Transport Committee on April 20th, 2021

[Pierre Karl Péladeau]

I will piggyback a bit on my colleague's response to the question of your colleague Mr. Soroka.

I think it's very important. Our experience for the last 12 years now, since the government decided it would set aside spectrum to make sure there will be competition, is that in certain areas of the country this goal or objective has been met. Should we say that it has been met everywhere? The answer is no. The answer is no because at a certain point, the participants at the auction.... I refer specifically to what we call the AWS auction that took place in 2008. It was open for companies that were probably not the ones that would build networks. After 10 years, it ended up in the hands of Shaw, and it has been able to build on Freedom Mobile and Shaw Mobile.

We know what's actually taking place. This is why I said, when I spoke earlier, that we're getting back to square one regarding how competition will take place in certain areas of Canada. This is for sure. Quebec is a very competitive landscape and it has been able to provide people with much lower prices for cellphone service because there's a fourth competitor or player in the marketplace.

Will the MVNO model be able to provide this? With the rules we have right now, it's tough for me to answer completely because the rules of the auction forbid comments on this. However, what we're seeing is a balance between organizations and companies that are able to piggyback on the network to make sure they will build and provide what we call a facility-based network, which will include significant investments. It's not going to flip the assets to a new owner for the purpose of making money or making a transaction. It's here to stay, and it will stay so that Canadians are able to enjoy competition with a fourth operator.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Péladeau and Mr. Rogers.

We're now going to move on to the Bloc and Mr. Barsalou-Duval for two and a half minutes.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

Mr. Péladeau, I want to talk about something that hasn't come up a lot during the meeting, but it's something you mentioned in your opening statement. I'm referring to the potential repercussions of Rogers purchasing Shaw, specifically, its impact on competition.

Would you mind elaborating on the issue?

[Pierre Karl Péladeau]

I'd be happy to.

The presence of a fourth operator has unequivocally been shown to be a good thing. In or around 2007-2008, the government introduced conditions that were conducive to competition, conditions that benefited Canadians, especially Quebeckers and people in the Maritime provinces. Eastlink, owned by the Bragg family, comes to mind; the telecommunications company became a fourth player in the market out east. The conditions to attract competition to the marketplace had the effect of driving down prices.

It's entirely appropriate that the government would want to take the necessary steps to create a more competitive marketplace. Not only does it lead to lower prices, but it also encourages innovation. Of course, customers care about the prices they pay telecommunications carriers, but it is not just prices they care about. Innovation also makes a difference. Increasingly, companies like Videotron are able to develop solutions that did not previously exist, solutions that are available to Quebeckers going forward.

Videotron provided high-quality service. It had a very reliable network offering faster Internet speeds. Now, we are entering the era of 5G technology, and thanks to the competitive environment, that technology can be rolled out more quickly in Quebec and Canada. I will come back to this shortly, but the competitive landscape allows for new technologies to be deployed. That's what we have observed in the past few years.

As I mentioned earlier, the purchase of Shaw by Rogers is creating something of a barrier in the competitive environment. The players that came into the market were not looking to become long-term telecommunications carriers. They were funded by foreign players or private companies that were not interested in building the conditions conducive to sustainable competition. Luckily, Shaw was the one that bought Freedom Mobile, previously Wind Mobile. That created the conditions conducive to competition.

Unfortunately, however, the deal that was announced would take us back to square one. That fourth player that was able to provide competition will disappear if the deal goes through as announced. That's why we are calling on the various regulatory authorities to approve the deal, whether it be the competition bureau, the CRTC or Innovation, Science and Economic Development Canada, if—and only if—measures are taken to ensure a provision for the divestiture of the wireless carrier. The government must see to it that a long-term fourth competitor can be accommodated, to preserve the competitive landscape.

That landscape will drive innovation, competition, lower prices and customer satisfaction, ensuring the service customers receive meets their expectations.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Péladeau and Mr. Barsalou-Duval.

We're now going to move over to the NDP, with Mr. Bachrach for two and a half minutes.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair. I have another question for Ms. Beck regarding the Lightspeed program.

There has been a lot of media attention on Starlink, Elon Musk's low-earth orbit satellite provider. I am wondering if you could speak to how Lightspeed differs and provides a unique product offering from that program.

[Michele Beck]

Yes. Thank you.

Lightspeed differs. We are essentially a B2B company. We provide backhaul connectivity in working with carriers, ISPs and other integrators. On the other hand, the Starlink service is a direct-to-user consumer offer. Their model puts the small dishes either on or beside people's homes, and they serve those homes directly.

Telesat looks at basically a holistic view of providing connectivity to the community, so we provide a big, fat, capable broadband trunk into the community that serves the community at large. We can connect the 5G towers so that they also have access to LTE or 5G services.

We provide sufficient connectivity, and we can trunk gigabits' worth of connectivity, so there is sufficient connectivity to connect enterprises that need as well those gigabit-per-second speeds in local or municipal governments, business and schools, as well as households. We can serve 50 by 10 services and target each of those homes. If services want higher tiers and the ISP is prepared to offer higher-tiered services, we can also support that. We can scale with the demand of the community.

Those are the key differences. It's direct-to-user versus a B2B solution where we trunk that capacity and we work with the local service providers or regional service providers that will manage and maintain the service locally.

[The Chair, Liberal, Vance Badawey]

Thank you, Ms. Beck and Mr. Bachrach.

We're now going to move on to the Conservatives, with Mr. Kram for five minutes.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you, Mr. Chair.

I would like to thank and welcome all of the witnesses to the committee this evening.

I am particularly interested in hearing from the witnesses from Telesat, since I read the article about them in last week's Financial Post. First of all, what is the timeline for Telesat's Lightspeed system of satellites to begin low earth orbits and be fully operational?

[Stephen Hampton, Manager, Government Affairs and Public Policy, Telesat]

Thank you, Mr. Chair.

We will be launching satellites at the beginning of 2023. We will be in service in the northern latitudes by the end of 2023. Between those times, we'll be doing beta testing and working with our customers. We'll have full global service kind of mid-2024.

[Michael Kram, Conservative, Regina—Wascana, SK]

Where will the satellites be built?

[Stephen Hampton]

That's a great question. We are working with local partners in Canada, and the satellites themselves will be assembled, integrated and tested at a facility in Montreal.

I should say that the constellation as a whole will be operated from here in Ottawa. We're going to be building a facility in Quebec as well, for the technical operations, and then we'll have landing stations throughout the entire world.

[Michael Kram, Conservative, Regina—Wascana, SK]

Where will the satellites be launched from?

[Stephen Hampton]

Unfortunately, Canada doesn't have a launch capability, but we are working with various launch providers. We've already announced one partnership with Blue Origin to launch some of our satellites. Stay tuned for some upcoming announcements.

[Michael Kram, Conservative, Regina—Wascana, SK]

Okay. Fair enough.

I can certainly see the benefits for consumers and the benefits for communities from having high-speed Internet access, obviously, but I was wondering if the witnesses could speak to the direct high-tech jobs that Telesat would be creating. How many jobs are under your roof, so to speak?

[Stephen Hampton]

Yes, absolutely. Telesat is scaling quite dramatically with this Lightspeed program and investing significantly in it. I should say that last year we hired about a hundred people. We're at only about 350 in Canada today. This year, we'll be hiring many more than that.

The recent announcement we made with the Government of Quebec will see the creation of 600 new jobs and the maintenance of another 650, and I should say that there are going to be more at our headquarters here in Ottawa as well.

[Michael Kram, Conservative, Regina—Wascana, SK]

All right.

The article in the Financial Post was titled “Canada's Telesat takes on Musk and Bezos in space race to provide fast broadband”. How would the witnesses rate Telesat's chances of getting a system of low earth orbit satellites into space before Elon Musk and Jeff Bezos?

[Stephen Hampton]

Telesat competes in one of the most competitive and dynamic global industries. You see exactly that in who we are competing with. There is one question we get a lot: How will you compete? We've been doing this for over 50 years, and when we first started looking at low-earth orbit satellite architecture, we really looked at what our customers needed today and then built a system that would deliver that in the most affordable, technically advanced way possible.

Telesat has a very long and storied culture of innovation, and we're world leaders in engineering. That comes through in the Lightspeed constellation. MIT has looked at multiple constellations in great depth and has said that our constellation is the most efficient and technically savvy. That's great. It points to the innovation pedigree that Telesat has.

We feel that we're coming to market with the best constellation. We know the markets and our customers very well. We provide services in Canada today, but we also provide services all over the world. We feel good coming to market.

[Michael Kram, Conservative, Regina—Wascana, SK]

The same Financial Post article mentioned that SpaceX and Amazon were going to focus on the “consumer market” while Telesat was going to focus on what it described as “deep-pocketed business clients”.

Could the witnesses elaborate on who these deep-pocketed business clients are? Why would they prefer to do business with Telesat over SpaceX or Amazon?

[Stephen Hampton]

My colleague Michele spoke about this in answering the earlier question about us compared with Starlink. It really comes down to the direct-to-consumer model that Starlink and Amazon are using and the model that Telesat uses. It's what we've used for 50 years. We partner with a local ISP, bring capacity into the community and then provide a holistic solution for the entire community, which includes things like LTE and 5G.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Hampton and Mr. Kram.

We'll now move on to our final speaker for the final set of questions from the Liberals.

Mr. Fillmore, you have the floor for five minutes.

[Andy Fillmore, Liberal, Halifax, NS]

Thanks very much, Chair. I appreciate that.

Thanks to the witnesses for sharing their time and expertise this evening.

I want to ask a question of our witnesses who are in the business of providing terrestrial broadband. Before I get there, I just want to correct the record so that we have a good record of the conversation at this committee for this important study.

One of the Conservative members brought up the Auditor General's report on rail safety and seemed to paint the report in a negative light, as if it were some sort of damning report. I need to clarify what in fact the Auditor General's report said, as follows:

Overall, Transport Canada made progress in addressing recommendations from our 2013 audit in the areas we followed up on....We found that Transport Canada improved its risk-based planning for oversight. In particular, the department significantly increased the number of its planned risk-based inspections. We also found that Transport Canada made progress in conducting more audits of railway companies’ safety management systems.

So the problems that the Auditor General was reporting on included the time range of 2013 to 2015, the time of the Harper government. The actual conclusion, I think, from the Auditor General's report was that the current government was able to achieve what the previous government was not with regard to rail safety. I thought it was important to leave an accurate record of our discussion here tonight.

We had another Conservative member of the committee who in the context of the greatest investment in community and national infrastructure in this country's history seems to find fault with the level of funding, and at the same time had actually run a federal election campaign on a promise to reduce infrastructure funding. So the internal conflict is a little hard to square. Needless to say, I think we've heard from our witnesses tonight that the level of investment we're seeing in national infrastructure is appropriate and is being very well received.

Having dispensed with those distractions, I want to bring it back to the reason we're here tonight, which is connectivity, and go back to the witnesses who are in the business of terrestrial broadband. The UBF is a national program. Our government has committed to working in every province and territory to support projects that ensure that every Canadian has the access to the digital opportunities they need and deserve in this era. I think it's evident with the recent announcements with the Government of British Columbia and Rogers in addressing the connectivity gaps along the Highway of Tears, for example, and with the recent agreement between the Government of Quebec that committed $800 million to fund the acceleration of broadband projects to connect every Quebecker by the end of 2022. Going further, last Thursday we announced almost $11 million in combined funding with the Tlicho government to bring high-speed Internet to rural residents in the North Slave region.

Where I'm going with this is that I wonder if any of the broadband witnesses could discuss whether—and if so, why—it's so crucial that these investments in broadband be seen as shared responsibilities that must include partnerships with the private sector as well as the federal government, provinces, territories and municipalities. My question is about the importance of that kind of collaboration and why that's important.

[The Chair, Liberal, Vance Badawey]

Who would like to jump in on that one?

I'll pick one: Mr. Field, go ahead.

[Barry Field]

Thank you.

Yes, I think it's vitally important that all levels of government and the private sector participate here. Ultimately, in these subsidy programs the money ends up in the hands of the ISPs themselves. We want to make sure the ISPs are contributing to that and are investing in their own networks.

I would go back to my statement earlier that this problem exists because of that market failure in these rural areas. It's not profitable for an ISP to invest in an area with very, very low population density. Therefore, the subsidy is required. I think it's important for the federal government to invest in this and the provincial governments and the municipal governments in the areas where these investments are being made.

Of course, at the end of the day, this is all coming out of the same pocket. It's all coming out of the taxpayer's pocket. I think it's incumbent on all levels of government to make sure that these programs are happening in the most efficient and effective ways possible.