Transcription, Audience du 28 février 2020
Volume : 9
Endroit : Gatineau (Québec)
Date : 28 février 2020
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Les participants et l'endroit
Tenue à :
Centre des conférences
140 Promenade du Portage
- Président: Ian Scott
- Vice-présidente, Télécommunications: Christianne Laizner
- Conseillers(ères): Christopher MacDonald, Alicia Barin, Joanne T. Levy
- Conseillers Juridiques: Adam Balkovec, Eric Bowles
- Secrétaire: Jade Roy
- Gérants(es) de l’audience: Jeremy Lendvay, Marianne Blais
--- Upon commencing on Friday, February 28th, 2020 at 8:58 a.m./L'audience débute vendredi, le 28 février 2020 à 8h58
12090 THE SECRETARY: À l'ordre, s'il vous plait. Good morning.
12091 We will now hear the presentation of the Canadian Electricity Association. Please introduce yourself, and you may begin.
PRESENTATION / PRÉSENTATION
12092 M. BRADLEY: Merci, Madame la Secrétaire d’audience, et bon matin.
12093 Mon nom est Francis Bradley. Je suis le Président et directeur-général de l’Association canadienne de l’électricité. Effectivement, je demanderai aux membres de notre délégation de se présenter avant notre présentation ce matin.
12094 MR. KENT: My name is Alex Kent. I am a Transmission and Distribution Policy Advisor at CEA. My work includes supporting the CEA Telecom Committee.
12095 MS. ROBINSON: Good morning. My name is Sarah Robinson, and I'm the Director of Communications and Marketing at Canadian Electricity Association.
12096 M. KHOSRAVI: Bonjour. Mon nom est Barmak Khosravi. Je suis ingénieur en télécommunications dans l'unité Architecture de solutions de télécommunications chez Hydro-Québec. Je siège sur le Comité des technologies et télécommunications opérationnelles de l’Association canadienne de l’électricité.
12097 MR. LANCASHIRE: My name is Sol Lancashire. I manage Telecommunications Engineering at B.C. Hydro, and nationally, I Chair the CEA's Operational Technology and Telecommunications Committee, also known as the Telecom Committee.
12098 M. RIENDEAU: Bonjour. Sylvain Riendeau, je suis membre du Comité sur les télécommunications de l’Association canadienne de l’électricité et chargé de programme d’innovation à l’Institut de recherche d’Hydro-Québec.
12099 MR. BERNDT: Good morning. My name is Charles Berndt. I am the Manager of Grid Technology at Hydro Ottawa, just here across the river, and I am also Vice-Chair of the CEA's Telecom Committee.
12100 MR. ABRAMSON: And Bram Abramson, outside advisor to the CEA.
12101 M. BRADLEY: Thank you, colleagues.
12102 Distinguished Commission, our request in this proceeding is focused. We ask that you direct the Canadian Steering Committee on Numbering to amend Canadian IMSI Assignment Guideline to allow Critical Infrastructure Operators to acquire MNCs.
12103 The Critical Infrastructure sectors that have had an interest in this hearing have demonstrated a substantial need whose fulfilment will allow continued innovation in electricity grids, advancing the social and economic fabric in all regions of Canada, but providing for MNC access also substantially advance the basic telecom policy objectives that you seek to fulfil.
12104 MS. ROBINSON: Members of the CEA employ more than 2,000 Canadians in telecommunications roles. Our networks span tens of thousands of route-kilometres of fibre, and tens of thousands more on wireless backhaul links.
12105 These networks connect more than 12 million endpoints, each with a unique identifier. We have a long history of connecting remote devices to monitor and control the electrical grid.
12106 Think of us as the original Internet Things of operators. Our members run research labs, design telecom solutions, and deploy telecom networks to connect devices at scale. We have been doing it for decades.
12107 But our sector's traditional business models are evolving in ways that engages both electricity and telecom. Distribution grids are getting smarter.
12108 MR. BERNDT: Like the railways you heard from last week, telecom isn't some external functionality we can outsource. It's core to what we do. We run intertwined power and telecom networks that meet stiff security standards to enhance power grid resiliency and efficiency.
12109 Both those grids are evolving into smart grids. Think of onboard devices that poll each other about what's needed where, and in a power outage can act accordingly.
12110 Even at a smaller electricity utility like Hydro Ottawa, generation and consumption are starting to take place throughout the network, in both directions. That's what's needed to integrate better resiliency and fault tolerance, and more distributed energy resources like solar panels.
12111 Different telecom-operating CIOs work with different geographies, resiliency designs, customer bases, and therefore, different network and operating models. But all of us are completely aligned in the following: we must continue to route our own traffic. MNC access is the only way to do that.
12112 Full MVNOs have had such access since 2015. The Public Safety Broadband Network has such access. But the Critical Infrastructure Operators with some of Canada's most extensive telecom networks do not. Without MNC access, Critical infrastructure operators cannot interconnect core-to-core.
12113 Without MNC access, we cannot sit down with Mobile Network Operators and negotiate in a way that lets us meet our obligations.
12114 M. RIENDEAU: Quand nous parlons d’innovation, cela signifie travailler dans des laboratoires de recherche, comme je le fais à Hydro-Québec. Nous continuons d’innover en créant des modèles d’exploitation pour une vaste gamme d’appareils connectés, tels que les topologies hautement maillées et auto-réparatrices par lesquelles nos millions de terminaux s’engagent les uns avec les autres, plutôt que de devoir téléphoner à chaque fois à un opérateur central.
12115 Il y a plus de sept ans, j'ai co-rédigé un article de l'IEEE décrivant le modèle « PVNO ».
12116 Pour être clair, un « PVNO » est simplement un modèle permettant de relier plusieurs réseaux d’accès de type LTE ou 5G, par exemple – qu’ils proviennent d’un opérateur sans fil traditionnel, d’un Réseau à large bande de sécurité publique, ou de d’autres partenaires, ceci en un réseau maillé et intrégré, identifié sous la forme de… identifié sous un seul MNC et distinct de chacun des réseaux en amont dont il dépend.
12117 Le chemin qui mène du concept… qui amené du concept à la Demande de Partie I à l’Association canadienne de l’électricité sur le PVNO, en 2018, a ainsi été l'objet de recherches approfondies. Nos secteurs font confiance en cette demande concrète et qui est davantage qu'une simple vision ou un rêve ou une intention générale. Les membres de l’ACÉ qui gèrent des réseaux de télécommunications se procurent de la connectivité, qu’elle soit auprès des trois grands opérateurs de téléphonie mobile, de satellites comme Télésat, ou bien de partenaires plus spécialisés comme Tamaani Internet au Nunavik, Entel dans le territoire Nisga’a, ou bien ABC Allen Communications, également en Colombie-Britannique.
12118 MR. LANCASHIRE: And when we talk about cybersecurity, we mean well-specified standards coordinated by the North American Electric Reliability Corporation. Our members' networks must meet these NERC standards, regardless of cost. This responsibility cannot be outsourced.
12119 In our British Columbia PVNO testbed, for instance, where integrating NERC compliance is a key part of the case we're proving out. By the way, you'll notice in our second attachment that testbed has three MNCs assigned to it. Testbeds are able to get MNCs, but they're also needed post-testbed, too.
12120 Cybersecurity is not a reason for us to outsource to a telco. It's one of the reasons we can't outsource. With an MNC, on the other hand, it means we can procure connectivity, in bulk, from multiple carriers, while maintaining responsibility for standards compliance internally.
12121 CEA members have been sharing information about cyber threats with what is now the Canadian Centre for Cyber Security for more than four years. Running highly secure telecom networks is the job of every CEA member.
12122 M. KHOSRAVI: Il a été question dans cette instance de l’attribution précise des MNC : par exemple, s’il faut attribuer un bloc d’MNCs à deux chiffres par opérateur d’infrastructures critiques ou par secteur, ou bien en associer un seul à l’ensemble des opérateurs d’infrastructures critiques.
12123 Nous sommes d'accord avec l'Association des chemins de fer du Canada que l’allocation plus granulaire se traduirait par plus de simplicité opérationnelle. Nous convenons également que l’utilisation efficace de cette ressource limitée est essentielle. C’est pourquoi nous privilégions ici l’accès aux MNC pour les opérateurs d’infrastructures critiques qui exploitent un réseau de télécommunication d’envergure.
12124 Nous sommes donc ouverts à une formulation restrictive. Cet accès pourrait, par exemple, cibler les opérateurs d’infrastructures critiques dont les réseaux de télécommunication dépassent un certain seuil d’appareils communicants, ou de kilomètres de fibre, de territoire couvert, ou de tout autre critère jugé approprié par le Comité directeur canadien de la numérotation, ou CSCN. Mais nous convenons également avec le RAC que la délégation au CSCN est la meilleure approche ici. Pour illustrer ce point, nous avons joint à notre présentation trois documents :
12125 Le premier est un extrait pertinent de votre décision de 2015 et une approche semblable que vous pourriez adopter en relation avec la présente demande; le deuxième document est une liste récente de l’allocation des MNC au Canada, et le troisième document décrit une activité en cours du CSCN en lien avec l’utilisation des MNC.
12126 MR. BRADLEY: There has been a fair bit of talk about threats at this proceeding. We're trying to change the channel for a minute to present an opportunity. We're not here to ask for special tariffs, or exemptions, or heavy-handed intervention. We have only one request, it is simple, and will help unlock competitive telecom market forces to best serve Canadians.
12127 It's time critical infrastructure operators were able to move forward with creating MNC numbered networks. Lowering the cost of rural and remote connectivity and fueling the competitive intensity of Canadian wireless telecom are opportunities worth seizing.
12128 We’d be glad to respond to any questions you may have. Thank you.
12129 THE CHAIRPERSON: Thank you. Pardon me. Thank you. Commissioner Laizner.
12130 COMMISSIONER LAIZNER: Good morning. Thank you for your presentation. I have a number of questions for you.
12131 Si vous désirez répondre en français, ça va aussi. Alors… mais je vais commencer mes questions en anglais.
12132 So you’ve talked about your request for a Private-Virtual-Network-Operator-type model and I’d like you to elaborate a little bit on the types of services that you envision a PVNO offering would entail.
12133 MR. BRADLEY: Do you want to go ahead, Sol?
12134 MR. LANCASHIRE: There’s a –- there’s a ---
12135 UNIDENTIFIED SPEAKER: (Inaudible).
12136 MR. LANCASHIRE: Pardon me?
12137 UNIDENTIFIED SPEAKER: One at a time.
12138 THE CHAIRPERSON: One mic at a time.
12139 MR. LANCASHIRE: There’s a number of services that we would consume, particularly machine-to- machine for grid operations either in our distribution grids, controlling electricity. Turning electricity off when –- in urgencies is one of the most important ones, so in our industry, we refer to that as fault location, isolation and in-service restoration. So there’s a lot packed in there, but finding out where the energy is flowing and being aware of it, responding to emergencies and coordinating our response on a machine-to-machine level.
12140 (Inaudible) anyone have something to add?
12141 MR. BERNDT: Yeah, if I could add to that, add some –- a bit of colour about how the electricity business is changing in Canada.
12142 We’re going from a world where we had generation –- large generation, transmission and distribution, and the customers kind of down streamed from each other, but we’re evolving to a world where generation and distribution and consumption is happening across those networks, so customers are able to store energy, generate energy and consume large amounts with electric vehicles.
12143 So that need that my associate, Mr. Lancashire, discussed where we need to have that connectivity and that broadband connectivity to route that traffic both between the central office and those devices is critical, and what we envision a PVNO enabling is with an MNC, we would be able to route that traffic on –- in our own ways to the most reliable network available, and that is critical. And the only way to do that is with an MNC.
12144 COMMISSIONER LAIZNER: So in terms of what the proposed network would look like, for example, who would manage the network; would that be the Canadian Electricity Association itself or would it be individual critical infrastructure operators that would build out their own networks and then become MVNOs or PVNOs of each other?
12145 MR. ABRAMSON: Maybe -- I just want to –- maybe I’ll throw up a clarification is when we talk about a PVNO model, you know, these are all -- as is my understanding, you know, correct me if I’m wrong –- different electric utilities that run their own networks today, have done for years and will continue to do so. So whether or not they run networks doesn’t depend on being able to deploy PVNO connectivity as part of those operations.
12146 The difference really is in their ability to move into broadband spectrum in their ability to get pervasive connectivity and their ability to sort of depend on their networks by routing that traffic themselves everywhere throughout the network, and therefore, to deploy some of the applications that we’ve talking about.
12147 So it’s –- you know, the question of if is really one about what kinds of investments and what kind of applications they’re able to invest in that they will make, especially as equipment lifecycles go and they’re constantly faced with these challenges of what to buy next.
12148 And so, you know, in a sense, they will continue to run networks with or without PVNO connectivity, but certainly, -- and that’s what I’ve been hearing in discussing rather intensively with these folks in the last few days –- the ability to have secured PVNO connectivity creates the ability as they’ve been accustomed to for years in their band spectrum to route dynamically to send bandwidth to upstream connectivity partners as those have a better or worse quality of connectivity at any given moment to mix in radio access networks that they build themselves or that they procure, for instance, from different partners and they go out and issues RFPs for.
12149 So it’s sort of like if you’re engineering an entire network, if you’re simply depending on one provider at a time, you’re a little bit captive; whereas, if you have the ability to dynamically route traffic among several upstreams, you’re able to really assemble that rope with several strands rather than hanging by a thread, so to speak.
12150 MR. LANCASHIRE: And to answer the question directly, CEA members each operate their own telecom systems and will continue to do so and want to continue to do so.
12151 COMMISSIONER LAIZNER: So it would be individual PVNOs basically amongst each CIO; is that –- do I understand correctly?
12152 M. KHOSRAVI: Oui, effectivement.
12153 VICE-PRÉSIDENTE LAIZNER: Oui.
12154 M. KHOSRAVI: C'est chaque… quand on parle de PVNO, ça implique d’avoir un réseau cœur cellulaire chez les opérateurs d’infrastructures critiques. Donc, on opère nous-mêmes le réseau cœur, mais la partie de radio, le réseau de radio est opéré par l’opérateur commercial, par exemple.
12155 VICE-PRÉSIDENTE LAIZNER: Bien. OK. Je comprends.
12156 Anybody else who wants to add?
12157 M. KHOSRAVI: Juste…
12158 VICE-PRÉSIDENTE LAIZNER: Oui, certainement.
12159 M. KHOSRAVI: …rajouter un point, c’est que ce modèle-là permet de conserver la sécurité à l’intérieur des opérateurs d’infrastructures critiques. Donc, le but, c’est d’utiliser la couverture existante, mais conserver la partie sécurité vraiment à l’interne de nos opérations pour être conforme à la sécurité.
12160 VICE-PRÉSIDENTE LAIZNER: Parfait.
12161 MR. ABRAMSON: I just want to, again, distinguish a little bit and just to make sure we’re on the same page. When we talk about running separate networks and even separate, I suppose, PVNO-style connectivity beds, that’s not the same thing and it doesn’t lead into the discussion about how to allocate MNCs, and so you certainly have contexts where you may have a bunch of networks –- a bunch of electricity networks, for instance, all running and being managed separately, but cooperating under a single MNC, so in a sense, sharing routing policy. That’s simple to do, for instance, when you have geographic (inaudible) -- geographically non-contiguous, I should say, networks so that it’s fairly simple to federate them geographically under a single MNC, so there’s –- it does get quite technical, but I do think it’s important to draw that line between MNC efficiency –- efficient allocation on the one hand and separate networks underneath that MNC or not on the other.
12162 And I don’t know -- if this is an important topic to you, it may be worth hearing a little bit about the test bed that’s underway now where they’re doing this.
12163 COMMISSIONER LAIZNER: Sure, absolutely.
12164 MR. ABRAMSON: And actually, that was a good point; we have a test bed in British Columbia where we have multiple cores and we’re working through some of the challenges.
12165 And sharing MNCs may be possible, but it’s not desirable either. It adds extra complexity that is likely not warranted, so we would certainly prefer that you direct the Canadian Numbering Association to work through that collaboratively with industry and determine the best way to allocate MNCs efficiently.
12166 COMMISSIONER LAIZNER: And in your minds, because I’m sure you’ve thought about it when you’re thinking about MNCs, had you thought about it in terms of one MNC per CIO per province or one MNC total per province?
12167 MR. BRADLEY: Where we’ve discussed this, our –- where we’ve landed on this is clearly –- I mean, different approaches are possible; for example, you heard from ARAC (phonetic) explaining why they felt the more granular you get, the more you strip needless complexity. But at the end of the day, working out technical questions such as that is exactly why the CSCN exists. The last thing we want to do is start second guessing the work in this (inaudible), but what we know is that we have the institutional capacity to back stop whatever approach makes sense.
12168 COMMISSIONER LAIZNER: So I get that you’re saying that there’s an organization there to look through some of these issues, but clearly, you’ll have some submissions to make to them as well.
12169 In your view, could multiple CIOs coordinate to make use of a single MNC in a province; I mean, because we are concerned about the finite number of MNCs?
12170 MR. LANCASHIRE: It’s technically possible, but it’s -- it’s operationally less efficient.
12171 THE VICE-CHAIRPERSON: Okay.
12172 MR. BRADLEY: I would also add to that that there are a few sectors that have the capacity really, and the wherewithal, to operate telecom networks with the scale and the scope needed to take advantage of self-routing. But we said in our presentation that we’d be willing to put callers on who would have MNC access, based on critical infrastructure operator status. As well as number of end points served, of network size, or whatever makes sense.
12173 Even as you’ll see from the list of existing and planned network operators that already have MNCs assigned on attachment number two, the bar is currently pretty low. But at the end of the day, we think this is exactly the kind of detail that the CNSC is best positioned to work out.
12174 THE VICE-CHAIRPERSON: Okay. And we’ve heard from some other CIOs in this proceeding that in their view, there would need to be definitional changes made to the MNC guidelines in order to offer the types of services that they envision. So if the Commission were to mandate, for example, full MVNOs, would definitional changes to the MNC guidelines still be required for you to be able to offer the types of services that you envision?
12175 MR. ABRAMSON: I can probably speak to that. Yes, in a sense the changes that relate to the MC assignment guideline that go to full MVNOs are already done, and so they fully have that ability. The changes that would need to be made, and again, this really doesn’t relate to any tariffs, or mandated access, or anything else which we, you know, the CEA is not asking for and does not believe is required, at least for these cases they have in mind.
12176 But what is required is simply changes that go to, for instance, the ability of a critical infrastructure operator to route its traffic across its network and so on, without needing exterior customers. Or the fact that end points are not just consumers, as it described, I think, in the MVNO definition, but devices and so on.
12177 So some of this, to be honest, is a bit of a modernization, I think, of the MC assignment guideline, generally, that will be required in the world of 5G internet of things, and there’s probably a lot of points of coincidence between that general overhaul and what, I think, that the CA is looking for.
12178 THE VICE-CHAIRPERSON: Okay. But in terms of -- I understand what you’re saying and it segues into another question I had that was, if you have this kind of a service, would you -- I mean, it’s being used within the CIOs of the Electricity Association. But would, for example, handsets be deployed to the workforce?
12179 M. RIENDEAU: La demande ici présente, c’est vraiment pour des applications de type machine à machine, des applications du type internet des objets, c’est pas vraiment des demandes qui s’adressent à des téléphones mobiles, ça ne vise pas… c'est vraiment pour nos opérations à titre d’une infrastructure critique pour gérer notre réseau d’énergie. C'est pas d’offrir des services à des tiers, ce n’est pas de se servir de ce MNC-là pour faire nos opérations administratives, mais vraiment pour nos opérations, pour exploiter notre réseau, c'est pas pour…
12180 VICE-PRÉSIDENTE LAIZNER: Oui, mais pour vos ouvriers, vos employés…
12181 M. RIENDEAU : C'est pas le…
12182 VICE-PRÉSIDENTE LAIZNER: …est-ce qu’ils auront besoin d’avoir des cellulaires pour communiquer avec…
12183 M. RIENDEAU: Ils ont déjà des réseaux cellulaires, ils ont des cellulaires, eux, mais c'est pas le but premier, c'est vraiment… le but premier, c'est d’aller chercher de la robustesse en combinant l’ensemble des réseaux sur lesquels on va obtenir… avec lesquels on va avoir des ententes commerciales négociées, on va combiner la fiabilité, la robustesse de l’ensemble de ces réseaux-là pour avoir un élément qui va en résulter qui va être plus grand que l’ensemble, une fiabilité meilleure que chacune des parties vraiment pour nos opérations parce que c'est vraiment là qu’on…
12184 VICE-PRÉSIDENTE LAIZNER: Oui.
12185 M. RIENDEAU: …au niveau du… toute l’évolution du réseau intelligent où est-ce qu’on a des besoins, c'est vraiment d’essayer d’avoir une fiabilité qui est le plus élevée possible pour nous permettre d’être efficaces et aussi être en mesure de… pas juste entendre de perturbations ou de catastrophes, de rétablir le service, mais aussi dans nos opérations normales d’être capables d’amener des applications comme de la maintenance productive, être capables à faire des opérations avant même qu’il y ait des défauts sur le réseau, être capables de faire du rétablissement de service rapide avant… pour isoler les choses.
12186 Un peu comme au Québec, en novembre dernier, on a eu une tempête de neige, y’a… je veux dire… je suis ému parce que ça m’a touché, y’a eu près d’un million de clients qui ont été affectés, et le genre d’application qu’on vise, c'est ça qui me motive, c’est d’être capable de rétablir le service le plus rapidement possible.
12187 VICE-PRÉSIDENTE LAIZNER: Merci, Monsieur.
12188 MR. LANCASHIRE: To add to Sylvain’s comments, when we think about worker communications and voice, while the landscape is changing, we still use mobile radio and that critical voice service. And it -- there will be some time yet before that service changes, and I know it is changing, you heard from public safety at this hearing as well. So there is movement happening there. But that’s an area where the PSBN is likely to change for critical voice communications towards LTE. But that’s -- that is a different use case.
12189 THE VICE-CHAIRPERSON: Okay. Because in your submissions, you have been proposing a kind of an MVNO model that you call a private virtual network operator, and in an MVNO model, obviously we’re talking about cellular services.
12190 So my question was directed at, is this just a network kind of process, as opposed to, you know, within your operations, your employees have cell phones that are connected to your network, as opposed to cell phones connected to the network of a Rogers, or a Telus, or a Bell?
12191 MR. LANCASHIRE: The technology continues to develop and the landscape changes. So we wouldn’t want to preclude anything. But what we’re working on now is connecting our machine to machine devices ---
12192 THE VICE-CHAIRPERSON: Okay.
12193 MR. LANCASHIRE: --- in a reliable way.
12194 THE VICE-CHAIRPERSON: And if you evolve to the point ---
12195 MR. LANCASHIRE: And ---
12196 THE VICE-CHAIRPERSON: Sorry, go ahead.
12197 MR. LANCASHIRE: My apologies. And there is a significant distinction between what an MVNO is and what a PVNO is. And the main one is, we’re not looking to resell the service.
12198 THE VICE-CHAIRPERSON: Right.
12199 MR. LANCASHIRE: We’re looking to consume the service on bulk, efficiently route between multiple networks, and then be able to take advantage of diversity of RAN.
12200 THE VICE-CHAIRPERSON: Got it. Although my questions are directed as well, but even if it’s only within your family, as opposed to a resale to a member of the public, the Commission has certain obligations it imposes on wireless service providers related to public alerting, 9-1-1 capabilities, that sort of thing. So if down the road you were going to expand into that world of cell phones, even within your own workforce, we would want to know that you would comply with those obligations.
12201 MR. LANCASHIRE: And we would. And I think one of the best examples there is, we already operate -- all of the utilities in Canada operate large PBX systems. So we manage our own telephone numbers on the wireline side. There’s a mechanism to do that. We foresee a mechanism to do the same thing. Not certain how it will done, but there should be a mechanism to do the same thing. It’s -- we expect that to work.
12202 And not only that, there is always an underlying RAN operator. So the operator that’s operating that network, there may be a commercial agreement we can have with them so they continue to offer the full 9-1-1 service for example, and we don’t need to take on that obligation because as the RAN operator they are still providing that service, wherever that tower exists. So we’re not -- we’re not, you know, we can still consume the service directly from the RAN operator, just in bulk with an MNC.
12203 THE VICE-CHAIRPERSON: Okay. And how do you compare your approach to the hybrid MNO proposal put forward by Cogeco? I think you mention that in your submissions, that there were similarities.
12204 MR. ABRAMSON: I can maybe speak to that. It’s fairly different. I mean, I think at the end of the day Cogeco is putting forward an approach to market entry, in terms of who ought to have access to mandated unbundling of radio access networks. Electrical utilities aren’t looking for mandated unbundling of radio access networks. There are no thresholds because, you know, it’s not something we’re looking for the CRTC to do.
12205 I think certainly, my understanding is that all of the members of the CEA have constant and regular negotiations with telcos and there’s no indicate that that would change and there’s, you know, nobody is looking for the CRTC to assist with those negotiations. The difficulty is that they’ve come to a point in their technological evolution where they need to move into similar spectrum areas that are used for consumer services, and suddenly in holding those negotiations, in a sense, they're not able to come to the table because they're not able to -- you know, the example we used is scheduling hockey games, but not knowing whether or not you have ice time yet. You know, they're not able to know whether they're going to be able to route the traffic that they're -- whose capacity they're looking to buy.
12206 And so, you know, Cogeco talks about a model where for how long, under what circumstances certain folks ought to get access to unbundled radio access networks that is mandated. I think here the attitude is really one of, look, we're able to co-negotiate for all that we need. There's just this one thing standing in our way, which is that without having an MNC we literally could not route the traffic whose capacity we're looking to buy.
12207 THE VICE-CHAIRPERSON: So, is it closer to the model of the Halton Police?
12208 MR. ABRAMSON: It's almost the reverse ---
12209 THE VICE-CHAIRPERSON: Okay.
12210 MR. ABRAMSON: --- of the model, only because, you know, when the Halton Police comes to the table and talks about, you know, public safety and first responder needs as opposed to critical infrastructure needs ---
12211 THE VICE-CHAIRPERSON: Oh, because they're at that end of the spectrum.
12212 MR. ABRAMSON: They are first ---
12213 THE VICE-CHAIRPERSON: They are the responders.
12214 MR. ABRAMSON: Well, that's it. They're the first responders. They're ---
12215 THE VICE-CHAIRPERSON: You're the instigators.
12216 MR. ABRAMSON: Well, they're not instigators, and there's good cooperation with the police safety sector I think it's safe to say, but, you know, they're the ones for whom the PSPN is designed. They are the primary users, unlike, you know, critical infrastructures is who our -- tertiary, I'm not sure what the classification is, but it's sort of a subordinated use where available on commercial rates and so on. But when PSPN users come to the table, they have a slice of 700-megahertz spectrum, and perhaps more importantly in terms of this application, they have MNC access. So, the very thing that we're looking for is something they already have.
12217 THE VICE-CHAIRPERSON: Right. If the Commission were to mandate full MVNO access, would that be sufficient to meet your needs?
12218 MR. ABRAMSON: I can probably take this one as well.
12219 Again, it's -- in terms of the needs that are being expressed here, full MVNO access was mandated in 2015; right? The MNC access that the Canadian electrical utilities are looking for that would be able to route their traffic depends only on MNC access, and that's something that full MVNOs have had for a while.
12220 You know, they haven't used -- that access hasn't been used to go off and start, you know, MVNO businesses in Canada to a great extent, I suppose, which is one of the issues on the table at this proceeding, but certainly, I think it's fair to say that electrical utilities who run large networks who procure, you know, services at a very large scale from MNOs, who build networks at a very large scale throughout Canada, especially in rural and remote areas where there aren't a lot of people, but where the electricity needs to move, are simply in a bit of a different bargaining position. And I think that they see MNC access -- you know, correct me if I'm wrong -- as the primary stumbling block really to be able to move forward with some of those purchase, some of those negotiations in a way that's consistent with their obligations as folks who are bound by NERC standards and other cyber security resiliency, safety rules that, you know, they have to be able to demonstrate they meet constantly. Is that fair?
12221 MR. LANCASHIRE: That's fair, but I could add to it, and you were just getting to it. We want to have direct relationships with the RAN operators. We don't need or desire a middle broker in between us for the purpose of security, for the purpose of reliability.
12222 What we do want to do is be able to route to multiple RAN operators and then use -- and basically reward the best performing network with our traffic and our business.
12223 THE VICE-CHAIRPERSON: So, what's been the experience amongst your members in discussions with carriers?
12224 MR. LANCASHIRE: We've had discussions as an association.
12225 THE VICE-CHAIRPERSON: Okay.
12226 MR. LANCASHIRE: We've had several workshops. There's been a fairly ---
12227 THE VICE-CHAIRPERSON: With the carriers as a group or with the ---
12228 MR. LANCASHIRE: With the carriers as a group. I mean, individual members have had individual communications as well, and that's ongoing as large operators of telecom systems and as large consumers of telecom services from the MNOs. There's always ongoing discussion at the individual member level. But as an association, we've had workshops and we've discussed this as an industry, how do we move forward, and there's been many offers or suggestions, mitigations put forward, but we do keep coming back to this with an MNC routing traffic as a very good solution.
12229 THE VICE-CHAIRPERSON: So, but I'd like to understand -- oh, sorry. I didn't see.
12230 M. KHOSRAVI: Pas de problème.
12231 Je voulais juste rajouter un point, c’est que nous, on a parlé, en fait, beaucoup avec les fournisseurs de réseaux, on leur a expliqué nos… notre problème, puis qu’est-ce qu’on essaie de… je pense qu’ils ont bien compris le point, ils ont travaillé… ils ont travaillé très fort pour essayer de trouver des solutions alternatives à notre besoin, mais à chaque fois ça revient toujours au même point : d’un point de vue sécurité, on peut pas subordonner notre sécurité aux opérateurs, puis ça, ça revient tout le temps. Et puis la deuxième chose, c’est qu’ils peuvent pas nous offrir un service où qu’on aurait de la redondance du réseau d’accès radio parce que ça voudrait dire que y’aurait des ententes entre compétiteurs puis ça n’arrive pas.
12232 Donc, ces services-là sont pas offerts par les commerciaux. Donc, c'est pour ça qu’on a besoin d’avoir un MNC pour pouvoir établir ces services-là.
12233 VICE-PRÉSIDENTE LAIZNER: Alors, un des problèmes, c'est qu’ils ne vont pas vous donner le niveau de service que vous désirez avoir.
12234 M. KHOSRAVI: Absolument. Absolument.
12235 THE VICE-CHAIRPERSON: We've also heard from Bell Mobility last week that although some associations had approached them, in their view, there wasn't an internal alignment, I think was the term used by Mr. Bibic, as to what services the members required. Do you have any comment to make on that?
12236 M. KHOSRAVI: En fait, au contraire, on est… l’Association est complètement enlignée vers un but commun, que ce soit l’Association des trains ou le Halton Police, c'est tout le monde converge vers l’idée que, premièrement, les réseaux LTE… les réseaux cellulaires 5G, c'est le futur, mais pour pouvoir vraiment en bénéficier de tous les avantages, ça prend le MNC pour pouvoir avoir le contrôle sur ces réseaux-là.
12237 Donc, c’est… c’est… l’alignement, je vois pas en quoi on serait pas enlignés à ce niveau-là sur cette question.
12238 THE VICE-CHAIRPERSON: Okay. There are parties that have suggested that it would be premature to address the various CIO solutions, given the ongoing public safety broadband network project or the B.C. Hydro PBNO trial.
12239 So, what are your thoughts on waiting until a specific PSBN model is agreed upon before we would consider your proposal?
12240 MR. LANCASHIRE: Well, we've already been waiting a long time, so -- I'm trying to find a polite way -- maybe I should drop to Francis, but we want to move forward.
12241 THE VICE-CHAIRPERSON: This is your opportunity. Let us know your thoughts.
12242 MR. LANCASHIRE: We want to move forward.
12243 THE VICE-CHAIRPERSON: Okay.
12244 MR. LANCASHIRE: And those things will come, and they'll offer services that we likely can use, but this is a solution that we would like to access now, and we don't really know the outcomes of those other elements. And let's say the PSPN moves forward and electricity is very well integrated into that solution, having an MNC and being able to use their RAN in the PVNO model is a good thing. We will have numbering resources. We will be able to route traffic into the PSPN. It'll be easy for the PSPN to identify our devices because we'll have unique identities for critical infrastructure. And there's no downside to having an MNC and a PVNO now. If anything, it'll -- it may help the PSPN find us a solution and move forward. We could become users on that system, or on other RANs.
12245 MR. BRADLEY: And in terms of timing, we -- our first step in this approach was to approach the CRTC in 2018, 2 years ago. It was suggested to us that not that we simply go and participate in the CSCN, but that we bring the issue forward in this proceeding.
12246 We think your following through with a direct instruction to the CSCN would be the most effective and most direct route to enabling IOT leadership, for example, rural and remote deployment assistance and competitive intensity that we believe our access to MNCs will help it along.
12247 THE VICE-CHAIRPERSON: Okay. In your further comments that you submitted, you stated that many benefits of PBNO, namely ground level connectivity, security, commercial, cellular field area network interconnection are not dependent on RAN diversity. And I'm just wondering if you could explain that, unpack it for me.
12248 That was at paragraph 22 of your November 22nd, 2019 submission.
12249 MR. KENT: In the further comments, we were talking how the MNOs have built excellent networks. They connect to people in building, to a limited extent, underground, and those networks already exist. So if a CEA member was able to access a current MNO network with the correct level of reliability and security, but to retract the reliability, like just if it was a single network, and the CEA member could hold the security credentials and controls, they would still have very good ground level connectivity.
12250 When you start to layer the different networks that have already been built that already exist and are managed by very qualified companies, you don't just have security, you have incredible reliability as well. But the security and the reliability are slightly separate conversations.
12251 Would anyone else like to add?
12252 MR. LANCASHIRE: I think it's also important that -- so RAN diversity is a key benefit that we can access with PVNO, but if there is a -- if there is only a single RAN, having a PVNO is not a problem, it still works, it's just you have a single RAN to access.
12253 THE VICE-CHAIRPERSON: But in your model, you would have multiple RANs to a PVN core -- PVNO core; is that right?
12254 MR. LANCASHIRE: We would have a core, and we'd be able to route to multiple RANs.
12255 THE VICE-CHAIRPERSON: Okay.
12256 MR. LANCASHIRE: So in -- I mean, when we -- there's been a lot of discussion at this hearing about RAN sharing, and I think it's an important point to note that there is a benefit to having multiple diverse RANs. So as more and more RAN sharing occurs, that diversity opportunity in fact goes away.
12257 THE VICE-CHAIRPERSON: And -- but as I understand it, that's because if one fails you've got the other one, right, as the backup?
12258 MR. LANCASHIRE: Correct.
12259 THE VICE-CHAIRPERSON: Okay. If the Commission were to mandate more than one network to provide a wholesale MVNO service, then would the specialized PVNO solution still be necessary? I guess, is there any other way the networks differ?
12260 MR. LANCASHIRE: I don't completely understand what you mean by mandated wholesale, but if you mean mandate MVNO ---
12261 THE VICE-CHAIRPERSON: Right.
12262 MR. LANCASHIRE: --- then it wouldn't.
12263 THE VICE-CHAIRPERSON: Okay.
12264 MR. LANCASHIRE: Because MVNO is different. We don't want the middle broker.
12265 THE VICE-CHAIRPERSON: You don't want the middle guy.
12266 MR. LANCASHIRE: We want to work directly. So -- and we're also not asking for a tariff, we're asking for the opportunity to have the numbering resource to negotiate.
12267 We're not mobile network service providers, but we do operate telecom systems. We are a capital-intensive asset management company. So we understand the notion of return on capital and the way that the telecos operate their business as well, so I believe we're in a good position to negotiate with them for fair and reasonable service.
12268 THE VICE-CHAIRPERSON: Okay. In your submission, would it just be the national MNOs that would be obligated to provide the wholesale RAN access, or would you also want any of the regional carriers under a PVNO model to provide ---
12269 MR. LANCASHIRE: Well, we don't ---
12270 THE VICE-CHAIRPERSON: --- service?
12271 MR. LANCASHIRE: We're not asking for anybody to be obligated, but we will -- we do want to make -- we do -- in fact, one of the benefits of this -- of the PVNO solution is it'll make it easier for us to access regional RANs. So today it's fairly common for a large utility to have a primary MNO, and perhaps a secondary MNO, and two major contracts, but it's much less common to have a contract with a regional MNO.
12272 And with a PVNO and the ability to route, it's -- it would be much easier to integrate regional MNOs into our network and then basically reward them if they have the best network, particularly in a rural area, with the traffic, which further adds viability to their business model.
12273 THE VICE-CHAIRPERSON: Okay.
12274 MR. LANCASHIRE: It benefits everyone.
12275 THE VICE-CHAIRPERSON: I think I understand what you're saying. And then I just had a question about eSIMs. In your further comments, and again, I'm referring to the November 22nd, 2019 comments at paragraph 23, you said that eSIMs are not necessary for PVNOs because a PVNO would achieve the same thing as an eSIM through a similar mechanism. So I'd like to understand that a little bit better.
12276 MR. KENT: Yes. What we're asking for is an MNC that uses the protocols that already exist for interconnecting different networks. The eSIM is not necessary to a PVNO because an eSIM is for the remote reprovisioning of a SIM card. If you have your own MNC, your own identity, you can -- to route your traffic to multiple networks, which is the core ask, so you don't need to then ask someone else to change your SIM card to route your traffic, you can route your own traffic. You can maintain your core functionality.
12277 THE VICE-CHAIRPERSON: And then if you did not get the MNC that you've requested, then eSIMs, would that be your next preferred solution?
12278 MR. LANCASHIRE: eSIMs would not -- would do little for us ---
12279 THE VICE-CHAIRPERSON: Okay.
12280 MR. LANCASHIRE: --- and in addition to that, eSIMs are relatively complex to implement, typically comes with a cost, and in many cases they're not even managed in‑country. So there's questionable security and there's some risks, perhaps, around the eSIM management and then exposing your SIM to that remote provisioning.
12281 So no, we're not -- eSIM wouldn't solve the problem. eSIM is -- eSIM is a sliver of it. If we had our own MNC and eSIM may be an effective way to reconfigure our SIM card if we needed to, but it doesn't solve the underlying problem.
12282 THE VICE-CHAIRPERSON: So I take it that what you want is an MNC.
12284 MR. ABRAMSON: If I may? You know, I was just looking at that part of the submission. The subhead is eSIMs are not necessary for PVNO, nor do they address service reliability or security. And that's really what it is.
12285 THE VICE-CHAIRPERSON: Yeah.
12286 MR. ABRAMSON: At the end of the day, it's a way of single homing to one network, and then if that doesn't work you could perhaps fail over more quickly to another network. And then, you know, dynamic routing is quite a different beast, and it's really what network operators do, such as (unintelligible) for utilities ---
12287 THE VICE-CHAIRPERSON: Right.
12288 MR. ABRAMSON: --- where as otherwise you're sort of captive to the one service provider, or at best, captive to the failing over quickly.
12289 And I suppose, and this is something we talked about a fair bit, there's always ways to engineer a very complex solution so to avoid the standard spaced way of doing things. At the end of the day, that's kind of what we're talking about doing. There's a straight-line here, and that is the MNC.
12290 And you know, one can perhaps, you know, incorporate extremely clever algorithms into computers on a chip inside eSIMs one day in the future, but at the end of the day, what we're doing is reinventing what -- that for which a solution already exists.
12291 THE VICE-CHAIRPERSON: Right. Great. Thank you very much.
12292 Those are all my questions, Mr. Chairman.
12293 THE CHAIRPERSON: Commission Counsel? No?
12294 Then thank you very much. Thank you for taking the time to appear before us and responding to our questions. It was very helpful.
12295 Madame la Secrétaire.
12296 THE SECRETARY: Thank you.
12297 I will now ask SSi Micro Limited to come to the presentation table.
12298 (SHORT PAUSE/COURTE PAUSE)
12299 THE SECRETARY: Please introduce yourself when you ready, and you have 20 minutes.
PRESENTATION / PRÉSENTATION
12300 MR. PHILIPP: Good morning. My name is Jeff Philipp, and I am the Founder and CEO of SSi Micro, with me today are Dean Proctor, SSi's Chief Development Officer, and Mairi MacDonald, our External Regulatory Counsel.
12301 Before I begin, I'd like to acknowledge the long hours the Commission has put into these hearings. We appreciate the opportunity to discuss our perspective on the wireless industry, and given that this is the last day, I will attempt to briefer than I normally am.
12302 Our main message to you today is that no market is too small, or too remote, to benefit from local competition
12303 As most of you know, SSi is a Northern company with headquarters in Yellowknife, Northwest Territories. Our company specializes in remote-area infrastructure involving connectivity and innovative energy solutions. Our business model is based on true partnerships with local stakeholders to provide broadband, mobile and other related services across Canada's North. We do this using our own infrastructure and facilities.
12304 We were intrigued by the Competition Bureau's presentation before you last week in which they showed a map of Canada highlighting where competing mobile network operators are present. Sadly, the map did not include Northern Canada, which, of course, is our principal base of operations. And I trust that the hearing is not just about service delivery in one-third of Canada.
12305 We launched SSi Mobile in 2018 and became the first company to deliver mobile wireless services in all of Nunavut's 25 communities as well as in Yellowknife, using state-of-the-art 4G LTE and 2G GSM technologies. Prior to 2018, these communities had no access to cell service of any kind, and today they have extremely competitive services, at the same price, in any community, no matter the size. The smallest, by the way, is 129, the largest in Nunavut about 8,000, and the larges in our market area is Yellowknife at 20 some thousand.
12306 We're successful in these capital intensive, highly regulated field, working in remote areas with a small population base, because we innovate and invest with a focus on the needs of the communities we serve. We leverage ideas and technology, tied together by our own custom software, to offer solutions that would be impossible otherwise. We've been doing this for the last 27 years, and not just in Canada, but around the world.
12307 Let me take a moment to explain our operations.
12308 We're a facilities-based and hold spectrum licences from the Government of Canada for both fixed and mobile wireless services. Our original 2500 MHz spectrum was transferred to us from Microcell back in 2004. We have also acquired 1900 MHz spectrum through a "first-come first-served" process. We've purchased 3500 MHz spectrum and, courtesy of good relations developed with Rogers, we received spectrum sub-licences and swapped spectrum with them.
12309 We've also successfully implemented a 2-way roaming arrangement with Rogers that's highly appreciated by SSi Mobile customers. I want to highlight the fact that Rogers has proven to be invaluable in our success as a facilities-based network operator and in the expansion of our operations.
12310 One item the Commission should note is that SSi has never been able to acquire mobile spectrum through the auction process, despite having participated in 6 auctions since 2008. We know our markets very well, and in each case the prices for spectrum were quite simply too high to make a business case. This is a major barrier for operators trying to expand service offerings in unserved or underserved markets.
12311 I’m going to turn it over to Dean now to talk about our perspective as it relates to the specific issues being addressed.
12312 MR. PROCTOR: Thank you.
12313 When the Commission initiated this proceeding, you announced it would focus on three key areas: first, competition in the retail market; second, the wholesale mobile regulatory framework, with a focus on MVNOs; and thirdly, the future of mobile wireless services in Canada, with a focus on reducing barriers to infrastructure deployment.
12314 As a facilities-based wireless operator in Canada's North, we're interested in all three of these issues. They all come back to the Commission's approach to the regulation of wholesale markets, which sustain present and future competition in the retail markets for mobile wireless.
12315 Let me address the first issue, competition in the retail market.
12316 Although we're first to market mobile services in most of the communities we serve, we've continued to invest heavily, evolving our service offerings so that customers continue to value them as other choices become available.
12317 For instance, we've recruited and trained Community Service Providers in each one of our communities as a local point of contact of assistance and of access to handsets. They also provide a local face in each hamlet, village and town we serve.
12318 We designed our simple, no contract service plans to meet the needs of the people we serve, based on their input, and we are dedicated to enriching those packages as we continue to innovate.
12319 But providing local service in the North requires access to wholesale backbone transport to connect with the rest of the world. When that backbone -- or rather, where that backbone is controlled by others, whether it be satellite or fibre, we’re constantly fighting for fair, open access at reasonable rates. Backbone transport is a key part of the wholesale regulatory framework for mobile.
12320 A point to take away is that an independent wireless network operator can open new markets and can offer a competitive alternative in other markets, even in Canada's most remote and sparsely populated regions. We're the living proof of that.
12321 To be clear, we firmly believe that no market is too small, or too remote, to benefit from facilities-based competition.
12322 Let me touch briefly on the third area of your focus, reducing barriers to future infrastructure deployment.
12323 Vice Chair Laizner, you've asked if there's any regulatory intervention the Commission could make to develop more favourable market conditions for service-based competitors other than mandating wholesale MVNOs.
12324 The answer to that's yes. Throughout this proceeding, we have attempted to point out that competition in the retail market depends on a healthy wholesale market. Rather than designing specific regulatory measures for retail markets, we strongly believe the Commission must be focusing on ensuring that wholesale arrangements support competition by local and regional wireless service providers.
12325 We've advocated a regulatory framework that ensures facilities-based wireless carriers have open access to key "upstream inputs" including sufficient backbone transport facilities, whether that be fibre or satellite, as well as suitable gateway facilities, which some have referred to as passive infrastructure.
12326 We've pointed out that all local wireless service providers must be allowed affordable access to backbone connectivity, without unjust discrimination or undue preference, if effective competition is ever to develop in the local services market.
12327 And we urged the Commission to place more emphasis on lowering barriers to service entry and ensuring the ILECs cannot abuse their dominant positions, including by restricting competitor access.
12328 Not a new position for SSi, as I’m sure you’ll recognize. It's the essence of our Qimirluk Proposal, first presented to the Commission in 2016. We laid out in the Qimirluk Proposal a detailed plan for a truly open backbone and gateway facilities. This, in turn, will spur on innovation, investment, competition and choice in even the smallest communities.
12329 We do note the Commission recently initiated a separate proceeding to address barriers in delivering USO-level broadband across Canada. But as we're highlighting today, there is a need for open access to adequate transport and gateway facilities for all broadband services, whether delivered through fixed or mobile networks.
12330 And, Commissioner MacDonald, last week you asked if Eastlink would be interested in becoming an MVNO in Iqaluit. It's probably worth noting that, since MVNOs function by using excess capacity of the MNO, until such time as there's much more capacity, backbone capacity in Nunavut, it's difficult to contemplate MNOs, mandated or not -- MVNOs rather.
12331 That said, please rest assured we continue to work with excellent local partners to improve service and expand our markets, but the need remains for greater backbone connectivity, greater backbone capacity and more investment into gateway infrastructure. Specifically, there's a need for Qimirluk.
12332 I'll now turn it over to Mairi.
12333 MS. MACDONALD: Thanks, Dean.
12334 Let me start by emphasising the Bureau's November 2019 conclusion that the market power of the dominant carriers extends to both retail and wholesale markets. These carriers enjoy high market share by any of the measures that the Bureau employs.
12335 High barriers remain to entry into mobile wireless markets across Canada. In this respect we underscore the considerable advantages enjoyed by incumbents, most notably the large ILEC- affiliated ones, over any independent or new entrant. Those advantages include both high sunk capital investments and an overwhelming share of the available scarce spectrum.
12336 As a company that prides itself on its wireless technology and its disruptive potential, we appreciate the Bureau's endorsement of regional carriers' impact on retail market competition. However, we disagree with the Commissioner's proposed remedy, for three reasons.
12337 First although the Bureau finds market failure extends to both retail and wholesale markets, its proposed remedy for the failure to develop a competitive wholesale market seems to consist of constraining MVNO entry to very few players for a very short period of time.
12338 In our view, while the Bureau’s proposed remedy would result in relatively little additional burden being placed on the limited network resources that dominant carriers already devote to wholesale, it does nothing to address the fact that there is no incentive for them to offer facilities at the wholesale level.
12339 Bell, for one, has clearly stated that it will not raise or invest capital to build capacity to develop a wholesale business.
12340 This aligns closely with the position they’ve been taking in other public policy forums for the past couple of years, and which we noted in our May 2019 submission.
12341 Bell does not want to build, or make available on a wholesale basis, any network capacity above and beyond what they anticipate they can sell to their own retail customers at retail profit margins.
12342 For its part, Telus has alleged that its investment in mobile wireless facilities will collapse if it’s forced to develop wholesale offerings for MVNOs.
12343 Now, other intervenors have expressed a healthy skepticism about this threat as it applies to facilities that MNOs such as Telus use to offer retail services. But it does seem clear that Telus is also not interested in developing wholesale offerings.
12344 For a lively MVNO market to develop, Canada will need facilities available on wholesale terms. And the fact remains that the major integrated ILECs and their affiliates are by far the best position under current Canadian ownership rules to raise the capital necessary to build networks that can support wholesale services, as well as retail.
12345 SSi has experienced the effect of the ILEC’s privileged position almost every time the Federal Government has auctioned wireless spectrum in any band, as the bid prices reach stratospheric levels.
12346 And as Jeff highlighted earlier, that places the cost of auction spectrum beyond any price that we could justify economically, even with approaches such as spectrum set-asides in place.
12347 Jeff also mentioned our appreciation for the relationship we’ve developed with Rogers and their openness, relative openness anyways, to enter in sub-licensing and other arrangements with us.
12348 But even there, seeking ministerial approval for sub-licenses can sometimes be a lengthy process. We need timely approvals.
12349 Our second concern with the Bureau’s proposal is timing. In suggesting that mandated MVNO entry should persist for only a short period of time, the Bureau is relying very heavily on its own finding that certain disrupters could achieve significant and lasting improvements in retail markets by rolling out their networks more quickly.
12350 From the perspective of SSi, when we acquire spectrum, we do so to build a network, and the sooner the better.
12351 If we were to devote limited resources to creating an MVNO in our license territory, we would eventually have to move customers from that MVNO to our own network. It goes without saying that those efforts will take significant time and resources away from the already challenging tasks associated with building and launching our own network.
12352 Like many others, we doubt the feasibility of ending mandated MVNO access on any fixed schedule.
12353 If network buildout is delayed for any reason, or if a voluntary wholesale market doesn’t develop, enforcing such a hard end to a policy would be disruptive and costly for the very consumers who were supposed to benefit.
12354 And even if the Commission were willing to enforce a hard end, we’ve heard more wishful thinking than helpful suggestions for what happens to an MVNOs customers in the event it’s forced out of business.
12355 The Bureau itself assumes the disrupter MVNO will have been able to build its own network-based business in the time of the -- in the limited window under the proposal that’s made.
12356 And so at the end of that window can transition all customers to its own network.
12357 Xplornet, alternatively, suggests the disruptor MVNO can keep its customers, even if it cannot transfer them to its own network, so long as it promises not to serve any new customers on wholesale facilities secured from the MNOs.
12358 And others simply assume that these retail customers are so inherently valuable, no matter who they are or where they live, that they’ll be snapped up quickly by another carrier.
12359 Before I hand this back to Jeff, let me quickly address our third problem with the Bureau’s proposal, which ducktails with our main concern about Cogeco’s HMNO proposal.
12360 Like the Bureau, Cogeco would limit HMNO eligibility to players already in the given geographic market.
12361 This helps only existing service providers who intend to make their offers more attractive by adding mobile services.
12362 The quad play that you’ve heard so much about over the past two weeks, it does not encourage investments in wireless facilities.
12364 MR. PHILIPP: Thank you, Mari.
12365 In closing, our biggest concern with many of the MVNO proposals placed before you is that they have little to do with competition, or with making retail markets more attractive for consumers, or at the end of the day, with actually growing the market.
12366 The problem is that with too many proposals, it invites the Commission to pick an MVNO winner. And they also invite you to believe that you can have competition where everyone wins and no one would lose.
12367 To do this, some oppose strict geographic restrictions on eligibility to become an MVNO, prioritizing wireline carriers already in the market. Some would limit mandated MVNO access to those who already have spectrum in the same area. Others still would exclude a facilities-based wireless carrier operating in any region of Canada from being an MVNO in any other region, or strictly limit the number of possible MVNOs.
12368 These parties would have you believe that without the name recognition, that of an incumbent cable company or an ILEC, the business will fail.
12369 Some argue that unless they can bundle mobile and landline services they already sell, they will not achieve acceptable profitability, which they think should somehow be the Commission’s concern.
12370 The fundamental problem with so many of these proposals is that they will in fact limit consumer choice, investment, and innovation, the very hallmarks of competition.
12371 Like Henry Ford, they’re trying to convince you that you can have a car of any colour, so long as it’s black.
12372 SSi’s own record of innovation, investment, and competitive services, even in the smallest and most remote markets, should put an end to all of that nonsense.
12373 It’s often said that a competitive market without the chance of failure is like heaven without hell. And somehow that concept just doesn’t work.
12374 The Commission must be careful not to assume that the decisions coming out of this proceeding will, or indeed should, guarantee success for all who enter the mobile market.
12375 Your decisions must instead focus on approaches that will make a positive difference for consumers and that will improve the quality, choice, and cost of wireless services.
12376 We’ve told you how we believe it can best be done with a focus on backbone transport and open gateways.
12377 We greatly appreciate the opportunity to appear today and would welcome any questions.
12378 Thank you.
12379 THE CHAIRPERSON: Thank you. Thank you very much for your presentation.
12380 Commissioner MacDonald?
12381 COMMISSIONER MacDONALD: Good morning. And thank you for your opening comments.
12382 I appreciate a statement you made a few moments ago about no community or region being too small or too remote for facilities-based competition. And I note that you operate and deliver services to Canadians in very remote and very challenging environments.
12383 So I’m interested in the perspective that you bring to this proceeding.
12384 I guess just to start off, when it comes -- a few questions around some of the promotional material that you’ve provided with your opening submission this morning.
12385 I’d just like to get a sense as to the breadth of everything that you are providing in the markets right now.
12386 And your promotional material outlined five -- sorry, four plans that you have in market, ranging from $25 to $110 per month with different features.
12387 Are those all the plans you have in market? Or do you have other perhaps less popular plans that just don’t make it the level of making it into your brochure?
12388 MR. PHILIPP: No, we -- the only plan that is not listed in the marketing is -- well, we have one of them that we call a utility plan, that we built for specific clients that -- monitoring fire control panels, or security systems that don’t require a significant amount of data, can’t afford to pay for, you know, the data plans on such a high level.
12389 So we introduced one which is a utility plan. And it’s on the website, I believe, but not in the marketing.
12390 But that’s the only other plan.
12391 Every other plan is offered at the same price, at the same level in every market that we serve, and it’s delivered an esteemed set of local agents.
12392 COMMISSIONER MacDONALD: Okay. Thank you.
12393 MR. PROCTOR: Sorry, if I could just add too?
12394 COMMISSIONER MacDONALD: Go ahead.
12395 MR. PROCTOR: Under our Qiniq broadband services, we actually offer a mobile wingle, which is a data only plan, which is not listed under SSi Mobile.
12396 THE CHAIRPERSON: And what’s the price point on that?
12397 MR. MacDONALD: They’re the same price points as we have for the residential, so beginning at $80 a month, which is a subsidised service.
12398 THE CHAIRPERSON: Okay. Thank you. And with the plans, the four that are outlined in your brochure, I know you give the option of bringing your own device, but do those four plans include a device, or is the device extra, or BYOD?
12399 MR. PHILIPP: Either. We sell devices, our agents in every community have inventory for local customers that come in to sign up, but we also allow you to bring your own device and just buy a SIM card.
12400 MR. PROCTOR: Sorry, and again, just to complete Jeff’s answer, we sell separately the handsets. So we do not bundle ---
12401 THE CHAIRPERSON: Okay.
12402 MR. PROCTOR: --- a service package with the handset.
12403 THE CHAIRPERSON: So this is the price just for the service and ---
12404 MR. PHILIPP: Correct. And predominantly because we are a prepaid service, not a contract service. So we don’t enforce a two-year term or anything like that where we would be subsidizing handset as part of the bundle.
12405 THE CHAIRPERSON: Okay. Thanks.
12406 MR. PHILIPP: It’s month to month.
12407 THE CHAIRPERSON: And ---
12408 MR. PROCTOR: Sorry, given the market too -- just to add a little more to that -- we offer a limited variety of handsets in the communities, but we make certain that we have something that is available for each one of the customer types. So the entry level or more economical phones, up to higher end smart phones.
12409 THE CHAIRPERSON: Okay. Thank you for that. On your website, I noticed that you have roll over gigs, and we’ve talked about that with a couple of other intervenors in the process. And I’m just wondering what the features of that particular option look like for your customers. If they have unused data, does it roll over forever, does it expire after a specific period of time? What flavour of that are you putting into the market?
12410 MR. PHILIPP: We’ve introduced a service that you call pay as you go. So basically, you can buy a basic package, any one of these, the Natsagaq 50 which includes 2 gig -- or sorry, yeah, Canada-wide data. And if you want to go over that you can put money into your pay as you go wallet, we’ll call it, and it will draw from that. If you want to go over, you can buy excess usage.
12411 So we have two methods, I guess, to be very clear. We have one method where you can buy some usage which is only good for this service period, it will expire at the end, or you can buy usage which will roll over. We give you the option of either, and that usage doesn’t expire, even if your plan should.
12412 Because we’re a month to month service, our current documentation says that if you are back in service within 90 days your usage still exists. But truthfully, we do not expire that pay as you go balance at this point within any timeframe, because our customers -- our customers cannot afford in these rural areas, to be on a contract. And I think that’s maybe clear to everybody.
12413 We don’t have banks, we don’t have credit cards in a lot of cases. A lot of this is cash. And there’s a very high unemployment in a lot of these communities, as high as 40 percent, which means that you may be six weeks between a paycheque, or between enough money to be able to reactivate an account. And the development of our services, our service delivery, our model has come about from the fact that I grew up in a town of 800 people in the Northwest Territories. I understand these challenges very, very well. And you will not sell service in a remote and rural community if you require a bank account, a credit history, a credit card, you know, and a two-year contract.
12414 So we have designed and tailored our plans, and continue to, to become attractive to the consumers that we serve and the markets that we serve. So we have both. We’ve introduced this roll over gigs recently, but we also have expiring gigs, if you want to call it that.
12415 THE CHAIRPERSON: Okay. Thanks for that. And you touched on the economic situation of many of the Canadians that you serve. We had conversations with other facilities-based providers over the last two weeks, who have low-cost plans within the market, perhaps even similar in features to -- to what you offer for $25, and to paraphrase, the basic response was, we offer it but no one takes it.
12416 In the geography that you provide service, what would your -- what’s your uptake been of your $25 plan?
12417 MR. PHILIPP: I’ll be as polite as I can be. Our uptake is high. I mean, if you look at the disposition of users amongst all of our plans, you would find that the very large number of them are on a lower end plan. But you would also find that our consumers switch plans very easily. Because when your month is up you can just stack another ticket on top. So you can literally go into the portal and say, next month I want a better plan. Halfway through the month you could upgrade your plan.
12418 So I don’t believe that there is no market for it, and frankly, maybe a better question is what is the cost of offering a lower end plan? The network exists, the billing, the marketing, the people, the staff, the support. The cost is a lower margin, frankly, and we’re maybe not accustomed to the margins that are made in some of the bigger markets. Maybe we just grew up in a little smaller diet. But, you know, those plans are necessary.
12419 In fact, I would argue that as Dean has pointed out, the critical aspect of delivering in these areas is access to dedicated backbone capacity, not shared, not obfuscated with no SLA or no QOS, which is typically what we’ve been fighting, access to dedicated backbone at reasonable rates. I would like to say at rates comparable to the south, but I don’t think that’s necessarily realistic, given the satellite market we operate in, without significant subsidies. But let’s say reasonable rates, so that we can deliver a reasonably priced service to the consumer, with a good quality of service. That’s our goal.
12420 And so, to end it there, because again, I’ll get too longwinded, no, there’s no problem selling those lower end plans. Those plans should exist. And if the consumer really doesn’t want it, you know, then you won’t put it on your list. But frankly, putting it on doesn’t cost much.
12421 THE CHAIRPERSON: I probably should just let you speak, because I think you were starting to go down the road that I’m about to go down right now. We’ve asked most providers to comment on some of the proposals put forward by the consumer groups, notably the Coalition for Cheaper Wireless Service has suggested a 25 to $30 plan unlimited voice and text, and 40 gigs of data.
12422 That would compare perhaps most closely to your $80 plan that you have in the market. And you highlighted some of the additional expenses and higher costs that you face in delivering service. When we ask others, we were basically -- we were told by some that such a plan would be at or below their costs. I assume that would also be the case for you if such a plan were mandated?
12423 MR. PHILIPP: The short answer is, yes. The longer answer is, I can’t see how it could possible be implemented without the Commission staff having 100 more people to investigate every market and look at every business case. Because, I mean, we’ve worked in Africa, Indonesia, the South Pacific, every community in the Northwest Territories, every community in Nunavut, as well as many in southern Canada, and the reality is the business case is different in everyone.
12424 So short of a large carrier choosing to -- and many do -- cross-subsidize their entire model and lose money on some, like, how would you possible manage it? Like, to suggest that a certain number of gigs should be mandated as a minimum level of service to be delivered by any carrier, I think is folly. I think if we want to get into something like that, it really should become more of a consumer subsidy to purchase a package and let the competitive market determine what the best package is. Because otherwise, it becomes very complicated to manage.
12425 And I’m all for cheaper packages, and you hinted, Commissioner MacDonald, at our higher costs. Let’s put that in perspective. Our power rates are 700 percent higher; our data rates are $1,000 a unit versus $10 a unit for wholesale backbone, right? Our labour costs, our transport costs, our infrastructure and heat costs, it is dramatically higher.
12426 So I would find it would be very difficult to come to me and say, “Jeff, can you deliver that for 20 bucks a month?” I mean, I’d be happy to show all the numbers and say, “Well, tell me how.” Because short of somebody giving me backbone at $10, you know, a meg, it’s just not possible.
12427 So no, I think it is folly to suggest that there needs to be a plan, and that plan should be the same everywhere and at the same price, because I think it becomes very hard to regulate. And I won’t go into it, I think Dean is itching to jump in with something on BAP. Are you? Is that it.
12428 MR. PROCTOR: No. Thanks, Jeff.
12429 I just wanted to add a bit. When Jeff mentioned that perhaps a large national carrier could do it on a cross-subsidy basis, I just want to underscore the horribly negative ramifications that would have on competition in the markets in which we operate, or other smaller carriers operate. Which again, if there's an idea of mandating a certain type of low level but high data consumer price plan, it's kind of running contrary to the purpose of this hearing and to the purpose of competition, which is to allow innovation, and which is to encourage new entrants to come in.
12430 By putting in place data plans, voice combined with data plans that are under cost in the markets which need competition, you will be nipping competition in the bud, not encouraging it. And I really want to stress that.
12431 MR. PHILIPP: And I want to make sure that – because Dean, you make a good point, and thanks for clarifying it – if I didn't let enough venom into that statement, I would not support the idea. And frankly, given that I grew up in the Northwest Territories and still live there, this is a living nightmare for me.
12432 I see a large ILEC with an operation in the North utilizing its large ILEC status to kill all competition. The Yukon's got none. The Northwest Territories has one competitor left – us. And in Nunavut, we're in every community because they aren't able to use their position, their status on the fibre backbone to thwart our competitiveness, we own our own backbone in Nunavut.
12433 So it's -- it would be a very bad idea, I guess to end at that.
12434 COMMISSIONER MacDONALD: And I appreciate your comments around the fact that such a plan, in your context, would be below cost. One of the other -- putting cost aside for a moment. One of the other criticisms against mandating one specific plan is it puts all low income Canadians into one bucket, and that, you know, features of that particular plan may not be best suited for their individual needs and the way they use their device.
12435 So -- and I think I know the answer to your question, because you mentioned a possible subsidy later. Are you of the view that a subsidy, however a such a subsidy came to fruition, that would allow a low‑income user to pick the plan that best suits them would be a better fit for perhaps additional funding provided, or a consideration taken when calculating the low‑income subsidies?
12436 MR. PHILIPP: Absolutely. I think that if we were to look at this very holistically without our ILEC-carrier-operator status hat on, and we just said as Canadians and as businesspeople what might be the best outcome, the best model, it's obvious; right? Provide everyone a fair playing field. Provide backbone at an equivalent price in every market.
12437 That's where the Commission can regulate and mandate, is to say, "No. We're going to have $10 a megabyte in Grise Fiord", and if that means it's a $900 a megabyte subsidy, so be it. Because then every competitor that wants to truly deliver service in that market has access to a backbone at an equivalent and fair price, equivalent to the South.
12438 And then secondly, we need to open up facilities in those markets, open gateways, and that is the basis of Qimirluk. And if you are new and haven't heard that, I would encourage everybody to go look. And the simplest thing -- and it actually stands for whales backbone in Inuktitut, but the easiest way to remember it is, "Come here, look" It's Q‑I‑M‑I‑R‑L‑U‑K.
12439 And really, it talks about -- and we laid that plan out without our SSi hat on. We laid it out as if -- and I said, specifically to funders, it doesn't matter who wins this competition if you do it this way, because whoever wins it is obligated to operate it on a fair and open basis, and we will be a customer. If they can outbid us on operating the backbone in the open gateway, we'll just become a client of it. But I think we're probably more innovative and we will probably win that, and we'll run it as an open backbone, which is what we promised with Qimirluk. And it still is needed.
12440 So provide an open gateway. Provide the -- what Dean calls the "passive assets" where others have those critical pieces. You know, the tower, the building, the backup power, the local trained people to manage the infrastructure, because we're talking about stuff in remote and rural areas. Provide the jobs; right? That will open up competition.
12441 COMMISSIONER MacDONALD: Just maybe one final question on your promotional material before I move on. We heard from a group, I believe it was yesterday, and they were talking about the challenges that many vulnerable Canadians feel when interacting with their service providers, particularly accessing services online. And I notice in your material this morning that you provide a card, I assume it's delivered with an individual's device when they sign up, how to activate the device and get the services that they've purchased.
12442 Do your customers face any challenges with doing this? I mean, it seems very straightforward to me, but ---?
12443 MR. PHILIPP: It's a great question, and I'll take a moment to actually promote the fact that I think we are one of those companies that probably meets the language commission, you know, closer than anyone else in Nunavut. We have gone to great lengths to make our website, our captive portal bilingual and language aware. We are in fact developing new markets now in southern Canada, which will include French being dynamically translated on that website, and our marketing will come out in it.
12444 So, A, we do go to great lengths to make sure that our material is available in the language of the people that we serve; that's important, I believe that. Secondly, we write all of our own software that integrates our systems together. We don't -- we rely on very little software from others.
12445 And so when you look at that card that I think that you're referring to, whether it's in the English or the Inuktitut, the activation code that is on that SIM card is something that our software recognizes.
12446 So when a customer in Grise Fiord or Qikiqtarjuaq goes to the local agent's home or place of business to sign up for an account, they literally can sit there with that person and be signed up in about 5 minutes, or they can take the device, and the SIM card, and the activation card, and go home and connect to the portal and punch in that activation code, and the system knows what that device is, and then they can choose a plan.
12447 Now, in a lot of cases, as I said, there are no credit cards because there are no banks. And partly this is because we haven't had driver's licences either or street names, right, or addresses in most of these communities. So you couldn't just phone Bank of Montreal in Ottawa and say, "I'd like to set up an account. I'm Jeff", and they say, "What's your address?" And you make something up, literally. I was at Number 1 MacKenzie Drive for most of my life because there were no street numbers, but I was on the MacKenzie River, and I figured that was a good street number.
12448 The post office in the community didn't give a shit what the street address said, because you had to go pick it up at the window at the post office at the Northern Store.
12449 So are there barriers? No, not in our service. That's why we have a local agent in the community that gets a percentage of the revenue, not the margin, the revenue off the top. We put over $1.6 million a year back into the communities of Nunavut by giving a percentage of revenue back to the agent in the community.
12450 The barriers faced in our communities are barriers when you have to deal with a teleco that lives in the South, that has a call centre overseas that doesn't speak your language and doesn't have your device in stock and can't take a cash payment.
12451 COMMISSIONER MacDONALD: Okay. Thank you for that.
12452 I'm looking at your opening remarks this morning, and you mentioned that until there's more backbone capacity available going to Nunavut it would be difficult to contemplate an MVNO, mandated or not. So I take it from that that you've obviously not been approached by another potential MVNO trying to seek access to your network, but have you looked at approaching other service providers to seek MVNO access so that you could launch in areas outside of Nunavut?
12453 MR. PHILIPP: That's a great question. Yes, we have sought, I'll call it co‑location status, in other ILEC's facilities in the North, in Nunavut, in the Northwest Territories, and prior to us building our own network in Nunavut, in Nunavut. And as I am sure you are well aware, much like we have mandated tower sharing, try to get access to an ILEC's tower and you will find out that before the engineering study starts, you're going to commit 6 months to try to get a discussion, then you're going to commit to a large potential bill for the first engineering study to be told there's no space left on it. Been there. Done that. Lived it. We started building our own towers.
12454 When we built the network in Nunavut in 2004, there was no broadband provider. There was Northwest Tel with copper dial-up, long distance, $1.10 a minute dial-up. Didn't work.
12455 So we built infrastructure. We built facilities in every community in Nunavut, towers, buildings, yards, dishes, multiple dishes for redundancy, multiple dishes for capacity. We trained local agents. And, yes, we've been approached by people that would love to move into our facility, and that facility is a 20-foot container, with a 60-foot tower, and 2 4½ metre C-band antennas at local agent. There isn't the air conditioning capacity. There isn't physical capacity. There isn't the security. There isn't the physical access control because in 2004, when we built that, even though we have since then invested $75 million of our own money against $75 million in funds from the federal government, we are 50 per cent matching funds in building out Nunavut. Nobody else has done that in most territories that are rural. We have.
12456 The facilities aren't enough, and years ago we identified that. And we said, look it, if we truly want competition -- and this coming from the heart. I grew up in Fort Providence where I wanted to compete, but I wasn't a telco. I was a kid in a community of 800 people. We built a computer company. We fought. We built a telecom company. We spent millions in front of the Commission in the last 10 years trying to open the market up, remove the monopoly, get into cellular. It's been a hell of a battle.
12457 We've had people come to us. And what I've said to them is, "We'd love to host you". Because competition -- we've not been first to market in many markets. Usually we're last in the market because we do a good job at it. But we can't entertain those other clients, for a whole bunch of reasons. One is security of that data and having them have access without being a proper facility.
12458 So, to end this, the proper answer is we need to invest in the infrastructure on the ground. We need open gateways that are shared by all, so that we aren't picking a winner or a loser. We're enabling the community and the people that live there to develop services as well. So, that's the basis of cumulative truly.
12459 And one last piece on that, the facilities are one part. The backbone is critical. And irregardless (sic) of backbone, right, and that's a big, big part of the underlying cumulative model, is that each backbone coming in -- it might be satellite today, might be fibre tomorrow -- is part of that shared service and it's costed appropriately, so that it is not a burden to the people living in the community.
12460 What I mean by that is if Grise Fiord only has satellite, but you've got fibre in Iqualuit, the people in Grise Fiord should not pay a higher price for the fact that they live in a part of our country we desperately want them to live in.
12461 MR. PROCTOR: Sorry, Commissioner MacDonald, if I could just ---
12462 COMMISSIONER MacDONALD: Yeah.
12463 MR. PROCTOR: --- add a bit to the very narrow focus of MVNO. We've not been approached on the mobile side for MVNOs in our serving area. We have had resellers on our broadband network in the past, mostly in the west, fibre served by Northwestel's backbone, but given the price of backbone transport, our resellers weren't able to continue to make a business case, so they have one by one fallen off. But as best I know, we were the only provider of resale service on the broadband side.
12464 In terms of MVNO in the south, our approach, if it wasn't clear from the presentation, I think it was, we prefer to go forward building our own facilities, and that's what we're continuing to do outside of the markets that we're serving right now, with local partners.
12465 COMMISSIONER MacDONALD: Perfect. Thank you.
12466 On the topic of building facilities, just a point of clarity, paragraph 37 you say the Bureau's proposal,
12467 "...does nothing to address the fact there is no incentive for them to offer facilities at [a] wholesale level".
12468 I assume by "them" you're referring to the large national carriers, or are you ---
12469 MS. MacDONALD: That's right.
12470 COMMISSIONER MacDONALD: Okay. So, you weren't referring to the fact that that proposal from the Bureau would not lead to investment on the part of the potential new MVNOs, what would be the regional carriers right now?
12471 MS. MacDONALD: That's right. Although, like, I went on to say that it makes that investment -- we're not entirely sure how a regional carrier is going to undertake the burden of becoming an MVNO for a short period of time while continuing that investment.
12472 But, yeah, our point in paragraph 37 is exactly that we don't see an incentive from the Bureau proposal on -- an incentive structure built to induce, shall we say, the better-funded players in this market to actually develop the facilities that would be required for wholesale.
12473 COMMISSIONER MacDONALD: Okay. Thank you for that clarification.
12474 On the topic -- if we did -- and I know your views on the Bureau proposal, if we did go that particular route, what benefit do you think it would provide to the regional carriers that would be able to apply for that MVNO access, the Eastlinks, the Shaws of the world?
12475 MR. PROCTOR: I'll go to that one. And when you acquire spectrum, and whether it's through sub-license, which is probably the most economical way to do it, or through a spectrum auction, you want to build a network of a certain quality and go after customers with a certain approach. By necessity, an MVNO regime, any level on a scale is a resale regime. You will always be riding along a competitor's network, with the limitations, no matter how it's regulated in terms of open or pricing, that constrict the quality of the service that you can provide to your own customers.
12476 At the same time, there are start-up costs. There's a lot of time to set up an MVNO, no matter how regimented the Commission makes it, no matter how tight the negotiation timeframes or the tariffs may be set to encourage earlier entry. You're putting time and resources into that.
12477 Then you have to build your own network. And it's a true wisdom that the first customer costs millions of dollars and it gets a lot cheaper after that. It becomes a diversion of assets, of activities to continue to be building and nurturing an MVNO service, which may have lower quality attributes as well, which affects the brand that you might be trying to build on your own network.
12478 So, for the Bureau to be suggesting that MVNO is a good route to get to a facilities-based carrier, it gives you a short-cut to gather up market share, there's a lot of shortcomings to that. And it becomes an even greater shortcoming if there's a gun against your head saying, "Hey, five years from now you have to stop all this". I mean, how does that work?
12479 The cost of switching over, whether there's eSIMs in place or not, the cost of switching over is very burdensome. The handsets may not match, so that means you're going to have to give everybody 2, 3, $400 handsets, maybe a thousand-dollar handsets, depending on what your network incurs them.
12480 There's undoubtedly slippage churn when you're moving over to your own network, away from the MVNO's network. There may be perceptions of lower quality onto the new network rather than the old network.
12481 So, I see so many -- and I've lived through these, I might add, over the last 20 years in the industry that there have been MVNOs, as I'm sure the Commission's aware. There's so many shortcomings in a mandated transfer over while you're building out a network MVNO status as the Bureau's proposing, that I just can't see it being practically workable.
12482 COMMISSIONER MacDONALD: We'll get to the -- as you called it, the "gun to the head" in a second or two.
12483 But what would you say -- I mean, if a regional provider was successful in gaining MVNO access, would that not at least allow them to launch sooner -- where they have spectrum, would allow them to launch sooner, begin to build their brand sooner, depending on the uptake among Canadians, make more informed decisions as to where they should invest in facilities next? Because largely, when providers are trying to make those decisions now, yes, they base it on a lot of data and best assumptions, but it is kind of a best guess as to what market share they're going to be able to gain in a particular community.
12484 MR. PROCTOR: The answer briefly is yes, but I want to go back to some of my previous comments, which may have been a little -- not as tight as they could have been.
12485 Probably the best thing I see about entering in as an MVNO if you already have a spectrum license, or if you're thinking of getting a spectrum license, is whether or not there's actually a market for your services.
12486 So, I suppose it avoids a problem if you find that you have absolutely no traction in a certain market, you don't have to bother going ahead and building, but tying that back to the Bureau's suggestion, or their proposed structure, you have to already have spectrum, which means that you've made a costly mistake. You're going to become an MVNO and find out that there's actually no market for your services.
12487 I also want to highlight a couple of the points I raised earlier. You're not operating in your network. So, yes, you may be able to enter the market quicker, but it's operating off of somebody else's network. There are quality attributes that may be greater, may be lesser when it comes time to move over.
12488 It may not be the type of services or the full richness of services that you could offer of your own network.
12489 Bell talked about differentiation. You may not have the differentiation you want as an MVNO that you would definitely have if you had your network.
12490 So sure, you can gather up some customers, but is it really the type of service that you want to have? And as I mentioned, there is going to be churn when you move those customers over to your own network. That’s costly.
12491 COMMISSIONER MacDONALD: You’ve mentioned -- and we’ve talked about the Bureau’s proposal, you mentioned the Cogeco proposal in your opening comments. There are other flavours of MVNO. Just so I’m clear, is there any model that you would actually support?
12492 MR. PROCTOR: In our evidence, in terms of mandated, we stayed to the –- what’s been defined as the full MVNO. Again, this is resale. This is open network access. This is something that SSi is doing very voluntarily, wants to do that is Qimirluk.
12493 And the biggest concern we have -- and we’re trying to get that across, if in fact there’s mandated MVNO access, there should be some requirements, such as Roger’s, I propose, provision 911 services, the provision of, you know, other respect for legislation, such as the PIPEDA and all of that. Those of the types of restrictions that should be in place. There should not be other restrictions such as ITPA is putting in place, then you have be a wireline carrier. That’s folly. That denies innovation. That denies, well, the market for competition.
12494 So as we’re trying to get across, we believe the best way to go forward is to focus on the upstream backbone facilities and to focus on passive infrastructure; in other words, the gateway facilities, the towers; spectrum is also a passive infrastructure, I might all, to allow local wireless carriers to build their own local wireless networks. It’s actually quite economically achievable if you have the other pieces in place.
12495 COMMISSIONER MacDONALD: And that’s understood and I –- your points are not being lost on us, so just be assured of that.
12496 Do you think that there –- given your experience negotiating with Rogers –- I don’t believe you’ve mentioned the other two national carriers, which lead me to believe you haven’t had the same level of success in your negotiations with them, do you think there’s any likelihood that an MVNO market in the country will develop if it’s –- if the access is not mandated?
12497 MR. PROCTOR: I apologize. I’m not certain if it was actually shared with the Commission, even in confidence, but there are MVNOs operating; I’m just not certain what ---
12498 COMMISSIONER MacDONALD: Yes, sorry, I mean ---
12499 MR. PROCTOR: I’m just not certain what their market share is, so that’s why I say I can’t actually opine on that. I guess none of us can.
12500 COMMISSIONER MacDONALD: Yeah, I mean, just to provide a little extra colour, yes, there are; there are branded resellers out there today. Some have put forward that at five years following our last decision that they would have expected a larger number of MVNOs to have come into the market and been successful in attracting a larger percentage of the subscribers than is presently the case.
12501 MR. PROCTOR: The MVNO is going to have to be an excellent marketer, so branding’s important; marketing skill and savvy’s important. You shouldn’t put up barriers to that in terms of who can actually become an MVNO.
12502 I can go way back in time because I was reading the TekSavvy Australian report and they talked about how MVNOs were invented in the UK with Virgin. The name was invented there. We can actually go back to Canada. Microcell, back in the day, created an open network. We didn’t call it MVNO; that’s classic Richard Branson in terms of marketing. But with Richard Branson’s brand, with the Virgin brand, with the wherewithal and the desire to enter in, it became clear that he would be able to –- and they’re still operating in the market today; it’s just it’s 100 per cent owned by Bell, the licensing deal from Branson.
12503 There are certain companies, brands, marketing skills that would likely lead to success in the marketplace, and if the business plan is there, it would be encouraging for any MNO, whether regional or otherwise, to enter into that relationship.
12504 Microcell, at the time, was in heavy negotiations with Virgin only to lose out to Bell for the MVNO deal, so in other words, that was a brand –- a player that was highly sought out as a non-regulated, non-mandated MVNO. So yes, it’s possible. And again, Virgin’s still operating today; it’s just it’s a hundred per cent owned by Bell with a licence for the Virgin brand from Branson.
12505 MS. MacDONALD: Can I add to that?
12506 COMMISSIONER MacDONALD: Yes, of course.
12507 MS. MacDONALD: One of the things I think that came through to me fairly clearly listening to the testimony, particularly in the first week of this hearing, was the major MNOs saying, “you know, if there’s nothing in this for us, we’re not going to negotiate with anybody”. And I think Dean’s given you an example of where a reseller, right, where a marketing –- a marketing-based entrant actually did have something to offer.
12508 Without something to offer, we’re dubious about the development of a market organically and because there hasn’t been –- because that MVNO market hasn’t developed organically, we also aren’t seeing the wholesale business, the wholesale facility or the facilities available to create a wholesale business, if you like, on those national networks.
12509 COMMISSIONER MacDONALD: So I guess just to ---
12510 MR. PROCTOR: Sorry, Commissioner MacDonald, I ---
12511 COMMISSIONER MacDONALD: Yeah.
12512 MR. PROCTOR: --- I probably have to close off on that one too. I apologize for all the back and forth.
12513 Microcell voluntarily opened up its network because of what I was talking about earlier, the first customer costing hundreds of millions of dollars and getting cheaper thereafter.
12514 When you put in place the network facilities that are good for a five-year horizon, you don’t have a lot of customers on that network to begin, so an open network policy actually allows you to have additional brands, additional marketing skills, additional reaches and distribution points into the community to build up your subscriber base which pays down the network costs. So ironically, the voluntary basis for wholesale access for an MVNO could, in fact, come mostly from regional players who voluntarily open their networks to help defray the start-up costs of capital.
12515 COMMISSIONER MacDONALD: Okay, thank you. Just a couple more.
12516 If we did mandate MVNO access, do you think that the Commission would have to set –- I believe the answer is yes, would have to set a rate, and would you suggest that our traditional phase II costing approaches would be the best way to do that or perhaps something more novel like a retail minus approach?
12517 MR. PROCTOR: We’ve talked about this a lot in the last couple of weeks, and the last 15 years have been quite eye opening in that regard. There’s been a lot of reference to: maybe we should start with the roaming rates as a basis. But a basis for what? I guess roaming represents one thing versus any number of variants in the MVNO components.
12518 At the same time, when you look at phase II costing -- and this is the concern that has been raised by a number of players; it certainly was raised by us -- we don’t have access to all those costs. I continue to be mystified how Bell and TELUS with their really efficient model of network sharing have voice and data prices in roaming that are more than double for voice over Rogers and a multitude of times over Rogers for text messaging. I can’t figure that one out.
12519 So again, if we were to start from retail price and to use phase II costing, which is probably the most logical, I might add, it’s just that we cannot contribute a lot to that because we don’t have access to the data. We don’t have the skill sets of the larger players to really contribute meaningfully to that type of an analysis.
12520 Retail minus –- and again, some people have been poo-pooing on retail minus -- it’s probably a much easier way to do it, to at least get started in the market, but again retail minus against what if you’re doing the RAN?
12521 Retail minus might work when you’re comparing roaming rates as some people have been suggesting, but you guys had a very lengthy proceeding on phase II costing for roaming rates, so can you put that genie back in the bottle?
12522 This is a long and drawn out answer to say that’s a difficult task in front of you. Retail minus might be the cleanest, but as I say, when you’re dealing with strictly a RAN, how do you do retail minus off of that?
12523 Should there be an interim rate, perhaps, before starting? I think that certainly makes sense. We have argued in front of you several times that if there is an interim rate, why not take the interim rate proposed by the competitor? Why not take a lower interim rate rather than a higher interim rate because that would definitely encourage entry, rather than an interim rate which is too high to begin with?
12524 And at the same time, it becomes a sort of –- without having arbitration –- baseball arbitration, if in fact you’re going to take the lower interim rate that’s proposed because the player that takes that rate –- the new entrant that takes that rate knows that if, in fact, they’re wrong, they’re going to have make up the difference at the end of the day. So rather than the carrier paying back to the new entrant, it would be the new entrant paying back for the carrier, if in fact the Commission adjusts rates one way or the other, upward or downward.
12525 COMMISSIONER MacDONALD: Thank you. Just one final question and then my colleagues may have others.
12526 If MVNO access is mandated, it will be a significant change for the Canadian marketplace. And I think, depending on your point of view, that change could either be disruptive or it could be destructive.
12527 And at present, we know that rates are going down, perhaps not as fast as many would like.
12528 We know that the new entrants are investing and gaining new customers. Again, perhaps not as fast as we would like.
12529 No one has questioned the quality of Canadian networks.
12530 So I’ll end it with just the question, MVNOs positively disruptive to the market or destructive to what appears to be working?
12531 MR. PROCTOR: Just to add to that, there’s actually a third option, which is it could become a big nothing.
12532 If in fact the rules are so restrictive that you only have oatmeal or a black coloured car entering the market, then it won’t be disruptive or destructive. It would be kind of boring.
12533 The key that we want to emphasize is that the rules need to encourage innovation, new entrants, investment, and it’s going to also encourage failure. People have to have their right to fail. They have to have the right to be able to try something new. And maybe it won’t work, but that’s what competition is all about.
12534 So I would just like to add a third option to it, which is, you know, if the rules are so restrictive that no one can actually play, even though you’re opening it up, it won’t be much of anything.
12535 But again, the hallmark of a competitive market is innovation.
12536 So destructive or disruptive, that would be more to the disruptive side.
12537 Destructive, I can certainly see the concerns of regional carriers who have invested a lot and have yet to cover their capital costs. I can see that. I’m very empathetic to the situation that they face, the concerns they face, given that they are actually still ramping up their own market shares, and that would be destructive in that case.
12538 COMMISSIONER MacDONALD: Okay. Thank you very much.
12539 THE CHAIRPERSON: Thank you.
12540 Commissioner Barin?
12541 COMMISSIONER BARIN: Thank you.
12542 Thank you very much for your perspectives.
12543 I have a couple of additional questions I want to ask.
12544 I want to pick up on your point about the wholesale backbone, and your position being that the currently negotiated rates are effectively a barrier to entry.
12545 Now, assuming the Competition Bureau’s MVNO model was put in place, hypothetically, whether or not you took advantage of that model, would you not say that if regional facilities-based MVNO carriers introduced more competition into the retail market, or the MNOs, that that would then not render the wholesale market much more attractive for the MNOs as a potential source of additional revenues and therefore that it would provide you with, I guess, a better wholesale backbone situation?
12546 MR. PROCTOR: The answer would probably depend on where in the subscriber take-up scale that MNO, that particular MNO is. Do they have excess network capacity available or not? If not, they’re going to have to build it to accommodate the MVNO. And that may then be sold at margins that are lower than they perceive on the retail side.
12547 The other aspect to this, I guess, is the whole question of how much wire is involved in the wireless network. This is why we focus on backbone.
12548 4G already is a huge consumer of fibre, of satellite backbone. 5G is going to be even more.
12549 So I suppose to the effect than an MVNO would actually augment the backbone transport capacity, sure, that would be good. But there would have to be excess capacity for it to be of any quality.
12550 COMMISSIONER BARIN: Okay. And your view on capacity today? Because there have been parties that have posited that MNOs are potentially holding back capacity, others mentioned that there is no capacity for MVNOs.
12551 MR. PROCTOR: Sorry, last mile or backbone? Because we have to really separate those.
12552 COMMISSIONER BARIN: Well, both actually.
12553 MR. PHILIPP: I think there’s a couple of things in this that I’m trying to convey or find a simple way to convey.
12554 So the question on backbone, it depends where you live. If you live in Grise Fiord, there’s no backbone capacity, there’s no diversity of backbone. It’s congested. If you were to try to buy it from the competitor, there is nothing to ensure your quality of service. So how would you sell a differentiated service?
12555 This is the case in Nunavut right now, where the T-19 capacity is being delivered into the community on a quote on quote basis for all competitors to be able to access.
12556 But the service contract that comes with that backbone access has no quality of service or no SLA. So there’s no way I could compete with the person offering it to me. I can’t use it because it doesn’t -- I can’t offer you video conferencing if I don’t know how bad the service is that I’m buying, because there’s no quality of service.
12557 So is there backbone constraints? It depends on where we’re talking about. If we were talking about downtown Toronto, you’d probably be able to buy whatever fibre you wanted at 10 bucks a meg and just bring your own fibre in. It wouldn’t even be an issue.
12558 But if you’re talking about in Grise Fiord, you’re talking about a million-dollar expense to put the hub infrastructure in, to put the antenna in, to put the building and transmitters in.
12559 You’re not going to be buying much backbone capacity. And then you have the costs in the sky.
12560 So Dean’s comment about, you know, it’s important to differentiate between backbone and last mile is because in the north, we’re in rural and remote areas, it doesn’t matter if we’re talking about markets in Africa we’ve worked in, or Indonesia, or the South Pacific.
12561 The problem is 180 percent different in a small remote rural market than it is in downtown Toronto.
12562 Downtown Toronto, there’s lots and lots of backbone, but the last mile becomes congested because the number of people, the number of sites, how much spectrum you have, that becomes the problem.
12563 In rural Canada, while we can still have a spectrum problem because we can’t afford to compete, even in set-asides, typically, as has been proven, the last mile, if you have spectrum, is typically not your problem. It’s the backbone out and, secondly, in these rural areas, it’s the facilities that need to be built.
12564 So if every competitor has to build their own three towers, their own uplink, their own two antennas for redundancy, their own genset, that’s a problem; right?
12565 Those are the passive assets. The building, the power, the local support, the antenna, the spectrum.
12566 But putting in your own RAN so you can differentiate your own service, putting in your own servers, putting in your own software, your own systems, that’s what differentiates the service, in my mind, and that’s what makes the difference between somebody that succeeds and fails is whether or not they’re a good service provider that deliver a good service.
12567 But in -- so in the south, to end this, backbone has typically not been the big challenge.
12568 In the north, backbone is absolutely the challenge. And access to facilities.
12569 If you want to encourage competition, you can’t have the next entrant in the market have to build the same three towers on the same three hilltops in the same little community of 129 people, right, to cover them. It doesn’t make sense.
12570 MS. MacDONALD: May I add to that?
12571 You’ve asked a number of the parties that have appeared before you how they plan their network and whether they build in excess capacity to them.
12572 And many of them have said, “We build according to how we perceive what the market is going to be at the time that that build becomes effective for us to serve the market.”
12573 You asked us a similar question in the July in interrogatories or requests for information. We answered it in a similar way. It’s -- from what I understand, and these guys know better, it’s how these networks get built.
12574 But it’s how these networks get built because these networks are oriented towards retail service.
12575 What you’re talking about, I think, with MVNO, is trying to -- is creating a revolution where in planning networks, those in a good position to plan networks and to roll networks out, are also thinking about wholesale services.
12576 And as Dean said, he and I were present at the creation all those years ago, this is -- that was Microcell’s model. You know, it thought it would be able to build a business in part on the basis of selling at wholesale, as well as selling at retail.
12577 That’s not the model that we see from the nationals, or frankly, the regionals that you've heard from in the last couple of weeks. People build networks on the basis of how they perceive what the market is going to be for their services at the time that network comes onboard.
12578 MR. PHILIPP: And I just want to add one last thing. I think this goes to the intent when you design and build that network, right, as Mairi said. You intend to build a piece of infrastructure that is going to hit the sweet spot of what your projections are.
12579 You can't predict how many MVNOs, how many other carriers, how many other people need to be on the tower, how much additional backbone. It's very difficult to try to predict that as a carrier building out in a market. No, that's -- you know, that's one aspect.
12580 The second is the intent. Is my intent to open this up as an open gateway, as a shared service to others? Because if your intent is no, well then you're going intentionally build it in such a way you can defend that position.
12581 And I have seen this time and time again, where, you know, you build a tower in Yellowknife 1 foot less than the requirement for public consultation and it also happens to be small enough you could justify there's no way SSi could put an antenna on there, even though it's in a great location next to the airport we'd all like to be at.
12582 MR. PROCTOR: For example.
12583 MR. PHILIPP: For example.
12584 So the intent of Qimirluk was to build a business model and a business case that did not require us to be the dominant carrier in any market. It required somebody to build a proper infrastructure sized for the consumers, not the entrant's intent, sized for the population regardless of the entrant. But that means designing differently.
12585 You know, that means designing secure and non‑secure facilities in a remote community of 500 people. That means intentionally building an open gateway so that it can support competition. That's what Qimirluk is all about, and it really comes down to the intent.
12586 COMMISSIONER BARIN: Thank you. So if you will indulge me with one more hypothetical. So assuming you did avail yourself of the Competition Bureau's model and you decided to build out and you built out also some of the wholesale backbone infrastructure, you mentioned that a 5‑year hard stop would not be tenable.
12587 Would you have an opinion, if the Commission were to impose a hard-stop, what would be an appropriate timeline?
12588 MR. PROCTOR: None, generally. The concerns I had with an MVNO earlier, when you're building out your own network, stand, and there's no timeline for that. Probably the only thing the Commission could do, if you are worried about this, is have another hearing like this to determine whether or not conditions have been met.
12589 But as Jeff has pointed out any number of times, each micro region of the country is going to be specific as to whether or not there is adequate competition or adequate achievement of build out or MVNO status. I'm not sure what you're even going to look at to shut down an MVNO. It will be extremely complex.
12590 MR. PHILIPP: To add to that, just to give you a simple, but obvious, example. The backbone subsidy programs that come out differentiate between a satellite served in a terrestrial market because they are so dramatically different in terms of funding requirements, design, timing.
12591 We operate in remote and rural areas. We get one sea lift a year. If it a decision is made in November, we can probably hit it in that year, or in January, we can probably hit it. If the decision is made in April, there's no way. So you've lost a whole other year; right? So is that an important thing? Well, it is if it's year four or five and you're on your last two communities you're trying to build.
12592 So it then becomes very slippery for you, on the regulatory side, to carve out all these exceptions because I don't imagine Nunavut's the only unique area. I mean, I'm sure there are many, many people in this country that would say that, and I would agree, that their region have as many unique challenges as ours, and they would have to be taken into account or it would not be –- it would fit the one‑third of the country that we saw represented on the Competition Bureau's image.
12593 And I don't mean to, you know, point out the Competition Bureau's image, it was quite fine. It was more the fact that two‑thirds of Canada is rural; right? It's the Yukon, Northwest Territories, Nunavut. It's the resources. It's the Northwest Passage. It's where we want people to be living, and we are not supporting that infrastructure. That was a bit long, but I think you get the point.
12594 MR. PROCTOR: And if I could just add one other thing too. I'm sorry. I apologize.
12596 MR. PROCTOR: This is our opportunity to make the points.
12597 A fundamental flaw of the Bureau's position is that you have to have spectrum before you can become an MVNO. It's a fundamental flaw. And Cogeco, for whatever criticism was aimed at their position, they have tried, and they've been unable to acquire spectrum.
12598 As we mentioned to you, we have participated in six successive mobile spectrum auctions, never to be able to justify paying the price for that spectrum. Richard Branson, probably the most successful MVNO in the world with Virgin has never had an intention to acquire spectrum.
12599 So the proposition that you're going to have to be weaned off of your MVNO and onto a network built with your spectrum presupposes that you've already gained that spectrum, which presupposes that there's going be a real high barrier to MVNO access, which denies, once again, the hallmark to competition, which is innovation.
12600 If some kid who wants to experiment with something, it's dot wireless. I don't want to call him a kid, but they're certainly younger than I am, having a good idea that they'd like to play with, you know. But to have a barrier to entry being spectrum acquisition, they'll never get in. You're killing them before they can even start. And you're equally killing them if there's an expos facto shutting down because they don't have spectrum.
12601 The fact that they can start without spectrum, let's say you modify slightly the Bureau's proposal, that doesn't mean they're going to be successfully able to obtain it after, we haven't been able to. We have lots. I don't want to complain about what we have in Nunavut and in the Northwest Territories and Yukon, but we've attained that through ways other than mobile spectrum auctions.
12602 COMMISSIONER BARIN: Okay. Thank you very much. No more questions.
12603 THE CHAIRPERSON: Commissioner Levy?
12604 COMMISSIONER LEVY: You've talked about the right to fail, that a new regime should be open enough so that, you know, there's no guarantees for success, that -- but it's a wide-open range. But we do have to consider as a Commission the damage to consumers that can entail from failure.
12605 So do you have any thoughts on how we might strike that balance?
12606 MR. PHILIPP: I think in the context of this hearing, and the question being do we mandate an MVNO and under what guidelines, the goal is to bring competition, to bring diversity, to bring innovation into the market. Ultimately, the goal is to benefit the consumer.
12607 The concept of opening up site to an MVNO assumes there is already an operator there, and if there's already an operator there and the new entrant should fail, you know, those subscribers if they want service are going to switch. We're going to see that happen.
12608 And there is going to be some pain, but, you know, as Dean pointed out, the pain of suggesting that the network that you have built as an MVNO in the next three years needs to be migrated to your own spectrum now, that's as much pain as having to switch to another provider because we failed. Right?
12609 So I don't -- I think fundamentally we cannot change basic rules. Things are going to fail. Some things are going to fail, and we cannot legislate around that. I just don't see it being viable.
12610 And frankly, we're not excepted from that; right? There's always possibilities in business that we may fail or somebody may fail. So I don't think we're ever going to change that.
12611 MR. PROCTOR: Just to add to this, and this isn't an attempt to be glib, but it's a bit of a rhetorical question. They typically fail because they don't have customers. So just something to keep in mind.
12612 THE CHAIRPERSON: Thank you. Thank you for your presentation. And I should echo Commissioner MacDonald's opening comment that you help serve a very challenging part of the country, and we appreciate that, and we appreciate you taking the time to come before us. Thank you.
12613 We'll take a recess. Madam Secretary, 15 minutes? Thank you.
--- Upon recessing at 11:09 a.m.
L’audience est suspendue à 11h09
--- Upon resuming at 11:26 a.m./
L’audience est reprise à 11h26
12614 THE SECRETARY: We'll now hear the presentations from EMF-OFF! and Marcel Durand. We will hear each presentation, which could be followed by a question by the Commissioners to all participants.
12615 We'll begin with the presentation by EMF-OFF! Please introduce yourself and you have 10 minutes for your presentation.
12616 MS. ARIAL: Can you hear me okay? Thanks.
12617 My name is Tracey Arial, and I am a board member of Safe EMF, which is CEM securitaire, which is a nonprofit that is also called EMF Off!
12618 Is there anyone in Canada untouched by the final tour of the Tragically Hip? We all danced and sang with Gord Downie as he belted out, "You're ahead by a century". This phrase summarises how I've been feeling as I listen to the mobile industry reps talk about their inability to face competition, while at the same time assuring us all that they have the knowledge and capability to roll out 5G safely. I don't believe them.
12619 I’m here to speak on behalf of Canadians who love the benefits and fear the risks of cell phone mobility technology. We need you to work for us, and at this point, that means ensuring that every jurisdiction in Canada contains safe public spaces where anyone can go to escape electromagnetic fields.
12620 Tragically Hip lead singer Gordon Edgar Downie died in October 2017 of primary glioblastoma, an aggressive and terminal brain cancer. Just last month, Neil Peart, the iconic Rush drummer, died of the same disease.
12621 These deaths of my contemporaries remind me of my friend Larry. Lawrence Jackson, a Newfoundland-based writer known for his staunch defence of copyright died of a brain tumour in 2003 when he was only 54 years old. I have an award in his name on my wall and often I wonder how much better Canada would be if he had lived a little longer.
12622 Now, it hasn’t been proven that these particular deaths were caused or hurried along by electromagnetic field exposure, but it’s likely. When I was a kid, it seemed as though most people who died young did so of heart attacks, strokes, lung cancer and suicide. Today, brain cancer seems more prevalent.
12623 That's why I’m open to learning about the work of Dr. Lennart Hardell, a Swedish oncologist, known for discovering cancers caused by Agent Orange exposure.
12624 Hardell’s testimony helped judges on Italy's supreme court understand that the brain tumour on the left side of business executive Innocenzo Marcolini's head came from holding his cell phone on that side while he took notes with his right hand.
12625 Reading Hardell's studies make me wonder how many more Gords, Neils and Larrys we're going to lose in the coming years.
12626 It infuriates me to listen to the industr'’s attempts to malign Hardell's work.
12627 As you listen to them, please remember that the makers of technology always fight attempts to make it safer. It took 200 years and 30 deaths in a single incident before regulations to protect people from decompression sickness passed in 1904. Canadians can't wait that long for protection from 5G.
12628 Canadians in every jurisdiction across Canada need public spaces where people can be safe from electro-magnetic fields.
12629 Do any such spaces exist now?
12630 If not, you'll have to remove the licences of emission operators in otherwise clean spaces.
12631 We’re already in trouble, because there are already tons and tons of 3 and 4G emitters sending electro-magnetic emissions into public spaces.
12632 Also, private and para-public enterprises across Canada are already installing 5G emitters on their properties and these emit into public spaces too.
12633 My friend Luc has a pacemaker, and he says he can tell me exactly where they're located because his heart starts racing whenever he gets within range.
12634 Instead of "ensuring timely deployment of 5G", as the Federation of Municipalities said it wants you to do, Canadians need you to ban 5G implementation in public spaces, like the municipality of Sutton already has. We need to figure out safety first. We need to embrace the precautionary principle.
12635 We can't simply keep experimenting on people until they suffer and die, like Gord, Neil and Larry did.
12636 Thank you.
12637 MR. HAVAS: My name is Magda Havas. I am Professor Emerita at Trent University in Ontario, and I've been doing research on the biological and health effects of electro-magnetic fields and electromagnetic radiation for the past 25 years.
12638 Today what I'd like to do is focus on the health affects to both plants, and animals, and also to humans. And I'd like to end by providing some warnings from different groups.
12639 When it comes to health effects, they fall into three categories: one is cancer, the other is reproductive problems, the third is something called neurohormonal disorders, and that's collectively called electrohypersensitivity.
12640 When it comes to cancer, we have evidence from occupational exposure. In the slide that you can see here, everything in red are the different types of cancers that I'm referring to.
12641 We also have an increased risk of cancer for people who live near antennas. That includes both broadcast and cell phone antennas. The closer they live, the greater the risk of developing cancers, the most common of which is leukemia. And you can see on the slide of the different countries where these studies have been performed.
12642 We also have cell phones, and there are a variety of cancers that have been associated with them. I draw your attention to gliomas because that's going to come up time and again. It's a very critical cancer that I'd like to talk about.
12643 If cell phones are so dangerous, who do we not see a rapid increase in brain tumours? And the answer is, we are seeing a rapid increase in brain tumours. They've been presented in the United Kingdom and in California, and it turns out the tumour that increases most rapidly is a glioblastoma multiforme. It's a stage four glioma brain tumour, and it increases -- from 1995 to 2015 it's increased almost fourfold, and it increases in the frontal and temporal lobe of the brain, which is where the levels of micro radiation are the highest from cell phones.
12644 In 2011, the International Agency for Research on Cancer classified electromagnetic radiation as a possible human carcinogen. What was missing at the time were large-scale animal studies. Since that time, we have two additional studies that they've referred to. What they had access to was the U.S. Air Force study in 1992 that looked at the same frequency we use for wi-fi, and they looked at it in laboratory rats and found there was 100 percent increase in metastatic tumours. These are tumours that move from one part of your body to another part of your body. And there was a 260 percent increase in primary tumours. What they also note is that the immune system was impaired in the laboratory animals, and this comes up time and again as well.
12645 We have two studies that came out in 2018. These are long-term animal studies. One was from the U.S. National Toxicology Program, the other was from Italy. They looked at cell phone frequencies in the 900 Megahertz and 1,800 Megahertz range, and what they found, there was an increase in gliomas, the brain tumour, and a heart schwannomas, which is a tumor of the heart that’s really quite uncommon.
12646 We also have evidence for reproductive problems, mostly effects on sperm and miscarriages, and also, behavioural problems with children who are exposed in-utero, when the fetus is exposed in-utero there are potential increases in things like attention deficit hyperactivity disorder.
12647 When it comes to electro-hyper-sensitivity, there are a variety of symptoms that have been documented. You can see them here in this particular slide. And in 2018 the World Health Organization came out with the international classification of diseases showing injury from radiofrequency radiation.
12648 So we now have a code that medical doctors can use when they’re treating patients with electrical hyper-sensitivity. We think about 3 percent of the population is severely affected, implying that they could not be in an environment like this with wi-fi around them, and about a third of the population has mild to moderate symptoms. And if you look at the numbers for Canada, we’re talking about a million people who have severe electro-hyper-sensitivity.
12649 When it comes to plants, we’ve done research looking at the effects of wi-fi on plants, and we see here, peas. On the right-hand side, you can see that the peas are growing quite nicely. This was the control condition. In the other side, these were exposed to wi-fi. Their root systems are simply not growing. There has been a lot of studies looking at birds, bees, amphibians. We did a study with bee population, exposing it to microwave radiation, and we found that the bees became extremely aggressive.
12650 I give talks on this topic, and one of the questions I’m asked is if this were true, they would have told us. And they are telling us. We have over 2,000 references going back to 1972 showing harmful biological effects of radiofrequency radiation. Scientists are warning the World Health Organization of some of the biological effects. Manufacturers are asking that devices be kept at minimum of one inch away from the body. Insurance agencies are no longer insuring radiofrequency radiation, and various medical authorities are saying that the current standard is unsafe. And we have governments that are beginning to remove wi-fi from schools because children should not be exposed to this radiation.
12651 In conclusion, what I’d like to say is that we have evidence of harm to plants, animals and humans at levels that we’re currently exposed to, and this is going to increase once 5G is deployed.
12652 Thank you.
12653 THE SECRETARY: Thank you very much. We’ll now hear the presentation of Monsieur Marcel Durand.
PRESENTATION / PRÉSENTATION
12654 MR. DURAND: Bonjour. I’ll speak in English because it’s better for me, technically.
12655 I’m a resident from Sainte-Anne-des-Lacs since 1986. I was diagnosed with CLL, which is chronic lymphocytic leukemia. And I asked my doctor why, and he told me, it’s the environment. So we’ll begin.
12656 In Sainte-Anne-des-Lacs the electrical power grid -- sorry, I can’t see. Sainte-Anne-des-Lacs, the electric grid and electric power line was added to supplement the grid on our village about 25 years ago. It follows my street to connect to the main line on Chemin de Lac, which is right on the corner of main.
12657 The power line was installed close and above my workshop. The architecture of the line, it was not at the proper height. It should have been much higher. A mistake was made. Corrections were performed to -- on the line, by Hydro Quebec in 2017.
12658 In 2007 my neighbour across the street from me dies of a quick and very --virulent cancer. In 2009, my next-door neighbour on the north side dies of a sudden cancer. In 2016 my next-door neighbour on the south side of me attempted to her life -- there was a mistake in the typo -- and its records with the police records four times. Her husband was diagnosed with cancer also. I don’t know which one. And they sold the house in 2017.
12659 In Sainte-Anne-des-Lacs our cell towers for Rogers, Telus, and Bell was erected and started operating in July 2016 on land that was supposed to be a municipal park, right behind city hall. I have shielded my house from this tower in order to be able to sleep. Being in my condition is the -- it was the only way for me to live and feel at least at ease in my house 400 metres from the tower.
12660 There are no more Canadian geese on our lakes. We have 23 lakes in Sainte-Anne-des-Lacs. No more geese come over in the autumn and the spring. The forest has dried up considerably around us with static electricity much more prevalent around my house and in the area in the forest. I discontinued the use of propane for cooking and heating for that reason alone.
12661 My house was built in 1949, and electrical renovation was made in the late ‘60s. By adding a smart metre to my house, I risk a fire from that metre in my house and are -- I’m renovating right now, and I’m paraphrasing because I’m a bit nervous here. But my electric system will be renovated when I can afford it. Shielding my house is also a problem because of the proximity of the tower. I have spent my retiring kitty on this and I’m struggling to find enough work to complete the electrical renovations.
12662 Thank you.
12663 MR. GREGORIO: Good morning. My name is Pedro Gregorio. I’m a Professional Engineer with more than 25 years experiencing in venting and deploying technologies, licencing them to consumer electronic device makers around the world. I’ve installed our technology in more than 500 million mobile phones, and I also have experience manufacturing satellite systems, including microwave communication antennas.
12664 Today with your indulgence, I’d like to talk to you a little bit about two consumer products that are treated in vastly different ways. It’s a story of cars and of cell phones.
12665 Cars are dangerous, no one denies it. In fact, automobiles are the number 10 killer in Canada. That’s higher than liver disease, and more Canadians are killed by cars than by kidney disease, inf fact. Vehicle deaths, however, fall into two broad categories. We can speak of direct fatalities from collisions, which are thankfully carefully tracked, reported, and monitored. Eighteen hundred and forty-one (1,841) Canadians died in 2017 and 155,000 were injured in vehicle collisions.
12666 Not as well known, an equal number of indirect fatalities stem from diseases related to tailpipe emissions. An estimated 1,400 Canadians died in 2015. These numbers are more difficult to track, and they are estimates.
12667 Now with all of this death and danger, no one proposes banning cars. Rather, ongoing efforts collaboratively by citizens, governments, and industry through regulation, research, technology, and infrastructure improvements and education to promote safety have more than halved fatalities over the last 20 years. That’s a 50 percent reduction from 2000 to 2017, either per vehicle distance, or per distance driven.
12668 Nevertheless, although there is good collaboration, and as shown by recent diesel -- so called diesel-gate scandals, manufacturers are not always reliable are not always reliable advocates for public safety.
12669 If we contrast that with cell phones, cell phones are also dangerous. And here I’m not talking about addiction, increased screen time, distracted driving, or other such direct dangers. But rather, wireless communication devices do emit microwave radiation. And to be clear, this is the exact same form of energy as your microwave oven uses to pop corn or to boil water, albeit at much lower intensities.
12670 Such electromagnetic fields are known to harm or kill above so-called safe emission levels, known as thermal levels. However, safe levels for non-thermal exposure, have never been adequately assessed, only inferred by studying unsafe levels and assuming that human tissue heats in the same way as boiling a glass of water. Even today, this is still how new phones are tested before commercial release. Six minutes of exposure, does it heat.
12671 That’s all.
12672 Existing safety guidelines are based on physics, rather than on biology. And they predate the first mobile phone.
12673 You’ll see in your handout a photo of the first Motorola phone from 1984.
12674 Even though this is an unsophisticated device, the guidelines used to assess its safety actually predate it. They go back originally to 1960s, where they were left in the hands of military leaders.
12675 THE SECRETARY: I’m sorry.
12676 MR. GREGORIO: Please?
12677 THE SECRETARY: Your time is up. You have to conclude. Thank you.
12678 MR. GREGORIO: So to conclude, while significant health impacts have been demonstrated from existing generations of wireless, 5G represents a dramatically different type of technology, both in type and in intensity. And its distribution can only exacerbate the dangers that are already documented in many studies.
12679 And for these reasons, we urge this Commission to consider phone safety that should mirror car safety.
12680 Thank you.
12681 THE CHAIRPERSON: Thank you. Thank you very much for all of the presentations.
12682 And thank you for bringing the issue before us.
12683 I have a number of questions about your submissions in relation to the rollout of 5G technology in particular and your concerns about the rollout.
12684 I’ll get to that in a second.
12685 But I guess I’d like to start, as you’re aware, ISED is the body who has responsibility over spectrum and Health Canada over Safety Code 6.
12686 So if I could, could you help me understand what role you believe the Commission can and should play?
12687 MR. O’BRIEN: Right. The basis of our -- Charles O’Brien, Lorax Litigation, I’m a lawyer, environmental law.
12688 So our position is that this Tribunal and the Commission are bound by the Constitution, the rights in the Constitution, and in particular, the public trust doctrine, which we tried to explain through our filings.
12689 In its most simple version, any public land has to be used by government, any government, federal, provincial, municipal, in a way that preserves it for future generations. There are 100s of cases where pollution on public lands have been found to be in breach of the public trust doctrine.
12690 The specific here is that the doctrine is strongest as concerns highways and roadways in Canada. And the siting of 5G will be on those highways and roadways. And by definition, those lands cannot be used in a manner that will either damage the lands for future generations, or cause pollution to humans, flora, and fauna.
12691 So it’s a Constitutional argument.
12692 But you’re certainly discussing the siting of technology on public highways and roadways. So it’s on that basis, as well as the right to protect Canadians against the fundamental rights, whether it’s privacy, life, liberty, security of the person.
12693 All of those, I think, play here. And we feel that you’re obliged on that basis to consider the health risks of the siting of 5G and, quite frankly, 4G, 3G, 2G, 1G. THE CHAIRPERSON: Thank you. Thank you for the explanation.
12694 But siting does remain an issue under the jurisdiction of ISED, not this Commission.
12695 On your comments about 5G, so I note in your further comments from November, you made a reference to the fact that 5G technology will, and I quote here:
12696 “…increase exposure to privacy issues for individuals…”
12697 Can you expand on that for me?
12698 MR. GREGORIO: So the nature of the 5G, especially with the higher frequencies and the higher data rates, will require distribution of infrastructure that is at a higher density, some estimates put it at tenfold, the density of existing infrastructures.
12699 So this will place those infrastructures in closer proximity to citizens and expose them to higher frequencies.
12700 The nature of the 5G infrastructures coming into the homes of folks, again, whether they like it not, and the nature of the data transmitted over it, as well as the services that it enables in terms of internet of things and device conation will allow the gathering of highly differentiated metadata about use patterns, devices, movements.
12701 It will exacerbate a situation. It won’t be a new situation. But it will exacerbate a situation that already exists.
12702 Moreover, as we see constantly in headlines today, there are lots of legitimate concerns about security in terms of whether or not we get our 5G infrastructure equipment from China. There’s very legitimate and vociferous positions expressed about China being able to get access to secure information.
12703 Whether its China or someone else producing these devices, there is a potential for accessing personal communications and personal data about citizens.
12704 THE CHAIRPERSON: Thank you.
12705 You may have heard -- I don’t know if you’ve had an opportunity to follow the proceeding as we’ve gone along in the past couple of weeks, but we’ve asked a number of parties, discussed with a number of parties, developments, for example, in South Korea and Germany, where carriers have been mandated or encourage to joint build a single 5G network.
12706 Would that in any be helpful in addressing some of the concerns and challenges that you have raised in the context of 5G deployment?
12707 MR. GREGORIO: Certainly the redundancy of infrastructures for different service providers does provide the opportunity to double, triple, quadruple the exposure of electromagnetic fields.
12708 Having said that 5G, on its own, because of the internet of things, the greater data rates, the higher density, even a single provider fully building out that system really represents a step-fold increase in the volume, the intensity of radiation, but also the nature of it.
12709 The 5G infrastructures with beamforming antennas and other types of infrastructures will, in and of itself, cause an increase in intensity.
12710 Not to be ignored as well is the frequency component.
12711 As I said earlier on, these rules were all developed a very long time ago with very old technologies working at vastly lower frequencies.
12712 The higher frequencies, some of them propose it’d approach millimetre wave frequencies, which are known to have direct impacts on human tissue at certain intensities.
12713 However, as little as has safety been studied on 1G, 2G, and 3G technologies, there is virtually no safety studies whatsoever that have been done at 5G frequency levels.
12714 So the two components, both the intensities of exposure and the frequencies of those exposure are of concerns regarding safety, regardless of whether there is a single operator or multiples.
12715 THE CHAIRPERSON: Thank you.
12716 MR. O’BRIEN: If I may, I would add to that that in Great Britain, industry has to fund testing of all equipment. All of Huawei’s equipment is tested in Great Britain at Huawei’s expense. So that might not be a bad idea here as well.
12717 THE CHAIRPERSON: You have also, in your evidence and remarks, talked a little bit about municipal issues and municipalities’ engagement on these issues.
12718 Do you participate in municipal meetings, consultations, when the issue of spectrum deployment is discussed?
12719 MR. O’BRIEN: Right. Well we’ve been involved with the Town of Sutton, which you might have read about it, and the groups there that want to make sure that everything is hardwired to the door, which was an agreement made with all the eastern towns and municipalities.
12720 So, yeah, we’re involved in that way, through public interest groups that are concerned about the health issues of non-wired connections, in particular in Sutton.
12721 THE CHAIRPERSON: So in your experience, has that been an effective forum in which to raise these concerns? Seems you’ve had some success in the eastern townships.
12722 MR. O’BRIEN: Well I believe the Federal Government has just told Sutton “No,” so I think the answer is no.
12723 THE CHAIRPERSON: The Federal Government meaning ISED in terms of siting?
12724 And I guess while we’re talking about, sort of, consultative forums, a number of parties have proposed a 5G working group as a potential forum for interested parities to meet and discuss issues.
12725 Do you think that forum would be useful with respect to a constructive discussion of the concerns that you are raising with us?
12726 MR. GREGORIO: Our belief is that any consultation that brings the issues to the fore and educates Canadians about the reality of these issues is a positive step. I'm ill‑equipped to say where such an exercise would lead, but it could lead to greater understanding, and potentially, allow citizens to make informed decisions and allow regulators as well to make informed decisions.
12727 We acknowledge and fully understand that there are many players, and Health Canada for safety, and ISED for siting, but with regards to allocation of spectrum, especially new spectrum in 5G, we just urge you to recognize that this is not a neutral decision relative to the health of Canadians, nor is it merely an incremental change over previous spectrum allocations.
12728 Because of the fundamentally different nature of 5G technologies, both in terms of the electromagnetic spectrum, the intensities, the frequencies, but also the usage patterns that it purports with machine-to‑machine Internet of Things, these would represent the step function in the noise, if I may, the electromagnetic noise that it would expose Canadians.
12729 And while, you know, today it may be reasonable for someone who is sensitive to elect not to use a cell phone, they cannot elect to opt out of infrastructure. And as we move from existing technologies to 5G the intensification of that infrastructure really risks crowding out, especially the electrosensitive individuals. That's why we're here today.
12730 THE CHAIRPERSON: Thank you. Those are all my questions.
12731 Panel members, are there any other questions?
12732 I thank you very much. I thank you for taking the time to appear before us and for identifying the concerns.
12733 MR. GREGORIO: Thank you very much.
12734 THE CHAIRPERSON: Madame la Secrétaire?
12735 THE SECRETARY: Thank you. I will now ask the Canadian Internet Policy & Public Interest Clinic and OpenMedia to come to the presentation table.
12736 (SHORT PAUSE/COURTE PAUSE)
12737 THE SECRETARY: When you are ready, you may -- oh.
12738 (SHORT PAUSE/COURTE PAUSE)
12739 THE SECRETARY: When you are ready, you may begin. Please introduce your colleagues, and you have 10 minutes.
PRESENTATION / PRÉSENTATION
12740 MS. TRIBE: Thank you Madam Secretary. Good afternoon, morning, I'm not sure what time it is, Mr. Chairperson ---
12741 THE CHAIRPERSON: Yeah, you've got one minute, and then you can shift to afternoon, but ---
12742 MS. TRIBE: Good morning ---
12743 THE CHAIRPERSON: --- no hurry.
12744 MS. TRIBE: --- Mr. Chairperson, Commissioners.
12745 I'd like to begin by acknowledging that this hearing is taking place on traditional, unceded Algonquin territory.
12746 My name is Laura Tribe, and I am the Executive Director for OpenMedia, a community-based non‑profit organization that has been working to engage and amplify the voices of Canadians on Internet policy issues for over a decade.
12747 I am joined here today by OpenMedia's Campaigns Director, Matt Hatfield, and Digital Rights Campaigner, Rodrigo Samayoa. I'm also happy to be testifying alongside Tamir Israel, staff lawyer at the Samuelson-Glushko Canadian Internet Policy & Public Interest Clinic or CIPPIC. CIPPIC is a public interest legal clinic based at the University of Ottawa, Faculty of Law.
12748 Unfortunately, the First Nations Technology Council was unable to join us here today as we had hoped, but they have asked us to emphasize that the challenges that we are here to outline today disproportionately affect Indigenous communities throughout Canada.
12749 Indigenous communities are not just lagging behind, they're often completely left out of the entire platform that our economy and society are built on. We'd ask you consider what that means in a time of reconciliation, and how the Commission's work can help address these disparities.
12750 Mobile services are at a crisis point. For far too long, excessively high prices have discouraged Canadians from realizing the full potential of their mobile devices. Some Canadians have been priced out of participating in the mobile data revolution altogether.
12751 In our submissions, we have proposed a three tiered response to Canada's wireless service challenges:
12752 The first, mandate full MVNO access on a cost-recovery plus based model; the second, mandate carriage of low-cost plans for all Canadians on national carriers' primary brands; and third, adopt in-principle wholesale spectrum access on the basis of fair and reasonable rates.
12753 Our comments today focus on our community's needs, the benefits of mandating full and unrestricted MVNO access, and the Commission's role in making this happen. But we are happy to answer questions on our proposed remedies as well.
12754 MR. HATFIELD: For years, OpenMedia's community has told us that mobile rates in Canada compare very poorly to what they see in other countries. We hear mobile costs are a significant burden on their finances and peace of mind, and when they try to make a change, they find they lack meaningful market choice. Study after study has confirmed these perceptions are grounded in fact.
12755 In this proceeding alone, over 18,000 OpenMedia community members submitted comments calling for MVNOs, while another 10,000 people took our survey providing more detailed insights on their wireless services. Eighty-five percent of respondents to our survey indicated high prices are a serious impediment to their use of mobile services. And I'll quote Margaret from Toronto said, quote:
12756 "I cannot afford to put a data plan on my phone. This used to be less problematic - but society has changed. Society, services, government, doctors expect one to have coverage and [to] be able to look up things and access information when out of the house. I cannot do it on my phone – [i]t costs too much." (As read)
12757 End quote.
12758 Eighty-nine percent of respondents indicated that there were not enough choice of providers. Byron from North Vancouver said, quote:
12759 "Personally, I live in dread fear of contacting my 'cell phone provider's customer service' because the cell phone industry...is so convoluted and restrictive in choice that I know I'll get bilked in one way or another. The cell phone companies have a monopoly...in which they charge whatever they want. One would have to take a PhD in how to negotiate fair billing terms." (As read)
12760 End quote.
12761 And nearly half of our respondents indicated that restrictive data allotments also contribute to their challenges. Sean from Hamilton said, quote:
12762 "My cell phone plan is $80/month, data cap is 8‑gigs. Last month I had accidentally gone above the 8‑gig threshold...the fee for end of month billing at 10‑gigs (2‑gigs over the limit) was over $500...Did I mention I need data for my day to day job?" (As read)
12763 End quote.
12764 Canadians are not fools. They know our wireless costs are incredibly high by international standards - a reality that slaps them in the face whenever they, their friends, or loved ones travel abroad. The recent emergence of plans branded as "unlimited" is an improvement, but only compared to where they're coming from. These unlimited, or rather "throttled" plans only appear cost effective when compared to the anemic data allotments which have been the norm in Canada to date.
12765 As our submissions demonstrate, our eye‑wateringly high retail prices cannot be attributed to high levels of investment. Even when adjusted for spectrum auctions, Canadian investment in mobile networks remain average when compared to our global peers, and low when compared to wireline.
12766 We also know that current competition levels aren't enough. The Competition Bureau's expert report to this proceeding found substantial price improvements following new market entrants in specific regions, and its expert report in the CRTC's 2014-76 proceeding examined wireless investment and pricing over decades and concluded that Canadian national providers continue to exercise market power on a national level. Full access to MVNOs will play a critical role in addressing this state of affairs.
12767 MR. FIGUEROA: MVNOs are innovative, they add diversity to -- of mobile services, and can help lower prices. In order to unleash the true potential of an MVNO landscape, full access must be mandated on a cost-plus basis.
12768 A full MVNO mandate facilitates innovation and service differentiation that better meets the needs of customers. For example, we heard on Wednesday that law enforcement would benefit from a cross-provider network robustness that an MVNO can provide.
12769 We've also heard from MVNOs who operate abroad that the secret to their success has been in excelling customer service and at providing service to groups with special needs. In the UK, for example, Audacious provides an enhanced call clarity for individuals with hearing loss.
12770 We also heard in this proceeding from First Nations network operators who would offer mobile services in their communities, if given the opportunity. Canada could benefit from this diversity in services.
12771 The Competition Bureau's expert report has indicated that an additional 5.5 per cent market share for MVNOs in specific areas is sufficient pressure to begin to curb the national provider's market power. In aggregate, MVNOs can accrue 10 to 20 per cent market share collectively. There are misconceptions that this form of competition can reduce investments. These aren't true. Investment will look different, but it won't be reduced.
12772 First, as we've mentioned, MVNOs frequently extend markets to niche demographics in ways that do not undercut the profits of MNOs, regional MNOs or flanker brands.
12773 Second, it is important to note that national providers recover healthy profit margin in a cost plus 15 per cent wholesale margin. By contrast, an MVNO's retail prices will reflect its wholesale cost, its own operating cost, plus whatever margins it seeks to obtain.
12774 The fact that the MNOs are worried about competing in a market where they are guaranteed a 15 per cent profit says much about the current state of retail prices.
12775 The wholesale model is eminently suited for 5G. High density last mile infrastructure is already leading providers around the world and in Canada to rely heavily on network sharing as a means of efficient infrastructure investment.
12776 Regional MNOs may become 5G leaders in their own regions, while leveraging their hybrid status to compete with MVNOs nationally.
12777 It is also possible that the larger MVNO may choose to build on its customer base by investing in facilities, and even spectrum, as German MVNO 1&1 has, which chose to participate in Germany's lastest spectrum auction and invest in a shared national 5G network.
12778 MS. TRIBE: The choice facing the Commission today is between ensuring Canadians' access to wireless services or protecting corporate profits. It's between fostering healthy market competition or entrenching the incumbents' market power.
12779 The obligation of the CRTC here is clear. It must take bold regulatory action to achieve its policy objectives.
12780 The Telecommunications Act entrusts the Commission with ensuring that Canadians are provided with competitive wireless services that are responsive to their needs. These networks must be high quality, but also affordable and competitive.
12781 The government's 2019 policy direction to the CRTC only further reinforces these objectives.
12782 And the government's Broadcasting and Telecommunications Legislative Review panel identified affordability as a central principle for regulation, while concluding that wholesale competition should become a mandatory condition of forbearance for both wireline and wireless services.
12783 Over the course of this hearing, we have heard dramatic threats from some of our national providers. They've threatened to cut investment. They've threatened to delay 5G adoption, and even to fire their own employees.
12784 But above all else, we heard them make it crystal clear that their priorities lie only with their shareholders. They have told you that they will not permit their profit margins to drop in the face of greater competition, and instead that Canadians will suffer.
12785 You cannot give in to these threats. The path forward is clear. It is time to put Canadians first.
12786 We need competition, and we need it now. Full mandated MVNOs are a critical step to addressing the lack of affordability, and competition, in Canada's wireless market.
12787 Thank you for your time today and we look forward to answering your questions.
12788 THE CHAIRPERSON: Thank you. Thank you for your presentation and for making the trip to appear before us.
12789 Madame Barin.
12790 COMMISSIONER BARIN: Thank you. Good afternoon. Thank you for your submissions and your contributions to this process.
12791 I would like to start with some questions about the international price comparisons. You mentioned it in your presentation this morning, and you also filed several -- you filed information in your interventions where you compared Canada and the international mobile wireless markets to show that Canada is increasingly falling behind in terms of prices, penetration and usage relative to international benchmarks.
12792 We have had parties in this proceeding, including the national MNOs, questioning the relevance of using international comparisons. And their arguments are that these studies are not comparing similar mobile wireless service plans, and that they're not taking into account socioeconomic factors and things like geography and population density.
12793 How do you respond to these criticisms?
12794 MR. ISRAEL: So, thank you for the question.
12795 We think that of course you need a bit caution where you're doing international comparisons, but there's a number of ceiling points that the international comparisons do eliminate.
12796 First of all, when there's a -- when you're starting from a similar baseline in tracking changes over time that are resulting from technological advancements that are international in nature, if Canada's prices are going down at a rate that's lower than other countries, that's a relevant factor that cuts across -- that can cut across at least -- or an indicator that can cut across other socioeconomic and geographic factors.
12797 But aside from that, we've also put in a lot data in the submission -- or in our submissions tracking the comparable amount of investment that Canadian networks providers are putting into our networks. And the geographic challenges that we face are real, but they're not reflected in the amount -- the cost that is going into building the networks in Canada. So, a number of factors are allowing our networks to build -- or our providers to build our networks with less investment, with I guess comparable levels of investment despite the geographic factors.
12798 One is the intensive levels of network sharing that we have in Canada, which allow for a more efficient rollout with less duplication. Another is the -- well, we've heard that until recently per usage cost in Canada were very high and were being used by network operators as a way of supressing usage; right? And we've heard that from Rogers' testimony and the changes that they've seen recently once they've started introducing unlimited plans for the users that have adopted those plans.
12799 So, between those two factors, those are not socioeconomic related factors. Those are very empirical factors that we can track across jurisdictions and they show very clearly that despite the geographic challenges we have in Canada, the amount of money that's going to the network does not -- into building the network does not reflect the very high prices that we're seeing comparatively.
12800 COMMISSIONER BARIN: Thank you.
12801 And in the course of the proceeding we had TELUS file a study by Dr. Dippon. You may have seen it. And if you have, I'd like your comments, because his study showed that Canadian mobile wireless prices are actually below international benchmarks.
12802 MR. ISRAEL: So, sorry -- so, our -- so, I mean, if you would like, we can file a more detailed response in our final comments.
12803 COMMISSIONER BARIN: Fine. We appreciate it.
12804 MR. ISRAEL: But in general, there is two challenges with that study. So, one is -- so, it relied heavily on promotions, which are a factor that should be considered, but when you're -- but it sampled significantly within Canada, so 246 price samples within Canada, whereas, 112 price samples for all the other jurisdictions we're comparing to. And when you're doing that type of comparison where the prices are -- where you're looking at changes in prices that are changing on, like, a week-to-week basis almost, you need a comparable level of -- you need more samples to begin with.
12805 That wasn't our main issue with the pricing comparison though, however. We think that a more relevant metric is the average revenue per user. That cuts across all promotions and all different types of revenue streams that are coming into a -- in terms of prices and different types of packages, and there's a better comparator for international comparisons.
12806 In particular, it better accounts for the limited nature of promotions, which is very difficult to calculate when you're doing international comparisons.
12807 So, if a promo is for 2 months and you're locked into that plan for 24 months, like, how do you -- like, calculating that is very difficult. But the average revenue per user cuts across all of that and provides a metric that is much better in those – in making those types of comparisons.
12808 COMMISSIONER BARIN: Thank you.
12809 Now, in your main intervention, you spoke about the attempts of new entrants coming into the Canadian market, and the fact that the MNOs collectively have approximately 90 percent of the wireless revenues and subscriber share in Canada. We’ve heard from other parties, so Bell, for example, argues that in order to get a sense of the competitive impact that new entrants are having in the market, that you need to look not at market share, but at their recent net additions. Can I get your views on that?
12810 MR. ISRAEL: All right. That’s me again. So yes, when you look at percentages of net additions in the last few months, the new entrants’ numbers and net additions are comparable to those of the national providers. But net additions for the national providers are not going down, they are going up at comparable rates, and the national providers have a very aggressive head start.
12811 So at this rate, it’s going to take, you know, decades, if not -- like, if they continue at the same rate, they will never get to comparable levels of -- like, to a comparable level where the distribution of market shares is actually changing significantly. But even if they do start adding at a more rapid rate than the national providers, it’s still going to -- it’s still not -- not enough, basically.
12812 COMMISSIONER BARIN: Okay. Thank you.
12813 Now, you mentioned the unlimited plans that were launched in June of last year. And given the recent trends that we’ve heard about prices decreasing, do you think that there is still a need for regulatory intervention? Or given the trend for prices to be decreasing, do you believe this need has diminished?
12814 MR. HATFIELD: We do think there’s still a need for regulation. I think we’ve touched on a few of the points we would make here already. But our essential point is that what we’ve seen in the last year is a start, but not nearly enough. Prices are coming down, not just in Canada, but across the world, and a lot of it is technology driven. And prices in Canada started from a much higher point, and so they actually need to come down much further in order to be comparable, and we’re not seeing a drop on that kind of scale as yet.
12815 And in terms of the so-called unlimited plans, I think it is important to point out that these are not truly unlimited. We call them throttle plans generally. And because of that, we’re not really seeing a massive change in Canadian’s use of their data plans. There has been a small uptick, but nothing comparable to what you might expect, or comparable to other jurisdictions. The plans remain more expensive than other comparable plans and they’re much less unlimited than what we see in other countries.
12816 And although we think it’s good that their may be a reduction in, sort of, bill shock under the new plans, ultimately, for me as a consumer, I’m still going to be trying to keep my phone functional and the phone does not deliver functional service when it’s on the throttled speed and therefore, I’m going to continue to be restricting my data consumption to much less than it would be otherwise, under this system. Whereas the more generous plans elsewhere encourage a different kind of using your phone.
12817 COMMISSIONER BARIN: Okay. So let me push you on that. What’s missing in your view? What would make the market competitive?
12818 MS. TRIBE: I think there are a number of providers. So I think that the unlimited plans are a good example of a type of plan that has been absent from the market, but does not address the competition issue. When we saw those plans rolled out, within days there were very comparable plans across all of the Big 3 providers.
12819 So we’re still not seeing the variety of plans that we think that MVNOs could bring in that would be reflective of a competitive market, that would offer different types of products to different segments of the population. All of those plans are still looking at the heaviest users. They’re not looking at what low-income communities are looking at. They’re not looking at what students, or seniors, or a number of other demographics might be in search of.
12820 So I think that when we’re looking at a competitive market, you’re looking at offerings of different types of plans across different providers. You should be able to see the differentiators when you look at their websites, beyond just the branding of those plans or those companies. I think that we need to see more choice, as much as we talk about having a Big 3, even in many areas that’s not the case for three networks. It’s two or one depending on where you are. And I think that really giving people the choice of the full range of service is -- and types of plans that they would be looking for, is indicative of that.
12821 I don’t know if there’s anything you want to add.
12822 MR. ISRAEL: Just really briefly, I would also push back on the assumption that -- these plans are great, and I think they’re great that they’ve appeared in Canada. But the assumption that we -- that they reflect a dramatically more robust price drop than our international peers. I don’t think we’ve actually confirmed that yet. It’s difficult because they’ve only been in the market for six months.
12823 But just to give one example, Australia has a similarly capped -- similarly capped unlimited plans that are half the price, have a one megabit per second drop off. So they’re still more usable once you’ve hit your cap, and come with 100 gigabytes of data before -- or sorry, the same amount of data, for the same amount of data before you hit the cap, if that makes sense.
12824 COMMISSIONER BARIN: Okay. Thank you for that.
12825 So now I want to talk about priorities in this proceeding. We’ve had different parties come to us with their own sets of priorities. For some it’s affordable price. For others it’s been the availability of and quality of the networks in Canada. And others believe that our priorities should be a swift rollout of 5G technology. Now, if I were to put that question to you, what would you consider the priority? Is it more coverage, is it advanced technologies, is it higher quality, or is it lower prices?
12826 MS. TRIBE: I’m going to turn this over to Matt in a second. But I think that it’s pretty important for us to just make clear that our priority is the needs of people in Canada, getting the services that they need. And that is not being met right now. And so there are -- there are ways to tackle that that I’ll let Matt get at.
12827 But I think that, you know, we’ve heard a lot of the needs being profits, we’ve heard the needs being investment, and revenues, and dividends. And I just think it’s really important to put on the record that our perspective is that the public needs are the ones that are not being met. And there’s a variety of ways that I’ll turn over to Matt.
12828 MR. HATFIELD: Yeah, so I mean, I think you mention a number of different priorities, you know, 5G investment, affordability, speeds and so on. And I think to some degree, different processes may support different areas of this development. We think MVNOs will lead to suitable competition and development of all these criteria.
12829 But I think that price is an area that we’ve heard a lot of concern in our community around recently. When we polled our community, we got 85 percent of people said that price was a major issue for them. Only 15 percent said that speed was a major issue. And that lines up with what we’ve heard in some of the other data presented to this proceeding over the last couple of weeks. I know that the province of B.C. survey, I think 86 percent of people said that they thought their data plans, the costs were not reasonable.
12830 So we think that price needs to be a high priority, but we also don’t think it’s a choice. We think that if there’s both adequate investment and sufficient market discipline we can have both things. And we think that there will be many opportunities to develop 5G under an MVNO regime.
12831 MS. TRIBE: I would just add, our -- if you’re looking for overarching priorities for us in this proceeding, it’s affordability and it’s choice of providers. And we believe that meeting those two criteria of providing more affordability through introducing more choice of providers will actually help hit a lot of those other targets that those other intervenors have brought into play.
12832 COMMISSIONER BARIN: So to pick up on the price point, let’s talk about low-cost plans. Now, some parties have suggested that the Commission mandate low-cost plans, and that they should be made available to a limited segment through means testing. Do you think this is a feasible alternative and specifically, for the Commission to implement such a plan?
12833 MS. TRIBE: So OpenMedia and CIPPIC have also proposed our own version of a low-cost plan. I think the main differentiation for us between the other proposals is that we do not think that these plans should be restricted to low income users. I think that often what we’ve seen is that low income refers to low use, or low need, and we don’t think that’s the case. And on the flip side, we don’t think that affordability issues only strike those who meet the government’s definition of low income.
12834 And so what we think that the Commission’s role here is, and what we are proposing in our low cost plan, is to make sure that there is a plan available on all of the Big 3’s networks that meets the basic needs of everyone in Canada, regardless of their income level. There are a number of circumstances that can arise where someone might be in need of an affordable plan, but doesn’t necessarily meet the government’s criteria. You could lose your job. There are a number of things that can come up that might not necessarily check all the boxes that would pass that means test, but don’t make you any less in need of those services.
12835 And as -- we do think that this is, as the CRCC does also, an essential service, we want to make sure that people don’t have the ability to just technically access, but actually use it.
12836 COMMISSIONER BARIN: Okay. And you did mention you proposed a plan that has various elements. Maybe you can describe the plan that you’ve proposed, and also let us know how you came up with the rate and the proposed elements?
12837 MS. TRIBE: So what we are proposing is a plan for four gigabytes of data per month for $20. We think that plan meets the average needs, as we've heard the incumbents refer to as well, that is under 3‑gigabytes of data, gives people some flexibility so that they're not going over their month-to‑month billing with that bill shock, as Matt referenced earlier. And we do think that that, again, puts that -- a little bit of aggression on competition and offerings to bring us inline with our international peers.
12838 I think when we saw the introduction of the low cost data only plans through the previous proceedings, we saw plans that really penalized those affordability users. We saw plans that for twice the price could get you 10 times the data proposed by the incumbents.
12839 And so we really think that if we are going to be addressing those affordability needs we need to be meeting them where the average user is.
12840 I'll let maybe Tamir add something on how he came to those exact numbers.
12841 MR. ISRAEL: Yeah, just really briefly. The 4‑gigabyte for us came from a projected -- where we think projected average should be, and the 20 to 30 reverse engineering from some plans that were in the retail market at some point in time where we prorated how much -- there were $60/10‑gigabyte plans that appeared at one point in the market, and we basically like prorated what it would take to get from 60/10 to 4‑gigabytes, basically. Does that make sense?
12842 COMMISSIONER BARIN: It makes sense. There were several plans proposed. Some of them were put on the public record, and they were plans that were in the price range of $15 and under. They were pre‑paid plans.
12843 Can you clarify, is the plan that you're proposing a post-paid or a pre‑paid plan?
12844 MR. ISRAEL: We don't have a strong position on this. We -- the comments from some of the other public intervenors around how post-paid plans are more consumer friendly and easier to manage and would not necessarily require a credit assessment if you're not pairing it with a phone, are I think very (unintelligible) and reflect our views. But I think having them both -- both options available is probably ideal.
12845 COMMISSIONER BARIN: Okay. Now, I understand your position that you would like this plan to be broadly available, but we also heard from TELUS about a program called Connecting Families. And I'd like to know if you have any thoughts about this program, and whether you believe that a similar approach might be considered in the context of low income families.
12846 MS. TRIBE: We have heard from, I think, TELUS and Rogers, in particular, around the plans and the offerings that they are trying to do to meet the needs of low income people in Canada. Again, I think that we don't think that these are limited to a specific bracket, particularly not one that is identified by a telecommunications company for who they think is in need.
12847 We really think that individuals are in the best position to determine what their needs are, what they can afford, and how that matches their lifestyle and the way that they need to use their devices in a wide-range of services beyond just what is imposed by the telecom provider. And so that's why we think that the CRTC needs to go beyond the voluntary offerings of the incumbents for a certain segment of the population and actually make sure that it is more broadly available so that people aren't left behind.
12848 COMMISSIONER BARIN: Okay. So to be -- just to clarify your position, then. You do not believe that the Commission needs to mandate a low‑income plan? A low‑cost, sorry.
12849 MS. TRIBE: We believe that our plan that we have put forward as a low‑cost plan should also be available to low income people in Canada, and that that hopefully would meet the needs of low income Canadians, as well as other segments of the population.
12850 COMMISSIONER BARIN: Okay. We've heard from many parties that there low cost plans available, and that the issue isn't the availability of low cost plans, but more a question of awareness and promotion of these plans. Do you believe that these arguments have any merit?
12851 MS. TRIBE: No is the short answer. There is no one that is going to work harder to find a low‑cost plan available to them than someone that needs it. And the implication that low income users are unwilling or unable to do that research is both insulting to people that are working incredibly hard to balance their budgets, but also indicative of the fact that these companies are not widely making those plans available. And if there is a perception issue, I think they really need to be asking why they aren't listed on the front page of their websites.
12852 And so I think that to indicate that low income users, or those who are just looking for a plan that meets their needs, are simply unable to find it, both implies a failure on the part of the incumbents, but also misrepresents those users and just how hard they are struggling. Because the more that you need it the harder you will work to find it.
12853 COMMISSIONER BARIN: Okay.
12854 MR. ISRAEL: Sorry. Just really quick to add to that. I think the -- one of the things that's most -- we think that these plans should be offered on the primary brands, but it's not just that they're not offered on the primary brands, in most instances they're not even offered on the secondary flanker brand. They're on the -- I think some providers have even established new flanker brands recently and they're offered on those lowest tier flanker brands. So I think that doesn't help with the wide availability and adoption of the plans as well.
12855 COMMISSIONER BARIN: Okay. Do you think that the Commission or that it's appropriate for the Commission to impose a condition of service under section 24 of the Act that ensures that low cost plans that are made available by the carriers are promoted and brought to consumers' attention? So this would include things like ensuring that their CSRs are appropriately trained, prominent links or prominent real estate on their websites, and visual display information in their retail outlets.
12856 MR. ISRAEL: It would certainly help. I don't know if it addresses -- there's also issues with the composition of the plans that they...
12857 So some of these plans are low cost and -- which is great and they were not available for the Commission encourage the appearance of these plans. But the data allotment in them, I think a part of the problem is that they end up costing more if you have them, and a lot of Canadians would realize that even if they were able to discover them because you're going to end up hitting the overage before you get through the month, and the -- as we know, the penalties at that point become pretty aggressive.
12858 So I think visibility is definitely helpful, and better training and all of that, are very important steps to encourage or mandate if the need arises, but I don't know if it solves the problem altogether. Does that make sense?
12859 COMMISSIONER BARIN: That makes sense. Thank you. So I want to move on now and talk about MVNOs and the risks and benefits.
12860 It's been argued that if the Commission were to decide to grant broad-based MVNO access that this would increase the risk profile for wireless investments from the carriers. Do you agree with this position?
12861 MR. SAMAYOA FIGUEROA: We don't actually believe this will affect any investments in the wireless market. Ultimately, and I mentioned this during my presentation, like we know from experience from -- we have seen this -- we have had this conversation in the past. We had it recently with -- when wireline access was granted a few years back, and incumbents also threatened that there would be loss of investments. They said there would be more risk in their investments.
12862 But in the end, we didn't see that reduction in investments, we didn't see that much more risk become present once the wholesale wireline access wireless service implemented. So we don't see why it would be any different by mandating MVNOs in the wireless sector. And in fact, we think it might actually help reduce duplication of 5G infrastructure nationally, which might actually help with the development of 5G infrastructure, overall.
12863 Thank you.
12864 Do you have anything to add?
12865 COMMISSIONER BARIN: Well, so I see. So you believe that there actually might be benefits in the sense that there would be a tendency to share networks or network costs?
12866 MR. SAMAYOA FIGUEROA: That's right, and we are already seeing that. There are more network sharing agreements to rollout the 5G implementation, and we think that this will actually be beneficial for companies. Especially when we look at communities that my have a local cable company or a local Internet company that would actually be willing, or even a local municipality that would be willing to invest in local networks that can connect to the incumbents', this would actually help facilitate and prevent network duplication.
12867 MS. TRIBE: Just to add to that. I think one of the challenges that we've had in our facilities-based competition model is that regional players and smaller players have been unable to grab hold of the market or their footprint in the way that the national providers have, having such a decades head start. And so I think that it's worth noting that even in the worst case position where the incumbents decide and the Big 3 decide that they are going to slow their 5G rollout, that they are not going to invest as heavily.
12868 I think at the end of the day, someone wants to build that network. And I think it will open up the door for other players to maybe catch up a little bit from where we are now.
12869 And so we don’t believe that this is anything but a threat, because we have seen this before time and time again.
12870 But we do think that there is an opportunity for other players, should that actually come through.
12871 MR. ISRAEL: Just really quickly, like in particular, for example, an aggressive competitor like Shaw and/or Videotron that would have the opportunity, if they so chose, to focus on rolling out 5G within their area more aggressively, and then acting as an MVNO in other jurisdictions.
12872 So it allows for these different types of dynamics that are not likely to take hold.
12873 And then in that scenario, the incumbents are going to have a choice between investing more in that area to catch up with Shaw, or not.
12874 So I think overall, the roll out of this model may -- it’ll come down to -- so we do have competition challenges in Canada, but there are, I think, -- I don’t think that we should just assume that just because the competition is driving down profits and revenues for the national incumbents, so they’re going to be able to stop investing in networks and new technologies like 5G.
12875 COMMISSIONER BARIN: Some of the arguments were less about not investing in 5G but about the investment trade-offs among which might be that they stop investing in rural areas or areas that don’t have the same business model as a high-density urban area.
12876 MR. ISRAEL: Just two quick things on that.
12877 So one thing is the Commission does have a framework for assuring that rural investment happens.
12878 And we’ve seen this on the wireline side, right, where let’s remember, first of all, there is this wholesale model in place, but capital costs are much higher, much higher, and capital intensity as well as capital costs.
12879 And we have a model for how to deal with rural.
12880 But aside from that, one of our additional proposals that we didn’t elaborate in great depth here is that we are also saying that the Commission should recognize, in principle, wholesale access to spectrum.
12881 And we think that that -- if you recognize that -- the need for that in principle, that will allow a lot of municipalities and other regional type groups in rural to develop their own wireless footprints should the national providers decide to not.
12882 MR. SAMAYOA FIGUEROA: I just have something quick to add.
12883 So I actually come from Prince Rupert in B.C.’s north coast.
12884 It is the home to North America’s third largest port. Yet, my home is four minutes away from downtown and Prince Rupert, and I only get one bar of signal in my home, which also doubles as my office.
12885 And for decades, we have been talking about network investments in rural communities in more communities, but the incumbents still have not been able, or have not been willing, to make those necessary investments.
12886 So ultimately, it’s time to try something new. And if the CRTC believes that it is time to bring in more investments to rural communities and remote communities, then we had more regulations and more obligations for these companies to make these investments.
12887 COMMISSIONER BARIN: Thank you. So yes, the national -- there’s the national carriers that are investing.
12888 We also have, currently in Canada, regional facilities-based carriers that are operating.
12889 And parties have argued that if MVNOs are introduced, the ones that would be the most hard-hit would be the regional carriers that are making some of the investments in those rural and more remote communities.
12890 What do you think about that?
12891 MS. TRIBE: A lot of the investment in rural areas is being done because those areas need to be served. And we really appreciate the fact that those companies are investing in other areas that do not see the same desire for investment as urban areas.
12892 It also is difficult because they don’t have the same market.
12893 And so I think something like this actually provides the opportunity for those providers to also offer MVNOs.
12894 If they can sell with a national footprint, if they can reach those urban areas, if they can increase their market share, that is another way for them to raise revenues to help build out their facilities in other areas of the country.
12895 Additionally, there still needs to be choice for those customers.
12896 And I think too often, we view rural and remote Canadians as people who have to settle for what they can get, as though if we get them something, that’s good enough.
12897 And I think that we really need to be looking, with the government’s target for having every person in Canada connected with the highspeed targets of 2030, of what does that look like? Is it just you get what you get? You get what we decide to give you? Or are we actually going to try to make sure that you can compete, not just in the fact that you can get online, but you can have the same choice, you have the same offerings, the same type of plans as people in other areas?
12898 And so we definitely want to make sure that companies are still investing in those areas, but we also want to make sure the people that are receiving those services are able to get online in the exact same way as someone who is in downtown Toronto.
12899 COMMISSIONER BARIN: Thank you. Now, in your submission, you submit that if we had a robust MVNO market, that it could spur innovation and cater to market segments that are currently underserved.
12900 Are there any areas in the market that you would consider that are being underserved right now that would be the niche markets sought by new MVNO entrants?
12901 MR. ISRAEL: So some of that is socio -- is economic based; right? So, you know, lower income groups, even with the emergence of the low-cost plans, we think are still being underserved.
12902 And the regional MVNOs do cater to a segment of that, but the fullness of that market segment.
12903 But I think part of the -- the innovative potential is actually -- of MVNOs, is they often create new market segments that don’t necessarily exist.
12904 So we’ve heard, for example, that, in the U.S. for example, there are MVNOs that create entire customer service infrastructures and toolsets that are directly catered to senior -- to elder -- to senior citizens and more elderly populations.
12905 I don’t see an MNO or even a regional MNO create -- like, catering their services to that degree to that type of market segment.
12906 So -- and many of -- we heard from ACT a couple of days ago that many individuals in that age group are not comfortable even -- so one issue was cost, but is also, you know, convenience and customer service factor. They’re not comfortable getting -- interacting with the parties that are out there.
12907 So there’s that type of niche service differentiation and there’s also the innovation factor.
12908 So the law enforcement, the Halifax law enforcement group -- or, sorry, the law enforcement, I got the wrong -- is it Hamilton?
12909 COMMISSIONER BARIN: Halton.
12910 MR. ISRAEL: Halton, sorry.
12911 The MVNO that they had described, for example, which is an interesting innovation, which I imagine is a cost-intensive MVNO rollout that’s not typical, which then, you know, which creates a technical relay that is able to triage across different networks and provide the most -- highest quality signal, that is -- I would consider that a niche market segment that, you know, we didn’t -- wouldn’t necessarily assume was out there, but if someone created that, it would create demand for that kind of thing.
12912 We also mention in our comments, I think, Audacity, which is an MVNO in the U.S. which created -- or, sorry, the U.K., which created a technical overlay that allows for higher quality call signals that most people would not require, but those who have -- who are -- have down sharing, for example, would like to -- it helps them use phones.
12913 So it’s that kind of thing. But there are -- those offers aren’t available in Canada.
12914 But it’s really the innovation aspect of it, is that we don’t know what -- allowing for this type of low-cost access creates experimentation and new types of niches -- markets get created through innovation by allowing full cost access at the service level, if that makes sense.
12915 MS. TRIBE: I think we -- the way that the plans in Canada are currently frame, are you an unlimited user? Are you a six-gig, a four-gig, or a two-gig user? And every one of those comes with talk and text, with some exceptions.
12916 So the idea of who those demographics are right now is defined by the plan offerings, not who you are or what you actually need.
12917 And so in some ways, Canada’s imagination is really small on this, because we haven’t even been allowed to think about what it could be or what it could look like.
12918 But, you know, when we looked at those low-cost data-only plans, the biggest concern that we heard from our community, is if I want data only, I need even more of it. So what does a data only plan look like that’s truly unlimited but has no talk and text?
12919 What about someone who wants to use only talk, doesn’t care about text? Do they have to come packaged together?
12920 What about the IOT devices that are going to be rolling out that aren’t going to need the same types of intensity that maybe streaming video services would, but do need to be connected more frequently?
12921 So our imagination needs to grow a lot on this, but I think that looking around at what’s happening in other countries, the types of plans that are being offered aren't just for a type of person the way that maybe Statistics Canada would define people, but also the types of devices that we're creating and the way that they might be using the system as well.
12922 COMMISSIONER BARIN: Thank you. I just have a couple more questions.
12923 On that point, the existence of flanker brands in Canada, do you believe that the flanker brands are, you know, ultimately going to be able to address some of those market needs and bring some of that innovation?
12924 MS. TRIBE: No, and I think we heard a really great example from ACORN testifying earlier this week as to why. The frustrations that people have with these companies, I know there's a lot of discrepancy between how they would try and define if they brand all of their flankers as one of them, as we heard TELUS start to talk about, do they -- or if they identify them completely separately, as we heard Bell talking about, but in either case, most people in Canada have some understanding that these flanker brands are actually owned by other companies. And so, it doesn't get at the core competition issue around the choice of providers.
12925 And then I think additionally, when we hear the way that those markets are being segmented, people are getting a poor quality of service as well, and I think really what we want to make sure is that people are getting the highest quality of service, whatever that might look like to them, as opposed to feeling like they're sacrificing because they are poorer than others.
12926 I'll let Tamir add. I know he has a few more thoughts on flanker brands.
12927 MR. ISRAEL: Yeah, I just -- and then in terms of whether those will ever provide, so, the price -- so two parts to that.
12928 So, in terms of whether those flanker brands are ever going to provide the price discipline aspect, I think that one you can dismiss. The -- just to -- like, they've been around for a while and the average revenue prices that we do it for our international comparing savings obviously incorporate the revenues from those brands as well and were still high, even with that type of segmentation on the cost side.
12929 But the types of innovation that we're talking about are -- a lot of them are higher risk. So -- and that's where innovation comes from, right, where risks are taken. And the ability to do that with a low-cost -- you're not going to see that type of experimentation with even a segmented flanker-type brand.
12930 Also, the last point there is that -- I lost it. Sorry. I had another one. If it comes to me, I'll mention it later.
12931 COMMISSIONER BARIN: Thank you.
12932 Okay. I have one last question before I pass it back to the Chair and my colleagues.
12933 In your oral presentation, you ended by saying, "We need competition and we need it now". And I also noted in your oral presentation in paragraph 22 you talked about the Competition Bureau, and you quoted the statistic of 5.5 per cent market share, and you attributed it to MVNOs. I believe the Competition Bureau was referring to the share of the market disruptors or the regional facilities-based carriers, and in particular, they had looked at the example of the Quebec market.
12934 So, my question to you, you are seeking a more competitive market. Does it matter whether that competition is coming from an MVNO model that is a facilities-based one or whether it's coming from a pure MVNO model?
12935 MS. TRIBE: From our perspective, the facilities-based model, in particular what has been proposed by the Competition Bureau, will not achieve the competition that we're seeking.
12936 So, we think fundamentally that relying solely on facilities-based competition has not gotten us to where we need to be, and we require MVNOs to be inserted into the market as well to be able to ensure that we can reach those levels of not just the 5.5 per cent, but as we also mentioned in our comments, upwards of 10 or 20 per cent market share for MVNOs, not just for the competition, but for the innovation and the affordability as we've addressed.
12937 We wish and would love for the regional providers on facilities-based competition alone to have been the solution, but they haven't been, and they can't do it alone.
12938 And we fundamentally do believe that MVNOs can actually help these regional providers as well, but we don't think that the Competition Bureau's model of allowing MVNOs, basically letting Canadians get a taste of what it could be with the intention of only doubling down on the existing strategy is going to be sufficient.
12939 And so, we do think that full MVNOs are the only way to introduce that level of competition, but also, to give MVNOs a chance to flourish. Because if they are not introduced in the full model that we have proposed, to some way they're being undercut or doomed from the start, and we think that making sure that there are no restrictions around the type of company that you are to be able to come in really brings in not just that risk, but that innovation that Tamir was referencing, to make sure that we do bring in the variety that will help bring in the competition and change the affordability as well.
12940 MR. ISRAEL: So and then -- so, just to elaborate, so what we were saying there in that example is that it's true that a single MVNO is not likely -- or it's rare for single MVNOs to get to 5.5 per cent market share in specific regions within a short -- short periods of time, but collectively they do get there and well beyond, and at 5.5 per cent is where you start to see the price discipline the Competition Bureau outlined.
12941 Sorry if that wasn't clear in our oral comments.
12942 But our -- in Europe you see 10 to 20 per cent market share, like, pretty much across Europe in every European country -- or MVNO market share, and that's pretty consistent.
12943 And according to the Competition Bureau's model, that is enough to impose the type of price discipline that we're -- that is required here to have an impact.
12944 But more to the point, I think if we're talking about long-term competition and sustainable competition in Canada, spectrum is an essential input into wireless -- providing wireless services, and a facilities-based approach to long-term competition in Canada is inherently limited by spectrum.
12945 A facilities-based approach also requires significant duplication, which is inefficient. On the wireline side, again, we've gone in the other direction. We understood that it doesn't make sense. It's inefficient. It increases cost across the board to make every single competitor build the last mile between the customer office and the last home, so we've opened up wholesale competition and it's -- you know, it's been -- had its affects, and it's provided for a more efficient type of investment to competition ratio, if that makes sense.
12946 With 5G, we think that this is -- the propensity for duplication is going to be significantly higher because you do need a lot of last-mile equivalent infrastructure. It's a very high-density rollout at the last mile. If every single competitor is going to need to have, you know, that high density of 5G rollout around every single tower, that's a lot of duplication. So, you're essentially over investing in a way, so -- to get to the level of competition that you want.
12947 So, the regional players -- so, we think long-term and MVNO-type competitive model is the solution.
12948 The last thing I'll say very briefly -- sorry -- is that the regional MNOs though in this model do have a competitive advantage over MVNOs, in our view, being a facilities-based provider in this context.
12949 First of all, the MVNOs start with a 15 per cent price hike because it's cost plus; right? So, there's already a margin that the MNOs are taking back off -- are able to build into their price and roll into profits and beyond the cost of building the network; right? So, there's already a differentiator there and an incentive to compete based on facility -- the ability to compete better based on facilities. But the ability to control your network and control the way that your network is set up and rolled out, and to make different quality decisions in terms of what area is something that -- what area you're investing in to improve your network is something that MVNOs are dependent on the national -- whichever network they're on to provide. So -- and there's also branding issues and perception issues as we've seen between types of brands.
12950 So, I think there is an ongoing role for regional MNOs in this and other types of facilities-based providers in this new ecosystem that we're recommending, but MVNOs also play a very important role, which is a bit different from those other roles.
12951 COMMISSIONER BARIN: Thank you very much. I appreciate all your input and answers to my questions.
12952 THE CHAIRPERSON: Commissioner Levy.
12953 COMMISSIONER LEVY: Just a couple of questions.
12954 First off, just to continue some of the discussion that you've just had with regard to the possibility of the regional players being net beneficiaries of a full mandated MVNO regime.
12955 You say that that 15 per cent margin and the ability to control their own networks would put them in an advantageous position, but that 15 per cent really doesn't compare to the sort of 40 per cent and so forth that we've heard the larger players are able to make on their investment.
12956 So, how does -- how do you make that a compelling argument, not only for the regionals, but for the larger MNOs.
12957 MR. ISRAEL: Sorry. So my point there was that the -- and sorry if I wasn't clear -- the MN -- the regional MNOs have a 15 percent advantage over the MVNOs. Does that -- if that makes sense. So the margins for MVNOs are usually very slim, and that's true everywhere that they popped up. MNOs are probably going to be able to hire -- based on their control of the facilities, are usually able hire -- offer slightly higher prices, not usually at the same rate as the national providers but there's that -- there's a hierarchy.
12958 But because their facilities are -- because they don't have to -- their costs are not the costs of building their facilities that 15 percent markup that the MVNOs are paying, let's say an MVNO has a markup beyond what they paid, so if they pay cost plus 15 percent and then add a 10 percent markup, to offer the same rate Shaw would charge whatever their facilities cost, plus 25 percent, and would get the entire 25 percent profit, whereas 15 percent of the MVNOs' profit margins will go to cost.
12959 So does that make sense? Like from a -- okay.
12960 COMMISSIONER LEVY: How many MVNOs do you think could emerge, and what do you think the -- you know, we've talked about the percentage in terms of 10 to 20 percent, but how do you see that emerging across Canada into rural and remote areas? How many do you -- how many or what do you think the potential is for MVNOs in order to have a real impact on the market?
12961 MS. TRIBE: That's a hard question for us to answer because we have never been able to actually truly test that in Canada to know what that would look like. But I think when you look over the course of the past two weeks, it's been a very full two weeks, filled with a number of intervenors who have said that they would like to get started, and that are -- that includes providers that are already providing facilities-based services, like Ice Wireless, it includes a number of providers who are providing wireline services already who would like to get into the market, and then you have providers who like to come in and enter as a pure play MVNO.
12962 And so I think that how many will actually be able and willing to make that leap and make that investment and flourish in the market is yet to be seen, but I think the fact that there is that much enthusiasm and excitement for offering these types of services really shows us that there is something here. But the specific number, I think we'd be making up a number to try and answer your question, as opposed to giving you one.
12963 MR. ISRAEL: I'll that say on the wireline where we've had again this model for a number of years, there are quite a few players, and some of them do have regional market share of 10 percent collectively. I think they have -- I'd have to check, but -- yeah.
12964 COMMISSIONER LEVY: And my final question. Going back to your suggested low cost plan, you're suggesting a $20 to $30 monthly price for unlimited talk, text, and 4G -- 4‑gigabytes of data. Have you built -- what would be the margin in that for the provider?
12965 MR. ISRAEL: We -- that's difficult to answer.
12966 COMMISSIONER LEVY: Well -- so how did you arrive at that number?
12967 MR. ISRAEL: So -- okay. So we looked at a couple of things. So we looked at, first of all, what -- where the usage should be and what a usable and helpful plan would be with the calculation that anything below that isn't really going to be responsive to what we're trying to do.
12968 In terms of the costing, though, we started off with a retail plan that was being offered by a number of providers, and -- for a higher data allotment, and tried to work backward from there to see what, you know, what would -- if you tried to figure out in a mathematical way how much, you know, how much removing 6‑gigabytes from that would -- what that would reflect.
12969 At the end of the day, I don't want to -- it's -- given the plans that are out there, we suspect that this is doable at a cost....You know -- with even a bit of a profit margin, you know, Videotron has a plan like this out in Québec because we've heard it's on their sub flanker. So it maybe doesn't have the same uptake and visibility as some of the other plans, but it's there, so presumably they're not losing them.
12970 COMMISSIONER LEVY: Is it not for 4‑gigabytes of data?
12971 MR. ISRAEL: I think so, yeah. On Fizz?
12972 MS. TRIBE: The Fizz Mobile plan is 4‑gigabytes of data for $25, I believe.
12973 COMMISSIONER LEVY: Okay. Thank you very much.
12974 THE CHAIRPERSON: I have one general question. I think counsel may have a question.
12975 We talked at the beginning about market not being sufficiently competitive. You pointed to market share numbers, which I understand.
12976 I guess the question I have as a regulator is what's the market share number in your view that we need to meet to reach a determination -- or put it another way. How will we know when we get there in respect of the market being competitive?
12977 So numerous parties have pointed out the current shares, which obviously are in excess of 90 percent. I think you've responded to the question about but in terms of new ads, most of them, the majority of them are going -- and it'll take a long time, I understand, to change the incumbent, if you wish, 90 percent share. But what's the destination?
12978 MS. TRIBE: I think you're looking for the checkbox you can tick when you know that you've done the job and have reached there or the metrics. I think ---
12979 THE CHAIRPERSON: Well, more than a checkbox. I mean, I think you'd accept the regulatory intervention is for a purpose.
12980 MS. TRIBE: Of course.
12981 THE CHAIRPERSON: And clearly, you're suggesting we need to intervene, and the purpose is to ensure that there is greater choice and better pricing. I accept that. Now tell me how we know when we get there.
12982 MS. TRIBE: So we would prefer that as a start the CRTC needs to be looking at if the objectives are actually being met, if the policy objectives are being met, which we don't think they are. We think we heard that from the Competition Bureau's own testimony, when we're looking at affordability that is not being met, competition, and in particular, if market power is being leveraged.
12983 We also think that beyond just a specific number of market share that market power itself is useful. But really when we're looking at penetration rate, usage rates, adoption rates, are these increasing? Can people afford their services? I think is really a critical question that we need to be asking. And in short, like can people use it, and how do we compare internationally?
12984 And I know that that's not a specific concrete number, but I think that fundamentally we keep hearing from intervenors throughout this proceeding that we aren't there. That there are issues where market power is being used to influence the ability or inability for other players to enter the market, and I think competition really would limit that. If we're seeing competition we're not seeing that use of market power, but additionally, that the section 7 objections would be met across the board.
12985 THE CHAIRPERSON: Thank you. One last one, and I'm -- I do want to probe a little bit about the questions about the impact on the regional competitors.
12986 You said several times you think this could be good for them, and I'm not sure based on the evidence we've heard in their submissions they would agree. But in particular, I'll give you an example just from the last discussion where we were talking about a service, 4‑gig, in the $20 to $30 range. I take your point about a current offering from Videotron.
12987 But Mr. Bragg from Eastlink was here, and we asked him what his lowest cost service was. It was $30, I believe, if my memory serves me correctly. And when asked if he could offer a service - and it was I think we put to him a 4‑gig service, it might've been 2, I apologize if I have it wrong - he just said no. Like not out of -- he said he could not do that on a cost-based basis, and he's a smaller regional competitor.
12988 So just how do you respond to that? I mean, they are clearly performing an important role with respect to the emergence of sustainable competition, but if he can't afford that, isn't the impact of MVNOs going to be strongly felt in those areas?
12989 MS. TRIBE: So the first thing is that our plan is not proposing that Eastlink or Bragg should be happy to do that. Our plan is proposing that this should be for the national providers. And we think, and still believe, that the other plans will begin to differentiate providers in the market, including providers such as Eastlink.
12990 I don't know if you want to add?
12991 MR. ISRAEL: Sorry. To your point, and I think, Commissioner, you were trying to get at this as well. Yeah, their costs may be higher than the incumbents, so there may be some (unintelligible) there. But to the regional providers or MNOs that we were specifically referring to were the same ones that I think the Competition Bureau had in mind when -- in their analysis, which is basically, Shaw and -- yeah, sorry. Shaw and Videotron, in terms of, you know, the broader market competitor dynamics. Mr. Bragg seemed very adverse to taking advantage of an MVNO model should it be mandated, but I think that a lot of smaller regional entities like Bragg would actually have a lot of opportunities to leverage their existing experience to branch out into other areas. This is not a categorical statement across all small regional current competitors. But I -- but Shaw and Videotron as well, will be able -- will have benefits from this.
12992 In addition to the competitive challenges that they will have on one end from MVNOS, they will also have benefits in the sense that they will be able to enter markets that they’re not in right now because they don’t have spectrum, and compete in MVNOs in those markets while still competing as an MNO in their like, home footprint. So there are -- there is -- I think what we were saying was not that this is potentially, necessarily the greatest thing -- a great benefit to these types of competitors, but more that they have a role to play in this ecosystem, if that makes sense -- and some benefits as well.
12993 THE CHAIRPERSON: Thank you. Thank you for that. Commission counsel?
12994 MR. BALKOVEC: Thanks, Mr. Chair.
12995 So the plan that you’ve proposed that the Commission mandate the national -- national providers to provide, some parties have suggested that in order to do something like that, the Commission would need to reassert its powers under sections 25 and 27 of the Act. To confirm, is that your view as well?
12996 MR. ISRAEL: We think you’d do it under 24 and 24(1), especially because it is going -- it’s not -- we don’t see it as -- because of the nature, the animating purpose behind it, even if it’s not limited to low-income parties the -- it’s low income participants. It's seeking to address a challenge for low-income participants. So we think that that type of requirement can go under 24.
12997 But we also do think that the -- if this is your next question, that if you were to reassert the de-forebear from those powers, you are able to do it based on the data that’s on the record, with respect to low income -- underserved low-income customers.
12998 MR. BALKOVEC: I think everyone will appreciate that you correctly anticipated my follow up question. So that’s all from us.
12999 THE CHAIRPERSON: Thank you, counsel. Thank you very much. I appreciate your presentation. We appreciate your presentation and your responses to our many questions. That almost brings us to a close.
13000 Madame Secretary, avant de clore cette d’audience publique, je voudrais prendre un moment pour remercier les nombreuses personnes qui ont contribué à la rendre possible.
13001 En mon nom et au nom de mes collègues du Conseil, permettez-moi de remercier les intervenants qui ont participé à cette audience, que ce soit par écrit ou en personne, ainsi que les nombreux Canadiens qui ont fait part de leurs commentaires dans le cadre de la consultation publique et du sondage.
13002 I want to reiterate that this is a significant proceeding for Canadians, for service providers, and for competitors. Our aim is to ensure that the regulatory framework fosters an environment that provides sustainable competition, continued investment in high quality networks, and an importantly better prices and innovative services for consumers. We look forward to reviewing all of the evidence on the public record.
13003 Thank you again to all those who took the time to provide their input on the state of the mobile wireless market in Canada. Your views are important to us.
13004 Je tiens également à remercier toutes les personnes qui ont contribué à l’organisation et à la réalisation de cette audience publique : le sténographe, les interprètes et, bien sûr, le personnel du Conseil. Merci pour votre excellent travail.
13005 Finally, I would like to take this opportunity to remind intervening parties they have until March 10th of this year to file their undertakings, given that the Commission is still considering procedural requests filed by CNOC and Telus, the March 23rd, 2020, deadline to file final comments is suspended. The Commission will confirm the precise filing date when it disposes of these requests.
13006 Je souhaite vous remercier tous une fois de plus pour votre participation.
13007 I thank everyone once again for their participation. I bring the hearing to a close.
13008 Bon après-midi.
13009 Good afternoon, everyone. Merci.
--- Upon adjourning at 1:08 p.m.
L’audience est levée à 13 h 08
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