ARCHIVED - Transcript, Hearing April 13, 2016

Volume: 3
Location: Gatineau, Quebec
Date: April 13, 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 Wednesday, April 13, 2016 at 9:00 a.m.

3531 LE PRÉSIDENT: À l’ordre, s’il vous plaît; order please.

3532 Madame la secrétaire.

3533 LA SECRÉTAIRE : Merci.

3534 For the record, we would like to announce that Qikiqtaaluk Corporation and Susan Lehmann will not be appearing at the hearing.

3535 We will now start with the presentation of Mr. Ryan Adams. You may begin, you have five minutes. Thank you.

3536 MR. ADAMS: Good day.

3537 THE CHAIRPERSON: Sorry, Mr. Adams, before you get started, I notice that you have added with your presentation a lot of documents. And as you know, I appreciate you might not be familiar with the rules of procedure that we use but normally, out of fairness, let’s say that we don’t add documents at the last minute. We try to do that ahead of time.

3538 So I’m going to give you an opportunity to explain why these documents you were unable to put them forward on the record earlier, so that those contrary to interests would have seen them sooner in the process.

3539 And perhaps you could give us an explanation for that, at this point.

3540 MR. ADAMS: Yes, Mr. Chairman.

3541 I was about to ask permission from the hearing Secretary to introduce new evidence in the form of a booklet to include the electronic links that I have detailed within said documents. The reasoning for this is this is new evidence that is directly relevant to my video and to my speech that I will detail before the Commission and for the review of CRTC 2015-134.

3542 THE CHAIRPERSON: Sure. How is it new? Did it only arise after an intervention period?

3543 MR. ADAMS: Overall, it did. Some of the information, the notes detailed inside there, were only recently discovered as part of CRTC case ID 722533 and CRTC case ID 728559.

3544 Seven, two, two, five, three, three (722533) was submitted on 16 October ’15, and CRTC case ID 728559 was submitted on 21 December ’15.

3545 THE CHAIRPERSON: Okay. And you weren’t able to, in your view, have addressed this sooner than this morning?

3546 MR. ADAMS: No. Sooner than this morning, I addressed -- I discussed this yesterday with the hearing Secretary when I submitted my documents.

3547 THE CHAIRPERSON: Understood. Okay.

3548 So go ahead but we’ll take it under advisement. The Panel hasn’t ruled on whether you’ll be able to include this or not, but we’ll deem it to be part of the record for now and then we’ll rule on it later on.

3549 MR. ADAMS: Absolutely.

3550 THE CHAIRPERSON: Okay. Thank you.

3551 So go ahead.

PRESENTATION

3552 MR. ADAMS: Good day. My name is Ryan Adams.

3553 I am an individual who has been made aware of many issues with broadband deployment in Eastern and Northern Ontario that have left some without service, and others forced to pay incredibly high rates. I also allege the misuse and inappropriate spending of public funds by Bell.

3554 I would like to outline a short excerpt of the evidence I have presented to the Commission related to the Bell Deferral Accounts broadband rollout, and the alleged use of public funds to subsidize deferral obligations in communities.

3555 Deferral accounts are similar to a fund being considered by the Commission where money would be set aside to provide broadband services. The Deferral accounts also detailed that broadband was to be afforded in a manner similar to a basic service objective.

3556 I prepared a short video to better represent my arguments and outline the true involvement of public funds in deferral communities.

3557 Roll the video please.

3558 (VIDEO PRESENTATION)

3559 MR. ADAMS: My allegations are simple and clear. Bell has used grant funds to provide broadband to deferral communities, contrary to the rulings and decision of the Commission.

3560 The Company further leveraged the decision in CRTC 210805 to not only misuse grant funds but apply punitive pricing through the overlapping boundaries of wireless.

3561 Bell’s actions are highly prejudiced towards both deferral and non-deferral communities.

3562 The solution to this disadvantageous practice, as per my written submission, is not to allow the selective implementation of the most expensive technologies and price gouging to communities as part of a basic service objective.

3563 This statement includes the consideration that many incumbent companies often service a community with landline voice or television, and a preference towards less regulated wireless internet.

3564 To conclude my presentation, there are many similarities between the Deferral Accounts Broadband Rollout and a proposed Commission managed fund to subsidize broadband. There are also many lessons to be learned from the past rollout.

3565 I am strongly supportive of the concept of a CRTC managed fund that would provide broadband in my community, in addition to a basic service objective.

3566 In closing, I would like to thank the Commission for its time and consideration of my presentation and welcome any questions you may have.

3567 THE CHAIRPERSON: Thank you very much. Vice-Chair Menzies will ask you some questions. Thanks.

3568 MR. ADAMS: Thank you.

3569 COMMISSIONER MENZIES: Thank you. What do you use the internet for?

3570 MR. ADAMS: My wife uses the internet for work. She is a pharmacist who provides remote telepharmacy through the internet to communities that are typically not serviced by pharmacists; remote communities, Hearst, Cochrane, there’s a few others.

3571 COMMISSIONER MENZIES: That doesn’t sound, on the face of it, as something that would require intense speeds; is it?

3572 MR. ADAMS: It connects using a VPN and not the typical VPN that’s often referred to ---

3573 COMMISSIONER MENZIES: Right.

3574 MR. ADAMS: By Netflix and all that.

3575 Over all, the band width usage is what’s important. Average 2 to 5 Gigabytes per day.

3576 COMMISSIONER MENZIES: Okay. So that’s 125, 150 a month? Well, working days it’s less, right?

3577 MR. ADAMS: M’hm.

3578 COMMISSIONER MENZIES: Okay.

3579 MR. ADAMS: I will note my costs here. I have an average of a five-year cost at $276.29 monthly. Over five years we’ve paid $16,577 for internet. I will note that this is for a typical 5-1 wireless service.

3580 COMMISSIONER MENZIES: Right. And if you’re operating a business that’s ---

3581 MR. ADAMS: What’s that?

3582 COMMISSIONER MENZIES: That’s part of the business cost, right?

3583 MR. ADAMS: Overall yes, I guess you could call it as part of a business cost, yes. The internet is used both for home and business usage. However, I wouldn’t necessarily call myself a heavy user in the sense of things like video streaming and all that.

3584 COMMISSIONER MENZIES: But your spouse is running a business out of the house, right?

3585 MR. ADAMS: What’s that?

3586 COMMISSIONER MENZIES: Your spouse is running a business out of the house?

3587 MR. ADAMS: No, she works for a company.

3588 COMMISSIONER MENZIES: Oh, I see. She’s an employee working from home.

3589 MR. ADAMS: Yes.

3590 COMMISSIONER MENZIES: Okay. I understand.

3591 So notwithstanding your concerns regarding Bell, help me understand the situation in Pembroke because when I looked up their website it describes Pembroke in a much different way than you describe it. It describes it as:

3592 “Pembroke is a smart community with fully a redundant fibre optic ring around the city with frame relay services and an asynchronous transfer made over sonnet ring. Several telcos offer business services and solutions… We also have ISPs that supply high speed.”

3593 It then lists five telcos, Bell, Ottawa River, Cogeco, NRTC, and Vianet.

3594 So that seems inconsistent with the difficulties you’ve outlined. So help me understand why these options that are advertised by the City of Pembroke’s website aren’t available to you.

3595 MR. ADAMS: Okay. I will emphasize my location is inside some of those blue circles that I’ll emphasize. However, my location is six kilometres from a fibre-to-the-home deployment from NRTC. I will emphasize that I am 10 kilometres from Garrison, Petawawa, overall a very large gathering of people.

3596 COMMISSIONER MENZIES: Okay.

3597 MR. ADAMS: However, I’ve outlined certain issues with regards to how grant funds have entered into that community. I would argue based on my assessment, did grant funds get pushed into the wrong DSAs?

3598 I’ve provided you in my reference package six notes.

3599 COMMISSIONER MENZIES: Certainly I understand your issue there, I guess, with this process here and I’m not attempting to diminish that issue at all. But in our process here we’re trying to determine basic needs and affordability and that on a broader scale. So I’m just trying to use a little bit of 360 view on things. So I’m trying to understand where your situation fits into the Community of Pembroke and communities like it and where they’re served.

3600 So do you have only one option for service?

3601 MR. ADAMS: Actually I have two, Bell Wireless through what is in effect a turbo hub, or Xplornet. Xplornet ---

3602 COMMISSIONER MENZIES: So none of these others are available, the Ottawa River, Cogeco, NRTC?

3603 MR. ADAMS: No, they are not. And Xplornet is not, due to the latency, Xplornet Satellite -- it is not Xplornet Wireless -- due to the latency makes it unsuitable for VPN use. The latency -- I’ve had it at home; I had it for one year. It has a latency of over approximately 1,000 milliseconds. So the back and forth time makes it unsuitable.

3604 COMMISSIONER MENZIES: Okay. And the rates Bell charges you are as you’ve described?

3605 MR. ADAMS: The rates that Bell charges me is what?

3606 COMMISSIONER MENZIES: As you’ve described?

3607 MR. ADAMS: Yes. I have described $276 monthly over five years.

3608 COMMISSIONER MENZIES: Okay. How would you have us fix that?

3609 MR. ADAMS: How would I have you fix that? I’ll note that the Chairman at the beginning has -- I’d like to read out to one of his quotes, a short excerpt of it, with permission, to reemphasize this.

3610 “The CRTC therefore issues the following challenge to parties. Demonstrate to us using evidence that the public interest and specific situation in each region justify action by the CRTC. Explain to us why market forces are currently insufficient to respond to the public needs.”

3611 Well, using evidence I’ve described a set of circumstances that is existing as regard to a previous rollout. I will emphasize the Bell Deferral Accounts fund should be looked at very closely, not just as part of the overall examination of my allegations, but as part of the consideration that the Bell Deferral Accounts fund provided for a basic service objective. In addition, a fund was set aside to provide broadband services.

3612 Now, in CRTC 2015-134, as part of the review of the basic service objective, you stated that the Commission has never done this. As per my written submissions, I’ve outlined, as part of the Bell Deferral Accounts rollout, in Ontario and Quebec service in that manner was afforded to over 69,000 residences.

3613 COMMISSIONER MENZIES: Right. So you’ve made your point clear on that. So you are in favour, I take it, of having internet designated as a basic telecommunications service and at an affordable rate.

3614 So just to focus on that because that’s the main point of our being here, what would you think would be an acceptable rate for the service that you need?

3615 MR. ADAMS: Comparable to urban rates. I’ve outlined, using evidence ---

3616 COMMISSIONER MENZIES: Okay, so the $64 rate that you referred to?

3617 MR. ADAMS: Yes. However, I’ve noted that the current plans, the Bell Wireless 5, as part of the Bell Deferral rollouts, comparable to DSL, is $100 more monthly.

3618 COMMISSIONER MENZIES: Okay. No, I understood that; you were very clear on that.

3619 Thank you. I don’t have any more questions.

3620 THE CHAIRPERSON: Have you been living in the area for a long time?

3621 MR. ADAMS: Five years in the same household.

3622 THE CHAIRPERSON: Okay. And did you move there before or after the rollout of the deferral account build-outs or the EORN investments?

3623 MR. ADAMS: In January 2011. So I got to observe aspects of the rollout as they were being constructed. Obviously there was construction all around my DSA and my neighbourhood, but obviously grant funds never entered my DSA or my neighbourhood.

3624 THE CHAIRPERSON: Right. We heard evidence earlier in the hearing about how access to broadband becomes an important decision point when people decide to move in and it affects as well the value of homes if it is not accessible. So from your perspective, when you moved to the area were you expecting to be able to get broadband?

3625 MR. ADAMS: Absolutely. I’ve noted that then there was the LVPBI, which I detailed. There was also previously the rural connections, which was I’d say slightly before the decisions in CRTC 210-806 and 210-637.

3626 However, I note I didn’t fully understand the whole process at the time. I’ve only conducted research on Ontario, Bell deferral communities, and I’ve chosen to focus on that specifically as part of my submission.

3627 THE CHAIRPERSON: Right. You’re probably not intending to move out of the area, but do you feel that he absence of access to broadband is affecting the desirability of others to move in the area?

3628 MR. ADAMS: Absolutely. As to the effects on the housing prices, I will note the aspects of people often will shy away from the fact -- when they’re purchasing a house they look at the internet costs. They have to look at every cost. So educated people do that.

3629 I did look at that before. However, I expected the natural progression of not only market forces in conjunction with government funds to eventually -- I’m so close to where the service is but nobody seems to have an interest in serving my household or my neighbours.

3630 I will note that either side of my house I can look at neighbours across the streets. There are others affected.

3631 THE CHAIRPERSON: Right. So it’s not a high-density area but it’s not, by the same token, a very low-density area?

3632 MR. ADAMS: No, it is not. And I am very close to Highway 17. I can walk there within a kilometre. You know, this is not a northern community and I understand the challenges of putting service. This is a community close to a built-up area that countless funds have went into, yet here I still am.

3633 THE CHAIRPERSON: Right. You're obviously frustrated and -- but then again, you prepared very well. You know numbers of our decisions and files better than I do, so congratulations for your preparation and that's commendable, but -- so your participation is very important. We're happy to have given you the opportunity to share a perspective on this issue.

3634 MR. ADAMS: Thank you.

3635 THE CHAIRPERSON: Thank you.

3636 I don't think we have any other questions. Thank you. Thank you very much.

3637 MR. ADAMS: Thank you.

3638 THE CHAIRPERSON: Okay.

3639 Madame la secrétaire.

3640 THE SECRETARY: Thank you. I will now ask Mr. John Roman to come to the presentation table.

3641 When you're ready you may begin and you have five minutes. Thank you.

PRESENTATION

3642 MR. ROMAN: Bonjour. Hello.

3643 Commissioners, Chairman, thank you for having me appear before you today.

3644 I will focus on only three areas of the several points I raised in my previous submissions: internet access, competition in the mobile internet market, and CRTC forbearance.

3645 For Canadians functioning in the global digital economy, the internet is an essential service, regardless of the technology through which it is accessed. Countries with an advanced internet infrastructure are moving to define the internet as a public utility. Without internet access, telecasting services like Netflix or social media are not publicly accessible.

3646 To protect our competitive position internationally, it is time to acknowledge that the internet has evolved to become a de facto utility. It must be accessible to all Canadians at a reasonable cost and reasonable speed, regardless of the delivery technology.

3647 As a means to increase competition, Canadian policy has endorsed increasing the number of companies in the mobile phone market. But competitiveness is not necessarily determined by the number of competitors in the market at a given time; of equal or greater importance is effective competition.

3648 The barriers to entry to our telecommunications marketplace are high. Apart from is-sues of spectrum availability and infrastructure development, incumbents underprice new entrants by cutting prices in markets other than those that new entrants are entering. That is how Rogers and Bell and the other regional oligopolies compete with new entrants. For example, an incumbent TSP will try to prevent a customer from switching phone service providers by discounting the price of its internet and cable services to compete with Wind. The same would be true of TekSavvy.

3649 To be clear this isn’t bundling to provide a volume discount, but price discrimination that’s offered only when a customer who already bundles services then wants to switch one service to new, lower-priced entrant.

3650 This price discrimination is a barrier to new entrants who can't provide as broad a bundle of services. Incumbent TSPs will probably attempt to use the same approach to compete with Virgin and Google when their multinational internet services are launched in 2017 and thereafter.

3651 I suggest that it is time for the Commission, in its role as advisor to the government and as regulator, to confront the challenge of constructing a more effectively competitive market for broadband services.

3652 In 1985, Professor Hudson Janisch proposed a regulatory forbearance policy, the essential elements of which the CRTC has gradually implemented in telecommunications, stepping back from its prior regulatory control as Canada’s telecommunications industry adopted new technologies.

3653 In earlier submissions, I proposed ending forbearance and returning to rate regulation. I am now convinced that forbearance is a matter of both degree and kind and can be tailored to meet the needs of different degrees and kinds of competition.

3654 I propose that the Commission take the four following steps:

3655 1. Recommend that, in the process of updating the telecommunications and broadcasting legislation, the internet be deemed a public utility.

3656 2. Rather than expecting TSPs to build optical fibre networks in low-density rural areas, consider encouraging the construction of additional cell towers across the country to allow LTE networks to provide internet service in rural areas. If the TSPs were then to provide rural cell plans that offered unlimited data, customers could tether their phones to their computers and access the internet at much improved speeds. This would both reduce TSP infrastructure costs and provide most of Canada with first-rate cellular network (and Internet) coverage.

3657 3. The current degree of forbearance unduly favours large incumbents to the marked disadvantage of consumers. The Commission should consider allowing price competition only in similar markets: broadband internet to broadband internet, cell phone to cell phone, et cetera.

3658 4. The Commission should also reconsider its policy of forbearance with respect to the terms of service contracts in telecommunications. Consider eliminating mandatory arbitration clauses, the main benefit of which is to prevent class-action law suits. Consumers should be able to choose whether to arbitrate or to litigate but, because everyone in the industry has a mandatory arbitration clause, consumers are deprived of that option.

3659 Those are all my recommendations.

3660 At this time, I'd be happy to answer any of your questions.

3661 THE CHAIRPERSON: Thank you very much.

3662 Commissioner MacDonald to start us off.

3663 COMMISSIONER MacDONALD: Good morning. I do have a few questions.

3664 Over the hearing so far, we've been talking a lot about the question of needs versus wants, and this is a hearing about basic service. And I guess I'd like to understand how you use the internet and what types of applications that you would want to run over the internet or access over the internet that form a basic need, in your particular circumstance, versus what some may argue would be nice to have, such as others have cited, you know, Netflix or gaming or what have you.

3665 So could you speak to that for a bit?

3666 MR. ROMAN: Thank you. Well, first and foremost, I live in downtown Toronto, so I have access to speeds that others that we've seen before us earlier don't.

3667 And in that regard, I'm spoiled for choice when to what I want to do. If I want to watch Netflix on my phone while I'm reading the news or playing a video game, I can do all of those things at the same time.

3668 As for other uses that I have for it, I do mainly communications globally through VoIP services, mainly in the UK to discuss legal matters with other people I went to law school with.

3669 But I don’t use it largely for business. I use it largely for recreation, so as to necessary means for education, it's for research for hearings and that's more or less it.

3670 COMMISSIONER MACDONALD: And you mentioned -- and thank you for clarifying that you live in downtown Toronto -- that sort of changes the set of lenses a little bit.

3671 You had mentioned that we should be looking, not necessarily towards expensive fibre rollouts in rural or remote areas and focusing more on wireless technology. Others we've heard in the hearing have been citing downtown Toronto with the degree of choice and bandwidth options that you have as the rationale as to why they should have fibre.

3672 Can you speak to that a little bit?

3673 MR. ROMAN: I'm not trying to say that those options that the rest of the country should want aren't necessarily desirable. I just fully expect that when Rogers and Bell and other TSPs come before you, they're going to try and find ways to suggest that things are too costly to put fibre into every square kilometre of Canada.

3674 So if we're looking for a stopgap measure, which isn't necessarily ideal, but as something I wanted to propose an option. Is it the best option out there? Possibly no. If Bell wanted to divert 10 percent of their net profits or 10 percent of their 10 percent of their net profits to infrastructure development for nation building in Canada, I would certainly be in favour of that. That being said, they're always going to come saying that their purse is, unfortunately, empty.

3675 I happen to know Canadians who live in Northern Ontario, in rural in Northern Ontario, who don’t have access to anything other than a cell phone. But because the plans are sort of prohibitive for unlimited data, they simply can't tether and use the internet as they'd like. They have to pick and choose regardless. But they still have cell access, so at least that way there's -- the internet is provided through cell phones and through broadband in home. So as long as we can one form of internet access at reasonable speeds, like LTE, to the home, there is still internet access. And I was trying to find a way to meet that need.

3676 COMMISSIONER MACDONALD: Okay, thank you. You also mention and support CRTC rate regulation for broadband services. Can you describe to me what that would look like? Do you see us regulating every speed option, every package in every geography, do you see us implementing a basic entry level package at a certain price? What form would you like to see that take?

3677 MR. ROMAN: Well, there's a couple of definitions of rate regulation in and of itself. There’s rate of return regulation which allows a company to attract equity investors and accrued debt because they know they’ll still be taking profit in, but not taking in so much profit that it necessarily contributes to a deficit for consumers as opposed to regulated rates which will be like payphones where it doesn't matter what the rate is, it's a point of access.

3678 I'm not quite sure which would be better at this point. If it's deemed to be utility like other telecommunications are, then rate regulated for basic accessibility would seem prudent if expensive and I'm sure TSPs wouldn’t appreciate it. On the other hand, rate of return regulation is something to be considered. Now what volume, that's something for experts who have a great deal of stats such as the CRTC to figure out.

3679 However, the option is one that should necessarily be on the table. Whether or not it's chosen, ultimately that's up to you.

3680 COMMISSIONER MacDONALD: Are you at all concerned that if we took any steps to regulate the rates that service providers can charge that that may stifle their investment in their networks, either bringing new service speeds into markets they already serve or building out their facilities into unserved and underserved areas of the country?

3681 MR. ROMAN: Not particularly but there's a few reasons for that. One, I don’t think the rate regulation, if it was to happen, would be such that no one would be able to make a profit. I don’t think that will be the goal of anyone in the industry. There is competition unless there's a monopoly, in which case it will be necessary anyway.

3682 That being said, we've seen with -- I don’t remember what case number it was -- but where Bell put in infrastructure in Etobicoke just outside of Toronto and TekSavvy wanted access to the wholesale line so that they could then compete with Bell. And you ruled that they would have to allow access and Bell instantly went and fought it to the courts, which of course is their right to do. But on the other hand, they're going to fight what's happening no matter what. They're going to claim no matter what. There's no reason to build new infrastructure if anything regulatory happens.

3683 So it's a matter of saying you're going to cry wolf no matter what. The question is what's best for consumers at this point and I think we've seen, at least so far, from a number of groups that there's a lack of effective competition and infrastructure anyway.

3684 COMMISSIONER MacDONALD: Many people are unhappy with the rates that service providers charge. Many people are unhappy with the price of things in general in this day and age.

3685 If we did take steps to control rates in some way, should that be to the benefit of everyone or should we take a special focus on low-income Canadians to ensure that they have access to the digital world?

3686 MR. ROMAN: I noticed that Rogers recently just offered a new plan for low-income Canadians in one urban centre. I'm not sure. It may have been Toronto in fact where it was a very heavily discounted basic internet service. I don’t know whether or not there will be a rate regulation or not or a specific service the CRTC is looking to do. There will be a sort of starter package for internet and while that's something to consider, but I would take away from the let's talk TV hearings and the follow-up that the TSPs aren't really interested in doing anything other than, one, lining pockets and, two, sticking it to the CRTC when it comes to any new regulations.

3687 When it comes to actually trying to meet the needs of low-income Canadians, they are the most vulnerable and, of course, we have to do everything possible to encourage their access to not just media but communications.

3688 That being said, you might be not necessarily low income but in a rural area and have similar problems of connecting to the internet. So in that regard, I think it's everyone and low income but I know that's not really an ideal answer and I apologize.

3689 COMMISSIONER MacDONALD: Just one final question and it comes to wireline phone services and you mentioned I believe one of the uses that you use your internet connection for is doing VoIP.

3690 We know that approximately one in five Canadians have already cut the cord on traditional wireline phone services. And can you speak to their continued importance or is broadband now king and everything can go through that one pipe and that's where the focus and any potential funding should be directed?

3691 MR. ROMAN: Well, I'm on the upper end of the millennial scale. So I've never had a wireline for home phone. It's always been cell phones because there's been no need.

3692 That being said, I don’t know about the privacy laws in this country versus America where -- because cell phones are public space, you don’t need a warrant. I don’t know what the rules are there. If there's a difference between wireless and wired, then there would be reasons to still keep them around. As well as in cases of emergency, wireline is certainly more useful because if there's a power outage, most cell phones tend to be less than successful.

3693 That being said, for everyone I know of my generation, no one has a home phone anymore. I don’t know whether that's necessarily because they just think they are modded or because we can do everything conveniently enough through cell phones and broadband. But between the two, I would say that you're going to see diminishing returns on any wireline infrastructure.

3694 COMMISSIONER MacDONALD: Okay. Thank you very much. Those are my questions.

3695 THE CHAIRPERSON: Not so much a question, it's just a final comment. I notice you have a recommendation about the content of the telecommunications and broadcasting legislation. That's really not our bailiwick. So you'll have to knock on other doors for that. We just implement what Parliament has asked us to implement.

3696 MR. ROMAN: Okay.

3697 THE CHAIRPERSON: Thank you very much for your participation.

3698 Madame la secrétaire?

3699 LA SECRÉTAIRE: Merci.

3700 We will now hear the presentation of Xplornet Communications Inc. They have switched place with Telesat Inc. So please come to the presentation table.

3701 When you are ready, please introduce yourself and your colleagues and you have 15 minutes for your presentation.

PRESENTATION

3702 MR. LENEHAN: Thank you, Mr. Chairman, Commissioners, Commission staff.

3703 My name is Allison Lenehan and I am the President and CEO of Xplornet Communications. Joining me today are: C.J. Prudham, Executive Vice President, General Counsel; Tim Dinesen, Executive Vice President, Network; James Maunder, Director of Government and Regulatory Affairs; and Laurie Dunbar, partner of Fasken’s.

3704 We are delighted to be here representing Xplornet, Canada’s leading rural internet service provider. My comments today will address who we are and how we believe Xplornet can contribute to meeting the Commission’s objectives.

3705 Xplornet was founded over 10 years ago with a simple mission: to make affordable, robust broadband available to every rural Canadian. This is what drives us. We want rural Canadians, wherever they choose to live in our vast country, to be able to connect to what matters to them in the digital world.

3706 We have grown to be the largest rural internet service provider by focusing exclusively on areas of Canada not served by wired solutions.

3707 Our customers are in every province and territory. While some live in the most remote locations of our country, most of our customers are just outside major urban cities.

3708 By offering fast and reliable internet services at prices comparable to what Canadians pay in the largest cities, Xplornet has grown to over 300,000 customers and today is the eighth largest in Canada based on number of subscribers, surpassing SaskTel and MTS.

3709 While we have come a long way, we know there is still much work ahead of us to continuously improve the internet experience of rural Canadians, now and in the future.

3710 The focus of this hearing is what constitutes a basic telecommunications service. The Commission is asking how to equip all Canadians, regardless of where they live, with the tools to succeed in today’s digital world.

3711 All parties to this hearing agree that the internet plays a major role in advancing both the social and economic well-being of Canadians. Xplornet strongly agrees.

3712 If we agree that internet access should be a basic telecommunications service, the Commission must define what comprises this basic service. In doing so, it must differentiate between what is “basic” and what is an “advanced broadband”.

3713 Xplornet believes email, electronic banking, software updates, being able to search for educational or health information, and the ability to access government services, form the basis of what defines basic service.

3714 These activities are all supported with a connection of 5 megabits per second, and should be considered part of basic internet access.

3715 The Commission’s 2011 target of 5 megabits per second download and 1 megabit per second upload should now be considered the basic service level.

3716 Conversely, playing real-time video games, or, replacing your TV service with video streaming, are “wants” and not “needs”. Canadians want these services. As an industry, we are investing to meet this market demand. But they are not a necessity.

3717 Has the industry made the basic service available to all Canadians?

3718 Ten years ago, this Commission and most of the industry believed that rural broadband would only happen if we forced the telephone companies to extend their wires with large subsidies. Even five years ago, many doubted the Commission’s target of 5 megabits per second was even possible in rural and remote areas of Canada.

3719 They were wrong. Canada’s low population density outside urban areas presents challenges to our shared goal of connecting all Canadians. Yet today virtually all Canadians, 99 percent, have access to an internet connection.

3720 Does that access meet the proposed basic service level? Based on the Commission’s 2014 data, excluding satellites, 96 percent of all Canadians, and including 86 percent of rural Canadians, had access to internet speeds of at least 5 megabits per second.

3721 When you include the satellites that are delivering 5 megabits per second or faster speeds, there were less than 180,000 rural households that did not have 5 megabits available in 2014.

3722 But the internet is not static -- excuse me -- the industry is not static. Given all of the private investment since 2014, and the building of networks under the Connecting Canadians program, we believe that number is much smaller today.

3723 How did we collectively achieve this remarkable result in a country that is the second largest land mass in the world and has just four people per square kilometer?

3724 It took innovation, it took courage, and it took the entrepreneurial spirit of over 500 ISPs that entered the marketplace to serve Canadians, particularly in rural communities.

3725 As an industry, we looked for technologies that could provide good service, cost effectively in rural areas. At Xplornet, we started with 3G wireless and satellite technologies. In 2010, the best we could do was 1.5 megabits per second of download speed, and the customer had to pay $400 upfront for equipment. We knew we had to do more.

3726 When we appeared before this Commission in 2010, we were excited to talk about the new WiMAX fixed wireless technology and the two new high throughput satellites launching in 2011 that would change the game. We could offer customers speed packages of up to 10 megabits per second and data up to 60 GB per month. This drove down costs, reduced monthly fees and eliminated upfront equipment charges.

3727 But again, as the internet continued to evolve, we knew more needed to be done. We work with suppliers from around the world to create leading edge technology for the delivery of rural broadband. In fact, in 2011 Xplornet was the first company in North America and only the second in the world to test LTE in the 3500 GHz frequency band for fixed wireless deployment.

3728 We are here today equally excited with the new LTE fixed wireless service we started rolling out last year, and the two new high throughput satellites launching within the next 12 months.

3729 We will make available to rural Canadians speed packages of up to 25 megabits per second with data of 250 GB per month, at affordable prices.

3730 However, we know we can do more for our consumers. We are currently testing fixed wireless technology that will make speeds of 100 megabits per second possible for rural Canadians.

3731 Similarly, a new terabyte satellite was just announced, with more capacity than all current commercial satellites in the world, combined. It can deliver speeds of 100 megabits per second to the consumer and will be launching in 2019. That is only three years away.

3732 In total, Xplornet has spent over $1 billion in the last 5 years bringing improved technology and better service to rural Canadians. We expect to continue making significant investments in our network. And Xplornet is just one of hundreds of rural ISPs.

3733 Truly, anywhere in Canada, Canadians can today and will in the future be able to fully participate in the digital world in ways we would have never anticipated just five short years ago.

3734 Now, there is an opportunity for the Commission to embrace a new role that guides innovation, and improves competition, for the benefit of all Canadians. That can start with establishing bold new speed targets for broadband internet access in Canada.

3735 Canada should aspire to do more than the 5 megabits per second basic service. We believe that the Commission should set a target speed of 25 megabits per second as a new aspirational goal by 2020.

3736 We anticipate components of the basic service, like e-health and e-learning, will evolve to incorporate video content, and utilize increasingly larger amounts of bandwidth in the future.

3737 We believe a 25 megabits per second target is entirely within Canada’s reach, and we encourage the Commission to set this new target, this new progressive target, while using a light regulatory touch that will foster innovation by Canadian companies to achieve more for consumers.

3738 However, to meet the “wants” of our customers, we need to deliver beyond the basic service. Xplornet is aiming higher. Our goal is to deliver 100 megabits per second by 2020 to rural Canadians and we challenge all rural ISPs to do the same.

3739 To achieve these bold targets in the future, Xplornet believes Canada needs to continue to make use of the most cost-efficient technologies capable of delivering robust internet service.

3740 Our best-fit technology approach is not unique. The United States has a similar multi-technology approach. Despite the much higher population densities, approximately 1.7 million Americans subscribe to internet service via satellite, and millions more subscribe to fixed wireless service.

3741 In Australia, the Government’s National Broadband Network set out to connect eight million Australians households with at least 25 megabits per second, at an estimated cost of $42 billion. Even with such an incredible budget, the Government of Australia’s plan called for a multi-technology mix approach deploying fibre, 4G LTE fixed wireless, and two satellites to connect everyone across the large Australian land mass. By 2020, after a significant fiber build is complete, the 25 megabits per second service will be delivered to 7 percent of its households by fixed wireless and 3 percent by satellite.

3742 Our technology and coverage approach is similar in Canada. However, we will achieve the same 25 megabits service with significantly less burden on the taxpayers because most of the Canadian networks have been built using private capital with relatively modest, targeted participation by the different levels of government.

3743 We would be remiss if we did not briefly address obstacles to connecting all Canadians to a world-class communications system.

3744 The first is spectrum. While Xplornet believes the basic service is available today to all Canadians, the biggest obstacle to improving the level of service beyond what is available today is not access to capital or infrastructure, it is access to spectrum.

3745 Consumer demand for speed and more data, combined with more devices per household connected to the internet, requires that all companies, including Xplornet, have timely access to spectrum.

3746 It is the absence of spectrum that has eroded our ability to provide the level of service required in certain areas of the country.

3747 New spectrum licensing policies, not subsidies, are required.

3748 We acknowledge spectrum is under the jurisdiction of the Government and not the Commission, but bring it to your attention as an example of the challenges that can impact service for customers.

3749 The second is consumer adoption. Basic internet service can be available, but it does not mean all Canadians will choose to connect.

3750 Approximately 6 percent of Canadians have indicated they are not connected, because they do not see the relevance of the internet to their lives or they lack the skills needed to use it.

3751 Similarly, nearly 3 percent of Canadians are connected because of affordability issues.

3752 Xplornet believes digital education can and will by far be more impactful in connecting more Canadians than additional funding for infrastructure.

3753 To address affordability, a policy of an income-based subsidy is the most efficient way to target individuals who cannot afford access to the internet.

3754 This is best administered by the Government of Canada who has the data to identify eligible Canadians.

3755 Third and finally, we are concerned about duplication of efforts.

3756 Since 2014, 283 facilities-based providers, including Xplornet, have spent hundreds of millions, if not billions of dollars, expanding coverage and have likely addressed most, if not all, of the 180,000 households without 5 megabits per second service.

3757 If that is insufficient, the commitment by the current government to spend half a billion dollars over the next five years in support of rural broadband will certainly reach them.

3758 We urge the Commission not to duplicate these efforts. We believe a new CRTC subsidy program would curtail private investment, discourage innovation and dampen competition. None of these outcomes would be helpful.

3759 In summary, Xplornet shares the Commission’s goal of ensuring all Canadians have access to a world-class communications system that promotes innovation and enriches their lives.

3760 We believe 5 megabits per second by 1 megabit per second should be the basic service today.

3761 The Commission’s decision in 2011 to set a target of 5 megabits per second inspired the industry to innovate and improve service without technology limitations, and worked to motivate all of us to deliver on that goal.

3762 Given the Commission’s success in setting targets instead of regulation or subsidies, we encourage you to again set an aspirational target of 25 megabits per second to meet the basic service needs of Canadians in 2020.

3763 We also challenge our industry, including ourselves, to reach higher to at least 100 megabits per second to meet the wants of Canadians in 2020.

3764 Instead of looking to the past for antiquated programs or duplication of funding, we urge the Commission to reimagine its role with a bold new vision of what the internet means to Canadians in the next five years.

3765 We believe this new framework of new targets and progressive government policies can deliver unprecedented innovation in the years ahead of us.

3766 Thank you for time today and we would be pleased to receive your questions.

3767 THE CHAIRPERSON: Thank you very much. Commissioner Molnar will start us off.

3768 COMMISSIONER MOLNAR: So good morning. I remember five years ago or so, when Xplornet came before us the last time we looked at this issue and, you know, there was -- there was great promise and it sounded like all was solved and it does again and in a way it is.

3769 There’s certainly been a lot of progress in the last five years and it is good to see the focus on rural and remote areas that is the focus of your company.

3770 So I want to get a little better of an understanding first about what you provide today. And I know there’s a -- there’s really quite a clear distinction between the wireless and the satellite.

3771 So as I ask my questions maybe if you wouldn’t mind responding in that vein so we understand well the difference between the wireless delivery versus the satellite and what those issues might be.

3772 And if I ask questions that you feel require a confidential response, you can indicate that it’s confidential and undertake to deliver? Okay, thanks.

3773 So just in understanding where you are today, I believe that you have placed on the record and in confidential filing the number of customers you serve and the number of customers you’re capable of serving today?

3774 MR. LENEHAN: Yes, that’s part of the materials we submitted.

3775 COMMISSIONER MOLNAR: Right and so did that include both from a satellite and a fixed wireless perspective?

3776 MS. PRUDHAM: I don’t believe we provide the fixed wireless information because that’s a constantly evolving network, so it’s --

3777 COMMISSIONER MOLNAR: Right and it is ---

3778 MS. PRUDHAM: -- a little hard.

3779 COMMISSIONER MOLNAR: Is it limited in any way by your access to spectrum today, to limit the number of customers you may be able to serve?

3780 MS. PRUDHAM: I think that’s better -- Tim?

3781 MR. DINESEN: Yes, in order for us to make the investments in any fixed wireless infrastructure we do need to have access to licence spectrum preferably. That gives us the longer term ability to make that investment and secure the fact that we can get customers.

3782 Certainly we prefer it in some cases. We use -- we occupy unlicensed spectrum but short answer to your question is yes availability of licence spectrum is a consideration for us to make investments in fixed wireless networks.

3783 COMMISSIONER MOLNAR: So just so I understand, you’re actually not limited but you would be using unlicensed versus licensed spectrum?

3784 MR. DINESEN: Depends on the area. Our strong preference -- and this is no different from even the guys offering mobility services, but our strong preference is to have access to licensed spectrum.

3785 We do have cases in some areas where we occupy unlicensed or quasi-license spectrum.

3786 COMMISSIONER MOLNAR: M’hm.

3787 MS. PRUDHAM: Just to clarify, an example would be some place -- like and I understand you’re hearing from them later today, would be the area of Milton, which is within the Toronto license area.

3788 The Toronto license is not available to the fixed wireless providers. That is an area where there’s more than one, in fact we’re aware of at least three providers in that area that are trying to share the 50 megahertz of lite license 365.

3789 So that’s obviously a limiting constraint for everyone involved there.

3790 COMMISSIONER MOLNAR: Before I go on with my questions about your plans and so on, on the issue of spectrum and you acknowledge that it is an issue.

3791 You know it’s administered by what was Industry Canada, would you see any role for the Commission or anything that we could do to facilitate business -- you know, kind of business problems that you’re facing in getting that spectrum deployed?

3792 MS. PRUDHAM: Well we would certainly ask the Commission to encourage the former Industry Canada --I’m not sure what the formal name is now; it’s quite a mouthful -- Innovation Science and Economic Development, to take into consideration fixed wireless when doing their allocations of spectrum.

3793 There’s been a lot of spectrum made available for mobile purposes and there’s been a lot of publicity around the auctions, but there hasn’t been a lot of focus or consideration given to the fixed wireless side, so any encouragement that you could offer to them would be greatly appreciated.

3794 COMMISSIONER MOLNAR: So speaking of your service that you offer today, and I think you put on the record your service plans, I’ve seen something about residential. Do you have separate and distinct plans for business?

3795 MR. LENEHAN: We do serve small business, but frankly in terms of medium or large enterprise that is not the current focus of our deployment.

3796 COMMISSIONER MOLNAR: And you have separate plans or you just have ---?

3797 MR. LENEHAN: For the small to medium size? Yes, predominantly the speeds are not materially different.

3798 We may adjust an upload speed, because they tend to require perhaps more upload, but by and large it usually is wrapped around services.

3799 So response times and so on for a business, because they simply -- if they are down with their internet they need very timely response to keep their business operating, so we tend to wrap services around those for home and small businesses. That’s the primary difference.

3800 COMMISSIONER MOLNAR: You wrap service level guarantees; is that what you’re saying?

3801 MR. LENEHAN: We do provide higher level of prioritisation of services, yes.

3802 COMMISSIONER MOLNAR: Oh so you prioritize their service?

3803 MR. LENEHAN: Yes.

3804 COMMISSIONER MOLNAR: Would they have higher data caps?

3805 MR. LENEHAN: By and large they’re similar. And if you’d like I can tell you what our new services are. But I think you’d find that the speeds and data caps for them generally would meet most small and medium businesses. And frankly for us, we tend to find that while it’s a residence that we’re serving, in a lot of cases the residence is used as a place of office. So sometimes we need to determine what they are attempting to do and then adjust their packages accordingly. And typically that results in perhaps higher speeds but certainly a review of what their data consumption may be.

3806 COMMISSIONER MOLNAR: So when you say that you provide service-level guarantees or perhaps not guarantees but you provide service parameters separate for business than residential, are you able to prioritize traffic by customer? Is that what you’re doing?

3807 MR. LENEHAN: That is not what I’m referring to. I’ll let C.J., if you wish, talking about traffic. But no, I’m talking more about -- you’ll see when it comes to business versus home you’ll tend to find slight differences on service levels in terms of prioritization of installation or repair that may occur for the location. That’s what I mean by services, not the actual internet access part but more around the service and support around it.

3808 COMMISSIONER MOLNAR: I see. Thank you.

3809 MR. DINESEN: If I can just add, Madam Commissioner, just by way of illustration. A small retail store that requires our service to do things like point-of-sale transactions, if they’re down for too long then they’re out of business for the day. So in terms of elevated ---

3810 COMMISSIONER MOLNAR: Fair enough. So you’re talking mean time to repair and that sort of thing.

3811 MR. LENEHAN: Yeah, that’s correct.

3812 MR. DINESEN: Correct.

3813 COMMISSIONER MOLNAR: Okay, thank you.

3814 Yesterday SSi was in front of us and speaking of how they were challenged to create plans for the customers, you know, kind of a bit of arithmetic around how do you balance speed and capacity and the number of customers and so on.

3815 Can you tell me how you go about doing that? I mean, you’re essentially in the same situation in the finite capacity of the satellite and the number of customers you might serve. Can you tell me how it is you go about determining what is your pricing plan, your offer to the customer?

3816 MR. LENEHAN: It’s a good question. I don’t think it’s unique to SSi or Xplornet. I do believe it’s typically just globally a broadband situation, when it comes to a significant amount of demand and supply, trying to keep pace with that demand. I think as an industry we continue to try to deal with that.

3817 And it’s a great question. The best way I can answer it on how we continue to evolve our packages and how we determine our short-term supply, is based on customer feedback. And generally speaking, for us, we’re a growth company. So if we don’t respond to what customers want then ultimately we’re not growing.

3818 So we try to take and incorporate what they’re asking and try to combine speed and data and keep it within an affordable price and try to find the right balance for them. But it is an ongoing art form that we all have to figure out on how to combine right packages to attract our marketplace.

3819 COMMISSIONER MOLNAR: And so it’s based on customer input?

3820 MR. LENEHAN: Yes, I’d say.

3821 COMMISSIONER MOLNAR: One of the ---

3822 MR. LENEHAN: Sorry.

3823 COMMISSIONER MOLNAR: One of the things we find in these proceedings is something customers who are engaged will participate, right? They’re perhaps frustrated with some levels of their service. And the large majority of customers maybe don’t engage with us. And so we don’t always get the same customer or, you know, consumer kind of feedback that you might.

3824 I wonder, do you have information around your customer feedback that you could share with us, kind of how you collect that information? How is it you’re collecting the information from your customers to determine that you’re in fact creating plans that meet their needs?

3825 MR. LENEHAN: Yeah, great question.

3826 When I say customer I’m talking two groups. Think of it as current customers, and all I’ll talk about how we continually collect current customer feedback, and then of course prospective customers, which is very dynamic. You may not see it in rural but we see it with hundreds of competitors that we face. And unfortunately they’re not all national brands so you can easily figure out what they’re doing. A lot of them are very local or regional-based. So you have to be very dynamic in responding.

3827 So we have two sets. The first is, and I’ll start with the prospective one. The prospective one is very market-forces driven. So if we are not succeeding very well in growing in a particular area, we tend to evaluate why. And we evaluate just like any other marker would. We tend to evaluate how we can create packages that meet the needs of the marketplace as well as compete with other providers.

3828 The cool thing about this business is that with current customers and a growing base you have real-time feedback and it really is real time. We have two 24-hour-a-day, 365-day-a-year technical care centres that receive your call. And they will receive them with email or phone call or any other form of communication, all the new social media. We get a lot of interaction with our customer base.

3829 So we continually receive that feedback, including typically what they want. And I would tell you with great certainty they continue to want more product, which we then try to breakdown exactly what they’re asking for -- which is important -- exactly what they’re asking for and then adjust our packages accordingly.

3830 So one of the great things about the broadband industry is that it is fairly real time and this isn’t always the good part because you don’t always get the good call. But we get a lot of feedback on our customers. We take that and we poll them from a research perspective to try to find out what they want now.

3831 But also, as you can imagine, and I’m sure you’ll ask questions about this, it’s not about today because internet is evolving fairly quickly. So we need to keep pace with not what necessarily they want today because the infrastructure takes time to deploy. You need to collect that information and then in fact plan ahead in terms of what they will want in the future. So that is a lot of the input process both on current and prospective, if that’s helpful.

3832 Anything I missed?

3833 COMMISSIONER MOLNAR: And I promise I will talk about the future.

3834 MR. LENEHAN: Yes.

3835 COMMISSIONER MOLNAR: But I just have a few questions about today first if that’s okay?

3836 MR. LENEHAN: Yeah, certainly.

3837 COMMISSIONER MOLNAR: One of my other questions about today, and I appreciate you say, you know, you’re polling your customers and meeting their needs. Would you undertake to provide us information on your residential price plans? For each of your plans with the bandwidth limits and data caps that are there, what percentage of your customers reach their data cap each month?

3838 MS. PRUDHAM: We will provide that undertaking; we have that information.

3839 UNDERTAKING

3840 COMMISSIONER MOLNAR: Thank you. It’s not been provided on the record to date?

3841 MS. PRUDHAM: I don’t believe we’ve previously been asked but we’d be delighted to provide it.

3842 COMMISSIONER MOLNAR: Okay. And on your plans, remind me, are customers able to purchase additional capacity? Or are they throttled once they hit their ---

3843 MR. LENEHAN: Yeah. So here’s how ---

3844 COMMISSIONER MOLNAR: I asked an “or”.

3845 MR. LENEHAN: Yeah. If you’d like I can just go with “yes”.

3846 COMMISSIONER MOLNAR: Sure. They’re able to purchase additional?

3847 MR. LENEHAN: Yeah. So the way we package our product is we set packages to try to keep people within a speed, data, and price envelope. And what happen is, as they approach their package they have a choice. And this is on a monthly cycle. They can stay within that package or they can contact us and upgrade their package. Either they can do that just for the balance of the billing cycle or upgrade to a different package with a different speed and data.

3848 And we tend to find that is a fairly active activity at the early stage of adding a new customer because typically we find when somebody (inaudible) they don’t really know exactly what they are able to do with the internet once they subscribe to our service. So they tend to take a package they think fits them at the time of activating and then they’ll adjust to what they tend to find fits their needs over a course of a brief period of time. But yes, they do have the ability to purchase more.

3849 COMMISSIONER MOLNAR: And can you tell me as well, and if this is long you can undertake to provide this, but what are the tools you provide to your customers so that they can make informed decisions, you know, so they’re not having to hit a capacity cap the first month and then realign and realign? Do you have tools available to them that will help them select the appropriate package?

3850 MS. PRUDHAM: Yes, we do have online tracking so every customer has a customer activity centre account that allows them to ---

3851 COMMISSIONER MOLNAR: But that would only occur once you have made your decision, right?

3852 MS. PRUDHAM: Once you have picked a package, yes, and then we do have also on our websites some examples and things like that to give people a sense of where they should be when they start out, and then they can of course, track on a daily basis, exactly what consumption they have. We do have warnings as they start to reach their limits.

3853 I think one of the key things that we do differently than other companies is that we truly give customers a choice, as Allison alluded to.

3854 And they have a choice whether it's more important to stay within their budget and at which point there is a fixed price per month and when they reach their data cap the speed slow down at that point or, alternatively, they can choose to buy more so they can have a usage-based billing arrangement if they prefer or, again, the last choice is upgrade.

3855 We try very hard to ensure that they find the right sized package and the vast majority of our customers stay within their limits and we will provide you with the exact percentage.

3856 COMMISSIONER MOLNAR: Okay, very good. And just too so I understand, that's a dynamic decision a customer makes or they make the decision upfront whether they will have?

3857 Like, can they choose every month whether they add additional data? Is that a one-time decision or they can choose that each month?

3858 MS. PRUDHOM: Well, they can -- we don't stop people from changing. They can choose when they would like to change. So they can -- we don't encourage them dynamically to change every month but we try to find the right package that fits them. So they don't generally move around too much after ---

3859 COMMISSIONER MOLNAR: Let me give an example.

3860 MS. PRUDHOM: Yeah.

3861 COMMISSIONER MOLNAR: Just a simple example. I have used it once before here.

3862 But Windows 10 came out and everybody hit their limits. It's not something you anticipated going forward. It doesn't happen every month. Perhaps it will go forward but it wasn't supposed to.

3863 So if somebody hits their limit, they could choose for that month to add additionally?

3864 MR. LENEHAN: Yes.

3865 COMMISSIONER MOLNAR: Yes.

3866 MR. LENEHAN: Yes. One of the more active contacts with our customer care centre is, in fact, package changes; up, down, depending on what their need is.

3867 So, yes, they -- and to your point on -- I think you were asking a question around -- when they first start out with us we try our best to try to, you know without being too pushy on what they are doing, we try to probe what they may want for a speed price/data combination. But as you know, no one quite knows the data side until they start using it in a robust way. So we tend to do, like most industry, we do upfront discount.

3868 So when you first join, we discount the product to try it and then within that timeframe they tend to have just settled in on what is best for them in the near term. Although I would think over time they will continue -- generally speaking, people will continue to consume more speed and more data. So over time they tend to change their packages.

3869 COMMISSIONER MOLNAR: Do you need to make any distinction between speaking of your customers on wireless versus satellite when you -- or you do that with everybody? They get a higher end package going forward and ---

3870 MR. LENEHAN: Yeah, make sure I say that -- they don't necessarily get a higher impact because sometimes a lot of people start with a lower-priced product and then, not realizing, so the speed works and the price works but they don't quite know how much data they, as a household will consume.

3871 So they tend to find what fits them and if they are fairly educated they already know, so they kind of pick high or low. So they do kind of self-moderate within a fair period of time.

3872 COMMISSIONER MOLNAR: Do you have issues with customers who perhaps have incurred additional data charges and all of a sudden, you know, there is an affordability issue there, an unanticipated, a bill shock if you will or your practice is set up so that doesn't occur?

3873 MR. LENEHAN: Well, I'd love to tell you we get that right every time. I think we do a pretty good job of that.

3874 As CJ mentioned, we notify them as frequently as we can and, in fact, to avoid -- and this is a choice we made and sometimes it probably is less good for the business because it results in phone calls.

3875 But we, when they get to a certain point, even if they haven't noticed the notifications, we will govern their behaviour.

3876 And then they tend to then call in, which is fine with us but we don't want them to have a billing surprise. So that we manage their expectation as to what their price will be for the balance of the month or if they have chosen a new package to go forward, then we will inform them exactly what that new product is.

3877 So I don't think there are very many surprises. I wouldn't say there aren't ever, but it would be very minimal.

3878 MS. PRUDHAM: We could also, in confidence, provide you with the split that consumers have chosen. As we say, they have a choice between whether they want to incur the potential additional charges each month that they happen to go over or receive a fixed plan.

3879 And we can provide you with the split. We will indicate that most prefer the fixed price approach.

3880 MR. LENEHAN: Just by way of ---

3881 COMMISSIONER MOLNAR: I would also be interested just if you have the information, and I appreciate you are sharing. It would be interesting for those that have chosen not to incur additional charges how many days before they hit their data cap.

3882 MR. LENEHAN: Just by way of a guiding principle if I may, what we try to engineer into our business is maximum choice for our customers without being controlling in terms of how they use a service and also, to the extent possible, the avoidance of risk of them being surprised with a sticker shock, as you put it.

3883 COMMISSIONER MOLNAR: So before we move on to looking at the future, as I promised we would I want to talk to you folks particularly as it regards Nunavut.

3884 If you listen to, you know, the parties who were before us for the last couple of days, and you know we read your submission here as a satellite service provider that there is lots going on really well in Canada that much of the problems are solved, none of the parties who were here before us were suggesting that kind of an outcome.

3885 So tell me particularly your participation in that territory.

3886 MS. PRUDHAM: We do offer service there. We do have a 4G service that offers 5 megabits per second.

3887 And if I may be so bold, based on our competitive research, we are the fastest and the cheapest in the territory. So we certainly attempt to make available. We do have dealers in that location.

3888 I can't speak to why people may or may not have opted for our service.

3889 COMMISSIONER MOLNAR: Maybe you can't speak on the record for why they have not opted for your service but, I mean, that is clearly a segment of the populations, 18,000, I think, folks that are satellite-dependent. That's a pretty good market base who are underserved today.

3890 Are you aggressively marketing to them?

3891 MR. LENEHAN: It's a good question. And so it's not about the future but it's about as a business what we will continue to do for investments. And I won't speak specifically to a particular territory. Just in general in the North a question we tend to ask is that, "Look, we want to have robust broadband at affordable prices ever in Canada". That doesn't mean that we are always the best solution.

3892 The reason I point to that is you will find in the recent Connecting Canada program they have chosen to work with other providers to solve the problem with government subsidy with other providers. So there is only so much as a business.

3893 I wouldn't want to misrepresent. We, as a private company, want to continue to solve as many customers' needs in rural as we possibly can but if we are chosen not to be that right solution for the North and the government has decided with the program to choose others then we understand.

3894 What that will do though is limit the amount of investment privately we will make to upgrade the capacity, so the infrastructure to continue to keep pace with what people want to do in that particular area.

3895 So that's the part that tends not to go unsaid, is that in the North it's not a technical issue in our point of view.

3896 However, it is an economic point of view and you can imagine for our private investors to invest a significant amount of capital for infrastructure in a particular area only to compete with public capital in that area of a sizeable amount is probably not the best thing for us to do. We should take that capital and deploy it to other parts of the country that are needing more infrastructure investment. So that's what -- a choice we make to do.

3897 COMMISSIONER MOLNAR: Thanks. And I appreciate that because you know if you read this, it becomes a bit confusing to say, well, there is a technical -- there is a satellite provider who is offering and promising to offer greater and greater speeds at commercial rates without any government investment and we have full communities coming forward saying they need hundreds of millions of investment in -- you know, they're like, scraping by with one and a half megs. And it's -- you know, that's two very different stories.

3898 MR. LENEHAN: And if you wouldn't mind -- if it's okay, I think it's really important that investment and infrastructure, as you guys know, is one of the most important parts of this conversation. And we need to continue to figure out a way to keep working together as a general government entities of all levels with private capital to make sure we are deploying the capital efficiently.

3899 And what we tend to find is that with the amount of money that's going into the Connecting Canadians in recent years, it's simply not the best idea for us to then overall, you know, spend more in that same area with the same private capital for particular -- to solve, apparently, the same problem if we have other areas of the country that have a similar need. So I really do not believe and we're capable of sharing that with you in greater detail, technically speaking.

3900 Technology can solve that problem for a significantly less amount of money, but there's a choice to be made and we're not always the answer. I'd love to tell you Xplornet can solve every problem. We think we can, but if it's the choice that is made, then we understand and we'll focus somewhere else.

3901 COMMISSIONER MOLNAR: So very good. Government investment is something you -- well, that you’ve contributed significant private investment. You've also participated in government funding programs in the past; is that true?

3902 MR. LENEHAN: Yes, we've participated. I think we -- it's been taxpayer money and it's been appreciated in targeted areas.

3903 You may know that it's not something we are advocating because we do think the private capital can solve it, but we do understand that there are particular cases that the government has chosen, whether it's the right decision or not.

3904 From our perspective, at the end of the day, the government has chosen to do that, and of course, we are, once that decision is made, we'll actively participate in the best way we possibly can. So just as a context, it's been a lot of taxpayer money, but relative to the amount of private capital, it would be a very small percentage of the capital we've deployed.

3905 COMMISSIONER MOLNAR: If that is not on the public record, could you place on the public record the different programs and amount that you have participated in for public monies?

3906 MS. PRUDHAM: I think we responded to an interrogatory and provided a full list of that, but if it's not, we will undertake to provide it.

3907 UNDERTAKING

3908 COMMISSIONER MOLNAR: Okay, thank you.

3909 So 2017, your new satellite is up and running and you're able to offer 25-1?

3910 MR. LENEHAN: Yeah, we decided that this could be solved, not just with one, but two, so the first one will launch late this year and the second one will launch as late as early the following year, so Q1 of '17; it may be a bit earlier.

3911 Both will be commercially operational in 2017 with capacity covering -- think of it as additional layers to our existing infrastructure. We just put two more layers on top of that infrastructure where we focused more capacity to augment what we already have. So yes, both will be launched and available in 2017.

3912 MR. DINESEN: And just to complete the question, we'll get additional coverage in addition to our current high throughput satellite fleet. The capacity of these two new satellites, due to come into service next year, will add three times more our existing capacity. So we'll have, coming out the other side of this, approximately four times the satellite capacity that we currently have.

3913 COMMISSIONER MOLNAR: Four times the capacity? So that will both increase -- and you identified that you have plans to increase the size of the plans available to your customers, and I assume that will also increase the number of customers you would be able to serve?

3914 MR. DINESEN: Yeah, let me check that.

3915 MR. LENEHAN: Good question. We're a growth company, so we'll continue to provide service to more customers, but frankly, much of this investment is targeted at current customers.

3916 So we do have the ability to continue to grow with more, but you know, the thing about infrastructure and broadband is that if we don’t continue to reinvest in the existing markets for existing customers, based on the feedback we're receiving, then we start to fall behind. And frankly, in some parts of this country for us we have done that.

3917 We would like to have just had the satellites up this year, but unfortunately, that's just the timetable available to us.

3918 So as we're rolling that out, we're continuing to roll out the LTE, and I know that we tend to get painted with the satellite brush, but we tend to be as big, if not bigger, in fixed wireless than we are in satellite. So we tend to target our fixed wireless capacity, not just for existing areas, so we're upgrading where we already have, but we're expanding that footprint.

3919 A lot of what we do is we target it to areas where we have seen unanticipated demands that satellite has identified and then we deploy fixed wireless in that area which then, frankly, think of it as it's harmonious for us because then we can re-deploy that satellite capacity to other parts of the region.

3920 So it's not like we're waiting to '17 to continue to provide a lot of capacity, but in terms of our ability to say to all of our customers, to be able to solve each of their problems, then we will need to be '17 before we kind of complete our task on infrastructure investment.

3921 But it's mainly, initially targeted at current customers, because they are telling us they want more, and we are happy to provide it to them as we go. But we definitely have a lot more capacity available in both our wireless and satellite networks to grow further.

3922 COMMISSIONER MOLNAR: Thank you. Just speaking of the LTE, it is -- would be -- from a customer perspective, would there be a noticeable service difference between being on the LTE network versus on the satellite network?

3923 MR. DINESEN: Yes, in very general terms. LTE is a relatively new technology to us. We're taking a mobile tier one standard technology and applying it to fixed wireless. Compare that to our existing satellite fleet, which was designed four or five years ago. The speed difference will be noticeable for customers who are buying an LTE package, which is 25 megabits up to 500 gigabytes of download per month versus a typical satellite package for us.

3924 With the next generation of satellites that are going to launch in 2017, our objective is to harmonize those products, so there shouldn’t be that much of a noticeable difference, either in terms of speed or in data allocations.

3925 COMMISSIONER MOLNAR: So very good. So you could get an equivalent speed on either one? You could get an equivalent data cap? Are there other issues, such as latency or others that would make it noticeable to a customer what service they're riding on?

3926 MR. DINESEN: So first part, correct on product. Our goal is to harmonize the product specifications.

3927 Latency, as defined by the time required for a signal to make its way through any transmission path, the satellite platform will still be subject to the same latency that all geo-stationary satellites have. And there will be still that remaining difference between fixed wireless and satellite in that regard.

3928 Its impact to service, however, as far as a customer is concerned, really depends on the type of application they're using. Latency is more noticeable for things that require real-time transactions, such as online gaming or auctions or bidding, but is not noticeable at all for things like streaming video or typical browsing-type activity.

3929 MR. LENEHEN: Could I just add a few, if you wouldn't mind, because this is a topical one, if that's okay, to say think (inaudible) want to take the -- all of the what people are doing and want to shrink down the -- what's still at issue, just within the satellite network to latency, and I think you'll hear during this hearing, a couple of different companies, be it Telesat or OneWeb or others, that are even working to solve that technical issue on satellite, perhaps before the decade is out.

3930 So it's not that we're foregoing that and as a concession of defeat on a technical limitation, whether that's with our wireless network where we don’t have the latency or whether it's a couple of the other satellite folks that will come before you.

3931 We are not forgetting our Canadian customers. We are very focused on solving that. It's just one that takes a little more time before we would rest.

3932 COMMISSIONER MOLNAR: I want to ask about voice, given we're talking about latency here. You offer a voice product over your wireless network?

3933 MR. LENEHAN: So good question. First is ---

3934 COMMISIONER MOLNAR: Thank you.

3935 MR. LENEHAN: --- that we -- yeah, it's a really good -- thank you. I should have asked you to ask that.

3936 First, as an internet protocol company, we carry voice traffic. We see it on satellite, we see on wireless of lots of providers. So that is happening and we are very happy to do that.

3937 And it's significant on satellite too. It's not just fixed wireless.

3938 However, recently, we’ve also introduced our own product that will be using our facilities; that is a very reliable home phone service, and here we’re not reinventing the phone. It’s a good phone in Canada.

3939 But in rural Canada -- and I think you’ve had people talk about this -- in rural Canada -- everyone has kind of moved on in urban from the pricing around phone.

3940 In rural remote, it’s still a significant price consideration. I won’t quote what the prices are. You folks know them very well.

3941 Our home phone product over both, satellite and wireless, will be $20. That is for local calling across the province, all the feature sets, and a quality of service connection for your home phone. That is what we’re rolling out as we speak in most provinces and we’ll have it out for all before the end of this year.

3942 And like I said, it’s not just wireless, it’s across all of our satellite.

3943 So did I miss anything there?

3944 COMMISSIONER MOLNAR: And if we were to look at the technical -- no, “technical parameters” is not the correct term. But as a customer, if I was to utilize your product over satellite or over wireless, would I be able to notice the difference from what I would -- from a fixed landline?

3945 MR. DINESEN: So you’re making the combination, and I think it’s an intuitive one, between latency and the perception of the effect of that ---

3946 COMMISSIONER MOLNAR: I’m trying not to speak of the technical because I’ll get over my own head very quickly.

3947 MR. DINESEN: Right.

3948 COMMISSIONER MOLNAR: And just say from a customer experience perspective, how would it differ?

3949 MR. DINESEN: So cognitively, in terms of how you interface with the product, there is a difference between fixed wireless and satellite.

3950 On satellite -- the way I categorize it is to say it’s not -- it doesn’t perform like landline or you don’t perceive it like landline to the extent that you can’t talk over each other. But it’s no worse than what we’re conditioned to experience when we make a mobile call.

3951 So there is a bit of -- a bit of talk and then wait and then get a response, but it’s not something that a typical voice consumer isn’t currently conditioned to expect.

3952 It’s not -- from our point of view and what the customers are telling us, it’s not an impediment to them purchasing and using the product.

3953 MS. PRUDHAM: And you have to keep in mind that even what we call the “landlines” have been using satellite to provide long distance since 1962.

3954 So what we think of as landlines are in fact carried over satellite for telephone purposes.

3955 So it’s the same experience from that perspective when you’re talking about using a VoIP product on satellite.

3956 COMMISSIONER MOLNAR: Right. The VoIP product over satellite in making a long distance call, not a call within the community ---

3957 MR. LENEHAN: Yes.

3958 COMMISSIONER MOLNAR: --- there’s additional latency within the community.

3959 MR. LENEHAN: Yes.

3960 COMMISSIONER MOLNAR: Yes, okay.

3961 You have proposed that the Commission should eliminate the existing subsidy for voice services?

3962 MS. PRUDHAM: Yes, that was our proposal.

3963 COMMISSIONER MOLNAR: Based on the fact that solutions such as yours -- or there is alternatives, low-cost solutions?

3964 MS. PRUDHAM: Yes. We’ve certainly seen a very large growth of the mobile networks. They cover 99 percent of the population, and there are, as we indicated, VoIP services, not only ours but many others available to people.

3965 So it’s increasingly -- other alternatives are there to provide the need.

3966 COMMISSIONER MOLNAR: So where there is no alternative, would you still believe that we should eliminate it or your view is you’re an alternative everywhere and therefore where competition exists there should be no subsidies and, I mean ---

3967 MS. PRUDHAM: Yes, that’s our view. Because of the ubiquitous footprint of the satellite, there’s no unserved area in terms of being able to reach a VoIP solution.

3968 COMMISSIONER MOLNAR: M’hm. I might have to go and just refresh myself but it was my sense, as I remember, that actually voice subsidies are not available where there is forbearance, where competition exists.

3969 So if there is viable competition, maybe that just solves itself, if it’s viable -- if there’s a viable voice option out there available to all customers in the region.

3970 MS. PRUDHAM: Admittedly we are not really an expert in this area. So that’s our understanding as well.

3971 COMMISSIONER MOLNAR: And you’re thinking that you have a viable option here that should be considered or will soon?

3972 MS. PRUDHAM: Yes or facilitate viable options by providing the internet connection that other VoIP services can run over.

3973 COMMISSIONER MOLNAR: Can I ask one more question about your LTE?

3974 If you’re going to be offering a voice product over that LTE, it’s a fixed product with arrangements that cannot form part of a mobile LTE network?

3975 MR. LENEHAN: We get that question a lot.

3976 So technically speaking, we could but it’s a business choice we’ve made that we think we have a mission that we still need to focus on, which is to provide internet service to rural homes and businesses. And I do believe that to focus on mobile at the present time would defocus us from that mission.

3977 So technically, we are capable of doing so, subject to spectrum availability to us but by and large we stay -- we want to stay very focused on what we’re doing.

3978 COMMISSIONER MOLNAR: Okay.

3979 You’ve proposed that we set an aspirational target of 25 Megs -- 25 down. Remind me what you said might be the upload.

3980 MR. LENEHAN: We proposed one upload, 1 Megabits upload.

3981 COMMISSIONER MOLNAR: Twenty-five (25) and 1. What’s the basis for that expectation of future demand, future needs?

3982 MR. LENEHAN: On the upload or download?

3983 COMMISSIONER MOLNAR: Both.

3984 MR. LENEHAN: So let me -- like I said in the opening comments, when we separate the distinction between basic, which is the purpose of this conversation, and then advanced is a bit different.

3985 So when we look at basic services for Canadians, we don’t foresee today anything that would require a 25 Megabits.

3986 However, what we are suggesting is that let’s not focus on where the buck is but where it’s going, and internet is moving so quickly that we want to get ahead of this. And so let’s set a 25 Megabit goal on what we believe to be services that are required in the future that may require video content for their delivery.

3987 And we would not suggest we know all of what’s going to happen or else we all would have seen Netflix coming when we sat here in 2010.

3988 So we just suggest that when we do the evaluation on what people may require in the future, it will be more than 5 Megabits. And so when we do our analysis on what is possible to occur, then it is certainly higher and we think 25 is (a) a very reasonable expectation of what could be required; and (b) what we believe Canada is more than able to accomplish.

3989 That does not preclude us from delivering much faster speeds and capability beyond the basic but in terms of what we see in the future on the 25.

3990 When it comes to the 1, I’ll quickly say we submitted 1 only because we haven’t seen a really compelling need of our customer group beyond the 1 from a need perspective. But we’re receptive; we’ve seen other proposals of perhaps 3. We’re very receptive to a 3, if we believe that that is a better upload goal than what we may see for data.

3991 So we’d be a little more flexible that if 1 isn’t quite the right number for the target, then we would evaluate slightly higher. But based on what we see, we haven’t seen a tremendous amount of need on the 1 Meg upload.

3992 MR. DINESEN: If I may add just in support of what we foresee as supporting the requirement for a 25 Meg service, different from streaming media for entertainment purposes such as Netflix, we do see in the next three to five years an increased requirement for media-rich type applications, such as telepresence, remote learning, access to -- accessibility to government services, which could drive the consumption of more video-type services into a typical residential home. And that in itself could accommodate or could require a difference from 5 to 25 Megabits per month on a per-household basis making the distinction between wants and needs as regards this video.

3993 COMMISSIONER MOLNAR: Yes. You know, there were comments made that the Commission shouldn’t involve itself in how people use their internet and I think you would find general agreement that it isn’t our intent to involve ourselves in how people they use their internet application. However, in defining what you basically require, you know, to be able to access, that becomes the need. What you do with it once your basic needs are met is not necessarily our requirement.

3994 Having said that, of course there’s also the problem of these data caps that exist that restrict people’s use, you know, between wants and needs.

3995 Let me go back to the 25 and 1. The 5 and 1 can be sort of -- you can sort of map what are the applications of essential need today and can those be achieved within 5 megs? And I think there’s general consensus yes, they can.

3996 I understand it’s really difficult to know what is a relatively short window. I think you’re talking about a four or five-year window here until 25 would become an aspirational target for four or five years. So kind of almost a build cycle. For the next build cycle we’d be talking 25. And yet, I’ve seen no evidence, no math, if you will, that helps get us to that 25. You know, if you have any I’d be interested in seeing it.

3997 I hear what you say; you know, there may be more educational videos and so on. And I know we don’t know what the next application is, but it sure would be nice to have something a little more concrete to base an aspirational target on.

3998 That target did, as you acknowledged, become the ceiling for some of the builds that occurred with government funding, you know, over the last five years. And so if it becomes the ceiling for funding going forward, I think we should try and put as much discipline around establishing that ceiling as we can.

3999 So if there’s anything more than, “Well, it’s 5 and we think it could grow a little bit, we think it could grow five-fold in the next four or five years,” we’d be interested in seeing more.

4000 MR. LENEHAN: It’s a fair question. I sure wish in 2010 we knew exactly what was going to happen over the course of five years. Because frankly from our perspective, if you look at just the patterns of consumption during those periods of time, and you folks have done a pretty good job of capturing that in your reports -- we haven’t seen ’15 yet but we have a pretty good idea what it looks like from our perspective. It’s a very different consumption pattern of consumers. The question is how do you evaluate that consumption?

4001 And what was see is two general patterns occurring. One is clearly we now can clearly state that video is inherent in what people want to do. And what that is by application will evolve over time.

4002 But that’s not the full, full lens of simply taking what you do and doing more of it such as video. There’s also this growing continued connection to an internet connection that is beyond a PC. It is more than just simply one laptop. It is now more than just everyone in the home that has one laptop or one PC are connecting. It’s now every time we walk into the room some device is trying to talk to the network, which is really changing the dynamic of not only how much does one person need to view. It’s also what is the connection in that home attempting to support for ongoing traffic?

4003 And that’s what we’re kind of mapping out. It’s kind of exploded in exponential in terms of not just depth of what people want to do, but not breadth of the number of devices attempting to do it. So that’s how we’re trying to, the best we can, anticipate what’s going to occur over the next five years both on consumption of applications and just doing more of it, such as standard definition goes to ultra definition. And that will get lots of attention.

4004 In addition to that, though, is how much will just simply the expansion of devices connecting to the internet affect what your service level is? And that’s a question for us that we’ve been grappling with as well and trying really hard to work with leading world experts to try to figure out what that’s going to look like.

4005 So did I miss anything? We’re happy to engage the best we can on how to anticipate what will be for five years. We’d really encourage us all to A, set a -- you used the ceiling; if you wouldn’t mind I would request that be more of a floor that we aim for -- and then say as an industry we should aspire as an industry to exceed that floor with much higher ceilings that deliver not only what is required of them but always what they want. Because effectively, if you go through all the feedback we get, that’s effectively what it is.

4006 People just want to do more of what they want to do, including watching Netflix and so on, and you can take all the different video-streaming services, which is a very unique change in the way people consume versus when we sat here in 2010. So as an example, there’s one; love to see what that would look like by application but also the expansion of devices.

4007 Did I miss anything?

4008 COMMISSIONER MOLNAR: And you know, I’m not suggesting that we are trying to set a ceiling; for sure a floor is better than a ceiling. I’m just saying it’s been communicated to us that it became the ceiling when there was funding or other requirements involved.

4009 MR. LENEHAN: If I could submit, I don’t think from our point of view that’s entirely true, with one exception which is does take time to build the infrastructure. So that’s the key piece for us on today versus the near future. I mean, our committed technology roadmap needs to be pretty crisp in the next 12 to 24 months because it just takes lead time to build towers for fixed wires and procure spectrum launch satellites.

4010 So it really is for us trying to get as much clear policy from you folks and other government agencies of what he landscape will look like in due course so that we can continue to make infrastructure investments ahead of what people will want.

4011 COMMISSIONER MOLNAR: Okay. That’s very fair.

4012 And the vision you want from us is not the floor? And you have the ability through your customer interactions and visions and so on to establish your own ceilings? You want something different from us than what we believe is the necessary element?

4013 MS. PRUDHAM: We’re encouraging the Commission to consider a need-based response or an aspirational target of 25. So that’s based on the needs. But what we’re saying is exactly the issue you’ve raised, that people might think that that should be the ceiling. We think the Commission should say, “No, that’s the floor. You should be aiming for the moon and keep going.” And that’s why ---

4014 COMMISSIONER MOLNAR: Well, then if it helped to aim for the moon -- there you go; Commission direction, aim for the moon.

4015 So you’ve been really quite -- courteous might not be the correct word, but you have understated perhaps your concern with the CRTC’s involvement in this file as we’re talking today versus what appears, I think, in your submission and the tone of your concern with CRTC involvement in some of this or what it might do to private investment opportunities or otherwise. I think that you’ve made quite clear in your submission your concern that our involvement, the establishment of subsidies or otherwise, is a concern to you from a private-investment perspective, from your own private-enterprise perspective.

4016 So I’m going to put the issue of subsidy, whether or not there should be a subsidy, aside for just a minute, and ask you, we can set an aspirational target, a floor, the aspirational floor to meet the needs of Canadians going forward. Do you see any other important contributions that the Commission could make to this file, going forward?

4017 MS. PRUDHAM: This is certainly a very challenging time for the Commission. I absolutely loathe to use the word because it sounds so 1990s, but convergence happened, when we weren’t looking maybe, but it did in fact happen that you have all the different media coming together essentially and a lot of it is now delivered through the internet. That represents a tremendous challenge for the Commission in terms of reimagining the policies and procedures around that.

4018 So we think there is a very large scope of a role for the Commission in terms of thinking about the framework because no one else is, frankly, thinking about all of that.

4019 And we recognize some of it may be beyond the scope of the Commission. As the Chair referenced, you don’t draft the legislation. But still, within the existing legislation there’s lots of opportunities to help guide the industry in terms of the policies, going forward.

4020 COMMISSIONER MOLNAR: And fair enough. And I guess I would ask you if you have some specifics? You know, it’s fair to say, “Guide the industry” and we’ll ask a question and the industry will say, “Get out of here; stop that.”

4021 What is it that would guide? What is it that would move forward? What would facilitate work of the industry to meet the needs of Canadians? Is there a role we can play that would facilitate something?

4022 MS. PRUDHAM: Although I may regret saying this, traffic management may be an example and the hearing the Commission undertook on traffic management.

4023 It was an extensive and fair hearing; it allowed all sides to present their view. And it created an existing framework that we all work within and disclosure obligations for transparency with consumers. I think that’s a very reasonable role for the Commission to be playing. And admittedly we may not always like the outcome from that, but it’s working.

4024 COMMISSIONER MOLNAR: Okay, thank you. And I’m going to make my own comment on traffic management.

4025 I was part of that as well and we had large discussions about the use of economic ITMPs, which have now become full-time data caps and do not align at all with traffic management. So that’s an unfortunate outcome, I think, when the industry suggested they would be used to help manage congestion and they have been put in place as simply part of a rate plan, not managing peak period or other congestion within the network. So that’s my own commentary.

4026 Let me go on to another role perhaps we might play. Is there issues related to monitoring or information that would be valuable to you? Would you see that?

4027 MS. PRUDHAM: With respect to industry statistics and things of that nature?

4028 COMMISSIONER MOLNAR: Right.

4029 MS. PRUDHAM: Absolutely. I know everyone at this table certainly looks forward to your annual report and the information contained in there. If you go back several years and start to look at how much you’ve expanded the internet section, that would be extremely helpful.

4030 And I know we occasionally point out that you do not always include our satellites in some of those statistics. We would welcome the opportunity to work with the Commission to figure out how they can be meaningfully included so that we get a good picture of what’s going on out there. So absolutely.

4031 COMMISSIONER MOLNAR: One more question and I will pass you to my colleagues.

4032 TekSavvy when they were here were stating that there could also be a role for the Commission in helping to facilitate or identify interexchange private line transport facilities that exist, that there’s not a lot of discoverability, if you will. It’s hard to sometimes discover what sort of transport facilities are there.

4033 I assume given that you folks are using LTE networks, wireless networks you might have some interest in transport facilities; do you?

4034 MR. LENEHAN: Well, let me defer to Tim. As a facilities-based provider I don’t know if we’ve seen much of that as being an issue. But perhaps Tim can comment a little further on that.

4035 DINESEN: No.

4036 COMMISSIONER MOLNAR: Middle mile transport is not an issue for you at all?

4037 MR. DINESEN: Well, transport is certainly a consideration for us when we’re building facilities. I can’t comment on what’s motivating TekSavvy’s perspective. But visibility-wise we generally have a good handle on what facilities are available where we have interest in building network.

4038 COMMISSIONER MOLNAR: Okay. Well, good to know. It’s always good to get a second opinion on this.

4039 MR. DINESEN: Right.

4040 COMMISSIONER MOLNAR: Okay, thank you. Those were my questions.

4041 THE CHAIRPERSON: Thank you.

4042 Well, first of all your comment about the converged world we’re facing. I wish people like yourselves would take a little bit more time to explain that to members of the Heritage Committee instead of being lobbied by people who are nostalgic for the 1980s.

4043 Now, I was listening to your presentation and you make considerable investments. But I take it that what you said is that was mostly to serve your existing customer-base rather than improve the quality of (inaudible) rather than necessarily be targeting growth strategies. Did I understand that correctly?

4044 MR. LENEHAN: Sorry, maybe I mixed and matched.

4045 So to this point, if the comment was about the last five years, we have continued to invest significantly in our network for current customers. But I would say the waiting has been a bit more towards the favour of a bit more expansion towards new and other areas.

4046 My comment was around for the new satellites that are coming up, as an example, we are very mindful that the investment will start, just like our LTE network last year, as much starting with current customers and providing what they need in the near future, as well as capacity for future expansion. So we’re taking a little more balanced and perhaps a little more aggressive view on current customer at this moment than perhaps the last five years.

4047 THE CHAIRPERSON: Okay.

4048 So let me bring you back to Nunavut. I understand that there’s a technical issue. But I want to explore sort of the marketing, customer-service aspects to a potential service up in the north in satellite-dependent communities. Do you think you have the marketing and delivery capacity to meet the needs of those communities many of which are dependent on air transport for any kinds of service and if they have any sea transport it’s maybe once a year?

4049 MR. LENEHAN: Great question. I’d say, just to make sure I ---

4050 THE CHAIRPERSON: I’m looking forward to seeing your assessment of my other questions.

4051 MR. LENEHAN: Yeah, not as good, no.

4052 No, it was a really good question because we get it all the time and I’m glad you asked it. Maybe that was a better way of framing it, to say, “Thank you for asking it.” Because we get this and I want to make sure I say this right.

4053 I don’t think it’s a technical issue. I do believe it’s an investment issue with respect to technology that’s available. And that’s a slight difference. So today it may be perceived as a technical issue because we have not invested sufficient capital towards that technology solution in certain places. I won’t speak specifically to Nunavut but certain places.

4054 And it does take time. So when we say, “Yes” to that investment, it takes time for us to construct and deploy that investment.

4055 So that would be my comment on infrastructure; just continually fostering the development of that takes some time.

4056 THE CHAIRPERSON: Right, but my question focuses more on the soft aspects to business.

4057 MR. LENEHAN: Yeah. So the reason I say this is the best I can tell you is experience-wise myself I come from the world of satellite television where we had a similar problem. I was one of the original folks a part of Star Choice Television Network and Tim happened to be with Bell TV. We both had this same challenge in more remote parts of the country. Not just the north, but there are other parts where it is very challenging. So it does require a different operational structure to provide them proper service.

4058 We do think we have the capability to do that. I do think that generally we support -- as we commented we do have customers across all of Canada and different provinces and territories.

4059 So we are capable of doing it. Whether we are doing it extensively enough, perhaps not; you’d have to give me the exact example on how we’re not and we should look into that because we don’t always get it right. But I do think we have more than the capability to do that with proper investment and time.

4060 THE CHAIRPERSON: I really did want to focus on Nunavut more than other places because of the reality that truck rolls are just not an option, right? It’s just too far, the distance as such.

4061 So we’ve heard evidence so far that one of the challenges is that if somebody in one of those remote communities -- and remote meaning you can’t even get there other than by air -- means that if there’s no local agent and there’s no technician available, that’s extremely costly. So that’s the capability I’m asking about.

4062 MR. LENEHAN: It -- and the reason why I’m saying it is -- just as -- and as an example of -- it is different to do it.

4063 And the only reason I’m saying not just Nunavut, there are other -- British Columbia we have similar challenges because they tend to be harder to reach places.

4064 THE CHAIRPERSON: M’hm.

4065 MR. LENEHAN: It is a different operating structure that we have to deploy, which tends to do a lot more scheduling, long lead times on installation.

4066 And when it comes to support once we do have them provisioned, your support can be by professional installers, but that may not be always available in a timeframe required, which requires proper technical support to enable that customer.

4067 Because our product, while we do not encourage and do anything but professional installs as a principle, where there is exception is we will provide troubleshooting support for a lot of these folks remotely and they are very creative folks that are very good.

4068 And only reason I’m pointing to our past experience is that effectively is how we ended up solving the video divide, if it were, from years ago, which was just a different operating model.

4069 THE CHAIRPERSON: Right. Am I correct in assuming that delivering quality service in those areas costs more?

4070 MS. PRUDHAM: Sorry, if I may just --

4071 THE CHAIRPERSON: Sure.

4072 MS. PRUDHAM: -- also bring to your attention, we did answer interrogatories with respect to how we install and provide service in the north, so the information is on the record that was confidential, but we do a range for fly-ins.

4073 THE CHAIRPERSON: Right.

4074 MS. PRUDHAM: We do recognize that some of these communities are difficult to reach.

4075 THE CHAIRPERSON: And the costs of that --

4076 MS. PRUDHAM: We’re ---

4077 THE CHAIRPERSON: -- do you spread it across -- I don’t want to get the exact number. I just want your accounting practices.

4078 Do you spread around those additional costs across all customers or do you target specifically those that are in those areas, because I can (inaudible).

4079 MS. PRUDHAM: As we indicated in the response, yes.

4080 What we try to do in those communities is we try to aggregate more than one installation at that time to make it more cost-efficient and usually we’re quite successful in bundling up a group of them, so it’s spread across a number of them.

4081 THE CHAIRPERSON: So a group of customers in that locality?

4082 MS. PRUDHAM: Yes.

4083 THE CHAIRPERSON: Not across your general subscriber base?

4084 MS. PRUDHAM: Exactly, so in that specific community.

4085 THE CHAIRPERSON: I was looking at their most recent CCTS report, which covers August 1st to 31 January.

4086 MS. PRUDHAM: M’hm.

4087 THE CHAIRPERSON: So that’s six months. From what I can see from the annex there you have 91 complaints, presumably of all sorts.

4088 By comparison Rogers has 300 -- 437 for that same period. You have 300,000 subscribers. Rogers has, on the wireless side maybe 9.5 million and on the internet side about 2 million.

4089 So tell me about your strategy to deal with 91 complaints, which you can see is a bit out of whack in number of subscribers you might have against other service providers.

4090 MS. PRUDHAM: It is in fact, as you notice, a bit of a spike from the prior year. Certainly that has occurred and we mentioned at length we certainly push the envelope to try and deploy new technologies.

4091 What happened last year -- and we have been public about trying to solve this problem for our customers, is when we started rolling out the LTE we did experience some issues.

4092 And it was difficult to initially assess what that was and that did precipitate the spike in complaints that we received.

4093 We are delighted to report we managed to break the back of the issue and you should hopefully see that number decline this year, it is our sincere hope, as a result. So that is why perhaps we were a little out of whack last year.

4094 THE CHAIRPERSON: Right. I’m more concerned that it would be your hope to reduce that number.

4095 MS. PRUDHAM: It absolutely is, yes.

4096 THE CHAIRPERSON: Commissioner Molnar started talking about this and I think I need a little bit more on the record, because you said at page 3 of your oral presentation, you’re talking about:

4097 “Conversely playing real time video games or replacing your T.V. service with video streamings are wants not needs. Canadians want these services as an industry we are investing to meet this market demand but they are not a necessity.” (As read)

4098 What would you say to those that have appeared and others that will appear that say that the CRTC should not be making normative standards about what internet services people are using through their broadband connections?

4099 MR. LENEHAN: As a -- I can’t comment to how you would respond to that.

4100 What I would say as the present CEO of Xplornet, is I take all that feedback as market asking us to do more as a business and I think that we will continue to invest to meet that need as we go forward.

4101 However, what we’re suggesting, and this is the difficulty of the hearing, is as a business we would prefer to talk about meeting all customer wants in rural Canada. That’s our focus.

4102 But you have a specific question around what is -- what is a basic service of Canadians and unfortunately it requires us to talk about basics as opposed to what people want, which is more of what I do every day. That’s what I focus on.

4103 So when it comes to delineation as to what is a basic service for Canadians, we’ve done the best we can to put forward our view of what we think is a necessity of Canadians and it’s our view that we want to serve.

4104 We want to continue to build infrastructure to allow them to replace their television set with internet traffic, which is effectively in some ways consuming a similar product, just a different way.

4105 That is a good thing as a business, because that -- we’re not in the satellite television business. We’re in the internet business. So that shifting interest towards our products and services is an encouraging thing from our point of view.

4106 But if it’s the question around what is defined as a necessity as Canadians, it would be our position that we don’t think replacing the infrastructure of a movie service on one platform to another is defined as a basic service.

4107 THE CHAIRPERSON: Building on that -- and that’s why you’re talking -- you actually prefer an aspirational goal rather than a regulatory goal? I get that.

4108 MR. LENEHAN: Yes.

4109 THE CHAIRPERSON: So assuming an aspirational goal, which is what you’re advocating, of 25/1 and I heard that you’re probably not wedded strictly to the 1, because there may be some issues around that and ---

4110 If we were to accept that aspect, what would you think we should include as an aspirational goal with respect to latency?

4111 MR. LENEHAN: I would -- and this is where I’ll probably dovetail into a question that was asked earlier around what the role this Commission can pursue.

4112 I think I would ask the question ‘what issue are we trying to solve’ and that’s such a simple question that engineers start with and then it gets very complex.

4113 I think it comes down to that’s a very technical question which I’ll -- if you would like Tim can talk about it being from a technical perspective, but I would say that for the issue of basic service and whether latency is inherently impeding peoples’ ability to deliver necessary services to them, I would advocate that’s not the case. So a phone call can be made. Perhaps there’s a little more latency.

4114 I would also argue that that would have been the same argument of a mobile network not too long ago, because it has more latency of that same phone call then landline, but people are choosing to pursue a mobile network over a landline for other reasons.

4115 So hence I would submit that if it’s around what they want to do, we tend to find that latency, while remaining an issue for people want to do and we need to continue to attack that problem very aggressively, it is not impeding peoples’ ability for doing what they need to do.

4116 THE CHAIRPERSON: Right. I’m not sure you were in the room earlier today. Like technology hearings sometimes accelerate faster than we expect.

4117 MR. LENEHAN: True.

4118 THE CHAIRPERSON: But we had one intervenor talking about his household’s inability, due to latency, to have stable VPN. To conduct -- and somebody was working out of their home, as an employee.

4119 So I appreciate sometimes we don’t always appreciate as individuals, because we’re not engineers, things about speed and latency, but that’s -- the customer experience in that case suggests that they would have wanted to experience a more stable VPN and they cannot because there is no normative standard with respect to latency.

4120 MS. PRUDHAM: Well I’ll let Tim answer the highly technical. For the non-technical that depends on the VPN. VPN and latency did not work very well originally. But most VPN today that you'll see, for example, in online banking or others are application based and do not suffer from the issues that were impacted by latency.

4121 So it's a different architecture that's used today for VPN, for the more modern versions, which not impede it.

4122 So Tim can certainly provide a better technical explanation.

4123 MR. DINESEN: Yeah, thank you. My commercial colleagues have been well trained. I usually start the conversation like this: what problem are we trying to solve?

4124 And so it goes to what applications, what use cases, what's a reasonable expectation of a service definition for what we describe as a basic service? And whether VPN is included, there are different solutions for that, different flavours of VPN behave differently under different circumstances.

4125 And going straight to what a basic definition of latency, if I can draw an analogy to the broadcast business, it's like asking what kind of bit rate should we mandate for a high-definition service? Well, that changes and it depends on the service.

4126 So it would be, I think, more helpful for us to have the conversation about what the requirements are around the definition of a basic service, before we start getting directly into what the technical solutions are to support that service. Latency will be a consideration in some applications, in some cases, for which satellite, for example, might not be the best fit technology.

4127 But that's not to say that satellite in different forms with different application-type configurations can't support a broad array of what we consider to be the requirements of a basic service.

4128 THE CHAIRPERSON: So I get back to my original question as to whether we should be. I understand it will depend on a case-by-case basis?

4129 MR. DINESON: Yeah, and ---

4130 THE CHAIRPERSON: But whether the Commission -- I've asked this of others -- where they're beyond defining in terms of speeds, because everybody's concentrating on speed, for some reason and nobody's thinking about price and other parameters like jitter and latency.

4131 So I'm asking you, because you proposed a aspirational target, should an aspirational target include such things as latency?

4132 MR. DINESEN: I don't think it would be helpful, personally.

4133 THE CHAIPERSON: Why not?

4134 MR. DINESEN: Because it wouldn't -- you can't directly make the connection between the technical specification and how that's going to translate into a product capability in all cases.

4135 If you mandate latency, then we could be chasing a solution that is not fit for the problem we're trying to solve. If you say that latency must be this, it starts to drive the solution towards a very specific technical solution as opposed to generally a solution to a problem that's trying to be framed.

4136 THE CHAIRPERSON: So what would be your answer to that individual who's frustrated -- I might actually, dare I suggest, angry -- about their situation, because they cannot -- they had expectations to be able to do certain things through a VPN setup? Maybe they've got the wrong one, maybe they don't understand the technology, but they're still frustrated.

4137 MR. DINESEN: Right.

4138 THE CHAIRPERSON: So ---

4139 MR. DINESEN: And I think the answer, in general terms, would be, what are you trying to accomplish?

4140 I'm trying to accomplish a VPN session between my home and wherever else. What is the technology that is supporting that VPN solution, and are there alternatives?

4141 THE CHAIRPERSON: Right, so you're suggesting you, as service providers, would be able to do that? Are you?

4142 MR. DINESEN: Well, we're not ---

4143 THE CHAIRPERSON: If that person happened to be your customer?

4144 Mr. LENEHAN: Yes, we would pursue that exact line of questioning, and I -- we’d simply say, in -- we deal with this question a fair amount from the marketplace and I think we've done a reasonable job of finding solutions to those issues.

4145 But I would be -- I would hesitate to say we could solve this problem, because we would need to truly understand exactly what his (inaudible).

4146 THE CHAIRPERSON: I’m using that as an example. I don’t think we'll use the hearing to solve that particular individual's problems, but is in an indicia of broader frustration and you know, there's some people that are more sophisticated than others. And standards are a way to get to remove individual frustration, because they set a -- whether it's a floor or ceiling -- they set a norm against which people must act.

4147 MR. LENEHAN: Yeah, it's -- the question -- we continue to answer this way, because I'll leave it to Tim to talk about the technical and the customer, if we had the example, because we do handle this question from the marketplace -- is that -- and I know you asked this about satellite. And I'll just remind the Commission that much if not more than our business is wireless-driven and we have successfully continued to drive down the latency of that network overall, so I think that one's hopefully sufficient for people's questions.

4148 On the satellite side, well, we are reducing it down to small amounts of questions outstanding in the near future on what people want to do, so I think, simply, you continue to build infrastructure for more capacity and packaging it in a way -- and I'm glad you pointed out that speed data and price are all somewhat related, so we need to keep packaging those up.

4149 But reliability has become not an attribute, but a requirement, so we are very fixated on delivering the reliable network, and that includes what people want to do.

4150 If we've got this down to customer-particular issues on VPN sessions, then we will focus on those solutions, so we have found lots of solutions for customers of ours that have faced that same question.

4151 So I'm reasonably comfortable we can handle most of those circumstances.

4152 THE CHAIRPERSON: Right. And if I would ask you, in terms of aspirational targets beyond latency, are there others that we should be thinking about?

4153 So reliability is -- I don't know what that -- how big that is. What does it look like, how tall, wide?

4154 MR. LENEHAN: Well, I -- the great point on reliability, which is we know about it when it's not reliable because somebody immediately calls and then we need to figure out quickly what the issue is and resolve that. And I think we've been spending ---

4155 THE CHAIRPERSON: We don’t have to worry about that, because it's always the CRTC's fault in the end, right?

4156 MR. LENEHAN: Well, I don't know if that's always the case, but in all seriousness, in some cases it's our fault. We didn’t do something right and I wouldn’t suggest we always get it right, but I am very confident representing all of Xplornet to say, "We may not get it right the first time, but we're not done. We will continue to focus on solving that problem for the customer."

4157 So no, I would like to blame it on the CRTC, but in some cases, it is our fault and we try to remedy that as quickly as possible.

4158 THE CHAIRPERSON: Okay. As the hearing progresses, you might want to add to this particular issue because I think it is one that we will be struggling with.

4159 And I'm not forcing you take a position one way or another, but I would like to have your views on it in the final argument.

4160 I believe legal has a question for you. Thank you.

4161 MS. HANLEY: We wanted to clarify an undertaking that you had discussed with Commissioner Molnar regarding the government funding that's been received buy Xplornet.

4162 You had indicated that you had already provided some information on the record of the proceeding, but there's some specific information that we would like to see.

4163 In respect to any government funding you have received to cover the costs of broadband internet infrastructure, please provide the following information: the amount of funding received from each funding program for the purpose of offsetting satellite transport costs. Please provide totals by program and by year.

4164 As well, during the years in which you received funding from these programs, what were the annual costs and capacity for the satellite transport services used to provide broadband internet services in your serving territories? Again, please provide the annual cost and capacity by program and per year. Can you undertake to provide that by May 5th?

4165 MS. PRUDHAM: With one important clarification. Could you clarify what you mean by "satellite transport"?

4166 MS. de SOMMA: (Inaudible) the satellite transponder cost that you incur for the lease of satellite transponder capacity?

4167 MS. PRUDHAM: Sorry, and forgive for me for asking the question, but in the satellite enquiry there was a considerable cost. We kept getting asked about transport. We're a direct-to-home, so just to be clear, this is -- you're asking about the direct-to-home costs associated; is that correct?

4168 THE CHAIRPERSON: I think the issue here is that we're asking a standard question and in your case, the answer may be "not applicable".

4169 MS. PRUDHAM: Well, that's what I was worried and I didn’t want to give a "not applicable" response.

4170 THE CHAIRPERSON: I think we've asked this similar to another intervenor and it may not be (inaudible) your case.

4171 MS. PRUDHAM: Okay, so to clarify, we have no satellite transport, so there -- I guess there's no undertaking because there's nothing to report.

4172 MS. HANLEY: Thank you.

4173 THE CHAIRPERSON: Yeah. Perhaps we can clarify offline as well if there's a misunderstanding there. That's best.

4174 I've forgotten one question that I wanted to ask, because you're one of the few parties so far that have raised this. You’ve talked about -- to address affordability and it's on page (inaudible). You prefer an income-based subsidy, but you said it was best administered by the Government of Canada, who has the data and identified eligible Canadians.

4175 I was wondering if you had actually more thoughts about that; first of all, why the Government of Canada is opposed to provincial or territorial governments and, second, are you thinking that it should be part of an input into social assistance programs? Are you thinking of a refundable tax credit, if you could put meat around that bone?

4176 MS. PRUDHAM: Thank you. That's a great question. You're right. We tried to compress an awful lot into a single sentence there.

4177 We are indeed thinking that the primary issue is that if you create just, you know, a cheap package what you have is a lot of people -- it's a rather blunt instrument to try and get at the affordability issue. You might have a lot of people taking advantage of it who are not necessarily in need, when what's important is we get to the folks who actually need assistance.

4178 One of the other statistics in the materials we had earlier provided was the percentage of Canadians without access to a computer. So if you are going to say, okay, we are going to subsidize you for internet access you have to make sure they have got the other piece that goes with it. Otherwise, having internet access without a computer or an appropriate device is useless.

4179 We also alluded to the fact that you need the skills.

4180 So from our perspective it is a package. You have to look at it as a holistic package.

4181 And we refer to the Government of Canada but, you are quite right, we do believe this is provincial and in working with some of the municipalities, we believe actually the municipalities can be quite successful in some of these aspects.

4182 So what we were focusing on was the folks who had the right data to assess who was in need and who can put together the collective package that needs to go together to make sure they are connected.

4183 THE CHAIRPERSON: So both connectivity and devices?

4184 MS. PRUDHAM: Yes, and education.

4185 THE CHAIRPERSON: And, oh, the digital skillset.

4186 MS. PRUDHAM: The skills, exactly.

4187 THE CHAIRPERSON: Associated with it, okay; understood. Thank you very much.

4188 I think those are our questions. We are quite late on our mid-morning break. It's hardly a mid-morning break now, but we'll take a 15-minute or so break, come back at 11:40.

4189 Thank you very much.

4190 MR. LENEHAN: Thank you for your time.

--- Upon recessing at 11:23 a.m.

--- Upon resuming at 11:42 a.m.

4191 THE SECRETARY: Please take your seats.

4192 LE PRÉSIDENT: À l'ordre, s'il vous plait.

4193 Order, please.

4194 THE SECRETARY: Thank you. We will now hear the presentation of Milton Councillor for Ward 3. Ms. Lunau is appearing by videoconference from the Toronto CRTC office.

4195 Good morning. Can you hear us well? I think you are on mute. Can you try again? Perfect. We can hear you.

4196 MS. LUNAU: Okay, good.

4197 THE CHAIRPERSON: Okay. Good. So we are all here. We can hear you.

4198 Please go ahead. Thank you.

PRESENTATION

4199 MS. LUNAU: Thank you very much.

4200 It's interesting that we are following

4201 Xplornet because Xplornet is one of our main providers in our area so with deference to some of the comments I will make regarding our internet service.

4202 I would like to introduce myself. I am Cindy Lunau. I am the Town Councillor representing Ward 3 which is rural Milton which comprises 64 percent of the land mass of Milton but only about 10 percent of the population.

4203 I have with me Frank Adili who is the Senior Technology Manager from the town to help me wherever I am a little bit out of my depth.

4204 The most frequent complaint that I receive as a councillor regards the high-speed internet and the lack of it there.

4205 High-speed internet is essential to our economic and educational survival. It's no longer optional. It's essential for businesses and employees, students and educators, agriculture and tourism and, certainly key families.

4206 Rural internet has fallen drastically behind the urban standards which negatively impacts our rural residents. Our rural area is essentially landlocked. We are neither the traditional rural area nor are we truly urban.

4207 We are denied our service because of spectrum constraints and our geography.

4208 Milton is the Toronto licence area and the licence spectrum is not available as it is currently owned and controlled by Inukshuk Wireless Partnership, a partnership between Rogers and Bell.

4209 The only available spectrum is the limited capacity “lightly licensed” 3.65 MHz frequency, which is also shared with 20 other users. I have Appendix A attached to my presentation which I trust you have a copy of.

4210 The lightly licensed” spectrum is saturated by the number of users, and therefore extremely restricted at reduced speeds of 4 megabytes to 5 megabytes and not available to any new subscribers due to saturation levels. And certainly those speeds fall as households log in with multiple users.

4211 Rural residents living in this area are also surrounded by the Greenbelt lands which is the Niagara Escarpment and the Oak Ridge Moraine which is shown in Appendix B.

4212 Due to Greenbelt preservation, rural areas are under development constraints, and the options to run fibre lines or cable internet into this area continue to be cost prohibitive or virtually impossible. We are also the aggregate centre for Ontario.

4213 But we are not alone as a rural area. Rural areas attached to large urban centers face this problem.

4214 Residents are within minutes of major city connections but cannot access these options. This forces people to locate their businesses and homes within the urban corridors, while adding to the traffic problems. It's ironic that our transportation seems to centre on roads when, truly, we should be thinking of transportation over the airwaves as well.

4215 Last year I conducted a survey and in just 10 days I had 363 responses. Only 9 percent were satisfied with their service.

4216 There have been improvements but local providers are handcuffed by this spectrum issue.

4217 When I asked in the survey, residents replied that 95 percent felt that internet speed was either critical or very important. Only 5 percent felt it was just important and none thought it was optional.

4218 There is a -- Appendix C includes more definitions and more of this information but I am highlighting what I feel are the most important portions of the survey.

4219 Multiple members of each household depend on the internet either regularly or frequently; 66 percent for business, using it for customers and services; 73 percent for working from home; research and telecommuting, for example; 77 percent are affected in the education sector; students, teachers, assignments and research; 98 percent use it for personal business; 73 for social connections and just 64 percent use it for entertainment.

4220 When asked, residents shared their views and their stories. They did, and I have literally 40 pages of stories, many of them heartbreaking as to regarding their service. And I'd be happy to share those with you if you wish.

4221 I basically have three recommendations. Two are outlined in the proposal and I will highlight the third.

4222 The first recommendation is that the CRTC recognize that high-speed internet is essential and a basic telecommunication service.

4223 Recommendation number two would be to request government assistance in freeing up the available spectrum to allow alternate carriers the option to provide rural residents with options.

4224 The third and very much -- which isn't included in this but is related to that is that if these spectrums cannot be opened up that you recognize the unique challenges of rural areas attached to urban centres and carve these out of the urban bundles when they are offered, permitting smaller, even local utilities to compete for the spectrum capacity.

4225 In closing, I'd like to share a photo. Believe it or not, in 2008 we first received internet -- high-speed internet working with the Ontario Ministry of -- the Ministry of Agriculture and Rural Affairs, and we distributed high speed to rural Milton for the first time. To emphasize how important this was, we delivered our proposal to the Ontario Ministry by a wagon train because that’s how far out of date we felt we were.

4226 We’re a little bit better these days but we are regressing back to those days where perhaps at the Model T stage. And we really ask that you help us solve this problem because it has an impact on real life. And we’re a very progressive community, but we are certainly hampered by the fact that we have low speeds, unreliable speeds, and simply not enough capacity to meet today’s needs.

4227 I’m happy to answer any questions and if you have any questions for Frank he’s here with me as well to help. And thank you. I really appreciate the opportunity to present this case.

4228 THE CHAIRPERSON: Well, thank you very much. And we did see your wagon train on the connection and appreciate that. And obviously the people in your ward are very well-represented by an eager advocate so thank you for that.

4229 Commissioner MacDonald will have some questions for you.

4230 COMMISSIONER MacDONALD: Good morning and thank you for being part of this proceeding. And I applaud you being a champion for your constituents in bringing their voice into the hearing today.

4231 I do have a few questions just with respect to your survey and just so I understand your particular ward a little bit better. And then I’ll have some follow-ups as well.

4232 Your ward is very large, about 64 percent of the landmass of your municipality. Are these service problems prevalent across your ward or is it just one or two specific areas that you represent that are suffering more than others?

4233 MS. LUNAU: The ward is actually the former Township of Nassagaweya so it’s a whole township. when regional government came in it was amalgamated.

4234 These are issues that are faced by the rural community. The urban centre of Milton is very well-serviced. And indeed, many of our students and many of our business people must go to either one of the coffee shops in Milton or the Milton Public Library to simply get their work done.

4235 Many of our students attend high school in the urban centre and they literally have to bring their homework assignments home on sticks because they can’t access the information as their fellow urban students can. It presents a real problem in the education sector and in fact in all sectors.

4236 If you want, I can read a short piece here from one of the comments. There’s a university student at the Waterloo School of Pharmacy who cannot access reliable internet to do her research, submit assignments, and apply for co-op jobs from home. The parents have challenges; the mom runs a business out of the home, which requires frequent email contact. She resorts to the phone to complete her tasks. The dad works in Toronto. He uses the internet regularly and requires remote access for work computers. And he relies on his phone.

4237 So this is, for example, how it affects one family.

4238 But it is strictly the rural area and Nassagaweya is part of the Greenbelt, which is a protected area, largely rock and water. So the population is spread out enough that the large providers are simply not interested in creating the -- providing the infrastructure. And yet, they have the spectrum capacity. Frank would correct me if I’m misunderstanding that. But they own all of the spectrum capacity and are not sharing it with the smaller providers that are willing to invest in the infrastructure. So it’s a very difficult situation.

4239 If we were considered part of Wellington, we would be in a different spectrum entirely, which is the neighbouring county. I realize you’re not (inaudible), but it’s not unlike the suburbs of, say, Ottawa.

4240 COMMISSIONER MacDONALD: Okay, thank you for that.

4241 When you conducted your survey you had 363 respondents. Were they all from the rural area or did people within the more densely populated area also partake in that survey?

4242 MS. LUNAU: I believe that they were all within the rural area. The reason I cut it off after 10 days was because I wanted to ensure that it was in fact as local as possible. I could have left the survey open for another, you know, two weeks but at that point you may have other people dialling in, so to speak. It was not perhaps the most sophisticated survey, but I felt we were getting the local population.

4243 We did have a community meeting with 300 people attending the community meeting. Representatives were there from Xplornet and Standard Broadband. Unfortunately, Rogers backed out at the last minute and Bell did not respond.

4244 We had 300 people quizzing what could be done and it was basically that group of people and their neighbours and those who were unable to attend the community forum that I was looking for the internet responses, the survey responses from.

4245 COMMISSIONER MacDONALD: As you know, we have ---

4246 MS. LUNAU: I feel it was truly local.

4247 COMMISSIONER MacDONALD: Okay, perfect.

4248 As you noted, we had Xplornet presenting just before you and they were talking about a lot of their investments that they have made as of late and what’s going to be coming over the next year to three years down the road. And I note that we received your first submission in June of last year so the survey would have been conducted before that.

4249 Has the situation at all improved for area residents over the last year with some of these new technologies coming to the forefront?

4250 MS. LUNAU: I would say yes, it has. But unfortunately, because of the spectrum limitations, so much more is needed that I believe Xplornet has to literally turn away customers. The spectrum just isn’t there.

4251 And even where you do have the higher capacity -- I know I have upgraded my service through Xplornet because I wanted to understand it -- when everybody’s in line it still isn’t enough. It slows right down to a crawl.

4252 But it is better. There’s no question that the work that Xplornet and the investment that Xplornet and Standard have put into the community is helping. But it literally is a drop in the bucket compared to what is needed.

4253 Frank, maybe you can ---

4254 MR. ADILI: Yeah. I think, you know, Xplornet has shared some of their mappings and their upgrades of their different locations for the towers. And I think it’s just the saturation point and that frequency range, that they can’t exceed that frequency range because of the spectrum so they can’t offer any more.

4255 And there’s different competitors or players in that same frequency range using it. And so they’re kind of limited right now to the 4 to 5 megs and they can’t even bring new subscribers on because if they do it degrades everybody else on that same spectrum. So there’s a real challenge. And even though they’re upgrading their towers, they can’t offer a higher capacity because it’s severely restricted by that spectrum.

4256 MS. LUNAU: If we’re within another district I believe -- and another spectrum, the problem might go away.

4257 COMMISSIONER MacDONALD: And have you had that discussion with any of the ---

4258 MS. LUNAU: But I don’t think that this is unique ---

4259 COMMISSIONER MacDONALD: I was just going to ask you, have you had that discussion with any of the other government departments such as what would have been Industry Canada as they’re responsible for issuing spectrum?

4260 MS. LUNAU: Well, ironically we had a representative from what was then known as Industry Canada, their senior IT manager for southern Ontario and the western district, appear as part of the internet panel at the public meeting we had.

4261 Lisa Raitt is one of my constituents and her neighbour uses her capacity because she runs out of her capacity by the middle of the month. And so she borrows her neighbour’s internet.

4262 But Lisa Raitt was very kind to ensure that someone from Industry Canada was at the panel. And I mean I certainly don’t want to speak for Mr. Bastien (ph), but I believe that one of the solutions that we had chatted about would be that if in fact these rural areas were not competing with the urban centres for a spectrum; if they were seen as the anomaly and the little landlocked pieces of geography that they are.

4263 So yes, we have chatted but again I know that sometimes government moves slowly.

4264 COMMISSIONER MacDONALD: I’m wondering about the -- I mean, you’ve made it very ---

4265 MS. LUNAU: I’m hoping that ---

4266 COMMISSIONER MacDONALD: Sorry, go ahead.

4267 MS. LUNAU: No, I’m sorry. I’m not quite used to the delay. You see, with my internet, I couldn’t Skype. I mean, this is my first Skyping.

4268 I am a -- dare I say it? I’m new to this.

4269 COMMISSIONER MacDONALD: The survey ---

4270 MS. LUNAU: I was going to say ---

4271 THE CHAIRPERSON: I hate to disappoint but you haven’t Skyped yet. This is just a videoconference facility but maybe one day.

4272 MS. LUNAU: Ah! Okay.

4273 COMMISSIONER MacDONALD: Your survey made very clear the impact this is having on residential customers in your ward.

4274 I’m wondering about business customers and the challenges that they face, particularly small businesses that may be operating in the rural areas.

4275 Have you had any conversations with your local Chamber of Commerce or do they have any data that they can share with respect to the impact it has on the economy of your region?

4276 MS. LUNAU: The region of Halton is doing an outline, a draft for their strategy for the rural area. And one of the top threats for the rural area for business and farming and agriculture in the rural area, has been identified as poor internet service. It’s one of the threats that is identified in the region’s paper, their strategy.

4277 I can give you a beautiful example. We have a new business that set up a couple of years ago called Terre Bleu Lavender Farms. They have 14,000 visits a year and well -- on Facebook and literally draw customers from across Ontario and even around the world.

4278 And on their lavender acres they have -- they also produce honey, they produce products that are related to lavender that are locally sourced under their banner. They have acres of fields and trails.

4279 They would love to be able to offer kind of a GPS interactive experience with their fields. This is lavender that produces at this time of year. They have a series of -- they produce their own honey.

4280 But even those guided tours of the lavender farm are impossible because they don’t have the internet capability for it.

4281 We have a very strong horse racing industry and horse breeding industry in Nassagaweya. At one point, I think there were more horses than people where the…

4282 Campbellville is in Nassagaweya and it has Mohawk race track, which is Canada’s perhaps premiere standard-bred operation. They have their own internet service obviously because they’re also a source for the old Ontario Lottery -- OLG slots. So clearly, you know, they need to have reliable service.

4283 But the people that they work with and that train and board the horses are absolutely dependent on internet as well.

4284 The farming community uses it for crops, for GPS -- as they spread their fertilizers and such. They use it and need it. They use it to check commodity prices.

4285 I would say that probably -- I would say without a doubt that 80 percent of the homes in my area have some form of business-at-home or business operation, whether it’s their own business or whether it’s telecommuting, whether it’s working from home. We have a very strong business-from-home in the -- component and they need it.

4286 COMMISSIONER MacDONALD: With respect to your municipality, because I was on your Website earlier today and I see that you’ve been a representative for 16 or 17 years at this point, so congratulations on that.

4287 Has your community ever made any investments in delivering broadband services or applied for any funding of any kind to facilitate builds, build -- services into rural areas?

4288 MS. LUNAU: The municipality supported the application that we put out to the Ontario government when they had a fund that first brought it in -- first brought internet to the rural area, in 2008.

4289 But again, because we’re a land of rock and stone, it’s -- to trace the fibre is literally unrealistic. There is an interest from our local hydro distributor to perhaps use some of their technology to help but again they’d have to have the spectrum capacity to do it, and they can’t compete.

4290 So as witnessed by Frank with me today, the town is certainly very supportive of what can be done, but there’s a limit to what we can do as a municipality.

4291 It’s private enterprise. It’s seen as private enterprise, and we support private enterprise but whatever we can do to facilitate and help things happen and help private enterprise succeed in it, we support.

4292 MR. ADILI: Well, I believe a few years back, didn’t -- the town helped work with Xplornet to establish them too, in that environment, if I’m not mistaken.

4293 MS. LUNAU: Yeah. Wherever we’re -- yes. And certainly we passed a resolution looking for solutions, and I believe that was included in my original submission.

4294 But again we help where we can but as far as putting the tax dollars into laying lines and laying fibres and putting up towers, no.

4295 COMMISSIONER MacDONALD: Okay, thank you.

4296 Sixty-eight (68) percent of the people that responded to your survey indicated that the costs were too high. And I was just wondering if you can explain that to me a little bit.

4297 Is the view that the costs are too high relative to the service that they get or the costs too high relative to what may be available in downtown Toronto? Are they so high that they’re not affordable for area residents?

4298 Can you help explain that to me?

4299 MS. LUNAU: In many cases -- in most cases, it depends upon the household usage.

4300 In the 40 pages of comments, there are people who say that they pay more for their internet than they do for their hydro. And I think the biggest problem is that it may be -- the initial service is fine but by the time they use it, they’ve gone so far over their caps that it becomes a $200 or a $300 bill.

4301 I know that one -- one family I know allowed their children to use the internet on March break and came up with a $500 bill and said, “This isn’t going to happen again” ---

4302 COMMISSIONER MacDONALD: So would you say the ---

4303 MS. LUNAU: --- they go over the cap.

4304 COMMISSIONER MacDONALD: So would you say the issue of data usage at any caps is as important if -- maybe even more important than the actual speed that residents are able to receive?

4305 MS. LUNAU: Living in a rural area, we’re aware that generally everything costs a little bit more than it does in the city.

4306 Most people are prepared to pay more than their city cousins for internet if they can count on it. It’s just when it starts going over that $200 bill that people get a little bit upset.

4307 So they’re willing to pay more. They aren’t trying to compare themselves with what is available at no charge or at a very little charge in town. But it becomes excessive when you start going into the $300, $400 range.

4308 And this is -- and most people did not think that they are going to get Netflix. They aren't using it for that. They are using it for day to day survival, you know, business and educational survival.

4309 MR. MacDONALD: Okay.

4310 MR. ADILI: I think from just a review too, even the costs are maybe triple what they would be in the urban areas, you know, and that's for a 4 or 5 meg connection that has a great deal of restrictions on it; isn't continuous at 4 or 5 megs whereas, you know, in urban Milton you can get a 25 meg 5 connection for $45 a month or $50 a month. There's not even a chance for that. So they are paying hugely more amounts of money for much, much less service.

4311 MR. MacDONALD: Okay. Just one final question and it's regarding directory listings and phonebooks. I am just wondering as a municipality how you use the phonebook. You advertise your services in it. Is that the primary way that area residents can get directory listing information or do you think some of those people are moving out those searches for telephone numbers online?

4312 Because I actually note on your personal website you have emergency contact information and information about how to contact City Hall or the fire department or what have you. So I am just wondering if you see a continued relevance or importance of printed directory listings.

4313 MS. LUNAU: Well, there are certainly people who are not connected to the internet, but I would say that probably most searches wherever it's feasible and they have the capacity, are probably done online. The town itself is moving more and more to online registrations, online information and, of course, our rural residents are left behind when it comes to that, especially if you are looking to get in a queue for lining up for swimming -- swim classes and you can't get through.

4314 I have two internet accounts. One is with the -- one provider but two accounts. My town -- I use my town email very seldom because it's slow. By the time it bounces back and forth it can be a little bit slower than using my own personal email.

4315 MR. MacDONALD: Okay, thank you very much. Those are my questions. And as someone who comes from a very rural area, a community of 420 people in rural New Brunswick, I certainly appreciate you bringing the voice of your rural residents to this proceeding.

4316 I'll hand you back over to my colleagues. Thank you.

4317 MS. LUNAU: Thank you.

4318 THE CHAIRPERSON: Thank you. So I have polled my colleagues here on the Commission and there are no further questions.

4319 But I do want to thank you for having participated and brought a perspective to this hearing. It enriches our conversation. And I can only hope that sooner rather than later you will finally get to try to Skype for the first time in the coming months. So thank you very much.

4320 MS. LUNAU: A real Skype?

4321 THE CHAIRPERSON: A real Skype, yes.

4322 MS. LUNAU: Thank you. I appreciate -- I appreciate your attention. Thank you.

4323 THE CHAIRPERSON: Okay. So we'll take a lunchbreak till 1:15.

4324 Donc nous sommes en pause jusqu’à 13h15. Merci.

--- Upon recessing at 12:13 p.m.

--- Upon resuming at 1:15 p.m.

4325 THE SECRETARY: Please take your seats.

4326 LE PRÉSIDENT: À l'ordre, s'il vous plaît.

4327 Order, please.

4328 Madame la secrétaire?

4329 THE SECRETARY: We will now hear the presentation of Telesat. Please introduce yourselves and your colleague, and you have 10 minutes.

PRESENTATION

4330 MR. SCOTT: Thank you. Thank you, Chairman, Members of the Commission.

4331 Telesat is pleased to appear before you today at this important public hearing.

4332 My name is Ian Scott. I am the Executive Director Regulatory and Government Affairs. With me today is Ms. Michele Beck, Vice-President North American Sales for Telesat.

4333 Our purpose in appearing today is to address a few key points relating to the provision of broadband telecommunications services by fixed satellite, or FSS. More importantly perhaps, we are here to respond to any questions that you and your fellow Commissioners may have in relation to Telesat’s role in providing these critical services to Northern and other remote communities.

4334 As Members of the Panel will know, Telesat has been a provider of services to telecommunications service providers in Canada, including the Canadian North, for more than 40 years. Of particular interest in the present proceeding, Telesat offers high quality fixed satellite services to a variety of telecommunications service providers operating in Canada, as well as to military, government, and some enterprise customers. For purposes of the present proceeding, Telesat notes that the satellite industry is undergoing significant changes both structurally, in the form of increasing competition, and from a technological point of view, and that these changes are expected to continue in the foreseeable future. These changes will both increase available capacity and lower prices of satellite services in Canada, including the North.

4335 In particular the introduction of high throughput satellites often referred to as HTS, operating in the Ka-band and the Ku-band, is changing the cost structure of satellite services used for telecommunications purposes. By allowing the reuse of scarce radio spectrum, HTS technology increases capacity by an order of magnitude, while leading to lower prices.

4336 For example, the current generation of HTS have more than 30 times the capacity of conventional C/Ku-band satellites. In the near term, this number will grow to 100 times the capacity, and future planned HTS will have approximately 400 times more throughput than conventional satellites.

4337 Telesat notes that the use of satellite services for the delivery of broadband to customers’ homes is increasing, and currently takes two forms.

4338 Traditionally delivery has been through a community aggregation model, that is, satellite capacity is transmitted to an earth station located in a community and terrestrial local distribution facilities are used to connect to individual households, businesses and government buildings. This model is used to provide service in communities like Iqaluit, and others as small as Old Crow with only 100 households. It is economically efficient, reliable and scalable and with the introduction of HTS, less costly than ever.

4339 More recently, an additional distribution model has emerged to deliver telecommunications services, and especially residential broadband access, directly to residential customers’ homes (DTH) and businesses, as exemplified by Xplornet from whom you heard this morning. This DTH model further increases the choices available to consumers in satellite-dependent territories or other areas of low population density.

4340 For its part, over the last decade, Telesat has introduced significant new capacity, C-band, Ka-band and broadcast satellites to the North. It has invested over $1.6 billion in its last generation of satellites including F1R, F2, F3, N4 and N6. These satellites cover all of Canada, with specific emphasis on the North

4341 More recently, on November 11th of last year -- of 2015, pardon me -- Telesat announced its plans to add additional capacity to the North. Specifically, Telesat announced its plans to procure a new satellite with two high throughput payloads.

4342 The new satellite, called Telstar 19 VANTAGE, will be co-located with Telesat’s Telstar 14R at 63 degrees West, a prime orbital slot for coverage of the Americas. The satellite has high throughput Ka-band capacity over Northern Canada, as well as the Caribbean and the North Atlantic Ocean.

4343 For Northern Canada, Telstar 19 VANTAGE will have multiple spot beams with coverage over most satellite-dependent communities and in excess of 20 Gbps of throughput capacity.

4344 A further exciting development in satellite communications relates to the deployment of new non-geostationary constellations of small communications satellites operating in low earth orbit. Telesat’s LEOVantage constellation will make available low latency broadband capacity to rural and remote areas.

4345 Telesat has been authorized by the Department of Innovation, Science and Economic Development to operate a global low earth orbit satellite constellation using the Ka-band frequencies, frequencies over which we believe we have very favourable ITU rights. Indeed, just recently Telesat announced that it is in the process of procuring two Ka-band satellites that it will be launching next year into low earth orbit. We are continuing to develop our plans for this constellation at this time and the two prototype satellites we’re procuring will allow us, among other things, to begin testing, demonstration, and validation of certain key features of this new and advanced broadband satellite system.

4346 All of the above will assist telecommunications service providers in the provision of residential broadband access throughout Canada, including northern Canada.

4347 One of the central questions posed by the Commission in the present proceeding concerns whether broadband should be considered a basic telecommunications service. Telesat believes that residential broadband access should be part of a basic service obligation. And if the Commission does make such a finding, Telesat believes that its current and planned services in the Ka-band and C-band will enable telecommunication service providers to provide such service in satellite-dependent communities, as well as across Canada more generally.

4348 HTS in particular, used both in a community aggregation and direct-to-home model, will help to ensure that sufficient broadband capacity is available in the north. HTS will be capable of delivering much higher broadband speeds at prices much closer to what is available in the south.

4349 The introduction of HTS, along with other technological improvements, will go some way to alleviating any residual concerns that the high costs of FSS are a barrier to providing residential broadband access throughout northern Canada.

4350 However, the fact remains that satellite costs are inherently higher than the costs of comparable terrestrial facilities in the south. This is part of a broader issue. The cost to power ground stations and local distribution networks are exponentially higher in the north, as are the costs of building materials and labour. Put simply, everything costs more in the north.

4351 Satellite, however, remains the most efficient and effective vehicle to deliver broadband and other telecommunications services to remote areas. Moreover, the combination of new technologies, intense competition, and growth in the deployment of satellite services will help reduce the cost of serving the north and other remote communities.

4352 Despite the economic challenges of providing services in the sparsely populated and relatively lower-income communities of the north, Telesat recognizes that all Canadians, including those in remote and underserved areas, increasingly require broadband internet connectivity to participate fully in the digital economy and society. Accordingly, Telesat has been focusing on ways to grow northern broadband capacity in both the short and longer term through its investments in satellite infrastructure.

4353 Telesat remains committed to finding ways to overcome the economic and technical barriers to providing northern and remote areas of Canada with increased satellite transport capacity at lower cost to support reliable, efficient and faster broadband services.

4354 Thank you Chairman and members of the Panel. That concludes our opening remarks. We’d be happy to respond to any questions that you and your colleagues may have.

4355 THE CHAIRPERSON: Thank you.

4356 So Commissioner Vennard is going to start us off.

4357 COMMISSIONER VENNARD: Thank you for appearing before us here today and thank you for your submission. I know you’ve had a lot to do with CRTC over the last while and we’re fortunate that we have Commissioner Molnar here in case anything has to come up about the Satellite Inquiry report.

4358 So I’ll start our questioning off and I want to take a little bit of a different approach to it. And I want to look at the whole concept of choices, okay? And in that sense, I want to sort of look at the choices that got us where we are, all of us, including you, and where we might go in the future, okay?

4359 We are where we are as a result of the choices that we made in the past, both in terms of our technology, how to develop it, how to deploy it, how to use it, our social policies, our business models and so on. And I think we seem to be sitting on the brink of something very new with a lot of new technology which will bring all sorts of opportunities and new business models and new services.

4360 So what I want to do first of all is just sort of go back and look at the C-band and then move forward. And you can translate some of those new technological advancements into a context, a social context.

4361 We’re been hearing for the last several days that we have a lot of social problems that need to be solved, you know, particularly in the north, which of course is your area. And I’m mindful of the fact that in your submission you occupy a certain position, which is you’ve got your satellite and then you’ve your TSPs and you’re in that middle range there. And that is what you wish to speak about at this intervention.

4362 So you’ve got your technology up here, the C-band satellite technology and also the new technologies that are coming, and they’re going to land on the TSPs that will take them out and provide service to retail customers. And so we don’t necessarily want to get into that; that’s not the area that I will be focusing on.

4363 But what I am interested in is how we go from your satellite down to the TSPs and that space in between there and what new things can happen and some of the challenges and some of the opportunities that we might have. So we can think of it sort of in two different ways, the first part being to talk about the C-band and what do you see that?

4364 Now, you have referred many times to the Northern Sky Research report in your submission so I’m feeling free to count on that for some of the information and so on. So if we can just sort of -- and basically, how is it different from here to going over here, where we came from? We’re here now and where are we going, okay?

4365 So to start off, I’m going to suggest that there are constraints and barriers and there’s also enabling features in a large way that account for where we are in terms of our technology, in terms of the issues that we’ve run into in northern Canada and so on.

4366 And they basically can sort of gel around our thinking, okay, which we can be channelled into certain ways of thinking. We are both constrained and enabled by technology itself. It provides us with a lot of ability to do something and also can constrain what we want to do as well. And then also there’s the business context too where we might be locked into certain pathways over this.

4367 So in that sense I’m looking at this as three different sort of pathways and I’ll like you to, you now, comment on that because I’d like to just see what your thinking is on this.

4368 So let’s just start off with the C-band, for example. What can we do with what we have and where we are now?

4369 MR. SCOTT: Thank you.

4370 So when you say, “What can we do,” I assume you mean, if I understand you correctly, what is it technically capable of doing and I guess in addition how much is available to allow more to be done just using that technology?

4371 COMMISSIONER VENNARD: Yeah, that’s right. And a really critical component of that is how could we change our thinking or do we need to? Is there a different way of looking at things?

4372 MR. SCOTT: Perhaps I’ll try and answer the first two and then we can move to the third. I’m not completely sure of your question on the third part but let’s start with the first.

4373 So C-Band technology to date has been obviously the dominate vehicle for providing service into communities. So here we’re speaking primarily of what we refer to as the community aggregator model. The reasons for it? It’s relatively plentiful; we have orbital rights and frequency rights to provide C-Band. It was, if you will, the first large-scale commercialized capacity and it is by far the most robust. And Michele may want to add on that side. It's the most robust. You're using large dishes. They are much less -- it's much less prone to any kind of interference, rain fade. It's a very robust traditional product, so that's why it's, you know, the dominant, if you will, vehicle for delivering services in those areas.

4374 As to capacity, the precise amount of capacity is not public information, although I would pleased to provide it to the Commission through an undertaking in confidence; although, as you noted at the beginning, we have had quite a bit of involvement with the Commission over the last couple of years, and so I think the Commission has quite current information.

4375 There is additional capacity available. It continues to get -- to be bought up. A number of our customers have been increasing the capacity that they've obtained from us in order to provide a higher grade of service and improve service to their customers. There is still capacity.

4376 One of the challenges when you're talking about C-band capacity is, of course, some carriers may be pointed at a particular satellite and not another and only have antennas directed at one and we have to be on the right polarization, so there are some limitations.

4377 Michele, I don't know if you had anything to add to that?

4378 MS. BECK: Well, so traditionally, the satellite sector started off on a particular satellite, and all of the infrastructure, the ground infrastructure in these communities were pointed at that one satellite.

4379 All of the satellite infrastructure on the ground had limitations. They were only capable of receiving the one pole, and that was on F2.

4380 And so that was fine when they were sort of building up that capacity. At some point, they consumed all of the capacity on F2 A pole and then had to look to upgrade or add new ground infrastructure to be able to pull down the capacity from other satellites.

4381 That has been done, some of those investments, and so they're increasing the satellite capacity that they're utilizing today to provide broadband services. It did require investment in ground infrastructure.

4382 COMMISSIONER VENNARD: Okay, now with respect to still sticking with the capacity, as the services will maybe be -- with the new satellites going into the future for just a moment -- you suggest there's a certain dynamic that's going to happen, which is that some services will migrate over to the new technologies, thereby leaving increased capacity on the C-band technology.

4383 MR. SCOTT: Yes, and again, Michele may want to add to this. We'll continue to provide C-band and we expect C-band to continue to be a service that we provide to our customers. And again, I'm talking here now of the community aggregator model.

4384 The Ka-band satellites, as they're brought on, again applied in the community aggregation model, just bring a much higher amount of capacity and throughput to those communities.

4385 COMMISISONER VENNARD: Yeah, I just want to stick with the C-band right now, because I'm actually going somewhere with this.

4386 So it seems like there will be increased capacity that, on the C-band as some services will migrate over to the Ka-band or the Ku-band.

4387 And I'm wondering about the allocation of the services on the C-band. Do you see -- and again, they aren't -- there's nothing about them that is inherently fixed, if you will. They could be used for one thing or another, okay?

4388 And here, I'm looking at -- there's quite a large amount of the capacity goes to something like video, for example, okay?

4389 Do you see a way to rethink some of what's going on up there with the way that the space, the capacity, is used? And this is what I was referring to, just to give you a real concrete example of when I referred to our thinking might be in a certain way.

4390 Just because something is the way it is right now, it doesn’t mean that it has to stay that way. And when we're looking at a lot of different social issues as well, then some things can be repurposed for something else at a minimal cost, and quite efficiently.

4391 MR. SCOTT: Our -- we're agnostic to what the application is. I mean, now I better understand your question. As -- if services migrate away from C-band to Ka-band, I mean, there will be additional capacity, but that capacity may well simply be taken up by existing customers or new customers.

4392 I mean, this C-band covers a very large area. It covers, effectively, continental North America.

4393 You're quite correct. It's used for broadcasting applications. Those are probably declining as well.

4394 C-band for telecommunication services is certainly not declining. As I mentioned, it will be supplemented and to a certain extent, substituted by high throughput capacity, but it will remain a viable and important part of the services obtained by telecommunication service providers.

4395 COMMISSIONER VENNARD: Okay, so you also suggest in the report -- certainly suggest that the cost will go down.

4396 MR. SCOTT: The cost for C-band rates and frankly, all satellite rates, have been declining.

4397 COMMISSIONER VENNARD: How do you see that playing itself out in terms of yourselves? Now, again, I'm mindful of the fact that we're talking about when you deal with the TSPs, not when they take it out there. How do you see that sort of thing, in terms of dynamics? Do you see a new business model there for reuse of -- repurposing of this capacity?

4398 MR. SCOTT: I don't know that we anticipate a reuse or reapplication. I think it will continue to form an important component of the -- for the services for which it is used today.

4399 As to how it would impact us, we operate in a competitive market and frankly, the competitive market dictates, by and large, the rates. It's a function of supply and demand and there is fairly -- there's a significant amount of unused capacity, not just from us, but from multiple providers.

4400 And it's a market rate. It's negotiated with our customers and the rate will be what the market dictates. We'll lower our rates as required in order to sell our services. That's the nature of our business.

4401 COMMISSIONER VENNARD: And you are neutral when it comes to what those services are for? That's not something that you -- would anybody be ---

4402 MR. SCOTT: Effectively, yes.

4403 COMMISSIONER VENNARD: --- should anybody be concerned about something like that?

4404 MR. SCOTT: Should they be concerned about what our services are used for? I don’t think so. In that sense, we're a typical common carrier. We're not influencing the application.

4405 COMMISSIONER VENNARD: Okay.

4406 MS. BECK: I mean, that being said, some of our customers have indicated to us that they will continue to make use of the C-band capacity, very specifically, you know, for the same applications that they're using that capacity for today. They want to maintain that capacity going forward.

4407 They will augment with the Ka-band, but the C-band will provide, you know, that baseline service. It helps to provide the diversity as well, in terms of the infrastructure, so it's a different band, it's a different satellite, and it just protects and ensures that the availability of the services into those communities, is there and is available on diverse infrastructure.

4408 MR. SCOTT: Perhaps this is a slight digression, but I think it may help answer your question.

4409 For example, things like the North Warning System are predicated on C-band, and they want the reliability and robustness of C-band technology, so one wouldn't imagine that's likely to change in the future. There will be continuing requirements, not just for TSPs but for certain other applications.

4410 COMMISSIONER VENNARD: Okay, I'll just leave it at that.

4411 What I'd like to do now, is just take us a little bit into -- and probably the future is actually here in terms of the new satellites, new technologies, new capabilities, new capacity, which is very, very large as we can see, if your numbers are accurate and I’m sure they are.

4412 So I would like you to just talk about the way and translate for us some of these technological advancements and translate them into what you see as maybe new customers for yourself, new business models, new things that can be done with this. So if we have something like 100 times more capacity or 400 times more capacity, you will probably have a different kind of customer coming to you. And we don’t know how that’s going to play itself out once it gets out there. But what do you see happening at the level that you deal with?

4413 MR. SCOTT: I don’t think it is so much that we’ll see a different kind of customer, but rather that we will remain competitive.

4414 The nature of the satellite industry is -- our comparative or competitive advantage obviously is we reach everywhere. So if you’re in the south in a densely populated and fibred area, there’s not nearly as much interest or demand for satellite service. Obviously the opposite is the case in the most sparsely populated areas.

4415 But to take a step back, what’s happening in the marketplace is that everyone is simply -- it’s the internet has happened, somebody said this morning; you know, convergence arrived.

4416 COMMISSIONER VENNARD: Yes.

4417 MR. SCOTT: That’s true. And what’s happening is that it’s a marketplace for blights of information at the lowest possible price. And we’re competing with other satellite providers and terrestrial providers to bring our customers whether TSPs, enterprise government services at the lower price in order to remain competitive. That’s what’s happening in the marketplace.

4418 So as we introduce high-throughput satellites, what it’s doing is effectively lowering the cost per bit and bringing us on an effectively competitive or comparative footing with our competitors.

4419 COMMISSIONER VENNARD: You know, the capacity is your product; that’s what it is that you’re selling. So you’ve got now 100 times more of your product; you’ve got 400 times more of your product. How does that change your own business? How does that change it for you? We don’t know what’s going to happen to it when it gets out there; we don’t know that. But what I’m interested in is, you know, if you have 100 times more product or 400 times more product that’s a lot.

4420 MR. SCOTT: It is but it really comes down to this issue or a lower price per bit. Consider, for example, you’ve heard from several parties that they would like to see fibre into Iqaluit or various remote locations. From our perspective, the proper analysis isn’t to assume that fibre is a superior solution. Fibre has large up-front capital costs; it has ongoing costs, which are sometimes overlooked. But at the end of the day you can take that capacity, look what it would cost to build, and figure out what your, sort of, price per bit will be.

4421 What satellite offers which high-throughput capacity is its ability to be a competitive, in fact superior, alternative in places like satellite-dependent communities in Nunavut where I earnestly believe satellite is the best possible technical solution. And it will be the lowest cost per bit.

4422 So that’s where the advantages of the high-throughput satellites comes, how it shows itself in the marketplace.

4423 COMMISSIONER VENNARD: So how does the actual technology itself -- how does that translate into other expanded or different business models? Because it surely can’t just be the same only 100 times bigger, 400 times bigger. Something has to change somewhere along the line. That’s really what I’m trying to get at here.

4424 MR. SCOTT: I’m not sure it does.

4425 COMMISSIONER VENNARD: So you suddenly will have 400 times more product and nothing changes?

4426 MR. SCOTT: Well, it’s not quite sudden. I mean, these are phases. I talked earlier about a conventional C-band or Ka satellite. The early high-throughput satellites, which have been in the marketplace for several years now, had significantly more. The next ones will have, as I said, roughly 40 times the capacity, if I’m remembering my multiplier correctly.

4427 And it’s exactly that. What it means is that -- you heard from SSi and others saying they have increasing demand; they have a fixed amount of funds available to them; and they need to increase the throughput available and the bite cap available to their customers. That’s what they’re asking of us and that’s where the increased capacity goes.

4428 And as to how it changes our business model, frankly it just keeps us viable and competitive.

4429 COMMISSIONER VENNARD: So you don’t see from your own point of view expansion into different services and that sort of thing, a different kind of customer?

4430 MR. SCOTT: The game-changer from our perspective is the throughput, not the applications.

4431 COMMISSIONER VENNARD: Okay.

4432 MR. SCOTT: That may change with the introduction of low-orbit systems. That will be different; that is another game-changer. That’s why it’s being explored and that’s because you remove issues surrounding latency.

4433 COMMISSIONER VENNARD: Okay, let’s go back to what you said about the game-changer for you being the high-throughput. Why is it a game-changer?

4434 MR. SCOTT: Because it significantly reduces the cost per bit, more so than has ever been the case before. These are fundamental changes.

4435 MS. BECK: Yeah. So it reduces the cost per bit but the platform is capable of delivering gigabits worth of capacity over a single satellite, something that wasn’t possible.

4436 COMMISSIONER VENNARD: In your own words, orders of magnitude -- and that’s what I’m interested in, is now that we have orders of magnitude, more capacity, where does it go; what happens to it?

4437 MS. BECK: Into some of these communities that are looking for broadband connectivity at higher data rates and capable of supporting higher bite caps.

4438 COMMISSIONER VENNARD: So do you see that as being something that will address some of the issues that we’ve been hearing about in ---

4439 MS. BECK: Absolutely.

4440 MR. SCOTT: Absolutely.

4441 COMMISSIONER VENNARD: Do you see a timeframe on that?

4442 MS. BECK: So our next satellite launches in 2018 and will be in service the second half of 2018.

4443 COMMISSIONER VENNARD: So that’s a couple of years down the road.

4444 So you will just carry on with doing what you’re doing and not much is going to change? It’s a game-changer but not your game?

4445 MR. SCOTT: But our game is the delivery of capacity. It improves our game. We get a better batting average but it doesn’t fundamentally change what our product is used for -- what our service is used for, I should say.

4446 COMMISSIONER VENNARD: Okay. That’s all my questions. Thank you.

4447 MR. SCOTT: Thank you.

4448 THE CHAIRPERSON: Vice-Chair Menzies.

4449 COMMISSIONER MENZIES: Hi. How much would it cost to get the north properly served?

4450 MR. SCOTT: I’ve heard you ask that question to a number of parties. I had given it some thought.

4451 COMMISSIONER MENZIES: Well, we go through these all the time and it’s very clear that he north is struggling when it comes to that and that satellite is really the only sensible short-term project.

4452 So if we were to fix it, if we were to start fixing things there, which clearly the most or much of the evidence indicates to date that it is clearly the most underserved area, what could fix it?

4453 MR. SCOTT: There’s a couple of ways I think of coming at that question. Ultimately I think the answer is that high-throughput satellites will enable us, in combination with C-band, to work with the other telecommunications service providers and can provide the types of service that you’ve been looking at, you know, a basic broadband service at rates comparable to those in the south. So when you are saying how much of it if you look at it from the cost of the south versus what it is in the marketplace, I think with the new improvements it can be comparable.

4454 How much that satellite costs depends -- you used the expression the other day, you know, is it bigger than a bread box and that will sort of be my answer is it depends on how big -- is it bigger than a bread box? How much capacity is wanted?

4455 If you add up -- if you took the population of the North and then you tell me do you want coverage, you know, east to west, is it only the Territories? Does it include the mid-North?

4456 And we you know given the parameters ---

4457 COMMISSIONER MENZIES: Satellite communities only. I mean we are talking in just the North probably no more than 30,000 people, right? It's not like -- I mean I don't -- I understand the issues with capacity and that sort of stuff but it's not a large number of people.

4458 MR. SCOTT: No.

4459 COMMISSIONER MENZIES: And even then if we took in North of 55, and some of those areas, you're still not talking a lot of people just ---

4460 MR. SCOTT: No, it's not and ---

4461 COMMISSIONER MENZIES: --- but they are our people.

4462 MR. SCOTT: I'll give Michele a warning then. I'll turn it over to her in a second.

4463 The capacity that we would bring on T19, and correct me if I'm wrong, Michele, would be sufficient to cover to meet the requirements of those people but the satellite is being launched in 2018. If you simply took that capacity and said, okay, we're applying it to satellite-dependent communities, you know, obviously you do the math.

4464 You go back with the result. If it's more than 20 gigs of capacity divided by the number of homes, divide that by how many devices are going on or how many people are using it, and you will come out with a number.

4465 I am not going to hazard a guess to that number, you know, offhand. I could look at it and come back to you. But I can certainly address it.

4466 COMMISSIONER MENZIES: Sure. I mean one said a billion dollars.

4467 MR. SCOTT: We can do it for -- in satellite for considerably less than a billion dollars. Satellites -- I am not going to talk about that particular one.

4468 When we go out and build satellites for our customers, I mean you are talking about a state-of-the-art large, complicated satellite can be in the range of $200 million to construct and launch, $200 million U.S. These are always done in U.S. dollars. You know apply that on a discounted cash basis and bring it back and you will find it's not that much money in -- not that much money when comparing it to a billion dollars.

4469 COMMISSIONER MENZIES: If it's -- I mean that's not an unsatisfactory answer but if you do have more, because at least it was an answer that said the word dollar in it, but if you can crunch that at all if it's possible and take that as an undertaking that would be useful information.

4470 MR. SCOTT: We can do that, and if I could add a caveat? Do you have any further parameters that you might provide us to help us size the bread box, so to speak?

4471 COMMISSIONER MENZIES: Well, the current -- take the current target and ---

4472 MR. SCOTT: Take the current target and ---

4473 COMMISSIONER MENZIES: --- take the current target and work it from that.

4474 MR. SCOTT: Okay.

4475 COMMISSIONER MENZIES: Okay.

4476 The other thing is the low orbit which you are anticipating; as well, other interveners have suggested that that has -- can be provided at a very low latency and there's others, projects out there that aren't part of this process; Richard Branson and others working on those things.

4477 What are your views on those new technologies and their allegations that this can solve everything?

4478 MR. SCOTT: Well, nothing solves everything, as I'm sure you well know or your tasks would be much easier.

4479 I'm not going to comment on other projects. What I would say is Telesat is committing significant dollars to a low orbit system. I mean this is real money. We don't spend money for no purpose.

4480 The opportunity that exists is to develop a service that would not -- that would address latency-sensitive applications that would have global coverage and, therefore, could be a viable solution to a number of perplexing and challenging problems.

4481 In combination with geostationary satellites, we think it would resolve effectively all of the issues and concerns that you are currently addressing. Now, there is a long way to go on those.

4482 I mentioned we are planning to launch -- we are procuring and launching next year two prototype satellites. There is a lot of work to be done on the orbits. There is a lot of work to be done on the ground infrastructure. This is very different.

4483 By definition, when you have low orbit satellites that means you have antennas that have to track the satellites. In Northern locations that means they have to be protected by radomes or other means.

4484 It's just there is a lot of work to be done is all I am saying, and we are very keen to continue to explore it.

4485 The Facebooks and Googles, whether they are using balloons or whatever, are all exploring similar challenges: How can you get -- extend the reach of broadband services in an economical fashion? That's, I guess, the Holy Grail that everyone is searching for.

4486 This one is in our wheelhouse, so to speak, and we see it as a very important development and one which complements our existing business of geostationary satellites.

4487 COMMISSIONER MENZIES: What sort of timeline do you see that unfolding over? What's your best guess right now before that rolls out?

4488 I mean there are private sector initiatives. We heard of one the other day about Google in Africa, Facebook in India, but those are actually largely populated areas. I kind of doubt that the same generous offer for free access would be extended to Pond Inlet.

4489 MR. SCOTT: As I said, there is a lot of work to be done.

4490 I would like to be helpful. I don't think I can answer that question right now. I would be happy to take an undertaking and try and get you a little more constructive an answer. I am just not able to provide it at this moment.

4491 COMMISSIONER MENZIES: Yeah, and really just try and give us a chance to -- I mean when new technologies come along it's sort of like the consumers electronic show where people are showing you this is the next great thing.

4492 MR. SCOTT: I understand.

4493 COMMISSIONER MENZIES: And the next year it's not there at all.

4494 MR. SCOTT: That's right.

4495 COMMISSIONER MENZIES: Because it wasn't the next great thing.

4496 MR. SCOTT: You know in the big -- as I said, there are a number of things to be worked out in these and logically one assumes whether you are talking about our project or others you have heard numbers of scores of satellites, hundreds of satellites, thousands of satellites. Needless to say, whichever model you are looking at, someone isn't going to put up hundreds of satellites overnight. It's going to be a process of launching prototypes, adding satellites, adding to the constellations and therefore their functional capability.

4497 That's why I am so hesitant to try and say certainly from our part, don't worry, by year X we're going to have that service there.

4498 I'm certainly not in a position to try and answer that today. But I will speak to, you know internally seek an answer internally as best we can give you.

4499 COMMISSIONER MENZIES: Okay, thank you. Those are all my questions for now.

4500 THE CHAIRPERSON: And just for the record, that's for the 5th of May and you can undertake to do that for the 5th of May?

4501 UNDERTAKING

4502 MR. SCOTT: Yes.

4503 THE CHAIRPERSON: Yes.

4504 So just a few questions. As you know, one of the issues in this proceeding is trying to define potentially what a broadband BSO would look like. I was wondering if you could help us a little bit from your perspective because presumably when you made these investment decisions a lot of factors go into it, probably the cost of capital, the competitive market; a myriad of issues.

4505 I was wondering to what extent was future needs of residential, business or institutional users part of your evaluation or did you do a separate evaluation? Is it -- which would then help us define is it 10 or 25 or whatever? Or do you just -- did you just take whatever your clients were telling you what their extrapolations would be and you then took that as your assumptions?

4506 MR. SCOTT: I think that's, to a certain extent, asked and answered, Mr. Chairman. I think both. I mean you have raised both ways which we would go at it.

4507 Typically, obviously you’re looking at cost of capital, launch costs, I mean, all of those, as you’re developing a business plan.

4508 The way that we put together a business case typically for a commercial satellite is -- and it won’t surprise you that our shareholders don’t like us to put things into space on speculation; they like to have a solid business case, which means ---

4509 THE CHAIRPERSON: Right. Oh, I know it’s complicated. I just want to get to the broadband characteristics.

4510 MR. SCOTT: We would do a market analysis, as part of our business case, looking at competitive supply, what we anticipate demand to be in the marketplace. And that demand forecast would very much be informed by our customers, who we would consult with and say, “What do you anticipate your needs to be in 5 years or 10 years?” Or more importantly, “What are you prepared to commit to financially?” Because we try and sign them in advance of launching the satellite or closing the business case.

4511 THE CHAIRPERSON: Are you willing to share what your working hypothesis is, or at least les fourchettes, the spread in terms of speed you were expecting for residential in the coming years, for residential, business, and institutional use in terms of that?

4512 MR. SCOTT: We’re certainly willing to share what we considered in our business case. I’m not sure if we looked at it at that microscopic level in terms of what bandwidth you expect. We would look at it more from a commercial sense of if we’re going to put a Ka-band payload on the next satellite covering the north, how much would we sell; how quickly can we sell it; who would our customers be? And then having polled the customers, they’re the ones who would consider they anticipate they will have to be providing 25 megs of service or 10 or 5, whatever the case would be. And that’s where we would probably draw that data from.

4513 Michele, do you have anything to add to that?

4514 MS. BECK: Really, I mean, we did consult with our existing customers and asked them for their projections, you know, several years out. We looked at the growth, looked at the household growth, the population growth, specific areas. We then looked at outside of just the consumer base and looked at, to some degree, you know, resource sectors, the industries that were truly satellite-reliant just to see whether or not, you know, we were putting on sufficient capacity and potentially, you know, capacity that we could see relatively quickly.

4515 THE CHAIRPERSON: Right. You understand I’m trying to look at what a reasonable estimate of future needs would be, and you seem to me ideally placed for that because when you’re doing investment issues around satellites you obviously have to look over the longer term. And one of the inputs would be what the future needs would likely be.

4516 So you may not have a detailed -- and I accept that -- but could you at least undertake to see what was in your assumptions and get back to us?

4517 MR. SCOTT: We’ll undertake it and we can get back to you on what assumptions we adopted in the business case for the satellite that we’re launching in 2018?

4518 THE CHAIRPERSON: Right. In terms of speed and other characteristics ---

4519 MS. BECK: Yeah.

4520 MR. SCOTT: Understood.

4521 THE CHAIRPERSON: --- caps and jitter and that sort of thing, if any. Maybe there wasn’t. If you could back to us on that.

4522 MR. SCOTT: Yes, we can, sir.

4523 UNDERTAKING

4524 THE CHAIRPERSON: Now, your view is that we should rely, going forward, not on any sort of subsidy approach but rely mostly -- well, CRTC-driven subsidy approach -- driven more by market forces combined with targeted investments from governments.

4525 Other parties, though, are of the view that market forces and targeted government intervention won’t be sufficient. I’d like to understand why you think they would be sufficient.

4526 MR. SCOTT: We haven’t so much taken a position that subsidies aren’t desirable or required. Obviously we don’t receive subsidies. We contribute; we provide a subsidy, at least for wireline, or pay our share of it.

4527 What we have said is that everything costs more in the north and we understand that closing the business case for the TSPs is very difficult. We have not taken the position that you, you know, need not subsidize, rather that we don’t need a subsidy for transport.

4528 THE CHAIRPERSON: Okay. But that’s less for the transport, but you do acknowledge there may be another type of subsidy that doesn’t target transport?

4529 MR. SCOTT: It’s very difficult. As I mentioned in the opening remarks, you know, everything does cost more in the north. And certainly you’ve heard from some of our key customers. You haven’t heard from Bell yet but you heard from KRG and SSi. And they certainly gave you what I think is a very accurate picture of the challenges associated with providing service in those communities.

4530 We do this all over the globe. I mean, we provide service in Brazil and Peru and governments invest in very similar kinds of programs to bring broadband communications into isolated or underserved areas.

4531 The difference with the north is, aside from the harsh climate and the cost of getting everything there, is the density. There’s just so few people compared to -- if you’re looking at a remote area of Brazil, that village or district being served will have thousands of people as opposed to tens.

4532 THE CHAIRPERSON: Right. So based on your Canadian and non-Canadian experience, when looking at shaping a future-going subsidy program of some sort, what kind of elements or principles do you think we should take into consideration when shaping that, were we to go down that road?

4533 MR. SCOTT: You have touched on them and most of the parties have touched on them. I mean, you take into account affordability. I think coverage is there and we’ve talked about it’s there today. And then we talk about capacity. We believe that there will be more than sufficient capacity.

4534 It then becomes a question of price and the challenge for those -- and I don’t know whether the Commission would be better to look at subsidizing the user or subsidizing the provider.

4535 THE CHAIRPERSON: But that’s what I’m trying to get at. Technology-neutral, is that a principle that you would advocate?

4536 MR. SCOTT: Certainly. Certainly technologically neutral ---

4537 THE CHAIRPERSON: Portability?

4538 MR. SCOTT: Yes.

4539 THE CHAIRPERSON: Others have mentioned the last thing you want, though, is to recreate a monopoly or an oligopoly. And so what do you think? If you do go down to a subsidy, somehow you have to have two groups that get subsidized.

4540 MR. SCOTT: I don’t know that we’ve discussed that internally at Telesat, but based on my personal experience, over time competing for the subsidy would be to me the most logical approach.

4541 THE CHAIRPERSON: And for what period of time would one lock in the winner of a competitive process? What would make sense in your perspective?

4542 MR. SCOTT: When I look at our business one sees, you know, what once was very long-term contracts aren’t anymore for a number of reasons. And I would think the same pressures would be on those service providers. So probably something in the range of three to five years.

4543 THE CHAIRPERSON: Okay. Again from a principled perspective, there’s always a danger when governments subsidize things that others pull back, particularly the private sector. So how would you deal with that particular issue?

4544 MR. SCOTT: Can you clarify “others”?

4545 THE CHAIRPERSON: Well, if there’s a subsidy, if you’re willing to put 10 bucks on the table and suddenly there’s subsidy, maybe you’re just willing to put 8 bucks on the table. I’m not saying you, personally. I mean a business.

4546 MR. SCOTT: I mean, obviously ---

4547 THE CHAIRPERSON: Subsidies can create disincentive to private investment.

4548 MR. SCOTT: Yes, they do. And it’s a distortion.

4549 And so there is a public policy decision to be made as to whether as subsidy is required and if so, you accept that there’s a distortion and then you seek to minimize the distortion. You know, the typical means used to minimize that distortion will be to introduce competition for the subsidy.

4550 I’m hope that answers your question. I’m not sure I can go beyond that.

4551 THE CHAIRPERSON: Well, I’m just throwing principles out because I thought perhaps you’d already have a list.

4552 Scalability, is that another principle that we should be thinking about as well, especially if we’re thinking long term?

4553 MR. SCOTT: In what sense? Scalability in terms of?

4554 THE CHAIRPERSON: We’re still talking about the guiding principles to setting a potential subsidy program down the road as a result of this proceeding. And I’m asking you what principles would help guide us in setting that out?

4555 MR. SCOTT: I understand. I was trying to understand what you meant by scalability.

4556 If you mean an increased -- the ability to expand the service?

4557 THE CHAIRPERSON: Yes or other aspects of it because of behaviour, technology; there’s all kinds of variables over a longer period of time.

4558 MR. SCOTT: Again, going back to the timing if it’s renewed or examined every three to five years, presumably you’d be able to address scale and continued need, very much like the Commission has approached the traditional contribution mechanisms. It’s revisited periodically and, at that time, you can assess the continued need and, obviously, you want to try and eliminate subsidies when not required.

4559 THE CHAIRPERSON: Do you have views on who should be making the decisions or as to a potential subsidy?

4560 Some parties have suggested that it would be some sort of third party. Others have suggested that it would be the Commission itself. Even the existing contribution program to a certain degree is managed at a distance from the Commission.

4561 MR. SCOTT: “Managed at a distance from the Commission” in terms of the ongoing administration but certainly the initial contribution arrangements were very much a creature of the Commission. And I think the Commission is probably best placed to make the determination.

4562 THE CHAIRPERSON: So are there principles to be drawn from that, in terms of creating a subsidy program; in terms of who administers it?

4563 MR. SCOTT: I don’t have anything to add. I don’t have any advice for the Commission on that.

4564 THE CHAIRPERSON: Thank you very much.

4565 Does anyone have any questions? No.

4566 Thank you very much, those are all our questions.

4567 MR. SCOTT: Thank you.

4568 LA SECRÉTAIRE: J’inviterais maintenant la Chambre de commerce de la Ville de Sainte-Adèle à s’approcher.

4569 S’il vous plaît vous présenter et présenter vos collègues et vous avez 10 minutes.

4570 Merci.

PRESENTATION

4571 M. VANDENHOVE : Bonjour, Monsieur le président. Bonjour, Monsieur le vice-président. Bonjour, Madame la conseillère et bonjour, Monsieur le conseiller.

4572 Mon nom est Guy Vandenhove. Je suis le président de la Chambre de commerce de Sainte-Adèle. C’est une région située dans les Laurentides à 40 kilomètres de Montréal, au nord.

4573 Et je suis venu, accompagné aujourd’hui de Me Roxane Stanners et de Me Jean-François Mercure. Et je vais directement passer la parole à Me Stanners, qui sont tous les deux résidents de notre région des Laurentides.

4574 Me STANNERS : Bonjour. Merci, Guy.

4575 Ma présentation sera en français mais je vous donne the gist in English just briefly.

4576 I think we’re here, as Mr. Chair said earlier, talking about some of the frustrations of people. And that you’ve heard this -- I hope it’s not too repetitive, but we are here to express and join our voice or our voices to some of the frustrations that you’ve heard of people who live near larger cities, in our case near Montreal and near Laval, and who do not have affordable, acceptable, in our view, access.

4577 Alors, je vous remercie beaucoup de nous donner l’occasion de vous faire cette présentation, de cette intervention.

4578 Tel qu’indiqué par Guy, la Municipalité régionale de Comté appuie cette intervention. Et Guy a indiqué que justement notre municipalité régionale commence à environ 40 minutes au nord de Montréal -- donc très, très rapprochée de Montréal et de l’autre centre, de Laval.

4579 Donc, nous ne sommes pas dans une région éloignée du Canada, des grands centres, c’est-à-dire nous ne sommes pas dans le Grand Nord. Mais souvent nous nous sentons comme si nous étions dans le Grand Nord.

4580 Et cette intervention est également appuyée par plusieurs municipalités, plusieurs villes qui font partie de la Municipalité régionale de Comté des Pays-d’en-Haut. Et je les nomme : Sainte-Adèle, L’Estérel, Morin-Heights, Saint-Adolphe-de-Howard, Sainte-Marguerite-du-lac-Masson, Wentworth-Nord, Saint-Sauveur et Piedmont.

4581 Nous avons eu l’occasion d’entendre les intervenants qui se sont présentés devant le Conseil depuis lundi et ce, je vous dis, parce que nous étions -- ou moi, j’étais à Montréal, lundi, mardi. Parce que si j’avais été dans notre logement des Pays-d’en-Haut, nous n’aurions pas pu avoir accès à cette audience, à moins de défrayer des coûts exorbitants.

4582 Donc déjà une frustration. Et nous avons entendu, entre autres, nos voisins -- l’intervention de nos voisins de Prévost qui, je crois, était hier ou lundi. Et leurs préoccupations sont très, très semblables à celles des résidents de la MRC des Pays-d’en-Haut. Et nous avons pu retirer certains de nos commentaires pour éviter de répéter ce que vous avez déjà entendu.

4583 Notre intervention écrite s’est appuyée sur une étude de 2014 qui s’intitule, « L’Institut de la Statistique du Québec, Perspective démographique des MRC du Québec pour la période de 2011 à 2036 » et c’est en annexe 2 de notre soumission écrite.

4584 Cette étude fait état de ce qui suit en ce qui concerne la MRC des Pays-d’en-Haut, notre MRC.

4585 D’abord, les prévisions de la progression démographique de la MRC pour la période de 2011 à 2036 sont de 28,9 pour cent, alors que celle du Québec en général, en entier, sera de 17 pour cent; donc, une progression démographique importante dans notre région.

4586 Et un deuxième fait; la MRC des Pays-d’en-Haut se trouve en treizième position dans l’importance de la progression démographique sur 104 MRC au Québec.

4587 En annexe 3 de l’intervention écrite, vous trouverez l’étude intitulée, « Étude de disponibilité d’internet haute vitesse » portant sur la MRC des Pays-d’en-Haut.

4588 Cette étude, en date du 11 mars 2013, utilise les normes du Ministère des Affaires municipales, des régions et de l'occupation du territoire, c’est-à-dire le MAMROT. L'étude indique que presque 10 pour cent, 9,4 pour cent des immeubles de la MRC des Pays-d'en-Haut ne sont pas desservis par l'internet haute vitesse.

4589 De plus, les immeubles qui sont dits « desservis », selon l'étude, le sont selon les normes du MAMROT, soit 1,5 Mégabits, qui sont nettement insuffisants selon plusieurs des intervenants. Nous avons entendu plusieurs des intervenants depuis lundi. On parle d’un minimum de 5, de 10, de 15, de 25. On n’est pas là pour discuter de ça. Nous ne sommes pas des experts.

4590 Les intervenants, comme je vous ai indiqué, ont donné certains points de vue et je pense que, dans vos commentaires d’ouverture, il n’était pas nécessairement question qu’on se penche là-dessus.

4591 Les motifs élaborés dans notre intervention sont de commune renommée et illustrent la nécessité d'avoir l'internet haute vitesse à prix abordable pour les raisons économiques, sociales, culturelles et politiques très bien connues.

4592 Maintenant, certains diront qu'il y a concurrence de fournisseurs dans la MRC des Pays-d'en-Haut mais, en réalité, cette concurrence est théorique et pratiquement inexistante.

4593 Effectivement, le service par satellite est très dispendieux et les grands fournisseurs ne desservent que les endroits facilement accessibles où la population le justifie.

4594 Permettez-moi de conclure avec un passage de l’éditorial -- et vous l’avez déjà possiblement entendu cette semaine, l’éditorial paru dans La Presse du 7 avril dernier où l’on indiquait :

4595 « Un pays développé qui se réclame de l’économie du savoir ne peut pas rester les bras croisés devant une telle aberration. Le problème ne se pose pas seulement dans les zones très éloignées posant de réels défis techniques. Dans bien des endroits, souvent tout près des villes, les particuliers et les entreprises n'ont pas accès à une offre internet digne de ce nom, faute d'intérêt des fournisseurs. De toute évidence, la logique du marché ne suffit pas. »

4596 C’est dans cette perspective, Monsieur le président, que nous souhaitons que le CRTC profite de cette consultation nationale pour trouver des pistes de solution afin que les $500 millions sur cinq ans promis par le Gouvernement du Canada, entre autres, servent à améliorer les services aux Canadiens dans toutes les régions.

4597 Alors, en vous remerciant, ça nous fera plaisir de répondre à des questions, le cas échéant.

4598 I would be happy to answer any questions that you might have. Thank you.

4599 LE PRÉSIDENT: Alors bienvenue à vous tous et puis -- assurez-vous là -- vous êtes -- on est -- on a la capacité de vous entendre dans la langue officielle de votre choix, donc inquiétez-vous pas de ce côté-là.

4600 C’est assez curieux vous avez mentionné l’éditorial de Madame Krol dans La Presse. Évidemment si quelqu’un n’était pas abonné à l’internet, c’est parce que ça ça l’a sortie la semaine, on n’aurait pas pu en prendre connaissance immédiatement; n’est-ce pas?

4601 Me STANNERS: Tout à fait.

4602 LE PRÉSIDENT: Oui.

4603 Et je connais assez bien la région et c’est une région qui a évoluée beaucoup depuis mon enfance.

4604 Parce que certainement à l’époque quand qu’on prenait (inaudible), on s’en allait pour faire du ski et maintenant on sait que c’est un endroit qui ressemble beaucoup à la continuation quand qu’on voyage vers le nord de Laval et des autres banlieues de Montréal.

4605 Donc c’est une communauté qui a changé sur plusieurs décennies, mais à votre avis est-ce que c’est une réalité de densification qui va continuer pour les municipalités-là, les comtés-là, le nombre de municipalités dont vous parler -- c’est huit à peu près, oui? C’est ça? Huit, neuf? Et des régions avoisinantes.

4606 Est-ce que vous voyez que c’est une densification qui va continuer?

4607 M. VANDENHOVE: Oui, les statistiques émises par le Gouvernement du Québec confirment la progression de la population de la région et on peut le voir géographiquement.

4608 La population double, la plus grosse, la MRC la plus dynamique en augmentation de population, c’est Mirabel.

4609 Et plus on monte -- et si on regarde historiquement il y a -- il y a une dizaine d’années c’était Boisbriand, Sainte-Thérèse et on voit que ça s’étend.

4610 LE PRÉSIDENT: M’hm.

4611 Et bon peut-être que j’aurais dû commencer -- vous êtes ici à la fois au début comme chambre de commerce, mais si j’ai bien lu les interventions d’appui au dossier public des autres maires et dirigeants, votre lentille d’analyse n’est pas une lentille uniquement de développement économique et de service pour le monde des affaires; est-ce que j’ai raison?

4612 M. VANDENHOVE: Oui, tout à fait.

4613 LE PRÉSIDENT: Donc -- oui.

4614 M. VANDENHOVE: C’est clair. Bien premièrement nous somme une chambre de commerce très dynamique, donc c’est pour ça qu’on a pris un peu le lead de ce projet.

4615 LE PRÉSIDENT: Oui.

4616 M. VANDENHOVE: On pense également que une économie saine c’est dans une société saine et dynamique.

4617 Beaucoup de le -- des contraintes que nous avons -- bien y’a internet, mais il y a aussi l’accessibilité et je pense que ça -- qu’on peut un peu réduire et alléger l’accessibilité en favorisant le travail à domicile, le travailleur autonome.

4618 Donc ça allège un petit peu et on peut travailler un peu plus (inaudible) sans être obligé de se déplacer.

4619 LE PRÉSIDENT: D’accord.

4620 Donc c’est un point de vue qui n’est pas limité au monde des affaires au sens strict, donc votre préoccupation c’est du service aussi aux résidences, aux individus qui habitent soit en permanence ou en fin-de-semaine dans la région; n’est-ce pas?

4621 M. VANDENHOVE: Exactement. Tout à fait, oui.

4622 LE PRÉSIDENT: Et aussi j’imagine les gens qui, par la même occasion, peut-être sont des résidents permanents, mais qui ont -- travaillent à partir de leur domicile ou qui ont des petits commerces ou des grands commerces dans la région?

4623 M. VANDENHOVE: Exactement. Tout à fait, oui.

4624 LE PRÉSIDENT: Ça va?

4625 M. VANDENHOVE: Puis pour le côté scolaire, également.

4626 LE PRÉSIDENT: Oui.

4627 M. VANDENHOVE: Beaucoup de -- beaucoup d’examens d’inscription, de consultations de cours se font par internet.

4628 Les enfants qui n’ont pas accès sont tenus de respecter des horaires à la bibliothèque qui ne sont pas toujours évidents.

4629 LE PRÉSIDENT: Oui.

4630 Dans votre intervention et je pense vous mentionnez qu’il y a presque 2,400 immeubles qui ne seraient pas desservis, approximativement-là.

4631 Bon j’imagine quand vous utilisez le mot « immeuble » vous l’utilisez dans le sens -- probablement plus dans le rôle d’évaluation foncière.

4632 Donc ça -- ce n’est pas des immeubles à logement comme on entend parfois dans les grands centres, mais plutôt des édifices. Donc là-dedans c’est vraiment des -- ça pourrait être des résidences privées, semi-détachées?

4633 M. VANDENHOVE: Exacte. Ils sont exclus de ce -- c’est parce que c’est sur un total de 24,000 résidences.

4634 LE PRÉSIDENT: Oui.

4635 M. VANDENHOVE: Sont exclus les immeubles industriels, communautaires, transports. T’as vraiment des -- ce sont vraiment des résidences.

4636 LE PRÉSIDENT: Des résidences.

4637 Et bon basé sur votre expérience de densité par résidence, on parle de -- à votre avis dans ce chiffre là de combien de résidents, d’individus?

4638 M. VANDENHOVE: Il y a 42,000 personnes qui vivent dans la MRC, donc c’est grosso-modo une moyenne de 2 personnes par résidence.

4639 LE PRÉSIDENT: D’accord.

4640 À l’âge qui devrait être capable d’utiliser l’internet donc ---

4641 M. VANDENHOVE: Oui, tout à fait.

4642 LE PRÉSIDENT: Donc un petit moins dépendamment?

4643 M. VANDENHOVE: Oui et puis -- et puis bien une chose également qui a été démontré dans les différentes études démographiques, c’est que la population également de notre région change.

4644 Le niveau scolaire, le niveau d’éducation, le niveau culturel augmente énormément. Ce sont des personnes qui ont eu une habitude d’avoir une vie sociale souvent bien meublée et ils viennent se retirer peut-être dans le moment pour certains, donc ils arrivent avec une soif de connaissances.

4645 LE PRÉSIDENT: Pour lire La Presse plus pendant la semaine, notamment.

4646 M. VANDENHOVE: Entre autre.

4647 LE PRÉSIDENT: Et bon ce que j’essaie de mieux comprendre, peut-être vous allez pouvoir m’aider, c’est que oui il y a des gens qui ne sont pas desservis, mais on a fait le sondage avec la firme Écosse et il semble qu’il y a des gens qui ne veulent pas être connectés.

4648 Qui ne voit pas encore ou peut-être le verra-t-il plus tard, mais pour le moment il ne voit pas l’avantage d’être branché.

4649 Est-ce que vous -- est-ce que dans votre position vous admettez que dans les 2,367 foyers immeubles, qu’il y a des gens là-dedans qui -- ça ne les intéressent pas du tout? Ils préfèrent faire autre chose, des marches, des randonnées, surtout que c’est à nouveau ---

4650 M. VANDENHOVE: Oui, mais c’est clair que tout le monde n’a pas l’intérêt identique pour internet, mais moi ce que -- ceux qui ne veulent pas être branchés c’est toujours lié à un coût d’accessibilité.

4651 Et c’est souvent un coût exorbitant d’installation et ça me réconfort avoir un service à faible débit dans certaines régions.

4652 LE PRÉSIDENT: Le sondage qu’on a fait semble indiquer que oui dans certains cas c’est l’abordabilité qui est un enjeu, mais pas toujours. Il y a des gens qui ne semblent tout simplement pas interpellé par ce genre de service.

4653 Donc le fait qu’il y a des gens qui ne sont pas connectés ça ne veut pas dire qu’ils ne veulent -- qu’ils veulent et n’ont pas les moyens de se brancher.

4654 M. VANDENHOVE: Oui, tout à fait possible. Tout à fait possible, oui.

4655 LE PRÉSIDENT: Donc ---

4656 M. VANDENHOVE: Parce que c’est clair qu’ils -- ils choisissent cette destination pour sa qualité environnementale, je dirais, donc c’est peut-être pas nécessairement tout le monde qui -- il doit y avoir des exceptions à ça.

4657 LE PRÉSIDENT: C’est parce que sous-jacent à votre position il semblait que vous vouliez assurer la disponibilité à 100 pourcent de la population.

4658 Et je me demande est-ce que c’est réaliste de penser que ça devrait être notre objectif, nous dans notre -- nos fonctions règlementaires d’atteindre 100 pourcent?

4659 M. VANDENHOVE: Je pense que c’est -- ça doit être peut-être lié au téléphone.

4660 Et les personnes qui ont droit au téléphone c’est un moyen de communiquer différent et je pense que ça va être vraiment identique au service téléphonique.

4661 LE PRÉSIDENT: M’hm.

4662 M. VANDENHOVE: Là où il y a le téléphone et bien il y a ces services-là. Chose -- oui. Tout à fait, oui.

4663 LE PRÉSIDENT: Bon -- oui? Allez-y, Maître.

4664 Me STANNERS: Vous permettez?

4665 Moi je -- enfin j’irai un peu plus loin, mais c’est comme résidente uniquement.

4666 Moi je dirais oui viser le 100 pourcent, parce que ceux qui expriment un désintérêt ne connaissent probablement pas les avantages, tout ce que -- c’est une question d’éducation, c’est une question de démographie.

4667 Moi je -- j’irais encore plus loin et je viserais le 100 pourcent.

4668 LE PRÉSIDENT: Au moins la disponibilité même si il décide de ne pas s’abonner?

4669 Me STANNERS: Voilà.

4670 LE PRÉSIDENT: J’aimerais peut-être vous entendre sur la -- oui vous voulez qu’il y ait de la connectivité, mais vous voulez plus que de la simple connectivité?

4671 Vous demandez une -- que ça soit une haute vitesse et donc je -- nécessairement je vais vous poser la question, c’est quoi à votre avis le service de base essentiel en terme de vitesse, mais pas seulement en terme de vitesse, en terme de prix et de capacité des données.

4672 Est-ce que vous vous êtes penché sur ça?

4673 Me STANNERS: Désolez, Maître Mercure n’a pas de voix dans le moment.

4674 Justement on en a discuté avec plusieurs résidents et on se disait même le 5 mégabits semble très, très lent. Donc il faut que ce soit absolument on pense un minimum, mais on espérait que ce serait plus que ça.

4675 Mais c’est beaucoup une question de prix.

4676 LE PRÉSIDENT: O.k.

4677 Me STANNERS: Je vous donne un exemple, essayez de suivre les audiences dans une partie de la MRC aurait possiblement coûté des centaines de dollars.

4678 Alors c’est -- ça limite.

4679 LE PRÉSIDENT: C’est bien la première fois quelqu’un dit qu’écoutez nos instances c'est un service essentiel, mais passons.

4680 Me STANNERS: Vous remarquez que j’ai rien dit.

4681 LE PRÉSIDENT: Oui. Donc c'est -- vous me dites que c'est pas seulement une question de vitesse. C'est vraiment le coût et l’abordabilité. Vous avez répondu comme résident.

4682 En tant que Chambre de commerce, parce qu’il y a des besoins d’affaires aussi puis le modèle est un peu différent, présumément quelqu’un qui est en affaires pourra déduire des coûts -- bon évidemment, ça coûte plus cher et dûment pour le consommateur qui achète les biens ou services, mais le modèle est un peu différent.

4683 Donc en termes de coûts et d’abordabilité pour les gens d’affaires, donc les membres de votre chambre, est-ce que c'est une réponse qui est semblable, différente, plus nuancée?

4684 M. VANDENHOVE: Non. C'est clair qu’il faut, je pense, bon ben envisager l’avenir également. Je pense que nos voisins du sud leur minimum c'est 15 mégabits. Ils visent 25 je pense ou plus et nous avons dans nos membres des commerçants qui font du commerce ---

4685 LE PRÉSIDENT: Vous voulez dire nos voisins aux États-Unis par Montréal?

4686 M. VANDENHOVE: Du sud, oui. Nos voisins des États-Unis.

4687 LE PRÉSIDENT: Plus au sud, oui, o.k.

4688 M. VANDENHOVE: Et donc ils font du commerce informatique. Ils vendent à travers le monde. Donc leurs concurrents ça peut être -- c'est peut-être le confort -- le confort d’accessibilité. Je pense qu’il faut quand même anticiper. C'est clair pour un instant si on se contenterait de 5. C'est bien. Nous ce serait déjà -- ce serait déjà très bien, mais je pense que si vous prenez une décision, vous le prenez pour les dizaines d’années à venir. Donc je pense qu’il faut pas avoir peur de ---

4689 LE PRÉSIDENT: Mais vous avez pas fait ---

4690 M. VANDENHOVE: On n’a pas fait de calculs, non.

4691 LE PRÉSIDENT: --- de calculs sur les besoins maintenant et plus tard.

4692 M. VANDENHOVE: Non, non.

4693 LE PRÉSIDENT: Et aussi y a une différence entre les vitesses de téléversement aussi par rapport au -- et ça non plus vous avez pas de point de vue?

4694 M. VANDENHOVE: Non, non, non.

4695 LE PRÉSIDENT: O.k. Je remarque que dans un document annexé à votre intervention-là -- la bonne référence. C'est une étude ---

4696 M. VANDENHOVE: Yuvo.

4697 LE PRÉSIDENT: Yuvo. C'est comment vous le prononcez? À la page -- oh, je vois pas de numéro de page -- ah oui, 7, à la page 7. On parle de service:

4698 « existe [des] grandes catégories d’offre de service internet haute-vitesse: »

4699 Et parmi les quatre catégories, y a une catégorie que vous appelez:

4700 « Sans fil n’ayant pas une offre acceptable du point de vue du [ministère du Revenu -- municipales du Québec et l’Occupation du territoire] ».

4701 M. VANDENHOVE: Oui.

4702 LE PRÉSIDENT: Est-ce que -- et vous mettez dans cette catégorie-là les fournisseurs cellulaires, même les cellulaires à haute vitesse comme Bell/Telus, Rogers, et Vidéotron.

4703 Donc, à votre avis, le service cellulaire même à haut débit ne rencontre pas les besoins des gens qui font des représentations ici. Est-ce que c'est par rapport à la capacité ou au prix dans ce cas-là?

4704 Je sais que c'est pas votre étude-là. C'est celui du ministère mais selon vos connaissances?

4705 M. VANDENHOVE: Je pense que ce qui nous correspond c'est la puissance. Donc ils sont à 1.5 mégabits par seconde et donc s’ils ne sont pas reconnus c'est parce qu’ils n’atteignaient pas le 1.5. Donc je pense que c'est une question de puissance.

4706 LE PRÉSIDENT: O.k., de vitesse de service.

4707 M. VANDENHOVE: Oui.

4708 LE PRÉSIDENT: Et donc ça c'est pas mal compris dans la région par rapport à certaines utilisations ou toutes les utilisations?

4709 M. VANDENHOVE: Je pense c'est l’ensemble des utilisations.

4710 LE PRÉSIDENT: L’ensemble. Et on a vu, on a entendu d’autres regroupements municipaux, notamment hier un groupe de l’Ontario qui se sont réunis eux pour justement améliorer la disponibilité des services à large bande dans la partie est de l’Ontario. Y a d’autres modèles ailleurs au pays avec l’aide des subventions, dans leur cas du fédéral mais un peu aussi du provincial, mais surtout du fédéral.

4711 Est-ce que vous envisagez ou à votre connaissance, est-ce qu’il y a des investissements qui pourraient venir à court ou à moyen terme pour justement aider à améliorer la situation?

4712 M. VANDENHOVE: Ce qu’ils offraient à certains distributeurs comme Cogeco c'était vraiment la rentabilité de l’investissement qui devait -- qu’il devait faire pour pouvoir couvrir une certaine région. Saint-Adolphe-de-Howard est une ville de 3,400 personnes et 50 pour cent n’ont pas internet, ne sont pas branchés. Et c'était surtout une question de coûts.

4713 Donc j’imagine que si on apporte cet -- si on comble leur déficit par un fonds que vous allez décider, je pense que ça peut aider énormément, c'est sûr.

4714 Il y avait 28 millions qui ont été débloqués par le MAMROT en 2009. Y a certaines tentatives qui ont été -- qui ont été mises de l’avant, des associations avec des sociétés comme, je peux les citer, Excel, etcetera, mais ç'a avorté pour des raisons de complications et je sais que le Gouvernement du Québec est en train de refaire un fonds, « Québec, Branchez-vous » je pense.

4715 LE PRÉSIDENT: M’hm.

4716 M. VANDENHOVE: Et ils sont en train de réévaluer un nouveau fonds. Donc nous sommes attentifs à ça, c'est clair, et si les raisons sont financières ---

4717 LE PRÉSIDENT: C'est pas tributaire à un certain niveau des priorités que les municipalités mettent pour avoir de l’investissement dans ce domaine-là?

4718 Je vais rappeler que, y a quelques années, moi en tant que sous-ministre adjoint des affaires culturelles, souvent on voulait des infrastructures de nature culturelle et des lieux de présentation ou quoi que ce soit. Et puis, inévitablement, les provinces et les municipalités, lorsque venait le temps de faire des demandes des divers fonds d’infrastructure, bien on voulait des routes, on voulait des systèmes d’aqueduc modernes.

4719 Donc ils faisaient des choix dans ces programmes-là puis je me demande à quel point les municipalités ont mis les enjeux d'infrastructures de large bande comme étant une priorité auprès des élus ---

4720 M. VANDENHOVE: Oui, tout à fait.

4721 LE PRÉSIDENT: --- partout là, soit provincial ou fédéral.

4722 M. VANDENHOVE: Oui. Vous avez vu le nombre de support que nous avons de l’ensemble des maires et préfets de notre région. Ça montre leurs préoccupations.

4723 LE PRÉSIDENT: Justement et donc c'est un reflet de la préoccupation de la population.

4724 M. VANDENHOVE: Oui.

4725 LE PRÉSIDENT: Mais après ça donc on devrait tomber dans des priorités budgétaires aussi.

4726 M. VANDENHOVE: Oui.

4727 LE PRÉSIDENT: Aux divers paliers.

4728 M. VANDENHOVE: Oui, tout à fait.

4729 LE PRÉSIDENT: Et quel montant d'argent est-ce que vos municipalités ont mis ou vont mettre directement dans l’amélioration des services à large bande?

4730 M. VANDENHOVE: Je ne pourrais vous répondre à cette question.

4731 LE PRÉSIDENT: Ni pour -- aucune idée?

4732 M. VANDENHOVE: Je ne -- non. Je n’ai aucune idée. Bon ben uniquement, typiquement le cas de Sainte-Adèle, la ville dans laquelle je réside, y a un changement de maire. C'est une élection partielle et puis chacun a ses priorités différentes. Donc ---

4733 LE PRÉSIDENT: Parce que y a quand même -- je sais que les gens veulent pas payer plus de taxes foncières et tout, mais quand même y a des projets parfois dans les municipalités.

4734 M. VANDENHOVE: Oui, mais je ne peux pas vous répondre à ce sujet-là. Y a pas de projet sur cela. Y a un projet qui a été géré par la MRC et ils sont arrivés à l’avorter avec l’association avec Excel. Ils ont commencé mais ça n’a pas été mené à terme.

4735 LE PRÉSIDENT: Seriez-vous d’accord avec moi que pour trouver des solutions, il va falloir trouver des partenariats et des sources de fonds de plusieurs sources ---

4736 M. VANDENHOVE: Oui, tout à fait, entièrement d'accord.

4737 LE PRÉSIDENT: --- parce que, oui, y a le privé puis des fois de plan d’affaire n’est pas appuyé par un déploiement entièrement par les forces du marché, mais y aurait peut-être le rôle aussi des gouvernements locaux, provinciaux.

4738 M. VANDENHOVE: Oui, tout à fait. Je pense que ça ne doit pas -- je pense que ça doit être -- c'est un bien communautaire et je pense qu’il doit être pris en charge par la communauté, mais l’individu l’est également. La population de la ville doit supporter également les personnes qui n’auraient pas ce service-là. Donc c'est clair que c'est un problème communautaire et pris en charge par l’ensemble de la société. Mon opinion.

4739 LE PRÉSIDENT: D’accord, mais votre message principal c'est que vous voulez que votre région reçoive un niveau de connectivité à des vitesses et à un prix plus abordable que ce que vous vivez à l’heure actuelle.

4740 M. VANDENHOVE: Exactement. Tout à fait, oui.

4741 LE PRÉSIDENT: O.k., très bien. Merci.

4742 Pas de questions. Pas de questions. Non plus du contentieux? Pourtant vous êtes arrivés avec des avocats, s’il y avait eu des questions juridiques mais malheureusement pas.

4743 Alors, merci beaucoup pour votre intervention.

4744 M. VANDENHOVE: On vous remercie.

4745 LE PRÉSIDENT: On vous a entendu et nous prenons tout ça en délibéré.

4746 Madame la secrétaire, je crois que c'est tout pour la journée, n'est-ce pas? Bon, petite journée pour nous.

4747 Donc on est en ajournement jusqu’à 9h00 demain matin.

4748 So we are adjourned until 9:00 o’clock tomorrow morning. Thank you.

--- Upon adjourning at 2:41 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:

2016-04-13