Conservative, Kevin Sorenson]

Here's the problem for most Canadians, if they're watching.

Connect to innovate had $500 million available for allocation to successful applicants. The program received 892 applications, with funding requests for $4.4 billion. In some cases, there were multiple projects covering overlapping areas.

Here's the problem: “We found that the Department used a three-step process to evaluate applications. First, it screened the applications and assessed their merit.” That was the initial screening. “Second, officials from the Department and the Minister's office assessed funding options, each including a different mix for eligible projects.” Finally, in the third step, “the Minister provided conditional support approval on selected projects.” All of these areas—not so much area number one, but the other two areas—can be politicized and could be problematic. I'm not stating that it was a roadblock in any way, but certainly it can be viewed as one.

In paragraph 1.57, the Auditor General's office “found that there were a number of considerations to select projects”. The applications came in and “there were a number of considerations to select projects, but the application guide did not specify the relative weight of each criterion used in the project selection process.” The people applying didn't really understand the weight to each part of it. “Projects were less likely to be funded if they did not align with provincial and territorial priorities. However, these priorities were not made public. In our view, the Department should have made the weights and priorities public.”

Does the department agree with that?

[John Knubley]

First of all, I'd like to just step back. There are three—

[The Chair, Conservative, Kevin Sorenson]

No, just answer that one question, for now.

[John Knubley]

The answer is that we did not assign weights, because there are different solutions in different areas. We assess the community needs and the technological requirements, and they vary from place to place. We believe that it is not appropriate to set one specific set of weights.

[The Chair, Conservative, Kevin Sorenson]

All right. Thank you.

We go to the conclusion, as Mr. Christopherson and others have done, and we see again that “Canada did not develop and implement a national strategy to improve broadband Internet connectivity to a specific service level in rural and remote areas.”

Again, I represent one of those rural areas and it is problematic.

We have a question from our analyst that we can include in our report. This is regarding its responses to recommendation 1.60, that ISED “should inform stakeholders of the planned availability date, location, capacity, and price of the backbone to which they will have access” in a timely manner. How has the department advised successful project proponents that information on access pricing will be made publicly available in a timely manner as contribution agreements are signed?

Ms. Gravelle.

[Michelle Gravelle, Director General, Science and Research Sector, Department of Industry]

To be eligible for the CTI program, applicants did need to commit to provide open-access infrastructure. There are provisions in all of the contribution agreements. As the contribution agreements are being finalized, there is a requirement to open that up.

[The Chair, Conservative, Kevin Sorenson]

Is this any different from what was recommended by the OAG?

[Michelle Gravelle]

That was the intent at the outset; it was a requirement of the program. It was just at the point that the audit was done. The program was rolling out, so everything couldn't have been opened up.

[The Chair, Conservative, Kevin Sorenson]

Did the Auditor General's office make a recommendation?

[A voice]

That was the recommendation, yes.

[The Chair, Conservative, Kevin Sorenson]

So it is not different from what the OAG...?

[John Knubley]

There's a timing issue. We ultimately did what they raised, although when they looked at our design, they had questions about it.

[The Chair, Conservative, Kevin Sorenson]

All right, so they questioned the design of the delivery.

[John Knubley]

Ultimately when we delivered it, I think we did our best to address that particular issue.

[The Chair, Conservative, Kevin Sorenson]

You're saying that in the action plan, although they questioned the design, in the action plan....

[John Knubley]

Yes, the design phase, when we were looking at how to do the program. Then when we actually delivered it, this is how we did it.

[The Chair, Conservative, Kevin Sorenson]

All right. Okay.

[John Knubley]

Is that reasonably clear?

[The Chair, Conservative, Kevin Sorenson]

Yes, well, I think that's an answer.

Regarding your response to recommendation 1.81, that ISED should foster secondary markets for unused spectrum in underserved areas, has the department ever conducted an industry analysis pertaining to the possible effects of mandating secondary market access to unused spectrum? Again, this has been a problem for years and years, where spectrum is purchased and everybody puts it into Calgary right away, but the outlying areas don't get it.

Has the department ever conducted an industry analysis pertaining to the possible effects of mandating secondary market access to unused spectrum?

[Michelle Gravelle]

I would start by saying that our rules do allow for some licensing, and it's relatively easy, but that being said, the providers don't license very much. We have been reaching out to better understand this issue, so for smaller service providers, we've been trying to figure out what the challenges are that they're experiencing, and for the bigger providers, we're trying to better understand why they're not licensing.

The consultations are under way, the outreach with the stakeholders. We're looking to identify specific obstacles to secondary market transactions.

[John Knubley]

Mr. Chair, I mentioned earlier that we had gone out and consulted small ISP providers. The short story is that these are exactly the issues we're consulting them on and trying to figure out the best way of moving forward.

[The Chair, Conservative, Kevin Sorenson]

I know that this consultation has taken place, and on the maps we've just published, I like the way that Mr. Scott said that they'd just published the maps—those maps have been out. I saw those maps in 2013 or 2014, I'm sure. Now we're publishing the maps, showing where there's lack of coverage, and these consultations as to why there's no delivery in those underserved areas outside big urban areas—they've been going on forever.

Is there a cut-off date on the consultation?

[John Knubley]

No. This is an ongoing consultation.

I would just like to shift to another point. With respect to our auctions—and it is relevant—we have deployment conditions. Again, we've been trying—and the Auditor General raises this question in his report—to increase our deployment conditions so we can get these kinds of outcomes that you're talking about, Mr. Chair. While the department doesn't mandate secondary market access to unused spectrum, it's increasingly trying, as it deploys the spectrum, to put conditions on the players to ensure there is this kind of use.

[The Chair, Conservative, Kevin Sorenson]

The question that the analysts have given me is what has the department learned from its consultations? But you're saying that these consultations are ongoing. Is it the kind of thing there's an assessment for at some point? I ask because the consultations have been going on for four years. If it's the same consultation, I'm not sure, but are they being assessed regularly, or when? There is no cut-off; it's ongoing.