ARCHIVED - Transcript, Hearing April 12, 2016

Volume: 2
Location: Gatineau, Quebec
Date: April 12, 2016
© Copyright Reserved

Attendees and Location

Held at:

Outaouais Room
Conference Centre
140 Promenade du Portage
Gatineau, Québec

Attendees:

• Chairman: Jean-Pierre Blais
  
• Members: Candice Molnar, Peter Menzies, Linda Vennard, Christopher MacDonald
  
• Legal Counsel: Emilia de Somma, Amy Hamley
  
• Secretary: Jade Roy
  
• Hearing Managers: John Macri, Christine Bailey, Sarah O’Brian
  

Transcript

Gatineau, Québec

--- Upon resuming on Tuesday, April 12, 2016 at 9:02 a.m.

1960 LE PRÉSIDENT: À l’ordre, s’il vous plaît.

1961 Order, please.

1962 Madame la secrétaire.

1963 LA SECRÉTAIRE: Merci. We’ll now start this morning with the presentation of the Nunavut Broadband Development Corporation. Please introduce yourself and your colleague and you have 15 minutes, thank you.

PRESENTATION

1964 MS. SPINU: Thank you, good morning. My name is Oana Spinu. I’m the executive direction of the Nunavut Broadband Development Corporation. To my left is Darrell Ohokannoak; he’s the chairman of the board and the president of the Nunavut Broadband Development Corporation, henceforth referred to as NBDC.

1965 NBDC is thankful for the opportunity to appear before the Commission to provide additional comments. While there are commonalities in the challenges and constraints rural and remote communities across Canada face in regards to access to telecommunications services, NBDC would like to highlight that satellite-served and predominantly Indigenous communities in Canada’s north are particularly disadvantaged. NBDC’s comments and recommendations speak first and foremost to Nunavut’s needs.

1966 NBDC understands that this proceeding is at its core looking at two fundamental questions. Is broadband a basic service that all Canadians need equitable access to? And if so, who pays for it in unserved or underserved areas?

1967 There does not appear to be a debate about the increasing importance broadband internet access plays in our lives. Most of the interventions, even the ones that do not support a formal recognition or funding for broadband, acknowledge this. The CRTC’s annual Communications Monitoring reports reflect steady consumer trends towards higher speed plans and larger monthly data usage, and the recently released EKOS public opinion research report identifies, in the report’s own words, “A dramatic increase in online engagement over the last five years.”

1968 The EKOS study further reports that public opinion clearly acknowledges that access to this increasingly important telecommunications service should be equitable across the country.

1969 Market forces have not adequately met the north’s telecommunications needs, and I will illustrate this with examples from three telecommunication service providers in Nunavut.

1970 Let’s first look at NorthwesTel’s modernization plan. NorthwesTel acknowledges that,

1971 “The services overwhelmingly demanded by NorthwesTel’s customers and the territorial governments are wireless and broadband expansion and enhancements”.

1972 The modernization plan clearly states in paragraph 106 that any such expansion into satellite-served communities, which includes all of Nunavut’s communities, is contingent on external funding. The only communities with, in NorthwesTel’s words, a “positive business case” for high speed internet are the regional capitals, where NorthwesTel currently provides DSL service.

1973 And I’d like to point out that only Iqaluit has a full range or close to a full range of services. As well, one must assume that there is some internal cross-subsidization happening between subsidized voice and unsubsidized broadband services to allow NorthwesTel to even provide DSL service in these few communities.

1974 Next let’s look at Xplornet. The company insists that it will be able to provide 25 meg service to all Canadians by 2017. When pressed for how many customers they could service or any waiting lists or delays for northern customers, the answer remains the same. They could theoretically provide service over the entire satellite footprint and will procure additional capacity as required.

1975 Yet Nunavut is always last in line. Viasat 1 doesn’t footprint the north and Nunavut users had to wait years for an upgrade to Anik F2 for comparable service. I use the term “comparable” very generously here. And who will install the dishes for direct-to-home satellite service in Nunavut’s 25 fly-in communities spread over 2 million square kilometers?

1976 Lastly, let’s look at SSI Micro, the operator of the QINIQ network in Nunavut. SSI is only able to provide service in all communities because they have received four successive rounds of federal funding to do so, most recently under the Connecting Canadians Program. But what happens when there is no funding?

1977 Three funding programs ago, SSI received federal funding to provide service in the Northwest Territories similar to what is sold in Nunavut under the QINIQ brand. When a dispute arose with the community champion and the funding was reassigned to NorthwesTel, SSI terminated service in the majority of communities in the Northwest Territories it once used to serve. I have no doubt that if it were not for continued federal funding and the obligation to provide internet access in all Nunavut communities at the same price, Nunavut would be in a similar position.

1978 What we have in Nunavut is market failure. Private sector providers are competing for subsidies and not customers and we are left with parallel regulated monopolies, one for voice and one for broadband, with little choice and even less progress. The growing gap between services supported through federal broadband funding in Nunavut and the average Canadian experience was detailed in NBDC’s original submission a year ago. Adjusting for the 2015 Communication Monitoring Report data, the gap has become even wider.

1979 There appears to be a tendency among some industry interventions, especially among parties that do not actually operate in the north, to be overly optimistic about the power of market forces and the potential of new technologies, coupled with a dismissal of government intervention or subsidies as “a blunt instrument”. NBDC insists that the financial interests of industry must be balanced with public interest and a modern interpretation of the Telecommunications Act.

1980 Canada has made a national commitment under Section 7 of the Telecommunications Act to ensure that high quality, reliable, and affordable telecommunication services are, “Accessible to Canadians in both urban and rural areas in all regions of Canada.” And I imagine you’re going to hear that phrase very frequently in the next few weeks.

1981 The problem is that the current interpretation of telecommunication services only includes landline telephone and dial-up internet access. Does a $20 million annual subsidy for landline voice and dial-up internet access make sense in 2016? No. Should broadband internet access be included in the definition of basic telecommunications services and supported accordingly? Yes.

1982 So who pays for it and what do you pay for exactly? There are a few things to take into consideration.

1983 Data from the Communications Monitoring Reports and the EKOS study highlight the increased reliance on and expectation of ubiquitous broadband and mobility. We need to look ahead and support access to the entire telecommunications basket. Users want to go seamlessly from device to device, in the home, at work, and on the move. Broadband targets should be indexed and reviewed regularly, and should include upload speed, download speed, and minimum monthly data allowance.

1984 While there has been a lot of focus on speed, for most Nunavut users it is the limited monthly capacity that is most debilitating. The focus group data from the EKOS report highlights the self-censoring and creative workarounds that are part of life for Nunavut internet users.

1985 The bottleneck for Nunavut is backbone and that cannot be solved with a fragmented approach where services for consumers are supported separately from services for business or government. All Nunavut users rely on the same upstream services delivered over the same inadequate infrastructure, legacy satellite.

1986 The North needs fibre. CRTC's own satellite inquiry clearly concluded that high-throughput satellites will not meet the North’s needs and that we will continue to be reliant on legacy satellite services of limited capacity and high cost.

1987 The federal government should designate one point of contact for Arctic broadband policy. Is it the CRTC? Is it Industry Canada or Innovation Science and Economic Development? Is it Infrastructure Canada? Canada? Is it CanNor? NBDC has dealt with all of the above. NBDC respectfully submits that one federal entity needs to take the lead and coordinate a coherent Arctic broadband strategy to chart a clear way forward for fibre.

1988 The Commission is best placed to take on this role because the CRTC is not as susceptible to political pressures and election cycles. It will take more than one election term to develop and implement a solution and to start seeing the social and economic benefits of improved telecommunications services. Indeed, a 2012 broadband report from the International Telecommunication Union identified thinking beyond electoral cycles as a best practice.

1989 The report states,

1990 “Broadband plans may be more effective when not subject to political imperatives or the need to address an infrastructure based counter-cyclical policy at times of economic crisis such as a recession. If endorsed by policy-makers as a primary component of the vision of the country's future, national broadband plans should become a permanent and on-going fixture of economic development.”

1991 I would like to finish by highlighting some other important considerations. It is overwhelmingly remote, Indigenous communities that are at the bottom of all metrics when it comes to telecommunications services. Specific efforts should be made to ensure that Indigenous communities in particular do not continue to be left behind. Greater local involvement will ensure that services offered in Nunavut meet the needs of and are accountable to Nunavummiut, the people of Nunavut. None of the current telecommunication service providers serving Nunavut are based in Nunavut. Corporate headquarters in Yellowknife, Montreal, Inuvik, and Woodstock are worlds away from the realities of Nunavut’s remote communities. NBDC believes that the Government of Nunavut and the territory’s Inuit organizations also have important roles to play in the future of telecommunications in Nunavut. Their involvement should not be excluded from any funding mechanisms to support broadband in Nunavut.

1992 This is not just an infrastructure issue; even if you build it they might not all come. Service availability does not equal adoption; adoption and effective use should be the end goal, across all demographics across the country.

1993 Broadband access and use correlates closely with socio-economic inequity. The difference in home internet access between the lowest income quintile households and the highest income quintile households is almost 40 percent. Level of education is also a significant factor in internet adoption and use. As such, NBDC would like to reiterate the need for digital literacy initiatives and support for low income households.

1994 Telecommunications infrastructure is absolutely critical for the future of Canada’s North for a number of reasons: for economic development, for education, health care delivery, civic participation, public safely. The list goes on but I would like to focus on education in particular.

1995 Nunavut has the youngest population in Canada. Our median age is 24; Canada’s is 40. So almost half the population is or will soon be school age.

1996 Right now, as I speak, at this very moment, all of Nunavut’s thousands of students and hundreds of teachers in the territory’s 42 K to 12 schools share 50 megabits of bandwidth. Twelve (12) percent of Canadian households -- average size 2.5 persons -- have home internet access that is better than the entire school system of Nunavut.

1997 I feel like that’s worth repeating; 12 percent of Canadian households with 2.5 occupants have better internet access than the entire school system of Nunavut.

1998 How can you train the work force of tomorrow, the citizens of tomorrow, without adequate access to the technology of today?

1999 Without a serious effort to address the digital divide -- urban and rural, rich and poor, Indigenous and non-Indigenous -- the benefits of broadband will be largely reserved for the privileged.

2000 Thank you again for the opportunity to contribute to this important proceeding and I would be happy to answer questions.

2001 CHAIRPERSON BLAIS: Thank you for that very direct and blunt intervention, and we appreciate it. I’ll put you in the hands of Vice-Chair Menzies.

2002 COMMISSIONER MENZIES: Thank you.

2003 I’m going to change slightly and start where you ended when you talked about schools. Can you just fill us in a little bit and tell us how education system works in Nunavut in terms of its -- how students have access to schools in a lot of those small communities?

2004 MS. SPINU: How they have access to schools?

2005 COMMISSIONER MENZIES: Yeah.

2006 MS. SPINU: Well, right now there’s 42 K to 12 schools in the 25 communities and there’s -- the Department of Education manages the schools. Each community has a district education authority that is responsible for the schools in their community.

2007 COMMISSIONER MENZIES: Right. And do they -- are they connected on internet?

2008 MS. SPINU: They have -- there’s a school network, this 50 megs that I mentioned ---

2009 COMMISSIONER MENZIES: Right.

2010 MS. SPINU: --- is specifically for students so it’s not as filtered as the government network. It once upon a time used to be part of the government network but now they kind of have this split-off network.

2011 COMMISSIONER MENZIES: And do the students at home have access to the internet as resource?

2012 MS. SPINU: In ---

2013 MR. OHOKANNOAK: Sorry, not all of the students have internet access at home.

2014 COMMISSIONER MENZIES: Okay, because you have a very -- Nunavut has a very high percentage of its population that are young people, right? And they would be the generation that the internet wishes to reach, correct ---

2015 MS. SPINU: Yes.

2016 COMMISSIONER MENZIES: --- especially for -- what I’m considering is the opportunities for those who do complete school at the K to 12 region, the opportunities for further training on the internet. Do those exist; are there -- is the community college accessible on the internet for online learning?

2017 MS. SPINU: I just want to get back to your original question. In my submission a year ago I mentioned the homework gap. And as Darrell said, not all students necessarily have access at home; we see a huge difference in home internet access between communities. So there’s rates of -- in one of the smaller communities, 36 percent of homes have home internet access; in Iqaluit it’s 76 percent on average; for Nunavut it’s 59 percent.

2018 We see studies from the U.S. that show that low-income families with school-age children are four times less likely to have home internet access so I think this idea of the homework gap is alive and well in Nunavut.

2019 The college has -- Arctic College has a campus in every community. It doesn’t necessarily offer all the programs in every community and it doesn’t do very much online because there simply isn’t the capacity to do it. So people will travel to the regional campuses in Iqaluit or Cambridge Bay or Rankin for ---

2020 COMMISSIONER MENZIES: Is it difficult to get equipment like a laptop? What’s involved if I did not live in Iqaluit, Pond Inlet, Gjoa Haven, Cambridge Bay? Cambridge Bay’s probably different; it has a big airport. But what’s the cost of getting yourself online in Nunavut?

2021 Or is it -- can you just -- it sounds odd -- I’d order one on the internet but ---

2022 MR. OHOKANNOAK: Yeah, today purchasing a laptop is so much easier than it was 10 or 15 years ago; nowadays you can get items shipped up for free. And we’ve got a social network where when people need some spending money they’ll sell their stuff on Facebook, on the internet; if they have an extra computer, they’ll put it up for sale.

2023 COMMISSIONER MENZIES: Facebook is very popular there.

2024 MS. SPINU:

2025 COMMISSIONER MENZIES: It’s extremely popular in the north.

2026 MS. SPINU:

2027 COMMISSIONER MENZIES: There’s one that I was looked that was mentioned in some of the reading of the “Hunting Stories” page; it seemed an excellent way for people to exchange their way of life and that sort of stuff. But when you talk about capacity in terms of that, how would a person normally be accessing online? Do you grab it for 10 minutes a day, or an hour a day, or -- give us a little bit of ---

2028 MS. SPINU: Just to go back to the question about, how easy would it be to get a laptop? I think, yeah, you can order something online if you have a credit card. If you have a credit history you can get a credit card. If you have a bank in your community, you might have a bank account and have a credit history to get a credit card to order a laptop online. But the majority of Nunavut communities do not have a financial institution in the community; only a handful of communities actual have banks.

2029 So I think while, yes, there’s the possibility that you could order anything you want online, the reality is that for a lot of Nunavut residents who don’t have credit cards, this whole world that online shopping opens up is not a possibility. So there’s -- but it’s interrelated because you need better access so you can better access so you can engage in online banking and kind of develop the credit history or whatever to be able to get credit cards and order things online.

2030 And now I have forgotten the second question you had, sorry.

2031 THE CHAIRPERSON: You were talking about data caps and we heard a bit about that yesterday about how that intimidates people's use of people who do have access that we heard yesterday, and you mentioned it today as well that people will use up their data cap in a week or a week or so and then not be online.

2032 So I am just trying to get you to paint me a little bit of a picture of how the average person would use it compared to how people who were, you know, almost always online. Is it something you use five minutes a day, 10 minutes a day, an hour a day? What would be the typical use?

2033 MS. SPINU: I think you monitor your usage on a regular basis. You see how much of your monthly cap you have used up at a particular point and you know ahead of time before you are going to do something what is the impact of this going to be on my cap.

2034 And households in Nunavut are larger than households in the rest of Canada. So you have more people using even less capacity and especially if you have young children who want to download something on iTunes or they are trying to do their homework. They are not the ones that are going to be thinking about what's the monthly cap. That's for the parents to think about and get the huge bill at the end of the month because of their overages.

2035 So I think that there is -- it's almost internalized. I don't know how much of it is really conscious and deliberate now because people have dealt with it for so long that I would say you don't even think about doing some things because you just know you can't.

2036 THE CHAIRPERSON: Okay. So what would you consider because we are discussing basic service objective, as was emphasized yesterday. What would you consider the basic need to be?

2037 MS. SPINU: I think NBDC has shied away from putting out a particular number just because what has happened in the past, the experience that we have had in the past with federal funding programs is that, here is a program. It has taken a year to develop it. Here is the target. It's taken a year. It's going to take a year to implement it and it's going to last another three, four years.

2038 So over the six-year period that's a plateau. This is what you have and then you hope there is another program that raises a target and then you plateau again.

2039 So one of the challenges is that we can't just plateau for years and years and years. Whatever target there is has to be reviewed on a regular basis so that it remains relevant, because in the south you see that usage patterns change on an annual basis. People will bump up to higher service level plans. So whatever target there is needs to be reviewed on a regular basis so it doesn't stay static for a number of years.

2040 In terms of what that actual number should be or what a starting point is NBDC's argument is that look at what the majority of Canadians are doing. They have made that decision of these are the services I need and this is how much I am willing to pay for it.

2041 So they have made that calculation in their head of, you know, what service do I want and I am willing to pay for it. I am willing to part with my money to get that service.

2042 THE CHAIRPERSON: Okay. I understand that but I don't quite get it in terms of looking at what sort of download speed, upload speed, data cap. If we were to go this route those are the sorts of things I think we would have to determine.

2043 It would be helpful perhaps if we look at -- I hope you have seen it -- Exhibit 1 that was put in yesterday.

2044 When you talk about what's basic needs and if we talk about e-health -- I am going to start with that, e-health, justice, education; basic services like that being able to access government websites and that sort of thing, plus obviously interconnection similar to a telephone service and be able to communicate with each other, can you give us -- would it be 5 and 1?

2045 Is 5 and 1 a suitable target for us to name with -- some interveners for instance, have said, mandate 5 and 1 now, set a target for 20 and 5 for five years from now or roughly something like that and work towards that. I mean it's generally assumed by most interveners that whatever levels are set would be reviewed, you know, as time passes just as this process would be reviewed.

2046 So can you give us a starting point?

2047 MS. SPINU: I think it depends on how frequently you are going to review it. I mean if you are talking about setting a target now and then another few years, maybe reviewing it.

2048 THE CHAIRPERSON: Try it hypothetically. Say if we reviewed it every five years, right? Where would --

2049 MS. SPINU: Well, in five years -- five years, Cisco's latest forecasting predicts that, I think, by 2019 the average download speed in North America will be 43 megabits a second.

2050 THE CHAIRPERSON: Yes.

2051 MS. SPINU: So I think that there is -- you know, one of the other questions is, okay, well, what do you mean by basic and are you assuming that these are other kinds of luxury uses that you are going to have for the internet and these are the really core uses that you are going to have for the internet and what defines what is luxury and what is basic?

2052 The reason that I'm talking about looking at what the majority of Canadians are -- what plans they are using and why that should be the basis for a target is because who can decide what's a necessary service and what's a luxury service or what's a necessary use or what's a luxury use for the connectivity? And if Canadians believe, you know, "I need a service plan of 9 megs down and I am willing to pay for it", they have made those decisions of I this service because of everything I want to do online with it.

2053 THE CHAIRPERSON: Right. But to try to use the telephony analogy, right, so you have a basic service where you get a phone and you have access to enhanced services, right, because when you are talking -- when you are talking about subsidy that would become part of the discussion.

2054 I understand what you are saying in terms you don't want to give any ground on the idea that you would have the same accessibility as other Canadians and I appreciate that. But if we need it, if we need a starting point and we were to look at it and say, "Okay, here is basic" or "Here is the basic service for subsidy" and here are enhanced services and then you have access to these enhanced services what would be -- do you want the starting point to be whatever the average download speeds are in Canada? Is that what you are looking for is social equity that's --

2055 MS. SPINU: I think somewhere close but I mean if you want to ---

2056 THE CHAIRPERSON: --- industrial equity?

2057 MS. SPINU: --- if you want me to put out a specific number ---

2058 THE CHAIRPERSON: I do.

2059 MS. SPINU: --- that's something I could consider and come back to you on. But I think right now at this very moment I don't have a particular number that I would feel comfortable saying, yes, this is what should be the standard.

2060 I would say my initial response would be that 5/1 is not sufficient for that five-year window.

2061 THE CHAIRPERSON: Okay.

2062 UNDERTAKING

2063 MS. SPINU: But what a higher target should be, I could come back to you on it if you want a specific number.

2064 THE CHAIRPERSON: Yeah, if you could give it some thought it would be helpful because not necessarily -- the terminology doesn't necessarily have to be the standard. It has to be the basic, the no less than. Think of it that way. It should be no less than and, ideally, it should be as much as. That would be helpful for us to work with.

2065 MS. SPINU: I think to a certain extent if the backbone infrastructure provisioning connectivity for Nunavut were improved, the discussion about what the minimum level is would be less important because then the constraint wouldn't be you have this really limited capacity, so what is the absolute minimum service that you want?

2066 If we have, you know, a mix of fibre and high throughput satellite so that bandwidth is not this scarce, scarce resource then I think it would be much easier for service providers to provide a reasonable level of service at a reasonable price and there would be less of a need to say, "Oh, you have to absolutely provide this minimum level of service".

2067 Right now the reason that we have that need is because we are entirely satellite-served. There is limited capacity. It's very expensive and government funding for broadband in Nunavut has always said, you want our money, you have to provide this minimum level of service.

2068 COMMISSIONER MENZIES: Okay, I understand that.

2069 You speak of affordability and you mentioned adoption too. How do you suggest we define affordability?

2070 MS. SPINU: I think in one of the ---

2071 COMMISSIONER MENZIES: I mean, there could be all kinds of different definitions, so what I’m trying to get at -- I mean, the server in a restaurant who lives in downtown Vancouver might think of internet as an affordability issue because of the high cost of housing there, for example.

2072 There’s so many different variables where somebody who lives in a -- who has a lower income or a similar income in a place where there’s a lower cost of housing might see it differently.

2073 MS. SPINU: I’m just looking because I think there’s a question similar to that in one of our interrogatories, and I referred to -- I can’t find it right now.

2074 In terms of affordability, Nunavut has a huge income gap between very high income and very low income. And I think some of the interventions have risen issue of that. You know, why should low income telecommunications service providers in southern Canada be subsidizing service for high income telecommunications service providers in the Territories?

2075 And I get that. I mean, affordability -- there’s really high rates of food insecurity in Nunavut. So people can’t afford food for themselves or their children. So on that list of priorities, broadband is probably well below food.

2076 So there are affordability issues in the Territories and how you would define it, I don’t know. I don’t know if you would use CRA definitions for what the minimum -- like the basic income is. I don’t know how we define that.

2077 COMMISSIONER MENZIES: Do you consider telephone service to be affordable in Nunavut right now?

2078 MR. OHOKANNOAK: Not for everybody. These days, just to buy food, people are -- some people are no longer getting telephones. They’re finding that they can contact people easier either by chatting on basic device or on Facebook.

2079 So there’s a trend of people no longer seeing a need for a landline.

2080 COMMISSIONER MENZIES: Okay, well, that comes to one of the points you were making when you talked about -- certainly in your initial submission, you suggested that a revised BSO should make efforts to support full deployment of mobile voice and broadband in rural and remote areas.

2081 And I just wanted to understand that when you were speaking of that, how you were suggesting -- how ubiquitous you were suggesting that should be. And in terms of -- I mean, everywhere it’s a very big place with very few people or everywhere there is a community and what sort of size of community would we be looking at in terms of your ask in that area?

2082 MS. SPINU: Again, I think one of the -- the fundamental challenge for Nunavut is one of backbone and the last mile infrastructure is sort of on top of it. And I think it will be a lot easier to provide these other services if there’s much more affordable backbone connectivity that doesn’t have limited capacity.

2083 So to provide mobile broadband, even SSI is deployment for connecting Canadians. They’re going to roll out wireless technology that will eventually be not just for fixed wireless residential internet access but also for mobile. And I think that’s a direction that we’re already moving in because people want that mobility.

2084 And if you’re going to have the -- I’m not expressing this well. There’s a ---

2085 COMMISSIONER MENZIES: Well, why don’t we -- because you’ve mentioned the backbone infrastructure area. You -- I mean you suggested -- you mentioned it a couple of times here. I’m curious, what do you want us to do about that?

2086 You mentioned in your submission there were -- you actually mentioned four areas for funding: open access transport, low income subsidy, broadband deployment to schools and community anchor institutions, and digital literacy.

2087 And I was unclear as to whether those should all be separate funds; they should all be funded from the same fund; or whether or not they should all be -- how those would interconnect with the national contribution fund. Would they be part of it? Would they be instead of it? Would they be in addition to it?

2088 Maybe you could help us understand that a little bit.

2089 MS. SPINU: So I think the first issue is higher capacity more affordable backbone connectivity, so that services are just more generous and more affordable to begin with.

2090 Those other funds in terms of low income, the schools, the digital literacy, I don’t necessarily think it’s entirely the responsibility of the CRTC to support those. I think, as I mentioned, there’s a role for the Territorial government. There’s a role for the Inuit organizations. And there’s a role that Nunavut has to play in making sure that people have access to and use the services.

2091 But the big challenge is improving the backbone. So whether that’s one upfront capital investment to support fibre and high throughput satellite in the Territory to bring in the infrastructure for that; whether it’s, you know, reoccurring funding, I think the model of reoccurring funding is one that works best for satellite, continued dependence on satellite, because you have these reoccurring operating costs.

2092 So I’m worried that if we go just down the route of okay, well, we’ll just cover these reoccurring costs, we’re never going to have the resources to actually make the big upfront capital investments to bring in fibre. And I think that that’s something that absolutely has to happen long term for Nunavut.

2093 COMMISSIONER MENZIES: And you articulated in your oral presentation there that the CRTC could play a leadership role in organizing all these various areas that have been working. And you mentioned the uncertainty in the past regarding funding and how it’s always -- it tends to roll out in terms of shifting governments and those sorts of things.

2094 So do you have a specific ask of us in terms of how we might help? Do you want ---

2095 MS. SPINU: A financial ask?

2096 COMMISSIONER MENZIES: Yeah, is there a specific ask there in terms of funding? Because as you said ---

2097 MS. SPINU: Well, I ---

2098 COMMISSIONER MENZIES: You mentioned open access transport. I mean these are all things you want.

2099 So I mean this is your chance to ask for it, right? So I mean -- and some of those asks historically have gone to other places, but this is -- there are many people coming in the next couple of weeks who are asking for things. You should not be shy about asking for what you want.

2100 MS. SPINU: Well, NBDC did a fibre feasibility study a number of years ago and the amount at that time, in 2012 dollars, was just over $1 billion for fibre in Nunavut. But I think one of the challenges is, you know, who’s going to build it? Who’s going to own it? What’s the governance model for it?

2101 And I think it’s one of the things I alluded to in the initial submission that there needs to be a discussion about what roles the Territorial government will have, what roles the Inuit orgs will have, what role the private sector will have in bringing this forward. So that -- I know the amount; it’s just who is going to do it?

2102 NBDC, non-profit, staff of one is not going to be ---

2103 COMMISSIONER MENZIES: So $1 billion would take fibre to Nunavut?

2104 MS. SPINU: Yeah.

2105 COMMISSIONER MENZIES: Right. Where to?

2106 MS. SPINU: In our study it would cover all the communities except Sanikiluaq, which would logically be served by fibre in Nunavik, but one of the discussions that's happening now between Nunavut, Nunavik, and Newfoundland and Labrador and Nunatsiavut is this idea of a regional fibre project, because you're not going to get fibre in Nunavut if it doesn’t pass by Nunavik or Newfoundland, and that's ---

2107 COMMISSIONER MENZIES: Okay, but there is a fibre line that goes down the east coast from Greenland to Newfoundland, right?

2108 MS. DANA: Yeah, Milton, but it doesn’t go up into Nunatsiavut.

2109 COMMISSIONER MENZIES: Right, okay. Thanks. So now, we've kind of touched on that.

2110 What would be the impact of the ubiquitous high-speed internet like that on the economic development in Nunavut? I mean, if we talk about funds as an investment, and it's -- I don't think anybody makes the argument that Nunavut really constitutes a market, but people are not just consumers, they are citizens as well and need to be respected as such.

2111 So how would you see if somebody -- if you're asking for a $1 billion, somebody could say, okay, what's going to be the -- some hard-nosed guy says, "What's going to be the return on my investment?"

2112 It doesn’t have to be dollars. It can be social, it can be economic. But could you give us some sense of what a difference that would make to Nunavut?

2113 MS. SPINU: So in parallel to the fibre feasibility study, NBDC commissioned a broadband socio-economic impact assessment and they quantified -- that study quantified some of the socioeconomic benefits. I don’t have that in front of me, at this moment, but in my head somewhere.

2114 We're talking about annually, you know, around 20, 30 million in GDP impact. You have 10, 20 million in revenues, 200 to 300 jobs. The Nordicity Study also looked at the socioeconomic impact of improved connectivity.

2115 So there have been studies that have really tried to quantify in dollars and in jobs and in quality of life when improved connectivity would be -- what the benefits of it would be.

2116 But I would say there's also some of the testimony in the public opinion focus groups in the recent report that the CRTC produced, you looked at the commentary from the lawyer based in Iqaluit who talked about not being able to fully service his clients because of telecommunications issues.

2117 You talked about the teacher that said, "Well, I can't assign online assignments because I know some of my kids don't have internet access."

2118 So that, I think, is less quantified, but equally important. Yes, there's the dollars and cents impacts and there are some hard numbers. And again, I could come back to you with our study and with the numbers from the Nordicity Study. But there's those other impacts that aren't being maybe not as easy to capture.

2119 COMMISSIONER MENZIES: Well, the recent federal budget targeted $8.4 billion in spending for Aboriginal and Northern investments, including 255 million for community infrastructure, of which broadband is a part. What impact do you think that will have?

2120 MS. SPINU: Nunavut has a massive infrastructure deficit from housing to waste water treatment to aging power plants. You name it. And I think putting broadband in the same group as those other core municipal needs doesn’t really do any service to broadband because people are not going to give up clean drinking water so they have better internet access.

2121 One of the issues with the infrastructure funding eligibility, as it stands right now, is that broadband is actually not an eligible project under the projects of national significance. I forget the exact name of the fund, but it's not -- at the provincial or the territorial level, it's an eligible project, but at the national level, it's not an eligible project.

2122 So if you look at this idea of a regional fibre that goes Nunavik, Nunavut, Nunatsiavut, that's a -- you know, it is a national project and it has possibility to have quite a bit of an impact in that region. But right now, it's not an eligible project under that funding.

2123 So the small pool of funding that's there that broadband is an eligible project for is already spoken for. The GN has already planned what they're going to do with that infrastructure funding and broadband is not in that mix.

2124 COMMISSIONER MENZIES: Thank you for clarifying that.

2125 So there's some of the interventions here, and I mentioned one yesterday, OneWeb, for instance, new technologies, low latency, low orbit, cluster satellite, satellite cluster.

2126 What are your thoughts on that as a possible solution, notwithstanding your position on fibre? That -- it doesn’t have to be that one, but there are similar -- there are other companies working on similar technologies with those low-orbit satellites, low latency, that claim to be the solution to everything.

2127 MS. SPINU: I think when it's operational it's a different story. I think right now it's in kind of development and testing phases. And I would say NBDC would never rule out any possible solution that could improve telecommunications services in Nunavut.

2128 But to put all of your hopes into new technologies that are not deployed yet without having parallel plans to advanced technologies that are deployed or could be deployed in the North would not be something that we would advocate for.

2129 COMMISSIONER MENZIES: Thanks.

2130 You asked us to address digital literacy as an issue. Why would it be appropriate for the CRTC to engage in that issue? Would not that be something for other people to be funding?

2131 MS. SPINU: I think the end goal of access is use. And there -- so I understand that the CRTC's mandate is perhaps predominately on the access side, to make sure that the services are there. But I think that it's important to make sure that demographics that are disadvantaged that may have access but don’t necessarily use it, that there's outreach to make sure that they do have the skills to take advantage of the connectivity.

2132 Whether it's uniquely the CRTC's responsibility or whether other parties have a role, yes, I absolutely agree that other parties have a role. There's a role for the territorial government in that.

2133 But I think it should be on the Commission's radar as something that you say we want to improve the access, but we also want to see that there is use that comes out of it, that there's adoption, and that segments of the population that are not taking advantage of the connectivity have the means to do it.

2134 COMMISSIONER MENZIES: Thank you very much. Those are my questions. My colleagues may have some to follow up.

2135 THE CHAIRPERSON: You were apparently very clear. We have no further questions for you. Thank you very much.

2136 MS. SPINU: Thank you.

2137 THE CHAIRPERSON: Madame la secrétaire.

2138 LA SECRÉTAIRE : Merci. J’inviterais maintenant monsieur Paul Germain à s’approcher.

2139 S’il vous plaît, présenter vos collègues et vous pouvez débuter.

2140 Vous devez appuyer sur votre micro au milieu pour l’activer. Parfait.

PRESENTATION

2141 M. GERMAIN : Merci.

2142 Je vous présente Pierre Daigneau à ma droite, Mathieu St-Jean à ma gauche et moi-même, Paul Germain. Nous sommes les représentants du Renouveau Prévostois, qui est un parti politique municipal.

2143 Nous sommes ici aujourd’hui comme citoyens ordinaires, novices en matière de technologie touchant internet et ignorant du droit des communications, mais désireux que notre ville, desservie dans son ensemble par -- soit desservie dans son ensemble par un service d’internet à large bande, efficace et abordable.

2144 Notre cas; notre ville abrite 13,000 personnes et s’appelle Prévost. Elle est située à seulement 50 kilomètre au nord de Montréal.

2145 Depuis une dizaine d’années, 80 pourcent de son territoire est couvert par internet à large bande. Cependant, 20 pourcent de sa population, soit environ 2500 personnes réparties sur 3 kilomètres carrés, ne bénéficient pas d’un service internet à haute vitesse, fiable à un prix abordable.

2146 Vous trouverez dans notre mémoire plus de détails sur le territoire visé.

2147 Actuellement dans ce quartier, Bell Canada fournit la téléphonie et un câblodistributeur qui s’appelle East Link fournit quelques postes de télévision, mais aucun ne fournit internet à haute vitesse bien que East Link utilise des câbles numériques.

2148

2149 D’autres petites sociétés ou individus fournissent un service internet entre 2 et 6 mégabits par Wi-Fi, sur un territoire montagneux et boisé.

2150 Inutile de dire que ces services sont inadéquats. II est de même pour la couverture cellulaire.

2151 II y a 10 ans nous pensions que cela n’était qu’une question de temps pour avoir internet haute vitesse, mais voilà que nous sommes en 2016 et rien ne bouge.

2152 Je ne vous rappellerai pas l’importance d’internet à large bande pour l’économie des régions. Par ailleurs, ce qui est nouveau maintenant c'est l’utilisation de l’infonuagique dans l’éducation de nos enfants.

2153 Par exemple, ma fille de 15 ans doit utiliser maintenant Google Classroom pour faire ses travaux. Nous nous retrouvons donc dans la même ville, dans la même communauté à avoir 2 sortes d’étudiants: ceux qui ont la haute vitesse et ceux qui ne l’ont pas.

2154 Cela n’a aucun sens, que nos jeunes au Canada n’aient pas les mêmes chances de réussir.

2155 Comme citoyens, nous constatons que les grandes entreprises privées ne sont pas intéressées a fournir un service dans ce secteur de Prévost.

2156 Faut-il rappeler que nous ne sommes ni en milieu rural ni en région éloignée, que 80 pourcent de la ville est déjà desservie par internet haute vitesse depuis plus de 10 ans.

2157 Les politiques passées -- sur la concurrence et les forces du marché pour fournir les services de télécommunications aux Canadiens ont à notre avis échoué. Tout de moins à Prévost ça l’a été un échec.

2158 Le budget du ministre Moreau prévoit 500 millions pour l’internet à large bande. Nous nous interrogeons sur l’efficacité de cet apport d’argent neuf dans un contexte où l’entreprise privée n’a que très peu d'obligation à servir les territoires moins rentables.

2159 Ce demi-milliard risque de se transformer en subvention déguisée aux grandes entreprises de télécommunication et échouer a rendre accessible internet haute vitesse à des petits marches comme Prévost.

2160 Nos souhaits; nous souhaitons que le CRTC établisse de nouvelles règles contraignantes, qui auront comme conséquence de rendre disponible internet à large bande partout au Canada et si nécessaire le Ministre du Patrimoine devrait établir des politiques dans ce sens.

2161 Idéalement les entreprises de téléphonie et de câble devraient être obligées de fournir un service internet à large bande d'au moins 10 mégabits pour avoir le droit de fournir leur service de base.

2162 Si l’imposition de telles politiques n'est pas possible à court terme, nous pensons qu'une partie de la solution passe par la prise en charge du service internet à large bande par les communautés locales, soit en partenariat public-privé, soit sous la forme de coopérative ou par des organismes para municipaux.

2163 Pour ce faire, les communautés locales qui n’ont pas internet à large bande doivent avoir des outils pour prendre en mains leur service.

2164 Elles doivent avoir accès gratuitement aux poteaux des services des entreprises publiques. Elle doit avoir accès à des subventions. Elles doivent avoir accès à une aide tant juridique que technique.

2165 C'est pourquoi nous proposons la création d’un bureau d'aide aux communautés locales pour le développement du réseau internet. Cet organisme pourrait relever soit du CRTC ou de Patrimoine Canada.

2166 Grâce à cette aide, les communautés locales pourront faire les bons choix pour fournir internet à leurs citoyens.

2167 II est faux de prétendre que les communautés locales feront de la concurrence déloyale aux entreprises privées, car les communautés locales ne feront que fournir le service que les sociétés privées refusent de leur servir.

2168 Je le répète, nous ne sommes pas des experts, nous sommes des citoyens ordinaires, mais convaincus que le CRTC et les communautés locales doivent avoir les moyens pour internet à large bande partout au Canada. Merci.

2169 LE PRÉSIDENT: Merci pour votre intervention. Donc je vais commencer avec quelques questions.

2170 Si je comprends bien la situation de votre municipalité, c’est une municipalité qui à un certain moment donné avait une vocation plus de législature(Ph) et puis maintenant c’est vraiment rendu beaucoup plus résidentiel avec étalements urbains de Montréal, Laval et de la zone de St-Sauveur; n’est-ce pas?

2171 M. GERMAIN: Tout à fait.

2172 LE PRÉSIDENT: Et que d’ailleurs, si je ne m’abuse, en regardant des statistiques il y a eu une -- en ’98 c’était à peu près 8,000 habitants puis là vous êtes rendus au-delà de 13,000, donc c’est une communauté qui a grandie très rapidement.

2173 M. GERMAIN: Tout à fait.

2174 LE PRÉSIDENT: Utilisez votre micro comme ça la transcription peut capter.

2175 M. GERMAIN: Effectivement on est passé de 8,000 à 13,000.

2176 LE PRÉSIDENT: En ce qui a trait au moment où on se parle de -- des services de téléphonie, vous avez mentionné que vous obteniez les services largement de Bell Canada j’imagine?

2177 M. GERMAIN: Dans le secteur dont on parle-là c’est Bell Canada.

2178 LE PRÉSIDENT: D’accord.

2179 M. GERMAIN: Dans les autres secteurs c’est -- il y a -- il y a de la concurrence. Il y a Vidéotron, Bell ---

2180 LE PRÉSIDENT: Mais le titulaire d’origine était Bell Canada; c’est ça?

2181 M. GERMAIN: Effectivement.

2182 LE PRÉSIDENT: Et est-ce que les gens n’ont pas accès à travers Bell d’un certain service internet?

2183 M. GERMAIN: Je vais laisser Pierre répondre à cette question-là.

2184 M. DAIGNEAU: C’est un service de base tout simplement par -- on n’a pas la fibre optique, tout simplement par le fil de cuivre, comme on appelle.

2185 LE PRÉSIDENT: Oui.

2186 M. DAIGNEAU: Donc on est presqu’à l’ancienne technologie-là des modems à basse vitesse. C’est impossible -- le réseau est tellement vieux de téléphonie, que Bell nous dit écoute on ne peut pas offrir un service convenable.

2187 LE PRÉSIDENT: Et quelle genre de vitesse que les gens sont capable d’obtenir à travers le réseau?

2188 M. DAIGNEAU: Ah ils vont atteindre une vitesse-là -- une vitesse de 2 megs, 3 megs-là. Pas plus que ça là.

2189 LE PRÉSIDENT: D’accord. Puis ça c’est j’imagine quand qu’il il y a -- à certaines périodes de la journée; c’est ça?

2190 M. DAIGNEAU: C’est ça.

2191 LE PRÉSIDENT: Qu’en est-il du -- des services sans fil? Est-ce que vous êtes -- je sais que c’est une région peut-être accidentée, donc parfois c’est un petit peu plus difficile là mais est-ce que il n’y a-t-il pas des fournisseurs de service sans fil?

2192 M. DAIGNEAU: Effectivement les services sans fil sont disponibles.

2193 Moi ça fait 35 ans que j’habite le secteur et j’ai été le pionnier, si vous voulez, essayer premièrement la connexion par satellite, qui était quand même acceptable, mais pas de vitesse.

2194 On appelait ça du temps partagé. Alors si il y avait plusieurs personnes sur le réseau on était obligé de partager, le time-sharing comme on appelle.

2195 LE PRÉSIDENT: O.k.

2196 M. DAIGNEAU: Est arrivé après ça un service par la compagnie qui s’appelle -- excusez-moi j’ai un blanc.

2197 M. GERMAIN: Xplornet.

2198 M. DAIGNEAU: Xplornet.

2199 LE PRÉSIDENT: O.k.

2200 M. DAIGNEAU: Et eux -- à ce moment-là eux offre un service de connexion Wi-Fi comme -- excusez le terme anglais.

2201 Et j’ai -- on a une vitesse relativement acceptable. Je peux atteindre des pointes de 30 mégahertz facilement. Sauf que le coût c’est 150$ par mois.

2202 Alors au niveau concurrentiel, si on prend juste à cinq kilomètres de chez moi, qui est le centre-ville où est-ce qu’ils peuvent avoir le service par Vidéotron pour 40$, 50$, 60$, on est réellement défavorisé.

2203 Et je vous dis que le service Wi-Fi ça fonctionne bien mais il ne faut pas qu’il y ait trop de feuille, il ne faut pas qu’il y ait de vent, il ne faut pas qu’il y ait d’envolée d’oiseaux. Ce n’est réellement pas stable.

2204 LE PRÉSIDENT: D’accord.

2205 Je me suis mal exprimé, mais vous avez répondu à une question que j’étais pour avoir parce que vous parliez du service sans fil fixe.

2206 M. DAIGNEAU: Oui.

2207 LE PRÉSIDENT: Moi je vous posais la question par rapport au service sans fil mobile, que ça soit par ---

2208 M. DAIGNEAU: Le service mobile c'est pas beaucoup mieux. Effectivement, j’ai une vitesse -- je suis obligé d’avoir mon service mobile aussi en même temps et y a pas de stabilité là-dessus. J’atteindrai pas une vitesse-là maximum 10 mégabits. C’est difficile d’avoir beaucoup plus ---

2209 LE PRÉSIDENT: Puis au Lac Renaud, je pense qu’il y a une partie où ça rentre pas du tout.

2210 Donc si je vous comprends bien, y a des fournisseurs mais vous n’êtes pas satisfaits à la fois du coût et de la vitesse.

2211 M. DAIGNEAU: La stabilité surtout.

2212 LE PRÉSIDENT: De la stabilité. Donc c'est pour ça vous parler de fiabilité.

2213 M. DAIGNEAU: Exactement.

2214 LE PRÉSIDENT: À votre avis, quelle serait la vitesse acceptable?

2215 M. GERMAIN: Ben nous on pense que ça soit pour Prévost mais pour tout le Canada, il faut pas faire un nivellement par le bas. Je pense qu’on est rendu à 10 mégabits. Je pense que 5 mégabits c'est dépassé. Que ça soit pour Prévost ou le Nunavut, je pense qu’il faut avoir que c'est un minimum 10 mégabits.

2216 LE PRÉSIDENT: Et pour quelle raison 10 plutôt que 8 ou 12? Quelle est votre analyse? Je sais pas si vous avez eu la chance d'examiner ce qu’on avait déposé hier. Le CRTC avait déposé une pièce numéro 1 juste pour pouvoir mieux se comprendre sur les applications, les utilisations. Peut-être la secrétaire peut vous en fournir une copie.

2217 Quant à la vitesse requise, donc je voulais savoir peut-être si vous avez fait une analyse pourquoi 10 plutôt que d’autres basées sur les utilisations qui se font dans vos régions?

2218 M. GERMAIN: O.k. Moi je trouvais que -- on n’a pas fait d’analyse approfondie comme telle mais qu’on trouvait que 5 et en bas de 5, on se retrouvait justement avec des services WIFI instables et tout ça. Je pense qu’en allant vers 10, ça nous amène vers la fibre optique, le cable, des technologies plus stables, plus -- malheureusement, on n’a pas eu ce document-là.

2219 LE PRÉSIDENT: Oui, mais ça donne une indication le genre de vitesse dont on a besoin pour certaines applications et des fois on pense qu’ils nous en faut plus pour obtenir certaines applications.

2220 M. DAIGNEAU: Malgré, si vous me permettez d’intervenir, moi je fais du support informatique chez mes clients. C'est du support en bureautique mais j’utilise des logiciels pour communiquer et avec une vitesse de 5 ou quoi que ce soit, c'est pas acceptable. Les délais d'attente sont pas acceptables. Si on parle de vidéoconférence non plus, 5 mégabits ça fonctionne pas bien. C'est réellement là déplaisant comme pour l’utilisation.

2221 LE PRÉSIDENT: Et ça c'est des clients résidentiels ou d’affaires?

2222 M. DAIGNEAU: D’affaires.

2223 LE PRÉSIDENT: D’affaires. Donc y a peut-être une question séparée que j’étais pour vous poser parce qu’on parle souvent des besoins dans une communauté par rapport aux besoins résidentiels et vous identifiez une vitesse de 10. Est-ce que votre point de vue est que, à 10, ça répondrait aussi aux besoins d’affaires?

2224 M. DAIGNEAU: C'est que je fais -- on parle d’affaires mais je fais du support à des individus, à des personnes. Alors, si la personne n’a pas une vitesse acceptable de son côté, j’ai beau avoir un gros débit de mon sens, ça fonctionnera pas mieux. Donc il faut avoir -- essayer d'uniformiser cette possibilité de vitesse-là.

2225 LE PRÉSIDENT: D’accord. Vous avez mentionné une vitesse pour le téléchargement. Est-ce que vous avez un point de vue sur le téléversement?

2226 M. DAIGNEAU: Pour téléchargement, actuellement avec le service que j’ai qui est dispendieux, le téléchargement je fonctionne moi souvent entre 10 et 20. Le téléchargement, ça va très bien. Mais quand j’étais par satellite, l’autre service offert, ça c'était pas acceptable. Si par téléchargement par téléphonie parce qu’encore une fois le réseau cellulaire 4G ne se rend pas bien chez nous, alors c'est très difficile de télécharger quoi que ce soit.

2227 Si on parle d'une vidéo ou -- un document simple, ça va très bien mais dès qu’on parle de vidéo, dès qu’on parle de YouTube et compagnie-là, rien qui fonctionne adéquatement sur le cellulaire.

2228 LE PRÉSIDENT: Je comprends votre position par rapport au téléchargement que la norme actuelle du Conseil c'est 5. Donc je pose la question sur le téléversement, dans l’autre direction, que la norme actuelle est 1. Je me demandais si le téléversement nécessitait peut-être une norme différente.

2229 On a entendu parler, et j’aimerais avoir votre point de vue, les utilisations que les Canadiens peuvent faire de leur service internet surtout s’ils ont -- qu’ils sont propriétaires de petites entreprises à la maison, parfois ils ont besoin d’une vitesse de téléversement supérieure.

2230 M. DAIGNEAU: Je m’excuse. Je vous ai mal entendu. J’ai des problèmes d’audition.

2231 LE PRÉSIDENT: Comme on dit en chinois, le « upload ».

2232 M. DAIGNEAU: Oui.

2233 LE PRÉSIDENT: Est-ce que vous avez un point de vue sur la vitesse idéale pour le « upload »?

2234 M. DAIGNEAU: Encore une fois, je suis pas un spécialiste au niveau de la vitesse des communications mais c'est un domaine où est-ce qu'on devrait avoir aussi un minimum de 10 à mon avis pour être capable d’avoir quelque chose qui a du sens.

2235 Et évidemment, là on est en 2016. Qu'est-ce qui va se passer dans cinq, six, 10 ans, toute la technologie, toute la radio et la télédiffusion est en train de changer. Les gens sont en train de regarder la télé par satellite ou par internet. Alors, qu'est-ce que ça va être dans 10 ans, je peux pas vous prévoir l'avenir.

2236 LE PRÉSIDENT: Ben on a discuté un peu l’enjeu de la vitesse. Qu’en est-il de la capacité des données? Je pense vous étiez là lorsqu’on a discuté avec les intervenants tout à l’heure que, en matière de capacité de données, on entend des commentaires qu’après -- même si on aurait la vitesse, après quelques jours, les gens atteignent leur limite de capacité et donc y a des frais supplémentaires pour aller chercher de la capacité supplémentaire. Et je me demandais si du point de vue des Prévostois si ils ont une problématique particulière concernant les -- pour nous aider à mieux décider quelle serait la capacité des données idéale?

2237 M. DAIGNEAU: Au niveau des capacités, je dois avouer j’ai une bonne entente avec mon fournisseur où est-ce que j’ai un accès presqu’illimitée au niveau des données mais il arrive un phénomène d’étranglement où est-ce que même le réseau s’il m’offrait la capacité de data, il arrive que si tout le monde est branché en même temps, là on arrive à une certaine limitation où est-ce que la vitesse de téléchargement est réduite. Alors, même si je voulais télécharger 24 heures sur 24, je pourrais pas avoir une vitesse stable et avoir un téléchargement-là satisfaisant.

2238 M. GERMAIN: Monsieur St-Jean voudrait rajouter un petit mot.

2239 M. ST-JEAN: Bonjour. Donc si je comprends bien, votre grande question en ce moment c'est de donner une donnée, donner un juste milieu sur le « upload » puis le « download » d’internet puis des bandes passantes sur cellulaire. C'est ça?

2240 LE PRÉSIDENT: Notamment.

2241 M. ST-JEAN: Notamment. Donc vous, est-ce que vous avez une famille? Sûrement. Vous avez des enfants, des petits-enfants ou quoi que ce soit. Sûrement les gens autour de la table et aussi dans la salle ont des familles. Aujourd'hui, les jeunes à l’école apprennent le fonctionnement de l’internet plus rapide que ma génération à moi. Ils savent utiliser les iPod puis les iPhone assez rapidement et je vais vous garantir que ça coûte cher de facture.

2242 Et la question est où est-ce qu’on veut aller avec ça? C’est pas les compagnies qui ont déterminé déjà cette base pour l’offrir à leur clientèle et où est-ce que nous on devrait dire où est-ce qu'on voudrait élargir ça au maximum. Si j’ai bien compris, c'est un peu le sens que vous en allez là.

2243 LE PRÉSIDENT: Ben c'est parce qu’on entend beaucoup de commentaires par rapport à la vitesse, qui est bien. Mais on tente aussi d’explorer si on est pour avoir un service de base minimal, c'est pas qu’une question de vitesse, y a aussi une question de capacité et l’enjeu connexe c'est l’abordabilité.

2244 M. ST-JEAN: L’abordabilité. Le document qui a été -- qui nous a été remis c'est un document qui a été créé par le CRTC, qui est une analyse du CRTC?

2245 LE PRÉSIDENT: Oui, c'est ça. C'est notre rapport annuel.

2246 M. ST-JEAN: Donc, vous, vous évaluez que -- de la lecture rapide que j’ai eue, corrigez-moi au besoin. Donc la moyenne des gens en ce moment au Canada utilise 5 mégabits. C'est ça?

2247 LE PRÉSIDENT: Non, c'est pas -- le document ne tente pas de décrire ce que les gens utilisent mais les vitesses qu’on préconise seraient utilisées et donc c'est un enjeu plus de vitesse. Puis je pense que je vous ai entendu assez sur la question de la vitesse-là. J’essayais de voir si vous avez un point de vue sur la capacité des données.

2248 M. ST-JEAN: La capacité du « upload ». Aujourd'hui avec les jeux vidéo, le transfert de données est très important, ce qui donne la rapidité aussi -- la rapidité de, comment dire, sur le jeu vidéo de réagir. Donc si votre upload et download n’est pas assez adéquat, on appelle ça du lag en jargon, donc vous avez un lag dans le jeu.

2249 Donc -- et les jeux en ligne présentement c’est une communauté, donc si moi je lag je fais lagger tout le monde.

2250 Donc c’est l’importance au niveau -- au niveau des transferts de données, au niveau résidentiel, beaucoup de gens qui s’en vont sur les jeux en ligne.

2251 Surtout avec les Xbox Live ou juste avec l’ordinateur il y en a encore beaucoup, mais avec Xbox Live, avec PlayStation et tous les jeux en ligne ça augmente.

2252 Donc beaucoup de gens vont aller sur une -- beaucoup de jeunes gens ou dans notre âge plus que d’autre chose, vont aller sur une bande plus rapide.

2253 Moi mon ami a pris le maximum qu’il pouvait offert par Vidéotron. Donc je pense c’est limité en mégabits upload et download, donc il y a une bande passante avec 15 mégabits.

2254 Donc je pense même il a été obligé d’aller sur le -- sur le forfait d’entreprise pour pouvoir avoir accès à ce genre de -- parce que lui il fait beaucoup de jeux vidéo, donc c’est à ce niveau-là.

2255 C’est surement un segment infime de la population présente, mais comme que je dis avec les écoles qui commencent de plus en plus à aller sur les outils internet ça va devenir une grande demande.

2256 Donc aller à un minimum de 10 mégabits je crois que c’est acceptable autant pour le upload que le download là; personnellement.

2257 LE PRÉSIDENT: Vous comprendrez que des gens qui observeraient notre conversation se poseraient la question, peut-être n’a-t-il pas une différence à faire entre obtenir des capacités, puis des vitesses pour pouvoir jouer des jeux vidéo d’une part et peut-être des besoins socio-économiques, autre par rapport à l’éducation, la santé, le développement économique?

2258 M. ST-JEAN: Oui, si on y va sur ce niveau-là j’en crois que au niveau privé il y a beaucoup en plus de logiciel qui existe aussi sur le marché, qui nous permet de nous aider dans la vie de tous les jours.

2259 Juste comme ça, quand vous essayez d’avoir des enfants maintenant les femmes vous avez un logiciel qui vous permet de savoir quand est-ce c’est le bon timing, mais toutes ces données-là doivent passer sur la bande autant upload que download.

2260 Au niveau des entreprises ou juste si on y va au niveau bureaucratique, toutes les hôpitaux maintenant, tous les services ministériels transites par internet ou presque, sinon ils sont en train de le faire.

2261 Donc au niveau de la bande passante du download qui est trop -- à moi trop -- pas assez grande, on va aller dans l’autre sens, ça va causer un problème éventuel, c’est sûr et certain.

2262 Dans le future proche, surtout avec la technologie qui augmente de plus en plus. Si on va se tenir à un niveau mondial quand même assez équilibré, ça va être quelque chose à faire effectivement.

2263 LE PRÉSIDENT: Bon vous avez mentionné que il y a quand même des fournisseurs qui opèrent dans le -- dans la région, dans une partie de la région. Vous mentionnez Bell, vieille technologie; Vidéotron, bonne technologie, mais qui ne se rend pas.

2264 Pouvez-vous m’expliquer quelle a été la nature de vos conversations avec ces fournisseurs-là, parce que de toute évidence vous avez eu des conversations avec ces fournisseurs pour étendre leur distribution à travers le territoire au complet.

2265 M. GERMAIN: Au niveau municipal il y a des démarches qui ont été faites avec Bell Canada, mais on n’a pas de nouvelle comme telle, nous comme citoyens, de qu’est-ce qui se passe à ce niveau-là.

2266 On a eu des rencontres avec un des fournisseurs qui est fourni par Wi-Fi. Lui il était prêt à élargir son réseau sauf que il y avait de la difficulté-là. Il aurait fallu qu’il enfouisse ses fils de fibre optique.

2267 LE PRÉSIDENT: D’accord.

2268 M. GERMAIN: Et il y a des ---

2269 LE PRÉSIDENT: Mais par rapport au service filaire, donc Vidéotron, Bell, East Link, vous êtes -- vous vous n’avez pas accès à la -- c’est la municipalité qui a faite des démarches et vous n’avez pas une fenêtre dans ces discussions?

2270 M. GERMAIN: Il y a une rumeur qui dit que East Link a acheté le réseau de l’ancien fournisseur avec une clause à l’effet qu’il ne pouvait pas vendre à Vidéotron, mais on -- ça reste au niveau de la rumeur fait qu’on ---

2271 LE PRÉSIDENT: D’accord.

2272 M. GERMAIN: Du ouï-dire.

2273 LE PRÉSIDENT: Et donc à votre avis les forces du marché ne suffissent pas pour atteindre les objectifs des citoyens de Prévost?

2274 M. GERMAIN: Bien effectivement je pense qu’on est relativement proche de Montréal normalement d’une banlieue de Montréal il devrait avoir de l’internet haute vitesse partout.

2275 On s’interroge; on a regardé les forces du marché agir depuis 10 ans. On se disait ça va être bientôt, ça va être bientôt, mais on est rendu en 2016. Ça va être quand?

2276 Est-ce qu’il faut -- si eux veulent pas le faire bien peut-être que nous on pourrait le prendre en charge, mais par où on commence? Comment qu’on fait?

2277 Si Vidéotron -- si le CRTC ne veut pas réajuster le tir avec des normes plus contraignantes je peux comprendre pourquoi. Il y a surement plein de raisons.

2278 Mais c’est un peu frustrant pour la population de ce secteur là de Prévost-là qui voit leur valeur de propriété diminuer. Ça nui à leur -- pour leurs enfants, ça nui à ceux qui ont des commerces. Fait que c’est un peu frustrant là.

2279 LE PRÉSIDENT: Oui, oui. Non, non, je ne veux pas nier votre frustration.

2280 M. GERMAIN: C’est comme on est à côté du gâteau, mais on ne peut pas le prendre.

2281 LE PRÉSIDENT: C’est clair qu’il y a une frustration.

2282 Avez-vous faites -- vous avez mentionné il y a des programmes de divers paliers de gouvernement, soit fédéral ou provincial. Est-ce qu’à votre connaissance Prévost a fait des demandes pour obtenir des subventions?

2283 M. GERMAIN: La -- non, à notre -- bien en fait non ils n’ont pas fait de demande.

2284 LE PRÉSIDENT: Donc vous avez connaissance et non ils n’ont pas fait de demande?

2285 M. GERMAIN: Bien écoutez, la dernière fois qu’on a parlé avec le maire à ce niveau-là il nous a dit qu’il avait eu une conversation avec Vidéotron en 2010.

2286 Fait que on ---

2287 LE PRÉSIDENT: Ça remonte à il y a quelques années quand même.

2288 M. GERMAIN: Oui, c’est ça.

2289 LE PRÉSIDENT: D’accord.

2290 Vous préconisez dans votre présentation d’un modèle ou ça serait la municipalité ou une filiale de la municipalité, qui pourrait offrir des services à large bande.

2291 C’est d’ailleurs un modèle qui existe ailleurs.

2292 M. GERMAIN: M’hm.

2293 LE PRÉSIDENT: Et je me demandais quelles était les barrières que vous voyez à ce que ce déploiement-là ou cette stratégie-là représente?

2294 M. GERMAIN: Écoutez juste -- excusez-moi.

2295 LE PRÉSIDENT: Oui.

2296 M. GERMAIN: Juste pour comprendre, bon moi je suis notaire de profession. J’ai quand même -- je sais quand je suis allé lire les lois habilitantes du CRTC j’ai lu quelques décisions.

2297 Bon peut-être parce que je suis de tradition civiliste puis on est dans le Common Law, mais juste avoir une photo de la situation au niveau juridique c’est extrêmement complexe.

2298 LE PRÉSIDENT: M’hm.

2299 M. GERMAIN: Et -- puis il y a tout le -- donc il y a le côté juridique que je trouve qui est par où qu’on -- qu’est-ce qu’on a le droit de faire, qu’est-ce qu’on peut faire, c’est quoi les droits de la compagnie East Link ou de Bell en ce moment.

2300 Donc c’est dans ce sens-là qu’on se disait que ça prendrait, soit que le CRTC ou Patrimoine Canada, fournisse un bureau d’aide aux communautés locales qui voudraient prendre en main leur service internet, puis plus attendre après l’entreprise privée.

2301 LE PRÉSIDENT: Je comprends, mais ce que je -- et puis je réalise là qu’il y a une certaine complexité, mais le Conseil a -- particulièrement du côté des télécommunications on octroi pas de licence comme telle. Une porte assez ouverte pour ceux qui veulent se lancer dans un modèle de concurrence.

2302 J’imagine -- puis je n’ai pas posé la question, puis c’est à vous de vérifier là, parce que moi non plus je ne suis pas un expert en loi de cité civile, mais présumément les municipalités au Québec ont le droit d’établir des corporations pour offrir des services de large bande, mais il s’agirait de se lancer.

2303 Je me demandais quelle était la barrière autre que les connaissances du secteur?

2304 M. GERMAIN: Bien on se demandait entre autre actuellement il y a East Link -- une des barrières c’est les poteaux. Il faut accrocher nos fils quelque part; o.k.?

2305 Et ça c’est une des barrières principales.

2306 LE PRÉSIDENT: C’est peut-être une chose que vous ne connaissez pas, mais j’ai remarqué que vous avez demandé gratuitement, mais il y a des tarifs pour avoir accès aux poteaux de -- on appelle ça des poteaux de téléphone, souvent ce n’est pas des poteaux de téléphone-là.

2307 M. GERMAIN : Oui.

2308 LE PRÉSIDENT: C’est des poteaux hydro ou --

2309 M. GERMAIN: M’hm.

2310 LE PRÉSIDENT: -- ou autres, mais le fait demeure que des compagnies peuvent, si vous payez le tarif, doivent même, vous donner accès si vous rencontrez les obligations du tarif.

2311 M. GERMAIN: Oui, mais ce qu’on nous a dit c’est que c’était -- parce qu’on a discuté avec un des fournisseurs de Wi-Fi, puis lui il semblait nous dire que à partir de -- du moment où payait le tarif c’était comme plus rentable-là.

2312 M. DAIGNEAU: C’est ça. Le coût -- le coût -- le coût de location devient exorbitant pour un petit fournisseur et c’est là qu’un moment donné il ne peut pas rentabiliser l’entreprise, de nous fournir le service.

2313 LE PRÉSIDENT: Mais c’est une filiale d’une municipalité j’imagine que ce n’est pas un motif de profit, donc la rentabilité ne tient pas -- on en tient pas compte autant que le service public?

2314 M. DAIGNEAU: C’est ça mais il faut constater qu’actuellement nous ne sommes pas à la tête de la municipalité.

2315 On est -- on vient de fonder un parti il y a à peu près six mois. C’est un de nos objectifs.

2316 Alors on n’a pas toutes les contraintes. On ne peut pas gérer tout ça sans être -- sans être au pouvoir.

2317 LE PRÉSIDENT: Oui.

2318 M. DAIGNEAU: O.k., on a beau vouloir faire des comités ou quoi que ce soit, on n’est pas entendu.

2319 Alors c’est pour ça que notre démarche était de -- le fournisseur de câble, si la CRTC pouvait forcer un fournisseur de câble télé d’offrir le service internet, est-ce qu’il y aurait une réglementation qui pourrait forcer ça? Ça règlerait le problème.

2320 LE PRÉSIDENT: Ce que vous cherchez plus c’est le déploiement plus grand du -- des réseaux existants --

2321 M. DAIGNEAU: Exactement.

2322 LE PRÉSIDENT: -- qui desservent une partie du territoire, mais pas le cœur-là, si je comprends bien?

2323 M. DAIGNEAU: C’est ça.

2324 Parce que la compagnie East Link offre le service internet dans bien des régions, mais chez nous ils ne sont pas intéressés.

2325 Peut-être à cause de la distance de chacune des résidences. Il y a un coût à aller là-dessus.

2326 Ils ne sont pas -- ils ne sont pas obligés d’offrir le service qu’il ne devrait pas. Si un fournisseur de télé par câble devrait au moins fournir un service internet, le CRTC pourrait -- ou soit par moyen de subvention ou par moyen de réglementation. C’est ce qu’on cherche à savoir.

2327 LE PRÉSIDENT: D’accord. Je comprends. Je comprends bien.

2328 Vous savez qu’il y a des représentants de diverses compagnies dans la salle? Peut-être vous pouvez prendre l’occasion de discuter avec eux pendant que vous êtes là? Certains des fournisseurs vous avez mentionné.

2329 M. ST-JEAN: Si vous me permettez juste de rajouter un dernier point là-dessus.

2330 LE PRÉSIDENT: Oui.

2331 M. ST-JEAN: C’est ce qui arrive -- ce qu’on peut remarquer en réalité, ce qui arrive, c’est que les compagnies vont chercher le maximum qu’ils peuvent aller dans une région de leur clientèle.

2332 Par la suite il y a des -- il y a des secteurs qui sont peu ou pas couvert pour 20 milliard de raison faites par les compagnies, que ce soit pour la location de poteaux.

2333 Exemple, moi j’ai déjà une rue qui s’est fait dire ça va coûter 6,000$ en poteaux, si vous voulez payer nous on vous installe. Donc c’est un peu ces problématiques là qui arrivent.

2334 C’est toujours -- c’est à eux de fournir -- oui, je comprends compagnies, et cetera, profit versus tout le reste de la patente, mais éventuellement le citoyen en est pénalisé et ça je ne crois pas que ce soit un phénomène unique à Prévost. Je crois que c’est un phénomène qui est surement à la grandeur du pays.

2335 Donc est-ce que le CRTC peut faire quelque chose pour ces gens-là, qui dans des secteurs où le déploiement a été effectué, mais que dans un tiers ou une partie du pourcentage du reste de la population, parce que ils sont trop loin du reste du central il n’ont pas le service adéquat.

2336 LE PRÉSIDENT: M’hm.

2337 M. ST-JEAN: C’est là peut-être la question qu’on voudrait savoir, si le CRTC a un pouvoir sur le marché pour dire au marché, au gens de la -- des compagnies qui sont ici, est-ce que vous pouvez faire de quoi en réalité ou non.

2338 LE PRÉSIDENT: Et c’est définitivement un enjeu qui est devant nous. C’est l’obligation de déploiement du réseau dans la mesure que y’a l’obligation de fournir ce service-là et bien voilà.

2339 Et puis, bon, je comprends par contre que si ils sont à l’extérieur de l’obligation stricte, telle qu’elle existe, ils doivent considérer la densité linéaire de la population et les coûts de déployer un nouveau réseau.

2340 Par contre, si je vous comprends bien, vous êtes une communauté qui augmente en population et donc il y a peut-être une opportunité d’affaire-là pour certains.

2341 M. ST-JEAN: Oui, puis le secteur qu’on parle c’est un secteur qui est là depuis longtemps. C’est les vieux chalets qui sont en train de se faire un peu renipper. Excusez mon anglicisme-là, avec mon français.

2342 LE PRÉSIDENT: M’hm. On parle de combien là? Parce que on a parlé de la population globale de 13,000, mais pour le secteur dont vous parlez de la population (inaudible)?

2343 M. GERMAIN: C’est environ 2,500 personnes-là ---

2344 LE PRÉSIDENT: Personnes?

2345 M. GERMAIN: Oui, personnes.

2346 LE PRÉSIDENT: Ça nous indiques-tu -- o.k.

2347 M.GERMAIN: Oui.

2348 LE PRÉSIDENT: Très bien. D’accord. Merci.

2349 M. ST-JEAN: Merci.

2350 LE PRÉSIDENT: Ce sont mes questions je crois. Je vérifie avec mes collègues? Non?

2351 Non plus. Merci beaucoup pour votre participation.

2352 On va prendre une courte pause pour -- de matinée, pour une -- 10h23. On va revenir à 10h40, 10:40. Thanks.

--- Upon recessing at 10:24 a.m.

--- Upon resuming at 10:43 a.m.

2353 LE PRÉSIDENT: À l’ordre s’il vous plaît. Order, please.

2354 Madame la secrétaire?

2355 THE SECRETARY: We will now here the presentation of SSi Group of Companies.

2356 Please introduced yourself and your colleagues and you have 15 minutes.

PRESENTATION

2357 MR. PHILIPP: My name is Jeff and I am the founder and CEO of SSi Micro. Joining me on the panel today are, to my right, Dean Proctor, SSi’s Chief Development Officer, and Johanne Lemay, co-president of Lemay-Yates. To my left is Chris Fraser, also a development officer with SSi.

2358 In addition, SSi team members in Yellowknife, Kanata, Nova Scotia, BC, and even Nunavut are watching the proceedings thanks to broadband internet.

2359 To begin, I’d like to thank the Commission for their efforts over the last several years. There’s been a tremendous amount of work done to improve communications services delivered to Canadians and in particular the north, where SSi started. So thank you.

2360 I’m hopeful that the current undertaking will provide the feedback required for further positive policy reform.

2361 SSi is a northern company. Our headquarters are in Yellowknife, Northwest Territories. We specialize in remote-area connectivity, providing broadband and other communications services across Canada’s north.

2362 We built the QINIQ network a decade ago and today we’re still the only provider to all 25 communities.

2363 We have seen, know, and live daily the positive impact that information technology has. It should, therefore, come as no surprise that our position in this proceeding is that broadband is a must-have service and that improving the basic service objective is a critical national issue.

2364 Consistent with our presentations in past proceedings, we come before you today with three key messages.

2365 One, from a practical level, the essential nature of broadband must be recognized. And I think we all agree on this point.

2366 Two, from a policy level, broadband must become the core component of the basic service objective.

2367 And three, from an implementation level, the Commission must recognize that a one-size-fits-all policy will not work.

2368 Before I go further, let me tell you a bit about SSi and why communications in the north is personally so important.

2369 My parents founded the Snowshoe Inn 50 years ago in Fort Providence, a town of approximately 800 people in the Northwest Territories. Twenty-five (25) years ago, my wife Stephanie, who’s also our CFO, and I started SSi Micro. Our mission is to ensure that all northern communities have affordable, high-quality internet access. And to achieve this grand vision we’ve had to invest heavily in facilities and infrastructure.

2370 To put this in perspective, in 2005 SSi was the first company to launch broadband service in Nunavut. It did not exist prior to our arrival. To this day, we’re still the only provider in the majority of the communities and we’re the only company to offer the same broadband packages at the same price in every market no matter how small.

2371 In 2011, the Commission determined that,

2372 “Canadians who reside in the north should be able to enjoy the full benefits of competition.”

2373 The Commission decided to introduce local competition in NorthwesTel’s territory to provide a choice of service providers and different service options.

2374 That decision enabled SSi to move forward with additional investment, delivering on the goal to provide more choice and innovation to northern consumers. It has taken considerable money and effort, but the new network infrastructure is now in place and we will soon complete our first interconnection arrangements with NorthwesTel.

2375 Unfortunately, without further policy changes and inclusion of broadband as part of the basic service objective, remote areas in Canada will suffer.

2376 This is the issue that concerns us most and which we will focus on today.

2377 SSi has consistently advocated for a holistic approach to address the communications challenges and needs in the north. The Government of Nunavut noted that a holistic approach means more than,

2378 “Proposing little Band-Aids of this subsidy here and that grant there. We need a coherent plan for the whole thing.”

2379 We could not agree more.

2380 To truly safeguard, enrich, and strengthen the social and economic fabric in remote communities, reforms must benefit everyone. That means consumers, business, and government regardless of the last mile supplier they select.

2381 A holistic approach would also have to involve commitments by the private sector. Companies like SSi need to take risks and commit to invest in developing the physical infrastructure as well as the human resources, the people to support it.

2382 I’m happy to report that we’re taking those risks. SSi is in the midst of a massive build-out in Nunavut, the largest in our company’s history. The new infrastructure will be transformative for the north and serve as a showcase for other remote areas around the world. This truly is a Canadian-made and a northern-made exportable model.

2383 Connectivity is critical. Lack of proper communications infrastructure has real-world negative impacts in our remote communities.

2384 When we put this in context. In many remote the communities the school and health centre have a hard time finding and keeping trained staff. Unemployment is very high. Housing is limited and typically overcrowded. Add to this the fact that there are no banks, one or maybe two flights a week in or out, and one sea lift a year to get all of life’s necessities. Imagine that for a moment, if you can -- no TV, no radio, no cellphones, no internet, no libraries, no bookstores, and no ability to leave.

2385 Broadband removes the barriers created by this isolation. Broadband provides access to books and knowledge. Broadband brings educators and students together. Education enables these same local kids to take on jobs that are currently filled with transient workers from outside the community. In short, connectivity has a dramatic impact on social development.

2386 As I’ve mentioned, we’ve invested a lot over the past decade; and we’re not finished yet. Last September we announced a $75 million investment program for Nunavut’s broadband future. Continuing over the next three years, it will drive significant network infrastructure and service improvements.

2387 The Government of Canada contributed 35 million through the Connecting Canadians program to help reduce the cost of consumer broadband in Nunavut. And to be clear, all of the government investment goes directly to satellite capacity, 100 percent of it.

2388 SSi is providing all other funding, more than 40 million over the next few years for new infrastructure, even more satellite capacity, facility upgrades, and operating expenses. To be certain, the investments we are making go well beyond what is required of us under the terms of our agreement with the government.

2389 Consumers saw the first benefits of this on April 1st when we activated new plans and increased usage caps in all 25 communities across Nunavut without increasing consumer pricing.

2390 Key components of our Nunavut investment program include a 4G broadband wireless network in each of the 25 communities to deliver mobile, voice, and broadband data, as well as other services like home security systems, content streaming, high-definition video conferencing, even plain old home phone service.

2391 We’re also making significant upgrades to our satellite backbone and gateway infrastructure to support the additional capacity required over the next few years. This is capacity is currently delivered via Telesat using C-band with plans to migrate to a new KA- band high-throughput satellite in 2018.

2392 Perhaps most importantly, more important than investments in hardware and software, we’re expanding our Service North Program which employs and trains local infrastructure support agents. These training programs are critical to developing long-term employment in the communities.

2393 The pictures you are seeing are from the installations going on right now. There’s no question that it is a challenge to build in the north. It’s not a job for the timid and it requires commitment beyond financial return. The current upgrades will dramatically improve the customer experience and deliver critical new services but there’s still more to be done.

2394 Customer demand in these remote and isolated communities is growing exponentially and backbone capacity is constrained. We’re hopeful that the results from this hearing will create conditions that enable long-term planning and investment. We need to come up with a long-term sustainable strategy.

2395 While on the topic of capacity, let me touch briefly on the subject of minimum broadband speeds. These targets have been a key area of discussion for some time now. We believe that asking whether the minimum burst speed should be five, 10, or even 25 megabits per second misses the mark. It’s the wrong question and invariably results in customer frustration during moderate to peak network loading. We believe that the overall quality of the service being delivered and the user experience on the ground is what matters.

2396 The variables that impact those elements include backbone over subscription, wholesale cost which affects the end-user pricing, and reliability. Until these basic service conditions are met, speed is immaterial. This is not to say that minimum burst speed targets should not be set; however, if a user never achieves the advertised speed and their streamed content constantly buffering, then we’ve not really advanced anything.

2397 It would be like suggesting that people in the Arctic should but Ferraris because they’re three times faster than the half-ton pickup. While we like the idea, it may not be a viable model for the North given our single-lane gravel roads that are covered in ice and snow eight months of the year. Clearly, the CRTC must implement different broadband targets and objectives for the North, particularly satellite-served communities.

2398 What matters most to the consumer is that they have access to global content and services with a decent user experience at a price they can afford. That would be something meaningful. As we’ve said before and will continue to repeat, it is reasonably priced access to shared local infrastructure and backbone transport, not the last mile, that are the issues for our remaining underserved communities.

2399 I’m very proud of SSi’s contributions to the North over the past several decades, both in terms of direct investment but also in terms of downstream benefits like new jobs, new services, and new opportunities made possible through these investments. I’m hopeful that the results of these hearings will enable us to complete the mission we started 25 years ago.

2400 With that, let me turn it over to Dean to review the details of our evidence and speak to key pieces that we think the Commission must address.

2401 MR. PROCTOR: Thank you, Jeff, et bonjour.

2402 SSi’s intervention is entitled “The Qimirluk”. Qimirluk is the Inuktitut word for backbone, and that is the cornerstone of our proposal to reform the BSO.

2403 For remote communities to receive better broadband service and participate meaningfully in the digital economy, focus must be on investing in and developing both backbone and gateway infrastructure. Policy reform and new investment mechanisms must also retain and encourage competition and innovation in last-mile service delivered to consumers, business, and government.

2404 SSi has proposed the creation of a backbone assistance program, what we call the BAP, as a means to augment backbone transport into remote communities and to develop open gateway facilities. This will allow competing local service providers to deliver quality and affordable communication services to end users.

2405 When we met with you in Whitehorse, we stated to the Commission -- that was back in 2013 -- that it is not at all about subsidies for local access infrastructure. SSi’s current access network available today is capable of delivering five megabits per second download speeds and can be field upgraded to provide more speed and capacity if required. Unfortunately, consumers will not be able to afford greater speeds without increased assistance on the cost of backbone.

2406 Jeff described to you SSi’s investment program and technologies currently underway in the North. With these, we’re able to meet the Commission’s broadband target speeds of five megabits per second down and one megabit per second up. In fact, we’re capable of delivering many times more that speed to every home, business, and government office in Nunavut. Put this another way, we’re deploying infrastructure in every Nunavut community that can deliver the same quality of broadband as you find in downtown Toronto.

2407 Quality local access networks can now be built in remote areas largely due to advances in technology, in particular wireless and IP technologies. Unfortunately, while last-mile infrastructure in remote communities can match that in Southern Canada, the barrier is and remains the backbone transport connecting those same remote communities to the rest of the world.

2408 Broadband service offering higher speeds and greater capacity in the North is still not affordable for many consumers and business and the government remains starved for capacity to deliver their most basic of electronic services. This reality effectively disenfranchises Northerners from the digital democracy. This is why all roads for policy reform lead to a focus on the backbone.

2409 In terms of implementation, the exact amount of BAP funding will have to be established based on the service obligations to be met and the number and identity of communities to be served. Service providers that receive BAP funding, the open gateway providers, will be competitively selected. A BAP-funded gateway provider will have to make available and consume the same backbone connectivity and colocation services on the same terms as other local service providers in any given community -- the principle of non-discrimination and no undo preference.

2410 The selected open gateway provider will acquire satellite or other backbone transport from network operators. They will light this capacity through the use of ground infrastructure, earth stations, and other needed equipment and electronics; bring this capacity into a point of presence in each community; and make backbone connectivity services and colocation facilities available to all local service providers.

2411 SSi also proposes that any open gateway provider, the party receiving BAP funding, be considered the carrier of last resort for the communities it serves.

2412 Finally, a key item is how to fund any new mechanism. We’ve detailed in our evidence how the Commission can evolve the existing primary exchange service proven planned subsidy regime to direct -- re-direct funds, rather to the BAP. This will go a long way to addressing the funding needs.

2413 In closing, today, consumers and businesses in the north are not full participants in the digital economy and governments in the north cannot offer many essential services that rely on broadband, services that are taken for granted elsewhere.

2414 Commission policy of reform must address shortcomings in the delivery of basic telecommunication service to remote areas, including the north. SSi is proposing the Backbone Assistance Program as the principal mechanism to do so.

2415 Those living in remote and outlying communities and the businesses, governments, and other organizations that serve these communities must have access to affordable communication services and competitive choice.

2416 Quality broadband must become a key component of the basic service objective. The Commission has the means and the Commission has the ability to enact substantial reform. Doing so successfully will allow Canada to be a global showcase, where broadband overcomes the barriers of distance and where all regions of the country, no matter how remote, benefit from and participate fully in the digital economy.

2417 Alors avec ça merci pour l’occasion de présenter devant vous aujourd’hui. Johanne, Chris, Jeff, moi-même, on sera très content de répondre à vos questions.

2418 And thank you again.

2419 THE CHAIRPERSON: Merci beaucoup.

2420 Commissioner MacDonald will start us off, thanks.

2421 COMMISSIONER MacDONALD: Good morning, and thank you very much for being here today as a service provider in the north. Your voice and your viewpoint and wisdom is very important for this proceeding.

2422 I'd like to start off by just discussing some of the speed targets that you put forward in your proposal. I note that you've increased your allowable data caps at no additional cost to your consumers, and are placing more of a focus on quality over increased speeds. And I'm just wondering, we're hearing a lot from other intervenors in this process that the speeds should be increased, and increased significantly in some cases.

2423 So can you speak to what type of uses residential or small business customers are able to receive via the current speeds that you're offering today?

2424 MR. PHILIPP: Current speeds offered today, so it used to be one and a half mg down, 384 up. That was the old Industry Canada, the last Industry Canada target.

2425 And to put this in perspective, we deliver services for more than just residential or household consumers under the contract with connecting Canadians or the previous one. We also deliver for the Government of Nunavut and we deliver for private enterprise and Inuit organizations, those that are not funded or subsidized or a part of the contribution program.

2426 And I make that point because when we talk about the speeds available, one and a half mg down, 384 k up, that's not the only speed available. That is the speed that is available to the masses because it's a subsidized rate funded through, in part, the Industry Canada funding that's come about.

2427 So the last program was one and a half down, 384 up. The current program is three megabit down, a half Mg up. And the big difference there is, so what can we do with it? Three megabit, frankly, is enough to do anything. Netflix is one megabit, one point one. Surfing the web really is not -- it's not a matter of speed. YouTube videos are typically not high def that you're watching.

2428 So speed is a bit of a red herring. It's why I said, you know, I think things like oversubscription are more important. It's wonderful that we can go 220 on the Autobahn in Europe, but it would not be wonderful if there were 5 times as many cars on the Autobahn. You just couldn't get that speed.

2429 So speeds are a bit of a red herring if we don’t also address congestion. And congestion is really a matter of oversubscription.

2430 So what are they able to do? I think as many other people want to put it very well earlier this morning, usage caps are a major problem. When somebody has to worry about whether or not they should watch this Netflix episode tonight or download that movie tomorrow because they may not be able to finish their homework, that's not a basic service. That's not a viable service, long term. I'm not happy about that as a service provider delivering it.

2431 But we don’t make the rules. We respond to an (inaudible) that says, "This is what is going to be available to consumers in Nunavut, and this is how much money we have. This is the box you will have to work within."

2432 Those are the exact words we're told. And so we try very, very hard to come up with a formula that allows us to deliver a combination of speed and usage caps and oversubscription that means that peak busy hour doesn’t last 14 hours a day.

2433 So the challenge is, how do we get enough capacity? Everyone thinks in terms of capacity, megabits per second. And true, if you were to give everyone 25 Megabits per second and you had even a reasonable oversubscription, probably it wouldn't be too bad.

2434 But realistically, if we just change our formula and our thinking slightly, instead of it being one connection per home, which is what is subsidized today -- and in fact, we had great debate in this last year, in this last round with Connecting Canadians about who is an eligible subscriber, because when this is the funding -- not this and not this and it's not variable, it's this -- then the only thing we can change if speed can't change and oversubscription can't change is the number of people you can subsidize.

2435 So the number of people eligible becomes a problem. It's currently homes and students, not MLAs, not Inuit organizations, not government, not tourists; homes and students.

2436 Now, how you police that becomes a whole other problem, and why you have to police that becomes a challenge. And when the funding is that limited, as Oana pointed out this morning, usage caps become a problem, because how much usage can you allow people? You can't rent cars with unlimited gas and unlimited kilometres for a fixed price per month. It just doesn’t work.

2437 So what do we need to do? We need to quit thinking in terms of 25 megabit or 10 megabit because those calculations end up leading statisticians and finance people to very, very large numbers for how much the backbone would cost.

2438 And what we need to start thinking about is how do we build this better? How do we take what we've got right now, the needs of the people, the infrastructure that exists, the remoteness, and the reality of where we live, and how do we build something sustainable, long-term, that people can afford that works?

2439 And it's actually not that complicated. It really isn't that complicated. The answer comes from doing a bunch of things differently. We can't plan in four-year cycles any more. We can't plan in small beauty contests that are run every four years to determine who's got the best proposal, who's willing to commit the most, and frankly, it's typically commit the most marketing, 75 megabit, oh, it's LTE. But you won’t get 75 megabit on the backbone.

2440 If you look into the details, what you'll find is that Industry Canada for years has said -- and don’t get me wrong, Industry Canada have been there to deliver funding and we've been there to co-invest with them, so I'm not hanging Industry Canada out to dry. Frankly, without them, we wouldn't have anything in the north today. We'd still be talking about dialup.

2441 But because of their programs, we have been able to build something. It's an LTE network in every community. It's amazing. The reality is the backbone out of those communities is too tight.

2442 Now, we're also, fortunately, the provider to the Government of Nunavut. In 2009 we won that contract. It was something that NorthwesTel had had for decades and we won it, in part, because if we were to combine those revenue streams from both operations from what we were doing with broadband and what we were doing with the Government of Nunavut, we could make our little network work. We could make this service delivery of broadband into these communities viable and sustainable with the pittance that is available, frankly, to deliver it.

2443 Now, what we need to do today is, we need to look at, how do we combine the need of government and the need of residential users and education and mining, into one pipe, not separate roads?

2444 We've built a separate road for the government into every one of these communities and a separate road for the private sector into these communities and they do not share capacity.

2445 It's like looking across a divider at the government's 80 megabit all night long while it sits there not fully utilized and all day long those same employees in the government have come from home to work in the government offices and the broadband that is sitting on the other side of the road, the Autobahn, with 800 megabit, is sitting there really half-used.

2446 Now, this is not a common argument made by a service provider selling to both clients, but it's the only argument that makes sense. We could continue to sell to the Government of Nunavut, and I think competitively do that and win that at public tender.

2447 We could continue to bid on Industry Canada projects where there isn't enough funding to meet the basic service objectives we set for ourselves, but if we could combine those two sources of revenue and those two networks, those two amounts of capacity, which is constrained -- we've heard that from everyone, it's satellite, and I'm not here to argue about satellite. I think there's great solutions with satellite, but we have a constrained resource. If we were to use it better we could get a lot more from it, and it wouldn't cost the consumer any more. It wouldn't cost the government any more. It's simply allowing the sharing of capacity.

2448 COMMISSIONER MacDONALD: So you're point about sharing capacity is definitely a valid one, but we're also hearing in this hearing the size of the households in the north, relative to households in the south, and there are more users. Do you see that daytime traffic dropping off that significantly during the daytime hours on the residential side given the sheer sixe of the families occupying those dwellings?

2449 MR. PHILIPP: I think it depends how we measure. If we measure as the number of homes connected, we can show very high penetration. I know that Oana had some statistics earlier, which is an average I’m assuming, of all service providers because our penetrations are certainly higher in the communities that we’re in and we’re in every community. So as far as number of homes and residences we have a very high number.

2450 But when we use that as a metric to determine the number of subscribers, we’re missing, to your point, the fact that there are six or eight people in that home. And we’re already starting with constrained networks.

2451 So what we need to do is change the method that we use to evaluate capacity. If we went to a per-subscriber basis, we said, “What do we need on a per-subscriber basis?” Forget how many are in a home. Let’s say 2 megabit because really, if you can stream a Netflix video at 1 megabit and you could also surf a little bit of web and I’ve seen my kids do it, they can three devices going -- but if you have 2 megabit and if everybody in your home had 2 megabit and there were six people, you’d now have 12 megabit allocated to you under some funding formula.

2452 And if we kept the oversubscription low enough, meaning not 50 to 1, not 50 people sharing 1 megabit, but more like 30 to 1, and reducing to 20 to 1 over the next 5 years, we could make the existing capacity work. We could make the capacity per household significant enough that usage caps wouldn’t be a problem and stuttering internet wouldn’t be a problem. But we don’t need 20 megabit to do it or we need 20 megabit with a low enough oversubscription.

2453 So your point is valid. There are more people per home. And when we measure broadband capacity on a per-home basis, we get messed up in the north because we’ve got more people than the south and we don’t have as big a pipe.

2454 COMMISSIONER MacDONALD: So in your presentation today you were talking about needing to take a longer-term view for any of these projects and the fact that, you know, what you’re installing has the ability to be upgraded over the long-term. And just yesterday we heard from the Government of Yukon; they came in and they were suggesting a target of 25 down, 3 meg up and an aspirational goal of 100 down and 30 up.

2455 The equipment that you’re installing, is it capable of delivering bandwidth at or near those levels? Understand that there’s an upgrade course and everything that goes along with that.

2456 MR. PHILIPP: Sure. What we’re installing right now is LTE. It’s standards-based LTE 4G. So the radios can deliver 150 megabit plus per sector. We have multiple sectors per remote community. So if you take the smallest community in Nunavut, we have 400 megabits of last mile capacity in that community now. But we’re sharing 800 megabit across the entire territory. So it doesn’t really matter that one community had 400 megabit when there’s 25 of them and communities like Iqaluit have gigabits of last mile. Our backbone is what is congested.

2457 So LTE with upgrades -- and frankly upgrades are licensed (inaudible) and that sort of thing. It’s not even huge capacity or hardware upgrades. The last mile is not the challenge financially or logistically. It’s the fact that for another competitor to come into Grise Fiord or Qikiqtarjuaq or anywhere in Nunavut, they need a piece of land; they need a building; they need a backup generator; they need a colocation facility; they need a tower; and they need shipping and receiving; they need flights and technical people. And that doesn’t exist.

2458 So our concept of this open backbone to share facilities so that any service provider can deliver in that community is the starting point. Without that we could put in fibre to every community. Where would it land? What building would it terminate in? Is that building connected to the schools and the hospitals and the Government of Nunavut? Does that building have a tower next to it for distribution?

2459 Somebody brought up the question of SuperNET on the first day. The biggest failure of SuperNET was that they didn’t build out local access infrastructure, meaning there was no place, when I wanted to open up in Red Deer, to mount a tower on the SuperNET facility because I needed to get the connectivity from there, from that fibre node, to my building. Because there was colocation; there was no tower; there was no mast; there was no ability to directional drill under the train track. So we just walked away and said, “Well, forget it. It’s a great node but it’s on the other side of the river and nobody can get to it.”

2460 So in all of these communities you could bring the best satellite capacity in space, you could bring fibre right up the street. What buildings are going into? They don’t exist today in these communities. We don’t have lots of infrastructure. We don’t have enough housing. We don’t have enough power. We don’t have enough water or sewers.

2461 So what building? If that’s the starting point, if we put in an open backbone facility, and if satellite is there today, whether it be C band or in 2018 high throughput, when fibre shows up, and it will and we hope it will, it needs to come to that same facility.

2462 Because what’s going to back the fibre up? We all talk about fibre being the end-all, be-all, but what is the backup when that fibre breaks if it isn’t a complete ring? Satellite. What’s the solution over the next decade while we wait for fibre to get there? Satellite. What is it that everybody needs on the ground to be able to support satellite or last mile or competition or fibre? Infrastructure. And you can’t build that one-off per carrier in these communities. So we need more backbone capacity, no question.

2463 The amounts that Government of Nunavut or the Yukon Government put forward are great targets; don’t get me wrong. If we had fibre in every community why wouldn’t you? If you had gigabits of capacity why wouldn’t you give that kind of speed? You’re not constrained anymore as Oana put it. Right now there’s so much constraint.

2464 Let me give you some very simple business case, I believe a very simple business case, and it goes to your question of long-term planning. We plan in four-year cycles right now. We go to Telesat and we negotiate the most capacity we can buy with the amount of money that Industry Canada has and then we hand that entire cheque over to them. And we put up matching funds towards that and then we build the infrastructure on the ground. That’s a four-year planning cycle. We can’t get much buy from them in four years with $35 million.

2465 But if we were looking long-term at the life of a satellite, 15 years for a high-throughput satellite, and if we look at the cost of that payload, the entire payload, of Ka band at 24 gigabits per second, not hundreds of megabits per transponder, but thousands of megabits per transponder, the payload is not the big experience, right? Getting the thing into space is the big expense. Buying that thing upfront is a big expense. But it’s a trivial expense when amortized over 15 years.

2466 And so the question of how much capacity do we need per consumer you can come at from the bottom or the top. And the bottom is per subscriber this much with this oversubscription, not per home. That’s that much bandwidth today and Oana pointed out not a plateau for the next five years but let’s keep increasing that.

2467 So let’s look at the average. If it was 5 megabit today, even 3 today, frankly, with a low enough oversubscription, and if we did it on a per-population basis, not per-household basis, and we aimed at 10, even in 5 years we would have enough satellite capacity in space with the first high throughput, 24,000 megabits, 12 down and 12 up.

2468 So from the bottom we work our math up, and we’re going to find that if you gave everyone 10 megabit per second -- or actually 25 megabit per second was a quick calculation they did yesterday -- and you took 10,000 subscribers and you went at 20 to 5 to 1 oversubscription, which would be a great number for us in the north today, you need 10 gigabit. That’s a single high-throughput satellite. That’s one.

2469 And we don’t need just one because we need redundancy and diversity. We can’t just have one. So we really need to plan for two. And those two need to come down into a common piece of infrastructure with two dishes, one pointing at each one, with redundant transmit power, with backup power, with secure and non-secure colocation facilities, and with a tower. And once that’s built, that’s a couple $100 million to buy those payloads, then we’ve got capacity for 15 years.

2470 And at that point we can look top-down. How much do we have? How many subscribers do we have? What should we set our basic service at? Well, we could increase the basic service. And as fibre comes in we could redirect that capacity to other communities that don’t have as much and that will not get fibre.

2471 COMMISSIONER MacDONALD: So we know that the satellites have, you know, constraints on capacity and cost. So I’m wondering, how do you actually build your internet packages today. How do you decide, based on those constraints, you know, what the data allowance should be? What’s your thought process when you’re doing that?

2472 MR. PHILIPP: I spent many long, dark days in a room before bidding this last Industry Canada. I’m not kidding. I spent three days in a very dark, depressive state because frankly there was no good way to make this business case work. You know, somebody I’m sure is going to ask me -- Mr. Menzies is going to ask me -- why we would invest $40 million alongside a $35 million federal investment? Well, if we didn’t who would? If we didn’t step up and take a risk, if we didn’t build this LTE infrastructure, the MCS infrastructure wasn’t going to do it. It wasn’t going to last long enough. It was a dead investment; why put more money into it?

2473 So the answer is the business case in the north is possible if you aggregate, if you don’t treat every opportunity as a separate one, if you build a backbone that brings the wholesale cost down for all carriers. And Dean made mention of this, where we eat and buy the same thing we sell, right? If that were a possibility, if an open competition would allow the lowest-cost price to deliver an open backbone into every one of these communities, I don’t care if we win it or NorthwesTel or Bell or Rogers wins it, I care that it’s there. Because if the wholesale price delivered to the community is low enough because the backbone is purchased over a long period of time -- and not just the capacity in space. The training of people on the ground -- without local residents trained to maintain and support the infrastructure.

2474 And I am a local resident from a community of 800 people, a small Aboriginal community in the Northwest Territories. I’ve lived there over half my life. I only moved to the capital 16 years ago. I’m telling you, this is possible.

2475 The Northerners have the technical capability to maintain and manage and support the network, but we need to train them. And training typically doesn’t flow unless you’ve got a grade 10 Math and English. And frankly, that’s not the priority in these communities.

2476 So we need to build an open backbone. We need to look at a long-term plan for buying capacity. We need to look at training people on the ground. And ultimately to meet the objective of the CRTC and everyone else, all competitors, we need to open that backbone up and allow competition, allow everyone to compete. And if nobody shows up in Grise Fiord to compete, make the person with the open backbone deliver the service, in Grise Fiord.

2477 This is not that difficult and the money we are talking about, if we aggregated with Northwest Tel who’s doing voice right now, we have a significant subsidy for terrestrial copper. We’re going to deploy mobile voice in every one of these communities this year. I assure you that very few people will be buying copper by Christmas, because the mobile voice package will be more competitive and bundled with your home internet service, and ideally a TV service, which we should be multi-casting to all of these communities as well, and radio.

2478 We should be doing this in every one of these communities, but we need to do it in one long-term sustainable plan that looks at fibre as well. I’m not against fibre. I love fibre. Everyone -- and we get a hard time on Facebook and from our customers because we don’t deliver enough usage, we don’t deliver enough speed, and we’re against fibre.

2479 That’s not the case. We’ve invested so much of our personal money into building this network because I believe every one of these communities needs this.

2480 It’s not a matter of the basic service objective for me. It’s a matter of what is healthcare and education going to cost us if we don’t start improving the connectivity into these communities?

2481 COMMISSIONER MacDONALD: So on the topic of funding, you’ve received significant funding over the years from, you know, what was Industry Canada.

2482 And I noted the slide 15 of your presentation where you’re showing some of your different, different offerings and the price points. And I found them on your Website as well. And I noted that there are significantly different prices for residents of Nunavut and then non-residents as well for what appear to be the same packages. And the prices don’t double but, in some cases, are close to doubling.

2483 So I’m wondering if you could explain what the rationale is for charging residents a different fee than non-residents or perhaps that’s something tied to your funding requirements that are provided and stipulated by Industry Canada.

2484 MR. PHILIPP: It’s a great question.

2485 When we bid this last round, this project, public tender, certain amount of money available, we spent six months prior to the close of this trying to have Industry Canada understand that 5 Megabits down, 1 Megabit up was not winning customers. That was a number of the speedometer.

2486 They came back and agreed, 3 Megs down and a half Meg up, because we could lower the over-subscription; don’t over-promise, over-deliver.

2487 So they agreed to that but they said, this is how much money we have. I said, well, this is how many subscribers we have. So subscribers, times this speed at this oversubscription, times time, there’s how much capacity we need.

2488 There’s the price of capacity, that’s not possible. So what do we do at that point?

2489 Industry Canada says, “I’m sorry, that’s the box you have to work within. That’s how much money is available for Nunavut.”

2490 Okay, so how do we reduce that? We can’t reduce the speed below 3 Megabits. I’m not willing to accept a contract with a high oversubscription because then it’s just me lying to the consumer. There’s no more money available.

2491 At that point, you have to reduce subscribers, eligible subscribers -- who’s eligible to receive the funding?

2492 Well, this is for residents in Nunavut. Okay, so what’s a resident in Nunavut? It’s a house. And because of the work that Arctic College had done and many people want to include it, Nunavut Broadband include it, to try to make education a really high priority in Nunavut, students were accepted into this criteria as well.

2493 So homes and students are the eligible recipients of the Industry Canada funding in this last round. And I may as well say it here first, every MNA in Nunavut who has a personal account on QINIQ will now have to pay the non-resident fee because they’re no longer subsidized. They’re not part of the criteria but they all have a modem because they all travel and they need it.

2494 Government doesn’t get a subsidy. They pay more for the capacity.

2495 So right now, the funding -- you start with funding, you take out what the service is, you divide it by the service level and you determine how many subscribers you can manage.

2496 And the reality is that’s really a backwards way to do it. But it’s the only way to do it if you have a limited amount of funding and you’re not looking at this thing holistically. You’re just looking at this is how much money we, Industry Canada, have and there’s the problem we need to resolve. The broadband has to carry on.

2497 How would anybody have come to Nunavut this last go-around and bid to build land -- to buy land, put piles in, put buildings in, put towers in, multiple co-location sites around the larger communities, and take the money from the feds and give it all for satellite capacity? All the rest, they’d have to pay for themselves and recover in a four-year window.

2498 The reason that we are winning these over and over is because we’re the only people foolish enough to put up the matching funds and to continue to invest in the North.

2499 And I mean that seriously. I mean, it’s funny frankly. I have a hard time with it too every time we go into this. Which is why I spent three days in a deep, dark hole wondering how we were going to make this work this last time.

2500 And what I said to Industry Canada and I said to my team was, “What choice do we have? If we don’t do this, who’s going to do it? Who is going to be there April 1st, in 12 months, right?”

2501 This was awarded January, a year ago. So in 14 months, somebody would have to build this and operate it.

2502 So we invested a significant amount of our own money in this last round because we know there has to be a solution. It has to be a longer term solution.

2503 So we are taking the risk on the ground to build the infrastructure for the long-term.

2504 COMMISSIONER MacDONALD: Xplornet Communications can provide services coast-to-coast-to-coast, and I’m looking at some of their pricing in comparison to some of your pricing. And I’m just wondering why yours may tend, in some cases, to be more expensive than they’re offering, especially in light of the funding that you’ve received?

2505 MR. PHILIPP: I’d go further and say their pricing is incredibly attractive, and I’d say their penetration probably sucks because if you’re not in the community, if you’re not there to build the antenna on the roof and fix it after the blizzard and answer the questions of the customer; if your peak busy hour in the Nunavut territories -- because if you actually read all of the terms of service that Xplornet have on their Website, they’ve got six or seven platforms. The two that cover the North have drastically different terms of service than the ones in the South.

2506 Their peak busy hour runs from 1:00 a.m. until 7:00 a.m., I believe. There’s not a lot of time in there to do anything else. That means they’re congested for a long period of time. It means that the usage that you could give away at $2 a Gig doesn’t really matter because not as many people are going to receive it.

2507 So I don’t know how Xplornet is able to do that in the South. I haven’t heard them say numerous times they don’t get any funding. I’ve seen recently, in the last week, press announcements of $6 million or to that effect going towards Barrett Xplornet for delivering internet into remote areas.

2508 So, you know, I don’t have any objections to Barrett, to Northwest Tel, to anybody delivering services in the north. I wish they all would. I wish everybody went into every community, not just cherry-pick the biggest ones; not just the Rankin, Iqaluit, Cambridges that Northwest Tel prefers to deliver service in, and frankly at rates that make no sense to me.

2509 But if you were to deliver service into every community in Nunavut, into the 16 smallest communities in Nunavut, you would realize that Barrett Xplornet is not anywhere to be found.

2510 There’s some that are using it, but the reality is if you wait months and have to sign a long-term contract and put up a lot of money, and it’s reliant on a technician that doesn’t live locally, that’s not viable.

2511 In our case, from day one, in 2004, we built a model that was a community aggregated model, where we would try to aggregate as much of the local services as we could through a gateway, because it was the only way to make that efficient.

2512 We would build infrastructure with a long-term view, which is what we’ve done in our family business for 50 years. And we would put a model together, which used community service providers where we gave initially, in 2004, 20 percent of the revenue -- not the margin, not the profit at the end of the year -- the revenue on every account went to a local agent.

2513 We still deliver over 10 percent of our revenue to the local agent and we’ve taken technical support back out of the mix because if we roll out 4G LTE and mobile phones, we need a higher level of support for our voice service than what we can rely on with an agent who is getting a fee or a portion of the revenue.

2514 Now, we put over $1 million a year into the Nunavut economy in the communities by taking a portion of our revenue and giving it back to the agent.

2515 The Service North program I talked about in the presentation is extremely important to me. It is training local people in the communities how to manage the infrastructure. We spend $10,000 per technician to send them to a community to climb a tower. Any community in Nunavut that’s the average. You don’t send one; you send two because you need a safety guy on the ground and a guy on the tower. That’s $10,000 per person per year. There’s at least four providers between Nav Canada, CBC, RCMP, SSi, and NorthwesTel. Why wouldn’t we have a local resident who’s been tower-safety trained who can hold the rope at the bottom of the tower and ensure that we don’t have any accidents, or rescue our people on the tower, and have $40,000 a year worth of income available to them just by what I would be spending and the others would anyways.

2516 So Service North is critical to delivery of these things. It’s not an add-on.

2517 COMMISSIONER MacDONALD: So based on your statements, and this is probably a yes or no question, you would ---

2518 MR. PHILIPP: Really?

2519 COMMISSIONER MacDONALD: You would be of the viewpoint that even with Xplornet’s future offer, and they’re saying they’re going to be able to deliver 25 megs everywhere in Canada, that that is not going to meet the unique needs of your service territory?

2520 MR. PHILIPP: No. That’s a no. That’s an absolute unequivocal no.

2521 COMMISSIONER MacDONALD: Okay.

2522 So significant money had already been invested both from government and from yourselves and other service providers to improve connectivity and improve services in the north. And I note that in your proposal you’ve suggested the open gateway facility and the Backbone Assistance Program. How can that existing investment that has already taken place be leveraged? Or if we move in the direction of, say, the Backbone Assistance Program, does past investment all become for naught and it’s replaced? Or can it be leveraged with new investment?

2523 MR. PHILIPP: That’s a good question.

2524 You know, right now in the Northwest Territories and in Nunavut and in the Yukon, if you look there are really two providers. There’s NorthwesTel with infrastructure -- and there’s more providers than that, but if you look at who has infrastructure of any significance it’s really NorthwesTel and SSi.

2525 I would say that in all three territories the infrastructure that exists today is not the infrastructure we need tomorrow. That goes even for our infrastructure.

2526 Now, to put this in more perspective, in Nunavut we have invested a lot over the last 10 years and our infrastructure in those communities is significant and is being designed and has been designed for the last decade to support these ideas, this open backbone that we talked about, this open colocation facility. So in the nine largest communities we have invested in infrastructure that would support the model that we’re talking about.

2527 But the bigger challenge is the 16 smallest communities. Now, we’ve deployed our LTE there. It’s sitting on the colocation facility that we have now. But it’s not big enough to support Nav Canada, RCMP, CBC, NorthwesTel, Bell, Rogers Wireless. And something needs to be built to support all of them.

2528 So in my view, if this were a public tender or a public RFP that we were bidding on, we would take all of the assets, as we’ve always done, and said, “Well, that’s already spent. Now what do we need to complete the project?” NorthwesTel would do the same thing.

2529 Anybody new coming to the game, anybody from the south that wants to bid on this, they’d have to start over. But frankly, the amount in the grand scheme of things that would have to be replaced is not going to be what puts them at a disadvantage. What puts the southerners at a disadvantage for building this network is the knowledge, the desire, the willingness to invest, the willingness to take risk. And if you haven’t been born and raised in a small community in the north, if you haven’t lived that life, you probably aren’t willing to. There’s suburb outside of Toronto that will generate far more revenue than all of the Northwest Territories, Nunavut, and the Yukon.

2530 But if we believe long-term that we need people in the north that we as Canada want to claim the Northwest Territories, the Yukon, the Northwest Passage, the oil and gas and the resources there as ours, we need people in the north; we need people in these communities. And if we want people in these communities, we need to provide the services.

2531 So there’s a large amount of investment that needs to be made. But frankly, the bigger investment it will depend on who you are. Everyone will build it slightly differently. If I was building it my way it would be redundant. There would be two satellites in space, high throughput. There would be a facility with private, secure, and non-secure colocation. There would be a tower with other distribution sites around town. There would be a backup generator. And you would provide fibre to the main facilities and classrooms and schools. That’s the way we would build it.

2532 But if the specs came out and said, “This is the box; what can you build?” Then everyone is going to have a different view.

2533 My view is it doesn’t need to be a huge capital expense that the federal government bears. This needs to be a long-term contractual commitment to use the services.

2534 There’s lots of money out there. Private equity has money to build infrastructure; the business case as I know it makes sense. Maybe it doesn’t make sense for all the big carriers, but it makes sense for us. It makes sense that if we aggregate the mobile, voice, and data, the residential voice, the government business, and what we as Canada need to deliver for basic services, there is enough money to build and operate this network without having to have huge billion-dollar investments.

2535 And when fibre comes it won’t come overnight. It will come gradually and organically over the next 20 years as we have more of these meetings. But at least the basic facilities will be there. At least the backup and redundancy for that fibre with exist. And at least we won’t wait another five years to deliver basic services to these regions.

2536 And one last point on this. This is not just a model for the North. If you think about the high-throughput satellites being launched and the coverage that could be built if we were designing a payload, we wouldn’t just target the North, Nunavut’s 25 communities. You would target the mid-north; you would target all of northern Alberta, BC, and Ontario and all of those communities that currently don’t have infrastructure or services or backbone.

2537 And you’d use the same model. You’d put out a public competition and say, “Who wants to build an open backbone in all of these communities” and utilize that asset in space fully. Not to the point where we’re going to Telesat and saying, “Well, this is how much we can afford.” No, we own the whole thing, 24 gigabit on two satellites.

2538 And all of a sudden we can service 150 reserves and Aboriginal communities across Canada that currently have no connectivity, and with one open facility, deliver an LTE last mile, which solves the distance education problem.

2539 It doesn’t solve the problems; it provides the tools and the facilities to deliver the solutions into all of these communities very quickly without waiting for the next big, shiny thing, meaning fibre from point to point to point. That’s great, but short of somebody paying a lot of money I don’t see it happening in my lifetime.

2540 COMMISSIONER MacDONALD: So with respect to your open-gateway infrastructure proposal, and this might be a little bit of dangerous question because when you’re building something it can be cheap, it can be fast, or it can be good, but you can only pick two of those things -- how long would it take?

2541 MR. PHILIPP: In five years we would be done. We would be done with all of these disconnected communities across Canada. The Aboriginal reserves and the small communities would be complete.

2542 And the reason I say that is we’re not building them one-off. You’re designing a facility, our open gateway, somebody else’s, with certain specs, certain requirements -- it has to be able to deliver x, y, and z, tilt up mast for cellular, dish on the roof, two dishes. You can cookie-cutter those.

2543 This is model where -- it’s what I’ve been planning my whole life. Twenty (20) years ago I saw a documentary on Holiday Inn and the answer was, “How did you go from 1 to 20 to 500 in a year?”

2544 And the guy that started it said, “Well, you know, once you figure out what people want and you figure out the price plan and you start to optimize it, then it’s just cookie-cutter. Then it’s build them as quick as you can.”

2545 I’m talking about 2 40-foot C cans a third one for power, for redundant power. Those C cans we build them now and they take weeks. If we were to ramp that up it would be days to build one of those. And they would be factory-assembled and shipped to site. Whether it be a fibre site or a satellite site is really immaterial.

2546 So building the infrastructure and deploying it across the country if it’s cookie-cutter is simple. If we’re building two satellites, one is going up in 2018; that’s Telesat’s new Ka high throughput. We will be one of the first people on it. Our contract, in fact, with Telesat that we just signed ensures that we will be one of the first people one it. Next year we’ll start building high-throughput gateways in some of our communities to be able to move traffic off C band onto Ka high throughput.

2547 And if we were to look at this as a national initiative, a priority to improve the basic service objective and remove these barriers, these isolations in all of these communities, two high-throughput satellites properly designed with an R footprint covering the mid-north and the north, the first one is being launched in a year, a year and a half and be operational. The next one isn’t even planned.

2548 And the first one is not being planned with this in mind. I’ve been harassing, I would say, Telesat to ensure that the beam coverage makes sense, to ensure that -- you know, even things like why don’t we have one of those beams -- which is not fixed -- one of those beams which could provide spot coverage to any fibre break across the country, within the footprint obviously? It’s an extra amount of money that you have to build into the platform. There’s only a certain amount of deck space on the aircraft; there’s only a certain amount of antennas you can put there.

2549 But with a proper plan, five years. And with the opportunities that are there and the existing revenues and money being spent, this does not have to be a huge undertaking that is not sustainable. In fact, I would not be a part of it if it was. It doesn’t interest me to build something that was not sustainable.

2550 COMMISSIONER MacDONALD: Thank you for that.

2551 I believe in your proposal you suggested an initial contract term of 25 years and I'm wondering, understanding a lot of the money goes towards buying payload on satellites when those contracts expire, what happens to the rest of the infrastructure at the end of the 25 years, the open gateway facilities you'd be looking to build? Are they end of life and essentially valueless at that stem point or would ownership need to be transferred in any way to a future provider after the initial contract term?

2552 MR. PHILIPP: There's many existing examples of how this could be structured. One is in power right now. You know, right now in the Northwest Territories, in my hometown, the power provider is actually Northland Utilities, an ATCO Company. We bought those assets when they won that contract, that franchise. They bid on winning the franchise.

2553 The network was already built. The power infrastructure was built. They just came over and put in a better bid later on to take over the operation because they thought they could do it cheaper or better.

2554 Now, in terms of length of time and whether that asset is worth anything, the best example I could point to is the Snowshoe Inn. That's what SSi stands for. It’s the family business and 50 years ago, my father built a motel, a restaurant, a construction company in a little town of 700 people when there was no need for a motel. There was a need for some accommodations for people that were doing DEW Line work or who were mapping out the north.

2555 That motel today, 50 years later, with 35 little rooms in that community is an asset that would be hardly replaced with less than $5 million investment, meaning at about $400 a square foot, you could build in these communities.

2556 So when we build infrastructure, if we build it right, if we build a throw-away trinket, a four-year solution, it will be “dual 40-foot C camps” (phonetic) for private or secure and non-secure co-location. It will be a backup power plant that normally provides power for this facility. But frankly, if we're going to do this, if you look at Nunavut and the need in power, we're going to put more power in.

2557 So the infrastructure needs to be designed right and there's no reason why these buildings and these facilities won't last 25, 30, 40, 50 years. That isn't the challenge if we build it right.

2558 And frankly, if we're going to do this, it only makes sense to build it right because when fiber does show up or when some new technology -- take OneWeb, great topic of discussion. We've met with OneWeb and frankly, I'm happy to see OneWeb and every other opportunity that comes along that provides capacity. But the reality is those are not going to be the backbone into these communities. Those are not going to be the thing that solves our problem.

2559 OneWeb provides great service on the land. OneWeb will provide the opportunity that when we're doing search and rescues outside of these communities, over this two million square kilometre area, we will have connectivity in a portable fashion. But OneWeb is not the backbone gateway that people think. It's not going to provide gigabits to a single community and when we're talking about 150 megabits per sector on our LTE network and 20 sectors deployed in a place like Cambridge Bay, you're not going to feed that with OneWeb. The pricing for that type of solution is too high. But OneWeb is one solution. It's one more piece of the puzzle but what we need initially is working from the bottom up.

2560 The core infrastructure and the training on the ground, we need the stuff on the ground, the building, the house, the thing we go into. We need to train the people on how to support it. We need to get the existing services into it. We need to open it up so that new competitors can come in without spending millions of dollars per community to get their foot in the door.

2561 I'll stop with that. That was a “yes”.

2562 COMMISSIONER MacDONALD: Thank you. Thank you for that.

2563 Changing focus here for just a minute, a latest communications monitoring report indicated that cost of services were increasing at a higher rate than inflation and that's particularly the case with entry level services.

2564 So I'm just wondering if you can speak to the affordability of service in your service area and what SSi in particular does to ensure that your services are affordable for residents?

2565 MR. PHILIPP: They're not affordable. It's that simple. Frankly, $80 a month is not affordable in my mind in the north, certainly not in the Arctic where unemployment is as high as it is.

2566 If you go back to my presentation when I say can you envision, you know, no TV, no radios, no cell phone, I mean this is a reality. Yes, we've got TV. We've got a couple of channels over maybe the local co-op cable network but we don’t have direct home TV in all these communities. We don’t have a lot of these services.

2567 So is $80 a month for internet with 20 gigs a month and 3 megs down and a higher subscription affordable, not at all.

2568 People afford it but, frankly, we went to no contract, month to month, pay as you go because people couldn't afford it. And when you put them into a two-year contract at $80 a month and they don’t make a payment and you suspend their account for two weeks, and when they finally do make a payment because their pay cycle when they get their cheque for their work doesn’t happen to coincide with your billing cycle, that's a reality in the north. They're living paycheque to paycheque.

2569 I mean food scarcity is a reality, right. Finding enough food for your family is a reality. So is 80 bucks affordable, not a chance. Is it being bought by thousands of subscribers, absolutely, but should we be doing more, no question. Do we have the funding to do more? I'll repeat, this is the box. So no, it's not affordable.

2570 COMMISSIONER MacDONALD: So with respect to funding, the Affordable Access Coalition has suggested that a fund be created to offset the monthly recurring charges for low-income Canadians. That's one option.

2571 Another option would be for the Commission to institute an entry level service package at a regulated rate and ensure that it's affordable that way.

2572 Would you care to speak to which direction you would feel is the best approach?

2573 MR. PHILIPP: Yeah, I thought about this a lot. I think that if we try to mandate a price that is affordable, it becomes a very, very big job. Somebody has got to monitor, police what's affordable. Is that speed still right? Is 5 megabits the right thing for the basic service?

2574 What we need to do is make the wholesale price affordable so that carriers can offer services competitively and I agree that we're not going to find market forces in every community. But if we start with a very simple premise that in all of these markets we need the wholesale price to the service provider to be cost effective so that we don't need to provide a subsidy at the retail level, we need to make sure that the price per megabit delivered in Grise Fiord is the same as the price per megabit delivered via fiber to our teleport in Kanata, and if we could do that, if we could achieve that, we would find service providers, guys like me, in a little town of 700 people 25 years ago saying, “Hey, I can buy that gateway feed and I can deliver dial-up internet in my hometown”, which we did 25 years ago. We bought one of the first 56K frame relay or CSU/DSU at the time was a sync link for Northwestel and put in a modem pool.

2575 There's people in the communities that will deliver. What you heard from the First Mile connection network was, you know, we provide a backbone and we allow the community to take over and do the rest. Well, frankly, that's a little too much. Most of those communities won’t find enough people to do it.

2576 So the answer is two-fold. You need to provide a contribution to reduce the cost of backbone connectivity and co-location facilities. So it can’t just be the super net model of fiber to that point and now you figure out the rest, especially not in the Arctic in these small communities, in any of these remote communities.

2577 It needs to go further. The line in the sand needs to be at the “you can now deliver a service”. You put your server in that rack, you put your cable up that tower. It's already there because we've already run the cables and the antennas because we've got the installers. And you now buy capacity at a regulated rate on this backbone. Now you will have competition at the edge.

2578 And where there isn’t competition because we spent a lot of time thinking about this, about how do we get around all the objections that might come to this plan from other competitors, from government, from others, government needs a co-location facility. We need one. Northwestel needs one. Nobody is going to object to that. Somebody might object to who owns it. Make that up. Make that a competition. Make that a public tender. Let the most creative people design, build, and operate it.

2579 Once that happens, if you don’t have service in a community, what we've proposed in the past is run a reverse auction because, frankly, if you just say, “Well, it should be $50 a month and you need to deliver it there”, if there's 20 customers in that community and you're going to generate $1,000 a month worth of revenue, how good is the service you're going to deliver?

2580 So the reality is we need to also look at the second level which is if there is no service delivered in that community, then what do you do to encourage service providers to come in?

2581 Our view in the past has been run a reverse auction in the community. Say, “This is what we want. This is what the consumer needs. Here's the wholesale price. It's already set. You should be able to do it.”

2582 Now, run that reverse auction and whoever wins that, force them to deliver it but don’t exclude others and I'm talking against myself here frankly. I believe you should leave the market open and if somebody else comes to the market and there is a subsidy already set because of the reverse auction and a second competitor comes in and they win the customer, give them the subsidy.

2583 Don’t continue to provide a subsidy to an incumbent or a service provider like us if we are not delivering the service. It makes no sense.

2584 So it’s two level. It’s the backbone; we have to provide the infrastructure and provide a regulated price in, that is at wholesale and competitive with what we can buy in the south or slightly higher. But really, if we could buy it what we’re buying it in the south, then all of a sudden the problem simply comes down to, why isn’t there a service provider locally? And frankly, if that gateway were there and if that backbone were cheap enough, there are people in these communities; there are ISPs and service providers that will start up.

2585 In fact, if you go back and look at why Articom was founded in the Northwest Territories, it used to be that the Government in the Northwest Territories bought their services in each community individually. And then one of the carriers, NorthwesTel, proposed, “Hey, why don’t we build a backbone into every community? And if we do that, the price for all the service providers will become cheaper and all of a sudden the problems will be solved.”

2586 It was a great idea; it just never got completed. They started building a backbone that went to frame relay but the promises of the prices decreasing never happened, never materialized. The open access to colocation never materialized. The towers that we might be able to use never materialized because if you can keep that out, you can keep competitors out because they can’t afford to build there own.

2587 So it’s a two-level thing. We need to solve the basic infrastructure. We need to build the buses and the roads. And we need to offer the service to those people that want to transit on those at a price that’s affordable. And frankly, affordability is a big, big factor. I think we should be providing for low-income housing. I think we should remove the subsidy for voice and just provide them with data connectivity and access to educational programs.

2588 COMMISSIONER MacDONALD: That actually answered a couple of my questions so I only have ---

2589 MR. PROCTOR: So Commissioner MacDonald, if I could just add a bit to that one.

2590 COMMISSIONER MacDONALD: Yes, sir.

2591 MR. PROCTOR: We currently operate under a regulated rate, the $80 a month plan that we’re offering as our Basic Connect Package is in fact a rate that was set by Industry Canada under the Connecting Canadians Program. So we are following what was viewed to be affordable for the resources available, a package that’s being offered.

2592 What Jeff was explaining with respect to the two-step, we have two proposals and we obviously think that the first proposal, the first mechanism, the BAP, the Backbone Assistance Program, if properly designed and executed, should go all the way to being able to deliver what the Commission may deem to be affordable broadband and, for that matter, basic services that should go beyond broadband, should include voice.

2593 To the extent that there may be a community or there may be a desire to have a lower price for either communities that are higher cost to serve or for individuals or groups of individuals who may not have the means, we’ve proposed something a little bit different or an additional second mechanism, only if needed, call the Consumer Broadband Offer. And that’s what Jeff was describing, the CBO.

2594 It’s a variation on a life-line service that you might find down in the States, for example, where through a negative auction process you would determine how much funding may be needed in a given community to be able to deliver a lower-cost service to individuals who qualified to take that service. Through a negative auction you’re actually, we believe, minimizing the uncertainty that up-top planning might cause in terms of what the right amount is. So the Commission may set a basic service package with a certain price and certain parameters around that.

2595 If there are communities, once the Backbone Assistance Program is put is place, that are not receiving service to that level -- or for that matter, communities outside those that have a backbone -- an open gateway provider with the Backbone Assistance Program funding, we think that the CBO is an alternative or a second mechanism, a second-level mechanism to be able to deliver more affordable packages for consumers.

2596 This differs somewhat. It looks somewhat like but it differs somewhat from the AAC proposal, as we understand it. We’re not proposing for that to be an exclusive subsidy. If anything, it needs to be portable; it needs to be technology neutral; it needs to go to the consumer to choose whatever local service provider they want for whatever service they want. We’ve been advocating that for several years.

2597 We were very happy to see the Lifeline Program in the United States come out on March 31st that put in place those exact same rules. They have good experience with lifeline programs. They’ve learned from the mistakes of the past. It is not an exclusive subsidy for ILX. It is an open subsidy, a portable subsidy of a very modest amount, I might add, but a portable subsidy that the consumer has to purchase mobile, broadband, fixed phone, whatever it might be, but from whatever service provider they want as well.

2598 So again, our implementation mechanism is somewhat different than the U.S. lifeline or from the AAC proposal but the base rule behind it has to be transparent, technology-neutral, and absolutely competitive-neutral. It’s meant for the consumer; it’s not meant for the exclusive domain of an new incumbent monopoly.

2599 COMMISSIONER MacDONALD: Thank you. Just one final with respect to data caps. We’re hearing some people suggest the minimum should 200; others say it should be unlimited. And since you are a service provider, I’d just like to ask how you manage that with your customers.

2600 How do you interact with them if they are continually going over their allotted data cap? Do you encourage or force them to another package? Do you have any online tools that they can access so they can manage their usage throughout the month? What do you currently have in place?

2601 MR. PROCTOR: We have been always -- we’ve always been very customer-centric. So we have tools online. When a customer signs up for a package they can come into the office and sign up in three minutes; it’s a very simple agreement. There is no contract -- no long-term contract so they pay their month fee.

2602 If they exceed their usage they’re notified; so they get an email saying that “You’ve exceeded your usage.” They can check online; there’s tools for them through the portal to check what their usage at any time is. When they exceed that monthly usage cap their modem is automatically downgraded to a slower speed; so we downgrade them to 96k download speed, send them a notice and say, “Hey, you’ve been restricted so that you’re not impacting the performance of other users who haven’t exceeded their usage.”

2603 They can continue at that speed for the remainder or the month -- it might be a day; it might be two weeks; it depends how quickly they use the usage -- or they can log into the portal and buy additional usage in one-gig increments. So if they want to buy an extra gig it will immediately reset their speed back to whatever there is, apply that usage into their account, and they can keep going until they exceed that, and then it will do the same thing, rate-limit them down to 96k but allow them to continue to utilize the service.

2604 COMMISSIONER MacDONALD: Good. Thank you. Those are my questions. I’ll hand it back over to my colleagues.

2605 THE CHAIRPERSON: Commissioner Molnar?

2606 COMMISSIONER MOLNAR: So I understand you have long-term proposal here as it regards the wholesale access model but I want to talk to something perhaps a little more immediate.

2607 Kativik was here yesterday and I’m sure you know well there how they manage their customers. And they have government and the have their residential customers and utilize their capacity to manage them on a holistic basis and provide priorities and so on.

2608 You mentioned you have as a customer both the government as well as many residential households. So what is it in the short term that would prohibit you from being able to manage the capacity on a more holistic basis such that maybe, you know, the households could take advantage of the full capacity that’s available when it’s unused by the government and vice versa?

2609 MR. FRASER: That’s a great question. When we did the Government of Nunavut RFP in 2009, they very specifically architected a network that was standalone. And to put this in perspective, there was not a lot of options at the time. QINIQ had been there for five years at this point. We were bidding ---

2610 COMMISSIONER MOLNAR: So is the issue it’s contractual?

2611 MR. FRASER: No, it’s actually physical architecture. We run a completely separate network so the capacity that is available in that computer system over there cannot even touch this one. They’re physically separate networks, physically separate pieces of electronics -- and contractual. But frankly, the contractual I’m sure we could overcome. The bigger challenge is, when the network was designed and architected and put to tender, we had no choice on how to bid it. We proposed, in fact, merging them but it wasn’t acceptable at the time.

2612 COMMISSIONER MOLNAR: So are there ways to address that separate and apart from your long-term plan as it regards all wholesale transport?

2613 MR. FRASER: The Government of Nunavut contract will come up again for renewal in the next three years and at some point -- at that point we will -- and the Government of Nunavut wants to do this as well; don’t get me wrong.

2614 COMMISSIONER MOLNAR: Oh, they do?

2615 MR. FRASER: Oh, it would make complete sense for them to be able to ---

2616 COMMISSIONER MOLNAR: So the two of you folks can solve this problem yourselves and ---

2617 MR. FRASER: I would say it’s a little more complicated than that. We would have to win the public tender and our proposal has to be accepted, yes.

2618 COMMISSIONER MOLNAR: Yeah. Well, assuming that you’re carrying both ---

2619 MR. FRASER: Absolutely.

2620 COMMISSIONER MOLNAR: --- both of those customers on the transport ---

2621 MR. FRASER: Yes.

2622 COMMISSIONER MOLNAR: --- you could collectively solve that without any of these and perhaps ---

2623 MR. PHILIPP: And potentially sooner.

2624 COMMISSIONER MOLNAR: --- in a shorter time frame than something like this would come (inaudible)?

2625 MR. PHILIPP: And potentially even sooner, absolutely. We're in discussion with the GN about that, and on the point of sharing capacity, I believe that firmly. We've been working with Connected North for the last couple of years, so with Sysco, running a program called Connected North, which was providing our excess capacity into classrooms for high-definition video conferencing.

2626 So Sysco donated the hardware, we donated the capacity, Nunavut Broadband, in fact, brought capacity dollars to bear and we've been delivering distance education using our excess capacity outside of the GN network.

2627 COMMISSIONER MOLNAR: Okay, thank you. I just wanted to address that, as I thought perhaps there was some short-term capacity that could be managed outside of this regulatory forum.

2628 MR. PHILIPP: That is certainly on our discussion list with the GN, yes.

2629 COMMISSIONER MOLNAR: Okay, thank you.

2630 THE CHAIRPERSON: It's clear from your answers earlier that in your view, that the wholesale service you propose would be a rate-regulated service, correct?

2631 MR. PROCTOR: Yes, that's correct.

2632 THE CHAIRPERSON: You also mention the high cost of satellite transport. Are you of the view that that's sufficiently competitive?

2633 MR. PROCTOR: Yes, we are.

2634 THE CHAIRPERSON: At this point, for not -- yes? Why?

2635 MR. PROCTOR: Jeff's done most of the negotiations. That's probably the best person to answer that.

2636 MR. PHILIPP: You know, we've worked in Africa, Indonesia, the South Pacific. We've worked with other satellite providers. We've looked at satellite capacity in contracts from all of these providers, and it always comes down to a couple of variables.

2637 It's not just the price per megahertz, it's the EIRP, the effect of irradiated power on the ground. How bright is your flashlight compared to the next guy's? It's what size antenna do we need? What size transmitter do we need, because the cost of power is so high?

2638 So we take all of this into account and frankly, I've had a love/hate relationship with Telesat for a long time, but I make no bones about it. I will tell them what I'm unhappy about and what I'm happy about.

2639 The pricing that we get for C-band, especially in this last round, was very competitive. We went to multiple -- every provider. In fact, we went to providers that didn’t have enough capacity and asked if they could move satellites into position before we concluded a deal with Telesat.

2640 So on the C-band terms that we have now, I don’t believe for a minute that there are significantly better deals to be had. It was a very good deal and a win-win for Telesat and for us, I would say.

2641 But on Ka band, on high throughput, there's lots of negotiation to be done yet on what is a payload worth? What would that payload look like? If it's for 15 years or it's covering the mid north and the north, it's serving 150 communities, and at that point, the cost per community, the cost per transponder, becomes far, far cheaper. But it depends on the design of the architecture.

2642 THE CHAIRPERSON: So -- sorry, but so not necessarily -- you're still hopeful that market forces would deal with the high throughput Ka band?

2643 MR. PHILIPP: We have, as part of our contract, we will take some initial high throughput from Telesat, but it doesn’t lock us into a 15-year commitment with them and it will give us the opportunity to start to work with other providers as well as Telesat to find out what is available that would be potentially cheaper in high throughput. But the only way to get any of this cheap enough is to commit longer term to it. We can't be buying in four-year commitments. It doesn’t work for Telesat either.

2644 MR. PROCTOR: And to do the package totally, the best way to look at the satellite is as dark fibre. You still have to light that fibre. That takes a lot of electronics, a lot of operating costs on the ground. So it's one component and it is a negotiated component, being the transponder space or the fibre coming in, whatever else it might be, in terms of the backbone.

2645 That's why the open gateway concept is so, we believe, critical. The fibre coming into a community, the satellite serving the community, is only one component of it. You still have to have a lot of other pieces to light up and make workable that backbone. So that's why it's a whole piece, it's a holistic view.

2646 THE CHAIRPERSON: Understood.

2647 I believe legal has a question or two. MS. HAMLEY: Thank you, Mr. Chairman.

2648 In respect to the federal, provincial, or territorial government funding that you’ve received to cover the cost of broadband internet infrastructure, we would ask that you undertake to provide the following information by May 5th:

2649 First, the amount of funding received for each funding program for the purpose of offsetting satellite transport costs, if you could provide this information by program and by year.

2650 And second, during the years in which you received this funding from these programs, what were the annual costs and capacity for the satellite transport services which you used to provision broadband internet in your serving territory?

2651 Can you do that by May 5th?

2652 MR. PROCTOR: We can certainly do that by May 5th.

2653 UNDERTAKING

2654 If I could just add an editorial or a footnote to that, I would like to point out to the Commission schedule 2 to last July's intervention by us, and it's a report actually prepared by Lemay-Yates, which is a more global view. It's a discussion of subsidies and investment in rural and remote areas.

2655 We'll certainly give you specifics of our numbers but this is a more global view of what's happened in Canada over the last few years.

2656 I'd also like to point out, given that in our particular case, we only receive funding for the Territories, for the Northwest Territories and for Nunavut, you did ask, "What about provincial and territorial funding?"

2657 There was a phenomenon, not a pleasant one, in Nunavut and in the Northwest Territories and the Yukon. When you look at federal programs connecting Canadians -- Broadband Canada, (inaudible) before that, the infrastructure Canada programs before that -- there was a federal prohibition on stacking. That means that you cannot get two sources of funding for the same program.

2658 So when KRG's in front of you, they give you a very nice breakdown of what federal funding is, what provincial funding is, what their own regional funding may be. There is no provincial, or if you want territorial funding for Nunavut, it actually runs contrary to federal stacking rules.

2659 So I'm just adding that one as a note. When one looks at the amount of funding that may be available in Territories, there's actually a permanent handicap, in terms of the amount of government funding that can actually be allocated, which affects obviously the amount of funding that is allocated to Nunavut from government sources.

2660 MS. HAMLEY: Thank you.

2661 THE CHAIRPERSON: Because the money territorial governments get from the federal government is deemed a grant or contribution to the same level as a grant and contribution from the resources.

2662 MR. PROCTOR: The definition of a Catch-22, that's right.

2663 THE CHAIRPERSON: Yeah, okay. I get -- was aware of the stacking rules. I didn’t realize the application of it in this case.

2664 Okay, good, thank you very much.

2665 We will hear -- thank you, those are our questions and we'll move on to hear the next intervener.

2666 Madame la secrétaire.

2667 THE SECRETARY: Merci.

2668 We'll now connect via Skype.

2669 Hi, Ms. Shepherd. Can you hear me well? We cannot hear you. Maybe you're on mute?

2670 MS. SHEPHERD: I don't think so.

2671 THE SECRETARY: Okay, yeah, now it's working.

2672 Hi, how are you? Welcome.

2673 MS. SHEPHERD: Hi. Thank you.

2674 THE SECRETARY: So you may begin your presentation. You have 10 minutes.

PRESENTATION

2675 MS. SHEPHERD: All right, thank you.

2676 Good morning, and thank you to the Commission for your time today.

2677 The question of basic service, as it has been posed in the notice of consultation and in many of the interventions and comments we've heard so far, tends to be rationalized primarily in relation to the digital economy.

2678 As a researcher of digital culture and telecommunications policy, I'm an assistant professor at the University of Calgary, studying those things. I aim to offer a perspective within this hearing that broadens the digital economy framings of basic service.

2679 Canada’s digital economy framework has been critiqued by myself and others for its narrow and instrumental focus on things like digital skills training for workers and innovation in the digital technologies sector.

2680 But what we are talking about, and I think it's clear in this hearing, by using the term "basic service" is something much more fundamental, something that is basic, by definition, forms an essential first principle upon which all else rests. Seen in this light, the consultation addresses the practice of communicating itself as the basis for not only economic, social and cultural ends, but the very fact of an economy, a society, and a culture in themselves.

2681 And increasingly, it's clear that the contemporary and future infrastructures needed to support this kind of basic practice of communication are predicated on broadband internet. A variety of delivery mechanisms for fixed and wireless broadband combine to create digital infrastructure. These physical manifestations of basic service have been the focus of much of this consultation so far.

2682 What I aim to add today is a consideration of the demand side of basic service, rather than primarily the supply side, as it’s typically discussed. The supply side questions, while crucial, don’t necessarily provide a full picture of how to meet broader policy objectives of economic growth, citizen engagement, and cultural flourishing.

2683 The infrastructures supporting such outcomes, while necessary, are not sufficient. As the concept of "affordances" suggests, the success of technical systems rests on the interactions between technologies and the people using them.

2684 So what I want to ask today is what kinds of communication does improved digital connectivity afford for Canadians?

2685 To answer such a question, I shift the focus onto the people implicated often invisibly in this consultation. These are Canadian citizens. When viewed broadly, not only in digital economy terms that see citizens primarily as economic engines, as either workers or consumers, Canadians express multiple and at times conflicting motivations, desires, and understandings around digital connectivity.

2686 For example, in my submissions I referenced a longitudinal review of the Canadian Internet Use Survey conducted by myself and Ryerson University Professor Catherine Middleton. While the most recent survey conducted in 2012 shows that most Canadians, nearly 84 percent, view internet connectivity as a necessity, as a basic service, or as a kind of utility, like we can think of electricity or water, a significant proportion, so 16 percent, remain offline for the most part.

2687 Within this group of Canadians who do not connect to the internet regularly, we found a dual digital divide, represented by two distinct camps of non-users, those who are either non-users by choice or non-users due to involuntary circumstances. And these involuntary circumstances include things like the prohibitive costs of service, lack of access to infrastructure, and lack of skills or training. And while these barriers seem to shift in frequency over the years of the survey’s results, the proportion of non-users by choice or due to lack of motivation seems to remain relatively small but consistent.

2688 One of the chief reasons claimed by survey respondents for choosing to remain offline, corresponded with advanced age. And I think this is a really important demographic to highlight in this consultation given the ageing Canadian population which tends to be overlooked in much of the digital economy framework.

2689 The choice made by older Canadians not to connect potentially, is a demand-side issue that won’t necessarily be addressed by improvements to digital infrastructures. And it’s important not only in light of basic communication needs but also considering the trend toward the provision of essential health services through online portals. How will this increasingly large proportion of the Canadian population be served by the regulation of basic service?

2690 Moreover, age-related reasons for choosing not to connect to the internet may also be seen to correlate with socioeconomic concerns about affordability, as we’ve heard a lot about, as well as the more social phenomenon of having no need or interest in connecting.

2691 And I’m raising these points in order to highlight how consideration of specific groups of people affected by digital infrastructures, especially those who experience the most barriers to connection, often challenges the version of average Canadians as imagined by the digital economy framework.

2692 The distinct needs of these different groups of Canadians, beyond the digital economy and its implied target populations of workers and consumers, demand more social policy considerations.

2693 Social policy is of course embedded within the seemingly technical regulatory decisions, such as those around target download and upload speeds, data caps, and latency. So for example, yesterday we heard from the First Mile Connectivity Consortium who noted the deficiencies in current service provision in northern communities. And these deficiencies show a bigger picture of how social inequalities have become even further entrenched through technical means, where the isolation experienced by members of these communities often gets compounded rather than rectified by digital connectivity.

2694 What such an example further demonstrates is the need to define basic service not only in terms of specific technologies, but as a broader concern with the reliability, affordability, and quality of connections. These more complex and intersecting dimensions of basic service suggests that a simple appeal to market forces is insufficient for ensuring that all Canadians can benefit from improved communications infrastructure.

2695 And this is true across various parties’ interventions in this consultation, where it can be seen that market forces are a contentious issue. Some service providers portray a dynamic and competitive Canadian marketplace for telecommunications services, while others describe an unfair and asymmetrical marketplace. Individual intervenors and consumer and public interest groups often question market logic altogether, noting the fallacy of the invisible hand as an assurance that the needs of demographically varied and geographically dispersed populations will be met.

2696 The disconnect between various intervenors’ perspectives on the ability of competitive market forces to support all Canadians’ access to basic telecommunications services, points toward the inherent problems with primarily market-based solutions. As such, moving forward with funding and subsidies for the least-served constituencies are crucial to maintain as broadband internet becomes defined as a basic service.

2697 The first step toward the articulation of appropriate regulatory safeguards is improved research and measurement of the reliability, affordability, and quality of existing digital infrastructures. Such monitoring will help to identify supply-side inequalities.

2698 But it needs to be matched with other kinds of research on the demand side. So more robust and reliable national surveys that can be conducted as part of the renewed commitment to the long-form census and support for qualitative programs of research by advocacy organizations, community groups, and university researchers, is needed on how diverse populations of Canadians are negotiating digital connectivity.

2699 Acquiring a better understanding of the people who are implicitly at the heart of this consultation, suggests a suite of policy instruments based on a version of basic service that acknowledges how fundamental these regulatory decisions are for people’s everyday lives.

2700 A broader notion of basic service reaches beyond the imperatives of the digital economy to make space for Canadians not only as workers or consumers, but as citizens who participate at all levels of governance, who create and share cultural expression, who learn and who teach, who explore the world, who connect with family and friends, and who come to know themselves in and through digital infrastructures.

2701 So thank you very much for your attention and I welcome any further questions.

2702 THE CHAIRPERSON: Thank you for that.

2703 Commissioner Molnar?

2704 COMMISSIONER MOLNAR: Good morning. I believe it’s morning in Calgary.

2705 MS. SHEPHERD: It is.

2706 COMMISSIONER MOLNAR: Okay. I have only a couple of questions for you. And first of all I want to understand, sort of, the fundamental premise of your comments here today.

2707 You begin with a concern that we have a focus on the economy. Based on the record of this proceeding, which is exhaustive, as well as what you may have heard in the last day or so, what leads you to conclude that our focus is solely on engagement in the economy and not civic engagement, cultural engagement, social engagement?

2708 MS. SHEPHERD: Okay, thank you. Yeah.

2709 This has of course come up in the further discourse generated by this proceeding. But I’m just referring to the preliminary description in the TMZ, which for me is really the whole purpose of the consultation in the language of the digital economy.

2710 And my kind of concern (inaudible) this language is that it tends to potentially limit some of the further implications of the hearing and the proceeding. So for example, in discussing the issue of speeds, which had come up a number of times, the sort of implicit assumption is that download speeds would need to be higher than, let’s say, upload speeds because the uses that we’re imagining for people who are, sort of, communicating over those speeds are primarily consumption-based. So they’re primarily downloading as opposed to uploading.

2711 And this I think reinforces the position that the average user is a consumer primarily, first and foremost, as opposed to an interlocutor or somebody who is using this sort of two-way (inaudible) of broadband internet.

2712 So this is just sort of what I mean about relying too heavily on the framing implied by the digital economy, is that it narrows and potentially restricts some of the possibilities that could be entertained through this proceeding. But of course as you point out, in the broader, sort of, diversity of input into the proceedings, we have heard lots of alternative framings of the rationale behind basic service.

2713 So yes, you’re right that that’s true. I just wanted to have it on the record that this digital economy framing is the sort of predominant framing that tends to be used as the key benefit that might potentially restrict some of the things we talk about.

2714 COMMISSIONER MOLNAR: Okay, fair enough. You’re on record and I can speak only for myself that certainly as we’re looking at what are the needs of Canadians for access and issues around adoption, certainly we are considering their needs much more broadly than simply the economy. I mean, needs are needs. I mean, you’ve heard plenty of conversation about needs for education, for example, right?

2715 And we have heard the conversations about cultural and social and so on and how that’s all important for a communication system to support.

2716 The record also does have a lot of information as it regards adoption and what may be influencing adoption, be it access, be it affordability, be it literacy. Do you see anything missing on the record that you’d like to highlight that should be considered?

2717 MS. SHEPHERD: Yes, thanks.

2718 Well, based on the research that Dr. Middleton and I have conducted on the Canadian Internet Use Survey, one of the things we found in looking at the changes to the survey over time, were changing descriptions of the sort of motivations behind people choosing to not connect, so those are non-users by choice, or not being able to connect, non-users by circumstance. And the reasons, as you said, have included things like affordability, access, but also things like digital literacy. Reasons such as age, reasons such as seeing no need for connecting have been stated.

2719 And the main sort of issue with this diversity of reasons is that the survey changes every year. So it’s difficult to track the persistence of those reasons given over time.

2720 And that’s why one of my sort of goals here is to put forward the call that potentially the CRTC could help in providing, or at least making the case to federal agencies like Statistics Canada, for reinstating, first of all, the Canadian Internet Use Survey; creating a kind of more robust survey, one that maintains certain questions over time so that the results can be tracked a little bit better without the sort of gaps that we see now; and adding more, sort of, qualitative research as well.

2721 So the EKOS report is a great example of this. If we could have, sort of, more work like that being done, I think you would get a better picture of exactly this question of needs that we’ve been trying to define.

2722 So really my call is for more research as supported by the CRTC in whatever capacity it can be supportive. So it doesn’t necessarily mean funding the research, although that would be nice, but also, you know, working in partnership with other federal agencies to, you know, create more robust terms of measurement.

2723 COMMISSIONER MOLNAR: Thank you. Those are my questions and I think you managed to explain well your call for research. So that’s all I have. Thank you.

2724 THE CHAIRPERSON: A few more questions.

2725 Commissioner Vennard?

2726 COMMISSIONER VENNARD: Good morning. Can you hear me?

2727 MS. SHEPHERD: Yes.

2728 COMMISSIONER VENNARD: Okay, hi.

2729 I understand what you’re saying, that we tend to focus on the supply side of things because you’re kind of using that economic model yourself of supply and demand.

2730 In your submission, you say in a couple of places that we need certain sorts of policy solutions but you don’t really suggest any. And I would just like to give you the opportunity to briefly suggest one, possibly two, that you think would be appropriate, that would be focused at what you’re referring to as your demand side?

2731 MS. SHEPHERD: Yes. Thank you.

2732 So I think on the one hand the question that has already come up for digital literacy and skills training and whether that should fall somewhere under the (inaudible) of the CRTC’s policy activities, would be one place to start developing more social policy in this area. And I think it does (inaudible) the CRTC’s goals, especially in terms of this question of adoption we’ve been hearing about.

2733 So that would be one answer, is something -- I don’t know exactly what it would look like, but developing something on the side of digital literacy, whether that’s, you know, committed support for Canadians that are aged already in communities (inaudible) digital literacy. That’s already happening. I don’t think there’s a need to reinvent the wheel there. But there are support groups that are already engaged in this kind of (inaudible). So for example, like media (inaudible) and groups like that.

2734 I think media literacy and skills-training programs could be sort of a condition that’s attached to, let’s say, subsidies for the development of infrastructure in underserved communities. So that could be one sort of piece of the puzzle.

2735 As we just heard from SSi, the part that people don’t usually talk about is the community labour involved in maintaining infrastructure in places that are remote. So the other part, the sort of human side to this infrastructure question in terms of the literacy training.

2736 And second, I think extending the CRTC’s current attempts to make participation in these types of proceedings acceptable, is really important. So in (inaudible) more diverse groups of Canadians to participate in hearings to have their voices be heard and to be represented. And that’s already happening (inaudible) going further in that direction (inaudible) potentially through partnerships with (inaudible) universities.

2737 I know in my own university a lot of the graduate students haven’t heard of these abilities to participate in hearings. So they hadn’t heard of, for example, (inaudible) to try to get the word out (inaudible) universities and schools to enable people to know, which I think already there’s really good things (inaudible) in terms of this kind of outreach.

2738 COMMISSIONER VENNARD: Okay.

2739 MS. SHEPHERD: Yeah.

2740 COMMISSIONER VENNARD: Oh, are you finished?

2741 MS. SHEPHERD: Yes.

2742 COMMISSIONER VENNARD: Did you have more to add?

2743 MS. SHEPHERD: I’m okay for now, thanks.

2744 COMMISSIONER VENNARD: Okay, thank you. Those are my questions.

2745 THE CHAIRPERSON: Thank you very much.

2746 You referred to older Canadians. And I was wondering to what extent, setting aside affordability issues because that’s a separate issues, in terms of needs, has your study covered the fact that when government services move online or when newspapers move online -- sort of, other types of services and applications that older Canadians might value -- that that’s actually a mover for those Canadians? And although they may have preferred to get their newspaper at the front door on paper, that they are actually changing their perspective on the need, assuming they can afford it?

2747 MS. SHEPHERD: Yes. So your question touches on the key thing here, which is clearly affordability, in a lot of the research that I’ve been part of on older Canadians, which is mostly around cellular telephones and wireless, mobile broadband.

2748 So yes, affordability aside, yes, I think that according to the CIUS some of the reasons for those groups of non-users who are choosing not to connect, which many of them are seniors, is that they don’t see the value. So I think you’re right that this will change our plan, but then it’s really difficult to see that in the survey results because of the ways that the survey has changed over time. And that survey was disconnected, so to speak, after 2012.

2749 So if it gets reinstated there would be a kind of gap there of (inaudible), which it would be difficult to trace the influence of the (inaudible) online sort of provision of these kinds of services, as you mentioned.

2750 THE CHAIRPERSON: Okay. Well, thank you for that.

2751 By the way, we’re not insensitive to the need for consistent data and gathering. And we do our best to try to ensure that, for instance, Canada does continue to invest in a consistent measuring tool. So we’re on that. I can’t guarantee results but we’re on that.

2752 Okay? Thank you.

2753 Those are our questions. I don’t know. No, nothing from legal. So why don’t we take a break until 1:30 and we’ll resume with the other interveners at that point.

2754 Donc, nous sommes en pause jusqu’à 13h30. Merci.

--- Upon recessing at 12:28 a.m.

--- Upon resuming at 1:30 p.m.

2755 THE CHAIRPERSON: À l'ordre, s'il vous plait.

2756 Madame la secrétaire.

2757 THE SECRETARY: Thank you. We'll now hear the presentation of the Eastern Ontario Wardens Caucus and the Eastern Ontario Regional Network. Please introduce yourself and your colleagues and you have 10 minutes for your presentation.

PRESENTATION

2758 MR. EMON: Thank you, Madam Secretary, Mr. Chair, and Commissioners.

2759 Good afternoon. My name is Peter Emon. I am the Warden of Renfrew County and the Chair of the Eastern Ontario Wardens’ Caucus.

2760 The Wardens' Caucus are elected -- the elected representatives of 750,000 residents of Eastern Ontario.

2761 With me today are my colleagues from the Eastern Ontario Wardens' Caucus and the Eastern Ontario Regional Network, who I am pleased to introduce.

2762 Appearing to my left is Reeve Dave Burton from Highland East and the Chair of the Eastern Ontario Regional Network; Warden Francis Smith of Frontenac County; Dr. Reza Rajabiun, who is our consultant; Warren Arseneau, director of the Eastern Ontario Regional Network.

2763 On my right is Warden J. Murray Jones. He's the Warden of Peterborough County and Vice Chair of the Eastern Ontario Regional Network as well as Eastern Ontario Wardens' Caucus. And we have David Fell, who is the CEO of the Eastern Ontario Regional Network.

2764 Behind me, I have Paula Preston, Eastern Ontario Regional Network Engineering Manager and Claudio Menendez, Eastern Ontario Regional Network Project Manager.

2765 The Eastern Ontario Wardens’ Caucus works as a team on behalf of 13 county and single tier municipalities representing 750,000 residents. We also work quite closely with the Eastern Ontario Mayors' Committee, which represents 500,000 residents.

2766 The Eastern Ontario Warden's Caucus' mission is to monitor federal, provincial and municipal legislation, regulatory and government information, and to conduct research and analysis for purposes of influencing and advocating enhanced municipal service delivery in Eastern Ontario.

2767 We are here today because access to basic communications services represents a common challenge for our communities. For over a decade, our residents, businesses, and public service agencies have identified limited access to the internet as a key barrier to economic development in Eastern Ontario.

2768 In response, and in cooperation with our provincial and federal partners, the Eastern Ontario Wardens' Caucus has developed the Eastern Ontario Regional Network, which serves as the vehicle for extending broadband access and improving internet speeds across the region.

2769 I would like to highlight for the Commission why we are asking the CRTC to redefine fixed and mobile high speed access as basic services under the Telecommunications Act and outline the recommendations we have detailed in our written submission.

2770 As you are aware, lower levels of government such as ours, represented in the Eastern Ontario Wardens' Caucus, have become increasingly responsible since the 1990s for delivering public services and economic infrastructure which helps retain and attract residents and businesses to our communities.

2771 Although this trend allows local communities to develop solutions that meet their individual needs, small rural communities such as ours have limited means to raise funds from taxes or to divert resources from social services to infrastructure development.

2772 At the same time, the business case for investing in the private delivery of public infrastructure -- for example schools, clinics, transport, and communications infrastructure -- can be very limited or non-existent in the rural communities we represent. Our experience with the development of broadband and mobile networks in Eastern Ontario over the past decade shows clearly that under-investment in rural network infrastructure is real.

2773 On the other hand, the Eastern Ontario experience also shows that different levels of government can work together to address market failures in a way that promotes, rather than discourages, private-sector incentives to invest in providing affordable and reliable services to our communities.

2774 We have argued in our responses to the Commission and to Rogers in this matter, that under the approach that the Eastern Ontario Wardens' Caucus and the Eastern Ontario Regional Network have recommended, to include fixed and mobile broadband in the basic service framework, would actually increase investment and competition by private providers to serve the needs of our communities.

2775 Where market forces are inadequate it is the responsibility of elected representatives such as ourselves and agencies such as the Commission to address the problems facing residents, businesses, and the broader public sector in under-serviced communities.

2776 Some of the parties arguing that the size of the current gaps are small and that market forces are sufficient to meet these demands, have as recently as just over a year ago received significant subsidies from Eastern Ontario Regional Network and other public sector organizations.

2777 Although we look forward to continuing our work and building future partnerships with all service providers willing to invest in Eastern Ontario, we strongly disagree with the contention that the mission has been accomplished or that the infrastructure subsidies from the new federal budget will be sufficient to address rural market failures across Canada.

2778 In addition to evidence detailed in our written submission, the record of this proceeding offers a wide range of evidence from other rural communities and advocates for under-serviced communities from all regions of Canada that are essentially consistent with our recommendations.

2779 Commitments to rural Canada are explicit in the Telecom Act, and a fundamental expectation of Canadian federalism.

2780 I will now ask Reeve Burton, the Chair of Eastern Ontario Regional Network, to elaborate on the concerns raised by the federal regulatory framework for Eastern Ontario.

2781 Reeve Burton?

2782 MR. BURTON: Thank you, Warden. With financial support from the provincial and federal governments, the Eastern Ontario Wardens' Caucus has responded to the demands for more stakeholders by setting up the Eastern Ontario Regional Network.

2783 Through Eastern Ontario Regional Network, we have made significant investments in the transport and broadband access networks and serve residents, businesses and public sector organization across Eastern Ontario.

2784 As a result, the region has also experienced significant improvements in terms of broadband coverage, which is delivered to residents and businesses through our private partners.

2785 Without substantive public investments, we are confident that the incentives for the operators to meet the needs of our residents, businesses, and public sector agencies would have remained limited.

2786 Without public sector leadership through Eastern Ontario Wardens' Caucus and the Eastern Ontario Regional Network, it is clear that rural parts of Eastern Ontario would have continued to fall behind in terms of broadband access.

2787 We are here today because we recognize that despite our past efforts and achievements, the job has not yet finished.

2788 Much like urban parts of Canada, demand for broadband internet and mobile services is rapidly growing in Eastern Ontario. The experience in Eastern Ontario, and other rural communities from across the country submitted to the record of this proceeding, indicate the lack of access affordable transport capacity represents a key barrier in overcoming market failures in our communities.

2789 In Eastern Ontario, even the incumbent was not willing to extend or upgrade its regional transport network or give service providers access to available capacity before Eastern Ontario Wardens' Caucus and EORN stepped in with the inducements to form the public subsidies.

2790 Without forward looking public policies that generate funds needed to improve the business case for investing in fixed broadband and mobile networks in our communities, we will not be able to engage market forces in serving our communities with essential communications services.

2791 It is precisely for these reasons that we recommend the Commission expand the range of basic service to include both fixed and mobile high speed access and to develop a sustainable cross-subsidy mechanism to support initiatives by lower tiers levels of government trying to meet demands for their communities for better connectivity.

2792 Warden Jones from Peterborough Country will elaborate on some of the challenges we are currently trying to address in Eastern Ontario in terms of access to basic services.

2793 MR. JONES: Thank you very much and thank you for having us here today.

2794 Since our colleagues have outlined some of our key concerns about the federal regulatory framework, I will focus on some of the specific problems that EOWC and EORN have addressed, and we are trying to overcome here today in response to demand by our stakeholders.

2795 As my colleagues pointed out, in Eastern Ontario we have recognized that market forces are not sufficient to meet the needs of our residents and our businesses and our visitors in terms of broadband access or mobile connectivity.

2796 As Canadians that live and work in rural communities, this is not a surprise to us as we long ago recognized that if we don’t solve our own problems, nobody else will.

2797 The EOWC therefore set up EORN, the Eastern Ontario Regional Network, to negotiate with private sector entities to extend their broadband networks and to improve the capacity of their networks to meet the needs of Eastern Ontario stakeholders.

2798 Now, in setting our original coverage and our speed objectives for EORN back in 2009, we determined that the national minimum service standards as defined by the CRTC, and which the Commission is reviewing in this proceeding, were inadequate to meet the needs of the region at the time and we adopted even higher speed targets.

2799 As detailed in our written submission, EORN has achieved speed targets that are substantially higher than the CRTC standard and the previous federal rural broadband development programs.

2800 Having achieved our objective of delivering speeds of 10 megabits per second download and 1 up, to more than 90 percent of the Region in 2014, we recognize the need for ongoing investments to meet the growing demands of our residents beyond our current speeds and our current capacity.

2801 Besides continuing to improve broadband speeds across the region, we are engaged in a number of strategic initiatives to address emerging concerns, which help explain why it is imperative for the Commission to institute a sustainable cross-subsidy mechanism to improve connectivity in rural communities such as Eastern Ontario.

2802 Now over the past number of years we have had many complaints from our residents, our businesses and even emergency workers about the coverage and capacity of mobile networks in the region.

2803 To evaluate these concerns, last year we retained an independent engineering company to map mobile network coverage and capacity gaps in all of Eastern Ontario, so this was not guess work.

2804 Consequently, last year the EOWC identified a project aimed at closing mobile network coverage and capacity gaps as a strategic priority.

2805 Achieving this priority will require substantive commitments by the Eastern Ontario Wardens Caucus, that’s for sure, as well as higher levels of government and mobile network infrastructure operators that serve our region. We’re all in this together.

2806 Access to mobile data services and reducing coverage gaps represents an important problem for many of the communities that we represent, particularly with respect to reliable connectivity needed for using information technology applications by our emergency service workers.

2807 We urge the Commission to include both fixed and mobile broadband/high-speed internet access into the basic service framework.

2808 We also urge the Commission to develop an industry funding mechanism of sufficient scale that helps close the gap in terms of access to these basic services in rural and remote communities.

2809 We live in a world of rural Ontario much different than the city life and I think you all probably know that.

2810 And I think I spent half my time as warden of Peterborough county trying to say that life does exist outside the city limits and I keep trying to hammer that away and I think that’s what we’re trying to say today as well. Thank you for listening.

2811 Warden Smith? She’ll elaborate on our recommendations on this matter. Thank you.

2812 MS. WARDEN: Thank you. Good afternoon, I am Francis Smith, Warden of Frontenac County and thank you for hearing us out today.

2813 Given the concerns and evidence we have provided, as well as evidence from other rural communities in this proceeding, we hope the Commission recognizes that broadband internet access and mobile services are already essential services for most Canadians, regardless of where they live.

2814 At the same time market, forces or one time infrastructure infusions, are not sufficient for ensuring that coverage, affordability, and service quality gaps across the urban-rural divide are addressed, or prevented from growing further with the increasing demands for service.

2815 On behalf of the Eastern Ontario Wardens Caucus and the communities we represent, I urge the Commission to consider our needs and interest in this proceeding by adopting recommendations we have detailed in our written submission.

2816 To promote private sector incentives to meet current and future needs of rural and remote communities across the country, we submit the Commission should, number one, redefine high-speed/broadband Internet access as a basic service under the Telecommunications Act.

2817 Any other decision would be inconsistent with the reality that broadband is already essential to most Canadians.

2818 The vast majority of parties to this proceeding and Canadians according to CRTC surveys, agree with this recommendation.

2819 Number two; include high-speed mobile broadband access services in the definition of basic broadband services.

2820 Mobile network coverage and the availability of high-speed mobile data service with minimum service quality guarantees are critical for communications between our residents, visitors, and emergency service workers.

2821 This issue has not been discussed as extensively as fixed broadband by other parties, but we hope the Commission recognizes its importance for rural Canada.

2822 Number three; mandate forward looking national standards. Existing aspirational speed targets were inadequate when the Commission adopted them five years ago and remain so today.

2823 We urge the Commission to mandate that operators provide minimum service quality guarantees to residential and business users at a reasonable price, as many Internet applications require sustained speeds and reliability.

2824 And number four; develop a sustainable industry funded cross-subsidy mechanism.

2825 Although one time infrastructure investments can overcome some rural conductivity problems, without sustained commitments by the public sector, rural communities are likely to fall behind and we don’t want that to happen.

2826 Thank you for your time and if we can answer some of your questions, please.

2827 THE CHAIRPERSON: Well thank you very much for being here and in such large numbers. It’s appreciated and it demonstrates how important this is to you and I –- particularly I know that you’re -- you’ve got other things to do than appear at CRTC hearings and the busy lives you have.

2828 So I’ll put you in the hands of Commissioner Vennard to start us off.

2829 COMMISSIONER VENNARD: Good afternoon. Pardon me. Thank you for coming to talk to us today.

2830 I have several questions for you, some of which relate to decisions that you have made already and also ones that you are going to be making in the future as well as your perspectives.

2831 I think in that regard it would be very useful if you would give us kind of a holistic view of your decision-making process, just to put it in context for us.

2832 Otherwise we’ll just be asking different -- I’ll be asking you different questions and the conversation will go all over the place.

2833 So I’m wondering if somebody, if one of you -- and I’ve tried to sort of put into areas that will be easy to -- for someone to respond to.

2834 If you could tell me a little bit about your organisational structure, and again, I’m interested in the decision-making process that you had.

2835 Your governance, how -- exactly what your organisation is. So if somebody could speak to that for a couple moments?

2836 I’d also like someone to tell me a little bit about your network structure. The kind of technologies you have, okay, your partners, the ownership of the network and so on.

2837 So that we can once again get a little bit better idea of how you make your decisions and where your perspective comes from.

2838 And then finally I’d like somebody to just elaborate on what you call the EORN model, which shows up on paragraph 18 of your submission.

2839 And maybe somebody could just encapsulate that for us in a short brief overview.

2840 So let’s just start with your structure, your governance, your decision-making processes and so on?

2841 MR. FELL: Thank you very much for the questions. Hopefully you’ll remind me of questions two and three later on.

2842 COMMISSIONER VENNARD: Sure.

2843 MR. FELL: And also to supplement we’ve put information packages about background material and on our digital strategy and the information package.

2844 So the Wardens Caucus, that some of our members represent, are the 13 upper tier governments outside of Ottawa in Eastern Ontario. It covers about 55,000 square kilometres.

2845 They came together in mid-2004-2005, to advocate for rural issues in Eastern Ontario. They did a substantial amount of research at the time and have continued to do a substantial amount of research on the economic realities of living in Eastern Ontario.

2846 And back in 2007 and 8, they identified broadband as one of the number one economic development goals required for the region in order to participate in the modern economy.

2847 They pulled that research together. They put $10 million of their own money on the table and were able to partner with the federal and provincial governments to secure funding, $55 million from the province and $55 million from the federal government.

2848 We entered into a joint agreement. The Wardens Caucus did and they formed EORN as the organization that would be the delivery mechanism for this project.

2849 So EORN is not -- it’s a non-profit, non-share capital corporation with a Board of Directors. My Board members are here today. The EOWC substantively controls EORN through its five seats on our Board and then we have four additional public members. It's a public/private partnership.

2850 So in terms of our governance, did you also want background information on how we made the decision?

2851 COMMISSIONER VENNARD: Yeah, just briefly how you go about making your decisions because you made some important decisions on behalf of the people that you represent and I'm interested in knowing how that's structured, how that came about.

2852 MR. FELL: So we did go through a thorough process at the time. I think one of the wardens mentioned that the targets at the time, I believe the national targets are 1.5 down and 500 kilobytes per second. We set aspirational targets of 10 by 1 and we believe we are looking forward. We are trying to build a forward-looking network.

2853 We went through a request for information process to the private sector and asked for their input. We initially designed the network and the backhaul component and we thought that we needed 60 PoPs or points of presence in order to get access in the region. We ended up getting feedback on that through the RFI process.

2854 And when we secured the funding from senior levels of government, it was contingent on bringing private sector money to the table as well. And when we ended going through a full RFP, it was a competitive process. Large, medium, small providers, ISPs were invited to bid and they did and we ended with 160 points of presence throughout the region.

2855 We used the services of both County of Peterborough and County of Hastings to assist in the financial management and procurement. We had a very thorough, open, transparent procurement process and we had quite a representative team that worked on the review process for the submissions to the RFP. We had legal representatives. We had business representatives. We had municipal representatives. We had independent advisors as well.

2856 COMMISSIONER VENNARD: Okay. And the funding for that, can you run that by me again? Where did the funding for that come from?

2857 MR. FELL: Sure. The Wardens Caucus started by putting $10 million on the table and that was proportionally shared out amongst the 13 members.

2858 COMMISSIONER VENNARD: Okay.

2859 MR. FELL: The provincial government contributed $55 million. The federal government contributed $55 million and that was through Infrastructure Canada funding at the time. I believe we were the only broadband infrastructure project in that. It's typically used for roads and bridges and things like that. And it was a two-thirds, one-third matching formula. So when we went out to the market, we needed to raise a minimum of a third from the private sector and we were absolutely able to do that.

2860 The total cash in-kind value of the project is $175 million but with the in-kind and fiber assets that were added in by the private sector, we valued the total project in the region at about $260 million.

2861 I will say we had a small team of which I'm very proud to have some of the members here today. We had 13 staff. We managed that -- EORN managed that entire project on 5.2 percent admin overhead.

2862 MR. EMON: If I might add about the history, EORN came about -- Eastern Ontario Wardens Caucus and EORN came about in 2007 and ’08. There was a series of provincial and federal programs for funding for broadband and they were just sort of thrown on the table and we were scrambling around as a series of small municipalities, 103 of us, looking for that money.

2863 And what happened was some of the projects were very successful in that you built capacity but there were large swaths of territory in between those dots on the map and it became very apparent that system wasn’t going to work. And that's how the strategy was then germinated as a question, how can we make it better, how can we get, you know, a certain percentage, a 100 percent or whatever, of coverage for our whole area and then that's how the strategy evolved.

2864 So it was out of necessity and it was out of frustration as well because we thought -- a lot of us thought this is a lot of money and it should do the job but it wasn't because we were being driven by the service providers.

2865 COMMISSIONER VENNARD: Okay. So in the end, out of this you developed a network, you created a network. And who actually owns that network now?

2866 MR. FELL: So the ownership of the network under Infrastructure Canada Rules, 51 percent of the tangible assets funded with government funding are owned by EORN and EOWC for seven years, and then released back to the private sector.

2867 The reality is the private sector owns, operates and maintains the network, and in exchange for the subsidy that we provided, they have ongoing service level agreements and upgrade maintenance, support and upgrade. So as the network starts to grow, they bring subscribers on to the network. They generate revenue. As the capacity starts to fill up, they have to then meet our service level obligations to continue to invest in the network over time.

2868 COMMISSIONER VENNARD: Okay. So your network is essentially a network of a lot of different technologies, fiber, copper, a conglomeration if you want to put it that way of both technology and partners. Would that be accurate?

2869 MR. FELL: That's correct. There were three main components. You asked about the technology. There was fiber call network which we needed to support the region and grow. That was 160 PoPs. There were also last mile access projects of which a number of providers participated in that.

2870 And then we always knew that some of the residents in the most rural remote areas would not be able to be reached by a terrestrial solution. So we negotiated a $10 million agreement with Xplornet for satellite capacity in the region.

2871 That contract was finalized in 2011 and that satellite capacity is pretty much used up at this point and we're looking forward to the addition of new satellite capacity later this year and early next year.

2872 COMMISSIONER VENNARD: Okay. So you can see that your -- why I asked a question like this so that I could understand the decision-making process both in the past and as well as in the future and where that all comes together with respect to the decisions that you end up making.

2873 I'm interested now in how did you make that original decision to do a 10 in 1? Can you tell me something about your process in doing 10 and 1? And why -- in your submission, you say that there -- you put out the idea that there's a need for symmetric -- symmetry in the up and down. But yet, you haven't done that yourselves.

2874 I'm just wondering if somebody could explain that and your decision-making process because, obviously, are you the main decision-makers or you clearly have to consider your partners in it too, and your partners are the private sector. So somehow those decisions have to be balanced. Could you maybe walk us through how that happens?

2875 MR. FELL: Okay. So it is a fine balance as you say and I think it's fair to say we've learned a lot through administering this project over the last five years. So the decisions we made in 2010 around those aspirational goals of 10 and 1 are perhaps informed by the experience on the ground that the wardens get and our staff get every day in terms of calls from citizens about the infrastructure that we built. And that's why one of our key recommendations was also about defining basic standards, not just aspirational speed goals.

2876 So with advice from our engineers and a lot of research and consulting, that's how we identified 10 by 1 as the aspirational goal for the network and that's what our service level agreements are built around.

2877 COMMISSIONER VENNARD: Did you have input from the communities that you were -- that the network was going to serve at that time? Did you do community engagement of any kind, or was that basically a business decision that you made?

2878 MR. EMON: Yes, we did and it was also at the local level too. Each individual council, single tier or regional council had a series of formalized and informal consultations with their communities. Industry came in to talk about their needs in terms of being just-in-time ordering and just-in-time delivery, the tourism sector and I can speak for Renfrew Country specifically.

2879 We spoke with the education sector about their needs for distance learning, distance learning between communities within our region. So we did a -- we did undertake some consultation and then some of it, once it was announced, started to trickle in.

2880 We heard from the hospitals about the ability to transfer imagery and what that was necessary -- what was needed for that and they had already gone out and wired themselves through a private service provider and then they’ve since, I think, amalgamated into our system at the same time.

2881 So it was a quasi-formal, informal -- and once your name gets attached to something in a small community, you’re not long getting told things. And so there was a series of those meetings as well.

2882 COMMISSIONER VENNARD: Indeed I’m sure that’s the case.

2883 So your decision was based on the applications and uses that you perceived would be needed by your communities at that time? And can you tell me what those would have been? You mentioned health; you mentioned education.

2884 MR. FELL: Health, education, finance. I think the warden spoke this morning that rural banks are closing. As you drive along Highway 7 you’ll notice bank branches are closing. Because of the demographics, schools in rural areas are closing. Recently about a week ago on CBC you might have seen Anna Maria Tremonti’s report on The Current about automated milking systems with cows. So farmers that live in rural area, they’re fairly isolated, they can automate that process. And if there’s a problem they get a text on their cell phone. In order for that to work they need to have connectivity. So those are some of the examples.

2885 MR. EMON: A more recent example for us was when the world kayak championships came to Beachburg, which is the Whitewater Region just up the Ottawa River about 70 kilometres west of here. And there wasn’t enough capacity nor a tower close by and we had to bring in a portable tower to be able to broadcast it worldwide.

2886 So we’re getting on a regular basis contact from the community saying, “You know, it’s great what you have, but it’s just not enough.” And so I think part of what we’ve undertaken as the Wardens’ Caucus and Eastern Ontario Regional Network has been a reassessment. And that’s been part of the digital strategy as well as the discussions we’re going to initiate about platform and cell coverage. Because we noticed there’s a cell problem in our communities as well; there’s not enough cell coverage for day-to-day activity plus for our emergency services.

2887 So it’s growing on a life of its own. In short, the more capacity we provide, the more capacity is needed.

2888 COMMISSIONER VENNARD: Yeah. It seems to work out that way, doesn’t it?

2889 MR. EMON: Yes.

2890 COMMISSIONER VENNARD: Yeah.

2891 Okay, the third point that I brought up earlier that I’d like a bit of a description on, the EORN model. Can somebody explain what that is? I know we’ve touched on a lot of it, but maybe just to briefly summarize and add any other points that you feel are relevant?

2892 MR. FELL: Well, it’s a private-public partnership model, which I think is fairly unique. The public sector -- there are different models that have been tried in Canada and around the world. And on the one hand, I think my board members and the wardens here today really have, as they mentioned, feet on the street; they talk to local citizens.

2893 At the same time, we managed all of the financing, legal, contracting, procurement, mapping, and decision-making process, as you mentioned, around targets. So our original targets were to try and get terrestrial solution for 85 percent of the population with the view that in areas where there’s less than three households per square kilometre it’s not likely going to be economically feasible.

2894 So by having an organization like EORN that has both local presence and understanding of the local issues, and yet an ability to partner and offer an incentive to the private sector and do it at a very low cost, the private-public partnership model is one that we think has in our case worked very well and we would like to see it used again in the future.

2895 In particular, as Warden Emon mentioned, no cell companies were technology-agnostic and that was a requirement of Infrastructure Canada funding and Industry Canada as well. We couldn’t say, “We want all fibre to the home or satellite.” So when we issued the RFPs it was about setting aspirational targets for access speed and price. And it came back on a competitive basis.

2896 But the network traffic has changed significantly in five years and it’s moving to mobile. And now we see a need for closing those gaps in our areas as well.

2897 COMMISSIONER VENNARD: Yeah.

2898 Your submission suggests, in fact as you suggest; it says, that you think that the market forces aren’t really working. It seems like when you look at the speed that you have, the type of network that you have, it seems like your coverage is quite extensive. Can you just say why you would say that he market forces don’t seem to be working?

2899 MR. FELL: I think in particular that was referring to pre-2010 and in what we see in the shift towards cell. But I’d ask Reza to supplement.

2900 MR. RAJABIUN: I don’t exactly which paragraph you’re referring to. It’s not that market forces are not working. It’s that the incentives are limited. So the role of the public sector becomes motivating and developing coordination mechanisms for the market players to become engaged in markets that they otherwise would not participate in, which was the case before EORN in Eastern Ontario, a very large part of the region.

2901 So the way we look at it is not a conflict within public leadership and market forces. The key to the development of EORN and the way this strategy is moving forward into the future is to work with the private partners to motivate them and increase their incentives to serve our communities.

2902 COMMISSIONER VENNARD: Okay, so that brings me around to basically about the funding because you’re suggesting a subsidy. And yet, if market forces are working why would there need to be some sort of a cross-subsidization?

2903 MR. EMON: Maybe just before David answers, what I would clarify is we feel that the market traditionally, since 2007, has been driven to work. It wouldn’t have worked otherwise. Previous to the formation of EORN there was no desire to do anything but cherry-pick several streets that had 50 houses on it. And for us to be able to generate enough capacity for our communities, our whole community, we had to drive them into those dark areas. And I think bluntly that’s probably the best model. Otherwise we wouldn’t have gotten service. And I think, you know, David can probably elaborate on a little broader what that means.

2904 But pointedly, we don’t think they would have gone into those areas. We had to drive them into those areas by showing them the need first and second the business case using the partnership model as the driver.

2905 COMMISSIONER VENNARD: The EORN model then would be to come together as a group and then apply some pressure which helps that market along, those market forces along?

2906 MR. FELL: Yes. And I think if you look at the economics of the cost-per-household passed when we averaged it out -- I mean, we broke the whole region up into geographic zones and we tendered those zones as a group. And we still got better coverage and a lower cost-per-household passed in the zones along Highway 7 and in more populated areas. But by coordinating the RFP process and the funding mechanism, in a way I’m convinced that we got better coverage. If you look in the northern areas, the cost-per-household passed was getting up into the $10,000 to $12,000 per household passed, which is prohibitive even with 100 percent subsidy.

2907 COMMISSIONER VENNARD: Okay. It seems like your strategy worked fairly well.

2908 MR. FELL: We think it did.

2909 COMMISSIONER VENNARD: Within the ---

2910 MR. RAJABIU: Sorry, may I expand on that? Just I want to simplify it.

2911 COMMISSIONER VENNARD: Of course.

2912 MR. RAJABIU: On that point of the connection between market forces, we were talking about mobile and mobile coverage gaps. As was in our presentation, the Wardens’ Caucus and EORN conducted an engineering assessment of identifying what kind of gaps exist in the mobile network in terms of both coverage and capacity.

2913 But on top of that, we have also done a financial analysis to understand what would be the rate of return for private-sector operator to close those gaps. And those rates of returns are clearly below, way below, the reservation rates of return on investment that they can get both in urban areas and also in other ventures.

2914 When you’re talking about the vertically-integrated operator, they have multiple opportunities for investment. So investment in a rural community’s mobile network, their rate of return might be positive and sufficient for a smaller operator to enter. But since mobile markets are dominated by a few companies, they don’t have that incentive to enter.

2915 So the subsidy and the inducements, both in terms of funds and also negotiation and coordination, are needed to increase that rate of return or bringing somebody that is willing to accept a lower rate of return than the large player that operates in very low-cost urban areas. So that’s the connection between the public and the private sector.

2916 COMMISSIONER VENNARD: Okay. Tell me something about the competition with your area, within your region.

2917 The different providers, they obviously have to compete with each other to -- because you've got a backbone and then you've got community on top of that. So how does that work out? How is that working?

2918 MR. FELL: So there is competition. There was competition on the backbone. The rates on the backbone are CRTC regulated rates and there's open access on that network from -- that pops outward.

2919 The same model applied to the access zone, so in some of the areas we awarded contracts to multiple ISPs to cover the same zone with different technologies, so the combination of DSL and wireless.

2920 In other zones, it was only economically feasible for one ISP that bid on the zone. We only got one response, for example, in some of the areas or the more northern remote areas, perhaps only a DSL bid on that particular zone.

2921 So there is competition, there is open access, and that backbone network is pushed out quite a bit further throughout the region with 160 pops.

2922 COMMISSIONER VENNARD: Okay, and the gaps that you had identified within your research, you're planning on closing those gaps with wireless? That's the idea?

2923 MR. FELL: We believe that's one solution, along with continued investment in the original project through the providers and other mechanisms that might come up, but we really believe that wireless is a huge opportunity to continue to close those gaps. And they will be able to leverage the original investment in the backhaul network as well.

2924 COMMISSIONER VENNARD: Okay. I have some fairly specific sorts of questions for you now. Thank you for that broad overview.

2925 What sort of specific applications or services do you envision that will require greater capacity, greater bandwidth? In other words, what's the difference between 10-1 and 25-3? What's going to happen in between there?

2926 MR. FELL: Paula, do you want to ---

2927 MS. PRESTON: And in some of the applications that we're seeing is -- and driving some of the symmetrical stuff as well, we're looking at a lot more organizations and small businesses are trying to use work-at-home type applications.

2928 Medical offices, they're looking at uploading as much as they are looking at downloading information, so things like -- as we've heard about, some of the small -- we've got small medical offices in rural Ontario and it's really important for us to be able to keep doctors in these rural areas as well, is that they're looking at how do they upload images to a subject matter expert if the hospital is in Kingston? It's that sort of uploads are required for across the board in all kinds of applications.

2929 Other ones are, we've got some people who are doing architects working at home or in other areas. They need to upload files as well. There seems to be a ongoing demand as more and more people are moving out into a rural community and to retain people living in a rural community is this need for both sides of a symmetrical driving force.

2930 We're also seeing -- also driving the demand for increased speeds are the increased number of devices in homes as well. It's not -- no longer one device per household. It's multiple devices, multiple simultaneous devices per household, whether it be children at home doing work at home or schooling at home, or parents working at home or even just the whole social media aspect of -- from a connectivity point of view.

2931 All these are driving increased bandwidth across the piece. I mean, it's just, everywhere we look there's a new application and we're not yet predicting where these -- what these new applications are. They're just appearing. So I mean, it's just, everywhere we look there's more demand.

2932 COMMISSIONER VENNARD: Okay, what -- how do you see the home and the businesses? Are there similarities in the requirements of that? You mentioned that they seem to be, you know, sort of blurring, a lot of working at home and so on. Is that one of the major drivers, do you think, in this -- in between this 10-1 and that 25-3?

2933 MS. PRESTON: I think that's a fair assumption, that there's -- it gives us the possibility of working at home, more so than -- you know, in terms of we don’t have the commute time. You know, we don’t -- people aren't -- I would say yes, it is more of a blurring of work at home and residential -- like, business and residential use, yes.

2934 MR. FELL: In particular, the example that we have in rural areas, we're trying to keep them economically viable.

2935 A lot of Eastern Ontario, rural Eastern Ontario, is cottage country. People come from Toronto, Ottawa, out into rural areas. We're encouraging them to stay there.

2936 Whether you agree with it or not, working from the cottage, if people can come up on Thursday night and stay til Monday night, they're buying gas, they're buying groceries, they're participating in the community. And it's helping keep a lot of our communities economically viable. So I think that that's another ---

2937 COMMISSIONER VENNARD: Yeah, so symmetry would be very important then to -- in access?

2938 MR. EMON: And if I might add too ---

2939 COMMISSIONER VENNARD: Sure.

2940 MR. EMON: --- when we talk about home use, that also includes a public use of your home because in some instances, we're working with our acute care paramedics to conduct home visits to people who are shut in for wound care or regular maintenance and visitations.

2941 And part of that, we envision, will be the transportation of their information or transmission, sorry, of their information on an on-site basis back to a doctor at a base.

2942 And so we are doing some things with that now where we're taking the notes and going someplace to transmit them. But I suspect most of rural Canada will shift to an acute care paramedic real-time transmission because we've got highly skilled people who go out on emergency calls and have some downtime, which we should be utilizing in the community.

2943 So I think you're going to see more of that as well as more home-based education opportunities. We've had some conversations with people asking about that ability to do that within the network of 10 families or 6 families, spread out over a distance. So there are some quasi-public applications for your home which will boost the need for capacity.

2944 COMMISSIONER VENNARD: How do you see things like gaming and so on? How does that fit into it?

2945 Some intervenors have suggested that that's not necessarily something essential. Maybe it is to some people. What would your views be on that?

2946 MR. EMON: It's essential to the peace in your home, but beyond that, I'm not sure what I could offer.

2947 MR. FELL: That really hasn’t been what's driven the Wardens' Caucus or EORN. It really has been about economic participation and continued participation in the economy, although, you know, as the warden said, it's important to some of our constituents.

2948 COMMISSIONER VENNARD: Now, just moving on a bit here, going back to the idea of the funding, I want to sort of focus on that and your suggestion, your recommendation for a funding initiative and so on.

2949 How do you see the latest announcement on funding from the federal government? Did you think that that's going to help you or some comments on that?

2950 MR. FELL: Any funding announcements by senior levels of government are always appreciated. I think it's fair to say, as most of the submissions have mentioned this morning, it's likely not enough.

2951 And I would come back to the question you asked about the model. Our model suggests that the private sector will contribute in areas where it's not necessarily economically viable if other levels of government will match that.

2952 COMMISSIONER VENNARD: M'hm.

2953 MR. FELL: And I think another comment about the funding was that we had to be extremely creative, as you can imagine, to get broadband in under infrastructure funding. It's not your typical infrastructure project.

2954 So we continue to look for creative ways to work with government and private sector to make that fit.

2955 COMMISSIONER VENNARD: M'hm. Okay.

2956 MR. FELL: Any assistance the Commission can give us on doing that was always appreciated.

2957 MR. EMON: Yeah, we've taken the approach of trying to massage programs as they came out. And I would suggest to you the last two years, the broadband funding that was released didn’t allow for the Eastern Ontario Regional Network to directly access that.

2958 But what we did was, we turned our expertise over to some smaller service providers and assisted them in making their applications to fill some of the gaps.

2959 So we've tried to evolve our model to service our communities, based on the financing coming out. But a direct answer to your question, at this point we don’t know what the criteria is. Ideally, it would be, you know, we'd love to shape it around our box and then export our model to other people, as you’ve noted.

2960 COMMISSIONER VENNARD: Yeah. What about with Xplornet? Do you think that that's going to help out, with Xplornet, the funding for Xplornet?

2961 Okay, we’ll just move that. We’ll just move on past that.

2962 So you gave us a bit of an idea of what your past experiences were with different funding regimes and so on and your creativity in that sense too. Now, if we were to decide that a broadband funding program is necessary, based on your experiences with the past funding regimes, both your own experiences as well as what you know and your viewpoint, what elements or principles of existing or previous programs do you see as being more beneficial or effective and why?

2963 MR. FELL: So I think one of the things we’ve advocated for in our submission is that public-private partnerships are a key aspect of that. Prior to our submission it wasn’t a mandatory requirement for federal funding. We chose to develop that governance model and submit and I think it worked fairly well. I believe subsequently for federal funding over $50 million PPPs are a required component of it.

2964 I also think having some connection to community-based organizations rather than just giving it directly to the private sector companies to administer -- the warden referred to Canada 150. Our mapping and our assessments at a very granular level of where the gaps are I think is much better and much more realistic in terms of where the priority areas are and helping to allocate some of those scarce dollars.

2965 COMMISSIONER VENNARD: Remember I asked you to give us some guiding principles which you would consider to be guiding principles for us?

2966 MR. FELL: For the CRTC?

2967 COMMISSIONER VENNARD: Yeah.

2968 MR. FELL: Reza?

2969 MR. RAJABIUN: I think the EORN experience in terms of structure of the model follows from the discussions that we’ve heard in the past day and a half.

2970 The backhaul infrastructure is very important to have for rural areas. And some of the newer programs from the federal government, they have just been focusing on last mile subsidies, and those last mile subsidies providing them directly to the service providers rather than going through a public intermediary. I think there was a terminology used yesterday about community intermediaries.

2971 So when you are not balancing backbone and last mile subsidies and you’re just going to the last mile subsidies, then that capacity is going to run out very fast. So that’s almost like throwing the money away.

2972 But if you are focusing totally on the backhaul facilities, then you run into the problems that have been brought up about the Alberta SuperNET. And its backhaul capacity being there, but since the incumbent was not involved in that project, basically not allowing the operators to connect from the local communities through the Alberta SuperNET.

2973 So the key, I guess, lesson from a technical perspective and a design perspective, is managing those two components to maximize the impact of their scarce funds that you have.

2974 COMMISSIONER VENNARD: Okay, so balancing the two components, the backhaul and the last mile.

2975 MR. FELL: And if I could be very specific with an example?

2976 COMMISSIONER VENNARD: Sure.

2977 MR. FELL: The county of Peterborough back from 2006 to 2009, all of the municipalities were competing for different funding programs for last mile access funding. They spent about $7 million on last mile, putting up towers, supporting smaller ISPs. And yet, those towers didn’t have enough backhaul to connect to so they were constantly filling up with capacity as fast as they could put them up.

2978 With EORN, their proportion it shares was around $700,000 or $800,000 or 10 percent. They got a $12 million investment into Peterborough County. They now have three providers with a number of points of presence with enough backhaul, DSL, wireless.

2979 So I think that that’s an economic example of working together regionally as another principle that I think we would really advocate for. Instead of forcing small municipalities to compete against each other, encourage them to work together.

2980 COMMISSIONER VENNARD: Okay. So yeah, that’s an interesting take on it.

2981 Should that be a guiding principle for us as well, how remote the communities are? Again, I’m asking for suggestions for guiding principles for us, what you would suggest.

2982 MR. EMON: I’m not sure how to define this, but I would broadly define it as liveability. I think if it’s a means of making the environment easier for people to reside and to work in the area -- and I think if it could be driven by research which shows the gaps and then also the service needs, and go across to some of the community services like paramedicine and like visiting homemakers and things like that as well, I think it has to be a total package because your whole community has to buy into it. We all like the fact that we can order something from somewhere and it gets delivered by UPS the next morning or two days later; that’s great. But at the same time, I think, you know, as we get a little older, and our demographics show that our community is getting older, that we want to feel safe at home.

2983 So I think it has to be a total community view of what’s good for your community as an overriding principle. And it shouldn’t centre solely on economic. That data maybe should be 80 percent of what you do, but there should be 20 percent or something like that to talk about the benefit to the community.

2984 COMMISSIONER VENNARD: Okay. And in your viewpoint that should be based on evidence, research?

2985 MR. EMON: Yes, I think that’s part of what’s been primarily the reason why the Eastern Ontario Warden’s Caucus and the Eastern Ontario Regional Network have been successful, is we’ve been able to go out and actually show you a map and point to the specific hexagon that says, “There is no service here; there’s limited service” and even talk to the standards of the existing equipment. And I think that’s necessary. I think you have to have a very good ground game and be able to produce information to show this makes sense to put it in here because of these reasons.

2986 COMMISSIONER VENNARD: Okay.

2987 MR. FELL: This morning one of the requests was around digital literacy or supporting digital literacy. I think if you look at the digital strategy that we put together, we’ve shown that the Eastern Ontario Regional Network started off as primarily an infrastructure project. But they’ve evolved that into a digital strategy that includes both supply and demand and encouraging digital participation in the economy. The more we work in the area, the more we see the need to work on the demand side as well to help rural citizens, municipalities, businesses take advantage of the capacity that we can provide.

2988 MR. JONES: If I could add as well, it also has a domino effect in other ways. In my particular municipality we have a tourist area, Stony Lake, and it certainly has really been obvious that people can spend more time now on their weekends. They can come up Thursday or Friday and they don’t mind doing that; they can still run their businesses from Toronto or Ottawa or Montreal. And it just made a huge impact in economic development. It just has changed the whole flavour of everyday life in the summertime.

2989 COMMISSIONER VENNARD: Okay. Thank you for that.

2990 Let me see. Another question I have for you, could you please share your views on the difference between low-density rural and remote areas compared to high-density urban areas in terms of choice of providers and the impact that that has had on your communities?

2991 MR. FELL: Sorry, could you clarify,

2992 “in terms of choice of providers”? Competition, is that specifically what you’re ---

2993 COMMISSIONER VENNARD: Yeah, one of these things that we’re interested in here is we want to explore the difference between the low-density rural and remote areas compared to high-density urban areas in terms of choice, more choice, less choice, do you have to try and stimulate that. Could you give me some comments on that?

2994 MR. FELL: Okay. I’m going to ask Paula to respond to that.

2995 COMMISSIONER VENNARD: Some of these specific sort of questions I ask of you are to create a fulsome record for us.

2996 MS. PRESTON: I think one of the things that we’re finding is that even after we’ve done this first phase of our project, in the areas that we’ve gone into there are two choices now. Before there was none; now we have two choices and that’s it. It’s either Bell DSL and satellite or it’s a wireless provider and satellite. I mean, we just do not have choice in the rural areas. And for people who are unhappy with their service levels, they have no choice. It’s keep it or drop everything; you don’t have any service.

2997 So choice is a key issue. We do not have choice in rural areas even with the successful program like ours.

2998 COMMISSIONER VENNARD: Okay.

2999 MR. FELL: And I think that’s why one of our other recommendations or suggestions to the Commission is around minimum service levels around adopting those nationally. If you pay for a 10 by 1 package, a certain percentage of the time you should likely get that; that’s what you’re paying for. And technologically we -- technically we know that that’s possible.

3000 COMMISSIONER VENNARD: Okay. Okay, now, in your submission you talk about, you know, getting a forward-looking viewpoint, and you’ve mentioned it also that we should to the future -- you should look -- we should all look to the future in terms of what’s going to happen, which nobody really knows, and how you will deal with that and how we will deal with that.

3001 So you suggested -- you suggested a cross-subsidization. Can you expand on that for us in ---

3002 MR. RAJABIUN: The future in general or cross-subsidy model, which one would you like to discuss ---

3003 COMMISSIONER VENNARD: Okay, so who ---

3004 MR. RAJABIUN: --- since it’s separate, I guess?

3005 COMMISSIONER VENNARD: --- should pay and who should get the money? And who should pay?

3006 MR. RAJABIUN: Well, the customers will always pay at the end. So starting from that -- but that’s at the end.

3007 So in the beginning there is two options; one is ad-hoc funding from the federal government, which has been the policy for the past 10, 15 years, and the second option, which is before you today, is to develop a sustainable funding model that can help rural communities across the country, including us, to address the challenges that the communities are bringing up to the representatives and are concerned about.

3008 So in the very long-term future, everybody knows that copper and cable wires are going to deteriorate and fibre is going to be -- has to come in so -- in 50 years, potentially. In urban areas in Canada, the incentives to deploy fibre have been pretty negligible, almost zero outside of Atlantic Canada. But maybe given your policy change over the wholesale decision last year, it seems like that has had a stimulating effect on the incentives of the operators to invest in fibre networks or at least announce that they will at some point in the future invest in FTTP in urban areas.

3009 But in rural areas, that is the likelihood that there will be any investment in next-generation fibre networks that will have to replace the copper -- aging copper infrastructure, some of it which was deployed before World War II, is pretty close to zero.

3010 So there should not be an assumption that market forces will solve this issue. And this connects back to the -- and it’s not just a very long-term problem. It connects to the short-term problem of dealing with phone -- with the existing basic service obligations for telephony. In the rural communities that are relying on the copper networks for the phone, that -- for phone connectivity, that -- the quality of service and voice is going down. That is going to have to be replace with fibre at some point in the future.

3011 So I guess the question before you is what kind of funding model will be developed that can accelerate that transition from where we are right now to where we’ll be in 50 years. So I guess it’s a question of short versus long-term objectives of the policy makers.

3012 COMMISSIONER VENNARD: M’hm. What’s your viewpoint on that? How does EORN see it?

3013 MR. RAJABIUN: I’m sorry?

3014 COMMISSIONER VENNARD: How does EORN see it? What -- who should pay and who should receive?

3015 MR. RAJABIUN: Well, the customers will pay at the end.

3016 COMMISSIONER VENNARD: Yeah.

3017 MR. RAJABIUN: In the beginning for the capital expenditures, if private service providers would be willing to invest in certain areas, that’s their optimal option, so scarce public resources can go into potentially more important things.

3018 COMMISSIONER VENNARD: M’hm.

3019 MR. RAJABIUN: But if they are not -- and we know that the incentives to invest in mobile -- in closing the mobile gaps or fibre networks -- FTTP networks of the future are going to be pretty close to zero. So we either have to wait for 10 years -- if you don’t adopt a sustainable funding mechanism, we’ll have to wait another 10 years until the copper loops start to deteriorate and then go back and look for funding from the government to try to motivate the private sector to come in and fill those gaps.

3020 COMMISSIONER VENNARD: Okay.

3021 MR. RAJABIUN: So without inducements, it’s not going to happen.

3022 COMMISSIONER VENNARD: Okay. But in your submission you’re pretty clear on the fact that it’s the lower levels of government that should be in control of whatever funding mechanism might come in to place.

3023 MR. FELL: We’re definitely suggesting that municipal governments have a role in that -- a role in contributing, but more importantly in some of the decision-making that you talked about in the beginning of knowing where those priorities are and knowing -- again, a lot of this was driven by economic development research.

3024 COMMISSIONER VENNARD: M’hm.

3025 MR. FELL: Where are the areas around agriculture, food, tourism, manufacturing that need -- as well as businesses and residents that are going to need this to support either sustaining those communities or growing those communities.

3026 COMMISSIONER VENNARD: Okay. But in terms of if the -- if the funding ends up in the hands of, as you suggest -- it ends up in the hands of the lower levels of government who are much more on -- have their hands on the pulse -- their finger on the pulse of their communities, where do you see this money coming from? Does it come from all of the -- all of the providers? You know, it has to come from somewhere and I didn’t really pick up in your submission where you would perceive that it would come from. I can see quite clearly where it would go but I don’t see where it would come from.

3027 MR. FELL: Sorry, I think I understand the question better now.

3028 COMMISSIONER VENNARD: Yeah, okay.

3029 MR. FELL: So I think we’re suggesting a continues approach to the one that we’ve used with EORN where there’s combined federal and provincial funding along with private sector funding through regional municipal entities that can help make that -- those decisions and allocate the funding on an as-needed basis.

3030 COMMISSIONER VENNARD: Okay. I don’t think I have any more questions for you. Thank you very much.

3031 THE CHAIRPERSON: Commissioner Molnar.

3032 COMMISSIONER MOLNAR: Thank you. And you answered, I think, my question. I just want to make sure I understand well here.

3033 My question really was what sort of funding mechanism you were speaking of when you wanted to develop a sustainable industry-funded cross-subsidy mechanism. So did I just hear you say that you would see the funding mechanism being basically a continuation of what has been existing in the past, or you’re looking for something else?

3034 MR. FELL: I think we’re advocating for a combined federal, provincial, and private sector funding mechanism that would be available for application and distribution through a municipal -- regional/municipal entities.

3035 It’s not exactly the way it was -- I mean it is the way we applied for it in the past but I think we talked about having to creatively make that fit within Infrastructure Canada funding. I think if the Commission could help clarify those kind of PPP funding mechanisms, that would be appreciated.

3036 COMMISSIONER MOLNAR: Okay. So you’re not looking for us to establish an industry-funded mechanism; you would look to us for some kind of guidance or direction to seek to coordinate funding or what?

3037 MR. RAJABIUN: No, we were looking for an industry-funded mechanism. The ad-hoc infrastructure funds are not sufficient. I’m going back to the question that you discussed about, what do you think of the new funding announcements from the federal government? It -- I think it was 500 million. That’s two or three projects around the country and regional projects will eat that up.

3038 So the question is, what is the degree of commitment by the CRTC to developing a funding mechanism that -- cross-subsidies means you have the low-cost urban areas, and you have the high-cost rural areas. So at some level we will -- you will have to -- if industry funding mechanism is going to be developed, industry funding means that there has to be some sort of mandate to generate those funds to be able to stimulate the industry again.

3039 The industry, without a CRTC mandate that generates a certain cash flow into the future that is distributable to the rural communities, will not by itself fill those gaps.

3040 And I think in our response to both CRTC and -- to interrogatories by both CRTC and Rogers, we didn’t really go through the detail in our original submission; we tried to present you with what we’ve done mostly and what our objectives are. But we had questions from CRTC and from Rogers in terms interrogatories and we actually go through the detail of why both on the input side of the funding mechanism, how you generate funds; we proposed that only the larger operators that dominate Canada’s urban markets should be subject to the funding mechanism -- to the funding mandate.

3041 That's a very important point, I think. A bunch of discussions that have come out because right now the threshold is $10 million for inclusion in the existing basic subsidy, I believe. Maybe I am incorrect on this, $10 million of revenues of the company. That kind of funding mechanism has a real -- has disincentivized smaller operators like SSi that we saw today.

3042 And in terms of compensation how much money you can raise by having such a low threshold, the value added is almost zero.

3043 COMMISSIONER MOLNAR: Maybe ask a question, and this is maybe what has confused me a little bit.

3044 I understand well the cross-subsidy mechanisms between urban and rural areas, between high cost and lost cost areas. We have done it on the voice side for a long time in an industry-funded mechanism.

3045 But you folks are successful. I think you can be proud of what you have achieved. You have looked at the needs of your communities. You have collected yourselves. You have addressed the economic and social requirements of your communities but came together with an innovative P3 project to make that happen and decided that the targets that were in place on a national basis were not sufficient to meet your needs and so you have gone forward.

3046 And so what confuses me a bit is why you would now come and say, you know, "Let's establish national standards and put in place this cross-funding mechanism which would essentially take it out of your hands". So are you comfortable that that might be an outcome of this that we establish standards?

3047 We established an aspirational target last time and you looked at your communities and said that wasn't sufficient, wasn't going to meet the needs of our -- to you know enhance our communities, to address the industries that existed there. You set your own and you went and sought funding.

3048 So if we -- it appears that you are saying here that -- you know establish standards and establish a mechanism. Well, if we do that you no longer have control of the telecommunications investment decisions in your communities. Are you comfortable with that outcome?

3049 MR. RAJABIUN: Why wouldn't we have the control? That's the whole proposal.

3050 COMMISSIONER MOLNAR: Well, that's your proposal but that's certainly not the way that the funds that exist today work.

3051 MR. RAJABIUN: Exactly.

3052 COMMISSIONER MOLNAR: So I am just asking you if you are not control of that are you still comfortable with that outcome? Are you comfortable with there being a national target? I mean it was set last time. You didn't like it and you went and created your own, and good for you by the way.

3053 MR. RAJABIUN: You are the only party with the legal authority and responsibility to do so.

3054 There is two answers to your question about why we are here. First, is that despite you may think that you are successful and apparently compared to a lot of communities across the country that have been totally left behind, we are.

3055 But the reason for that is that we are looking forward into the future. We are realizing that if we don't do something now about the fibre and you don't develop it as a sustainable funding mechanism, that that cross-subsidizes from urban to rural areas in terms of fibre. We are not going to have it any time in the future. So that's one aspect of it.

3056 And the second aspect of it is basically these models that are successful can be replicated. So it's not -- the question that you are bringing up about loss of control is a clear possibility that if you develop a new mechanism that it basically collects the funds and just gives it back to the incumbents maybe that's not going to work out so well, so that becomes a political decision whether we support it or not.

3057 And I don't want to comment on that but the results -- we will know what -- from an economic perspective you know what the results will be.

3058 MR. FELL: I don't know that we drew the same conclusion from the recommendations that we put in. I think that our view ---

3059 COMMISSIONER MOLNAR: I understand you're looking for sources of funding and looking for sustainable sources of funding. And fair enough, you know, to come in front of us.

3060 I am just asking if you have considered all the consequences. I mean there have been sources of funding since the internet emerged and it has done wonderful things for this nation. I mean there is gaps but I don't -- frankly, I don't know why we are viewed as to being the sole source of funding. We have not been in the past.

3061 MR. RAJABIUN: You have the responsibility under the Telecom Act if you want -- if you define a -- if you go on to define the service to be basic then you can just define it and say this is a basic service. The key becomes the implementation and how effective we are to implement that legal mandate

3062 So just having a formal announcement after this proceeding that we have decided to redefine broadband, recognized that it's a basic service that's really not going to help anybody. The key is going to be what kind of mechanism you develop following that in order to be able to deliver to us and various other communities where there is a recognition and there is -- the facts on the ground show you that market incentives are not going to be strong and therefore support is required to motivate private sector operators to serve our communities.

3063 MR. EMON: And if I might add, the short answer to your question about losing local control, no, we wouldn't be in favour of that. We would hope that you would sculpt your response to recognize the value of having local -- either local control or local direction.

3064 And, secondly, I can assure you that we are quite comfortable with a nearly constant audit process during the last iteration of funding that we have gone through since 2010. So I would think that would also be part of -- part of, you know, respectfully part of your decision-making would be the local control with a series of audits to ensure that either regional goals are set and met or maybe you know quarter provincial goals or something so that, I think, you know, local -- I think the local input and the local control because of the ability to recognize the needs of the community almost instantaneously is important to the success of a model such as this.

3065 THE CHAIRPERSON: Maybe I would just like to follow up on the conversation you had about perhaps not having any use to declaring a basic service.

3066 I understand the point that to use our cross-subsidy model existing you have to first declare it to be a basic service. But I don’t understand why you would think that it's completely not useful to declare something to be a basic service because certainly it would have an influence on others who might have funding mechanisms other than the existing one. Would you agree with that?

3067 MR. RAJABIUN: Yes, I stand corrected ---

3068 THE CHAIRPERSON: Okay.

3069 MR. RAJABIUN: --- on that point.

3070 THE CHAIRPERSON: So it may be not going as far as you would want but it does go further than the status quo.

3071 MR. RAJABIUN: Yeah, and actually I'll come back a little more on that just by correcting it to the speed discussions that we have been having and the quality of service guarantees versus aspirational standards. You could define broadband as we are asking both fixed and mobile to be technologically neutral. You can define them as a basic service and not develop a funding mechanism but those -- so two options are if you don't -- if you don't develop a funding mechanism.

3072 So there is -- two options remain on the table. We either keep the existing regime under the 2011 framework where there is just aspirational targets that we hope will be achieved at some point, versus a system that you define what is a minimum basic level of service which every operator has to guarantee to whoever demands it and then market forces can set prices and quality besides for that. So you create a focal point in the market ---

3073 THE CHAIRPERSON: Right.

3074 MR. RAJABIUN: --- for the basic service.

3075 THE CHAIRPERSON: Yeah, so the BSO declaration is a threshold question to many follow-up issues.

3076 MR. RAJABIUN: Yes.

3077 THE CHAIRPERSON: Okay, just some follow-up questions on paragraph 44. You have said here, and I realize it's 2014 numbers. I just want to understand exactly what you are saying here.

3078 You are saying that 90 percent of the region in 2014 or more than, let's say 90 percent, delivered speed of 10 and 1. So are you -- I'm trying to figure out what -- 90 percent of what? Is it 90 percent of the projects you were involved in or is it the entire region whether you were involved or not?

3079 MR. FELL: Ninety percent of the households that we counted in our mapping have access to a 10 by 1 terrestrial solution.

3080 THE CHAIRPERSON: Terrestrial?

3081 MR. FELL: Terrestrial solution. The rest of them have -- the other 10 percent have access to a satellite solution up to --

3082 THE CHAIRPERSON: Right.

3083 MR. FELL: -- 10 by 1, but those satellite beams are almost all full now.

3084 THE CHAIRPERSON: Right and it’s residential of any type? Because I took it -- your point is that your mission is an economic one?

3085 So you’re focusing on obviously small businesses, farms, agricultural business, tourism and home businesses that might be in a residence.

3086 So is your 90 percent all residences, whether or not there’s a business in it?

3087 MR. FELL: Of all households.

3088 THE CHAIRPERSON: All households?

3089 MR. FELL: Yes.

3090 THE CHAIRPERSON: Okay, good.

3091 And you’re obviously at the wholesale level then at the retail level. The functionalities of various -- because you’ve got both DSL and sort of satellite, Xplornet type services.

3092 Do you get any feedback from the people in the region as to their experience from a quality, capacity, speed or do you get any echoes of that? I can’t imagine a local politician wouldn’t hear about that.

3093 MR. FELL: Thank you for that question, Mr. Chair.

--- (LAUGHTER)

3094 MR. FELL: Yes we do get a significant amount of feedback from citizens and businesses. A lot of it depends on the technology, as you can imagine.

3095 One of the things that in your -- I believe in your EKOS research that was done, it didn’t include wireless.

3096 So different technologies, Fibre to the home tends to provide a better quality of experience, satellite has latency, so we do get a lot of feedback.

3097 And in some of the most hard to reach areas, where we did build out services as fast as we can build it, it’s being consumed and the providers are now investing their money to increase that.

3098 But it’s not fast enough always for the citizens that are using that service. And that’s why we were also advocating for some kind of minimum national standards.

3099 We did the best that we could in terms of negotiating those with the private sector in 2010. As I mentioned we’ve learned a lot over the last five years.

3100 As we go forward I think we might incorporate some of those learnings and take that into contracting going forward.

3101 MR. EMON: If I might add, some of the -- if I can leave two words with you, some of the comments are both profound and profane about --

--- (LAUGHTER)

3102 MR. EMON: -- about access and capacity, so I -- I’ll just leave that with you.

3103 THE CHAIRPERSON: Yes.

3104 MR. EMON: And some of it is quite laudatory as well.

3105 THE CHAIRPERSON: Right and in terms of lessons learned, what would be your top three next time you negotiate these things in terms of quality? Or the nature of the capacity or whatever, price, what -- the top three?

3106 MR. FELL: One of the top three lessons learned and one of my colleagues mentioned it to me, you were asking about recommendations, was to have some flexibility in the funding envelopes.

3107 When we started off we had a large envelope and we were trying to envision five years out. We set some aspirational goals for coverage and capacity, speed and price.

3108 One of the things we didn’t anticipate in 2010 was being able to put high speed fibre into 56 business parks around Eastern Ontario.

3109 We were able to do that because of some of the efficiencies we realized in the contracting process.

3110 So was that in the contracting that we did between the federal and provincial government? Initially it wasn’t envisioned.

3111 We were able to flex that and allow that to happen and that really made a difference.

3112 So flexibility of the funding envelope, always try to be more aspirational than what you can even anticipate now.

3113 Netflix in Canada didn’t exist in 2010 when we started and now, as you know, in many of the areas, many of the most hard to reach areas, again, as fast as we can put those towers up and position the radios, LTE service 25/1 people are consuming it and it’s filling up and it require more investment.

3114 Do any of the other Wardens want to add?

3115 MR. EMON: One of the things that I’d forgotten to mention as a partner, is we had partnered with the First Nations in our communities well and consulted with them frequently and still do.

3116 And they have a -- I think a regular presence with many of our board members and board meetings as well.

3117 So I -- and my apologies, I’d forgotten to mention that in my introduction. It was hidden in there and I hadn’t brought it up.

3118 THE CHAIRPERSON: Okay, I appreciate it.

3119 I only heard two lessons learned and then a mention of the Aboriginal -- I mean that’s a given. So what’s your third lesson?

3120 MR. FELL: Yes, thank you.

3121 So the original funding envelope from infrastructure Canada is structured in a 1/3-2/3, and the literal interpretation of that was every single piece had to be 1/3-2/3 funded.

3122 When you go through a public RFP process and you’re trying to encourage competition, some of the subsidies were down around the 10-20 percent level, some were at the 99 percent level.

3123 THE CHAIRPERSON: Right.

3124 MR. FELL: And that flexibility over time around the allocation at the end of the day we hit the 1/3-2/3 and we got that private sector investment and that was a -- that was really key to making it work.

3125 When we first started implementing it the senior levels of government weren’t sure that was the appropriate interpretation of that rule and that really helped.

3126 THE CHAIRPERSON: Okay, good. Thank you very much for that. Those are our -- oh, was there a question from legal as it turns out? No? Okay.

3127 So thank you. You’re a big panel and there’s another larger panel so we’ll take a short break until 3:10 and continue the 2 last intervenors. Thank you very much.

--- Upon recessing at 2:58 p.m.

--- Upon resuming at 3:11 p.m.

3128 THE CHAIRPERSON: À l’ordre, s’il vous plait. Order, please. Madame la secrétaire?

3129 LA SECRÉTAIRE: Merci. We will now hear the presentation of the Government of Nunavut. Please introduce yourself and your colleagues and you have 10 minutes.

PRESENTATION

3130 MR. ALEXANDER: (Speaking in Aboriginal language)

3131 Good afternoon. We really appreciate this opportunity to talk to you today with respect to Nunavut.

3132 Joe Manoll, Chris Mullally, Leanne Babstock and I are from the Department of Community and Government Services.

3133 Joe is a project manager for operations; behind me Leanne, is our senior advisor to the Deputy Minister; next to her is Chris, he’s our policy analyst and communications officer; and I am the acting manager for -- informatics operations.

3134 On my right, Matthew Bowler is the Director of policy and planning in communications from economic development and transportation; and to his right Margaret Hollis, our legal counsel.

3135 Mr. Chairman, we have no new exhibits or attachments. However, today’s submission is heavily footnoted with references that are not referred to in our filed intervention, all in the public domain and all in support of our previously stated positions.

3136 With your permission, we’d like to continue. Thank you and in the interest of time ---

3137 THE CHAIRPERSON: Do so, yes, please.

3138 MR. ALEXANDER: Thank you. And in the interest of time we will be hitting the highlights of our written submission.

3139 So on page 1: Nunavut, our land. Nunavut is unique. On pages 1 and 2, you’ll see illustrations of how different we really are.

3140 We’re one fifth of Canada’s land mass, 86 percent Inuit. All satellite served. We have the highest cost of living.

3141 If you turn to page 3, you will see a recent screenshot from CBC. I’d like to draw your attention to 60 percent of Nunavut children are living in food insecure households.

3142 Given your recent comments about believing the CBC, Mr. Chairman, I should add that we did not have time to source the University of Toronto’s study referred to in the headline, however, we undertake -- we would undertake to do so.

3143 And at the top of page 4, demographically you will see that we are completely different from the rest of Canada. We are young and the youngest cohort is growing the fastest.

3144 To categorize Nunavut with other rural and remote regions in Canada is misleading. Nunavut is not like those, because Nunavut is isolated.

3145 Residents of the territory have to access their home communities by air. All communities in Nunavut are what the Commission refers to as satellite dependent communities. As a result, Nunavut faces unique political, and social, and economic challenges.

3146 Comparisons are often made, that small rural communities in Southern Canada with broadband services similar to Nunavut, with the point being that their speeds are acceptable in those communities.

3147 This is not a fair comparison, because residents of those communities can drive to the nearest town.

3148 As Commissioner Menzies pointed out yesterday, driving an hour north out of Ottawa brings you to a remote location.

3149 So people from that town can drive an hour and be in Ottawa, whereas a family from Nunavut could take anywhere from $10 to $20,000 to get to an urban centre.

3150 Another difference is fixed satellite services are more available in rural Southern Canada, due to higher volume of available satellites covering Southern Canada.

3151 You have heard how much more expensive it is to supply broadband to satellite dependent served communities.

3152 You must understand that our communities are underserved and overcharged in every other goods and service as well, therefore, the impact of the digital divide is more significant in Nunavut.

3153 MR. MANOLL: Thank you, Nate.

3154 In 2015 Nunavut Broadband Development Corporation collected data on actual download and upload speeds and Nunavut’s speeds are one-twentieth the rest of Canada. As an example, to upgrade from Windows 8.1 to 10, in Ottawa that would typically take about 20 minutes; in Nunavut, greater than 10 hours and use up most of your monthly data allowance. Simply, that would not be acceptable to most Canadians.

3155 In Nunavut, recently in the CRTC-funded SamKnows Survey, an analysis of broadband performance in Canada, the entire jurisdiction of Nunavut was excluded. Yes, the report does clarify that no satellite-served communities were included, but not why they were excluded.

3156 We all know that research drives policy. But how can there be good policy in Nunavut if we are excluded from the research?

3157 We ask that you reject the assumption that Nunavut is an acceptable anomaly. Nunavut as a territory cannot function properly if the government does not have decent broadband.

3158 And the gap is widening. On page 6 you have two graphs. Note the unusual flat steps in the Nunavut usage graph. This is the direct result of data caps. Data caps are enforced by overage charges, which are typically $15 per gigabyte per month. A family of four can typically have monthly overage charges in the hundreds of dollars so families limit usage.

3159 Each line on the graph represents what the data cap was at that time. There is no ramp-up period. As soon as the data cap is increased, it is used up instantaneously.

3160 The data cap, data usage, and download speeds are all the same graph. In the context of the gap illustrated in the graphs between Nunavut and Canada, it is important to consider these recent statistics on the Nunavut demographics.

3161 Nunavut high school graduation rate is the lowest in Canada at 57 percent. The next lowest is the Northwest Territories at 81 percent. And recently, Statistics Canada advised that 35 percent of Canadians have good problem-solving and information and communication technology skills. But only 12 percent in Nunavut.

3162 Today, computer literacy, information retrieval, and problem-solving skills are all linked and the tools for problem-solving require more and more bandwidth. The gap must be addressed.

3163 MR. BOWLER: Affordance Broadband equals access to resources and opportunities. As numerous Canadian stakeholders have identified and documented, the internet is an essential service. Considering our isolation, broadband may be the best possible way to address vital socioeconomic development in Nunavut.

3164 Connectivity can be a great equalizer for Aboriginal Canadians, particularly in isolated regions such as Nunavut. Some projects currently underway have demonstrated the value of connectivity, particularly interactive education or remote learning pilot projects.

3165 A strong majority of students who participated in these projects reported that lessons were more interesting, more enjoyable, and that they learned more. Considering that Nunavut’s dropout rate is almost five times the national average, anything that makes school more enjoyable has exciting potential.

3166 On the basic service objective, clearly the market had not provided modern broadband to isolated areas, and Nunavut falls further and further behind. Broadband must be part of the basic service objective. That change can help provide services in Nunavut that would be closer to the Canadian standard.

3167 The BSO standard we are asking for is 9 down and 1.5 up by 2019, measured in actual speeds, not peaks. Those standards are justified in the NCIS “Northern Connectivity Report”.

3168 Updating infrastructure to those standards in Nunavut will require large infrastructure builds. Canada has a history of making ambitious investments as far back as the Transcontinental Rail link in the 19th century. In the 21st century, we now need a north to south telecommunications link.

3169 Federal funding is available for new infrastructure, which could reduce the impacts of isolation in the north. To help Nunavut benefit from that federal funding, the CRTC must include broadband within the basic service objective.

3170 With respect to subsidy structure and funding models, the NCF subsidy is not addressing the gap, nor do other federal programs support large, new infrastructure builds. But that is what is required in Nunavut. There should be support for new infrastructure builds, an affordable broadband contribution fund.

3171 The EKOS report found that better broadband for isolated areas is something Canadians support.

3172 The new structure also needs to address all pricing, not just residential service. At present, the Government of Nunavut pays about 60 times more per megabit per second than an Ottawa-based business. Nunavut businesses face similar or worse circumstances relative to the Government of Nunavut.

3173 Finally, we would like to stress that any change to the BSO, contribution programs, or subsidy regime, or any new framework should be designed so as not to created or promote a monopoly or oligopoly.

3174 MR. ALEXANDER: In summary, nowhere is the digital divide more significant than in Nunavut. We are asking the following three items from you to close the gap.

3175 One, require as a matter of policy that Commission-funded studies that are designed to measure the Canadian telecom experience must include Nunavut.

3176 Two, include broadband as part of the basic service objective, a 2019 target BSO of 9 down and 1.5 up, which includes Nunavut, in actual speeds.

3177 And three, to establish a fund to support infrastructure to isolated or satellite-dependent areas.

3178 Thank you. Qujannamiik. And we are open to questions.

3179 THE CHAIRPERSON: Thank you very much.

3180 For the record I’ll mention that I think we understand the particular challenge that the territory of Nunavut faces. And so I would like more to focus our time here today on concrete solutions that we might be able to look at.

3181 Is your proposal for 9 down and 1.5 up a national target or one you’re suggesting should be appropriate for Nunavut?

3182 MS. HOLLIS: We really can’t speak for the rest of Canada.

3183 THE CHAIRPERSON: Okay. So implicit, therefore, at least for Nunavut since I guess you don’t want to speak for the other ones, that this is the right target. Is it foreseeable or feasible in your view to have a target that maybe focuses more where the problems are and leaving market forces operate elsewhere?

3184 MS. HOLLIS: If by where the problems are you include all of Nunavut?

3185 THE CHAIRPERSON: Yes.

3186 MS. HOLLIS: Okay.

3187 THE CHAIRPERSON: Yeah. So we could have a different basic service BSO in different parts of the country?

3188 MS. HOLLIS: There are a lot of places in Canada that have Nunavut’s problems. The difference is their government isn’t there. But to the extent that there is government there like in KRG or in the self-governed First Nations in the north of the western provinces, again I don’t want to speak for them, but it would make sense that the same applied, yes.

3189 THE CHAIRPERSON: How did you come to conclude that 9 and 1.5 -- well, let’s start with just 9 for first; I’ll get to 1.5 in a second -- was the appropriate speed target?

3190 MR. ALEXANDER: Sure. The Government of Nunavut participated with the Northern Communications Information Systems Working Group that is both federal and territorial governments jointly collaborating. And this report was commissioned called the “Northern Connectivity Report”, which involved building out the rationale for why speeds of 9 down were required. In the report it specifically focuses around administration, education, health, justice, public safety, as well as social services and residential access.

3191 THE CHAIRPERSON: Right. Is it your understanding that they, in their methodology, looked at the likely number of concurrent users in a residence, the likely concurrent types of applications that the service is being used and, therefore, extrapolated that the amount that one would need would be in that range?

3192 MR. ALEXANDER: At the time, it was specifically across all jurisdictions that the NCIS group were working, so not just Nunavut but also focussing on Northwest Territories and Yukon and all services in order to provide that level of service. The extrapolation, I don’t know if it was specific to density of household but it was looked at a pan-territorial design.

3193 THE CHAIRPERSON: Is there a specificity -- because I take it that that's the methodology you're accepting. It is an appropriate methodology in your submission.

3194 MR. ALEXANDER: Yes.

3195 THE CHAIRPERSON: Is there anything specific to the Nunavut experience that would make that number not quite appropriate compared to the Yukon or NWT?

3196 MS. HOLLIS: Almost everything. For example, I mean it was very interesting listening to the last group, the Eastern Ontario group. You know, their problem is keeping their aging community alive by inducing urbanites to come out with symmetrical service. We wish we had that problem.

3197 So that's almost an unanswerable question. Everything about the north, well particularly the satellite-served areas of the north, are so different.

3198 THE CHAIRPERSON: I appreciate that but I'm talking here we said -- I thought I understood that the 9 and 1.5 standard that you're proposing comes from a northern working group, which would have included the two other territories.

3199 MR. ALEXANDER: Yes, it did.

3200 THE CHAIRPERSON: Are you prepared to accept that the facts relevant to those two other territories, setting aside the satellite-delivered dominance -- I realize that -- that the social demographic realities of Nunavut are similar and therefore we should be taking that number as an appropriate number? For instance, are the household sizes different in Nunavut than, for instance, in Yukon?

3201 MS. BABSTOCK: Mr. Blais, so in Nunavut, yes, we do have larger households. The average typical Canadian family is often stipulated as like a mom and a dad and two kids. Up north, it's often a mom and a dad and it could be, you know, four to six and sometimes relatives are living there as well. We have overcrowding as you know.

3202 THE CHAIRPERSON: I'm trying to compare between territories, not between north south. I realize that you're proposing a number that was developed as a northern number. I want to see is there any specificity about Nunavut compared to your other colleagues?

3203 MS. HOLLIS: Part of the problem, the Government of Nunavut lacks a great deal of capacity and one of the things is the ability to answer this sort of question in a sophisticated way. We simply don’t have the capacity to compare. We don’t know enough about the Yukon. We have to rely on the NCIS report. I'm sorry, we just -- we are not in a position to comment on -- to make that kind of comparative economic analysis.

3204 THE CHAIRPERSON: The problem we may lead down therefore is when you're asking us to solve a problem, we may be solving a problem on facts that aren't relevant to your territory. That's the issue and I would have thought that the Government of Nunavut who considers this a key priority would have put resources to come to this hearing which is key to social and economic, more than airfare for people to travel here, to actually bring us strong evidence so we can help out and understand the issue in the territory.

3205 MS. HOLLIS: We accept the NCIS conclusions and the conclusions of that report. The people from the Yukon will probably beat us up afterwards if we say that. I mean, they don’t want 9 and 1.5. They want more. If you want us to tell you that they shouldn’t have more, it's not going to be ---

3206 THE CHAIRPERSON: I'm asking about your position, just your position, and I want to know if there's a specificity in your particular reality that makes that the common analysis that all three came to would not make sense in your particular situation. That's all I'm asking.

3207 MS. HOLLIS: It makes sense in our particular situation.

3208 THE CHAIRPERSON: Thank you.

3209 Similarly, the 1.5 up, how did you come -- it's the same rationale? You based it on that common study?

3210 MR. ALEXANDER: We did, yes.

3211 THE CHAIRPERSON: And again, you accept that as appropriate in light of your knowledge of Nunavut?

3212 MR. ALEXANDER: So as part of the original investigation of the report, it did reach out to specifically the different areas inside Nunavut to validate our unique requirements so that our unique requirements were covered as part of the report, not to say that we were the exception but that we, as inclusive, this would meet all our needs to be able to deliver and have access to services.

3213 THE CHAIRPERSON: Beyond speed, we've been talking a lot about capacity and I think affordability is an issue that you've raised. As we set, you know, about to develop a record on the possibility of setting a BSO for broadband, do you have a view or can you help us better understand in terms of monthly data caps what we should be examining?

3214 MR. ALEXANDER: I think as an item to take a look at is over the last three different initiatives that have been used to fund access for service inside Nunavut, each time that a cap was created, the cap was met instantaneously within the first month of serving access.

3215 So trying to set a standard that we feel in Nunavut would be acceptable watching each time -- as I pointed out this morning, they increased their cap to 20 gigs this month. When the billing cycle comes in May, most people will have reached that 20 gig limit. So trying to pick a number that is going to be an appropriate value, I don’t know if we have a specific number that may meet that requirement showing our history that anytime any cap is added, we reached that cap.

3216 THE CHAIRPERSON: You understand that that's not very useful to us because it leaves it without any guidance in terms of what, if we were going to set a minimum amount of basic broadband services BSO, what it includes because it's not just not a question of speed.

3217 MR. MANOLL: If I had to pick one today, I would probably pick 40 or 50.

3218 THE CHAIRPERSON: Okay.

3219 MR. MANOLL: And the reason I would come up with that is there's a lot of -- and just from personal reasons and without the research is that most families that I'm aware of will have multiple service providers, whether it's Northwestel or SSi, and they do that so they can get the combination of their caps together so they don’t have to go into overuse.

3220 So if SSi is providing 20 gigs and Northwestel is providing 20 gigs, multiple families will have both services to give them a collective 40, of which they tend to max out. So if I say 50, that gives you about a 25 percent buffer, so in that range.

3221 THE CHAIRPERSON: Would you see that as well as being a moving target over time?

3222 MR. MANOLL: Absolutely. It's where is the technology going and what new applications are going to be added. If the data is there and the technology is there, it will be used more for multiple reasons.

3223 THE CHAIRPERSON: Affordability is a bit of a difficult aspect to define and I was hoping that perhaps as I did with Yukon, getting a little bit of your experience in trying to find what's affordable based on your knowledge of the population in Nunavut.

3224 So I take it there are social assistance programs in Nunavut?

3225 MR. ALEXANDER: Yes, there are.

3226 THE CHAIRPERSON: Yes. So in establishing the level of support, how does the government in Nunavut allocate the costs of communication services?

3227 MR. ALEXANDER: The ongoing or sorry?

3228 THE CHAIRPERSON: Well, if you set a particular amount of social assistance at “x” number of dollars total let's say per month, how much is allocated for communication services within that?

3229 MR. ALEXANDER: Right now in the social assistance program, none of it is.

3230 THE CHAIRPERSON: None of it. So there's zero associated both for broadband, telephony.

3231 MR. ALEXANDER: Correct. Right now, the ---

3232 THE CHAIRPERSON: Cable, television or anything like that.

3233 MR. ALEXANDER: The four areas that are covered right now under the social assistance program is housing, food, clothing, and power, so having access to power.

3234 THE CHAIRPERSON: And do you foresee that changing at all over the next while or is that -- because these things change over time, right? What becomes basic household necessities evolve over time. Do you see that changing in the social assistance program evaluation in Nunavut?

3235 MR. ALEXANDER: As this time, I think we'd have to take that as an undertaking and go find out from the department that is responsible for delivering social services -- social assistance.

3236 UNDERTAKING

3237 THE CHAIRPERSON: Okay, that would -- we’d appreciate that. And while you’re at it, maybe understand why it is not -- why communication needs are not part of that calculation.

3238 MR. ALEXANDER: Okay.

3239 MS. HOLLIS: We can answer that one right now.

3240 THE CHAIRPERSON: Okay, good.

3241 MS. HOLLIS: Food is more important; a roof is more important; not freezing in the dark is more important; and having clothes to wear outside 10 months of the year is more important. We are -- you’ve asked for basic; we are so basic.

3242 THE CHAIRPERSON: I’m not denying that those in the hierarchy of needs -- obviously the needs you’ve just mentioned are higher. I’m just trying to understand, when we talk about affordability, what in your particular circumstance does the government and the leadership of the government see as affordable in terms of communications. In fact, you can perhaps, from what you just said, extrapolate that there is -- nothing is affordable in that sense, right?

3243 MS. HOLLIS: Pretty close.

3244 THE CHAIRPERSON: Okay.

3245 MS. HOLLIS: Almost everything you spend money on in Nunavut means that you can’t have something else that you really kind of need.

3246 THE CHAIRPERSON: Right. So in your submission you also talked about the need for the government itself to benefit from broadband services, as a provider of service. I was wondering -- I’m not sure if medium business makes sense but at least small businesses, what, in terms of your assessment, are small business needs with straight to broadband access or would they necessarily be covered by the sort of services you’re suggesting individual residential customers would get, that that would be enough even for business purposes?

3247 MR. BOWLER: I guess it depends on the business. And certainly some with greater needs are going to have challenges and others, I guess, manage with the current prices and packages.

3248 THE CHAIRPERSON: Does -- from an economic development perspective, because I know some of the work has been done to look at broadband not just from a social, education, health perspective but it’s also important from an economic development perspective. Has there not been any evaluation of what basic broadband levels might be to support a business opportunity in the Territory?

3249 MS. HOLLIS: The 9 and 1.5 supports the basic -- again, banking and point of sale, the ability to do basic research, the ability to buy online, to publish, to keep -- to maintain a website -- again basic.

3250 THE CHAIRPERSON: M’hm.

3251 MS. HOLLIS: You’ve introduce another word in the question; is that enough? And I’m a little concerned about the difference between basic and enough. Or are you using them as synonyms?

3252 THE CHAIRPERSON: I’m trying to get my head around what business uses might be dependant on broadband, for instance, I don’t know, a hotel or other tourism activity ---

3253 MS. HOLLIS: M’hm.

3254 THE CHAIRPERSON: --- and whether when we were thinking of what the basic service obligation might be with respect to broadband whether 9 and 1.5 is sufficient to actually support and help economic development.

3255 MS. HOLLIS: To run a small business, probably the numbers we’ve used are -- right? Yeah. Now, for a mine, that would be something else and ---

3256 THE CHAIRPERSON: Right. But presumably, then, we’re not in a small business anymore ---

3257 MS. HOLLIS: Right.

3258 THE CHAIRPERSON: --- and the size of that company would be sufficient to -- they would obtain the services to support their mining activities on uploads and downloads separately. It was part of the business case, right? Is that correct?

3259 MS. HOLLIS: I would think so.

3260 THE CHAIRPERSON: Right. Let me turn to directory information. We haven’t spoken a lot about that and I was wondering to what extent is directory information important to residents and businesses in Nunavut?

3261 MR. ALEXANDER: Right now in Nunavut we have the privilege of having our current directory services translated into Inuktitut which is still the dominant language in the Territory. And we still have unilingual people that don’t read English so having that capacity is of great benefit to communities especially where broadband access may not necessarily may not be something that’s affordable.

3262 THE CHAIRPERSON: So -- and I know you don’t want to comment on other parts of Canada but certainly from your perspective a printed directory has a specific importance particularly because of that additional language?

3263 MR. ALEXANDER: Correct.

3264 THE CHAIRPERSON: Okay. And is this how residents and businesses currently would access government numbers if they needed to?

3265 MR. ALEXANDER: It is one method of accessing government access. We do have an online published access as well. However, the main printed copy is still used as a source for accessing government contact points.

3266 THE CHAIRPERSON: It almost begs the question, if you think that the access to internet is not as universally accessible, why would the government have put numbers on the internet? I guess some people use it; is that what you’re saying?

3267 MR. ALEXANDER: We are saying that some people use it but it’s also for Southern people or Southern contacts to be able to find our numbers as well, not just the people within the territory.

3268 THE CHAIRPERSON: Right. And is that in Inuktitut as well or do you just provide -- do you do it like the phonebook or not?

3269 MR. ALEXANDER: I’d have to double-check. I’ll take that as a takeback and find the actual answer. I believe our website is fully printed in all four languages as well as the directory for lookup.

3270 UNDERTAKING

3271 THE CHAIRPERSON: Right. You talked in your presentation about the importance of education -- to use broadband to help educational needs of individuals. I’d like to dig around a little bit more around the notion of digital literacy, you know, arguably not at the core of the CRTCs mandate but certainly something that we might want to develop a record on as best practices or what you know with respect to this.

3272 Have you studied the amount of digital literacy in Nunavut?

3273 MR. ALEXANDER: I don’t believe we have directly studied the digital literacy levels in Nunavut. I’d have to take that away and find out for sure for you ---

3274 THE CHAIRPERSON: Okay.

3275 MR. ALEXANDER: --- because I know that there has been some research around the ---

3276 THE CHAIRPERSON: Well, either yourself or third parties might have looked at it.

3277 MR. ALEXANDER: Yeah.

3278 THE CHAIRPERSON: If you could get back to us?

3279 MR. ALEXANDER: Yeah.

3280 UNDERTAKING

3281 THE CHAIRPERSON: And the follow up would be, if there was when you do -- if there is some and you have a look at them, whether there are best practices that we should be aware of out of those studies.

3282 MR. ALEXANDER: Okay.

3283 THE CHAIRPERSON: Okay?

3284 MR. ALEXANDER: Yeah.

3285 THE CHAIRPERSON: I appreciate you might not have that at the tip of your fingers.

3286 Is digital literacy part of the educational program either at -- you know, for younger children or in adult education at all?

3287 MR. ALEXANDER: It is. There’s access to computer labs in every school that is inside the Territory as well as the local Territorial Arctic College. So the Nunavut Arctic College also has a community learning centre in every community within the Territory and they are delivering programs specifically at the college at the adult level.

3288 There’s a program that our department, Community and Government Services, supports that is the Computer Systems Technician Program. So we are funding the running of that program through the Arctic College but the Department of Education and their initiatives for access to computers and that information, I’d have to find out the actual information for you. I can take that as an undertaking and get the material back to you.

3289 UNDERTAKING

3290 THE CHAIRPERSON: Right. Are these facilities used at all as a kind of hub or anchor for the rest of the community where they’re present?

3291 MR. ALEXANDER: The schools tend to be in some cases the main community hall or main gathering point because of the fact that they have a large gymnasium attached to them. So after-hours usage for taekwondo training, or a yoga class, or a youth drop-in does exist in a lot of the communities, so it does act as a hub in that sense.

3292 But when it comes to as a hub for access to information, after the community access program stopped some of that function fell onto the territorial government to start providing innovative ways of providing that style of service back to the community.

3293 So we have continued to help support some of the community access program locations while we try to figure out the next step. Because after the cap program was deemed a success, the funding process for it sort of teetered off and now, we’re at a point where we’re trying to just -- in Nunavut, we still need to bring that digital literacy level up -- so trying to find the right -- a way to do that.

3294 THE CHAIRPERSON: Okay. Would it be fair to describe it as -- let’s say for children that may not have access at home to either connectivity or devices, that a community centre could be a place where they could access broadband connectivity?

3295 MR. ALEXANDER: Absolutely. Or in some cases the only spot where they access broadband at present.

3296 THE CHAIRPERSON: And with support to teach them how to do so beyond -- well, perhaps they already know and people are often quite adept at these things, but there would be as well support to build on the sort of digital literacy required to do so?

3297 MR. ALEXANDER: Correct. Yes.

3298 THE CHAIRPERSON: Right?

3299 MR. ALEXANDER: Yes.

3300 THE CHAIRPERSON: They’re not just left on their own?

3301 MR. ALEXANDER: Correct.

3302 THE CHAIRPERSON: Okay.

3303 Maybe you were in the room earlier when we had some presentation by SSi and BDC. And one of the messages I took away from their presentation is that the solutions that we’re looking at will probably require long-term commitment. I also heard the word “holistic” commitment.

3304 And that is, in part, because you want to have long-term business planning and return on investment over a long period of time, and the reality of that is that it would require looking at these issues beyond normal parliamentary cycles.

3305 Would you agree that that is a wise way of thinking about what the long -- the solutions might be; that they have to be looked at in a longer term horizon?

3306 MR. ALEXANDER: Yes. We have -- as a government, we’ve taken that same stance during the last time we were in front of the Commission to make a similar statement with the Northwest Tel modernization review. We said at that same time a holistic review of what we have is required for Nunavut.

3307 THE CHAIRPERSON: Right. Would you agree that we’re not quite there yet?

3308 MR. ALEXANDER: I would.

3309 THE CHAIRPERSON: Okay.

3310 The Open Gateway model; do you have views on it?

3311 MR. ALEXANDER: We’ve had that conversation with SSi Micro on their design. We are trying to be innovative at the government level, taking away the traditional method of fixed service solutions. We have to be innovative in how we’re going to deliver service in the North.

3312 But an actual concept -- comment regarding the Open Gateway model at present, we don’t have one.

3313 THE CHAIRPERSON: And I appreciate that it’s delicate because there’s not a lot of suppliers and you don’t want to show your cards too publicly at this stage.

3314 MR. ALEXANDER: True and we also are in contract obligations with SSi as our current service provider.

3315 THE CHAIRPERSON: Okay. Let me ask the question differently then.

3316 When you’re looking at, in the future, innovative solutions, what would be some of the hallmarks that you would want to advance in looking at innovative solutions in terms of pros and cons, risk, risk management solutions?

3317 MS. HOLLIS: I’m not sure exactly where you’re going with this, but I’ll try a couple of things and see if we’re in the right ballpark.

3318 Certainly, SSi made the point that the government system is idle while the residential system is working. Absolutely, there are economies and things we can do that -- not that I can commit the Government of Nunavut but certainly we would look at ways of optimizing available usage.

3319 THE CHAIRPERSON: Right.

3320 MS. HOLLIS: Another one is ---

3321 THE CHAIRPERSON: That’s not quite -- it was going to be my next question, but you’ve already answered it.

3322 MS. HOLLIS: Okay.

3323 THE CHAIRPERSON: So there’s an openness on your side, I take it, and there’s ongoing discussions. And I don’t think we can go very much further than that.

3324 MS. HOLLIS: Right.

3325 Another one would be, you know, looking at collaborating with other governments, other territorial governments, Labrador and Newfoundland, KRG, Quebec, maybe the James Bay Nations. There are -- so collaboration is up there, and that is also just a hugely important northern thing. Nobody can go alone in the North. You have to collaborate.

3326 THE CHAIRPERSON: Right.

3327 MS. HOLLIS: Another one would be looking at possible lean construction techniques. There are -- you know, derived from the Toyota systems. There are new ways of coming in that maximize construction efficiencies.

3328 THE CHAIRPERSON: Right.

3329 MS. HOLLIS: So ---

3330 THE CHAIRPERSON: And -- and I know you don’t want to talk about the Open Gateway, but there is an element of that in that.

3331 So those are the sorts of things, without endorsing necessarily their particular model.

3332 MS. HOLLIS: Right.

3333 THE CHAIRPERSON: So a quick construction, short period, being able to repeat quickly from one community to the next. Would that be another indicia of something that might be new in Nunavut?

3334 MS. HOLLIS: Efficiencies of all kinds like that.

3335 THE CHAIRPERSON: Right.

3336 MS. HOLLIS: Yes, absolutely, and innovations of all kinds. We were all ears listening to the Eastern Ontario experience.

3337 Oh, and also flexibility on the federal funding envelopes.

3338 THE CHAIRPERSON: Right.

3339 MS. HOLLIS: The point that EO made so well.

3340 THE CHAIRPERSON: There were comments earlier that although perhaps -- and that’s interesting, you mentioned the previous group from Eastern Ontario. I think there was a recognition that in an ideal world a wireline, perhaps even fibre solution, would be the best thing but then practicality comes into play.

3341 And with respect to your particular situation, it was put forward earlier that we could hope for a fibre solution but perhaps let’s be a little bit more realistic and realize that over the foreseeable future, it will be a satellite driven backbone.

3342 Would you agree with that; that it will likely -- that there is nothing we see right now that suggests anything other than satellite?

3343 MS. HOLLIS: Given how long a fibre build takes, yeah.

3344 THE CHAIRPERSON: Okay. And therefore, when we look at the backbone connectivity or transport issue, we’re necessarily in a satellite model?

3345 MS. HOLLIS: Yes.

3346 THE CHAIRPERSON: Okay.

3347 You appreciate that nodding heads don’t make it to the transcript?

3348 MS. HOLLIS: That’s why I pushed the button.

3349 THE CHAIRPERSON: Thank you.

3350 And we’ve had conversations about the challenge of satellite and I’m not an accountant, so I don’t know, but sometimes costs around satellites, one would describe as capital; others, operating; and others, maintenance.

3351 Do you have views as to if we were to explore options with respect to transport, and in this case satellite transport, where the Commission should put its efforts and what kind of model should we be looking at?

3352 Is it one that supports capital; expenditures; operating or maintenance? Although I guess the maintenance could be either capital or operating.

3353 MR. ALEXANDER: In our realm of how we look at it, it would be falling under capital to start, as the initial build requirement is the upfront capital requirement to build the infrastructure.

3354 As the others have alluded from earlier today that the ongoing is a concern as well, but it’s one of the ways that our current process for funding similar builds is we’ve done ours through capital expenditures.

3355 THE CHAIRPERSON: Okay.

3356 It’s my last here -- just my colleagues to get prepared if they have any questions.

3357 I appreciate that that’s from your perspective. When it comes to us, because you’ve heard that people have asked us to create some sort of financial support model through subsidy or not.

3358 I was asking my question is that context, whereas, you know, I understand you, as the government, would prefer to get involved in the capital side.

3359 When we step in, potentially, what kind of support do you think would be most efficient in your reality in Nunavut?

3360 MR. ALEXANDER: In our reality, we have -- it would be a mixture of both the upfront build and then the ongoing support as well.

3361 THE CHAIRPERSON: Okay, and through whom would the ongoing support be delivered?

3362 MR. ALEXANDER: In our case we would look at it as the incumbent who is providing the broadband service. So if we have multiple suppliers that are available, it would be the one that is currently providing for that specific subscriber.

3363 THE CHAIRPERSON: Right. Help me square that with your comment in your submissions that you don’t want us to create a monopoly or oligopoly? Because essentially you might find yourself in a situation where one player does get the benefits but not the other. And how do you do that?

3364 MS. HOLLIS: I have to say my reaction to that is that that question exactly illustrates what’s wrong with the current subsidy, that it isn’t possible to not, you know, create or enhance a monopoly or oligopoly. I mean, that’s kind of what you get with satellites.

3365 THE CHAIRPERSON: Right. Which may plead in favour of another completely different model, whether we call it open gateway or other type of anchor solution. It may be the better way of going about it, that’s then available to all access suppliers in a given community.

3366 MS. HOLLIS: We have collectively painted ourselves into a corner and the solution is going to be artificial in its nature is what I keep coming up with. It’s that we’re going to have to find some way of spreading that money around.

3367 THE CHAIRPERSON: Right. I’m not sure it’s artificial as much as it’s a reality because there’s a market failure and, therefore, it’s driven by public policy as opposed to ---

3368 MS. HOLLIS: Maybe regulatory would be a better word than artificial.

3369 THE CHAIRPERSON: Yeah, perhaps, indeed.

3370 Okay, those are my questions. I’m going to turn to my colleagues and see if there are any questions.

3371 COMMISSIONER MENZIES: I’ve just got one.

3372 THE CHAIRPERSON: Mr. Menzies?

3373 COMMISSIONER MENZIES: It’s kind of a social question. I’m kind of curious when I listen to the northern groups and they look at proceedings like this and they see other groups asking for much more, for free internet or for unlimited speeds essentially, gigabyte services, and no data caps and that sort of stuff.

3374 If I walked down the street in Iqaluit and asked people about that, what sort of response would I get?

3375 MR. ALEXANDER: You would get everybody excited to hear that you would be able to deliver something like that. However, they would say, “At what cost?” Because one of the realities that we recognize living in such an isolated environment is that cost is a driving factor for unlimited access.

3376 COMMISSIONER MENZIES: Thank you.

3377 THE CHAIRPERSON: Commissioner MacDonald?

3378 COMMISSIONER MacDONALD: Good afternoon.

3379 Just one question that’s following up on the Chair’s final question.

3380 I get that more competition is better; competition breeds innovation and more competitive pricing. But if through any funding the majority of the funding does happen to go to a single provider or a strengthening of a current monopoly that’s in place, if the end result is better speeds or higher data caps, does that end result not trump any harm that may be created through the enhancement of a current monopoly? And how much competition is realistically viable in Nunavut given the population spread across 20 percent of Canada’s landmass?

3381 MS. HOLLIS: I learned in logic class that any if-then proposition that starts with a false statement is necessarily true -- to say if a monopoly resulted in, you know, better speeds and more affordability yeah, we’d all over that. But that’s not our experience. That is absolutely not our experience. The monopoly situation was not good for Nunavut. And our experiences that as SSi showed up, as Ice Wireless showed as others showed up, that things got better really fast.

3382 So to say, you know, “Well, if a monopoly made it better,” it’s like, but they don’t. It’s just so hard for me to accept that basic premise. Yeah, a benign monopoly that took care of us, yeah, that would be really sweet. But I haven’t seen it.

3383 COMMISSIONER MacDONALD: Okay, thank you.

3384 THE CHAIRPERSON: Thank you very much. Those are our questions.

3385 Madame la Secrétaire?

3386 THE SECRETARY: Thank you.

3387 I will now ask NWT Association of Communities to come to the presentation table.

3388 --- (SHORT PAUSE)

3389 THE SECRETARY: Please introduce yourself and when you’re ready you have 10 minutes.

PRESENTATION

3390 MS. BROWN: Thank you very much. Thank you Commissioners for allowing us this opportunity to speak. And I’m very pleased to be here and let you know our perspective of the NWT communities.

3391 I am Sara Brown. I’m the CEO of the NWT Association of Communities. We represent all 33 communities in the Northwest Territories. And we have a resolution that speaks to the importance of telecommunications and the viability of our communities on so many levels -- social, economic -- and that we hope that we will see some significant improvements. And that’s why I’m here today.

3392 I think it was just last week that the Commission released a map showing service across the country. And it’s very clear that you don’t see that across the north. Lots of colour across the southern bands in Canada and not across the north.

3393 I’m not a technical person within this industry. So I’m going to speak to you about what it means on the ground, trying to function in these small remote communities, of which of our 33, 10 are as I understand it satellite-based. So we have an interesting mix of fibre and satellite across the territory.

3394 One of the things that happens, and the presenters from Nunavut really talked about this a lot, is the isolation. We are very different from rural. We are not rural. It does not look the same. We can’t drive to the next town.

3395 Everybody in the north has these wonderful stories about talking to the bank and the bank saying, “Come on it and sign that.”

3396 “Well, no, no, no. Our nearest branch is 1,500 kilometres away.” We can’t function in those sorts of things. We can’t go to the next town for resources. We really absolutely rely on the internet. It could be such an important tool to us, but we don’t have that opportunity because of our speeds and our capacity.

3397 Things like hospitals. Most of our communities have nursing stations. And even in our regional centres we rely heavily on expertise from the south. So that connectivity is very, very critical from sending down x-rays, reports, scans to making life and death situational decisions on the ground -- a nurse trying to get advice about whether to bring in the MedEvac or not bring in the MedEvac. It’s absolutely critical to be able to rely on that and to have the speeds that allow you to do that function.

3398 Education. We talked about education a lot. We heard lots of things about that today. And that starts right at a school level, a junior school level, that ability to stay and be exposed to things that you might not be otherwise. Right now one of our communities, their music program is actually offered by somebody in the south. There is nobody with that expertise in the community so they are actually having classes through Skype. And that’s absolutely critical.

3399 And it becomes even more so when you start talking about core courses, that ability to take a calculus class at the end of a high school career, or that adult education to be able to do your online MBA. You know, something simple like attending a meeting can become a big deal. If you go from a community like Paulatuk, it takes a week to go to a half-day meeting or an hour-long meeting.

3400 So having that connectivity to be able to participate in the digital world becomes absolutely critical.

3401 Many of our communities do not have policy detachments. Again, that reliability, connectivity absolutely critical.

3402 You know, we talked about lots of economic issues. The territorial government just did an economic opportunity strategy, a really strong document, and it involved meeting with communities across the territory. And everywhere they heard that the broadband issues were absolutely stopping or slowing down their ability to grow. They heard that across the north, even in communities like Yellowknife that have a fairly good level of service, but we have some reliability issues and we have capacity issues that are affecting our ability to actively participate.

3403 You know, you’re in a small community and things like somebody puts a logo and attaches a 5-meg document, which you would think nothing of. All of a sudden you might as well go get a coffee because your system is down as you’re downloading that material.

3404 I recently went, and this is in Yellowknife, to send a 10-minute video for upload to be used in an education program. The first time I did it it said it was going to take 11 hours. So I stopped it, went back and picked another time and it only took four.

3405 So I mean, those are the kinds of issues that you really don’t realize how much the digital economy has moved into what we do every day. And when you can’t actively participate in it, what a detriment that is.

3406 The NWT, and I can’t speak to the rest of the north, has been experiencing a lot of out-migration. So they’re always struggling to keep and attract people. Well, just as a high-speed internet can be an attractant, a lack of one can be a detractant. You know, if somebody is thinking about moving there and they have to tell their kids that they’re not going to have download speeds that are going to allow them to watch a YouTube video -- I can’t watch a YouTube video at home. That is a detractant to you coming and participating.

3407 I think you’ve talked quite a lot about market forces and how they can’t really drive this, so we look forward to your guidance. And I apologize; I can’t offer a lot of advice about how you might make that happen, about how we can do things and move that ahead.

3408 Certainly we have talked about the 9 megabytes per second for download and 1.5 for upload based on the same study that Nunavut’s government was representing using because we have to rely on that expertise. They did a very exhaustive review of the various users within the community so we certainly have to acknowledge that and look at that.

3409 And one of the other issues we have is a lack of redundancy. We have communities that will go offline for days at a time, not, you know, a half hour, day. Even Yellowknife our speeds can just suddenly drop and we’ll be almost unable to check emails for a day, half a day, two days sometimes.

3410 So I just wanted to let you know you don’t realize how much the digital world has become part of how you live every day until you miss it like our communities do.

3411 So thank you very much.

3412 THE CHAIRPERSON: Thank you.

3413 Vice-Chair Menzies will have some questions for you.

3414 COMMISSIONER MENZIES: Thank you. I have a few questions.

3415 Are things better than they were five years ago?

3416 MS. BROWN: Yes. My understanding is they are better and some of the other work that is being done by NorthwesTel is improving the situation in some of the communities over the next year to year and a half. But that’s to achieve the 5 and 1 at this point.

3417 COMMISSIONER MENZIES: But there are a number of communities that have better than 5 and 1, right?

3418 MS. BROWN: There are.

3419 COMMISSIONER MENZIES: There’s 15?

3420 MS. BROWN: Yeah.

3421 COMMISSIONER MENZIES: Not some of the communities you’re talking about. I mean, there’s quite a contrast, right?

3422 MS. BROWN: Absolutely.

3423 COMMISSIONER MENZIES: Because I’ve been to the big places like Yellowknife and Inuvik, and except when the satellite turns around it’s general pretty good.

3424 MS. BROWN: Yes, yes. Those major centres are better, absolutely.

3425 COMMISSIONER MENZIES: Okay. Then the challenge then is connecting some of the smaller communities.

3426 How many of those do you think will be able to benefit in the short-term from the Mackenzie Valley fibre project?

3427 MS. BROWN: I’m hearing mixed comments on that. My understanding is quite a number would be. But then I’ve asked for confirmation of that and I haven’t received that yet, truly understanding that they will get full access to the fibre going by.

3428 COMMISSIONER MENZIES: So maybe you could just dispossess me of this notion that the biggest issue would be the satellite communities?

3429 MS. BROWN: It would be the biggest issue but not the only issue.

3430 COMMISSIONER MENZIES: But not the only issue, okay.

3431 In your initial submission you referenced the issue of redundancy.

3432 MS. BROWN: M’hm.

3433 COMMISSIONER MENZIES: Could you basically outline what the current situation is in terms of community connectivity and redundancy?

3434 MS. BROWN: Yeah. My understanding is there is relatively little redundancy and that’s why we’re having these long-term outages. So if there is a problem anywhere on the network -- even Yellowknife we experienced quite a number of days of no service or very low service because of a failure in the line on the way north. So there’s absolutely no redundancy in the system as I understand it.

3435 COMMISSIONER MENZIES: Are you optimistic that that might be resolved with completion of the Mackenzie Valley fibre and the Dempster project?

3436 MS. BROWN: I don’t believe it would be but I don’t know that absolutely.

3437 COMMISSIONER MENZIES: Okay.

3438 In your initial submission you talked about affordability quite a bit. What sort of reference points would you have us use to define affordability, in part given that the EKOS survey that we did, Northwest Territories was reasonable notable in its acceptance of the situation where they might have to pay a little bit more for that?

3439 MS. BROWN: There certainly is an understanding that we pay a premium where we are for all our services. But we’re always trying to get those numbers down.

3440 But yeah, there is a certain acceptance that there should be some premium, but not excessive. Like, all our ---

3441 COMMISSIONER MENZIES: So can you give me a best guess what that might be? I mean, generally costs in the north are what? About 30 percent higher?

3442 MS. BROWN: I would recommend that it might be worthwhile to look at some of the cost of living indexes and say, “Okay, this is reasonable. In the absence of anything else this would be a reasonable assumption,” that those costs of living indices could apply to broadband as well.

3443 COMMISSIONER MENZIES: You think people would accept if something cost $50 in Edmonton, it might cost $65 in Yellowknife? That’s within the realm of non-hysterical reaction?

3444 MS. BROWN: I wouldn’t want to put words in people’s mouth, but they understand that ---

3445 COMMISSIONER MENZIES: Well, I’m just asking in your own sense.

3446 MS. BROWN: Yeah, I would think so and I would think particularly if it was in line with what the difference in the cost of living indexes were between the two places.

3447 COMMISSIONER MENZIES: And if the service was comparable?

3448 MS. BROWN: Yes, and the service was comparable, absolutely.

3449 COMMISSIONER MENZIES: Right. It would be one thing to be $100 for 10 percent of what somebody else got for 60.

3450 MS. BROWN: Right. Absolutely.

3451 COMMISSIONER MENZIES: Do you have an indication of how many of the communities you represent currently have access to speeds of 5 and 1?

3452 MS. BROWN: I couldn’t comment off the top of my head on currently, but my understanding from NorthwesTel is that all of them will have them by 2017.

3453 COMMISSIONER MENZIES: By next year?

3454 MS. BROWN: Yes.

3455 COMMISSIONER MENZIES: Okay, thank you.

3456 The target speeds you suggested, 9 and 1.5, sound similar to what we just heard from Nunavut. Is it sourced from the same NCIS working group?

3457 MS. BROWN: Yeah, same study.

3458 COMMISSIONER MENZIES: Okay. But you also suggest 11 and 16 for education and healthcare locations?

3459 MS. BROWN: Again that was identified in that study, that those would be better speeds for those particular uses. That those -- they sort of -- there was everybody else and then they carved off (inaudible).

3460 COMMISSIONER MENZIES: It said sourced from the same ---

3461 MS. BROWN: The same study, yes.

3462 COMMISSIONER MENZIES: From the same report and essentially, as I recall that report, education and healthcare had those big upload needs.

3463 MS. BROWN: Right, right.

3464 COMMISSIONER MENZIES: So ---

3465 MS. BROWN: Yes, yes.

3466 COMMISSIONER MENZIES: Okay and that -- so you believe that standards for those both speeds would meet basic requirements?

3467 MS. BROWN: Sorry, can I ask you to rephrase that?

3468 COMMISSIONER MENZIES: Sorry, it’s 9 and 1.5.

3469 MS. BROWN: M’hm.

3470 COMMISSIONER MENZIES: If the Commission decided to mandate internet as part of the basic service --

3471 MS. BROWN: M’hm.

3472 COMMISSIONER MENZIES: -- that speeds -- download speeds of 9, with upload of 1.5, would meet what you believe to be basic service and for education and healthcare locations 11 and 16?

3473 MS. BROWN: I believe that it certainly seemed that that was a very thorough examination in the report and that was their conclusion, so.

3474 COMMISSIONER MENZIES: Right and that would also meet small business needs? Small-medium business?

3475 MS. BROWN: It -- that’s my understanding from that report, yes.

3476 COMMISSIONER MENZIES: Okay.

3477 Do you have any estimates for us on how much it would cost to bring internet access in the communities you represent up to the levels you suggest?

3478 MS. BROWN: I have no knowledge of that.

3479 COMMISSIONER MENZIES: Okay.

3480 How do you think it -- if it were to be subsidized how do you think it should be subsidized?

3481 MS. BROWN: Again, as somebody who’s not part of the industry it would be very hard for me to comment on that.

3482 I don’t live this world day-to-day, so I don’t understand the structures that have been used to date and I wouldn’t want to comment on them going forward.

3483 COMMISSIONER MENZIES: But would it be fair for me to assume because you’ve raised the issue of affordability --

3484 MS. BROWN: Yes.

3485 COMMISSIONER MENZIES: -- that the answer would be someone else?

3486 MS. BROWN: That would be a fair assumption, yes.

--- (LAUGHTER)

3487 COMMISSIONER MENZIES: Okay, thank you.

3488 Do you think there’s any opportunity for some of the northern Indigenous funding -- I think it was 8.4 billion, 255 million for infrastructure, would be of assistance to any -- would be accessible to any of those communities?

3489 MS. BROWN: I ---

3490 COMMISSIONER MENZIES: Would make a difference?

3491 MS. BROWN: Yes, I know there was lots of funding. It was not -- some of those line items were not clear that they would apply to our communities, because we are not all on Reserve.

3492 We only have two Reserves and so some of the funding was allocated differently on-Reserve versus off-Reserve.

3493 But as well I know we have a very, just like Nunavut, a very significant infrastructure deficit, both -- at a municipal level our communities are underfunded by 40 percent, our territorial government is going to be reaching its debt cap at 2018.

3494 They are in a very significant fiscal situation and are very, very concerned and that’s just to meet their current needs.

3495 So I’m not sure that there would be -- I wouldn’t want to comment on their ability to participate.

3496 Now the one opportunity that may be there within the context of the Aboriginal governments is for some of our development corps to participate as private partners.

3497 COMMISSIONER MENZIES: Okay.

3498 When you talked about out migration, I understood that you’re saying there’s a lack of access to the same quality of communications network --

3499 MS. BROWN: M’hm.

3500 COMMISSIONER MENZIES: -- as people in at least in cities in the south have, might be encouraging that, but just to challenge that, aren’t -- wouldn’t there be -- how would that fit up against other factors such as resource prices, mine closure?

3501 I mean --

3502 MS. BROWN: Yes.

3503 COMMISSIONER MENZIES: -- even one time somebody at the Chamber of Commerce in Yellowknife told me I made a comment about since WestJet is flying there the airfares it’s much cheaper to get there.

3504 MS. BROWN: M’hm.

3505 COMMISSIONER MENZIES: And he pointed out yes, but it’s much cheaper to get out now too; right?

--- (LAUGHTER)

3506 MS. BROWN: Yes.

3507 COMMISSIONER MENZIES: And you can go to Edmonton and go shopping for the weekend --

3508 MS. BROWN: Yes.

3509 COMMISSIONER MENZIES: -- and basically pay for your airfare on the costs and that would have an impact on retail sector.

3510 MS. BROWN: Yes, yes.

3511 COMMISSIONER MENZIES: And you have roads.

3512 MS. BROWN: Yes, yes. Yes, we certainly -- I wasn’t making the comment in the context that it’s a -- the primary reason for our migration.

3513 COMMISSIONER MENZIES: Right.

3514 MS. BROWN: But we are always struggling with ways to be more attractive and to recruit, and then to retain, and anything we can do to improve that what we see as a (inaudible).

3515 COMMISSIONER MENZIES: Right so that -- that’s understandable, because that would be a big feature for trying to recruit young people for --

3516 MS. BROWN: Absolutely, absolutely.

3517 COMMISSIONER MENZIES: -- areas where there is labour shortages and that sort of stuff.

3518 MS. BROWN: Yes. Yes, absolutely.

3519 COMMISSIONER MENZIES: Discovering that connectivity would be an issue for people of a certain generation would be a brand new thing.

3520 MS. BROWN: Oh, yes, yes. You send -- you send a young employee to some of these smaller places, they’re going to let you know pretty quickly they weren’t happy that they couldn’t get online.

3521 COMMISSIONER MENZIES: Yes, I would expect so.

--- (LAUGHTER)

3522 COMMISSIONER MENZIES: Those are all my questions, thank you.

3523 MS. BROWN: Great, thank you.

3524 THE CHAIRPERSON: Okay, I’m checking around to see if there are other questions for you.

3525 MS. BROWN: Yes.

3526 THE CHAIRPERSON: Thank you very much. I apologize that you had to go by late in the day like this.

3527 MS. BROWN: No problem.

3528 THE CHAIRPERSON: But I appreciate your participation in the hearing. Thank you.

3529 MS. BROWN: Thank you for the opportunity.

3530 THE CHAIRPERSON: So this finishes the people we’re going to hear from today and so we’re adjourned until 9 o’clock tomorrow morning. Thank you.

--- Upon adjourning at 4:21 p.m.

REPORTERS

Sean Prouse

Mathieu Bastien-Marcil

Lucie Morin-Brock

Renée Vaive

Lyne Charbonneau

Karen Pare

Ian Schryber

Krista Campbell

Kathy Poirier

Karen Noganosh

Mathieu Philippe

Date modified:

2016-04-12