ARCHIVED - Transcript, Hearing April 21, 2016
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Location: Gatineau, Quebec
Date: April 21, 2016
© Copyright Reserved
Attendees and Location
140 Promenade du Portage
- 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
--- Upon resuming on Thursday, April 21, 2016 at 9:32 a.m.
11643 LE PRÉSIDENT: À l’ordre, s'il vous plaît.
11644 Madame la secrétaire?
11645 LA SECRÉTAIRE: Merci. Bon matin.
11646 Nous débuterons ce matin avec la présentation des députés des Laurentides-Labelle et du Pontiac.
11647 S'il vous plaît, vous présenter et présenter votre collègues, et vous avez 10 minutes pour votre présentation.
11648 M. GRAHAM: Merci, Monsieur le président, Mesdames et Messieurs les conseillers. Merci de nous donner l’opportunité de participer à vos consultations.
11649 My name is David Graham, Member of Parliament for Laurentides—Labelle. Presenting with me is William Amos, Member of Parliament for Pontiac.
11650 Together, our neighbouring ridings cover a territory of some 50,000 km, equivalent to about half of South Korea. Containing tens of thousands of square kilometres of non-organised territories and some 87 municipalities, our ridings are typical of rural Canada.
11651 Chairman, digital infrastructure in the small communities dispersed across our ridings is a generation behind our urban counterparts. Every year, we fall another year behind and the gap between our constituents and other Canadians widens.
11652 Furthermore, our social, economic, and youth retention problems are all compounded by the lack of proper network access.
11653 Let me give you an example. In the town of Lantier, population 724, I have a constituent who recently had to drive to a friend’s house at 10:00 p.m. to submit her daughter’s homework in time.
11654 In Notre-Dame-du-Laus, with 1,633 inhabitants, another constituent was telling me about driving 20 minutes to park downtown every few days in order to access news and e-mail.
11655 Entire communities in our ridings have no broadband internet whatsoever, and many do not have cell phone signal either. For us, these issues are one and the same. The lines between telephony, television, and internet are so blurry in 2016 as to be wholly irrelevant.
11656 In the age of convergence, our digital infrastructure needs to be considered holistically.
11657 Will Amos and I submitted a brief on this topic back in February and I will not rehash all of it today.
11658 But I will highlight that while single-purpose telephones and televisions continue their march toward obsolescence, in rural Canada where landlines and satellite dishes continue to be the principal connection to the outside world, a generation is growing up without adequate access to the technology that is bringing everyone else together. It is a situation that must be addressed quickly and forcefully.
11659 Permettez un autre exemple. Dans la municipalité de Kiamika où vivent quelques 800 Canadiens, un citoyen m’a écrit au nom de 80 familles locales pour m’expliquer que les problèmes socio-économiques de la communauté sont largement tributaires d’un accès à internet inadéquat.
11660 Actuellement, les clients doivent passer par des fournisseurs distincts pour la téléphonie, la télévision et l’internet, pour un coût total de 180$ par mois en échange d’un service approximatif.
11661 Le manque d’accès aux réseaux nuit non seulement au tourisme, qui est la principale source d’activité économique, mais contribue sérieusement à l’exode des jeunes de Kiamika, écrit-il.
11662 Un autre citoyen m’a écrit de la ville de Prévost, près de Montréal, pour me parler de la dévaluation des propriétés locales et pour me dire que les nouveaux acheteurs, tout comme les entrepreneurs, boudent son territoire, faute d’un accès approprié à l’internet.
11663 Chair, in 2016, high speed internet is an essential service to participate in the modern economy, in modern culture, and in modern democracy. In 2016, proper internet access is a rite of passage into the information society.
11664 It must, therefore, be considered a right and, as a baseline, anyone who has access to electricity must have access to high speed internet.
11665 Nous sommes choyés au Canada d’avoir de nombreux fournisseurs, petits et grands, qui se font concurrence. Toutefois, ces fournisseurs font face à des conditions qui les incitent à délaisser une partie du marché.
11666 Selon la réglementation en vigueur, un fournisseur a tout intérêt à s’installer dans une ville d’un millier d’habitants et fournir le service à 90 pour cent d’entre eux tout en délaissant les 20 maisons qui se trouvent du mauvais côté de la colline.
11667 À mon sens, cet indicatif tient beaucoup plus à une structure de marché sous-optimale découlant de la réglementation qu’à la nature de la technologie, de la géographie, ou de la demande qui sous-tendent ce marché.
11668 Ainsi, nous estimons que la concurrence et l’investissement privé seraient mieux servis par une réglementation qui ne ferait pas de la discrimination géographique entre les clients un impératif concurrentiel.
11669 Les fournisseurs promettent que les régions rurales seront branchées adéquatement dans deux, trois, ou cinq ans. Et ils sont bien intentionnés et ils travaillent fort pour y arriver, mais le fait est que le Canada est à la traîne de plusieurs autres pays en matière d’accès et les régions rurales souffrent chroniquement d’un retard d’une génération sur les villes.
11670 En campagne électorale, ou depuis que j’ai été élu, la question de l’accès aux réseaux est de loin celle qui revient le plus souvent, autant de la bouche des citoyens que de celle des élus locaux.
11671 Vous permettrez que je cite encore deux exemples.
11672 Monsieur Béland de Notre-Dame-de-Pontmain travaille avec Windows 7. Environ une fois par mois, lorsque les grosses mises-à-jour arrivent, sa ligne téléphonique est paralysée pour une période variant de 18 à 30 heures. Il s’inquiète de ne pas pouvoir appeler le 911 en cas d’urgence.
11673 Monsieur Désy, lui, habite à 14 kilomètres de Mont-Laurier. Il paye 100$ par mois pour internet par satellite. J’ai rencontré des dizaines d’autres citoyens qui payent entre 70 et 150 par mois pour un service qui manque trop souvent de fiabilité.
11674 On dit que plus de 95 pour cent des Canadiens sont à 5 mégabits et on s’en félicite.
11675 Monsieur le président, l’innovation numérique nous amène vers des technologies immersives, des jeux et des films en 3D, la réalité virtuelle. L’économie se dirige dans cette direction à grands pas.
11676 Où les entreprises innovantes iront-elles si le marché suédois donne accès aux consommateurs à 100 mégabits, alors que notre marché se satisfait de 5 ou de 10? Quelles écoles produiront les meilleurs innovateurs si les jeunes Suédois ont 10, 15 ans d’avance sur les jeunes Canadiens dans l’accès aux dernières innovations technologiques?
11677 Bref, les forces du marché, certes, mais orientons-les pour nous assurer que tous les Canadiens aient accès à un service de classe mondiale.
11678 We have a responsibility to make room for all Canadians on the train of the digital revolution. I am proud to say that the government recognizes the transformational nature of the times. I am truly pleased by the $500 million investment for rural connectivity announced in the last budget, and even more excited by the promise that this is the first step in a long-term strategy that will truly address the problem.
11679 At the same time, my colleague and I believe that certain adjustments on the regulatory front might contribute to bridging the digital divide. It is our contention that the CRTC and other relevant actors should consider a few actions aimed at equalising Canada’s internet access.
11680 Let me be clear that these suggestions are ideas for discussion and that they are formulated in our role as MPs, representing the voices of our constituents. They should be taken neither as the position of the Liberal Party nor as that of the government. They are ideas that we would like relevant stakeholders to consider.
11681 Ces idées sont les suivantes.
11682 Que l’on envisage des moyens d’encourager, voire obliger, les fournisseurs à desservir les résidents du marché où ils investissent à un prix égal pour tous, retirant ainsi l’incitatif à la discrimination des clients en fonction de la géographie;
11683 Que l’on envisage de nouveaux règlements pour encourager la mise en œuvre de partenariats entre les administrations publiques et les fournisseurs pour financer l’infrastructure numérique;
11684 Que soit menée une étude objective sur la nature du modèle suédois et la meilleure façon d’en tirer des leçons pour le marché canadien, en tenant compte de ses conséquences sur toutes les parties prenantes;
11685 Que nos politiques considèrent la haute vitesse, la stabilité du réseau, la faible latence et l’accès illimité comme droits universels dans une économie moderne, à l’instar des services téléphoniques et d’électricité;
11686 That, as a general rule, no connection with a packet round-trip time in excess of 100 milliseconds to the nearest backbone should be considered high speed, as longer delays result in excessive latency limiting the usefulness of fast connections;
11687 That no connection with a sustained capacity below 10 megabits should be considered high speed, and that this threshold should increase on an annual basis reflecting the reality of internet usage, much in the way the Consumer Price Index follows the cost of living. What is considered high speed today will no doubt feel like dial-up to our children;
11688 That bandwidth caps should themselves be capped and regulated, and restricted to situations that are technically justified. A high speed connection with a 40 gigabit monthly cap was not adequate before the advent of widespread internet video, let alone today, but it is the norm in rural Canada;
11689 And finally, that the myth according to which the free market, on its own, can resolve these problems be dispensed with. If it were indeed the case, we would have no need to be here today.
11690 Merci. Je cède la parole à mon collègue.
11691 M. AMOS: Merci, Monsieur le -- pardon.
11692 Merci, Monsieur le président.
11693 LE PRÉSIDENT: Ce n’est pas comme à la Chambre des communes. Les micros ne s’allument pas automatiquement ici. Il faut les actionner.
11694 M. AMOS: Monsieur président, Commissaires, je suis très heureux d’être ici pour représenter, non pas le Gouvernement Libéral, mais nos concitoyens de Pontiac.
11695 I salute the CRTC, my former employer, for the invitation and for the effort around this Let’s Talk Broadband hearing.
11696 It’s an important conversation. It is actually one that we did in our ridings have during the election.
11697 It was -- this is a key issue for our small businesses, for our farmers, indeed for everyone in our riding.
11698 We know that the future success of our economies is distinctly related to the regulatory regime reforms, as well as the investments made by multiple levels of government.
11699 I’m proud that our government has made a significant investment through the budget and I look forward to working with my colleagues on the rollout of the expenditures.
11700 That’s going to involve lots of consultation I’m sure and I think that it’s important to give that process time, but I’m sure that the Minister of Innovation, Navdeep Bains, is ready to do a phenomenal job of identifying exactly how the Federal Government can best contribute with that half billion dollars towards the growth of our digital economy.
11701 It’s so important because at the end of the day this is, for the riding of Pontiac, this is about youth retention, it’s about keeping our young kids in the towns they grew up in.
11702 It’s about the isolation of seniors, it’s about small business expansion, it’s about agricultural modernisation, of course it’s about democratic participation.
11703 And I think that if you look at this in a macro sense, this is really about the reconciliation of what many people describe now as a rural urban divide.
11704 So with respect to that threshold question of whether broadband access ought to be included in the basic telecom service definition, I think the answer is a resounding yes.
11705 And it is the case that high speed internet must be incorporated.
11706 But many other questions flow from that ---- what I think is a fairly trite conclusion. You know, how do you -- how do you get it to high cost areas, how do you finance digital infrastructure buildout.
11707 The potential for low income subsidies and in Pontiac there are so many low income situations and that’s -- it’s just crucial for the -- for this Panel to understand that you know we have so many, so many individuals, so many families living on a net income of less than $30,000 a year. It’s just -- it’s a hard reality in Vallée-de-la-Gatineau and in the Pontiac.
11708 I note that the -- that previous intervenors such as the Affordable Access Coalition were supported by the Canadian Federation of Agriculture in Cullen(Ph) for a contribution fund to include internet revenue with download speeds of at least 10 megabytes per second.
11709 That’s something that I think is an appropriate direction, but I mean I’m conscious of the fact that, you know, I don’t represent government here and I do respect the independence of the CRTC to make its own regulatory decision to pursue the public interest pursuant to the legislative responsibilities that you have under the telecommunications Act.
11710 So I would simply say that I would hope that the -- that an updated regulatory regime priorities two basic things. Expanded access to locations not currently served by a high speed internet and an effort to ensure that high speed internet access is affordable.
11711 Those are the two main things that the people of Pontiac would want me to say if they were sitting here and able to do it themselves.
11712 I think with that right mix of an updated regulatory regime and expenditures at multiple levels of government, then we can have small towns who are now suffering jump to that next level of being able to compete and able to take advantage of the fact that they’re -- even though they’re small, that they’re able to participate in a digital economy.
11713 Merci beaucoup. Thank you for your time.
11714 LE PRÉSIDENT: Merci beaucoup, messieurs les députés et comme j’ai fait pour vos collègues députés qui ont aussi comparu, je pense c’est un peu un record dans cette instance le nombre de députés qui sont venus intervenir, puis on est très heureux.
11715 Parce que comme je leur ai dit vous avez -- vous pouvez avoir beaucoup plus d’influence sur les décisions finales quand vous participez avant, que de faire des études par la suite en comité parlementaire une fois que les décisions sont prises.
11716 Donc merci beaucoup d’être là et puis on l’apprécie beaucoup. Puis ça semble avoir fait un impact aussi sur le nombre de personnes qui sont dans la salle ce matin.
11717 Donc anything you can do to make our hearings more popular that’s also very appreciated, apparently because we were dwindling in number of people following our hearings so far.
11718 So you may have heard what I said earlier in the week, so I’m not going to spend much time today asking you why it’s important.
11719 I’m going to take that as a given because you obviously think it’s a given, so I’m more in the mindset okay there’s a problem how do we solve it and I’d like to have your perspective on those things.
11720 I noted, for instance, Mr. Graham, you said we need to address this issue quickly and forcefully. Okay how quickly and -- well let’s deal with that. How quickly?
11721 MR. GRAHAM: If I could have everybody in my riding connected by yesterday I think we’d be getting just about where we need to be.
11722 MR. GRAHAM: Ummm ---
11723 THE CHAIRPERSON: We’re working on that.
11724 MR. GRAHAM: We’re working on that. There’s no -- I can’t give you a timeline. I can say that as fast as we can do it we should try. So how quickly, that’s up to you, that’s up to us, that’s up to the Minister’s office, that’s up to all of us as partners in solving this problem.
11725 THE CHAIRPERSON: And could you put meat around the word forcefully?
11726 MR. GRAHAM: If we use the tools we have available to us and we’re here not to talk about the government’s investments; that’s their department.
11727 We’re here to talk about the regulatory changes that you can consider in acting, can contemplate, can discuss.
11728 And if you want to make regulatory changes that require or encourage different levels of service or better service in different places or investments in different manners, then I think that discussion should be had and I think that the regulatory approach is sort of the hammer approach but it is a forceful tool that’s available to us.
11729 THE CHAIRPERSON: Tous les deux vous avez mentionné l’investissement annoncé par le gouvernement dans le dernier budget, puis personne ne peut critiquer un tel investissement. C’est positif, mais je sens -- peut-être j’ai tords, dans vos propos que vous regardez le rôle du CRTC puis le rôle du Ministre comme étant un peu des rôles qui opèrent en vase clos et sans nécessairement avoir une coordination.
11730 Est-ce que j’ai tords de percevoir ce commentaire -- cette impression?
11731 M. AMOS: C’est une question très intéressante. Je crois qu’il faut débuter en identifiant l’indépendance nécessaire du CRTC.
11732 Il faut que -- il faut que le gouvernement respecte cette indépendance. Il faut que le gouvernement réalise que c’est à vous autres d’établir le cadre règlementaire, mais c’est sûr que dans le sens -- dans un sens c’est une conversation.
11733 C’est une conversation ou il y a des -- il y a des promesses d’investissements et de l’autre côté il y a pas de promesse mais un potentiel de réforme de régime règlementaire pour assurer l’internet à haute vitesse.
11734 Je crois que notre gouvernement a donné un très -- une très importante -- un signal très important. Les fonds seront là pour investir et ils seront dans des montants accrus vis-à-vis le passé.
11735 Bon. Ça prend -- ça prend du temps. Je ne parlerais pas pour Ministre Bains, ni notre gouvernement, mais je crois que c’est raisonnable de croire que après avoir annoncé les montants dans un budget et après avoir légiféré la loi budgétaire, il faut consulter, il faut évaluer avec un département dans la première année d’un mandat, d’un nouveau gouvernement, comment on pourrait mieux investir cet argent-là.
11736 LE PRÉSIDENT: M’hm.
11737 M. AMOS: Alors dans ce contexte-là on peut s’attendre à ce que ça prend un peu de temps et je crois que la conversation, si elle continue, la CRTC est -- aura le temps d’évaluer qu’est-ce qu’ils ont entendu des Canadiens et des Canadiennes et des députés, par exemple, de circonscriptions ruraux. Alors, oui, c’est une conversation mais c'est au CRTC de prendre ces décisions sachant qu’il y a des fonds importants à investir.
11738 THE CHAIRPERSON: Someone once said that arm's length doesn’t mean you can't touch, and I'm always afraid that this notion of the CRTC's independence prevents alignment and coordination, and that's certainly not my philosophy.
11739 Certainly, the Commission in its actions, it's decisional work, has to be -- act in an independent way, but it has to do so in a coherent and coordinated way more broadly.
11740 So I was wondering if you could help us? You know, you give the example of Sweden. Unitary states have the advantage of being unitary states and federations, it's even more complicated, particularly then -- and I think many people have recognized that municipal governments play an even more important role in -- than we may have thought of 150 years go, regional municipalities, band councils.
11741 I mean, the levels of governments are rich in diversity across the country, and yet in the end there's only one citizen and they get frustrated by this. And even the Commission, although independent, we're still part of the executive, the federal level. And I'd like to have your views. I mean, you must think about these things, because governance of Parliament has been the subject of some debate.
11742 In the end, people are wanting action and they're not going to trip up about who's responsible and who's not responsible. But the great risk is that the left hand doesn’t know what the right hand is doing.
11743 Could you help us with that?
11744 MR. GRAHAM: I'll start quickly by saying that our role isn't to connect the right hand with the left hand. Our role here, as Members of Parliament is to tell you what we're hearing.
11745 I encourage participation -- interaction between you and the Minister's office to the extent that you are both comfortable doing so, but that's not our role here as Members to speak to you. And that's where I'll start.
11746 If Will wants to continue?
11747 MR. AMOS: I take your point that, you know, Canadians get frustrated when they don’t have the internet access that they see as being a basic infrastructural right, and who feel that they're being left behind or having to leave their small communities as a result.
11748 You know, the accountability gets spread around in different ways and I think, depending on where one sits, the -- you know, the -- that accountability can feel hotter. You know, the politicians certainly -- I'm going to be held accountable in my riding for the success of expanded internet rollout. I would venture a guess the vast majority of the people in Pontiac don’t know or understand what the CRTC does, and they don’t necessarily know what level of government is responsible. They just want to know that they're going to get internet.
11749 So that puts me on probably the hottest seat, and when it comes to you know, building a conversation, I think that the responsible thing for us to do is to engage in the conversation.
11750 How the CRTC should engage? You know, there are a lot of different ways, and as you mentioned, there are multiple levels of government that are involved. You know, a public dialogue, through opinion editorials; there's all sorts of ways that Canadians can better understand, you know, what are -- what the regulator is doing, what levers they have, in terms of encouraging the build out of internet.
11751 And you know, to the extent that the municipal and regional governments and Indigenous governments can be involved in this process and themselves better understand what they need to do in order to encourage broadband rollout, that's great.
11752 But I think the CRTC has a leadership role. Ultimately, that's fundamental, and you know, the federal government has important policy levers as well and funding levers, and I leave that to Minister Bains to lead on.
11753 THE CHAIRPERSON: Right, because -- and I appreciate but, you know, although there is -- you do represent people with a great deal of expertise because of your own personal backgrounds, and I appreciate that -- but you've also heard a lot from Canadians in your ridings and elsewhere, and I tend to be a -- more than a glass half-full sort of guy, and I want to move to solve problems.
11754 The market forces have done a great deal to ensure the availability of broadband services in some places. We're now at the outer edges of where it hasn’t worked, and that's -- it's strange, because we hold public hearings. We're very available. We reach out. We do lots of communications. And what happens is, even though issues may not be strictly within our bailiwick, in our remit and what we're responsible for, from a strict regulatory perspective, we have tons of people coming to us and saying, "We have this issue."
11755 From digital literacy to poverty to health and safety concerns in the north, the list goes on, and I'm happy to think that you think we should play a leadership role on this, and we will take it up. But people have to come as well, and when other groups, provincial, federal, territorial -- and that's what I'm hoping that you could at least express some support when we occupy that field that we're not stepping on anybody's toes and that that's, in fact, the right way to do things.
11756 Because we could -- on peut se regarder comme des chiens de faïence puis personne bouge, personne fait rien, et puis en bout de ligne, qui qui en souffre? Probablement pas nous parce que nous habitons tous dans des endroits où on a les services, puis on est suffisamment fortunés, éduqués pour bien comprendre comment interagir avec, mais c'est d’autres personnes qui en souffrent.
11757 Et moi j’aimerais me rouler les manches et trouver des solutions et je cherche votre appui, non pas comme représentants du gouvernement mais comme des députés, comme tous les autres députés, pour dire bon, finalement faut trouver une solution ici d'une façon très concrète. Il va y avoir des conséquences, on en est certain, mais c'est pas seulement le CRTC qui en est responsable. Et je veux pas non plus avoir le dieu d'être celui qui est le seul qui est perçu comme être responsable, puis ni mes collègues ici sur le panel.
11758 M. GRAHAM: Je vais répondre vite à ça. Moi, on parle ce matin -- comme CRTC, on parle au bureau du ministre. On parle aux autres députés. Je parle à mes municipalités, mes MRC. Je parle à tout le monde. Je me limite à personne. C'est un enjeu qui est tellement important, c'est numéro un dans mon comté.
11759 J’ai une ville dans mon comté que j’ai, comme j’ai parlé dans ma lettre, qui a une commande d’ébullition d’eau de 12 ans et eux-mêmes ont investi leur agent au lieu que dans l’eau dans la connexion à l’internet.
11760 C'est un enjeu tellement grave que je vais parler à tout le monde qui nous écoute. C'est très important.
11761 Si vous prenez le leadership, on va vous appuyer puis vous suivre, mais c'est à tout le monde de prendre ce rôle. Ça vient un peu partout.
11762 LE PRÉSIDENT: Voulez-vous ajouter?
11763 MR. AMOS: I want to be careful with what, you know, how I couch my remarks, because I really do want to stay within this box of representing Pontiac and not representing the government.
11764 I mean, I think the word "leadership" is easily misconstrued. The CRTC has a leadership function as an independent regulator. The Government of Canada has a leadership role in other aspects of investment, in terms of spectrum auction. I mean, there's a series of levers that both the federal government and the CRTC, as an independent institution, have.
11765 So I don't think it's a question of one level of -- one governmental entity being perceived as more of a leader than another. I think the more important thing is that we act, and the -- I think it's fair to say that, you know, the CRTC has, you know, among the most sophisticated understandings of how market forces have worked to engender broadband rollout and how market forces have not. And the CRTC is also in a strong position to assess how far market forces can be shaped by the regulatory tools available to assist in a speedy rollout.
11766 But I think that the key word here is speedy. You asked earlier how fast? I would agree with my colleague. Immediately.
11767 Well, I mean when you have -- in Pontiac you don’t just have, you know, median income levels that are tremendously depressed but you have towns that have shrunk by 50 percent, 60 percent and that they continue to go down.
11768 You have demographics that are trending upwards. Why? Because the youth have left. And the only way to maintain -- to conceive of a strong future for so many small towns is by ensuring that they have the tools.
11769 You know, back in the day it was a nice paved road. These days I’d say that I have more residents of Pontiac knocking on my door and sending me emails saying we need high-speed internet now than they’re saying please fix the potholes.
11770 THE CHAIRPERSON: Right. By the way, I had a conversation -- and I know you folks have to get back to pressing matters across the river so I’m going to keep my questions short, but -- or my comments short as well. But I’ve always spoken about chair leadership, not individual or single. And I think that’s the spirit I’m asking the question in.
11771 I ask this question of others elected officials, whether they’re municipal, federal, provincial. Filling the gap, whether it’s our regulatory actions or government programs or myriad of activities at even purely provincial level, in the end whether the citizen is wearing his hat as a taxpayer or as a subscriber there’s only one wallet being tapped.
11772 And I appreciate you want results now quickly, but the speed at which we act and the objectives to which we work, like, so much speed -- or even, you know, you talked about jitter and latency. And those are real issues, I’m not demeaning them at all; quite the contrary. The experience is affected by them.
11773 But as we try to go down farther and farther to assure near 100 percent connectivity at the sorts of levels people expect there’s a cost to that. And perhaps building -- I’m wondering to what extent are people willing to contribute to that national vision and contribute financially one way or another to that national vision of a more connected country?
11774 MR. GRAHAM: I think there’s a willingness because I think if we invest in expanded infrastructure it will end up costing less for people, not more. And right now the cost of internet in the city is considerably lower than it is a rural area like mine. My connection of 40 or 50 gig a month costs $70 and up. And I’m lucky, my connection works.
11775 You know, if we have a clear plan, I think people will follow it. Right now the problem is, as I’ve mentioned, at the age of convergence we have three different bills you’ve got to pay to achieve a lower quality signal than your neighbour. The money that is there it’s a matter of spending it properly and figuring out where to direct it, in my opinion.
11776 LE PRÉSIDENT: Puisque vous ne parlez pas pour les comtés d’un et de l’autre, je veux m’assurer que vous avez tous les deux la chance de vous exprimer.
11777 Monsieur Amos?
11778 MR. AMOS: Je dirais qu’il y a au moins deux poches. C’est sûr que nous payons nos impôts et que nous payons nos frais d’internet à haute vitesse. C’est la même poche. Mais il y a aussi une poche de l’industrie aussi.
11779 I think that’s what’s really, you know, that’s one of the key questions here. What is the appropriate private sector investment? And I think the CRTC is well positioned to evaluate that.
11780 THE CHAIRPERSON: The challenge we may have because of -- you may or may not know -- but the vast majority of retail services are now deregulated. In fact, I think of the total amount of tel co’s current revenues 90 percent are deregulated.
11781 In that environment, what happens is if we put more costs on them they get redistributed probably not to shareholders or bondholders but on rate payers. And is that an outcome that you see? Because politicians are sometimes concerned about income taxes or taxes generally going up. It’s a bit the same thing because it is in the end the same wallet.
11782 MR. AMOS: I mean, I think we can all agree that taxpayers want to pay the least amount of tax and consumers want to pay the least amount for their internet service. I don’t think it’s a given that any additional costs that might be imposed upon industry, whether that’s in the form of, you know, conditions of licence that speak to mandatory basic packages or contribution funds. I don’t think it stands to reason that those contributions would be directly passed to the consumer.
11783 THE CHAIRPERSON: Well, I respect your optimism. It has not been the practice.
11784 MR. AMOS: There are limits to consumers’ ability to pay more.
11785 THE CHAIRPERSON: Which is interesting because like yourselves we’ve heard from the most vulnerable people in Canada, the poorest of the poor. Some of them have come through great courage to our hearing to tell their personal tales.
11786 And they are making choices, extremely difficult choices, between having the sort of connectivity you need for all the reasons you’ve put forward, including their children’s education, their health, participating in society in various ways. And what we would have maybe a few years ago thought hierarchies of needs much great, food and shelter.
11787 In a sense they are caught. And we have tel cos that have come to this hearing, so we’re hearing that side. And then we’re having other people come to this hearing and say, “Oh, CRTC, don’t worry about that. That’s a poverty issue, other people should deal with it.” Because the last thing they want is for us to deal with it because they know that we may actually have an impact on their business.
11788 So what are your views on that? Is affordability something we should -- or unaffordability should be something we deal with?
11789 MR. GRAHAM: I think you have a chicken and egg problem. The poverty is exacerbated by the lack of internet connectivity so -- and if you’re going to say the poverty is going to fix itself then they can afford internet you’re just -- when I said at the beginning of my presentation that every year our divide gets a year greater it’s just going to accelerated that, it’s not going to fix it so -- yeah.
11790 THE CHAIRPERSON: Very few CEOs have showed up to our hearing. I’m respectful of the people they’ve sent, they’re knowledgeable. But if this is a debate of society where were the CEOs; where are the CEOs on this?
11791 Because when we pushed and asked whether they think they have a social responsibility they said, “Well, no, we rather put our money elsewhere.” That’s the situation we’re in because we’re open, we’re transparent, and a number of issues come to our shores. And the part where we have an influence on is actually rather limited. And so that’s -- yeah, I’m not sure it’s a catch-22 but there is a conundrum there.
11792 MR. AMOS: I would simply say that -- and again, just as it’s not my role to speak for my government nor is it my role to speak for the major tel co’s, I will say that I’ve had great conversations with a number of senior executives from Canada’s telecom industry.
11793 I do believe that there is a commitment to tackle issues both related to access and related to affordability. I think there have been some examples discussed before this Panel in days past. And I think that, you know, as long as the message is being heard loud and clear that whatever the regulator can do to speed up enhanced access and to create a regulatory system that over time, you know, expands the bandwidth and the megabits that are available to communities as a matter of basic service that’s really important. And to the extent that it’s possible to ensure that there is a basic provision that is affordable, very important.
11794 So again I don’t know if that takes the form of a basic skinny internet package. I mean, I’ll leave that to the regulator to determine what is possible, but I mean, I can say very simply that the good residents of Pontiac, 110,000 of them, they want this kind of government assistance. And when they -- when I say “government”, what they’re thinking of government is the CRTC, municipal regional governments, federal government, a member of parliament, the whole package.
11795 So I mean I -- and so I say that in a spirit of collaboration and I hope that our, you know, our comments are at least somewhat useful.
11796 THE CHAIRPERSON: Before I turn to my colleagues, just a couple of other questions I want to ask you about.
11797 Une des questions que -- parce que vous êtes proches de vos commettants et je me demandais si vous avez à la fois entendu des commentaires de la population dans vos comtés par rapport au service satellitaire comme étant un mécanisme acceptable pour desservir les populations en termes de bandes passantes? Et si vous -- parce qu’ils ont comparu devant nous un petit peu plus tôt, une compagnie comme Xplornet, disant qu’ils ont quand même l’intention de déployer plus de capacité.
11798 Est-ce que vous êtes confiants que ça sera un service qui pourrait rencontrer les besoins de vos communautés?
11799 MR. GRAHAM: I get a lot of complaints in my writing about satellite. And the complaints are cost, reliability and latency. If they can address those issues, it is -- it will become a better and better service. It is certainly part of the solution. If you don’t have anything else, satellite is available, it’s not a negative. It’s part of the mosaic of solutions we have. But I think it has a lot of issues that need to be addressed. I’ll put it that way.
11800 LE PRÉSIDENT: Monsieur Amos?
11801 M. AMOS: Jusqu’à date, je n’ai pas eu l’opportunité de rencontrer Xplornet. Alors, je réserverais mes commentaires mais, à mon avis, ce n’est pas la seule solution.
11802 LE PRÉSIDENT: D’accord. Mais ils sont dans la salle. Donc vous pouvez peut-être faire un échange de carte de visite en l’occurrence et trouver une opportunité.
11803 Ma dernière question relève d’un enjeu que nous avons tous comme panel établi au début de la semaine en disant que faut peut-être avoir une feuille de route, une stratégie -- y a différents noms pour ça -- mais qui a divers acteurs qui pourraient agir dedans. Et lorsqu’on fait des politiques stratégiques pour l’avenir des services de large bande au pays, comme je l’ai mentionné à d'autres, y a plusieurs étapes.
11804 Première étape, faut faire un constat de la situation. And I must say, you know, you’ve come here and explained the frustration and that’s step one. And we’ve heard from lots of Canadians in this hearing about, you know, the strength, weaknesses, opportunities and risks and threats associated with the current state.
11805 Then the second step is to set out the end goal, the objective you want to reach. And I’m hearing “we” want to reach. All of Canada, not just the CRTC.
11806 Then third you do, after having done both current state, future state, you do the gap analysis. And then based on that gap analysis, the fourth step is to have specific action, some of this will be regulatory actions, no doubt, but there’s a whole lot of actions that need to be taken by other people to reach a potential end state.
11807 And then proper public policy always results in some evaluation of how well you’re doing at certain times towards filling the gaps and then you adjust your plan.
11808 I know that’s a huge question and you have to go, but maybe you can help us frame that problem. Take it for given we know what the current state is, help us identify the gaps and the potential future actions.
11809 MR. GRAHAM: The gaps that I see are on the service side. I don’t know the process gaps that we have. I know the technology’s advancing very, very quickly. In my writing, the main source of Nunavut fighters is wireless, using LTE signals.
11810 There’s 1,000 different ways of skinning this cat and I don’t have a really good answer for you. I know that we have to work on it and that’s what I’m here to try and figure how to do.
11811 THE CHAIRPERSON: Right. Cats are getting a really bad rap at this hearing. We’re trying to herd them and skin them now.
11812 But anyhow, Monsieur Amos?
11813 M. AMOS: Quand moi je conçois une feuille de route ou une stratégie, moi j’ai pas de commentaires au niveau de notre gouvernement et la stratégie qui va être ---
11814 LE PRÉSIDENT: Je comprends très bien. Vous parlez pour ---
11815 M. AMOS: Mais ce que j’inviterais -- je ferais un peu une invitation publique à toute l’industrie de télécommunications, que ça soit des petits joueurs ou les grands joueurs.
11816 I know that the good people of Pontiac would love for the telecommunications industry players to come and visit our riding and speak to residents about what is possible, what they can do, what opportunities they would like to make available if only there were some government assistance, or if certain measures could be undertaken by regional governments or by, in the case of my riding, band governments as well.
11817 I mean, there’s nothing that I would like to do more than to sit down and talk about small towns A, B and C with an internet service provider and figure out how are we going to get -- how are we going to go from zero or two-and-a-half or five megabytes and get well beyond that. That’s the conversation I want to have.
11818 So I don’t -- I prefer not to speak about broad strategies and big questions. I really want to focus in on local solutions. And so my, you know, my invitation is an open one and I look forward to hearing, you know, hearing back from industry on that.
11819 THE CHAIRPERSON: The problem of the absence of broad strategies is then attention is given not to a common purpose, but louder voices.
11820 MR. AMOS: Is a suggestion that we’re loud voices but there are others that --
11821 THE CHAIRPERSON: Not at all. But I mean ---
11822 MR. AMOS: -- aren’t so loud?
11823 THE CHAIRPERSON: No, but you know, it does -- there are some people that are off the grid that don’t get to have access to make their point as much.
11824 And even -- it was striking in this hearing so far. We even have mayors of small communities that are clearly overwhelmed by the issue. So how effective can they be in advancing their needs for their community?
11825 See, that’s -- it’s not a criticism. It’s more a -- un constat que la capacité pour faire avancer les dossiers est inégale. Je comprends que vous, vous êtes ici pour parler de -- puis c'est tout à fait juste là de parler de vos circonscriptions, mais nous comme institution nationale, on doit penser au-delà de -- il faut penser à tous les Canadiens.
11826 M. AMOS: Je crois que c'est une perspective intéressante et je sais que, par exemple, y a un employé du MRC Pontiac ici dans l’audience, Marc Fortin, qui est responsable pour le développement économique du MRC Pontiac et il est là parce qu’il est responsable et il sait très bien que c'est un enjeu très, très important pour Pontiac.
11827 Et je crois que ça soit des fonctionnaires ou des élus, il sent l’importance de l’imputabilité dans cet enjeu-là de déploiement d'internet à haute vitesse. Il le sent.
11828 Yes, there are capacity issues. There -- I mean, you know, that that’s a reality. But, you know, it’s something we have to -- it’s something that we have to overcome and we need to encourage industry to make that extra effort and to help us figure out what can we do to build a, you know, to build out more fibre.
11829 So I’ve had those kinds of conversations with major telcos. What -- you know, can we sit down and what can we do to lay down more fibre? What is a reasonable way of accelerating that? And so, you know, that’s partly my role. I’m taking that initiative. But I know that there will be other government, levels of government who are trying -- going to try to do the same. And to the extent that the CRTC can aid and abet in that effort to bring more communities to the table with industry, that would be really appreciated.
11830 THE CHAIRPERSON: There’s further rounds of comments, at least one of comment in this proceeding. Hopefully you and your colleagues from rural communities can help us come up -- it’s a very rich record so far and maybe you can help us frame the outcome in this and make it better for people in your ridings but also Canadians across the country.
11831 I’m going to see if our colleagues -- Vice-Chair Menzies?
11832 COMMISSIONER MENZIES: I thank you for coming today. It’s much appreciated.
11833 I’ve had the opportunity to meet, in this role and previous lives, a number of members of parliament, and they usually have a very, very good sense close to their constituency of what’s going on because their phone rings a lot.
11834 And it’s difficult to judge -- I’m guessing that both of you, and your colleagues, have knocked on a great many doors the last eight months or so so you would have a pretty good read on things, and also within the context that in the last decade or so I think we’ve seen public opinion drive public policy more and more directly and not just in Ottawa but in all the provinces and municipalities and that.
11835 So because we can be very narrowly focused, I’m trying to get a sense of sort of at what level this issue sits in your community. You know what I mean. Is it the first thing people talk about at the door? Are they angry when they talk about it? Are you getting, you know, sort of -- I don’t know -- how hot is the issue I guess, to put it that way?
11836 MR. GRAHAM: I can’t speak for other ridings obviously, but in my riding it’s number one. There is no more important issue than this issue. And there are highways that need repair, there are lakes that need to managed, there are all kinds of other problems but it always come back to this. Internet is number one. We are not part of the modern world; we’re not part of the modern economy until we get this internet solved.
11837 And when you say I get a lot of phone calls from my constituents, you’re right, as long as I’m in an area where I have cellphone coverage, I get less calls.
11838 COMMISSIONER MENZIES: Mr. Amos?
11839 MR. AMOS: I mean, I think I wouldn’t say it’s the number one issue in the riding of Pontiac. The number one issue is job creation and economic stability. But within the context of that major issue, it’s one of the top two or three issues. So it’s -- yeah, it’s a high, high priority.
11840 COMMISSIONER MENZIES: Right up there with potholes?
11841 MR. AMOS: Well, I mean, there’s always going to be a conversation around the most immediate issue, and all politics is local, and sometimes -- I think sometimes the issue of internet infrastructure deployment is -- the importance of it is masked by the fact that it isn’t -- doesn’t seem so local all the time it seems like someone far away has to solve it. If it was a mayor who could wave a magic wand and had the power to do it then you could be certain that that would be -- you know, it would be even hotter.
11842 So I think it’s partly the nature of the issue that makes it, you know, maybe not seem as hot but -- I mean, we have -- as members of parliament we’re either blessed or cursed with the challenge of managing -- attempting to manage way too many demands and we have to prioritize in extreme ways. We’re prioritizing internet issues.
11843 And there are a lot of people within our caucus who feel the exact same way, and that’s, I think, one of the reasons why such significant funds were invested in the budget.
11844 COMMISSIONER MENZIES: But this will ---
11845 MR. GRAHAM: If I could just add a little bit to that. In my riding, the way we see it, the economic issues, the job issues, those are there, and the internet problem is exacerbated, and we could have a better time solving our economic issues, and our job retention issues, and our youth retention issues if the internet was there. But, you know, the youth get up and they leave because then we don’t have any future because no internet. It’s a loop.
11846 COMMISSIONER MENZIES: It is. We’ll dig around then and look for magic wands.
11847 Thank you.
11848 THE CHAIRPERSON: Well -- and you have a few years ahead of you in your current mandates representing your respective ridings and hopefully by the time those first mandates come to an end for yourselves that we’ll have done a good job in addressing most of the issues you’ve raised here today. And by “we” I don’t mean just us here at the CRTC.
11849 So I appreciate your participation and hopefully we’re getting you out here soon enough so you can do your other jobs across the river.
11850 Encore une fois, un gros merci pour avoir participés à nos audiences. C'est vraiment apprécié et je sais que Madame Dawson a des règlements par rapport au ministre mais vous pouvez encourager vos collègues de venir à nos audiences le plus souvent que possible. J’espère que votre expérience n’a pas été trop douloureuse.
11851 Merci beaucoup.
11852 MR. GRAHAM: Thank you very much for doing this.
11853 And then, for me, internet is a team sport so ---
11854 THE CHAIRPERSON: There you go.
11855 MR. GRAHAM: --- I’m working today.
11856 Thank you.
11857 LE PRÉSIDENT: Merci beaucoup. Bonne journée.
11858 Madame la secrétaire?
11859 THE SECRETARY: Thank you.
11860 I would ask if Mr. Frank Brolly is in the room.
11861 --- (NO RESPONSE)
11862 THE SECRETARY: I would now ask Mr. Benjamin LaHaise to come to the presentation table.
11863 THE CHAIRPERSON: So if you could introduce yourself for the transcript, and go ahead, we’re listening.
11864 MR. LaHAISE: All right.
11865 My name is Benjamin LaHaise, and as a resident of Lanark Highlands Township I’m pleased to appear before the CRTC today.
11866 Given my background in the technology industry, my experience working with and starting ISPs, as well as deploying my own wireless and fibre last mile infrastructure I feel I can share some insight into the issues that leave residents of my community unserved and underserviced.
11867 Lanark Highlands is a township located approximately 90 kilometres southwest of Ottawa. It is characterized by hilly terrain mixed with trees and farmland. It is the northwestern most township in Lanark County and it is predominantly rural.
11868 The concerns surrounding the provision of broadband internet access in this area are quite similar to those brought forward to the Commission by other municipalities. This is to say there are small pockets of served customers in the higher density areas of the county, like the Village of Lanark and the Town of Perth, while just a few kilometres away there are many residents who have no viable form of internet access.
11869 In my community the missing pieces are the gaps in the so-called last mile infrastructure. Thanks to the efforts of organizations like the Eastern Ontario Regional Network, or ERN, over the last few years and the deployment of ATM based services in the late 1990s and early 2000s Lanark County is relatively well-connected to the incumbents transport network.
11870 However, despite the work by ERN to improve the access market in eastern Ontario over the past decade, the coverage maps of the Connecting Canadians program still showed that in Lanark Highlands Township 40 percent of households -- that’s 868 out of 2,136 -- remain underserved.
11871 For example, from the CRTC’s only broadband internet service coverage map the hexagon on which I reside is shown as covered by fixed wireless and DSL. What the map does not illustrate are the distance limitations of DSL as well as the potentially excessive costs of tower installation for wireless, in some cases as much as $1,200 for a single household and the comparatively meager data caps over the fixed wireless provider.
11872 Given the technologically constraining nature of the terrain and tree coverage, it is essential for there to be an option for residents to obtain a wireline-based internet service. This must be the case since for so many residents there is no other option.
11873 If it is accepted that there are some users who can only be served by a wireline technology then it stands to reason that the Commission must make it economically viable for ISPs to deploy fibre in rural areas. Whether these services are provided by the incumbent or by a community-based group the deployment strategy must be economically efficient. That means it must be possible to reuse existing infrastructure wherever possible.
11874 Specifically, this necessitates the economic use of existing central offices, transport and support structures in rural areas. The Commission has taken action of this nature in the past to enable the existence of collects through the use of the incumbents copper local loops but similar rules do not exist for a residential fibre access over incumbents’ facilities, even in the case where facilities were built with subsidies and passed right by the doorsteps of the underserved.
11875 Furthermore, in the case of support structures in rural areas, the costs of permits needs to be both predictable and reasonable. Urban areas measure density in terms of customers per pole, while rural areas are measured in poles per customer. Given the significant benefits the incumbents have exploited over the years for their use of public rights of way, it seems only fair that they be obligated to remove numerous obstacles for other providers to serve rural households where they themselves have chosen not to.
11876 As mentioned in other interventions, there is a role for community-based organizations in helping to fill the service gaps across the country. Any actions that the Commission can take to assist these organizations will foster growth and improved access in communities across Canada, as no single entity can address the significant gaps in connectivity that exist, by itself.
11877 Thank you for your time today, and for allowing me to speak before the Commission. I am happy to answer any questions.
11878 THE CHAIRPERSON: Well, thank you very much for being here.
11879 Commissioner Vennard will start us off.
11880 COMMISSIONER VENNARD: Good morning. Thank you for coming before us today. I have a couple of questions for you here. We've heard about the problem many times about the small pockets of unserved people across our country, and it seems like your community might be -- fall into that group as well.
11881 You mention that 40 percent of your households, 868 out of 2,136, are underserved. Can you define "underserved" for me? Are you talking about less than 5-1?
11882 MR. LaHAISE: So in many cases, I mean, there are users who have no option other than satellite or fixed wireless.
11883 COMMISSIONER VENNARD: M'hm.
11884 MR. LaHAISE: There are some users who cannot get either. For example, if you have -- live on one side of the road and there's forest on the other side of the road that somebody else owns, you can't obligate them to cut down trees so you can get path to the satellite, to go and get satellite service.
11885 Similarly, the height of the trees and even the small valleys and sort of depressions in the area mean that you have to put extremely tall towers up. And once you start getting into a tower that's like, 80 feet tall or so up in the air, you're starting to spend, like, $1,200 to install a tower. If you're getting into those sorts of numbers, you're getting into the point where -- to costs where it's similar to the cost of deploying fibre.
11886 COMMISSIONER VENNARD: Okay. Yes, we've certainly heard that before too, that these pockets seem to be associated with sometimes very challenging geographical features to get around as well.
11887 What sort of steps or efforts have you taken, just briefly, to address this?
11888 MR. LaHAISE: I've sort of -- I've observed the EORN Process. Owing to certain business restrictions, I wasn’t able to participate in that at that time.
11889 What I have done is I have put up my own wireless. I have a bit of fibre up as well and I use that. And along the path that I've put up to service my own home, I've also serviced my neighbours along the way. And sort of, the restrictions to go and be able to go and expand beyond that, given my experience with wireless and such, it's very difficult to obtain or achieve a level of service that I feel comfortable putting more people on the network with.
11890 And for example, my main wireless backhaul link, which shoots across the valley to McDonald's Corners, it's about a 3-kilometre link, but I can only get about 30 megabits out of it in the winter, a little bit slower in the summer. And as a consequence, you can only put like, maybe five or six households onto that amount of bandwidth.
11891 That whole question of over-subscription is a huge challenge in rural areas. It's even a bigger challenge for the wireless networks because fundamentally, what happens is, the slowest radio connecting to a tower makes service slower for everyone on accessing that radio on that tower.
11892 And so from a backhaul point of view, in my initial written submission, for me to cross the last three kilometres to get back to the Bell central office in McDonald's Corners, Hydro 1 has quoted numbers of $70,000 to replace telephone poles. And when you look at that kind of business case, you simply cannot get a return on investment. You cannot get your customers to pay for it for 10 plus years or more.
11893 COMMISSIONER VENNARD: What do you see as a solution? Do you see funding of some kind? If it's very expensive, then somebody has to pay. Who do you think is responsible for servicing areas such as yours?
11894 MR. LaHAISE: So funding is part of the question. I mean, it's not the sole thing. One of the big challenges for individuals in smaller community groups, smaller ISPs, is that you don’t have access to funding that allows you amortize these costs over the long term.
11895 Companies like Bell, Hydro 1, and such are able to do things like issue bonds and such with like, 10, 20-year timeframes for repayment, and so programs that enable that, or at least allow us to work with those providers to address the issues with telephone poles and support structures -- because part of the problem is, out in our area, a lot of the -- 60 percent of the poles are owned by Bell, but a good chunk of the other -- the rest of the poles are owned by Hydro 1. And a lot of those poles were installed back in, like, the 1950s, 1980s, wherever.
11896 So they are infrastructure that is at the end of its life, and this is why, when you go and say, "I would like to go on and add an attachment to these poles," that they come back with, "Well, it doesn’t meet current standards."
11897 After the ice storm in 1998, the Province of Ontario also revised their standards for electrical networks, so again, poles that were installed before then, not all of them are up to date and so that whole adding a new attachment triggers replacement of those facilities.
11898 So if I could wave my regulatory wand, I would like to see that some of those costs, where reasonable, are borne by the hydroelectric and the incumbents who own these facilities.
11899 COMMISSIONER VENNARD: Okay, thank you for that bit of insight. Do you -- what do you see as an actual solution for this? Do you see this something that possibly the Eastern Ontario Regional Network could take a role in locating these areas such as yours -- and we've heard of many of them all across the country ---
11900 MR. LaHAISE: Yeah.
11901 COMMISSIONER VENNARD: --- and doing some sort of an extension through there, or what solution do you see?
11902 MR. LaHAISE: So there's sort of a couple of things in that question. I'll first sort of grasp onto the questions of figuring out where these problems are.
11903 COMMISSIONER VENNARD: Sure.
11904 MR. LaHAISE: Given that we have started or that the Commission has just put out the coverage map for Canada, and this map sort of aggregates a lot of data from a lot of sources, if I'm correct. From a rural resident point of view, the hexagon structure is not a good fit because fundamentally, what you, as an individual, if you want to go and look at this map, you want to know how does this map apply to me?
11905 COMMISSIONER VENNARD: M'hm.
11906 MR. LaHAISE: Who are the providers who are claiming that they can service me? And so on that question -- and it was also mentioned, I think, in some of the discussions yesterday about discoverability -- is as a rural resident, I think it would be very useful to be able to go in and punch in my address and see who claims they can provide service, who is responsible if there is no service at my address, who is the entity that's responsible for trying to address that gap?
11907 And so certainly in the case of eastern Ontario, EORN has already done a lot of work in this area and is in a position where they are able to go and tackle that, to a degree.
11908 COMMISSIONER VENNARD: M'hm.
11909 MR. LaHAISE: That said, the other -- the incumbents, other ISPs, other providers in the area, should be able to contribute their own information into the map and additionally, for customers themselves, they should be able to raise the question -- raise issues where the claimed coverage doesn’t actually apply.
11910 COMMISSIONER VENNARD: Yeah.
11911 MR. LaHAISE: So that's sort of on the discoverability and mapping side of things.
11912 As for EORN, I think they're in a good position to be able to start to help with the process of filling in the gaps.
11913 I mean, probably from their point of view the biggest challenge is funding.
11914 COMMISSIONER VENNARD: Sure.
11915 MR. LaHAISE: Five hundred (500) million sounds like a lot of money to me as an individual. But if I look at the scope of the problem, having listened to the hearings about the challenges that they have up north, the challenges they have all over the country, it’s not going to go very far.
11916 So in order to make better use of that money we have to not spend money on the things we don’t have to. So if we can get help, like, coming back to the answer for the previous question. If we can get help from the incumbents, if we can get help from the municipalities, from the hydroelectric companies, from everybody who has sort of a vested interest in the existing infrastructure, and the local organizations, the municipalities so that they’re able to drive and coordinate the construction of this infrastructure I think that would help.
11917 COMMISSIONER VENNARD: Okay, thank you for that.
11918 What were your expectations when you moved out to your -- to where you are? And here I’m -- where I want to go with this is just kind of a few comments maybe on what your expectations were and whether or not you actually expected that. We heard from a lady just off Vancouver Island that they moved into their house knowing that there was not going to be access. And so if you could just comment on that.
11919 And then the second part would be with respect to small and medium-sized businesses that are in your area, if this is having an impact on them in terms of them participating in the digital economy as well.
11920 MR. LaHAISE: I actually grew up in the area, so I lived in Toronto for a number of years. And sort of when I moved back to the area I knew what the situation was.
11921 COMMISSIONER VENNARD: M’hm.
11922 MR. LaHAISE: And I mean that’s why I addressed setting up my own infrastructure. I had initial deployed wireless back in 2006 and it was totally wireless to get from the DSL service to our household. And that didn’t work terribly well so hence the upgrades in recent years.
11923 But if I go back to what was it like back in the eighties and the early nineties and such, our entire area actually had a very lively bulletin board system in the community. So it used to be we had -- I think at the peak there were about six or seven public BBS’s that were set up, and people would go and use dial-up modems and connect to them. They had message boards they were able -- you know, it was part of FidoNet.
11924 I was able to go and send email before we had internet email through these different dial-up networks. We even had the people who ran these bulletin board systems got together and then they all pooled -- because long-distance was very expensive back then so they would pool up their resources together.
11925 Systems were set up to make automated phone calls at four o’clock in the morning, pick up our email, and our message groups, and everything from systems in Ottawa and bring those back into the community.
11926 And so the fact that we had universal access for telephone systems already back then it meant that our communities were on an equal footing with those of the larger cities and regional hubs in the rest of the country.
11927 And it was only with sort of the deployment of broadband, as it started ramping up at the end of the nineties and early 2000, that the people -- those of us who are just a bit further, a little bit too far away from the central office began to have that inequality.
11928 COMMISSIONER VENNARD: Yeah. It sounds like it had a bit of a paradoxical effect there.
11929 MR. LaHAISE: Yeah.
11930 COMMISSIONER VENNARD: Where it should be connecting you and in fact ---
11931 MR. LaHAISE: Yeah, we were connected and then suddenly so many of us ---
11932 COMMISSIONER VENNARD: You’re less connected.
11933 MR. LaHAISE: --- weren’t.
11934 COMMISSIONER VENNARD: Yeah.
11935 MR. LaHAISE: Yeah.
11936 COMMISSIONER VENNARD: What sort of impact is it having on the economy in your area, the people that are operating small businesses, if you have bread and breakfasts there or other home-based businesses?
11937 MR. LaHAISE: It can be a challenge. I mean, most of those businesses that are in the rural areas have purchased fixed-wireless service where needed. Some of them purchased satellite. I mean, the bigger challenge though is, like the previous presenters mentioned, you have a lot of sort of brain drain where young people and such, even people who have moved into the rural community, they thought they could do it and then they learn that they can’t live with the quality of internet that they have, that their kids are demanding so much use of bandwidth because the kids want to play video games with their friends, they want to chat, watch videos. So there is an impact but I’m not qualified to say how much of an impact that is.
11938 COMMISSIONER VENNARD: Okay.
11939 MR. LaHAISE: But I certainly do see evidence of it being an -- impacting things.
11940 COMMISSIONER VENNARD: Okay, well, those are all of my questions. Thank you very much.
11941 THE CHAIRPERSON: Commissioner Molnar?
11942 COMMISSIONER MOLNAR: Thank you. I am interested; you say that you’ve started ISPs and almost been forced into creating an -- working as an ISP within your own area to get the service levels that you require.
11943 And you make a point of speaking of access to what in regulatory terms we would call “unbundled network components” that the incumbents are required to make available.
11944 We have heard, and you’ve noted, that there’s community groups who have come forward and have become ISPs. It’s a new role for them, it’s a gap. The incumbents have other places they choose to spend their money now, and so we have new people entering the world of ISPs.
11945 And I just wonder, to what extent were you able to determine what is available, you know, what unbundling has occurred? How easy was it for you to understand what you could expect to access from the incumbent’s networks? You mentioned central offices, transport, support structures. Was it easy for you to understand what you could anticipate you could or could not access through the existing networks?
11946 MR. LaHAISE: Yes. Strange person that I am, I have actually read the Bell and Bell Alliance tariffs, almost all of them. And so given what I know about those tariffs and so given what I know about those tariffs and what I know from how they are actually implemented in the real world, Bell is very good at creating tariffs that leave certain things undefined. And so there are tariffs for some of these things.
11947 For example, if you want to get business internet service from Bell over fibre, because of the obligations they’ve made or promised to your end and as well as via the tariffs for certain services, you can purchase business-level services. Like, you can purchase 100-megabit or gigabit internet access from them. But the problem is, only at business rates and so you’re looking at hundreds to low thousands a month for fibre access.
11948 And so if you take a look, like, in one of the unserved areas within Lanark Highlands, they have -- Bell has a remote that provides telephone service. That remote is fed via fibre from their central office in McDonalds Corners. That remote, if you look at it in terms of how many subscribers are within range if you installed DSL and that, it’s a small number. It’s only order of about maybe 30 houses, or reasonably close.
11949 And so if you look at the feasibility then of purchasing the currently available fibre access and putting up your own (inaudible) equipment there to go and provide service, the unbundled local loops, you can’t get access to them in remotes; that’s one challenge.
11950 And you can’t put in, like, a gigabit feed and pay for that on the amount that’s reasonable for 30 subscribers to pay. So yes, there are services but they don’t fit economically into what the reality is in rural areas.
11951 COMMISSIONER MOLNAR: Okay. Thank you and I’m not sure if everyone -- every one of the community groups or other ISPs are going to read the full tariff as you have. But that was more my question. Like we have spoke of discoverability to understand where facilities exist, and also perhaps a little bit on the literacy side, if you will, to say for those who are moving into the work of closing these gaps, do they understand well what obligations incumbents have to share facilities and networks and so on so. In your case, you believe you --
11952 LAHAISE: So --
11953 COMMISSIONER MOLNAR: -- have the information you needed?
11954 MR. LaHAISE: -- so one of the aspects of one of the ISPs that a friend of mine owns, and I do a lot of work with him, focuses on is helping people to understand what their actual needs are when it comes to technology, what options are actually available.
11955 So you take somebody like myself, I can drive down a road and you look at the telephone poles and you can see, oh, Bell has their fibre on this pole. They have copper phone lines here. They’re this far from their central office. They have a remote here and whatnot along the way.
11956 And the thing is, information like this is very hard to discover by yourself. I mean, you can do it if you go out into the field and drive around and have a look. That costs a lot of time and money. In other aspects you can go and use Google Earth, for example, and go and get some ideas of what facilities are out there.
11957 But the challenge of actually going and knowing what information to look for and knowing how to do it, I think EORN can develop some of that facilities. I mean, they already have. Their level of technical competence now compared to when -- what the project was started back in, what, 2008 or -- so 8 plus years ago, they’ve gotten better, but I think there’s still room to grow and contribute.
11958 And I think there needs to be some coming together of the groups across the country that want to go and do what EORN has done and learn lessons that people like myself can help them to understand and then go and train people to go out and teach them how to roll out the same model in their own municipalities. I think that that’s one possible model.
11959 And if you talk to municipalities, if the business case is there and nobody else is willing to do it, they do certainly have some facilities in terms of financing.
11960 So I think it’s a matter of enabling that and teaching the municipalities how they can fit into this process and drive the needs of their own local area so.
11961 COMMISSIONER MOLNAR: Thank you.
11962 THE CHAIRPERSON: I believe -- sorry, those are our questions. But I do want to thank you for having participated. The richness of the CRTC’s open process is that we get very diverse and insightful voices from quarters we don’t expect. So thank you very much for your participation.
11963 MR. LaHAISE: Thank you very much.
11964 THE CHAIRPERSON: I think we’ll take a mid-morning break at this point because the next panel is pretty big and we’ll let them get organized. So we’re adjourned until 11:10. Donc, on ajournement jusqu’a 11h10. Merci.
--- Upon recessing at 10:55 a.m.
--- Upon resuming at 11:10 a.m.
11965 THE CHAIRPERSON: À l'ordre, s'il vous plait. Order, please. Madame la secrétaire.
11966 THE SECRETARY: We will now hear the presentation of Rogers Communications. Please introduce yourself and your colleagues and you have 15 minutes.
11967 MR. WATT: Thank you, Mr. Chairman and Commissioners. My name is David Watt, Senior Vice President, Regulatory.
11968 With me today to my left is Pam Dinsmore, Vice-President Regulatory Cable and Broadband; to Pam’s left is Howard Slawner, Vice-President Regulatory Telecom; and to Howard’s left is Deborah Evans, Director of Consumer Policy and Associate Chief Privacy Officer.
11969 To my right is Suzanne Blackwell, President, Giganomics Consulting; and to Suzanne’s right is Scott Wallsten, Senior Fellow and Vice-President for Research with the Technology Policy Institute, and Senior Fellow with the Georgetown University Center for Business and Public Policy.
11970 In the back row starting from my right is Barry Choi, Director Regulatory Economics and beside him is Simon-Pierre Olivier, Director Regulatory.
11971 We have followed the hearing closely and heard the panel on Monday. We are going to speak to the geographic, affordability and accessibility gaps that have been flagged. But first we want to share some of our initial thoughts on your call for input on a National Broadband Strategy.
11972 Having reviewed the reports of the National Broadband Task Force and Telecom Policy Review Panel, a National Broadband Strategy should be framed by key principles and we list these in Appendix 1 to our remarks. And because a strategy needs leadership to get results, we propose a multi-stakeholder advisory council to oversee the strategy’s implementation. The council would bring together the many levels of government, industry, consumers and non-governmental organizations.
11973 The record of this proceeding has much to contribute on how to fulfill our proposed principles. We will expand on these aspects as we turn to our specific proposals in this proceeding.
11974 Rogers agrees that the definition of basic telecom service should include broadband internet.
11975 Rogers recommends that the definition of basic telecom service should include a broadband internet service that provides a connection of no less than five megabits per second download and one megabit per second upload.
11976 A broadband connection of five and one is sufficient to support the basic telecommunications requirements of Canadians. The most popular types of online activities, encompassing everything from emailing to watching high-def video, can be enjoyed using a basic five and one connection.
11977 Voice over Internet Protocol, or VoIP, requires only a fraction of this bandwidth. This is illustrated by CRTC Exhibit 1. The same bandwidth requirements are true for VRS, which performs well at less than one megabit.
11978 Broadband internet service will continue to evolve. And in keeping with that evolution, the Commission should establish a more advanced level of service as a prospective target. Rogers proposes 25 megabits download and 1 megabit upload as a target for all Canadians by 2020. While many Canadians can already receive this higher level of service, extending it to all regions will take time.
11979 Basic telecom services redefined to include broadband internet are broadly available in Canada, yet there are pockets of unserved and underserved households that remain.
11980 The challenges facing the North and truly remote places are well known. Rogers also acknowledges that there are locations near larger centres currently served by Rogers which are underserved at this time. We have simply found these locations to be uneconomic for us to serve at this time.
11981 Many of these unserved areas may soon become served, given the number of recent announcements of government-funded projects. We note that Connecting Canadians is in the early stage of deployment.
11982 In the recent federal budget $500 million has been allocated to improving access to high quality broadband internet in rural and remote communities over the next 5 years. And these funds will be matched by the private sector.
11983 We have heard other provincial and regional governments describe their own initiatives. One of the key challenges is to coordinate these efforts in ways that maximize the benefits and minimize duplication.
11984 New satellite-based solutions also promise to greatly expand the capacity and lower the price of advanced broadband internet service across Canada. The threat of new satellite providers is also pushing existing providers to up their game.
11985 To summarize, Canada’s achievement in broadband coverage is the result of competitive market forces encouraged by past CRTC decisions and government directives. Increased competition has driven private sector investment in wireline, wireless and satellite technologies.
11986 Rogers supports initiatives that will continue to foster innovation, investment, and market forces to the greatest extent possible. Canada’s National Broadband Strategy should continue to be based on a market-driven approach that has seen the investment of tens of billions of dollars of private investment. This approach has been very successful.
11987 Rogers does not support creating new industry-funded subsidies for extending broadband internet service without knowing whether, or how much, subsidies may be needed. This, as the Chairman suggested, would be like “pouring money into sand”. Instead, any subsidy should be narrowly targeted to where gaps may persist absent funding. The source of the subsidy should continue to be government. However, if the Commission chooses to create another fund, it should do so by re-directing the existing subsidy for local voice service in high-cost areas.
11988 Properly updated cost studies will show the subsidy is no longer needed for local voice service. Any obligation to serve should also be applied only in subsidy-eligible areas, consistent with the Commission’s past practice of linking the obligation to where it provides financial support.
11989 Other opportunities exist to help industry do more in closing the gaps such as improvements in accelerated capital cost allowance and the terms of access to support structures and rights of way. We also see the CRTC providing information on where there are geographic gaps through enhanced mapping exercises in conjunction with ISED.
11990 The Federation of Canadian Municipalities can play a role in having its members input detailed availability data, identifying pockets that can be as small as a street in a 25 square kilometer “served” hexagon. These outliers are hard to find. This work may not sound exciting but it is required to effectively address gaps.
11992 MS. DINSMORE: Availability is only useful if the service is adopted. Adoption has many dimensions, of which affordability has received a lot of attention.
11993 Canadians receive extraordinary value from a single broadband connection that they can use to engage in multiple forms of communication. The increased functionality should be the point of reference for assessing affordability. Separate payments for voice and television service may no longer need to be incurred.
11994 Canadians have benefitted from more choice and greater value across a range of broadband service tiers. Rogers’ 5 and 1 megabit broadband service costs $33 a month including the modem, equal to only 2 percent of the average monthly income of a low-income household. Bell Canada and many other ISPs have similarly affordably-priced basic broadband service tiers.
11995 Competitive market forces will continue to protect the interests of consumers, and it is not necessary to take the extraordinary step of regulating basic broadband internet service prices or packages.
11996 However, there is an identifiable gap, or digital divide, for low-income households when it comes to broadband internet. Rogers is well aware that low-income households are less likely to subscribe to broadband internet service. Social assistance programs operate under the auspices of provincial governments who are experts in this area. These experts should retain lead responsibility for this type of support.
11997 Rogers’ Connected for Success is an affordability support that we have initiated as part of our Corporate Social Responsibility activities, at below cost. Our Connected for Success program is designed to reduce the barriers to subscribing. The program allows eligible residents in community housing organizations to subscribe to broadband internet service for $9.99 per month, with no installation fee or additional charges, and no credit checks. The program provides access to Rogers 10 and 1 megabit internet service.
11998 Connected for Success was launched three years ago in partnership with the Toronto Community Housing Corporation. Rogers recently announced that we are expanding this program to other community housing organizations throughout our serving area.
11999 Connected for Success has already improved the adoption of internet service, with around 9,000 active participants. However, this represents only 17 percent of eligible residents in Toronto Community Housing, many of whom were already subscribing to Rogers’ internet service.
12000 Our experience with the Connected for Success program confirms through a real-life experiment what many surveys have found; the price of broadband internet service is not the only barrier to adoption for low-income households.
12001 We do not believe that we know enough to endorse any proposal for a national industry-funded subsidy program targeted to low-income households. Gaps in digital literacy and skills are also substantial barriers to adoption. In the near term, the Commission should allow industry to try a variety of approaches in regard to affordability under their corporate social responsibility initiatives. Encourage and have experimentation.
12002 We will be pleased to share our learnings from our Connected for Success program. Other service providers will have their own projects which could contribute other insights. The advisory council could also contribute to learning more about adoption by sponsoring a new Canadian Internet User Survey to be conducted by Statistics Canada.
12004 MS. EVANS: In the area of accessibility, Rogers is systematically improving our services and processes for this important segment of the population. We take this issue seriously. Rogers is meeting with representatives of advocacy groups. We have a data-only wireless flex plan. We have introduced a range of handsets with accessibility functions. We have introduced a website specifically for accessibility. We have dedicated customer service representatives to work with these customers to meet their needs. And we take steps to ensure customers with accessibility requirements are automatically directed to these specifically trained CSRs to respond to their inquiries.
12006 MR. WALLSTEN: Canada has performed well compared to the United States in terms of the availability and adoption of telephone and broadband internet services. This performance is impressive considering Canada has spent only a fraction of what the U.S. spends on promoting universal service availability and affordability.
12007 The U.S. has spent $130 billion on universal service subsidy programs, and the Federal Communications Commission recently announced plans to spend even more. Yet, the evidence from several studies is that the programs are costly, inefficient and inequitable.
12008 The U.S. programs have had very little impact on service adoption. If the billions of dollars in subsidies do not cause people to subscribe to a service they would not have otherwise, then the programs become inefficient substitutes for general welfare programs.
12009 Canada may want to learn from this experience, and not simply copy the flawed universal service programs of the U.S., as proposed by AAC.
12010 AAC’s Exhibit 2 suggests that its most expensive funding proposal, at $710 million a year, would represent an additional $2.09 per month per household for Canadians. But that would recover only half of their funding request, as shown in Appendix 2 attached to these remarks. Recovering 100 percent would require $4.44 per month per household.
12011 In my report, I provided a number of recommendations for the components of a universal service program should the Commission decide to create one.
12012 First, a universal service program should be cost-effective to ensure the biggest bang for the buck.
12013 Second, it should include evaluation criteria at the outset. This requires setting outcome measures. So a program intended to increase low-income adoption must cause non-connected low-income people to subscribe, not simply lower the price for those who already subscribe.
12014 Third, consider the full cost of a universal service program, including the economic cost of raising revenues from industry levies that ultimately are borne by consumers.
12015 Fourth, because we do not know how to encourage the unconnected to subscribe, any program should first design, run, and evaluate pilot programs before committing to a single, nation-wide program.
12017 MR. WATT: The Commission can play a vital leadership role by providing critical input to, and promoting, a National Broadband Strategy. Such a strategy would take into account the result of this proceeding on the definition of basic service that includes broadband and future targets for broadband service, as well as information collected about current and persistent gaps that may remain.
12018 At the same time, the Commission should do its part by ensuring its regulations in the near term strike a balance between pursuing the social benefits of promoting access to high quality and affordable basic telecom service, and the economic benefits of fostering investment and innovation in a competitive market.
12019 Thank you for your time, and we are ready to answer any questions you may have.
12020 LE PRÉSIDENT: Merci beaucoup, mesdames et messieurs. Je vous mets entre les mains du vice-président des télécommunications, Monsieur Menzies.
12021 COMMISSIONER MENZIES: Thank you. Good morning. What I propose is maybe we'll start with what's newest and most strategic, and then probably gradually work down from there and get ever more granular.
12022 So National Broadband Strategy, you’ve outlined these principles. Can you maybe unpack for us a little bit what you think that would look like? And I'll start with -- so you've indicated, I think, that we would lead it or where do you see leadership coming from or is it a -- anyway, what's the cap? Where do we start?
12023 MR. WATT: We think that the advisory council needs to be initiated to the leadership jointly of the CRTC and ISED. The model behind our approach here is the National Broadband Task Force, before that, even the Information Highway Task Force. Those were activities that were jointly led, initiated by the CRTC and Industry Canada, that's, as I said, was named at that time.
12024 We think that you and the government department, as the -- effectively, the representatives, broadly speaking, of all the citizens of Canada, are the two entities that should play the initiating leadership role. You have the authority to encourage people to obviously actively participate; indeed, to require them to participate.
12025 Then both those previous exercises which did excellent work -- and we did hear the Chairman this morning -- in those cases, CEOs of major corporations in this industry were the lead representatives now. They had a cadre of people working on their behalf in the various subgroups but the membership would also obviously include representatives from PIAC and the AAC.
12026 We believe since this advisory council, we would be addressing affordability issues as well, that there would be provincial government representation. We think there should be municipal government representation, because we see a major role in this exercise for them, think without this type of joint exercise, we're not certain the problem is going to be addressed in the best manner possible, because you will have a piecemeal approach.
12027 We assume -- believe one of the difficulties you face in this very hearing is, we know that for Connecting Canadians, we know where that gap is being closed. Those locations have been identified. They're not all closed yet. They will not close some of them until into 2017.
12028 For the recently announced $500 million, that program hasn’t been defined. So say, for example, you were to adopt Bell Canada's proposal, our proposal today, to take funds from the voice contribution fund, which, as we said in our opening remarks, we don’t believe are needed there, first, because I don’t think the cost exceed the revenues, but secondly, because when you provide broadband service, we think you would also be providing that voice functionality at the same time.
12029 But if you were to devote that money to closing the geographic gap, you -- the two -- the federal government program, your program, could easily be working at cross-purposes.
12030 These things do need to be coordinated. Both activities need to know where the gaps are, and as we said in our opening remarks, that's not easy and it's not easy as you've heard earlier here in this proceeding. The people from, I believe, Thetis Island, many are well-served, but a street isn't. It's hard to -- as carriers, it's hard for us to know where that street is.
12031 And so a considerable amount of work needs to be done, and it shouldn't be duplicated, and so that, in broad strokes, and I'll turn the mike back over to you. I've spoken for quite some time now.
12032 COMMSSIONER MENZIES: That's okay, because we're dealing with concepts, so we almost have to speak conceptually. But if such a framework or body were to be established, given how quickly things are changing, we should probably start pretty soon on something like that. So when would you -- have you -- I'll ask two questions at once here. So have you consulted with others or even casually as opposed to formally, and when would you see this getting underway?
12033 MR. WATT: In response to the first question, other than within our company, no, we have not consulted with others outside. We -- oh, possibly we should have thought of this concept before ---
12034 COMMSSIONER MENZIES: No, that's okay. I just -- eventually ---
12035 MR. WATT: --- but we really turned ---
12036 COMMSSIONER MENZIES: I know. This is ---
12037 MR. WATT: --- our minds to it (inaudible).
12038 COMMSSIONER MENZIES: No, this is really quick. I just wanted to know if you ---
12039 MR. WATT: M'hm.
12040 COMMSSIONER MENZIES: --- had the chance because ---
12041 MR. WATT: No.
12042 COMMSSIONER MENZIES: Let me ask it this way. Do you think others would be open to the idea? Would it be a tough sell or an easy sell?
12043 MR. WATT: Well ---
12044 COMMSSIONER MENZIES: Just an opinion of ---
12045 MR. WATT: --- nothing is easy. I do not think it would be a tough sell. It's -- it'll be a tough coordination. It will be -- it's something that needs to be done. I think everybody recognizes that something of this nature needs to be done to address this problem properly.
12046 We don’t want to undersell the complexity and magnitude of such a council because we know, having participated in the previous ones that there was a lot of infrastructure to a council; there's a lot of participation, a lot of resources involved.
12047 But when we're talking about investing billions of dollars in a directed manner, we think that expenditure of those sums warrants such a concentrated effort of this nature, in terms of an advisory council that would make sure that things are being done in a coordinated fashion to a commonly-agreed goal.
12048 COMMSSIONER MENZIES: And in terms of the stakeholders who would be part of this, the Stakeholder Advisory Council, just to confirm that you would foresee that to be more or less the general shape of what you might see in an average CRTC process, in terms of the participants, consumer groups, and as well as industry experts and other experts that -- if we were to lead at our discretion, relatively?
12049 MR. WATT: Well, we did see -- and I know actually there have -- there has been provincial participation in this proceeding.
12050 COMMSSIONER MENZIES: Yes, there has.
12051 MR. WATT: Actually, there used to be more in CRTC proceedings, but it's good there was provincial participation here. But we would see actual members of the bureaucracy of the civil service of the provincial bodies involved, and the municipal bodies. I know they appear sometimes at hearings, but I think the answer generally is yes, the people that appeared here.
12052 I'm trying to think of -- you would have First Nations representation as well. They appear at some proceedings, others they don’t. So it is a broad comprehensive composition to this committee.
12053 COMMSSIONER MENZIES: Okay, thank you. We may revisit some of these aspects later, or feel free to see how they might fit in and -- when we're dealing with other issues.
12054 The next place I'd like to go is your views on affordability. Let's start, before we get into the poverty issue, just with the general affordability of internet. Now, you mentioned here that you have a $33 package that's available. Is that in a bundle or stand-alone?
12055 MR. WATT: That is a stand-alone offer.
12056 COMMSSIONER MENZIES: That's a stand-alone, okay. Do you think that's -- I think most people would look at that as relatively -- as accessible and affordable, as you mentioned a two percent there. But we've also heard here -- we heard last week, particularly of the ACORN panel in Halifax, that they didn’t seem to be able to find a basic internet package available for anything less than $70 or $80, which is a bit of a shift. Well, let me say $65, but you get into HST and that sort of stuff. It was into the $75-$80 range. And some discussion about TELUS's packages on the west coast where I did see they had a $30 package advertised on their website, but when they spoke of it the other day they were more in the range of $60.
12057 So would you agree that the price that you were mentioning is more of a basic level or is there technologically can you think of any reason why other companies shouldn’t be able to offer an entry level internet package at the same price the $33 you’ve mentioned?
12058 MR. WATT: Well we don’t obviously serve Halifax through our wired internet service. Our $33 offer is economic for us. It’s a compensatory offer. That’s why I feel comfortable making it broadly available. It is a commercial offer.
12059 We -- for a while we did not actually have that speed service at that price point. The way we had evolved we -- most companies we started, you know, 1.5 down and then 3.
12060 And we had a 3 megabits per second offer in the market we then up-speeded it; everybody got 6. Then we up-speeded them to 10, then we up-speeded them still further and the price increased as we up-speeded them.
12061 We found that we were losing a segment of the market and our subscriber growth was not what we wanted it to be. So we introduced this service to aggressively address that market.
12062 We promoted -- we promoted where we think it is useful. You’ll ride the Toronto Subway you will see signs for this service, because we think that that is a good place to advertise that type of service.
12063 As for others I really can’t -- I shouldn’t speak for their economics, but for us this service is economic and works for us.
12064 COMMISSIONER MENZIES: Okay, thanks. And maybe you could describe the demographic that that’s targeted at?
12065 MR. WATT: Well it’s -- it is targeted -- it’s really targeted to two demographics. It’s targeted at the lower income demographic and it’s targeted at the light user demographic as well, because many people have a single computer and they can obviously watch everything they want at 5 in 1 and so that’s quite sufficient for them.
12066 They don’t want to pay a higher price to get more speed.
12067 COMMISSIONER MENZIES: Okay. Thanks.
12068 MR. WATT: They maybe -- they can well afford to do that but do not want it.
12069 COMMISSIONER MENZIES: No, but it’s interesting to learn about and the fact that it’s, you know, it’s economic for you in terms of that, because it does give us some perspective on other issues.
12070 So your Connected program, can you tell us about the genesis of that and -- I mean I’m aware of the fact that a couple weeks ago you announced you were expanding it, as I mentioned, and that’s good to see too.
12071 But tell me why it started, when it started, just so I understand for the next questions what its background is.
12072 MS. DINSMORE: Sure. Thank you, Commissioner Menzies, and I’m happy to address that, the background of the program.
12073 Under our former CEO, Rogers had a program under our corporate social responsibility banner all about youth and education.
12074 And we were aligned with Boys and Girls clubs and we had after school programs and we got very familiar with some of the shortcomings that these youth faced in terms of access to broadband.
12075 We also were mindful of the Internet Essentials program that had been launched by Comcast in the U.S., as a result of the Comcast NBC merger.
12076 And looking at that we knew that we couldn’t offer the exact same kind of program as them, because in the states there was a school lunch program that effectively acts as the “means test” and in Canada we don’t have a school lunch program.
12077 Our major accounts folks were -- provide service in Toronto Community Housing in Toronto, as well as other community housing developments or organisations.
12078 So we had contacts at TCH and it looked like to us that was a good place to start because TCH offers their tenants the opportunity for rent geared to income, which effectively means that if you can’t, that you only pay 30 percent of your income in rent and the rest we provide -- the subsidy is provided by the government to the housing -- the not-profit housing organisation and that helps subsidize the rent of the tenants in the units.
12079 So because the means test is already done there, we looked at that as being a good way for us to get in and try this program.
12080 So we did our work through 2012 into ‘13 and launched in our very first building with Toronto Community Housing in August of 2013.
12081 Now Toronto Community Housing has 53,000 units that are rent geared to income. Ninety-two (92) percent of the units are rent geared to income, so 8 percent of the units the tenants in the units would not qualify for the program, by 92 percent did, so we thought that was a pretty good start.
12082 And we thought that we would use this as a test bed, a place to learn and following that we would see whether it was the kind of program that could be rolled out more broadly.
12083 As it happened we were able to rollout more broadly prior to the start of the hearing, which as you would understand, obviously there’s a lot of coordination and work that goes on behind that.
12084 It was really a happy coincidence that these two things dovetailed at the time they did and as you will find out, we will be rolling the program out to both New Brunswick and Newfoundland in the near term.
12085 We have partners in Newfoundland and New Brunswick. The largest public housing operations there are actually run by the governments of each, so those are our partners.
12086 And we otherwise have signed up, I think, 21 partners in Ontario now, outside Toronto Community Housing, since we have done our announcement on the rollout.
12087 So we’re very pleased with it. We seem to be getting a lot of enthusiasm and we will definitely see our numbers grow, but obviously the pool of RGIs, rent geared to income units, will increase from 53,000 to 150,000.
12088 So there’s a much bigger pool now for us to offer the service to.
12089 COMMISSIONER MENZIES: So nothing hints more directly at the fact -- at the complexity of this issue then the take rate that you’ve indicated for that program, which I think it 17 percent -- 16-17 percent.
12090 What can we learn from that or what have -- have you been able to discover? I expect folks have drilled into that a little bit to find out what’s going on there.
12091 MS. DINSMORE: Yes, the 17 percent number if the number that represents the number of units in that 53,000 -- I mean 53,000 number that have actually taken the service. So that’s about 9,000 on 53,000.
12092 This program is a program targeted at affordability, not so much adoption. So for us we know we have that 17,000 number, because we know that out of 17,000 unit number. We know otherwise that we are penetrated at 30 percent in Toronto Community Housing.
12093 Obviously that leaves 70 percent who are neither taking Rogers’ commercial offers or our low income $10 offer.
12094 As to the remainder, we have competitors in those buildings. They may be wholesalers, they may be facilities based, but we do have competitors and one could posit potentially that they have half the building otherwise.
12095 So in terms of reasons why we have not got greater adoption, much as we don’t have the answer for you I can certainly throw it to Scott who can talk to you about adoption at large and what are the factors there.
12096 We know from the IPSOS Reid Survey that we filed with the Commission of the 250 people that respond to that survey only a third of them cited cost as the barrier and the other barriers were relevance, usability. So there are other reasons why people choose not to adopt.
12097 But the 17,000, just to put it in perspective, doesn’t mean that the rest of the building or the rest of the housing organisation that those tenants are not -- don’t have a broadband connection.
12098 COMMISSIONER MENZIES: Sure. There’s no assumption on my part that it goes to the effected ---
12099 MS. DINSMORE: Yeah.
12100 COMMISSIONER MENZIES: Effectiveness of the program. I think it goes more to the complexity of the issue, and -- that’s my instinct anyway. You can dispossess me of it.
12101 But just a -- and we can get into that in a second, but just to be clear, the competitors in the building are they offering similar rates or are people choosing to pay higher rates, so far as you know?
12102 MS. DINSMORE: To the best of our knowledge ---
12103 COMMISSIONER MENZIES: Nobody else is offering it for $10, in other words?
12104 MS. DINSMORE: To the best of our knowledge, no one else is offering it at $10.
12105 COMMISSIONER MENZIES: And the other quick one is, to what extent is -- what are the -- are there programs available or where do people get the equipment to ---
12106 MS. DINSMORE: A good question.
12107 COMMISSIONER MENZIES: --- access the internet?
12108 MS. DINSMORE: When the program began we were in partnership with Compugen and there was a program whereby refurbished computers were made available at $150 per computer. We no longer are in that partnership, for various reasons. But we do identify for all of our partners places in each province in a city that we’re in where they can get refurbished computers, and the price of those range from $150 to $250.
12109 So, for example, in both Newfoundland and St. John’s we have identified where new tenants on the program can go and purchase those computers, and the price would have been similar to what we were getting with Compugen.
12110 DR. WALLSTEN: So it’s interesting, I think, the response that Rogers has had in its Connected for Success program is very similar to that that the FCC found in these pilots that ran for its lifeline reforms, our low income support program.
12111 It -- before doing these reforms, which recently passed, they worked with 14 ISPs to do experiments to see how low income people -- low income people who are not connected would subscribe to different types of plans, and each company involved very different things, you know, they would have different prices, they would include discounts on different types of equipment, they would include digital literacy and different options around that, and some of these were, you know, randomly controlled trials. These were really carefully thought out both by the FCC and the companies involved.
12112 And, remarkably, across -- in 12 of the 14 companies -- the two exceptions were in Puerto Rico, which is a little different -- they got only a tiny fraction of the sign-ups they expected. On average they got 10 percent of the number of subscribers that they had expected. They expected in the thousands and they got in the hundreds. And this was a puzzle across the experiments.
12113 I mean, it’s certainly true that the cheaper plans got more subscribers, as one would expect, and that’s consistent with the surveys and everything. But also consistent with the surveys in this experience is that we really don’t know how all these factors work together, because this was not the problem that they expected to see. And it’s still kind of a puzzle why this result happened.
12114 And I’m -- I’ve found myself perplexed that we got this result. And the FCC unfortunately sort of didn’t know what to do with it. But we see that in the surveys where people sort of list a host of reasons why they don’t subscribe in this percentage of eligible subscribers who connected -- who subscribed to Connect for Success and in the FCC’s pilots.
12115 So it’s a remarkably consistent result and we just don’t know why.
12116 COMMISSIONER MENZIES: Thank you.
12117 When it comes to this issue of poverty, in terms of that, you’ve indicated here, but I just want to confirm, do you think that’s an appropriate issue for the CRTC to be addressing on its own, or do you see it being an issue that could be addressed within the Advisory Council group?
12118 MR. WATT: We do not see it as an issue that the CRTC should address alone. We do see it as an issue that should be addressed in the Advisory Council.
12119 COMMISSIONER MENZIES: Thank you.
12120 MR. WATT: If I could just add, speaking about the Advisory Council again, it was pointed out to me that I actually -- I referenced the Information Highway Report and the National Broadband Task Force Report but the other document that we drew on was the Telecom Policy Review Panel Report. I believe it came out -- it was initiated 2005-2007. And it also had an extensive discussion and a recommendation to this affect in it.
12121 COMMISSIONER MENZIES: Thank you.
12122 Let’s touch next on service availability challenges that -- I mean, you touched on it in your oral remarks -- in areas that are really comparatively non-remote. I tend to refer to them as semi-rural and that sort of stuff. And you said it -- you indicated that it wasn’t very exciting work, but I think it’s an exciting challenge anyway, but that says more to how my personality has developed in this role than anything else.
12123 You don’t want to subsidize that, right, that issue -- that’s my take of your interventions. So -- but you do indicate an understanding that subsidy may be necessary in high cost serving areas, right. And what I guess I’m trying to get my head around is these areas, these fill-in-the-gap areas, they must be non-economic in some way otherwise they would have been served, even though -- or are they just turns that people don’t take that just get missed?
12124 MR. WATT: Well, I have listened to a lot of the discussion and the -- for example, the location outside Milton, and these are -- they’re close to urban areas but they are sparsely populated. They are long loop length, or fibre runs, or cable runs. And you’re absolutely right it’s not economic for us to go there on straight economic terms.
12125 It’s -- you know, for example, in just rough numbers, if we’re building into a new location today you’re typically -- and people want -- they would want fibre. Just a round ballpark number the kind you’re looking probably at $2,000 a home, and that’s in a fairly suburban setting.
12126 Say, Rogers gets 50 percent take-up on that service, so that for subscribing home you’re looking at $4,000, and leave aside operating costs going forward, they were able to sell $100 package into that home, we’re getting about $40. So you multiply that times the months and you will see that your years you’re into a fairly lengthy payback even on an undiscounted basis.
12127 So when we look at that and then we -- the problem is always we have a finite amount of capital. And some of these locations may actually pass the economic hurdle but then they are -- go into a hopper where they’re compared against other projects and they very frequently fall off the bottom. So there are some that are absolutely uneconomic, some that are marginally economic.
12128 The other consideration we have is -- well, a number of them. One, often we think we’re probably not the lowest cost provider. We can have a situation where we go into these areas -- and we do believe that satellite service is going to be an effective -- very effective competitor, certainly for data. We recognize there are latency issues in terms of voice, and until low altitude satellites come -- and they are coming -- North Telesat launching their prototypes next year, et cetera -- I won’t go into that. But for us there is an issue as to whether we would be competitive in the long-term in addition.
12129 And then -- and it gets very complicated here because you might leap to the conclusion well this is a good location for a subsidy and we actually think it is, but then we think, if somebody’s going to get a subsidy at some point to serve this location, do we have wanted to start to build and compete with subsidized dollars or, probably more accurately, should we wait? Should we wait and then bid on that program ourselves, which would improve our economics.
12130 COMMISSIONER MENZIES: It reminds me of the Ronald Reagan quote, “If it moves tax and it if stops moving, subsidize it.”
12131 But the argument there is that, I mean, people who live, you know, two kilometres away from people who are well served and can’t get that service because of the lack of economics, they would have a legitimate argument to say well, you know, make them. You know, they -- the CRTC -- I have a telephone because the CRTC says I must. I -- internet is equivalent to telephone now. So why wouldn’t that make sense? Because waiting, obviously, the issue is -- they have presented it to us is they are falling further and further behind. And as society moves forward, all of a sudden their kids can’t keep up with their homework. They can’t work from home. Their employer expects them to work from home. The education system expects them to educate their kids on the internet and that sort of stuff. And the world is changing very, very quickly.
12132 So let me ask it this way, if we were to subsidize it, without you agreeing to that, how would you suggest we subsidize it?
12133 MR. WATT: If I could take maybe just one minute before answering that.
12134 I think, you know, when you look at the very expensive locations for the many places for even voice service, we’re special projects. You know, the obligation to serve really extended to a reasonable distance from where the facilities already existed. There really wasn’t an obligation to build. So it speaks to actually targeted directed dollars going to expand even the voice network.
12135 Secondly, we -- well, if we’re to do that, we’re in a competitive market. We’re -- we sit nicely in this room with Bell and Telus and the others, but in the marketplace it is a vicious competitive battle.
12136 In addition to that, we are trying to keep our prices as low as possible for the broadest array of people. We’re trying to make the Canadian economy economic. We will, to the extent we can. If we are required to subsidize we do. It’s been mentioned here many times. Ultimately, will be reflected in consumer prices.
12137 And so now coming to your question, how would you do it? Our recommendation is if you feel that government subsidy is not going to do the job, that targeted money, that you should redirect the voice contribution.
12138 So with that money set aside, we think you then are into, as Bell was describing, a program likely similar to Connecting Canadians where you’re not trying -- you don’t want -- you want private money to be combined with that money, so true, real economic dollars from us. You would have a bidding process and award the contract to the person seeking the least amount of money.
12139 There’s been a lot of discussion, I know there was lengthy discussion about how you would do that and setting up auctions and so on and so forth. We participate in auctions. In fact, we’ve contributed over $5 billion in auctions over the past 15 years to the federal purse, which, you know, raises another issue for us as to why some of that money couldn’t have been used to extend service. But leave that aside.
12140 But you can have an auction as simple as a single bid sealed envelope bid for a location when the terms have been specified in terms of what the price would need to be and what the service characteristics would need to be. It is not -- it’s not something that necessarily takes years to set up and a lot of dollars.
12141 COMMISSIONER MENZIES: Right. So the reverse --
12142 MR. WATT: Now --
12143 COMMISSIONER MENZIES -- the reverse ---
12144 MR. WATT: -- having said that, Scott may tell me in the United States they found they couldn’t do that. But I don’t think that ---
12145 COMMISSIONER MENZIES: But a reverse auction process appears sensible to you? I mean, it’s nobody’s -- well, I can’t speak for all of my colleagues, but I mean, we all approach these hearings with an open mind and must. But it’s not my first instinct, people can talk me out of it, to come out of here making everybody’s internet bill go up. It’s to figure out how to fix -- because it is a very good system overall. And this combination of market forces and targeted government funding has built a very good system. But there are these problems.
12146 And ideally, we can come out of here with solutions that fix what’s broken but don’t try to fix what’s not broken. You know what I mean? So that’s what I’m ---
12147 MR. WATT: Well, we are -- we’re trying to provide a solution that would not increase consumer’s bills. That $110 million voice contribution fund is already being collected. It’s already being reflected in bills. So we are proposing a redirection of that, which in turn would generate additional private money. And as we said, we recognize that voice is still very important. We believe that voice can be provided over broadband, and in fact, the Commission has recognized that and you have a 9-1-1 obligation and rules around VoIP service, both fixed and nomadic VoIP.
12148 COMMISSIONER MENZIES: Okay. Thank you.
12149 Let’s move on to -- excuse me -- I just want to touch on upload speeds for a minute. Some of the accessibility groups talked about the need for synchronicity, and to a greater or lesser extent, certainly higher upload speeds than most of the ISPs have been proposing. Sorry, I’m just trying to read my writing for a second.
12150 Can you assure us that five and one is capable of meeting those needs? We asked the other day about VRS, for instance. We were given, you know, that maximum service is about 1.3 I think for uploads and that. And particularly once VRS rolls -- and VRS is the best example because once it rolls out it’s going to be a 9-1-1 service too. So -- and I’m nervous about one being enough to make that assured.
12151 MR. WATT: Well, when we appeared at the VRS proceeding, my recollection was that certainly they were really looking at 256 kilobit per second was adequate to provide the service. If you look at Sorenson’s website, the largest provider -- I believe it is the largest provider of VRS services in the United States. They said they have a 256 kilobit per second requirement. So we think it is sufficient. We think you can tell from just watching video yourself today that you have certainly approved the, typically with the cable provider, you will have a one megabit per second upstream, that the video is very good.
12152 I -- now you may well be coming to this in the 9-1-1 proceeding you’re going to be having later, but it may -- you may well know more about this than me. But I don’t think VRS is a 9-1-1 functionality because my belief is with VRS you’re actually -- you’re scheduling your appointments for -- with the video relay centre. And so I’m not sure in an emergency situation that they are -- it was contemplated that they would be directly connected to the peace aps. I thought ---
12153 COMMISSIONER MENZIES: I think that ---
12154 MR. WATT: Really, I thought text 9-1-1 was --
12155 COMMISSIONER MENZIES: Yeah, I --
12156 MR. WATT: -- addressing the issue.
12157 COMMISSIONER MENZIES: -- understand. I believe that’s their aspiration.
12158 MR. WATT: Okay.
12159 COMMISSIONER MENZIES: So I’m expressing that not as the institution’s view, but from --
12160 MR. WATT: Okay.
12161 COMMISSIONER MENZIES: -- that is their aspiration. Okay.
12162 Date of usage allowance. You were fairly clear that you don’t see that as something we should contemplate, but what’s the point of setting a five and one target without setting some sort of minimum data usage standard? Because as we’ve heard from many groups in, I guess, often high-cost service areas or various plans it becomes an issue.
12163 MR. WATT: Yes, our 5 down/1 up service, our $33 plan, it has a 25-megabyte cap. But we do understand the issue that once you get above a certain speed, and we would say as we’ve indicated here today, five and one is, in our view, a really sufficient speed for definitely a basic telecom service requirement.
12164 But frankly, your issue is the cap, the usage at that speed. We think 25 megabytes provides a standard that could be met across the country, bearing in mind that the definition here is to be available to all Canadians and to be achievable. And we think it is useful.
12165 MS. BLACKWELL: Commissioner Menzies, if I could just add. I know that many parties have cited standard speeds, standards in other jurisdictions, and my understanding is that in most part when I look at the United Kingdom and the United States that those speed standards generally don’t have a cap associated with them.
12166 I know that usage levels amongst them on a median level is something that would have to be a moving target if you set it. So I think other jurisdictions have gone forward with targets that don’t have a usage amount associated with them.
12167 COMMISSIONER MENZIES: Okay. So how do you manage people with data cap issues? How do you manage your customers? Through this we’ve heard various offers for various -- and various approaches and that sort of stuff and, anyway, how do you manage it?
12168 MR. WATT: Well, what we do is for a customer who has a byte cap they receive a notice, pop up the next time they log on saying you have hit 75 percent of your usage. You get another when you hit 100 percent of your usage. And then once you’re over the cap then you’re billed additional usage charges.
12169 COMMISSIONER MENZIES: But I mean, what happens if they keep going over? I mean, they’re going to get mad at you sooner or later. And I don’t think that’s the goal of your association with them, right?
12170 MR. WATT: No, we do -- we track these people when they go over and we contact them. And we generally try to convince them to take an unlimited plan. Or in the case if they had been at a lower byte cap and don’t need unlimited, there are certain thresholds, we try to -- we call it -- some people would call it “upselling” we call it “right sizing”. But we try to fit the customer to the plan that will provide him the least bill relative to the usage that he wants to consume.
12171 So in other words, you go over your cap and you pay the additional usage charge for gigabyte you’re paying more. You can, in many instances, move up to a higher package with a higher byte cap and pay less than you -- more than you would on your plan, if you didn’t exceed usage, that you were on but less than what you’re paying with the plan you were on and the additional usage charges. So we try to right size the customer.
12172 COMMISSIONER MENZIES: Okay. And do you contact them?
12173 MR. WATT: We contact ---
12174 COMMISSIONER MENZIES: You contact them if they’re ---
12175 MR. WATT: --- them if they are going over, yes.
12176 COMMISSIONER MENZIES: To educate them on how to manage it if they are going over consistently, or do you contact them after one incident?
12177 MR. WATT: We have a series of tools actually on our website in terms of how to optimize, how to manage your usage, and what you should do. And encourage them, as we say, to actually prompt there to phone us. But we do also, when a person is over consistently, we contact them.
12179 MR. WATT: Yes.
12181 COMMISSIONER MENZIES: Thank you.
12182 THE CHAIRPERSON: On that question I’ll point out that somebody was wondering why we were asking those sorts of questions when they’re publicly available.
12183 We’ve got rules of evidence and it’s in fairness to everyone. I know you understand this in front of us, but I saw somebody make a comment to that effect. Well, we can’t just be going on a frolic of our own finding evidence here and there. That’s not fair to parties. So what’s on the record is what is on the record.
12184 So I just wanted to clarify that for the less informed. Thank you.
12185 COMMISSIONER MENZIES: Okay. When you talk about proposed five and one as the basic standard and you propose a future target for 2020 of, I think, 25, I just want to be clear, do you suggest that the future target be an aspiration or that it be defined in some way?
12186 MR. WATT: Well, I think we saw it -- I’m not sure of the difference between the aspirational. It’s the target. It’s in the similar fashion that the target was set at 5 down/1 up in the 2011 decision. We would see written in the decision that the target is 25 down/1 up in five years.
12187 COMMISSIONER MENZIES: In 100 percent, 90 percent, 80 percent, or ---
12188 MR. WATT: Well, again ---
12189 COMMISSIONER MENZIES: --- leave it to us?
12190 MR. WATT: --- this I think is why it’s why we call it a target. Because we think we collectively, as industry regulator government, as you mentioned earlier, have done a good job in advancing internet in this country with increasing speeds but not everybody can get five and one today. So think we want to try as hard as we possibly can. I think our aspiration probably would be to try and be at 96 percent in five years at 25 down and 1 up, same as we are sitting here today at 96 percent 5 down/1 up. We think this time may well be absolutely achievable.
12191 We heard Xplornet say they plan on offering 25 down/1 up satellite everywhere. We also heard though, you know, B.C. Broadband Association and there are areas where the satellite signal cannot get through. So to say all, we may not be able to get to all.
12192 COMMISSIONER MENZIES: No, I understand. Actually, I recall when the five and one was set it was considered to be a stretch objective and had feedback from people saying, “Yeah, like that will ever happen.” And then it happened very fast in most places. But, yes, 100 percent is a noble aspiration but it does fall into aspiration at that point.
12193 So what are your thoughts on a model that would include a minimum service level of say five and one, but also that there be higher optional service levels available; you know what I mean? Like, the minimum standard be that five and one folks be able to get five and one at a certain affordability rate and but they also have access to eventually higher services or unlimited plans or something like that.
12194 It’s kind of proposed in the OneWeb intervention.
12195 MR. WATT: Okay, I’ve read the One -- well, my initial answer was going to be we have a wide range of speeds, you know, 15, 30, 60, 100. We have a lot of service packages in the market that people obviously can move up to. On a broad basis across the country can that be done everywhere? I don’t know.
12196 COMMISSIONER MENZIES: Their suggestion is that subsidy apply to the 5 and 1.
12197 MR. WATT: M'hm.
12198 COMMSSIONER MENZIES: But then, that also -- but that our actions would also indicate that while subsidy applies to 5 and 1 and they get 5 to 1, they may also have access to others.
12199 MR. WATT: I'm going to ask Ms. Blackwell. She, I think, knows more about the record than I do on this matter.
12200 MS. BLACKWELL: And I have read the OneWeb; I believe it was a response to one of the interrogatories and they do talk about a 25 down 5 up as a service level that they believe they can offer.
12201 And I think in terms of what you're suggesting, in terms of a model, it may be that by setting the definition of basic telecom at a 5 and 1 and combining it with that target, the 25 and 1, at least, you know, we've put out in the submission, that does give you that signalling to the consumers that they should be expecting to have those other options.
12202 And I will also note that in one of the -- as I think we're in violent agreement that there has been a lot done from private sector and competition -- is that if you look at how quickly the rollout of even 100 megabits per second service has happened in this country, in 2010, less than 20 percent, I believe your monitoring report -- less than 20 percent had access to 100 megabits service, and in 2014, that was over 70 percent.
12203 So I would say that you can inform your goals and that kind of model with the information you have about what's -- what is available, and I do believe that a very large proportion of consumers do have those options.
12204 But when we get into the tricky part of saying everyone should have both a minimum of 5 and 1 and also something higher, then are you not suggesting that everyone should have the something higher? I just -- it's -- you said a minimum is your -- what you define as basic, so is it something like an advanced goal as well?
12205 COMMISSIONER MENZIES: That's the proposal ---
12206 MS. BLACKWELL: Right.
12207 COMMISSIONER MENZIES: --- as I recall it. I'm -- I know I'm not as quick on memory, because Mr. Watt could remember what VRS was -- usage were from a hearing two and a half years ago, so I'm a little intimidated by that. The -- as I recall it, the idea was that there would be a basic standard of 5 and 1, to which subsidy would apply.
12208 MS. BLACKWELL: Right.
12209 COMMISSIONER MENZIES: Right? And that the -- it would also include, you know, analogous to the telephone thing, access to enhanced services in the sense that they would, by a certain time, have the option to choose higher level of non-subsidized services.
12210 MR. WATT: Well, I think that's actually right. That's what -- because the satellites would be in the sky. As I understand their proposal, they -- in order to launch the constellation covering Canada, they were -- said, "We will cover this certain area, $5 per household." And with that commitment, customers in that area would also -- they would also have the ability to take a 25 down 5 up -- they call premium because presumably at a higher retail price than the lower one -- so basically saying, "Look, if we can get the satellite there, we'll provide 5 and 1 at a certain -- with a certain subsidy and because the satellite is in the air, we also will provide a premium service at a higher price and people could, depending on their means and wants, avail themselves of that service."
12211 But I think, in our context, Rogers, we -- well, it's direct analogy, but we have our lower speed offer targeted at a certain segment, but many touches here, we believe even Toronto Community Housing, there are people there who internet is very important to them. They are subscribers to Rogers at their 60 megabit per second service. So they're not -- they -- the $9, the subsidized service doesn’t meet their needs and it's -- internet is important enough to them that they pay the commercial price. And so all this to say that one size doesn’t fit all.
12212 COMMISSIONER MENZIES: Okay, understood.
12213 When you were referring to it today and before when you were talking about developments, new technologies in satellite and how that's inspiring more response from legacy satellite providers, I guess, can you just specify, were you talking about, for instance, Xplornet? Were you talking about low-orbit, low-latency or all of the above? Or was there -- is there something else there that you were thinking of that maybe I'm unaware of?
12214 MR. WATT: What we were thinking of there, specifically, was actually the advent of low-altitude satellites, and you know, our belief would be that the interest shown in Canada is inspiring Telesat to move, by others. It's inspiring Telesat to move quickly. There will be a battle over getting slots. There'll be a battle to be in the market first, and Telesat has leapt forward. It was launching the two prototypes.
12215 Our view is, had an entity such as OneWeb not, you know, publicly announced they are hoping to be in Canada by 2019, that it might have been a slower rollout. So we think this type of competitive pressure is moving things along and that's, as we said in -- the wording was the threat, even the threat of someone coming in is getting people to move quickly.
12216 COMMISSIONER MENZIES: Just to touch on the speeds again, and I might come back to it again, because it's connected to so many things. If 5 and 1 is appropriate, I've -- just, I mean, your "Connected for Success" program is 10, right, and your $33 package is 10, right or is it 5?
12217 MR. WATT: The $33 package is -- it's 5 megabits down ---
12218 COMMISSIONER MENZIES: It is 5?
12219 MR. WATT: --- 1 up. It's 5. It's the commercial available offer.
12220 COMMISSIONER MENZIES: So what's the roadblock, though, between -- I mean, CCSA yesterday, they said, "It's no big deal if it's 10 versus 5." What's the -- is there a price point on there that we're missing? I mean, why would 10 be any pricier for you to -- for people to provide than 5?
12221 MR. WATT: Well, 10 is -- at that level, it is pricier because you're putting more bits through at a peak period, so it's putting -- sort of driving incremental costs, we would say.
12222 COMMISSIONER MENZIES: Is it more a peak period management issue that you're looking at?
12223 MR. WATT: Well, we really don’t -- no, our peak management, what we do is, we have our byte caps and that will govern people's behaviour so they're not all unlimited. We don’t throttle or traffic shape, shape our traffic. But like, so your question is, if you're offering "Connected for Success" at 10 megabits per second, why is it the commercial offer at 10 megabits per second rather than 5?
12224 I think the answer is that the broadly available commercial offer is exactly that. It is an economic offer. It is what we can provide economically at a price point of $33. Five, we want to be quite clear, the "Connected for Success" is a heavily-subsidized program that we provide in the community housing organizations. It does not come near to covering its costs.
12225 COMMISSIONER MENZIES: Okay. At the risk of having asked this before, if we had slightly or touched on it ---
12226 MR. WATT: Sorry, just -- I hate to interrupt, but just a good point was brought up. It's the thing and broadly reference that really, to us, I think, in the broader context of the basic service definition that will apply across the entire country, I said our incremental cost, additional incremental cost, may not be that large, 5 to 10. But it's been pointed out to me that's like, probably not the case, in non-urban areas, more remote areas that the incremental cost going from 5 to 10 would be a substantial cost increase.
12227 COMMISSIONER MENZIES: Okay, maybe one more question and then, with the Chairman's indulgence, we might eat.
12228 The -- just to confirm, in terms of two areas, digital literacy and adoptability, where -- how do you think those are -- where does the responsibility for those issues lay?
12229 MS. DINSMORE: In our own program, we did have initially ideas around digital literacy and you know, I think there's a couple of things. One, we're probably not the best place to provide those kinds of educational programs to the target audience. We did have some events within the housing operations in the evening. They were not well attended. It didn’t seem to be something that was catching on.
12230 I think it's really -- and I know TELUS referenced MediaSmarts as one organization that is in this field, but I think there others who are more expert at this, and if we come back to the notion of an advisory council, we would certainly want to have government and non-profit organizations who work in the space to step up and in that context, we could determine how we might partner with those kinds of organizations, potentially to, you know, bolster our own program.
12231 But I don’t really think it's the -- it's in the DNA of the ISP to provide those sorts of digital literacy programs. And I might then throw it to Scott, because I think he can shed some light on the interplay between digital literacy and actual adoption.
12233 DR. WALLSTEN: Yeah, unfortunately, this was also part of the -- one of the -- another surprising result from the pilot programs that the FCC did, which was that the digital literacy classes, even free or when you were given an additional discount on your broadband service if you take a digital literacy class, were not popular. People didn’t want to do them. In one experiment that was designed explicitly to look at the effects of digital literacy, people were willing to pay an additional $10 a month to avoid digital literacy classes. I mean -- I say -- because their time is valuable to them too.
12234 And I mean, let me clarify that or make it a little bit more nuanced, because there were people who did self-select into digital literacy training and in those cases, the people who selected in seemed to subscribe a little bit longer than those who did not take digital literacy. I'm not sure that the differences were statistically significant and there was a lot of, you know, there was self-selection in there, but it does show that there might be -- you know, that there still could be a role for it. We haven't quite figured it out, or at least, in the pilots, they hadn't.
12235 THE CHAIRPERSON: I'm not sure if the vice-chair's desire to have a break is a want or a need, but it seems wise, in any event. So we'll take a break til 1:45.
12236 Donc, en pause jusqu’à 13h45. Merci.
--- Upon recessing at 12:29 p.m.
--- Upon resuming at 1:45 p.m.
12237 LE PRÉSIDENT: A l’ordre, s’il vous plaît. Order, please.
12238 Now, I believe you have something to correct. You may have misspoken earlier?
12239 MR. WATT: Thank you very much. Yes, I did misspeak. When I was stating the byte cap of Rogers 5 down 1 up, $33 including modem price plan, I indicated that the data byte cap was 25 megabytes. It really is 25 gigabytes. I have received many, many emails to that effect. But for the record, it did -- really did need to correct that and I apologize for that.
12240 THE CHAIRPERSON: Thank you.
12241 Vice-chairman Menzies?
12242 COMMISSIONER MENZIES: Thank you. So I'm going to try to be a little bit more rapid-fire here and then leave some room for my colleagues to follow up.
12243 When you say the coalition's call for 10 and 3 would require considerable upgrades, do you have a cost on that, estimate?
12244 MR. WATT: Sir, if you could give me the reference, this is the ---
12245 COMMISSIONER MENZIES: It's to the PIAC et al. group. They've asked for (inaudible) 10 and 3.
12246 MR. WATT: And the reference was 10 down and 3 up. Well, I think for many of the companies in Canada, that would incur significant cost. I do not have a cost estimate for that. For Rogers, we can't accommodate that speed.
12247 COMMISSIONER MENZIES: Is it possible for you to give us an estimate of financial impact?
12248 MR. WATT: You know, I really don’t think we could.
12249 COMMISSIONER MENZIES: Okay.
12250 MR. WATT: I don't know what it would cost the other providers to increase to that functionality.
12251 Ms. Blackwell, would you ---
12252 MS. BLACKWELL: I think it would be dependent on what assumptions about serving technology that you might be using. If we are to take on face some of the submissions of satellite-based providers, that perhaps a 10 and 1 service is something that is available at a commercial rates now, or in the next two years. Within the next five years, even OneWeb is suggesting 25 and 5, so it's not a question of -- it depends on what technology you're assuming. If you're assuming a wire line terrestrial technology, and can it be available today, obviously, that's a lot of -- I think it would be quite a bit of money.
12253 I know that when Bell Canada appeared earlier this week, one of their appendices had a fair amount of costing around what they thought, based on taking some proxies from Connecting Canadians and trying to do some estimates of, well, if that was what it cost to 5 and 1, and it might cost -- or if it was a magnitude more to do a 10 and 1 or to that area.
12254 So it involves a number of assumptions. Could this panel or group go away and develop their own assumptions? It's possible, but I'm not sure that it would be that much more -- shed that much more light on the issue. So I mean, we could assume right now, well, if we're relying on a satellite plans that are already been announced, then the cost, in terms of a subsidy might be zero.
12255 COMMISSIONER MENZIES: Okay, thank you.
12256 What is the best solution to connecting the north, in particular, satellite-dependent communities?
12257 MR. WATT: We think the best solution for connecting the north is of course, obviously satellite. By definition, satellite-dependent locations is satellite. We really think that there will always be locations in this country, in the far north, that will have to be served by satellite, that it will be uneconomic to ever bring a fibre backbone or transport facility to that location.
12258 For example, understanding is the Mackenzie River valley optic line 1,152 kilometres, it's $84 million. That's about $77,000 a kilometre for that fibre line, and that's just the installation and the line, so not the ongoing maintenance of it. And you know, there are places that are literally 1,000 kilometres away from any other place that may well only have 300 inhabitants and you just can't afford to put in an $84 million line to that location.
12259 COMMISSIONER MENZIES: Right, and you think the transfer of the current subsidy from telephone to internet would be sufficient to subsidize 5 and 1 in the north via satellite at a ---
12260 MR. WATT: We do.
12261 COMMISSIONER MENZIES: --- comparable price?
12262 MR. WATT: We think the exhibit that Bell put before you on Tuesday, having looked at it, was a really good effort at sizing the cost problem. And so they had a range and admittedly, a wide range, 1.2 billion to 1.7 billion, roughly, to accommodate 5 down, one up. And that did include or rely upon satellite provision to many of the far north locations.
12263 COMMISSIONER MENZIES: The question on the subsidy, if -- and in your indication, and obviously technologically, once you have internet of a certain standard you have VoIP service and you have voice service, but what about redundancy in those situations? A lot of those remote communities, they face pretty severe weather conditions and the power can go out. Wouldn't that be an issue that we would have to address?
12264 MR. WATT: I think it is an issue, but it's an issue today. These locations still face power outages which will impair service. I think the satellite people are better to speak to this but I know that they spoke of they can have diverse transponders and ways to address this.
12265 And I think you are -- again, we're talking about the true satellite dependent locations. They're actually -- an example I just gave, the Mackenzie River Valley, they actually are going to have a diverse fibre route because being at least planned to announce to build a $40 million pipeline from Dawson City over to Inuvik.
12266 So you would have this loop but the other locations, I take your point that there are clearly a risk of outreach with satellite but just not sure there is any other feasible alternative.
12267 COMMISSIONER MENZIES: Okay. I understand your position.
12268 Should quality of service standards be part of basic service?
12269 MR. WATT: We think the competitive marketplace is setting the standard for quality of service in those locations where you have a subsidy, so the uneconomic places. Our assumption is that in the bidding process, people would bid with a certain price, a certain quality of standard that they would be held to so that you then could obviously compare competing economic bids and choose the least-cost solution.
12270 So, in that way, we think quality of service could be maintained for the competitive marketplace. No, we think the competitive marketplace is providing an excellent quality of service.
12271 COMMISSIONER MENZIES: It would assured through the bidding process.
12272 MR. WATT: Through the bidding process.
12273 COMMISSIONER MENZIES: And do you see it -- does 5 and 1 meet the needs of medium and small business?
12274 MR. WATT: This is a very interesting area.
12275 COMMISSIONER MENZIES: Because we look at, you know, some of the -- I mean the situation for a lot of those areas, they talk about economic development issues and that sort of stuff, and it's kind of key in terms of setting those standards.
12276 MR. WATT: I guess the question is the basic telecom service, are we talking about a residential service there or a business service? I ask that in a sense we have every Canadian right to a voice line currently. Now, for business, I'm not sure if that definition includes business or if it's speaking to residential service there.
12277 But what I would say is that, to date, the Commission and in the regulated world previously, business rates were significantly higher than residential rates for individual line business service.
12278 So now -- and I understand that it's more of a blurry line maybe than what's in the path, although you always -- my understanding in theory, if you're operating a business out of your home, you are to pay the business rate. Now, I know a number of people pay the residential rate but it seems to me that the problem becomes much more complex if we're trying to set a basic service definition to be set at a level that were to accommodate business enterprise.
12279 I think the business enterprise needs to determine by its business plan whether it makes sense in that location with its costs and revenues and yet, it should stand on its ---
12280 COMMISSIONER MENZIES: What I'm trying to get at a little bit is just if 5 and 1 is all that's available in a community, is that sufficient to sustain a small business operation?
12281 If I live in Baker Lake and I decide I want to sell furs online, is that -- can I operate that business?
12282 MR. WATT: Well, my understanding and I've to go and check my notes but I believe that there is a business service offered that is significantly more expensive than what is offered to the residential customers. I'd have to check the speed but the speed is faster and the byte cap is higher.
12283 COMMISSIONER MENZIES: Okay.
12284 MS. BLACKWELL: I don’t know if this is that much more help. I consider myself a small business person and I have frequently found myself in a position of relying on 5 and 1 service as I travel my business around.
12285 It really depends on the nature of what your business is and I think if it's an ecommerce, is it a -- I mean you get into speeds as a lot of it is time sensitivity of that exchange of the internet traffic.
12286 So some businesses are going to have requirements that may be challenged under 5 and 1, but I think to Mr. Watt’s point, then it's an issue of is this the best location for my business. Is it a viable spot?
12287 So are we setting standards from a business and a residential perspective, and I know the Commission has turned its mind to issues around subsidies for business services in high cost areas in the context of telephone and it's -- the analysis comes down to is the cost of a higher greater service a business may require, is that a threat to the viability of that business? And the answer was no in this context.
12288 As I say, I'm sure you could come up with a scenario of a small business that would have potentially higher needs, but a lot of the kinds of applications, as shown in CRTC Exhibit 1, are maybe applications that a small business could work with and those are all supported by 5 and 1 speeds.
12289 COMMISSIONER MENZIES: Okay, thank you.
12290 What is your response to the Cable Systems Alliance proposal that they’d be able to discover where facilities exist and then be able to contact the owner of those facilities and gain access?
12291 MR. WATT: Yes, I've heard this matter discussed. Frankly, I was surprised to hear that there was a problem. I think it is fairly well known who the providers of transport are. And I would think, you know, you could in any location pretty much phone the five or six people who you think who you would expect to have facilities in that area and ask what they offer.
12292 It's another way and this could be maybe too general but I believe it's public information but twice a year, the carriers provide the interchange private line report and it’s a route by route listing of where there is -- where parties have facilities. This is in order to gain forbearance in that location.
12293 So I think they should be able to find out who has facilities and transport in their area.
12294 COMMISSIONER MENZIES: Yes. I mean their evidence was that that's a problem. Would there be anything -- would you object to their suggestion of having that information available to us so they could ---
12295 MR. WATT: No, no, Rogers certainly would not object. For our transport facility, it would be no problem telling you where we have facilities.
12296 COMMISSIONER MENZIES: Okay, thank you.
12297 You indicated -- I just want to touch on accessibility item mobile. In here some place, paragraph 27 of your oral I guess in the presentation, data-only wireless flex plan for advocacy groups. I just wanted to touch on that as the availability of wireless plans and fixed plans in terms of data discounts or enhanced accessibility for groups like the people who would be using VRS and that sort of stuff.
12298 Can you summarize for me where you are at with that and your presentation indicates that you feel you are making progress to meeting their needs?
12299 MR. WATT: Certainly. I’ll ask Deborah Evans who’s our expert in this area to address these matters.
12300 COMMISSIONER MENZIES: Thank you.
12301 MS. EVANS: Thank you.
12302 So we introduced last year about mid-March a data-only flex plan. So it starts at 150 megabytes of data. It’s data and unlimited text messaging. It’s $35 a month and then it flexes up to a 4 gigabyte tier.
12303 We had originally, when we first introduced the plan, we had started at a regular voice data and text plan with a discount to account for disability groups not using voice. But we were hearing from the advocacy groups and our customers that that wasn’t sufficient to meet their needs.
12304 They really just wanted us to introduce a plan that took voice out so that’s what we did. We introduced it. We’ve promoted it on our website. We’ve spoken to some advocacy groups. We’ve made them aware of its existence. And we are slowly seeing some customers taking this up.
12305 We will be working with the groups to make sure it’s more broadly known to them but this is how we’re addressing it.
12306 COMMISSIONER MENZIES: So that would be news to many of them that there is a plan available to them that excludes voice. Well, they indicated -- let me put it this way. They indicated when they were here that such plans were not available.
12307 MS. EVANS: I’m surprised to hear that some of them would have said that because I personally have met with a couple of the parties who were there and I did tell them about it. It was news to them when I met with them and told them, so we do recognize that there’s more that we can be doing in this space. And we’re having regular dialogues and I’ve undertaken to continue that discussion with them, and make sure that we partner we them so that their constituency group is made more aware of it.
12308 COMMISSIONER MENZIES: Okay. And unless I’m erred in putting words into their mouth, my expectation was they were asking us to mandate that and might not have said that it’s not available. So anyway, thank you for clarifying on that.
12309 Just want to touch on references to the Universal Service Fund in the U.S., $130 billion. Can you -- for me I believe the last number I saw was that that disperses about 7.4 billion U.S. a year, something like that, to about $10 billion Canadian.
12310 DR. WALLSTEN: Yeah, it’s actually it may go above 10 billion U.S. this year but it’s been up above 8 and to $9 billion. And that $130 billion is in real dollars. So it started in 1995 so that’s in 2015 dollars that total.
12311 COMMISSIONER MENZIES: And you have argued that that is an inefficient use of funds?
12312 DR. WALLSTEN: That’s correct.
12313 COMMISSIONER MENZIES: What level of inefficiency do you think it functions at?
12314 DR. WALLSTEN: Well, I think it’s inefficient on a number of levels. Broadly speaking, it gives out money inefficiently and it takes in money inefficiently.
12315 On the how it raises money, it raises money by taxing telecom services. And every quarter a group at the FCC sets the tax rate that they need to have in order to raise enough money. The most recent rate I think is about 18.2 percent, and that’s on what they call long-distance services. And of course long-distance as a service itself doesn’t really exist so it’s spread across mobile and international (inaudible) calls.
12316 So because it’s -- so it’s going to affect people who are on the margin of whether or not they will connect because it increases the price. It’s inequitable in that sense because the burden falls especially heavily on low-income people and immigrants who call abroad often with calling cards. And low-income families are more likely to be wireless only households and the tax is more heavily on wireless. So that’s on the how you get the money side.
12317 On the how you give out the money side, there are several different programs. There’s the High Cost Fund, which we now call the Connect American Fund. The Lifeline Fund, which is the Affordability Fund, which has just been changed although they haven’t released the text of the order yet. And we have schools and libraries; that’s the bulk of it.
12318 On high cost, it’s mostly been a cost-based program. And so these rural telephone companies, there are thousands of them, get sort of pretty much however much money they ask for. There are companies in Alaska that get $5,000 per year per line in subsidies. The FCC set, as part of its most recent reforms, a cap of $2,500 per month per line, which as itself sounds outrageous. But they couldn’t even stick to that cap because some of these companies immediately appealed and were given, you know, their higher and higher amounts.
12319 So there’s no effort at all to distribute the money in any sort of cost effective way by, you know, say rank ordering, getting the biggest bang for the buck. It’s just whoever, you know, sort of is eligible gets it.
12320 And then on the availability side, most of the research unfortunately has shown that it’s had a largely (inaudible) marginal effects. It hasn’t increased telephone adoption among low-income people. It only just recently -- that side only just recently turned to broadband so we don’t, you know, we don’t know how that’s going to change. Although pretty much all they’ve done is change the subsidy from voice to allow it to be also broadband.
12321 The General Accounting Office and the Office of Management and Budget private independent analyses pretty much all show the same thing, and especially GAO has, in almost every report it does on these programs, it tells the FCC that it has to -- it should set some sort of measurable objectives, which it never does. And they say, you know, we can’t even evaluate whether this is doing anything, you know, whether it’s meeting the goals if you don’t set any goals. And they’re sort of just not taken seriously.
12322 So I probably went on for a lot longer than you had wanted, but it is unfortunately an inefficient and inequitable program.
12323 THE CHAIRPERSON: Thank you. You don’t have to excuse yourself for being passionate on a topic.
12324 Those are all my questions. I expect my colleagues may or may not have more so I will turn them over to you. Thank you very much.
12325 THE CHAIRPERSON: Commissioner Molnar?
12326 COMMISSIONER MOLNAR: Thanks. I just have one question.
12327 I don’t think I heard you speak much about mobility products or broadband. There was a lot of discussion leading into this about setting a basic service and what is basic service in the future. And I’m sure you know well, having read the record, that a lot of people were talking about mobility products. I’ve seen no response to any of that in your comments here today.
12328 What are your thoughts on expanding basic telephone service definitions to include access to mobility services?
12329 MR. WATT: You’re correct. We have obviously focused on the wireline situation with respect to basic telephone service. I’m going to ask Suzanne to just speak to it a bit more.
12330 In terms of wireless, we’re thinking of situations where people are working out in fields and so on and so forth. Again, we have extended coverage to almost all of the population but there is a couple of percent that can’t get it. The problem is in Canada we’ve -- well, Rogers -- we’ve spent about $20 billion and we covered 10 percent of the geographic map of Canada. It’s the problem.
12331 So in terms of suggesting or saying that you could have -- you have right to a wireless service in Canada, I think even if we were to go down that path you’d really have to narrowly circumscribe or define what the geographic footprint would be to make, otherwise the cost would be absolutely astronomical.
12332 I’m not sure if that is addressing the concern that you were raising.
12333 COMMISSIONER MOLNAR: Well, it was a concern raised in this proceeding by many Canadians in that, as you know, they believe that it’s an important service. It’s a service for emergencies, and security, and economically for some folks.
12334 Yeah. So would it make any sense to look at extending broadband in a way that could meet the needs of kind of both of these for mobility and for basic broadband? Essentially I’m saying would it make any sense to say something like LTE should be the preferred means of extending wherever possible, extending broadband so it can meet the needs of sort of the broader constituents?
12335 MR. WATT: Well, I think what we have in mind is for the programs where you would apply for the very -- otherwise uneconomic areas I think we had in mind a technologically neutral approach so that if LTE was the lowest cost technology that it could be deployed. I heard Xplornet saying they’re deploying LTE on fixed wireless, which may hold some promise.
12336 LTE on mobile wireless, the issue is the -- it’s not so much the speed, it’s the absolute capacity that is available. So the issue on wireless would be definitely bit caps.
12337 COMMISSIONER MOLNAR: Yeah. Could you help me understand that? Why is there that capacity constraint on the mobile?
12338 MR. WATT: I ask the same --
12339 COMMISSIONER MOLNAR: I mean, if --
12340 MR. WATT: -- thing of my engineers and they --
12341 COMMISSIONER MOLNAR: -- they’re talking about sort of ---
12342 MR. WATT: -- tell me it is physics.
12343 COMMISSIONER MOLNAR: It’s physics?
12344 MR. WATT: The laws of physics.
12345 COMMISSIONER MOLNAR: Even where there’s not a lot of customers? There would not be potentially --
12346 MR. WATT: Well ---
12347 COMMISSIONER MOLNAR: -- the same amount of traffic and congestion --
12348 MR. WATT: Different --
12349 COMMISSIONER MOLNAR: -- within these areas.
12350 MR. WATT: -- different issue there. See, the laws of economics that it would be incredibly expensive. Cell site for us is roughly $800,000. So if it were serving, you know, 100 people, it would be an uneconomic cell site.
12351 COMMISSIONER MOLNAR: M’hm.
12352 MR. WATT: That radius is about -- the diameter of that circle is I believe about 25 kilometres for the $800,000.
12353 COMMISSIONER MOLNAR: You just mentioned Xplornet and the fact that they’re using LTE to deliver fixed wireless. And they suggested one of the things we could do would be to provide a recommendation to Innovation Canada, I’ll just shorten it, as it regards Spectrum allocations. Because I’m sure you heard them, you know, in areas particularly the areas on the fringe of major urban, it’s pretty hard for them to get access to Spectrum and there is people out there that are unserved. Do you have any comments on whether or not we should be looking at that? Again, as to making a recommendation.
12354 MR. WATT: M’hm.
12355 COMMISSIONER MOLNAR: Obviously, we don’t manage Spectrum.
12356 MR. WATT: Right. I think I’ll ask Howard Slawner to speak to the wireless licensing issues. He’s very familiar with those and is our expert on this panel for that.
12357 COMMISSIONER MOLNAR: And we are not, as you know so well.
12358 MR. SLAWNER: So Innovation Canada sets the licence areas for all the Spectrum licences. And they have four tiers basically. Tier one is the national licence area. Tier two is basically provincial, although Ontario and Quebec are split into three. Tier three is -- they’re about 59 areas across Canada and tier four is the smallest, about 172.
12359 A lot of the fixed wireless Spectrum actually got auctioned at tier four, which is the smallest. The issue that Xplornet has is even though it’s the smallest, areas like Toronto or Calgary still include a lot of the area surrounding it.
12360 The problem that Innovation Canada has is they had to pick borders that kind of conform to the population centres, the geography of the land, and then any kind of interference issues by the adjoining licence holders. So the big areas like Toronto and Calgary still have to be kind of big.
12361 That being said, when we buy or get the licence for the Spectrum, we’re still very willing to -- if we’re not using in a certain area, we’re willing to subordinate it, which is kind of issue a sub-licence to other partners out there, which we’ve done with a lot of carriers. So there are mechanisms already in existence that carriers who want to use Spectrum that another carrier isn’t already using that they can get that Spectrum.
12362 So we’ve entered into agreements with several people who have already appeared before the Commission this past week and we’ll keep doing this. If we’re not going to launch a service in this area ourself, we’re very open to listening to anybody who wants to actually use that Spectrum themselves.
12363 COMMISSIONER MOLNAR: Well, thank you. As I said, I mean, we’re not the experts on this, but it didn’t seem appropriate that you would come before us and not speak of any wireless issues at all in this. So thank you.
12364 THE CHAIRPERSON: Commissioner MacDonald?
12365 COMMISSIONER MACDONALD: Good afternoon. I just have one question with respect to your Connected for Success program. And congratulations on that initiative.
12366 I understand why you would roll it out to individuals living in government-supported housing because someone else has already done the means testing for that. Is there a way to work with government to expand that program to low income Canadians that do not live in supported housing?
12367 MS. DINSMORE: We have talked with the Province in Ontario. It’s Ontario Works who handles this kind of thing. It becomes a lot more complicated to figure out how to do that. And one of the things I think would be helpful if you understood is that we never know who these Canadians are. So -- and there’s a lot of concern on the part of the housing operations that we deal with to ensure that we don’t.
12368 So how it works is that we partner with the housing operation -- Not for Profit Community Housing Organization. And through that partnership they will agree that they will provide us with a unit number to which we will direct market the unit number, the offer, and then that person in that unit will call Rogers, the special line, special number for this particular offer, not our regular call centre. And that’s how the thing works.
12369 So even in that context it’s -- there’s a lot of caretaking. And actually, we have some new signatories for whom we actually have to add an extra step because even they find that to be potentially problematic from a privacy perspective.
12370 So we’re just getting over these sorts of things in terms of this role that we’re optimistic. We think it’s all going to work just fine.
12371 We heard, you know, the folks, the AAC when they came up and they said, “Look, it’s double penalizing those who can’t get into community housing. There’s a wait list. Not only can they not get in, now they can’t get the Rogers offer. That’s too bad.” And we agree that’s too bad. We would like to be able to serve those people as well.
12372 But at this stage, we’re really just -- I mean, we’re just rolling out phase -- this second phase where we’re going to blanket, you know, Ontario, New Brunswick and Newfoundland. Possibly through that process we will find that there is some other way. But for now, I think it’s enough for us just to get the service out to the people that need to get it within the Community Housing Operations.
12373 COMMISSIONER MACDONALD: Okay. So I’m hearing you’re not opposed to rolling it out on a larger scale. There will just be some challenges that would need to be addressed and considered before that happens.
12374 MS. DINSMORE: There would be some challenges, yeah. There would be some challenges.
12375 COMMISSIONER MACDONALD: Okay. Thank you.
12376 THE CHAIRPERSON: Just a few questions.
12377 Paragraph 29 of your oral presentation you refer to several studies that concluded in your view that the programs are costly, inefficient and inequitable.
12378 Is there a list somewhere you can point to of the studies you were referring to?
12379 DR. WALLSTEN: Sure. Actually, I have compiled those. I could -- I’d be happy to provide it.
12380 THE CHAIRPERSON: Okay. So you could provide that --
12381 DR. WALLSTEN: Yeah.
12382 THE CHAIRPERSON: -- as an undertaking --
12383 DR. WALLSTEN: M’hm.
12384 THE CHAIRPERSON: -- so we know exactly what you’re referring to.
12386 THE CHAIRPERSON: You constructively and helpfully provided some principles in Appendix 1 today, and I won’t go over the territory the Vice-Chair covered earlier. But you probably followed the discussion I had earlier with I think Bell where I referred to David Johnston’s report entitled “The New National Dream Networking the Nation for Broadband Access.” And I asked them if they agreed or not with the nine principles that were identified in that report.
12387 And should I take it that you -- by providing your own principles you disagree with the previous principles?
12388 MR. WATT: That is correct. We looked at these principles in developing the five that we placed here.
12389 THE CHAIRPERSON: And could you address why you think the principles as articulated back then don’t make sense or are not the ones you support?
12390 MR. WATT: We didn’t think that any of them didn’t make sense. We just synthesized them down to the five that we presented.
12391 THE CHAIRPERSON: What did you leave out, in your view?
12392 MR. WATT: We actually didn’t leave any out. We just -- we combined --
12393 THE CHAIRPERSON: Okay.
12394 MR. WATT: -- a number of these.
12395 THE CHAIRPERSON: So you think they dovetailed. There’s no contradiction.
12396 MR. WATT: Yes. There ---
12397 THE CHAIRPERSON: Okay.
12398 MR. WATT: No, there’s nothing -- sorry, not clear. There was nothing that we didn’t agree with in the nine. So we didn’t leave any out. We ---
12399 THE CHAIRPERSON: Okay. That was the nature of my question. By providing something you call different principles and there’s a lesser number one could conclude that you disagree with the original -- the nine I was asking questions about earlier, but that is not the case.
12400 MR. WATT: No, no problem with the nine. THE CHAIRPERSON: You’ve just rearticulated them in a different bundle. Fair enough.
12401 You made reference to a multi-stakeholder advisory council. Have you given some thoughts to potential terms of reference?
12402 MR. WATT: We have not come up with anything new. We reviewed the Telecom Policy Panel Review Report and they, I believe, talk about terms of reference there, and we would use those as a starting point for this particular body.
12403 And we -- I dislike giving undertakings, but we’ve only -- we’ve had a couple of days, we’ve talked about this fairly extensively, but this could be something -- we wish we could come back with something in our final written remarks.
12404 THE CHAIRPERSON: When I used to practice law in the private sector I was always willing to volunteer to hold the pen because you have some influence that others may not have. So will you undertake to do that?
12405 MR. WATT: We will.
12407 THE CHAIRPERSON: We won’t necessarily agree with everything but you might have the opportunity to frame those terms of reference.
12408 What do you see in terms of the outcomes or the remit of such a multi-stakeholder advisory council?
12409 MR. WATT: Sorry, I was being asked whether -- so this is an undertaking for the May 5th date as opposed to ---
12410 THE CHAIRPERSON: Unless you have -- yes, it was for the May 5th, yes.
12411 MR. WATT: Sorry, about that. I got distracted. Could you repeat your question please?
12412 THE CHAIRPERSON: My follow-up question was what would be the outcome or remit for this advisory council?
12413 MR. WATT: The outcome. I think you’re asking what their objective is?
12414 THE CHAIRPERSON: What would they do? What’s the work? Maybe that’s -- does it overlap with the terms of reference?
12415 I mean, perhaps it’s the -- maybe -- you used an Appendix 1 principles. Strangely enough I thought those were outcomes, but anyhow.
12416 MR. WATT: Well, really what we thought this group would do, based on these principles they would address the gaps that you’ve identified, and they would -- well, first, really building off this decision, I think you will establish a basic definition and it will have at least a speed target.
12417 And with that as the objective, there then would be the gap analysis as to where we are now because we know we’re not there now. Then I think this group would help coordinate all the information that’s necessary. What you’re really trying to do is determine the best most economical and fastest way to get that service to -- in the geographic gap situation to the people who don’t have it today.
12418 And then you’re going to have basically -- in our view, there’s no reason why you wouldn’t use the same application process for -- potentially for the federal government money and in our position the redirected contribution money. So it would be the same type of application program.
12419 And then you would -- they would set up the body that would handle basically what is the RFP process and the bidding process and then they would be responsible -- and again, this is setting the framework. The very senior people obviously wouldn’t be doing the work. But then you would have the action plan that you’re trying to do and then they would monitor it and keep people on track and make sure that it was put in place.
12420 THE CHAIRPERSON: Now, you’ve mentioned action plan with respect to rolling out greater connectivity.
12421 MR. WATT: M’hm.
12422 THE CHAIRPERSON: But would they also keep track on issues that you’ve also mentioned as principles in Appendix 1 dealing with -- well, availability, that would be covered, but affordability and adoption as well?
12423 MR. WATT: Yes.
12424 THE CHAIRPERSON: So all the areas here?
12425 MR. WATT: All of the gaps.
12426 THE CHAIRPERSON: How long do you see this multi-stakeholder advisory council being required in terms of timeframe?
12427 And I’ll ask the question in a -- well, first of all, I’ve been involved in another life with committees that start off at the deputy minister level and they last very long and so deputies don’t show up anymore and assistant deputy ministers show up, and then it’s lasted even longer and so even assistant deputy minister’s don’t show up and so it’s director generals, and then 10 years later it’s a bunch of very hardworking but more junior analysts that are involved.
12428 So how do you see it? Where -- because there is a risk that we lose steam.
12429 And, you know, I might quote to you what -- well, David Johnston, he wasn’t His Excellency at the time but still a good man, but when he wrote the covering message from the chair of the committee he said, “Finally we thank” -- he thanked the ministers at the time, which was Mr. Tobin and Mr. Manley:
12430 “...for reaching out to citizens across the land through us for advice. Our message through them to their colleagues and our fellow citizens is carpe diem and keep the completion focus of 2004.”
12431 So, in light of all that, what’s the timeframe for this advisory council?
12432 MR. WATT: Having not discussed this with anybody on my panel, in my opinion, I think you would have the advisory council very active for a year and a half, two years.
12433 You then -- you’re going to have to -- and it quite possibly could devolve back to the federal department and the CRTC, because at that point, in our opinion, you would be into -- we believe you could be at the stage where you would have had your application, your bidding process completed, and then you’re into a monitoring process, which would not require the -- really the very senior people.
12434 So the deputy minister, an example, would not have to be involved, but we think there would be, you know, an ongoing role for a level of this collective activity to exist throughout the entire five-year period because we’re assuming there will be a five-year review of basic telecom and that -- you know, that they don’t really see any other way around it.
12435 THE CHAIRPERSON: Right. Well, I appreciate you didn’t have a chance to consult more broadly. So I guess if we never see you again at a CRTC hearing that was the wrong answer.
12436 THE CHAIRPERSON: But I ---
12437 MR. WATT: We’ll find out.
12438 THE CHAIRPERSON: I trust your level of expertise and knowledge about such things.
12439 Sorry, you look like you wanted to add something.
12440 MR. WATT: I think it might be wiser if I didn’t.
12441 THE CHAIRPERSON: I understand.
12442 Those I believe are our questions as well. So thank you.
12443 MR. WATT: Thank you.
12444 THE CHAIRPERSON: Your mic’s on. I don’t know why that might be -- okay -- because I think you didn’t want to add anything.
12445 Okay. That’s good. Thank you very much for your participation and your constructive approach to the issues before us. Thank you.
12446 It’s not that we agree with everything but it was constructive.
12447 Madame la secrétaire?
12448 THE SECRETARY: I would now ask the Canadian Taxpayers Federation to come to the presentation table.
12449 Please introduce yourself and you have 10 minutes.
12450 THE CHAIRPERSON: Press the button so the light -- yes. That way we can hear you well ---
12451 MR. WUDRICK: Thank you.
12452 THE CHAIRPERSON: --- and people who are listening online can follow it as well.
12453 MR. WUDRICK: It certainly helps.
12454 My name is Aaron Wudrick. I’m the Federal Director of the Canadian Taxpayers Federation.
12455 I’d like to thank the Commission very much for the opportunity to appear today.
12456 The CTF, for those who do not know, we are a non-profit citizen’s advocacy group. We are dedicated to three principles, lower taxes, less waste, and accountable government. We’ve been existence about a quarter of a century and we now count almost 90,000 supporters across Canada.
12457 I suspect my remarks today will differ somewhat from most of the other presentations which the Commission has heard in these proceedings.
12458 First of all we are not an obvious stakeholder in the telecommunication industry and the focus of our advocacy is not normally on telecommunications policy or issues.
12459 But we requested to appear nonetheless because we believe we can contribute an alternative perspective which would be useful as part of this conversation and frankly the very nature of these proceedings probably an unavoidable pitfall of them as they tend to have an interest bias.
12460 People with strong opinions about telecoms policy are likely to appear. There are however millions of Canadians who are frankly unaware of the CRTC, what you do and there’s really no way to get those people to come here.
12461 We certainly don’t suggest we speak on behalf of all of them, but I would suggest that some of the comments that I have are things that would be on the minds of some of these people.
12462 As you might expect from an organisation which is focused on the tax burden that Canadians face, the primary concern from the CTF’s perspective is less in the details of any broadband strategy that the CRTC lands upon, but rather in the simple question will it result in Canadians having to pay effectively a new tax in order to pay for this strategy.
12463 It will also be no surprise that the CTF oppose any such new tax, or levy, or access fee, or any other creative moniker which is applied to a mandated cost which will ultimately borne -- be borne by consumers, for the express purpose of subsidizing other consumers.
12464 I suggest that the core of these proceedings is a philosophical question. When is it appropriate for some people to subsidize the services consumed by other people?
12465 More specifically, should the CRTC force some Canadians to subsidize the cost of broadband for other Canadians?
12466 And is access to broadband at, for example, a particular price, a right which should be enjoyed by all Canadians, regardless of where they live?
12467 Since I believe there will be no shortage of witnesses arguing for an answer in the affirmative on that, let me simply present a brief counterargument.
12468 For those Canadians who choose where they want to live within our country, there’s a range of trade-offs that must always be considered.
12469 There are advantages and disadvantages to living, for example, in a large city, compared to a rural area.
12470 Costs are a large part of this equation, as are the range of amenities and services that will be available to you where you live.
12471 If peace and quiet and wide open spaces are important to you, the downtown area of a large city might not be your cup of tea
12472 And similarly, if you value having a wide selection of say restaurants or shopping opportunities within walking distance, that small town with the one stoplight might not be your best bet.
12473 So if we view the availability, speed and price of broadband as simply another one of these types of considerations, it therefore becomes questionable as to whether or not it’s the duty of some Canadians to subsidize the choices of other Canadians.
12474 But leaving that aside, should this commission decide that it is indeed a right that all Canadians have broadband access at an affordable price, we would urge the Commission to try and find a way to do it without imposing a new cost on consumers.
12475 The reason these consultations were launched is because of the recognition that the definition of “basic services” requires updating.
12476 This does not mean the definition needs to expand indefinitely without also assessing what could be removed from the definition.
12477 It seems logical that, for example, obsolete or declining technologies be considered to be dropped and replaced with new and emerging ones, with the result being that consumers do not face the prospect of ever-increasing taxes and fees.
12478 As I’ve noted, it had already been mentioned in these proceedings the National Contribution Fund, which already exists, provides for the subsidy of residential landline telephone service.
12479 However the trend line, with respect to landline service is quite clear, use is in decline.
12480 So we would suggest that it would make little sense for the CRTC to continue funding a declining technology and instead to think about reallocating those -- that existing funding toward more relevant, up-to-date technologies including broadband services.
12481 In closing, we recognize that some advocates for a new fee to subsidize broadband insist that the amount is small and it’s true that in many cases it would be the issues of a couple dollars on a consumers’ monthly bill.
12482 But we would counter that this has to be considered in a wider context. Canadians face increased taxes, fees and prices on a wide range of goods and services, none of which in and of themselves is very large, but in the aggregate can start to add up very quickly and become very significant.
12483 There are many other worthwhile causes aside from broadband with advocates making similar cases, but this of course becomes problematic when there are proponents of dozens or hundreds of different causes the costs start to add up very quickly for Canadians.
12484 So we simply ask that the Commission bear that in mind when considering the impact of what might otherwise be a very small cost. Thank you very much.
12485 THE CHAIRPERSON: Well thank you. And rather than have a long debate as to what a tax is and isn’t, why don’t we just agree to put that within quotes --
12486 MR. WUDRICK: Fair enough.
12487 THE CHAIRPERSON: -- in our context and move on to a more substantial discussion.
12488 So I’ll put you in the hands of Commissioner Vennard.
12489 COMMISSIONER VENNARD: Good afternoon. Thanks for coming to talk to us today.
12490 You present a really interesting perspective here and I would just like to unpack some of your thinking, because it is quite different than what we’ve been presented with.
12491 First of all, I want to just focus in for a few moments on the idea of the choice and you suggest that if people choose to live in certain areas they’re going to get -- there’s a trade-off. There’s a payoff and there’s a trade-off.
12492 I would like to get your comments on those people who do not choose to have -- would not choose to have broadband because of affordability issues.
12493 MR. WUDRICK: M’hm.
12494 COMMISSIONER VENNARD: If you’re making a choice it’s a free country, you can make your choices, but sometimes choices are made for us.
12495 MR. WUDRICK: Yes, I think, you know, this discussion turns on whether you characterize it as a choice or frankly as a service which is imperative or amenity that’s optional.
12496 I mean, we look at things like education and health care, for example, these are things that are deemed as rights, that Canadians can expect to have regardless of where they live and in those instances, you know, the costs become something that other Canadians are expected to bear.
12497 So I think the discussion here turns on whether or not -- do we view broadband -- is it categorized as something vital and imperative to an individual being able to succeed in life or is it something that’s nice to have, but that not all people, you know, if they can’t afford it or if they live in a place where it becomes uneconomic for it to exist is that just a sacrifice that they have to live with.
12498 COMMISSIONER VENNARD: Yes and there’s where, you know, I think a major part of this kind of hinges is, you know, looking at that, because it’s beyond our mandate and scope here at the Commission ---
12499 MR. WUDRICK: M’hm.
12500 COMMISSIONER VENNARD: --- to start looking at things like rights. We’re looking at the objectives, the basic -- what should we be thinking about as basic services.
12501 MR. WUDRICK: M’hm.
12502 COMMISSIONER VENNARD: So if we look at the basic services being things -- access to such things as you mentioned, health care, 911, that sort of thing, then how do you see that?
12503 Do you see that as being a basic service that most people would like given the opportunity to make a choice to have it or how does that fit into your argument?
12504 MR. WUDRICK: Yes, it’s interesting. I mean I had not considered it from this view because, you know, when we had looked at what we thought the intent of a national broadband strategy was -- it was that it was an issue of geography.
12505 It was less an issue of -- because there are obviously people of lesser means in urban areas.
12506 COMMISSIONER VENNARD: M’hm.
12507 MR. WUDRICK: That have accessibility of these things, but for the cost.
12508 COMMISSIONER VENNARD: M’hm.
12509 MR. WUDRICK: And our view is more a question of there are many parts of this country which there’s not a lot of people and there’s a lot of distance. We’ve heard from, you know, for example Rogers and TELUS that it’s just not economic to do business in those places.
12510 COMMISSIONER VENNARD: M’hm.
12511 MR. WUDRICK: Those were the people I think we were envisioning in terms of making a choice. Obviously if we’re talking about individual with low income that would apply to Canadians wherever they live in the country and that is obviously a much broader class of people.
12512 COMMISSIONER VENNARD: Yes.
12513 And our country is moving in the way of digitization, I mean that’s clear in almost everything we’re doing, and some segment of society is going to be left behind if they do not have the option, or the choice, or the ability, or the means, to participate.
12514 What kind of comments would you make on that? How do you see that?
12515 MR. WUDRICK: They’re -- I think -- that’s a fair comment. I think there are also many other areas as well. I mean we look at education, for example, education is a lynch pin to success today.
12516 And there’s a lot of discussion around access to that. Does that mean that we provide education for free? Some people argue that, you know, or do we subsidize it to a certain extent.
12517 So I take your point and I, you know, recognize our viewpoint is on the further end of the spectrum in terms of taking (inaudible).
12518 COMMISSIONER VENNARD: Yes and that’s the basic thing that we’re trying to determine here is, like, education for example.
12519 You know we -- there’s -- we provide a basic level of education. If you want more then you can pay for it, but it’s there for people.
12520 MR. WUDRICK: Right. And so that is what we are trying to determine is what should be there for people.
12521 So from that point of view, what would you say should be there for people?
12522 MR. WUDRICK: If you’re asking if we believe that it is -- it is the duty of the government through the CRTC to provide Canadian citizens with access to the internet at a particular price. I don’t know that that’s a position we would take.
12523 COMMISSIONER VENNARD: Okay. So do you see anything as being a basic service?
12524 MR. WUDRICK: Maybe health and education, for example. But I mean if you’re asking us the direct question do we think the internet is something that, you know, the government needs to be in the business of we would probably say no.
12525 COMMISSIONER VENNARD: Yeah. I’m asking you if you -- do you see anything to do with the internet being connected to the idea of a basic service of some kind, emergency, for example? Or do you think the landline will be just fine?
12526 MR. WUDRICK: Well, I mean, if there’s an area -- if there is a part of the country which does not have communication with the outside world I would view that as a problem. Does it have to be internet? I don’t know that it has to be in the internet. Could it not be a landline or, you know, any other form of communication?
12527 COMMISSIONER VENNARD: So what would you see as a -- I guess what I’m trying to get at here is what your perspective is on the function of the internet itself. And, you know, your perspective is your perspective. You’re entitled to have whatever perspective you like. I’m just trying to sort of drill down and see that.
12528 MR. WUDRICK: Yeah.
12529 COMMISSIONER VENNARD: Because more and more our lives are connected in one way or another to the internet. Our government is connected to the internet, our institutions are, healthcare. We have all sorts of different things that are provided through the internet.
12530 MR. WUDRICK: Yeah.
12531 COMMISSIONER VENNARD: So of all the different things -- and I’m not necessarily talking here about something like, you know, Netflix or gaming or whatever, although to some people that’s something that’s very, very important and very, very basic. How does your organization view the internet, or do you just view it as just another expense and nobody really needs it?
12532 MR. WUDRICK: No. I guess I’d use this analogy. I guess there’s two ways to look at the internet. Is it a public good like a road? Something that should be, you know, a consideration? That obviously people need roads to get to and from places.
12533 Another important thing we all need is food. Food is largely in the hands of private enterprise and the government has less involvement in it.
12534 So, you know, the internet is important. It’s an important part of our lives. We all use it every day. I don’t know that it falls, that it automatically falls in the category of road and not in the category of food.
12535 COMMISSIONER VENNARD: Okay. So in your written submission you say that you agree that the definition of basic services can and should change over time, and where possible it should include the swapping out of obsolete or declining technologies in favour of new and emerging ones.
12536 What do you see as being -- how do you see that working? Can you unpack that for me and explain that to me?
12537 MR. WUDRICK: Well, you know, we looked at some of the statistics because -- I think we’re conceding the point here. We’re now at the point where we’re going to concede to you, okay, assuming we’re going to agree that there have to be basic services does that mean that the definition -- we always add things to that definition.
12538 COMMISSIONER VENNARD: Yeah.
12539 MR. WUDRICK: Or are there things that over time become obsolete? And the argument that we are advancing is that landline telephones seem to be on the way out. They’re in declining use. I personally haven’t had a landline in I think seven years.
12540 And so it would make sense for us if we’re going to decide to have basic services and things that consumers are expected to contribute to, we can agree to add new technologies or add new things to that definition. But simply look for ways where you can use the same amount of money but put towards the purposes that are more relevant and that are emerging.
12541 COMMISSIONER VENNARD: Okay. You go on to say in the paragraph that follows in your written submission a reallocation of existing funding, and here I’m presuming that you’re referring to the National Contribution Fund.
12542 MR. WUDRICK: Yeah.
12543 COMMISSIONER VENNARD: How do you see something like that working? You don’t give us any information there and I’d just like you to expand on that further.
12544 MR. WUDRICK: Certainly. And I confess, I am certainly not an expert telecoms policy. But my understanding is the purpose of that fund is directed towards areas that require a subsidy for landline telephone use. So rather than directed towards landline use it could be redirected towards supporting the expansion of broadband into those same communities. So it would be a swap out in terms of rather than supporting landline it would be to support broadband.
12545 COMMISSIONER VENNARD: Okay. I just have one final thought for you to comment on, and that’s basically is it okay to leave some Canadians behind?
12546 MR. WUDRICK: I take your point. But as I think I made in my remarks, there are many worthy causes. There are many other things that Canadians will argue for.
12547 And as I put in my remarks, I didn’t mention them orally, but if we took a dollar from every Canadian every year that would be $35 million for a cause. There are literally dozens of good causes that that money could be put towards. But there are hundreds of people making a case about their cause so, you know, this Commission is seized with broadband alone.
12548 There are other bodies, both government and non-government, that are seized with their own issues. If they all succeed in getting their issue forward, the aggregate cost of that does become significant. So and again, this comes back to the sort of diffuse nature. These proceedings will attract people who are interested in these issues particularly. Other issues will attract people interested in those issues. We are here to simply point that fact out.
12549 COMMISSIONER VENNARD: Okay.
12550 MR. WUDRICK: Thank you.
12551 COMMISSIONER VENNARD: Okay. I have no further questions.
12552 THE CHAIRPERSON: Vice-chair Menzies?
12553 COMMISSIONER MENZIES: Thanks for coming. It’s actually good to see you here in terms of the fact that all arguments are illustrated more fully in contrast.
12554 Really just one question, and that goes so far as the North. You may not be aware of it, but I referred earlier to a report done a couple of years back by a group of stakeholders in the North. And it was headed up by the Department of National Defence and Border Services were there.
12555 And it concluded that connectivity, you know, of a communication system in the North was sub-standard and needed to be upgraded because it was a matter of survival, and based on three principles, the maintenance of sovereignty, security, and public safety. And that was for to be able to track vessels, exactly who was in our country ---
12556 MR. WUDRICK: Yeah.
12557 COMMISSIONER MENZIES: --- in remote areas and vessels going through the Northwest Passage and other areas and that sort of stuff.
12558 So would you concede -- no, I’m not asking you to concede. Would you agree that sovereignty, security, and public safety are areas that Canadians would not have difficulty understanding that it should be subsidized in the North?
12559 MR. WUDRICK: Yes, absolutely. I think that the closer you get to defining the services you’re talking about along those lines I would agree.
12560 COMMISSIONER MENZIES: Okay, great. Thanks very much. And that was my question.
12561 THE CHAIRPERSON: Thank you. I don’t have any questions. But I just want to make the point that although not everybody shows up at our hearing everybody has the opportunity to.
12562 MR. WUDRICK: I understand, that’s why we’re here.
12563 THE CHAIRPERSON: And the barrier entry into a CRTC proceeding is the cost of a stamp, or not even that much. We allow people even to fill in questionnaires through phone calls, which we will pay the long-distance charges to. I know of no other federal minister of tribunal with lower barriers to entry.
12564 For some reason, for instance, our colleagues at the Energy Board are prohibited from hearing from certain interest groups. That’s not our case. In fact, we go out of our way to make it available. And we’re very thankful for you and your association for having participated in this. Okay? Thank you.
12565 MR. WUDRICK: Thank you very much.
12566 THE CHAIRPERSON: Madame la secrétaire?
12567 THE SECRETARY: I would now ask Michael McNally to come to presentation table.
12568 MR. McNALLY: Hello. My name is Michael McNally and I’m an assistant professor at the School of Library and Information Studies at the University of Alberta. I want to begin by thanking the Commission for undertaking this review of basic telecommunication services.
12569 As noted in my July 14th, 2015 Phase I intervention with my colleagues Rathi, Evaniew and Gareau-Brennan, the Commission has demonstrated policy leadership, which, according to the ITU is an essential ingredient for national broadband. I want to thank the Commission again for showing this leadership.
12570 Our Phase 1 intervention, along with our Response to Requests for Further Information from the CRTC on September 21, 2015, outlines our responses to the Notice of Consultation in which we suggest four key elements: facilitating access to transport/backbone facilities; subsidies to incent and ensure broadband penetration for rural and remote communities and individuals; mechanisms to ensure affordable access for low income individuals; and, funding for skills development or digital literacy.
12571 I want to use my time today to discuss two of these four elements in detail, and draw connections with comments from several other intervenors and the Let’s Talk Broadband Findings Report from EKOS. My choice to focus my comments on broadband penetration for rural and remote communities and funding for digital literacy is not meant to suggest that the other two elements of the intervention are not important; however, as noted in my September 21st response, I'm cognizant of the fact that CRTC faces an extensive array of comments, and,
12572 “We are reasonably amenable to modifying our proposal so long as the primary purpose is that ensuring…our primary objectives, overcoming the digital divides and ensuring universal, high-speed, affordable broadband, are met.”
12573 In regards to digital literacy, I want to begin by noting that the Commission itself identified digital literacy as a potential barrier to meaningful participation in the digital economy in its Notice of Consultation.
12574 As we noted in our Phase I intervention, digital literacy should be conceived broadly, and not simply skills for using the internet. Demand side factors are an important element for the Commission to consider. It should be considered to include knowledge such as how to understand, troubleshoot, and maintain networks.
12575 Other jurisdictions have adopted significant measures to enhance the digital literacy of their citizens, and increasing Canadians’ digital literacy offers,
12576 "numerous benefits to ensure Canadians are able to participate in and remain competitive in the digital economy."
12577 Specifically, we have proposed funding for skill development and digital literacy be made available to community anchor institutions -- libraries, schools, and communities centres -- and be tied to assessment criteria to measure increases in skills.
12578 Our sentiments are reflected by several other intervenors. The First Mile Connectivity Consortium notes,
12579 “Basic telecommunications services available in rural, remote, and northern areas must also be of high quality, and digital literacy skills must be promoted, both for consumers and in terms of local management and operation of telecommunications infrastructures and services.”
12580 Roslyn Layton states,
12581 “Regulators should think more broadly about defining what digital literacy means for Canadians and how specifically Canadians are to participate meaningfully.”
12582 Tamara Shepherd underscores the importance of considering demand side policies for lower income, senior, or disadvantaged users who have specific reasons for non-adoption. Concerns over digital literacy are also expressed by Xplornet, which claimed,
12583 “If the Commission can play a meaningful role in promoting digital literacy, that may be an appropriate area for action.”
12584 The Cree Nation Government in its intervention specifically recommended funding for project-specific digital literacy and training activities. Similarly, MediaSmarts has also urged the Commission to take into consideration the importance of digital literacy, noting, “Digital literacy is essential.”
12585 Telecommunities Canada iterates that “digital literacy skills must also be supported." And finally, the Nunavut Broadband Development Corporation states it,
12586 “Would like to see targeted funding support for low-income households and for community anchor institutions such as schools and libraries, as well as for digital literacy programs.”
12587 These comments demonstrate that a range of intervenors share a sentiment similar to ours. The demand side of broadband, and specifically digital literacy, must be considered by the Commission as an aspect of basic telecommunications services.
12588 The importance of digital literacy is also reflected in the findings of the Let’s Talk Broadband report by EKOS. In the representative survey, while only a small number of Canadians -- two percent -- noted that lack of skills or training was the main reason they had limited their use of the internet, nearly one quarter -- 24 percent -- noted that it was an “other reason” for limiting use.
12589 Given that so many Canadians identify digital literacy as a factor limiting use, and the Commission’s stated interest in examining what services Canadians require to participate meaningfully in the digital economy, the Commission should consider digital literacy as an essential aspect of basic telecommunication services.
12590 With regards to rural and remote broadband, comments on its importance have appeared extensively in the interventions, and even today and yesterday at the hearings.
12591 I would like to take my remaining time to underscore some of the findings from the Let’s Talk Broadband Report that demonstrate the critical importance of enhancing rural and remote connectivity. This report underscores that rural Canadians face limitations in terms of access to key services such as healthcare and education. Individuals have lost out on employment opportunities and scholarships. The report notes that in once case an individual had family members in southern Ontario send flash drives with large files to them through the mail. This certainly doesn’t constitute meaningful participation in the digital economy.
12592 Finally, many of the participants noted that they can’t seek out other service providers because they simply don’t exist. This last comment is particularly insightful as it reinforces the point from our original intervention that in many rural and remote regions market forces simply don’t exist, and as such can’t be relied upon to encourage the development of broadband services.
12593 Given the lack of market forces, we have suggested that local communities and governments be empowered to develop their own solutions. As detailed in our September 21 response, funding local governments and giving them the decision making capacity to either a) develop their own community owned networks, b) create public-private partnerships, or c) rely on the private sector is a means of reducing the regulatory burden of the CRTC while encouraging rural and remote broadband development. These funds should be made available by revising the National Contribution Fund.
12594 It will also be necessary to ensure that rural and remote communities have access to transport infrastructure to ensure that locally developed solutions do not face bottlenecks in terms of interconnections.
12595 As we have suggested in cases where local governments are unwilling or incapable to develop plans, access to funds should be opened up to telecommunication services providers via a competitive bidding process.
12596 To conclude, I want to emphasize that the Commission has stated its interests in examining which telecommunication services are necessary to meaningfully participate in the digital economy. Meaningful participation is only capable when communities and individuals possess access to broadband infrastructure and have the requisite skills to make use of such infrastructure.
12597 Many Canadians lack the prerequisites for meaningful participation, and addressing issues including access to transport or backbone infrastructure, ensuring rural and remote broadband penetration, affordable access for low-income individuals, and digital literacy skills is crucial.
12598 I again want to thank the Commission for its role in addressing these issues.
12599 THE CHAIRPERSON: Thank you very much, Mr. McNally.
12600 Commissioner MacDonald will start us off.
12601 COMMISSIONER MacDONALD: Good afternoon. I think I want to start off by asking about your research into what other countries are doing on this very topic. And in your intervention you describe access to fibre as the gold standard that we should be -- what should be striving for, and obviously there are inherent benefits to fibre over some other technologies.
12602 But I just want to get your sense on how realistic a full fibre deployment across the country would be. I notice that you, in your intervention, provide a table comparing where various different countries are in their own broadband rollouts, and Canada is definitely not towards the top of that scale, but we're being compared to companies -- to countries like Japan, for example, which has many more people than we do and is roughly -- well, it's actually smaller than Atlantic Canada. So can you comment on how realistic full fibre would be?
12603 MR. McNALLY: I think getting to full fibre, connecting every single last community, particularly in the north, is perhaps at best, an aspirational goal. That being said, in terms of the research that we've been doing and looking at other countries, we do see a large push by countries to develop strong targets, in terms of, you know, the U.S. in connecting 100 million households to 100 megabytes per second.
12604 The Australians, they've, however, have significantly scaled back their program. I had the good fortune of being involved in a meeting with some officials from Covage, which is Axia's French subsidiary, and they were discussing their deployment of fibre in France. The price tag was 40 billion Euros. We had to check translation a couple of times to make sure that that was billions and not millions.
12605 So I think is connecting every community to fibre a realistic goal? In the short-to-medium term, certainly not, but I think one of the things we can do is try and develop the capacity within local communities so that they can build solutions that best work for them, which I think in many cases, if we let them decide and inform them, it may be fibre.
12606 COMMISSIONER MacDONALD: You also suggest that we may want to adopt similar speed targets as the FCC has done south of the border, 25 down, 3 meg up. Do you view that as being a hard regulatory target that should be met or would that be more of an aspirational goal?
12607 MR. McNALLY: I think the challenge that you face is you’ve got at one hand what you want to get everyone to, and on the other hand, what do we really want to have communities have?
12608 And I think that certainly 25/3 is reasonable in many non-satellite dependent communities. If a community is satellite dependent, that defines its abilities. It's dependent on satellite technology and therefore other options aren't simply available.
12609 What I think one of the challenges is, if we set a very achievable goal, whether it's 5/1, 10/1, 10/3, do we end up taking these communities that are not connected at this point and setting them up so that they will only get 10/1 or 10/3? And so the challenge is how can we encourage communities to effectively leapfrog?
12610 And for good of context, I do a lot of work in Alberta. I've been part of the Van Horne Institute’s series of digital futures meetings and we've really seen over the past several years Olds, Alberta being held out as an example that’s, you know, rather than relying on the existing service providers, it went with its own community developed solution and now I know individuals there who are getting 100 gigs at work.
12611 So how can we develop a strategy where we set a baseline for basic services, yet we don't disincentivize communities from going much further ahead? And that's one of the challenges that I really observed within Alberta in particular.
12612 COMMISSIONER MacDONALD: You noted in your opening remarks this afternoon that we should be creating an environment where communities can go out and develop their own broadband infrastructure. Some communities across the country have already done that quite successfully and others have not even looked at the issue.
12613 Why do you think some municipalities are so resistant to the idea of funding broadband networks and getting into that business themselves?
12614 MR. McNALLY: One of the things -- and I'm drawing on my work here from being involved with the Van Horne Institute and the Digital Futures, and I should also note that I'm doing some work with Economic and Development and Trade Department of the Government of Alberta, is there's simply a lack of knowledge and understanding sometimes at the community leaders level and sometimes at the citizens level.
12615 In some cases, the citizens, “Well, I have internet. I don’t understand, you know, what better internet is going to do. I can talk to my grandkids. You know, I can order things online. It doesn’t need to be any better.”
12616 And that's where this kind of broad understanding or broad emphasis on digital literacy is about, in part building capacity in communities so that they can kind of engage in these discussions and say, “We have maybe an existing service provider. Do we want to take a municipal initiative and spend more money to build a better solution?”
12617 In many cases, they don’t have the information to inform that discussion but we know that the communities are facing challenges. The MP from Pontiac this morning talks about youth retention and that's a major issue in rural communities and it's also an issue for urban Canadians because we can't simply depopulate all the rural areas of Canada and send them all to the big cities because we'll face sprawl and growth and other issues that way.
12618 So I think, you know, why have some communities done better, because in some cases they see a more urgent need to do something to revitalize their community and that's often broadband. I think both the MPs this morning did a good job of illustrating that.
12619 And in other cases, there may be more pressing issues. You know, it's one of the discussions I often hear in the Alberta context is, you know, you talk about municipal broadband project and someone will say, “Well, that's a hockey arena or a swimming pool”, and for a lot of communities particularly in rural Alberta, that hockey arena, new hockey arena is a pretty important piece of infrastructure as well.
12620 COMMISSIONER MacDONALD: We had a presentation last week I believe from a municipality here in the country and they had underserviced citizens but they hadn’t put any focus at least to date or any money behind building out or encouraging any infrastructure to be built out.
12621 So I went on and I looked at the most recent budget that I could find, which admittedly was from a couple of years ago, and I noted that they spent $12.9 million upgrading parks in that fiscal year.
12622 So how can we encourage local communities or regional municipalities to prioritize broadband infrastructure versus the hockey rink or the new park or other priorities?
12623 MR. McNALLY: I think one of the key things that can be done is providing information particularly around the business models that are available to communities.
12624 So through the work that the Van Horne Institute has been doing and now in conjunction with the Government of Alberta, we're developing information around five business models for community broadband.
12625 And so these exist all the way from the kind of find the -- encourage the private sector partner to come in and so we have examples of that in Alberta. We have fibre builds. Axia is doing fibre builds in Vulcan, Alberta, and that is the lowest risk, lowest cost option for a municipal or city or regional government, conversely all the way up to build the and operate the network which was the approach in Olds.
12626 So what we're doing is trying to identify how the spectrum of models that exist in between those two points so that we can provide that information and I think a national initiative that the CRTC could undertake to provide such information to communities would go a long way in facilitating community developments.
12627 COMMISSIONER MacDONALD: So with respect to national initiatives and the focus of this hearing is quite broad, are there any best practices you can draw on from other countries as to how all of these stakeholders are brought together, be they provincial, municipal or federal government, different agencies, the regulator, the service providers? How do we bring all of those groups together and who is best to lead that exercise in the development of a broadband strategy?
12628 MR. McNALLY: I think it's difficult to generalize from other nations’ experiences but certainly I mean here in the Canadian context -- and I should note when I wrote my initial comments on policy leadership, it was the summer of last year, I will acknowledge the federal government, the new federal government, of course, has announced 500 million.
12629 That overarching leadership must come from government. I've heard the Chairman today talk about willingness to work together with Innovation, Science and Economic Development, but I think at the same you've got to facilitate the solutions from the bottom up.
12630 One of the things we've discovered is, you know, often the locally developed solutions are the most effective but there's often a capacity gap in getting local or regional groups to kind of make decisions.
12631 And, you know, just thinking of Rogers’ presentation earlier, I think a national task force is perhaps a useful idea for, you know, getting a little bit of momentum. However, you look at the National Broadband Task Force and we were to have universal 1.5 down internet by 2004 and we still don’t. And you look at the Telecommunications Policy Review panel and we were to have ubiquitous internet by 2010 and we still don’t.
12632 So a national blue-ribbon panel may not be the best approach but trying to catalyze conversations from lower level regional governments, provincial governments, federal governments, along with the telcos, independent non-governmental organizations, the academic community, and those can be done by any number of ways, including this hearing to some extent.
12633 COMMISSIONER MacDONALD: When you're suggesting builds, facilities builds, are you targeting those just at unserved and underserviced regions, or you're suggesting that infrastructure be overbuilt where there already is service today?
12634 MR. McNALLY: My suggestion in terms of funding for capital costs for new builds would be for underserved communities.
12635 Now, part of that may be -- depending on how one defines basic services, there may be communities that have very low speed broadband now becoming then considered underserved. And certainly the kind of proposals we've sketched out is, you know, fund the capital cost of the connection from that community, a local point of presence, back to transport infrastructure, make that conditional on having the community develop some sort of plan, then to build last mile connections, and whether that’s partnering with the private sector or doing it themselves or some combination in between, that would be an option, and then we’ve noted that there should be a small remittance for operational costs in any community that is a single service provider regardless of who that service provider is.
12636 COMMISSIONER MacDONALD: So in that regard, with the focus on transport, it would be similar to the Axia presentation that we heard from a few days ago with respect to funding the build of transport capacity and then leaving the last mile access up to market forces?
12637 MR. McNALLY: Leaving the last mile up to market forces where markets exist. In those areas that are considerably underserved or have no broadband then there’s no market forces there to have activated and there’s a need for intervention.
12638 And I think the people best suited to make the decision as to what that type of broadband may look like in that community are the local citizens. They may say “We’re willing to endure a local higher cost and we’ll take care of that last mile fibre connection”, or they may say “Well, we’ll see if we can get a third party to do it”, or they may say “Well, we’d rather build fixed wireless”, or “We’d rather, you know, go some other route.”
12639 So I think in many ways the key to those underserved and unconnected communities lies in the communities themselves and giving them the information and the decision making power and a little bit of funding to make their -- whatever they decide in terms of broadband come through.
12640 COMMISSIONER MacDONALD: Just to change topics for a minute. How do you define affordability?
12641 MR. McNALLY: Affordability is obviously relative to one’s income. So, as I noted in my September 21st response, ideally this issue of affordability could be addressed through a tax expenditure. You simply report your income, an internet provider could provide you with a set of alphanumeric digits to describe your broadband package, and then CRA could calculate your broadband expenditure relative to your income and whatever potential tax expenditure or tax credit you may qualify for. Of course that’s far outside of your regulatory purview.
12642 So, in that regard, I think, looking at affordability for something like broadband, I would compare it to other utilities, so things like gas, water and electricity. I think electricity is a very strong parallel for broadband.
12643 If you look at Statistics Canada data on expenditures for utilities, those three utilities are roughly one percent each of either household income or household expenditure, and so broadband roughly should be again one percent of household income or household expenditure, and that paying it or connecting it to either average household expenditure or average household income would allow you -- you could vary it then in geographic areas where there’s higher or lower average incomes or average household expenditures.
12644 COMMISSIONER MacDONALD: So the one percent that you described, that would be just for broadband, that’s not a total expenditure on communications services? That doesn’t include landline, that doesn’t include wireless; the one percent is just for broadband?
12645 MR. McNALLY: Yes, the one percent would be for wireline broadband and wouldn’t include other services.
12646 COMMISSIONER MacDONALD: Should any special, be they discounts on the part of the service providers or any additional funding through like a funding mechanism suggested by AAC, should that be targeted in addition to low income people also to people with disabilities?
12647 MR. McNALLY: I’m struggling to answer the question because they’re obviously connected. Disability and -- I would like to know the degree to which disability and income -- lower income are connected.
12648 To give a remark, at this point I would say yes, it should be extended to people with disabilities, although I think there -- it could merit further analysis as well.
12649 COMMISSIONER MacDONALD: Okay. You had suggested taking -- the funds can be made available through the National Contribution Fund to fund broadband services to unserved Canadians. Are you suggesting that we would no longer want to fund the deployment of wireline telephone in high cost serving areas?
12650 MR. McNALLY: Yes, I think repurposing the National Contribution Fund so that it targets broadband and no longer wireline telephone and focusing it on underserved and rural areas would be kind of the principal drive.
12651 You could -- I’m more than willing to acknowledge that you could also use it for high cost areas as well, areas where there’s high cost of broadband. Those are likely to be underserviced areas anyway. So I don’t think there would be much difference in those two.
12652 But certainly yes, take the NCF, expand the eligible funds to include wireline, broadband, and also wireless broadband under the argument that if you’re going to spend part of these funds on enhancing the digital literacy skills of Canadians and really driving, you know, a meaningful culture of use around the internet, that that will have benefits for the wireless providers in terms of increased usage which they can then capitalize on.
12653 So, yes, expanding the eligible funds to cover a broader range of funds and then funneling it to fund both underserved kind of rural and remote areas, ensuring backbone connections, digital literacy, and some means of support for low income and disabled Canadians.
12654 COMMISSIONER MacDONALD: With respect to expanding the collection of those funds to include other services, what happens when peoples’ bills go up; do you think Canadians are willing and eager to spend a few bucks more a month to ensure broadband services for their fellow Canadians in more remote areas?
12655 MR. McNALLY: I think there is mixed evidence for that. I think if you look at the Lets Talk broadband findings you do see that there is some -- some Canadians are willing to support, you know, relatively equal costs of broadband in rural areas.
12656 There’s also some -- to some degree a question of whether there’s a public good argument that overrides the individual -- interested individual Canadians.
12657 I see -- I think the analogous technology for broadband is not the telephone it’s electricity. It’s an underlying enabling technology. And if we don’t start facilitating and ensuring broadband universally those communities that don’t have it will be left a generation -- a century behind.
12658 And so I don’t think it’s always necessary that individual Canadians be the decision makers. I think in some cases there are broader public good arguments that need to carry the day.
12659 COMMISSIONER MacDONALD: So if funding is required, is that a decision best made by -- through regulation, a decision made by five people sitting here that no one voted for, or is it better made by instituting tax measures that are decided on by 338 elected officials across the river?
12660 MR. McNALLY: Ideally, I should not be here, because I think -- I think you’re right. I think in a perfect world government expenditures would be well-suited to cover this. I know you don’t have regulatory authority over spectrum. The revenues from spectrum auctions would seem well suited to fund other broadband deployment. Ideally digital literacy should not be the primary responsibility of the CRTC; it should be Employment and Skills Development Canada and to a lesser extent CMEC, the Canadian Ministers of Education Canada.
12661 However, there is in some ways a little bit of a vacuum. ESDC has a little bit around computer skills but they do not really emphasize digital literacy to the same extent they provide funding for literacy and numeracy. And so there is a little bit of that vacuum where we need policy leadership.
12662 And in this case you yourselves have demonstrated that leadership and I think, you know, certainly continue conversations with the government. I mean, ideally they should be the ones leading this. But I think the National Contribution Fund certainly has some potential to provide funding in the meantime, to facilitate connections for rural and low-income Canadians.
12663 COMMISSIONER MacDONALD: Thank you. And your answer actually bridged into digital literacy, which was going to be my next question. So I just have one more question on digital literacy before I hand you back over to my colleagues.
12664 What do you think the Commission should do on that topic? Should we encourage, should we strongly encourage digital literacy enhanced programs on the part of the service providers, perhaps educational bodies from across the country from stepping up and offering digital literacy courses? What do you think we should do to ensure that there’s more of a focus placed on that in the future?
12665 MR. McNALLY: I think of you look at it there’s a lot of digital literacy that goes on nowadays by various institutes, I mean, in schools, in libraries. And so I think the best suggestion would be to really kind of encourage those particular ESDC, Employment and Skills Development Canada, CMEC, provincial library associations to really take a keen interest in digital literacy. Many are already doing that.
12666 I think the other two pieces, and again, considering digital literacy very broadly, not just how to use a computer, how to use the internet, the digital literacy around how to build a network and, you know, what kind of benefits broadband might bring to a community, I think that might be work that the Commission can kind of spearhead and encourage provincial governments to partner with and provide that to communities.
12667 And I think as well, I know the First Mile Connectivity Consortium has talked about the importance of digital literacy around the kind of more technical aspects of operating broadband networks. And I think that’s a really important gap that needs to be addressed because by developing that kind of technical capacity in communities it reduces the cost for everyone. Whether it’s an existing telecom provider now has a local pool of knowledge that they can draw on and they don’t necessarily have to fly experts or technicians in from further away, or if it’s a community-developed initiative then they have kind of local expertise.
12668 So I think that kind of traditionally conceived digital literacy I think is the Commission’s job to really push the existing stakeholders to take on a stronger role. But those kind of less traditional things like community knowledge about broadband networks and the business models around how rural and remote communities can develop broadband, I think there’s some role for the Commission to play a little bit more of a substantive role, at least in the early days on and certainly encourage and work with provincial partners.
12669 COMMISSIONER MacDONALD: Okay, thank you very much. Those are my questions.
12670 THE CHAIRPERSON: Thank you.
12671 Commissioner Vennard?
12672 COMMISSIONER VENNARD: Good afternoon. I have a couple of questions that I would like you to sort of explore with me.
12673 As the Commissioner for Alberta, I’m interested in your research and what you’ve heard through your work and so on. And I’m presuming that you’ve heard about the different pockets of unserved people, and gaps, and stranded people, and so on. And I’m curious to see from your point of view and what you know and have researched on this, do you think that we have that problem in Alberta?
12674 MR. McNALLY: Yes. Even if you look at the coverage map and Alberta comes out very well, we still have pockets of communities where they are underserved and, as Commissioner MacDonald, really have no interest in -- they haven’t gotten to the point where they’ve said this is a problem and we need to solve it.
12675 COMMISSIONER VENNARD: Do you think that it’s the same sort of problem as we’ve heard described where the service goes out to a certain point and then there’s a dead zone there? In Alberta there are communities that are underserved or possibly even -- I’m wondering if you think it’s the same dynamic in Alberta or if you think that the SuperNet, the actual idea of the SuperNet, has alleviated some of that problem as we start to think about potential solutions and strategies and so on? I’m looking at what you might think the value of the SuperNet would be in that type of a situation.
12676 MR. McNALLY: The SuperNet certainly gets one a long way there in terms of potential. But once you start to move kind of outside of communities into, you know, the farm, and when the next closest farm is two kilometres down the road and the next closest farm is three kilometres down the road, those are very challenging pockets to address.
12677 I mean, the Government of Alberta has tried with satellite to address some of that in some ways. You know, my kind of belief is if we go to those farms and they have gas and water, well, maybe they wouldn’t have running water. They may have gas and electricity. If we can run gas and electricity to those farms and fibre is, in comparison, a relatively cheap utility, especially if you have existing infrastructure, certainly how can we get those last few places connected?
12678 But yes, there’s a problem of remote connections at the end of the day, and I think that’s ---
12679 COMMISSIONER VENNARD: Which the problem of remoteness I think is a little bit different than people that are just sort of stranded.
12680 MR. McNALLY: I would agree. I think that the remoteness, and the stranded, and the satellite-dependent communities pose a real challenge in terms of thinking about basic telecommunication services. Because obviously if you’re making a statement or declaration about a basic service that all must have then that’s got to be something that works for those individuals or households, and yet that comes back to the idea of, well, if we have to go to that lowest common denominator do we end up actually underserving everyone else?
12681 COMMISSIONER VENNARD: M’hm. The second thing I wanted to talk to you about is about the five models that you mentioned. And those are business models. I presume they’re also deployment models for broadband, both for new services as well as expanding services and so on.
12682 And I’m presuming that -- and here I’m making a long list of presumptions -- that you developed these models from your research and literature reviews and so on and looking at the international level and that. And I’m further presuming you’re probably writing a paper on it; would that be correct?
12683 MR. McNALLY: So with regards to the business models, I want to acknowledge the work of Bob Dyrda who’s at Alberta Southwest who’s really been a key participant in a lot of the Digital Futures conversations. And he has actually done a lot of work on developing at least initial sketches of those models. What’s now happening is, in partnership with the Government of Alberta, we are writing up a toolkit for communities that will flesh out those business models with examples. Wherever possible, Albertan Canadian, and then in some cases U.S. examples.
12684 And so, yes, there will be two publications kind of come of that. One is the toolkit designed for communities to use and the other being the academic research paper that will go into the more traditional ---
12685 COMMISSIONER VENNARD: When might those papers be available for people?
12686 MR. McNALLY: Unfortunately the timeline for the toolkit is -- it won’t be ready until October at the next Digital Futures. That being said, I can check with my colleague Mr. Dyrda. He gave a presentation at the last Digital Futures in March. If he would be willing to chair his presentation slides I would then be willing to pass those on to the Commission.
12687 But again, I can’t guarantee that ---
12688 COMMISSIONER VENNARD: Sure.
12689 MR. McNALLY: -- he would speak with ---
12690 COMMISSIONER VENNARD: And I won’t ask you for an undertaking. I’ll just ask you if you’re able to share those with us if you would.
12691 MR. McNALLY: I will. I will indeed.
12692 COMMISSIONER VENNARD: Okay. My final question is along the same line. Within those models, and I’m not even going to ask you to describe them because you’re obviously not ready to talk about them yet and that’s fine.
12693 Would there be -- would this be of use to Canada, the north? Might there be some deployment models there that would be useful in trying to take on some of the challenges that we've been hearing about in the north?
12694 MR. McNALLY: So these models would be useful in many communities, I think. In some northern communities, there isn't -- you could build the fibre infrastructure and there's nowhere to connect that fibre infrastructure backbone to. You'd run into a bottleneck issue.
12695 And the other, of course, if you have a satellite-dependent community, then by definition, it's satellite-dependent. But there's certainly nothing stops these models from being applicable in many regions of the country and not just -- there's nothing uniquely Albertan about them.
12696 COMMISSIONER VENNARD: Okay, so even -- we've heard a bit about the challenges in different areas of Quebec and so on where they have the stranded problem and they have, you know, deployment problems and so on. So okay, well, we will certainly look forward to seeing those when they're available.
12697 Thank you. Those are all my questions.
12698 THE CHAIRPERSON: Just polling my colleagues. Apparently, those are all our questions. Are you actually physically based normally in Alberta?
12699 MR. McNALLY: Yes.
12700 THE CHAIRPERSON: And you’ve come for this hearing?
12701 MR. McNALLY: I've come for this hearing.
12702 THE CHAIRPERSON: Well, you be commended for having done that. Thank you very much. It was very (inaudible).
12703 MR. McNALLY: I want to thank the Commission for having the hearings.
12704 THE CHAIRPERSON: Thank you. I think what we'll do, because next Panel is rather large as well and we're probably due for a break, so why don’t we come back at 3:45? Thank you.
--- Upon recessing at 3:34 p.m.
--- Upon resuming at 3:48 p.m.
12705 THE CHAIRPERSON: A l’ordre. Order please.
12706 Madame la secrétaire.
12707 THE SECRETARY: We will now hear the presentation of MTS Inc.
12708 Please introduce yourself and your colleagues, and you have 15 minutes.
12709 MS. TULK: Thank you very much. Good afternoon, Chairman Blais, Vice-chair Menzies, and commissioners.
12710 My name is Heather Tulk and I am the Chief Customer Officer at MTS. With me today, starting at my far right is Hong Chung, our Director of Network Technology; Patricia Solman, our Senior Vice-President of Network and Field Services; Paula Anderson, our Director of Wire Line Products; Paul Norris, our Vice-President of Residential Solutions; and Grainne Grande, our Director of Regulatory.
12711 I'll start with the opening remarks and then the whole team will be ready to answer your questions when I'm finished.
12712 On Monday, Chairman Blais asked remaining parties to address some key issues regarding broadband internet access. We will do that, but before we discuss broadband, we are compelled to make a couple of points with respect to other matters that have been raised during this proceeding.
12713 First, reliable high quality basic voice service and the regulatory regime that provides for it remains essential to many Canadians and should not be altered.
12714 Second, if a local service subsidy is prematurely phased out or eliminated, so too should be the obligation to serve the basic service objective and the cap on residential primary exchange service rates.
12715 Let's start with the first point, that reliable high quality wire line voice service is a requirement that is still essential and relevant to millions of Canadians today.
12716 Throughout Canada, emergency, government, and Social Services can all be accessed using basic voice and for many Canadians, basic voice remains the chosen method to do so. Without access to basic voice, some residents could be cut off from all basic communications, including emergency services as well as services such as banking, education, and government services.
12717 Simply said, basic voice is integral to allowing many vulnerable Canadians to participate in the economic and social fabric of their communities. Any premature changes to the basic voice services regulatory regime will have a disproportionate and adverse impact on rural and remote customers in high-cost serving areas in Manitoba, and indeed across Canada.
12718 In our case, Manitoba has a unique and challenging geography. It is one of the lowest population densities among the provinces in Canada, with an average of only 2.2 people per square kilometre. Even more significant is that 88 percent of Manitoba's land mass contains just 13 percent of Manitoba's population, leaving the 88 percent of Manitoba with a -- that 88 percent of Manitoba with a population density of only .31 people per square kilometre.
12719 We estimate that currently 24 percent of all residential lines in Manitoba are in high-cost serving areas. This is almost two and a half times greater than the national average of 10 percent.
12720 MTS, in fact, serves a disproportionately large number of these high cost lines. Approximately 37 percent of our residential wire line telephone service customers are on rate bands E, F, and G. Manitobans in these high cost serving areas depend on this basic telecommunication service. Given this dependency, the regulatory regime underpinning basic voice is crucial.
12721 This regulatory regime has been well-examined, tried, and proven. Just five years ago, it was the subject of an in-depth review by the Commission. The Commission's decision at that time struck the right balance and resulted in a just and reasonable outcome for Canadians. One of the main features of that decision is the acknowledgement of the importance of the voice subsidy mechanism and the affirmation that the subsidy should remain in place, given that it was designed to decline naturally over time.
12722 To the Commission's credit, this mechanism is doing exactly what it was intended to do. Since 2010, the subsidy regime has already seen the required subsidy decline by 35 percent, and this trend is expected to continue.
12723 Turning to my second point, any accelerated phase out or elimination of a local service subsidy would need to be accompanied by a corresponding reduction or elimination of the obligation to serve the basic service objective and the cap on residential rates on these areas. Changing one part of this equation without changing the others would disrupt the carefully crafted balance of this naturally declining mechanism.
12724 Removing the subsidy mechanism would lead to a need for price increases well beyond the established price cap, making basic voice unaffordable for many Canadians. This in turn will lead to customers being forced to drop this essential service. Since the costs of providing local service are largely fixed, the cost per subscriber will increase even more as these customers leave, resulting in the need to raise rates even further for those remaining.
12725 The Telecommunications Act expressly states that every rate charge by a Canadian carrier for telecommunications services should be just and reasonable. The 2011 proceeding extensively reviewed what a just and reasonable price cap would be, and we see no need to reopen that decision now.
12726 Under the obligation to serve, ILECs have no choice but to provide basic voice in high cost areas; however, no service provider should be forced to provide service below cost, meaning both the service levels and service obligation would need to be re-examined. The end result would be that a fundamental basic telecommunication service would no longer be affordable nor accessible for many Canadians in rural and remote regions.
12727 I will now turn my remarks to the broadband questions in front of the Commission in this proceeding.
12728 Mr. Chairman, earlier this week, you challenged the industry to provide input on a national broadband strategy. We agree that this proceeding provides an important opportunity to review the state of broadband services in Canada and the next steps. Market forces and rapid changes technology, together with targeted government funding, have had profound and positive effects on the availability of broadband services in the country.
12729 The vast majority of Canadians are able to access services at or near the target speeds established in 2011. As Chairman Blaine noted in his opening remarks at this hearing, 96 percent of Canadians had access to internet download speeds of at least 5 megabits per second at the end of 2014. As of the end of 2014, in Manitoba, 98 percent of households had access to fixed broadband and 95 percent had fixed broadband available to them at speeds from 5 to 9.9 megabits per second.
12730 Commissioners, I'm delighted to say that I was part of the roll out of some of the first broadband networks in Canada in the late 1990s, and I am, in fact, very proud of the fact that in just 15 years, broadband services are now available to 96 percent of Canadians.
12731 Significant progress has been made. The industry has actively responded to market demands, governments have been active partners, and substantial benefits of broadband are being delivered to the vast majority of Canadians. Yet we share the belief that gaps in broadband coverage still persist and the work must continue.
12732 We believe that universal broadband access is a worthy and important policy objective, and we are delighted that industry, governments, and other stakeholders continue to step up in pursuit of this goal. There is a well-established track record of successful government and industry partnerships to drive broadband coverage. Canary, the Broadband for Rural and Northern Development or BRAND program, and Broadband Canada are just some of the examples, and they go way back.
12733 And this work continues. Since 2014 the federal government's $305 million Connecting Canadians program has been extending and enhancing broadband service to more than 300,000 rural, remote, and northern households, with a goal of connecting over 98 percent of Canadian households to new or improved high speed internet services.
12734 Most recently, we were delighted to see that in budget 2016 the federal government committed to spend an additional $5 million over 5 years to extend and enhance broadband service to even more rural and remote communities.
12735 The government also allocated $255 million over 2 years to the First Nations Infrastructure Fund, which can be used towards broadband connectivity.
12736 Several provincial governments have also pledged funds to promote broadband deployment across rural and remote Canada, signalling a clear intention to continue to act.
12737 We believe that this sustained approach will ultimately lead to near universal access to broadband in Canada, without any need to impose a basic service obligation. Moreover, it is an approach that is more efficient and proportionate to the purpose than others that might be considered, since it allows for a narrower focus on only those areas where market forces are not sufficient to ensure adequate deployment and where communities are actively involved in the solution.
12738 In Manitoba we know that many of the five percent of households that do not yet have access to download speeds of five megabits per second live in challenging to serve rural and remote areas. These real challenges of broadband deployment must not be overlooked.
12739 Caution must also be taken to ensure that in the desire to increase target speeds, the goal of universal coverage is not displaced. Real trade-offs are being made between investments to increase speed and investments to increase coverage. And we believe that we must first ensure all Canadians have access to broadband before we consider increasing the five and one targets.
12740 The Commission’s role in establishing broadband speed targets in Canada has struck the right balance of regulatory oversight. The five one speeds meet or exceed what is required for access to the essential services examined by the Commission in this proceeding.
12741 With respect to economic access to broadband connectivity, we agree that it is not just availability but accessibility of broadband that is important to Canadians. Dealing with social issues impacting Canadians, such as affordability, are important. But we respectfully submit that this is an issue that should be addressed by social policy tools, as opposed to regulatory measures.
12742 We believe that it is governments, not industry, that are in the best position to decide who should qualify for necessary assistance, and in what form that necessary assistance should be granted.
12743 That being said, in Manitoba we see ourselves as an important community partner. We participate in numerous community initiatives and programs that are designed to address accessibility and digital literacy. Examples such as our ongoing consultation with various accessibility groups, delivery of technology tip seminars to train seniors and new Canadians in digital literacy, a Computers for Schools partnership, our leadership role in supporting the Canadian Centre for Child Protection’s efforts to protect child and youth online, and as a co-founding partner of the Cybertip.ca program and the MPS Future First program, which in 2015 alone awarded $100,000 in grants to youth organizations, including over $40,000 to those supporting children with disabilities and indigenous youth.
12744 Work with the Society for Manitobans for Disabilities has also been undertaken to develop and accessibility sensitivity training course that over 600 of our employees have already taken.
12745 And Commissioners, this is just a few of the community initiatives supporting accessibility and digital literacy that we are involved in at MTS.
12746 It is our position that the best strategies to eliminate the gaps in broadband connectivity are those strategies that target the specific needs to be filled. Each of these needs must be addressed by the party that is most appropriate to assess and fulfill it.
12747 Effectively, this means that all stakeholders have a role to play. All levels of government from band councils straight through to the federal government, public interest groups, private sector and the CRTC. But this does not mean that there is a need for regulatory intervention.
12748 What we are recommending today with respect to broadband we believe is consistent with all of the guiding principles of the National Broadband Taskforce of 2001 that you asked us all to consider.
12749 In conclusion, it is our position that there is no need for regulatory intervention on broadband internet services, given that market forces, technology advancements and existing and new targeted government programs are reaching and filling the gaps that exist in broadband coverage.
12750 The value of policy levers like this is that they can be tailored to the needs of a particular region or a particular group, rather than attempting a one size fits all solution.
12751 This concludes our presentation and we are ready to take any questions you may have for us. Thank you.
12752 THE CHAIRPERSON: Thank you very much for that presentation.
12753 Commissioner Vennard will start us off.
12754 COMMISSIONER VENNARD: Good afternoon.
12755 There’s a few areas that I want to explore with you today. And what I’d like to do is just start off by pointing out that I think that there was a little bit of slippage in your written submission. Because we’re looking at the digital economy, not just the economy. And you seemed to sort of drop that part out. In one part there you said that you encouraged us to think about participation in the economy. And we are here more focused on a digital economy and the way that digitization and networks fit into that; okay? So that’s just something that I wanted to say.
12756 Now your written submission is very complete. You presented your arguments with respect to wireline and voice and they form part of our records here. So what I want to do is just move into that area of looking at the digital economy, rather than just the economy, and move into the area of broadband. You also covered off the whole voice line very well in your opening remarks too.
12757 So having said that, from your point of view, what are the basic services? And here I’m not talking about the economy. I’m talking about the digital economy; okay? What would be the basic services as they relate to the digital economy?
12758 You mentioned some of them in your submission on point number 14 and 16. Is there anything that you would want to add to that?
12759 MS. TULK: Well, I think that, you know, and I can pass it over to Grainne if she wants to add anything after. But certainly in our submission we articulated the things that we believe is necessary for Canadians to be able to access in order to participate in the knowledge and digital economy. And the services that are required to do that, which we said we believe can be met with a five one broadband access into the household.
12760 COMMISSIONER VENNARD: Could you be more specific on what services and uses you think are -- create a basic ---
12761 MS. TULK: Where there’s access to government services, banking, distance education, distance health applications. I think we articulated them. We don’t really have anything to add beyond what we had in our submission.
12762 COMMISSIONER VENNARD: Okay. So in your senses and from your point of view, is there any difference between the economy and the digital economy? I just want to make sure that we’re capturing that difference there because I consider that to be a fairly significant difference.
12763 MS. TULK: Well, I guess I would say that the digital economy is a subset of the overall economy, however, more and more inextricably linked. However, I guess in the remarks that we were making, I don’t think it was intended to be slippage. It was intended to point out that the demographics of Canada and, in fact, the east case in Canada, are such that although the economy and the digitization of the economy is certainly happening, there continues to be a large swap of Canadians who prefer to interact in the economy in more traditional ways.
12764 COMMISSIONER VENNARD: M’hm.
12765 MS. TULK: And we don’t believe that they should be left behind. And we don’t believe that the time is right to assume that the digital economy replaces other ways of accessing and participating in the economy. So that was meant to be our point.
12766 COMMISSIONER VENNARD: Yeah.
12767 MS. TULK: But certainly the digital economy is very important to Canadians, both in terms of current use and growth and --
12768 COMMISSIONER VENNARD: Yeah.
12769 MS. TULK: -- that’s why we believe, as we mentioned in this submission, that universal access to broadband at five one speeds is a reasonable goal.
12770 COMMISSIONER VENNARD: Yeah. And of course, that’s exactly what I want to make sure that I’m clear on is that we’re looking at that -- what you’re calling a subset. And that’s precisely what we’re focussed on because it’s completely possible to participate in other areas of the economy without having that. But we’re interested in that.
12771 And so therefore, if you’re going to participate, participate meaningfully in the digital economy, you have to have the means to be able to do that. And that, of course, obviously you have to have some sort of an infrastructure for that or technology for that. So that remains what our focus is.
12772 Now, we’re transitioning -- our society is transitioning in a lot of ways into that with our online banking and with health applications, education and so on and so forth. So do you see that as being something as very significant to your submission? Because you did make this distinction and that’s why I’m being very clear on the fact that we’re dealing with one part of it and not the other part of it.
12773 MS. TULK: Sorry. I’m not sure if I follow the exact question there.
12774 COMMISSIONER VENNARD: I’m just trying to be very clear that we’re talking about this subset, which is a digital economy versus the other economy. And that we are becoming, as a society, more and more moving into the direction of the digital economy. Therefore, although from your point of view and the point of view of a lot of others, five one might be sufficient. But will it be sufficient in the future because we are thinking about things like speed and so on and so forth.
12775 So really what I’m trying to do is just get your thinking really sort of away from the voice and more onto this digital part of it.
12776 Now what I’d -- I’ll just go back to a different, a second area that I just want to sort of clarify there. You state in your written submission that you believe that the competition is strong and pervasive in Canada, okay, when it comes to broadband internet access services. And that you don’t believe that there’s any need for regulation. And that’s accurate as to what you put to us?
12777 MS. TULK: Yes, that’s correct.
12778 COMMISSIONER VENNARD: Yeah. Okay, so therefore, clearly you’ve also -- you’re saying that you believe that the market forces are working well as well, and obviously including your own. I see that when I go on your website. I see that you have a lot of different services and things are moving along in a certain direction. So it seems like that would be a statement that would be sort of self-evident, okay? So your website indicates that, you know, you’ve got a lot of expansion and so on going on there.
12779 Now because I’m from Alberta, what I’d like you to do -- and for the purposes of me really being able to understand the context within which your company operates, and your service area, and where your thinking comes from -- can you tell me about your service area? Can you tell me about your customers? Can you tell me about how many customers you serve, where they are?
12780 MS. TULK: Yeah, I could go into quite a bit of detail on that. Obviously our serving area spans the entire province of Manitoba.
12781 COMMISSIONER VENNARD: M’hm.
12782 MS. TULK: We serve -- and I think a lot of this is, you know, in the records, you know, in the (inaudible) but we serve about 500,000 households across the Province of Manitoba. And also business customers as well, ranging from small business to enterprise and government customers across the provinces.
12783 We sell a wide range of services, including wireline voice, full set of mobility and wireless services, broadband services including internet and IPTV across various serving areas in the province.
12784 COMMISSIONER VENNARD: And would you say that your -- so what percentage of your province would you say is covered, is served? Like, who’s unserved? Tell me a bit about your unserved, underserved.
12785 MS. TULK: Yeah. Specifically with respect to broadband I’m assuming is your question?
12786 COMMISSIONER VENNARD: Yeah, correct.
12787 MS. TULK: So in Manitoba, I believe it’s in the Commission exhibits, currently about 95 percent have coverage between 5 and 10 and above megabits per second. And about 98 percent of households have access to up to 5 megabits and 1 megabit of download. Total coverage being about 95 percent of -- sorry, 95 percent of the province at 5 to 10 and 98 percent overall.
12788 COMMISSIONER VENNARD: Okay. Part of your customers are -- tell me about your customers. Are they also the MKO communities and so on?
12789 MS. TULK: Yes, we serve all communities in Manitoba.
12790 COMMISSIONER VENNARD: Okay. And their coverage is good? We certainly heard different things from the group that presented last week.
12791 MS. TULK: That was ---
12792 COMMISSIONER VENNARD: Maybe can you tell me something about if you have challenges with them?
12793 MS. TULK: Well, certainly Pat and Hong can add on that but we, you know, like every provider in Canada the service, and particularly every ILEC provider in Canada, our services have various characteristics and serve very specific communities.
12794 And also, as I think you mentioned in your question, one of the presenters earlier today, limitations such as distance of a certain home from ---
12795 COMMISSIONER VENNARD: Sure.
12796 MS. TULK: --- our switch and our serving area so the experience can vary by individuals. But specifically, you know, and Hong, I don’t know if you want to add specifically to the MKO communities, the service in those?
12797 MR. CHUNG: The MKO communities, there’s about 30 of them, just about 30, and about half of them are remote fly-in sites. All of them we do provide voice services, but a small percentage of them get broadband internet services. And that largely has to do with the geography and the remoteness of the communities.
12798 COMMISSIONER VENNARD: Okay. So the numbers that you’ve cited a few moments ago, the 95 percent, that includes these communities as well that you serve?
12799 MR. CHUNG: Correct. Just to clarify, the 95 percent is the current coverage in Manitoba. It’s not necessarily the same footprint that we serve for broadband. There are other competitors in the markets. There are wireless ISPs that serve northern communities as well.
12800 COMMISSIONER VENNARD: Okay. What does the 95 percent represent then? What does that number mean?
12801 MR. HUNG: That was the collective sum total of all carriers and coverages within -- all carrier coverage in Manitoba.
12802 COMMISSIONER VENNARD: And that’s for broadband?
12803 MR. HUNG: That was broadband, yes.
12804 COMMISSIONER VENNARD: Okay. So there’s 95 percent or 98 percent so virtually 100 percent.
12805 I find that it’s, you know, that’s kind of interesting because further in your submission, if I look at -- if we look at point number 76, for example, you’re serving many, or some at least -- you don’t give a number here -- of rural and remote customers with ADSL technology that seems to be slower than a 5/1. Can you maybe reconcile that?
12806 MS. TULK: So in our network we have a number of customers in DSL coverage, which of course is distance sensitive based on the speed. So the actual delivered speed can vary based on a number of characteristics, including the equipment in the home, including the quality of the line back to the CO, and including the distance from the central office or the CO. So that’s why, you know, when as an example we advertise our entry-level services up to 5 megabits per second because those differences do deliver different experience to various customers.
12807 COMMISSIONER VENNARD: Okay. Would you say that that -- first of all, how many of your customers or how many homes would be served by the ADSL? Percentage-wise even.
12808 MR. CHUNG: It’s about 85,000.
12809 COMMISSIONER VENNARD: About 85,000. And they wouldn’t be receiving then that speed, that 5/1 speed, would they?
12810 MR. CHUNG: The challenge with ADSL is actually on the uplink. The current maximum speed, depending on vendor, is about 800 kilobits per second. Most of our equipment goes up to 768 kilobits per second.
12811 COMMISSIONER VENNARD: M’hm.
12812 MR. CHUNG: So that’s really the bigger challenge. There are, to Heather’s points, a few -- there are a percentage of customers that won’t get the 5 as well due to loop length, but the real challenge is related to the uplink speed.
12813 COMMISSIONER VENNARD: Okay. Do you have plans for replacing this legacy technology? We heard from the MKO group last week that they -- some of them, and not saying necessarily in your operating area, there’s 80-some communities -- that they feel that they have outdated legacy technology and that it’s not sufficient for their needs.
12814 And again, I’m not saying it’s necessarily in yours but that was put to us. Do you have plans for changing that, for upgrading that, expanding that?
12815 MS. TULK: Well, we provide broadband service to I believe nine of the MKO communities, and we’ve actually been upgrading the broadband in -- there’s four of them that we’re addressing with known issues.
12816 COMMISSIONER VENNARD: Okay.
12817 MS. TULK: I think we have three done. Is that right, Hong?
12818 MR. CHUNG: We have one done and three more to come this year.
12819 MS. TULK: One more -- three done. Or two more that will be done this year.
12820 COMMISSIONER VENNARD: Okay. So out of those roughly say 30 communities, nine of those are actually yours and you’re looking at upgrading them already?
12821 MS. TULK: Yes, that’s right. The ones that require upgrading, yeah.
12822 COMMISSIONER VENNARD: Yeah. How is that coming along? Do you have times on that and so on?
12823 MR. CHUNG: We’re estimating this fall to have those three communities that we talked about ---
12824 COMMISSIONER VENNARD: So this fall.
12825 MR. CHUNG: --- upgraded.
12826 COMMISSIONER VENNARD: So any concerns that that group might have had with respect to the groups and the communities that you serve that should be looked after by this fall, would you say? Yeah?
12827 MR. CHUNG: Some of the communities we still are working through implementing plans to upgrade the rest.
12828 COMMISSIONER VENNARD: Okay.
12829 MR. CHUNG: There’s no firm plans yet. We are still working through timing and schedule.
12830 COMMISSIONER VENNARD: Okay. I just wanted to make sure that we got that on the record.
12831 But from your point of view then, the market forces are working well and there’s no need for intervention?
12832 MS. TULK: Well, I think that I guess meaning regulatory intervention. We don’t believe there’s a role for regulatory intervention. We are strong believers in the continued role of government and private sector partnerships ---
12833 COMMISSIONER VENNARD: Okay.
12834 MS. TULK: --- in finishing the job to get to the last, you know, the last five percent nationally, and in our region two percent. I think these are, you know, in the far north including in our province, but also across the north of Canada and in very rural and remote areas in virtually every province there are still unserved areas that we believe should be served. And I don’t believe we’ll have them without government partnership.
12835 And so things like the Connecting Canadians program, et cetera, I think those are really good programs and it’s our hope that they’ll continue as well as community involvement, municipal involvement, provincial involvement and, you know, forms of all public sector involvement.
12836 So I don’t think there’s regulatory intervention needed, but I think there’s certainly importance of continued policy and funding intervention, as has been going on for the last number of years.
12837 COMMISSIONER VENNARD: Yes.
12838 So in terms of the funding, those targeted funding subsidies, do you want to make some comments on that? What you think has worked well for you --
12839 MS. TULK: Well I think --
12840 COMMISSIONER VENNARD: -- in your serving area?
12841 MS. TULK: -- when you -- with respect to broadband, specifically the private partnerships, I’d say that public partnerships and the government funding -- in fact I’d say for MTS, we haven’t been as successful with them as would have liked to have seen us.
12842 And certainly our desire with the connecting Canadians program was to see more success in the future.
12843 But they’ve been successful insofar as they’ve led to broadband being built out in these communities and so as a member of the industry I’m a huge fan of that.
12844 And I, you know, unfortunately we weren’t the winning bidder to build that out, but the fact that they got built is I think a really good thing and something that we’re very supportive of and hope to see continue.
12845 COMMISSIONER VENNARD: Okay. Well thank you for that.
12846 Now I’ve talked -- before I move on to -- to another area there, I just want to get your views on the idea of stream being an entertainment and so on.
12847 Do you see that as being something that’s essential for people?
12848 MS. TULK: Well I think it’s certainly desired by people.
12849 COMMISSIONER VENNARD: We keep asking people that question, because we’re really interested in just sort of knowing what everybody thinks on that point.
12850 MS. TULK: Yes.
12851 I mean I think it’s difficult to say that streaming, you know, Hollywood movies is an essential service for Canadians, but I think it’s certainly something that’s in high demand and wished for and aspired to for a lot of Canadians.
12852 I think the good news is that the actual, you know, the compression and other technologies actually make the streaming services -- they work quite well at a 5 in 1.
12853 And so I think, you know, these customers that have access to broadband even at 5 can reasonably do that and, you know, so I think that’s a good thing.
12854 But it’s hard for me to say that’s an essential service when, you know, as you’ve heard from some of the other witnesses today, when you look at the needs of vulnerable and marginalized Canadians in many, many different ways, to say that we should be in the business of ensuring every Canadian has the ability to stream high bandwidth movies when every Canadian doesn’t have access to potable water is probably a stretch for me in the definition of essential service.
12855 COMMISSIONER VENNARD: Yes, yes.
12856 But yet on the other hand too, the bandwidth required to stream a movie is, you know, the bandwidth is the bandwidth.
12857 If you’re using it for a health application or if you’re watching Netflix on it --
12858 MS. TULK: And that’s great.
12859 COMMISSIONER VENNARD: -- you’re still using it.
12860 MS. TULK: Yes.
12861 COMMISSIONER VENNARD: So I mean there’s that argument that we’ve heard quite a few times too, that what the content should be not relevant --
12862 MS. TULK: Yes.
12863 COMMISSIONER VENNARD: -- in terms of the ability to do it.
12864 MS. TULK: Yes.
12865 COMMISSIONER VENNARD: So having said that, do you think that we should be looking at an aspirational goal of some kind that would be higher on the upload part of things, for people who want to post their YouTube videos, upload their medical records, whatever?
12866 MS. TULK: Yes, well I mean I guess in the uploading of medical records, most of what the average Canadian would need to do with respect to uploading medical records actually can be done quite well at 5 megabits; you know?
12867 Not many individual Canadians are taking their own MRIs and uploading them, so I think that, you know, that most of what -- you know, as we’ve said and we explored in our submission, most of what we see –- being able to do, that fall within the realm of essential services, can be done with a –- certainly a –- you know even at the 7-60 range that we’re able to deliver.
12868 Even our ADSL communities upload and I think it came of one of Commissioner Molnar’s questions earlier today, I think upload can be an issue, in fairness, for certain small businesses.
12869 COMMISSIONER VENNARD: Yes.
12870 MS. TUSK: Depending on the industry that small business is in. The vast majority of small businesses it’s not, but if you’re, you know, an architect or someone who’s doing high definition rendering or things like that, then it can be an issue, but for the vast majority of households and even businesses it’s not an issue, even at the one.
12871 Is more speed better? Sure more speed is better. Down the road do I think these aspirational targets should continue to grow? I think they do -- or I think they should go forward in building.
12872 I think most people who are building now in new builds are looking at increasing speeds beyond 5 in 1 in those new builds. People aren’t building the networks that only deliver that.
12873 However, you know, I guess our position would be that finishing the job on universality of access is a big -- should be a bigger policy priority then increasing the speed targets in the areas that are already served.
12874 COMMISSIONER VENNARD: So what are -- what are your comments with respect to say small and medium sized businesses, possibly even home businesses?
12875 Your province is quite sparsely populated and I would venture a guess that there’s probably a lot of people that work at home, use it for businesses purposes.
12876 So they might not be uploading their own, you know, X-rays or whatever, but they might be uploading a lot of other things that once again take a certain amount of capacity.
12877 MS. TUSK: Yes and again, as I mentioned, for the vast majority of businesses the upload speed of 1 in the current aspirational target is more than adequate.
12878 COMMISSIONER VENNARD: Okay.
12879 Okay, now -- so you’re quite sort of firm on the idea that there’s no need to extend the basic service objective to broadband and to leave that out.
12880 And it seems that you, from your point of view, market forces are working and the communities are reasonably well serviced and if they’re not then there are plans for it and this should be meeting peoples’ needs.
12881 So am I summarizing what we’ve talked about so far?
12882 MS. TUSK: I think so, yes.
12883 COMMISSIONER VENNARD: Okay.
12884 MS. TUSK: I guess with the addition of the continued support of government funding mechanisms and partnerships.
12885 COMMISSIONER VENNARD: Yes, I was going to get to that in a moment.
12886 MS. TUSK: Yes.
12887 COMMISSIONER VENNARD: So in –- basically in your view there’s not a whole lot of issues on things in your world?
12888 MS. TUSK: I think that -- I would certainly -- I mean there’s a lot of issues that we ---
12889 COMMISSIONER VENNARD: There’s not a lot of issues that you want to tell me about.
12890 MS. TUSK: There’s a lot of issues that we deal with every day, but specifically to the availability of broadband.
12891 As I said in the submission, when we look at the pace at which broadband has been rolled out in a country that has some of the most aggressively difficult to deal with geography and dispersion of population as Canada, I think in fact Canada, and the Commission, and Industry Canada, and all the players in the industry, should be rightfully proud of the work that we’ve already done.
12892 COMMISSIONER VENNARD: M’hm.
12893 MS. TUSK: And more important, rightfully proud of the work that’s continuing.
12894 You know, as I mentioned seeing in the recent Federal budget an increase in the funding available to continuing the job was something that we were delighted to see.
12895 And, you know, we think that the industry is moving along very well and recognizing the importance of what’s being done here and committed to finishing the job.
12896 COMMISSIONER VENNARD: M’hm.
12897 MS. TUSK: So I guess that would be, you know, our position on that.
12898 COMMISSIONER VENNARD: Okay.
12899 Now that leads me around to the question of course of money, that always enters into it, and affordability.
12900 Availability is one thing, it seems like you are fairly confident that you’re serving your area well and there’s not a lot of issues there.
12901 What about affordability?
12902 MS. TUSK: Yes.
12903 Well I think that certainly affordability for the vast majority of Canadians isn’t an issue, as evidenced by the uptake on broadband that’s occurred and penetration of broadband that’s occurred in Canadian households across the country.
12904 Certainly there are vulnerable groups or segments of the population that I think affordability is a real issue for and I know you’ve heard from them in some of the hearings today.
12905 However, as we said in our opening remarks, we’re also a believer that the best served group to identify and ensure that that assistance is provided are the groups that deal with those individuals every day.
12906 And rather than a blunt instrument that would require us to require more information about our customers than I believe is probably right or reasonable for them to have to supply to their telecommunications operator, that those -- that assistance should be given through the provincial or federal social assistance programs that are already available.
12907 And should be evaluated for expansion and you should make sure broadband is included in that, but I don’t think it’s the role of the telecommunications operator to source that information about individual Canadians and make decisions about which individual Canadians should or shouldn’t be qualified for assistance.
12908 I don’t believe that’s the role of a telecommunications operator and I think it would be extremely difficult for a telecommunications operator to get that right, in a respectful way for the people who need it.
12909 COMMISSIONER VENNARD: Okay. That’s well put.
12910 But having said that, do you offer a basic package of some kind? We’ve heard from different providers that will have a $9.95 package or that sort of thing.
12911 Do you have -- do you offer something like that to your customers?
12912 MS. TUSK: No we have entry -- our entry level package -- the other thing that’s different though about our packages, versus most of the providers you’ve heard from, is that we don’t have any bandwidth cap.
12913 So we give our customers bill certainty on their bill, because we have unlimited use of internet included in all of our packages.
12914 COMMISSIONER VENNARD: Okay.
12915 MS. TUSK: So when they choose a broadband speed and they buy that package they know that that’s what their bill is going to be that month and it doesn’t depend on how much they use. They have full use of the internet.
12916 COMMISSIONER VENNARD: Okay.
12917 MEMBER VENNARD: Can you give us an idea of what your packages are, what your lowest to your highest, given that they’re all unlimited data?
12918 MS. TULK: Yeah, so the lowest package is $60, an unlimited package, if you purchase it standalone without any of our other services.
12919 MEMBER VENNARD: M’hm.
12920 MS. TULK: We have also -- you can get -- depending on which other services you buy bundled discounts can apply and you can get another -- you can get up to $40 in bundle discounts depending on other services you’re purchasing.
12921 And we also have a plan that allows a customer to put internet and wireless data together -- wireless together in the same plan and be able to combine the usage that’s available. So basically flat rate data on both wireless and internet devices inside the same plan.
12922 COMMISSIONER VENNARD: Okay. Okay, thank you.
12923 Now, going back to the idea of the -- once again back to the money and the funding and subsidies. What do you think has worked, given all the funding programs and the targeted programs and so on? From your point of view, what has seemed to work in the last -- you’ve been in the business 15 years now. What has worked and what hasn’t worked, from your point of view?
12924 MS. TULK: Well, you know, I think what I’ve seen works is when individual communities are actively involved in the solution.
12925 And so, you know, in the case of -- you know, when I look back at the brand program that was really good and that individual community participated, but as one example in that program a number of communities in the Province of New Brunswick got together and collectively looked to address the problem and collectively accessed the money and collectively set forth for the funding and drove broadband out to -- you know, was virtually universality of broadband in the province. And so I think that is a great example of communities working together to address the problem.
12926 I think in the current Connecting Canadians program I also really like that aspect of it. I like that individual communities who know what it is they’re looking for are making decisions as to how in accessing use the money to solve the problem in their individual community.
12927 And I think that brings a commitment of the community to look at both their short and long-term needs that I would like to believe that -- I do as a business person, I would like to believe every business person does, but I think the reality is knowing that the communities are controlling their own destiny in the selections and choices they’re making has a lot of power to it, and so I think that’s a very good element of those programs.
12928 COMMISSIONER VENNARD: Okay. Now, what I’d like to do is to move the discussion into sort of more of a general level and address some of these things that we had, you know, decided that we want to start thinking about earlier.
12929 And here of course we’re -- you know, there’s the idea of the strategy, there’s an idea of a broadband fund, and so on. So I’d like to first of all start with the idea of should there be something that resembles a broadband fund. What do you think would be a good working model for that?
12930 I know in your submission you talked about maybe repurposing or redirecting the existing voice fund as it naturally sort of dies off anyway.
12931 From your point of view, what would guiding principles for a broadband fund -- what should we -- would you have recommendations for us?
12932 MS. TULK: Well -- so, first of all, we’re not in support of a broadband subsidy or a fund beyond what the federal government is doing. I think that -- and what the provincial governments are doing.
12933 I think the reason for that is again we actually believe that the pace of rollout, although it didn’t meet the 2004 aspiration, is quite stunning in its success, and we’re down to very real issues in very real communities that need to get solved community-by-community piece-by-piece, and they require that individual look at the problems and issues in each and selections in each around how they can get it.
12934 So I think the fact that the federal government is making this money available for communities to use to solve this problem I think is very compelling.
12935 And I often find and found in the past that when you set up funding mechanisms or subsidies two things happen. One, it takes the pressure off where the policy pressure potentially should stay, and is clearly being reacted to in the federal government programs. So I wouldn’t like to see the pressure taken off that continued funding into these communities to help them solve their problems.
12936 And the other thing is it tends to set up extremely complicated and unwieldy and a lot of overhead in the administration, and debate, and re-debate about the fund. I mean, in the specific example you opened a public record to talk broadband and immediately people started filing and -- and, you know, you say we talked about voice, we’ve talked about voice because we’re required to react to someone else bringing into a proceeding ---
12937 COMMISSIONER VENNARD: Yeah.
12938 MS. TULK: --- trying to reopen that proceeding that’s been well-examined and put to bed, right.
12939 And so this overhead really I don’t think in many cases is solving the problem. What’s solving the problem is making the funding available to the communities that need it, who have a legitimate concern and need, and then industry stepping up. And I think by the fact that these Connecting Canadian programs have been well competed for by multiple companies industry has shown its willingness to step up and be a partner.
12940 So we don’t see that there’s something broken here, beyond the fact that as, you know, Bell pointed out I believe yesterday, this is an extremely large economic problem and the solution for it is continuing to solve the extremely large economic source of funds, and I think the government has shown itself to be at a really good pace to do that.
12941 COMMISSIONER VENNARD: Okay. Well thank you for that.
12942 I just -- a few other things that I want to just kind of talk about with you, and what is the idea of a broadband strategy, a national broadband strategy. Do you think there should be a preferred technical solution to that? Do you think there should be like a fibre strategy, a wireless strategy, both, a combination? What are your thoughts on that?
12943 MS. TULK: Well, if you want to get into a lot of technical detail Hong would be a better example.
12944 But I guess just from a policy and strategic perspective I don’t think -- you know, as I mentioned, I’ve been in the industry a long time. I don’t think there is a single technical solution that applies across all of the areas that we’re talking about and the differences between, you know, urban and rural, the differences in the geography, the distance limitations, the issues in the far north. I think many different technologies need to be brought to bear in Canada to solve this problem for all Canadians.
12945 COMMISSIONER VENNARD: Okay. And that would include satellite, and fibre, and wireless, and the ---
12946 MS. TULK: And, you know, like any other industry there are certain tools that are right for a certain purpose, and I think the point is to go in and apply the tool that’s right for purpose to each existing -- each specific problem, which in this specific case is a community-by-community evaluation.
12947 COMMISSIONER VENNARD: So do you think mobile broadband should be part -- would that be appropriate to have that in there as well, or do you think we should be looking at more of a fixed ---
12948 MS. TULK: I think mobile broadband can be a solution. I think it’s -- the economics of it are probably still a few years away before it’s a viable true solution, depending on, you know, which vendor and technology vendor you ask, you know, that time is shorter or longer, but I don’t believe in most cases it’s -- it’s a good adjunct into coverage.
12950 But in terms of going into a community that’s current unserved and trying to serve it specifically with a wireless solution is in fact in most cases uneconomical at this point versus other options.
12951 COMMISSIONER VENNARD: It seems the time has come when we are able to take a more nuanced approach to communities and their needs rather than just trying to, you know, sort of a blunt, let’s try and cover the country type of ---
12952 MS. TULK: Even in our own province the different -- you know, dealing with some of these MKO communities that we’re dealing with we’re having to do completely different things than we’re doing -- you know, so we have areas of the province where the coverage needs are based on dispersion of the population because they’re, you know, kind of evolved -- you know, they have farming areas, people live very far apart, things like that. We have other areas where the issue is the population is actually not overly dispersed but getting to the population is a massive problem.
12953 So in those two examples groups of people equally unserved or underserved, equally frustrated, equally deserving of broadband, but the solution for them is from a technical perspective day and night, completely different and an economic perspective.
12954 COMMISSIONER VENNARD: So we’ve heard many times about different unserved pockets and so on. Is that a major issue in your serving area do you think?
12955 MS. TULK: I don’t know if I’d classify it as a major issue. As I mentioned, we have, you know, very good coverage, but it’s -- there definitely are -- I mean, the reality of the network is that with the exception of pure fibre to the premises services in the VDSL2 and ADSL solutions they are distance sensitive so they depend on loop lines. And that, by its nature, has led to some black holes of coverage. We have specifically some black holes in our case in the business market that we’re aiming to address. But in general, it’s -- I wouldn’t call it a major problem.
12956 COMMISSIONER VENNARD: Okay. Do you think that quality of service metrics should be important in anything that we might be looking at in terms of strategy or from a regulatory point of view?
12957 MS. TULK: I don’t think as a widespread blunt instrument they’re necessary because certainly, for the vast majority of Canada, it’s a highly competitive market. I think what we have seen in the past useful is in the case of some of the government funding programs they’ve had requirements built in that in accepting the money you must guarantee that that community has similar pricing and similar quality of service delivered over time to areas that didn’t receive funding. I think that’s useful as an adjudicator. But I don’t think broad based quality of service is necessary. I see no evidence of a need for that across the country.
12958 COMMISSIONER VENNARD: Okay. From your point of view, do you think that it would be -- would make sense to set basic service targets at a less than Pan-Canadian view? So different targets for different areas? What do you think on that one?
12959 MS. TULK: Again, I think -- I don’t think it’s necessary. If it were to move forward, I think it’s reasonable insofar where government funding has been used to expand broadband. I think it’s probably reasonable in that case.
12960 COMMISSIONER VENNARD: To -- from your view that would speak to accountability to make sure that --
12961 MS. TULK: Yeah, exactly.
12962 COMMISSIONER VENNARD: -- you achieve -- yeah.
12963 MS. TULK: Yeah.
12964 COMMISSIONER VENNARD: Yeah.
12965 MS. TULK: Yeah.
12966 COMMISSIONER VENNARD: Okay.
12967 Okay. I’ve got basically just two -- a couple more questions to ask you before I turn it over to my colleagues. And I’m wondering if you would like to comment on a digital literacy strategy. How -- do you think something like that would be useful for us in our country and for us to think about here on the Commission? Or and what would that look like? We’ve heard a lot about digital literacy as well.
12968 MS. TULK: Well, I think -- so I guess I’d say I believe digital literacy and work on digital literacy is critically important going forward. I think it’s important for our country with respect to the ability of our country to continue to prosper in a knowledge economy going forward, and to be competitive both intra in the country but also on a global level.
12969 So I see it as a -- we would see it -- we do a lot of digital literacy, as I mentioned, with seniors, new Canadians, disability groups, et cetera. I think it’s actually more of an education issue. I think it belongs -- digital literacy is an issue in the -- that should start in the primary education level, as -- by the way, you know, having been part of the Canadian Council on Learning in the past, as is other forms of literacy. And I think Canadian’s ability to operate and work and prosper in the knowledge economy is something that has to be addressed. Because I believe it’s an education issue I don’t think it’s necessarily a CRTC issue.
12970 COMMISSIONER VENNARD: Okay.
12971 MS. TULK: I have to admit, I’m not an expert on the division between, you know, the federal and provincial government, but I know education is generally a provincial responsibility and -- but I do think it’s something that our industry should be talking about, our industry should be calling attention to. But I wouldn’t see it as something that’s the CRTC’s mandate to solve.
12972 COMMISSIONER VENNARD: Okay. And the final thing I want to ask you about is accessibility and the disabled persons. Do you -- what do you have, if anything, on -- to handle people who might have different needs?
12973 MS. TULK: We have a wide range of accessibility and I can ask Paul to add on, but accessibility programs. We do in most -- in a number of our residential or consumer product areas we offer a discount on -- to -- sorry, on our internet we offer a discount to subscribers who have forms of disability. We have an accessibility website where we provide information and tips on our -- to our customers in terms of which of our products and services may be better and may be helpful to them with respect to their specific type of disability. And that’s organized by general disability category.
12974 And we also have set up in our retail -- one of our retail stores that we’re piloting a program where we set it up as an accessibility centre of excellence. We have a number of accessibility improvements in there, including staff trained in American sign language. And as I mentioned, we’ve piloted with the Canadian Centre for Disabilities disability and accessibility awareness training for employees. And so far about 600 of our employees have taken that training.
12975 COMMISSIONER VENNARD: Oh. Do you have anything else to add?
12976 MR. NORRIS: Maybe just to emphasize that we -- through our forums with the disabled peoples, we actually get their input. So we don’t start off with an assumption of what we need to do. We actually gather feedback from them. We gather feedback on our products and services. We gather feedback on our sales channels in terms of, you know, for example, our portal, making sure that it is accessible, making sure that the screen readers can work properly on ours and that we’re not using pdfs. Those types of things are all the kinds of things that we do.
12977 COMMISSIONER VENNARD: Okay. Well, thank you very much. Those are all of my questions.
12978 THE CHAIRPERSON: Thank you.
12979 Commissioner Molnar?
12980 COMMISSIONER MOLNAR: Thank you.
12981 I want to go over the voice subsidy requirement with you, if you don’t mind.
12982 You have heard those that have suggested that it be redeployed to broadband. And I -- you state here that it continues to be important. But I wanted to give you an opportunity to address some of the sort of key arguments that have been made to either eliminate it or transfer it.
12983 And -- excuse me -- one of the arguments -- I’ll throw out the three that I’ve heard and give you a chance to give your rebuttal, if you don’t mind.
12984 One is that VoIP products provide -- will provide these customers with access to voice. Another I’ve heard is that cellular is available. It’s, you know, we’ve got basically 20 percent of customers have already unsubscribed to basic wireline. There’s cellular and other voice options available. And another that I’ve heard is that the subsidy is unnecessary because the investment in the copper has already been recovered.
12985 MS. TULK: Okay. Well, maybe we’ll take those in turn and I’ll give a high level and then my colleagues can go deeper on them.
12986 With first the spec with the VoIP products. It is true that VoIP products are available. I would point out VoIP products are available where you have IP services. So until we have universal access to broadband there’s not universal access to VoIP services either. So these things go hand in hand to some extent.
12988 Respect to where cellular is available, I think the issue is an economic one as well as a usage one. There are certainly, although there’s high penetration of wireless, it’s not universal. And certainly the availability of wireless from a perspective to say someone’s required to now subscribe to wireless who may not otherwise or, in fact, use wireless differently than from an economic perspective, the wireless plans, generally, would end up being more expensive for many Canadians. So in terms of economic access to communications, wireline is still a better solution.
12989 And then in terms of being unnecessary, again, I’m hoping we’re not going to in this proceeding reopen what we just explored fully a few years ago. But I think the costs have been, you know, filed on the public record. They were relooked at again in 2011 and deemed by the CRTC to be reasonable.
12990 And although the original capital investment in these communities has, you know, in many cases been fully depreciated. The cost of continuing to serve these communities is very high. We have fly-in communities, we have communities in the winter that require other modes of access, you know, and they’re very hard to serve and difficult to serve. And you have to continue to upgrade the network. Like, you know, we replace drops all the time. And we spend a tremendous amount of money each and every year serving these networks.
12991 Pat, I don’t know if you have anything to add?
12992 MS. SOLMAN: Yeah. I just wanted to add, you know, you have incidents like -- and unfortunately last year we had two fires in two of these remote communities in the COs and we had to replace the equipment. And you can’t -- because the copper is already there you’ve just got to replace the electronics. And so we had to rebuild those sites.
12993 And the funds go to maintaining it, not just -- like, the operating costs are huge because they are remote. But there’s also still capital maintenance costs that need to be incurred, regardless of the fact that the copper plant is already paid for.
12994 MR. NORRIS: Maybe if I could just add a couple more points on it as well. You know, our view is obviously that the phone service is an essential service and that we shouldn’t be looking at change there.
12995 I would add that there is groups of people that are more comfortable with it and they can tend to be seniors or more vulnerable groups, and so we have to kind of take that into account that there is segments that have different needs and have different expectations.
12996 The other piece is that there is inherent reliability in the basic telephone service. The line is powered through the CO right to the end so it’s not subject to power outages, those types of things, and weather and those kind of issues don’t crop up as well. So, you know, something that might be more satellite fed with a VoIP solution can have some -- it doesn’t necessarily have the same reliability that a traditional line does.
12997 COMMISSIONER MOLNAR: Okay, thanks. I just wanted to give you the opportunity to expand on that.
12998 And you also talk about the fact that the subsidy has declined by 35 percent and the trend is expected to continue. So how would you see this natural evolution occurring if the Commission didn’t intervene?
12999 MS. TULK: Well, it’s naturally occurring to one of the points in the original question. As people naturally select alternative technologies and move, you know, and the adoption goes up -- you know, you talked about the wireless only stats, things like that -- these lines go down. And the contribution regime is designed to address that and naturally fall.
13000 So as I mentioned, we’ve seen that decline since 2010. It’s moving apace. There’s no slowing in that decline. We expect to see it continue. And I think the other thing that it does is it allows the receivers of the funds to evaluate and manage through how they’re going to deal with the loss of those funds over time. And so I think that’s a steady pace or reduction that can be maintained without putting undo pressure on the actual users.
13001 Any acceleration of that decline would have to be accompanied, and I think has been proposed in some of the proceeding, with an increase in the cost of basic service beyond the price cap. And we think that that would mean that these services would go quickly well beyond the point of affordability for a lot of the people who rely on them.
13002 COMMISSIONER MOLNAR: Thank you. You spoke about 98 percent of households had access to fixed broadband and 95 percent at speeds from 5 to 9.9 megabits. Are you saying that 95 percent meet the CRTC’s basic definition?
13003 MS. TULK: Well, we got those statistics from the CRTC exhibits so ---
13004 COMMISSIONER MOLNAR: Maybe I’ll ask my question more directly. Is the upload net on that 95 percent?
13005 MS. TULK: We don’t know that. The download speeds were all that was disclosed in the statistics. I mean, we don’t have -- we have access to our own information but we don’t have access to the whole province’s information except in so far as the TMR Report, and so that’s where that information is taken from.
13006 COMMISSIONER MOLNAR: Okay, that’s fair. So if we were to talk about the customers you serve, would these percentages align with the customers you serve?
13007 MS. TULK: Well, as I mentioned, in our ADSL areas our upload speeds would go to 768.
13008 COMMISSIONER MOLNAR: Right, so ---
13009 MS. TULK: (Inaudible) say 712 so ---
13010 COMMISSIONER MOLNAR: I think you said 80,000 or something like that?
13011 MS. TULK: That’s right.
13012 COMMISSIONER MOLNAR: Eighty-five thousand (85,000) ADSL out of 500,000 customers you serve.
13013 MS. TULK: Out of the total households that we serve. So in the -- Hong, what would be the -- well, I guess we could take an undertaking because I don’t think we have on the public record the detailed definition. But we can give you the breakdown if we haven’t already between the technologies in our service area, if you like.
13014 COMMISSIONER MOLNAR: Sure. Okay, thanks. Those are my questions.
13016 THE CHAIRPERSON: Just a few more questions.
13017 Was the issue of broadband discussed in your recent election; do you know?
13018 MS. TULK: Was the issue of broadband discussed in the recent election in Manitoba?
13019 THE CHAIRPERSON: Yes.
13020 MS. TULK: Not in a large scale way, I wouldn’t say. That’s of course my opinion.
13021 THE CHAIRPERSON: Not a large scale that means not at all or hardly? We were discussing other things perhaps.
13022 MS. TULK: Perhaps.
13023 THE CHAIRPERSON: You’re familiar with the EKOS study we conducted and put on the public record?
13024 MS. TULK: Yes.
13025 THE CHAIRPERSON: And perhaps I can bring you to Tables 2.12, which -- in the representative sample. I’m going to focus on that one. And I’ll grant you that Saskatchewan and Manitoba are bundled together. I think there’s a statistical reason for that in terms of number of people. But this is a study of dissatisfaction, percentage of people surveyed that are dissatisfied.
13026 In terms of reliability, the national average is 16 percent being dissatisfied but in Saskatchewan and Manitoba it’s 19 percent. In terms of speed, the national average is 19 for Saskatchewan and Manitoba in terms of home internet and for speed, and in that territory it’s -- in those two provinces it’s 23 percent. And in terms of price, well, you align with the national dissatisfaction of 48 percent.
13027 Do you care to comment on that?
13028 MS. TULK: Well, I’m ---
13029 THE CHAIRPERSON: Because I take it your argument is things are fine?
13030 MS. TULK: Well, no, I wouldn’t say things are fine. As I mentioned, there’s a lot of things we’re working on.
13031 THE CHAIRPERSON: Right.
13032 MS. TULK: And one of them, which you’ve probably seen even in our public disclosures, we believe we have a lot of work to do with respect to our customer experience at MTS. And we’ve recently embarked, which we announced in Q3 of last year, on a three-year customer experience transformation program where we’ll invest about $100 million into improving the customer experience for our subscribers. So certainly we’re not ---
13033 THE CHAIRPERSON: Sorry, just so I understand, customer ---
13034 MS. TULK: --- happy with these numbers but we’ll be ---
13035 THE CHAIRPERSON: Customer experience, it covers reliability and speed?
13036 MS. TULK: It covers a number of the things that we see driving the dissatisfaction of our customers.
13037 We also, you know, as we mentioned, we’re going in very specifically into each community. We’ve recently, with Pat and Hong, in the last number of months have put a lot of work into understanding the specific performance in each community that we serve with broadband and we’re going in. As Hong mentioned, we have programs for the communities that are having a problem, including a few which we mentioned are in the MKO communities in particular, and doing overbuilds and improvements to the network to bring up the speed and reliability.
13038 But that being said, I think one thing I’ve mentioned about the surveys is that -- two things. When you look at, you know, obviously margin of error. As you get into the provincial breakdowns it’s different than the national number.
13039 And the other things, as I mentioned in my submission, the unfortunate -- well, not unfortunate, it’s a great province, but the reality of Manitoba is that it’s a much more -- and Saskatchewan for that matter -- are much more geographically dispersed and rural provinces than some of the other, and certainly much more rural and remote than the national average.
13040 So there are definitely -- I think it’s well known and well documented on the record of this proceeding that there are unfortunately still disparities in the availability of speeds in urban centres in Canada versus some of the more rural and remote. And I think you’re seeing that reflected in some of those numbers.
13041 THE CHAIRPERSON: The dissatisfaction percentages for mobile internet in Table 2.3 also suggests the gap of the national average being for reliability 13, but in Saskatchewan and Manitoba 22. And in terms of speed, average nationally 14, but Saskatchewan and Manitoba 22. And you’re about the same in terms in price as the national average.
13042 Would your answer be the same to that?
13043 MS. TULK: I think it would be the same as definitely the urban and rural has the same issues reflected in with respect to the wireless network as the broadband network. And also, the same evaluation that we're doing in looking at how we can improve this.
13044 I mean, so I’d say the numbers are unfortunately not surprising to me but we're very committed to improving them and we're making significant investments in our company to bringing them up in the future.
13045 THE CHAIRPERSON: And you're doing that because of market forces?
13046 MS. TULK: Yeah, I think market forces and also because, quite honestly, it's obviously not -- our performance isn’t acceptable to a number of our customers and so whether you call that market forces or you call that just good business, we should be doing better for our customers.
13047 THE CHAIRPERSON: Well, presumably you don’t want to lose those customers to other competitors.
13048 MS. TULK: Exactly, exactly.
13049 THE CHAIRPERSON: To the extent that there are competitors available in some of the regions.
13050 MS. TULK: Yeah, and there's competitors available in, you know, the vast majority of our customer base and certainly we need to be competitive in order to prosper.
13051 THE CHAIRPERSON: To your knowledge, do the current social assistance programs in Manitoba include a calculation for connectivity?
13052 MS. TULK: Do you know?
13053 MS. GRANDE: I’m sorry, repeat.
13054 MS. TULK: Can you repeat the question?
13055 THE CHAIRPERSON: So there's a variety of social assistance programs presumably offered by the Government of Manitoba.
13056 MS. GRANDE: Yes.
13057 THE CHAIRPERSON: When those calculations occur -- and you may not have the information at hand, that's fine, but when we do -- when government programs in Manitoba try to calculate the amount of social assistance, is connectivity part of that calculation?
13058 MS. GRANDE: So when -- if you are speaking to when people put on their application and specifically to which funds they're going to get to cover which expenses, there is a provision for a cell phone but I'm not aware of any provision for a broadband connectivity.
13059 THE CHAIRPERSON: Right.
13060 MS. GRANDE: And there are conditions to my knowledge on the type of cell phone and for the purpose of the use. But I'm not aware for broadband connectivity.
13061 THE CHAIRPERSON: Do you think that's the right approach to take to social assistance programs or would your leadership be advocating that perhaps we should think about life’s necessities for the low income Manitobans to include such things as connectivity?
13062 MS. TULK: Well, I think, you know, certainly we advocate, as we mentioned, that access to broadband is important to all citizens and, you know, I think that there's various ways that communities or governments can go about providing that. And I think that there are -- you know, I guess another question in the availability of broadband that I think a lot of the provincial and municipal governments are considering is, is broadband required for each individual home or is the availability of places such as public libraries and community sites, and et cetera, to be able to use broadband a reasonable solution to the essential service.
13063 So I think we said in our submission we believe that contributing and being part of the partnership to make broadband available to citizens is a role of all levels of government. One way might be in the social assistance calculation but there's certainly other ways that might be appropriate as well.
13064 THE CHAIRPERSON: So when I asked you whether you've advocated for social assistance calculations to include connectivity, I guess your answer is, to your knowledge, that has not ---
13065 MS. TULK: To my knowledge, we have not taken that on as an advocacy in our government relations program or whatever.
13066 THE CHAIRPERSON: With respect to access to local libraries to access the internet, I don’t know if you've had a chance to read the transcripts or actually watch the hearing when some very poor people came to advocate and saying that, you know, when part of their social assistance needs flow from their mobility issues -- and it snows in Manitoba, does it not?
13067 MS. TULK: Quite a bit.
13068 THE CHAIRPERSON: Yes. So is telling somebody with mobility issues to travel some distance to a local library a valid solution to connectivity?
13069 MS. TULK: Well, I think -- so I would say in that specific example, no, but I think that, in fact, supports the argument we've made that these solutions need to be provided on a case-by-case basis by the organizations best able to know the case-by-case needs.
13070 And so I think that it is certainly for certain people reasonable that they might be encouraged to go use a public access site. For others and individuals with accessibility, it certainly wouldn’t be and, you know, that's exactly our position here.
13071 We're not in a position to be able to adjudicate individual needs of individuals with respect to social assistance. We certainly would support that that is a role that the governments and the government bodies that are engaged with these individuals should be taking. And yes, you know, I think broadband is an important part of that discussion and should be considered in those programs.
13072 THE CHAIRPERSON: But your company has not so far advocated anything to do with that?
13073 MS. TULK: Again, not that I'm aware of.
13074 THE CHAIRPERSON: Earlier you talked about the need for policy intervention and government funding. I take it that your point is that government funding should be principally, if not exclusively, federal?
13075 MS. TULK: No. I think that there's roles for different funding. I think to date most of the funding has been provided federally.
13076 In the past, I have actually been involved and I know MTS was as well before I was there in advocating that certain of the infrastructure, provincial infrastructure funding should be used for broadband, et cetera. So I think that there's roles for all levels of government to play.
13077 And as I mentioned, you know, as just one example, the community access and library sites and things like that, in most cases they are provided by either provincial or municipal organizations.
13078 THE CHAIRPERSON: But in light of your earlier response to the fact that broadband issues weren’t widely discussed in your recent election, what are the likelihoods of additional funding occurring from the Manitoba coffers?
13079 MS. TULK: I can't speak to that.
13080 THE CHAIRPERSON: Earlier, Rogers put forward the idea of a multi stakeholder advisory council. You referred to “finishing the job”, saying that we've done a long way but there may be still gaps.
13081 What is your view on the utility of having a multi stakeholder advisory council to ensure coordination to fill the gap?
13082 MS. TULK: Well, so I think it's a good idea. I think it needs to be set with the right parameters and I think it needs to have the right level of attention and timeline given to it.
13083 I think if we're going to set something like that up, it should be set up for a short period of time with clear deliverables and expected to deliver on that strategy rather than be a group that has an endless date. I think you, yourself, were talking about, you know, how these things go on and they move down in levels of attention and detail until, you know, they're meeting and not actually driving change.
13084 So I think it's important that it be set up with a firm end date and a firm set of deliverables.
13085 THE CHAIRPERSON: So what would they be?
13086 MS. TULK: Well, you know, I think it would be to look at the unserved areas of the country and to put together an advocacy position to go forward to the various levels of government as to how those specific unserved, you know, the last 2 percent if you will that we expect to be there after the current Connecting Canadians funding how that's going to be addressed.
13087 THE CHAIRPERSON: Again, federal funding.
13088 MS. TULK: No, I said the current Connecting Canadians program is federal funding.
13089 THE CHAIRPERSON: Right.
13090 MS. TULK: But I think I said or at least I meant to say to put together an advocacy strategy of how the next 2 percent should be addressed. That's not to say I wouldn’t preclude the work of that committee that that outcome would be necessarily federal.
13091 THE CHAIRPERSON: But the funding would be?
13092 MS. TULK: May not be. That will be part of what I think needs to be examined and then brought forward to varying parties.
13093 You know, as I mentioned in my opening comments, I think there's roles of all levels of government, from band councils, municipalities, provincial governments, and the federal government to play in this and I think that, you know, quite honestly, I'm quite -- you know, provincial governments across the country have been involved. In some cases, municipalities have been involved. Band councils have been involved.
13094 And I think kudos, the majority to date of the support has come from the federal government but I think there's roles for a lot of different levels of government to play.
13095 THE CHAIRPERSON: Right. Well, in terms of timelines and remits for a potential multi stakeholder advisory council, others have agreed to give some thought to that and put it on the record.
13096 Perhaps you can as well respond to that in the various phases coming up.
13097 MS. TULK: For sure, yeah.
13098 THE CHAIRPERSON: And see what’s your perspective on it.
13099 MS. TULK: Yeah, we'll do that.
13100 THE CHAIRPERSON: Okay. Thank you very much. Those are our questions I believe. Yes from legal.
13101 MS. TULK: Okay. Thank you.
13102 THE CHAIRPERSON: Thank you very much for participating. I should -- actually, I will commend you for your -- the gender representation on your panel. It's ---
13103 MS. TULK: Thank you.
13104 THE CHAIRPERSON: One of my colleagues, Vice-Chair Menzies, pointed out that you were I believe the first province to give the vote. Now you may have gotten another success here today.
13105 MS. TULK: Yeah. Well, Chairman, I appreciate those remarks and it is a -- I know that it's been a comment that you've been making all week, and knowing we were coming late in the week, I think it's fair to point out this has always been the panel we've had.
13106 THE CHAIRPERSON: No, I -- don’t worry, I actually checked ---
13107 MS. TULK: Oh, did you?
13108 THE CHAIRPERSON: --- on that, so ---
13109 MS. TULK: We haven't changed any of the names.
13110 THE CHAIRPERSON: No, I know, but ---
13111 MS. TULK: Thank you.
13112 THE CHAIRPERSON: But by the way, if people do suddenly want to change their panels, I won't penalize them either if they choose to do so for those appearing later on, so thank you very much for (inaudible).
13113 MS. TULK: Thank you.
13114 THE CHAIRPERSON: So we're adjourned for the day. Just to remind everybody, we're reconvening at eight o'clock tomorrow morning, 8h00 demain matin, so that perhaps people can get away for the weekend a little earlier. So nous sommes en ajournement jusqu’à 8h00 demain matin. Merci, bonne soirée.
--- Upon adjourning at 5:06 p.m.
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