Transcription, Audience du 21 avril 2023

Les participants et l'endroit

Tenue à :

Centre culturel Kwanlin Dün
Whitehorse (Yukon)

Participants :

• Présidente : Vicky Eatrides
• Membres : Adam Scott, Vice-président, Télécommunications
  Claire Anderson, Conseillère, Colombie Britannique et Yukon
  Nirmala Naidoo, Territories/Conseillère, Alberta et Territoires du Nord-Ouest
  Ellen Desmond, Conseillère, Région de l’Atlantic et Nunavut
• Conseiller(ère)s juridiques : Alexander Ly
  Michel Hogan
  Stephanie Willsey
• Secrétaire : Dale Moore
• Gérant(e)s d'audience : Celia Millay
  Nicolas Gatto

Table de matières

Présentations

3428 Competitive Network Operators of Canada

3638 Northwestel Inc.

Engagements

3686 Engagement

3844 Engagement

3967 Engagement

4012 Engagement

4148 Engagement

Errata / Addenda

2023.04.20 (volume 4)

para 3223
“...we do allow for a period for written submissions to be provided by May 9th, should you wish.”
devrait être
“...we do allow for undertakings to be provided by May 9th, should you wish”.

para 3423
“June 6th”
devrait être
“June 9th”

Transcription

Whitehorse (Yukon)
21 avril 2023
Ouverture de l'audience à 9 h 02

Whitehorse (Yukon)

--- L'audience débute le vendredi 21 avril 2023 à 9 h 02

3425 MS. MOORE: Good morning, everybody. Welcome to day five of the hearing. We are going to start with Madam Chair's words of welcoming. Thank you.

3426 THE CHAIRPERSON: Hello. Bonjour, tout le monde. Welcome to our final day of our hearing.

3427 I would like to begin this morning by acknowledging that we are on the traditional territory of the Kwanlin Dün First Nation and the Ta'an Kwäch'än Council. So thank you very much for welcoming us.

3428 Alors, on va continuer avec Madame la Secrétaire. Merci.

3429 MME MOORE : Merci, Madame la Présidente.

3430 So we will begin with our first presenters. Please introduce yourself, and you have 15 minutes for your presentation. They will be joining us by Zoom today.

3431 I'm sorry, we are not hearing you. Are your microphones -- can you hear me?

3432 MR. WHITE: We can hear you now.

3433 MS. MOORE: Okay.

3434 MR. WHITE: Now we can, but you folks were muted.

3435 MS. MOORE: Let's do a round of sound checks with everybody then.

3436 MR. WHITE: One, two, three from CNOC. I'm here. Hello.

3437 MS. MOORE: Okay, fine. Okay, great, we can hear everybody. You can proceed. Thank you.

Présentation

3438 MR. WHITE: Good morning, Chair Eatrides and Commissioners, Commission staff and colleagues. My name is Geoff White, I am the Executive Director and General Counsel to the Competitive Network Operators of Canada, a not-for-profit industry association.

3439 Appearing with me virtually today is Bryson Masse, CNOC's Regulatory and Communications Advisor, as well as Christian Tacit and Stewart Cattroll from Tacit Law.

3440 We are appearing before you today remotely from Ottawa on the traditional and unceded territory of the Algonquin People. However, we acknowledge that the public hearing is taking place on the traditional territory of the Kwanlin Dün First Nation and the Ta'an Kwäch'än Council.

3441 Today I want to tell you who CNOC is, why mandating Northwestel to provide wholesale high-speed internet access service and transport service is the right thing to do and consistent with the Government's telecommunications Policy Direction, why LEO satellites are an overpromised and underdelivered alternative, and to give you some details on our model for the delivery of telecommunication services in the Far North.

3442 About CNOC. Established in 2010 as the national advocate for Canadian independent internet service providers, CNOC has been and will continue to be a champion for service-based competition, whereby competitors facing higher barriers to entry can lease wholesale access to large incumbent facilities to deliver high-quality, innovative and affordable choice for Canadians.

3443 Due to a long and costly period of regulatory uncertainty, a recent string of acquisitions and exits, CNOC's ranks are changing and thinning. Whereas we had over 30 members just a year ago, we are hovering around 20 at the moment and now have several members that are affiliates of large incumbent telephone or cable companies.

3444 That said, our mission remains the same and we are very encouraged by the recent work of the Commission under the 2023 Telecommunications Policy Direction, which provides a clear mandate for improved accessibility and affordability.

3445 As we are appearing second-to-last in this hearing, we will skip over what we believe has been a large and largely uncontradicted body of evidence demonstrating the severe digital divide between the Far North and the rest of Canada. Northern Canadians pay far more than other Canadians for lower-quality telecommunication services that are prone to outages and, for the most part, they are compelled to obtain their services from Northwestel.

3446 To the greatest extent possible, northern Canadians should have access to the same options for telecommunications services as Canadians living in the South. Universal internet service shouldn't be a "nice to have", it's a "must".

3447 That's why we say that Northwestel should have the same obligations as other incumbents, including the obligation to provide wholesale high-speed internet access services to competitors.

3448 Like numerous other parties, we believe the Commission should mandate Northwestel to provide aggregated wholesale access over all its wireline infrastructure, which includes regulated transport, unregulated terms and conditions, because those services satisfy all of the elements of your 2015-326 wholesale analysis. Mandated wholesale access in the Far North will be a significant step towards universal service.

3449 As in the South, regulated wholesale access in the North can drive competition, which is something the Competition Bureau and this Commission have recognized. Now, why should you want to drive more competition? Because it benefits consumers through greater options and choice, better pricing and better customer service.

3450 LEO satellites, they won't do that. LEO services are extremely expensive, such that a very small subset of Canadians in the Far North can afford them in the first place. As we explained in our latest submission, customers must pay an initial one-time equipment fee of over several thousand dollars and a monthly fee of several hundred dollars for Starlink's internet service optimized for the Far North above the 60-degree latitude mark, which includes the three territorial capitals.

3451 LEO services are extremely risky and unreliable. It is much harder to fix a broken satellite in space than a severed fibre cable on the ground. The sudden and unexpected failure of Telesat's Anik F2 satellite, which left Northwestel scrambling to find replacement satellite transport providers to avoid a prolonged outage, illustrates my point.

3452 Another thing, LEO services don't have a track record the Commission can trust. As we detailed in our written submissions, and others have told you, Canadian Starlink customers have expressed concerns about price increases, poor quality of service and poor customer service.

3453 To be frank, Starlink and OneWeb appear to be financially unstable. They haven't bothered to attend this hearing and, at least in the case of OneWeb, during the last review of the Basic Service Objective which started in 2015, they promised the Commission the moon and then they crashed into bankruptcy. In sum, it would take a huge evidentiary leap of faith to put the needs of northern Canadians in the hands of foreign-owned non-appearing parties.

3454 On to our proposal. In contrast to LEO satellite services, the Commission's wholesale framework is a tried and tested model for the development of effective competition in the provision of telecommunication services that has worked in the rest of Canada for decades, and that is what we and many others in this proceeding are asking you to do.

3455 Mandated wholesale access if offered at regulated cost-based rates works, and the regime in place in the South, while currently under much-needed review, is the most solid footing the Commission has. Mandating Northwestel to provide wholesale access will create a pathway for the development of new locally-owned-and-operated TSPs in the Far North, including TSPs that are owned and operated by Indigenous peoples and communities.

3456 That is not just speculation. You have heard from Indigenous groups who would use regulated wholesale access to enter the market and serve their communities. Surely that is a step towards achieving the policy objective of ensuring that telecommunications services respond to the economic and social needs of users.

3457 At this stage in Canadian telecom history, there really should be no question about the role and importance of wholesale-based competitors into the future, because the 2023 Policy Direction goes to great lengths to ensure that the Commission maintains and improves that wholesale access regime.

3458 While most other parties than Northwestel have endorsed the idea that Northwestel should be required to provide wholesale access, there have been some differences of opinion on how that wholesale service should be configured. While some additional transitional measures might be needed in the North to protect consumers, such as retail rate regulation for Northwestel and perhaps consumer subsidies, there is no need to deviate from the tried and tested model for wholesale access services.

3459 So what do we say needs to be done and what do we say needs to be in that wholesale access regime?

3460 First, in the Far North there is a total absence of competitive transport services, which is a problem we also see in the South, and so we recommend that wholesale services be mandated on an aggregated basis for all technology types.

3461 Second, because Canadians should have access to the full benefit of Northwestel's network, Northwestel should be required to offer wholesale access over all its wireline facilities, including its copper, coaxial cable and fibre wireline facilities.

3462 Third, because the Commission continues to price mandated essential services on an incremental cost basis, Northwestel should be required to offer wholesale access pursuant to Commission approved tariffs supported by Phase II cost studies. Retail minus or negotiated pricing proposed by others will not do the sustainable long-term job of fostering competition.

3463 Fourth, to ensure that competitors are not at a disadvantage relative to Northwestel when going to market, Northwestel's wholesale access services should be subject to the competitor quality of service regime established in Telecom Regulatory Policy 2018-123.

3464 Fifth, regulated transport, which Northwestel is currently mandated to offer in the form of the Wholesale Connect service, should continue to be offered as a separate wholesale service, separate from Northwestel's aggregated wholesale access, on a transitional basis, because transport between Northwestel's network and that of competitors will be needed even if the presence of an aggregated wholesale access service is there. We urge the Commission to improve the highly deficient, overpriced and often unusable service as recommended by Iristel and subsidies before us.

3465 Sixth, Northwestel should be required to offer regular transport services such as Ethernet and Wavelength services, albeit at regulated rates, since Northwestel has a monopoly on transport to and from the Far North, and once this occurs, the much less efficient Wholesale Connect service could and should be retired.

3466 Even Northwestel has affirmed that if it is mandated to provide wholesale access it will need to provide a transport service to competitors to make its access functional. It is simply not feasible for any carrier, even another large incumbent, to reproduce Northwestel's transport facilities in the Far North.

3467 Northwestel has argued strongly against being required to offer wholesale access to competitors, with its principal arguments being that LEO satellite services will create sufficient competition in the Far North and that the costs, including the negative impact wholesale access will have on its ability and incentives to invest, will outweigh the benefits.

3468 I already explained why it would be a huge leap of faith to rely on LEO satellite services instead of mandating wholesale access. Similarly, Northwestel's claims that the costs of implementing wholesale access will outweigh the benefits don't stand up to scrutiny. Wholesale services have been successfully implemented elsewhere in Canada and are valued by Canadian consumers, as attested to by the very existence of CNOC and our members.

3469 Now, I'm not saying that mandated wholesale access in the Far North will solve all the telecom access and affordability problems faced by northern Canadians. An aggregated wholesale service won't have an immediate impact on satellite-dependent communities. Instead, a follow-up proceeding dealing with satellite transport, which could form part of a wholesale access service in such communities, will be needed to deal with that challenge. But mandated wholesale access is the best alternative to doing nothing or taking a stellar leap of faith with LEOs.

3470 At the same time, we recognize that mandated wholesale access, just as it did in the South, will take some time to yield positive results as competitors plan and implement their offerings, and that's why we support regulating Northwestel's retail rates for a limited timeframe to allow competitors to enter and execute.

3471 What about an affordability subsidy? By all means, as an additional measure to provide relief if the Commission determines that it is necessary, but customers should get to choose who they use their subsidy with, and it shouldn't go to any specific provider and not Northwestel by default.

3472 On a final point, before I yield and we answer questions, I would like to ask this Commission to be careful not to use the recent difficulties experienced with the mandated access regime in the South as a reason for not pursuing it in the North. The Commission appears committed to optimizing that regime in the South and it can apply the same principles in the North, even if the North also requires some additional regulatory measures as well.

3473 The regime for the South has been tried and tested, and indeed litigated, and now we are in a position where the Commission's jurisdiction on this point is well established and its mandate for competition clearly expressed in one unified, coherent Policy Direction. You have a unique opportunity, albeit in two separate proceedings, to do great things for Canadians.

3474 Thank you.

3475 THE CHAIRPERSON: Thank you so much to CNOC for being a part of these proceedings and for joining us this morning -- or this afternoon your time. We will say good afternoon to you. So thank you for that and thank you for your remarks this morning -- or this afternoon.

3476 I will turn things over to Vice Chair Scott to lead the questioning for the CRTC. Thank you.

3477 VICE CHAIR SCOTT: Hello, everyone. Can you hear me okay? Smiles and nods, perfect.

3478 So I think I will jump right into discussion of wholesale and then we will in due course get to issues like subsidy, affordability standard and some other things that are part of this proceeding as well.

3479 So I did hear you say that the wholesale framework is tried and true, but I think it would also be fair to say that it has been not an easy road for competitors. So if we were to open up wholesale in the North, which features numerous challenges in providing service -- low customer density, high cost of service, weather, et cetera -- who would show up to compete, how quickly and where?

3480 MR. WHITE: That's a fair question. The parties that would -- the service providers that would show up to compete and where, I think there's a large body of evidence before you, sir, regarding interested parties, including Indigenous operators. There hasn't been any deployment in the North from competitors other than the main competitors, SSi and Iristel, but that is not to say the interest is not there. In fact, we are here to say the interest is there from service-based competitors.

3481 Regarding challenges in the South, you know, that is a long -- there is a long history to be told there, but the Commission indeed is committed to reforming the regime and in fact the Government of Canada has instructed you to do so. And as other parties have said, you know, there should be no question at this point whether or not service-based competition is a part of the telecom landscape.

3482 And I would like to say there is a bit of false dichotomy being presented by some incumbents that it's either facilities-based competition or service-based competition. The reality is it's both.

3483 And that is the reality for CNOC members as well. We have facilities-based -- or let me say it this way. We have telecom service providers who own and operate their own facilities and who are access seekers in lease wholesale access. We have small members such as Coextro who built out a 1 gig service on Georgina Island, to the Chippewas of Georgina Island, because a large incumbent wasn't interested on the basis that there was no population density.

3484 So, you know, this dichotomy that the smaller players won't build is false. This dichotomy that large facilities-based providers don't also seek access where they don't have facilities I think is false.

3485 So I think there is tremendous opportunity before you, and you have heard direct evidence on the record of this proceeding that there are parties willing to meet the demand for choice.

3486 And if you set the rates properly -- and I guess that is the main bone of contention about the wholesale regime in the South that led to years of lawyering and lobbying and delays, et cetera, that I think is now well settled. If you set the rates properly using the Phase 2 costing methodology, which gives the wholesale -- the primary internet service provider a rate of return, you know, there is a business case there for everybody to get in. And clearly, you have heard from customers and groups up North that the status quo is insufficient and unsustainable.

3487 VICE CHAIR SCOTT: Thank you.

3488 Are there legitimate concerns that competitive entrants could serve the largest communities, the easiest-to-serve communities, and as a result have no meaningful impact on the hardest-to-serve and in fact maybe pull some revenue out of the system and make it harder for the incumbent to serve those hard-to-serve areas as well?

3489 MR. TACIT: Vice Chair Scott, I don't think that is the case. The experience in the South that I think is quite instructive in terms of some of the more remote areas, although the technology used has been different in some cases, for example, there has been a bigger reliance on fixed wireless systems in the South, which may partly be duplicated in the North but may not in some cases, leading to the need for wholesale aggregated services.

3490 The reality has been that a lot of those small players have actually filled gaps that haven't been served by other parties and it's only when they have demonstrated success that incumbents have come in and tried to overbuild them and have done so actually with subsidies, whereas the original players did it on their own. So I don't think there is a lot of revenue that will be pulled out of the system.

3491 There is always an argument, you know, that if we just give the monopolist the ability to earn supernormal profits, they are going to do all of these things that other parties can't do, but what actually happens in the end is that they give extra dividends to their shareholders. It doesn't automatically translate into money for consumers' welfare.

3492 So I think part of good regulatory oversight and supervision is making sure that the Commission doesn't allow Northwestel to run away with the riches entirely and that while it should deserve to get a reasonable return on its investment for the risks that it takes in the North, it is also providing a public utility service certainly at this point and eventually hopefully a competitive service as well.

3493 VICE CHAIR SCOTT: Thank you.

3494 You mentioned in your remarks that wholesale, while a positive step, is unlikely to be the entirety of the solution for affordability in the North. We have certainly heard from consumers this week that they are looking for urgent relief. Some of them have proposed changes to retail rates.

3495 Could you comment on the interaction between any changes the Commission might consider to retail rates and the business prospects for competitors hoping to enter the market?

3496 MR. WHITE: Absolutely. We are certainly sympathetic to and we recognize the need for immediate relief in the North. There is no question that subsidies could and perhaps should play a role in the short term.

3497 And I don't think it's an either/or type of scenario. I think you can and you could and we submit you should pursue both a long-term model of sustainable competition which allows the interested parties who have appeared before you and others to come to the table to serve customers and offer them the choice and affordability they are craving and better customer service.

3498 But certainly, some form of affordability subsidy could work and as well as retail regulation, but they shouldn't -- one shouldn't preclude the other from happening.

3499 I think I will ask Mr. Cattroll to elaborate more on our points about how the three different -- the issue of a subsidy, wholesale and retail rate regulation might work.

3500 MR. CATTROLL: Sure. Thanks, Geoff.

3501 Thank you for the question, Vice Chair Scott.

3502 So if I understood it correctly, you were specifically asking about retail rate regulation and our position on that is that any kind of retail rate regulation of Northwestel needs to make sure that there is space for competition.

3503 It can't be that Northwestel's rates are regulated through some sort of standard such as the Connecting Families' rate that puts their -- where they are putting plans out into the market that are below cost plans, that don't give a space for wholesale competitors, for service-based competitors to develop in the North.

3504 We want to create a framework that allows for competition to develop in the North and if Northwestel's rates are regulated at a point that doesn't allow that space, there's going to be some long-term negative consequences for the Far North, for northern Canadians if competition can't take hold.

3505 So I hope that answers your question on retail rate regulations, about making a space. And we are interested in measures such as maintaining the price floor initially to ensure that Northwestel doesn't engage in any kind of predatory pricing that might drive competitors from the marketplace before they're able to enter and execute as we described in our opening statement.

3506 On the issue of subsidies, again, our position is any kind of subsidy that you feel based on the evidence, if the Commission decides that that's what needs to be done, it should be done in a manner that doesn't preclude competition. It needs to be a pro-competitive subsidy. And something like that might be a portable consumer subsidy that we mentioned that any consumer could use with any service provider so that it doesn't result in, as we said in our opening statement, the subsidy automatically going to Northwestel.

3507 I hope that answers your question. I can elaborate on any of those points if you want.

3508 VICE CHAIR SCOTT: It does, and it actually answers a few of my subsequent questions as well.

3509 MR. TACIT: I just want to elaborate, perhaps, on one aspect of this just to kind of tie all this together, if I might, and that is this: our core message is that what's really been lacking in the North, besides some of the challenges it has, is the competition such as it is that's existed in the south. And we need to bring that as a very, very high priority. And it shouldn't look really much different or any different than it is in the South in terms of the types of wholesale services.

3510 Having said that, there are additional transitional concerns associated with the potential for Northwestel to engage in anti-competitive conduct associated with affordability issues for Northerners. So things like retail regulation and portable subsidies, if necessary, are tools that can bridge that transition until we get to a better competitive state where those things can fall away.

3511 But fundamentally, the remedy is the same. It's just that you might need other add-ons for a period of time to help through that transition period.

3512 VICE CHAIR SCOTT: Thank you.

3513 I think I can close off my subsidy line of questioning with just one more, since you've raised it. So clearly, you're in favour of a portable subsidy as opposed to a non-portable.

3514 On the issue of a mains-tested subsidy versus a non-mains-tested subsidy, so something more in line with the local service subsidy, could you speak to the relative merits of those two models?

3515 MR. WHITE: Again, I'm going to ask Mr. Cattroll to answer this on behalf of CNOC.

3516 But I did want to clarify something you said, Vice Chair. You know, to say we're in favour, it shouldn't leave the impression that it's our proposed outcome. Our proposed outcome is the adoption of the wholesale access regime from the south in the North. It's one regime for our country, with special provisions to deal with the unique circumstances of the North.

3517 And this is something that the policy direction is very explicit about. Section 10 of the policy direction talks about mandating an aggregated service. And then section 11 talks about a variety of speeds and services as well. It's not territorially specific, the policy direction, in respect of those two mandates. So I think as a matter of law and practice I think the Commission has to be careful not to deviate from the policy direction in the outcome of this proceeding. So.

3518 But on the specific issue of subsidies, we just want it in a way that isn't assigned by default to the incumbent, because that's only going to preserve the status quo. And I think as a general principle, the Commission should avoid setting up a regime that really sort of picks winners and losers.

3519 Our proposal for wholesale access in the North is really no different -- it's no different from, you know, what we have been advocating for years and will be advocating for in the South. And it's as a matter of regulatory oversight, you know, this isn't -- there's no cost to implement our solution. The Commission already has the staff and the expertise to do it. So rather than doing something new and wildly different that will involve lengthy proceedings in the North, we think we've got a solution that, yes, indeed, will take some work, but that can deliver results in the meantime, of course, with the expiration of some subsidy mechanisms.

3520 So Mr. Cattroll, can you help me out on that one?

3521 MR. CATTROLL: For sure.

3522 So Vice-Chair Scott, just to make sure I understood the question, you were asking if we had any views on a means-tested subsidy or essentially where the subsidy should go, who should get the subsidy.

3523 I think when it comes to means-testing the subsidy, we don't have a strong position on that. Our view is really that any sort of subsidy, however the Commission decides it should be designed and where it should go, our view is it needs to be designed in a way that doesn't stifle competition. So we don't have a strong view on whether or not it should be means-tested, and we'll defer to your assessment of the evidence if it's necessary and whether it should be means-tested.

3524 VICE CHAIR SCOTT: Thank you.

3525 Jumping back to wholesale, so you proposed a need for aggregated HSA, but also indicated that Wholesale Connect, the existing service, would continue to be required. Could you give us an example of a scenario where, despite the presence of wholesale HSA, a competitor would need access to Wholesale Connect?

3526 MR. TACIT: Yes, I'd be glad to do that.

3527 So when you have aggregated services, you still need a transport link from the point of interconnection of the incumbent to the point of presence of the competitor. In the south, a lot of those are provided through ethernet connectivity, sometimes through other types of standardized transport services. And there may be other types of services for which transport is needed. So you need to have functional transport links from the North to the south and vice versa, and also within the North. As aggregated as the service can be, you still need to be able to connect it via a link to the actual service providers. And so if you've got service providers appearing in different communities -- and we would expect, actually, that the model in the North could end up looking -- it could end up featuring a lot of community-based and Indigenous group local ISPs. They all need ways of connecting to that Northwestel network.

3528 The other thing, and this was implicit in your question, you know, we want Wholesale Connect. What we want is I think a rapid fix to some of the most difficult problems with Wholesale Connect, but we don't view Wholesale Connect as the right transport remedy longer term.

3529 We think the kind of standardized services like ethernet and wavelength services available in the south -- albeit regulated in the case of Northwestel as the monopoly supplier -- are more appropriate. Wholesale Connect has a whole bunch of inefficiencies. Besides the excessive pricing, it has a whole bunch of technical problems with it. You have to oversubscribe to get the service. You know, the links can often be congested. And you have a situation where although the promise of it, because it's an IP-based service, was to provide diversity in the case of fault, that that really hasn't materialized either.

3530 So we think ultimately the path needs to be to more traditional transport services that the market has developed throughout Canada and the world, in fact, and away from this very unique kind of thing that Northwestel created.

3531 VICE CHAIR SCOTT: Okay. You spoke this morning about your preferred approach to setting rates were a wholesale service to be introduced. We've heard I think three proposals this week, so the cost-based model, a retail-minus model, as well as Telus's proposal for a commercial negotiation backstopped by arbitration. Could you expand on kind of the merits and drawbacks of all three of those models briefly?

3532 MR. WHITE: I'll ask Mr. Tacit to elaborate. But just at the outset, I'd like to observe that the way the Commission sets rates is a live issue as part of the wholesale rate-setting methodology notice of consultation. And so I think what this hearing about the North could have the effect of doing is sort of indirectly influencing the outcome of a live proceeding. It's also having the indirect effect of revisiting the basic service objective. And it indirectly or directly, very directly, might influence the outcome of the 2023-56 proceeding. So I think it's important to be very careful not to take representations here in a way that will influence other files necessarily.

3533 But when it comes to alternative rate-setting methodologies, as we said in the Commission's consultation on how it sets wholesale rates, commercial negotiation is an absolute non-starter from the perspective of stimulating competitive entry and competitive survival. It has been the Hunger Games down south in terms of the landscape base in competitors. I alluded to the fact that we were 30 and now we're 20. And the competitive sector as a whole is on the edge of a massive collapse, and to the point where perhaps a year from now there will be no smaller competitors left. And so I think -- and part of the reason is, notwithstanding some trials and tribulations about what the cost of wholesale access should be, there just hasn't been any ability for smaller players to negotiate fair deals with the larger incumbents.

3534 So we're very concerned about our friends at Telus, their proposal there. I think that's a non-starter. There's simply an inequality of bargaining power, and there's no mandate to deal. And then you get caught up if there is some sort of a negotiation, the Commission process for dealing with that, with baseball-style negotiation, it really favours the larger interests that have more lawyers, et cetera. So we're against that.

3535 In terms of the other two rates, I think I'll turn it over to Mr. Tacit to expand on our views there.

3536 MR. TACIT: I will, and I will also have a few more comments on negotiations as well.

3537 So first of all, I mean, the status quo until the Commission changes it for rate-setting is Phase II cost setting for mandated services. And there's no logical reason why that should change the head of any other wholesale change which we hope won't happen. But there's no logical reason to treat the North any differently in that respect. But I will get to one tiny temporal exception soon.

3538 The advantage of incremental costing approach is that it is based on the actual costs of service delivery. Implicit in the costs, and this is often lost, is there is a cost of capital factor that actually allows the incumbent to recover its cost of capital, and that includes a profit element. On top of that, Phase II right now includes an additional markup which serves in part to cover fixed and common costs and also is an additional contribution to the profitability of the incumbent provider. So properly calibrated, Phase II costing should work.

3539 A lot of the jurisprudence around Phase II costing took time to resolve, but in the litigation that ensued in the past few years, we think a lot of it has been settled. The principles and their application have largely been settled. And it should be not as difficult as it has been in the past to keep applying the methodology.

3540 Retail-minus has a number of drawbacks. First of all, it forces those who obtain wholesale services to mimic the service of the underlying service provider, because if you don't, you have no particular reference for pricing.

3541 It also means that you get seesawed whenever the provider of wholesale services changes its pricing promotionally, seasonally, whatever. You end up getting taken for a ride. And now you have to adjust your retail pricing to the market.

3542 Interestingly, it can actually also set an inflated price floor because the incumbent will be tempted to set a fairly high base retail rate, even knowing that its wholesale customers will end up getting a wholesale service at a discount. Overall, it still pushes the market pricing up. So it can actually run counter to solving affordability problems. And that is a significant concern.

3543 And one of the other things, if we talk about areas of contention, long-term retail-minus pricing is premised on the notion of wholesale rates that are set at a discount to account for avoidable costs of the providing wholesale service as opposed to retail service by the incumbent. But there's seldom any consensus on what those avoidable costs are. And so in that sense, it's, you know, there's still going to be disputes relating to that.

3544 So overall, it is not a good long-term solution. But I do want to include one little caveat, and that is retail-minus pricing can be used in a short-term scenario to kickstart competition while the Commission goes through the exercise of studying the cost studies of incumbents. This has been done successfully in a couple of cable carrier situations with Shaw and Eastlink. And we proposed it in an application that was -- ultimately did not succeed, as a fast-track way of getting access to fibre to the prem facilities in the South. And instead, we now have the 56 proceeding, which is great.

3545 But the point is, if you're worried about a lag in terms of the time it would take for the Commission to process cost studies and approve final rates, the retail-minus certainly could have a role there as a short-term vehicle.

3546 I'll just add a couple of things on the negotiation problem.

3547 You know, there's a temptation to say, Well, you know, this has kind of been used in broadcasting, so what's wrong with using it in telecom? But the incentives and the market power dynamics are very different in the two markets. On the broadcasting side, if you have a BDU that ultimately can't reach agreement with the provider of a particular underlying service, the BDU has other choices. It can go for near substitutes, in some cases, you know, very close substitutes instead. And that provides some discipline in the marketplace. Similarly, if a particular service provider can't reach an agreement with a particular BDU, there are still many others from which -- to which it can connect.

3548 In the scenario we're talking about, we're talking about incumbents who have inherent hostility with wholesale and whose objective is to keep out competitors from negotiating with them. And they have incredible market power.

3549 The other thing is that there's a huge information asymmetry element. If you take one incumbent negotiating with 20, 50, 100 potential wholesale customers, they will glean a tremendous amount of information about how far they can push the envelope based on those multiple negotiations, whereas for a wholesale customer dealing with Bell, all they've got in terms of whether they get access to Bell or not, is that one particular negotiation. So the dynamics are very different. The incentives are very different. The market power balances are very different. It is not the way to go for telecommunication services of any kind.

3550 VICE CHAIR SCOTT: Okay. I'd like to change gears now and speak briefly about the issue of outages, service outages. Could you speak to, in your view, the need for a refund mechanism, the need for increased information sharing and transparency. And could you also speak specifically about how wholesale customers might fit in a refund regime or transparency regime. So where do members like CNOC fit, recognizing that they may not own all the infrastructure responsible for an outage.

3551 MR. WHITE: Happy to. And Mr. Cattroll will elaborate on the points I'm about to make.

3552 But we've provided our views on the general outage reporting regime as proposed by the Commission in multiple rounds, highlighting both our support for the regime but also, you know, our concern that the service-based competitors who may not have control over pieces of the network aren't unduly or unfairly tagged with responsibility. We also highlighted some operational concerns with the regime.

3553 But generally, we think, you know, customers should be refunded for outages, of course. It's a question really of who is the refunder and where the fault lies in terms of those outages.

3554 So Stewart, why don't you take it from there, please.

3555 MR. CATTROLL: Thanks, Geoff.

3556 So Geoff summed up our position quite well there. In the case of the North, we've heard this question throughout the proceeding. And our concern there from the perspective of service-based competitors is that if there's an outage that is the fault of Northwestel, we don't want a situation where service-based competitors are then out-of-pocket required to provide refunds to customers for an event that's beyond their control.

3557 So if the Commission did decide that a refund mechanism of some sort was required, there would have to be a flow-through somehow from the upstream provider, if that's where the fault was for the outage, through the wholesale to the wholesale-based service-based customers so that they're not out-of-pocket for events that are beyond their control.

3558 MR. WHITE: And I'd like to add to that just to say this is another example of how looking specifically at the North sort of interfaces with a number of live proceedings before the Commission right now. But the issue of who's responsible for what in the wholesale scenario can easily be resolved in a simple tariff provision, we suggest.

3559 VICE CHAIR SCOTT: Thank you.

3560 My last question is on the issue of reconciliation and improving relationships between service providers and Indigenous rights holders.

3561 Do you have comments on the role that business organizations such as CNOC could play as well as what the appropriate role for the CRTC would be in enhancing service providers' relationships with Indigenous rights holders?

3562 MR. WHITE: We do and we don't. I'm a privileged White male, and so, you know, it's my duty to learn and to reflect. And I've read the Truth and Reconciliation Report. I've followed the Missing and Murdered Indigenous Women's process. I'm a member of the Law Society of Ontario, and I publicly support the statement of ethics, diversity, and inclusion.

3563 As an association, we strive to help our members to do the right thing. And that includes complying with the Commission's -- the Accessible Canadians Act. And as a federally regulated undertaking, we of course recognize the Government of Canada's commitment to reconciliation. We have Indigenous operators within our association. We look forward to learning more from the Indigenous communities who we've been listening to with open minds and open hearts this week. And we're ready to do the work of learning and reconciliation, absolutely.

3564 MR. TACIT: Just to add to that very briefly, you know, we've heard from a lot of groups in this proceeding how if a wholesale option was available, they might embrace that and start their own ISPs. To me, that's potentially one way to advance reconciliation that could involve both the Commission and organizations like CNOC, which could end up growing their membership through the addition of such Indigenous organizations and communities.

3565 VICE CHAIR SCOTT: Great, thank you very much.

3566 Those are my questions, Madam Chairperson.

3567 THE CHAIRPERSON: Great, thank you so much.

3568 We have a few final questions from Commissioner Anderson and Commissioner Desmond.

3569 COMMISSIONER ANDERSON: Thank you very much for your submissions and your presentation.

3570 My questions relate to the last point you made about reconciliation, and specifically I wanted to get your views on where Indigenous ISPs would fit within your proposed wholesale framework. And so, as you said, you’ve been following the proceeding this week and you’ve heard a lot about intervenors and, in particular, Indigenous intervenors stating that Indigenous groups, Indigenous Nations ought not to be treated as stakeholders but that they are rightsholders by virtue of the UN Declaration on the Rights of Indigenous People, the Truth and Reconciliation Calls to Action as well as section 35 of the Constitution which recognizes and affirms Aboriginal and treaty rights.

3571 So given those views, which form a part of our record, do you think that Indigenous ISPs ought to be treated the same as competitive ISPs if they were to enter into the market that you’ve proposed as competitive ISPs?

3572 MR. WHITE: You know, I think this -- I have to personally acknowledge that this is a blind spot both in my legal -- my understanding as a lawyer, but also my attempted understanding of the subject as someone who wishes to be an ally.

3573 I don’t -- I certainly don’t object and we certainly do not object to the law, which is that Indigenous people are rightsholders. Of course.

3574 We also recognize that the laws of Canada must be interpreted in light of that, and we recognize that we’re fundamentally dealing in a world that is the Telecom Act for the CRTC, but of course, UN -- the UN Declaration.

3575 So I think there’s certainly work to be done there and I want to say we have -- my example of Coextro, I don’t know, frankly, what -- if I may characterize this as an Indigenous ISP, but I know that this was a perfect example of an ISP that uses wholesale access, but actually built facilities to the Chippewas of Georgina Island in a case where an incumbent wouldn’t do it.

3576 So I think from a market-based lens, the interest is there. But are we open to the idea that there’s a special place for Indigenous communities? One hundred percent.

3577 COMMISSIONER ANDERSON: Thank you.

3578 And then I guess in your proposed wholesale framework, if Indigenous communities own a portion of the network infrastructure and say it’s fibre to the premises, would your wholesale framework apply in the event that it’s Indigenous communities or Indigenous entities that own the FTTP assets?

3579 MR. WHITE: I think so. And I don't -- and I hope I don’t say that in a way that’s disrespectful.

3580 And I say so on the basis that we believe, and I think the government believes through its policy direction that consumers benefit from competition and affordability and that consumer interests are served when there is a choice between services providers.

3581 That’s the model we are advocating for. We say that when the competitors can access incumbent networks or the facilities of others that consumers have a choice and that drives competition.

3582 Now, our focus at CNOC has obviously been on the larger network, network operators, and so we really haven’t talked about opening up the smaller networks and there hasn’t been an interest in there.

3583 So could we and should we have an exception? Perhaps, absolutely. It’s not something we’ve given much thought to, but I certainly don’t rule that out.

3584 COMMISSIONER ANDERSON: Thank you. Thank you very much.

3585 THE CHAIRPERSON: Thank you.

3586 Commissioner Desmond?

3587 COMMISSIONER DESMOND: Thank you, and good morning or good afternoon.

3588 I just have two questions. The first is -- relates to paragraph 19 and paragraph 25 of your opening comments, and it relates to your suggestion that we would support regulating Northwestel’s retail rates for a limited timeframe to allow competitors to enter the market and execute. That’s at paragraph 25.

3589 So I’m just curious if you can expand on that interim period of time. I guess once you’ve opened the market and there is a competitor in the region, at what point would the Commission say, “We do not need to regulate retail rates any further”?

3590 Like if there is competition, why wouldn’t the rates then be no further regulated on a retail level.

3591 MR. WHITE: What we tried to express is that retail regulation is a transitional measure and until such point that healthy, sustainable competition is emerging. The Commission’s forbearance test for home phone, I think, could be a model there, but I’ll ask Mr. Tacit to elaborate.

3592 MR. TACIT: Yes, thank you.

3593 So the Commission does have a well-established forbearance test based on economic, which is applied through an economic test lens, and so I think that it is quite possible for the Commission to periodically, after implementing a wholesale model, check in and apply it every so often. And there will become a point at which it’s obvious that it’s appropriate, but it's -- so it’s not so much time based as evidence based, based on the economic scenario that is in place at the time and, you know, is there enough rivalry, is -- you know, are prices falling, are people switching, you know, is there churn. All of these indicators that will tell you when the time is right.

3594 So I can’t answer it in terms of a timeframe, but I can certainly answer it in terms of the types of economic indicators that the Commission ought to take into account in making that determination.

3595 COMMISSIONER DESMOND: And do you see those economic indicators being agile and responsive or is it a process that would take sort of a Notice of Consultation and a full hearing or is it that kind of, region by region, the Commission could be quite agile in determining, okay, we’ve got competition, now we can forbear, for example, in a particular region?

3596 MR. TACIT: Yeah. So I think that the Commission has already indicated in the policy direction requires it to do market monitoring. And in terms of that, it really does just require some monitoring to provide a trigger.

3597 So just like the Commission collects all sorts of data now through the CMR, it could collect this sort of data and I think -- I think the application of a transition could be triggered in one of two ways.

3598 Either Northwestel believes there is enough evidence to unshackle it from retail regulation and it brings a Part 1 application and the Commission will have to deal with that or the Commission, through its monitoring process, believes that some tipping point has been reached and puts out a Notice of Consultation or some sort of letter process.

3599 So it could happen either way, but I think it’s certainly possible for this to be agile. I think it’s certainly possible that it will develop differently in different areas, too. So it may not be this homogenous thing that happens the same way everywhere at once.

3600 COMMISSIONER DESMOND: Just on that point, I think we’ve heard suggestions over the past week that perhaps we need to evaluate the framework from a region-by-region basis. Would you -- do you agree with that approach?

3601 MR. TACIT: I absolutely do. I think -- you know, I think a place like Grise Fiord is very different from Whitehorse or even Iqaluit, you know, and they can’t be treated homogenously.

3602 MR. WHITE: I would like to reiterate and emphasize that the policy directions calls for more monitoring. It’s crucial to understanding the health of this industry and whether or not your Section 7 policy objectives are being met.

3603 But clearly, from my perspective, at least, there’s quite a record in front of you right now of concerns with the status quo and demand, including from Indigenous rightsholders for a wholesale access model. And I hope it is -- the Commission will find that it’s -- the status quo is totally unacceptable in the north and take a bold move to actually hear those rightsholders, hear us as well and give the wholesale approach a try with the transitional measures because the results will be -- you will know if you see entry. The monitoring report picks up entry and market share and you track pricing, et cetera. And we’ve done it in the south and we believe it can be done in the north.

3604 COMMISSIONER DESMOND: Thank you.

3605 And just my second question is around the use of subsidies. You talked about the subsidies being portable.

3606 If a subsidy was portable, do you see any conditions attached to the provision of a subsidy to a particular competitor, conditions vis à vis quality of service, reasonable rates?

3607 MR. TACIT: So in terms of quality of service, a lot of that is driven by the underlying provider of the network, so we have to be a little bit careful if we have a portable subsidy not to penalize other ISPs that are reliant on the infrastructure provider for things that are beyond their control.

3608 If they’re things that are within their control, certainly that is something. There should be some sort of SLA, I suppose, you know, to make sure that some reasonable standard of service is being provided, but it has to be realistic given the infrastructure, given the terrain, given all of the limitations, you know, the weather and so on.

3609 Assuming that that’s all properly taken into account, then yes, ISPs should be held accountable for providing what they promised to deliver, their speeds, the -- and the quality and so on. But it does need to be realistic and it’s important not to decouple, you know, responsibility from the ability to actually deliver as well.

3610 COMMISSIONER DESMOND: Okay. Thank you very much for your responses.

3611 THE CHAIRPERSON: Thank you very much. So maybe I could just ask one final question and then we will turn things back over to you for any concluding remarks or if you’d like to add anything.

3612 Obviously, there’s been a lot of discussion this week, and you’ve mentioned this, about the impact of LEO. We will be hearing from Northwestel next and I’m quite confident that they will make submissions regarding the competitive impact of LEO.

3613 We’ve heard throughout the week problems around reliability. You’ve touched on that. We heard an example from Moose Creek Lodge that, you know, it kind of -- Starlink worked one hour in the morning, two hours in the evening. You know, PIAC said on Tuesday they’re sceptical. We’ve heard that cost is an issue.

3614 You have some figures in your submissions, you know, numbers like $3,100 or close to $3,200 for kind of initial costs, another $635 monthly fee, but we’ve heard from others like the Council of Yukon First Nations that, you know, it's about an $800 initial fee, $140 a month.

3615 I’m just wondering if you could comment a little bit further on the cost.

3616 MR. WHITE: Absolutely. I'll ask my colleague, Mr. Masse, to speak to that.

3617 But you know, to the extent that there’s an error in that number, we’d happily correct it.

3618 But Mr. Masse, why don’t you walk us through the math?

3619 MR. MASSE: Absolutely. What we highlighted in our opening statement with those figures was the optimized version of the service and home equipment that Starlink is offering to the -- to users in the north above that 60-degree area. And while we definitely have heard evidence here in the proceeding and as well as online through support channels, Facebook, Reddit, that the smaller, more affordable system does function, it doesn’t necessarily fully function or completely. As we’ve heard, it may offer some sort of basic intermittent connection, but it isn’t substitutable for wireline connection. And I’ve heard that it’s not even substitutable for a -- the wireless connections that are offered through Northwestel as well.

3620 So we have that range, and unpredictability. And we don’t know which set of devices are going to work better or to see the performance improve because what happens if the basic service over the smaller dish stays the same when the larger, more optimized dish ends up improving, are consumers going to need to buy a second set of -- you know, and do another install with enormous barrier to entry and huge initial outlay. It’s tough to say.

3621 It’s a lot less predictable than, say, wireline wholesale access that would be enabled in the short term.

3622 THE CHAIRPERSON: Okay, thank you.

3623 So maybe at this point, we can turn it back to you for any concluding remarks, anything you’d like to add. You know, I think you’ve been quite clear in terms of your proposed outcome, you know, being wholesale HSA and transport service, but if there’s anything further you’d like to add, we’ll turn it back to you.

3624 Thank you.

3625 MR. WHITE: Thank you very much for your questions and attention today.

3626 I’ll just close by saying how we do telecoms in Canada, I think, really needs to change and there are some early signs that it is changing.

3627 The issue before you is the same issue in the south, but it’s a Canadian issue. It’s -- and a Canadian issue because how we fare relative to other countries is very poor, and it’s embarrassing.

3628 The issue in this proceeding is how do we regulate Northwestel in such a way that it provides service in a way that responds to the economic and social needs of users. And I think it’s quite clear from the parties that you’ve heard that it isn’t and that the current model is broken.

3629 We and others and the Governor in Council -- I’ll retract that.

3630 We and others have said the wholesale model is worth investing in because it will yield results. And the Governor in Council has instructed the Commission, without any territorial caveats, to also encourage it.

3631 So we’d like to leave you with that and wish you well with your questioning of Northwestel.

3632 THE CHAIRPERSON: I feel like everybody at CNOC has that February policy direction sitting right in front of them.

3633 Thank you so much. We really appreciate it. If you were here in Whitehorse with us, we would come around and shake your hands, so we will do that virtually. Thank you again.

3634 MR. WHITE: Thank you.

3635 MS. MOORE: Thank you very much for taking part in the hearing today.

3636 We will take a 15-minute break. We will be back at 10:20.

--- Suspension à 10 h 05

--- Reprise à 10 h 24

3637 THE CHAIRPERSON: Welcome back, everybody. We will proceed with the final presenters of the day. Please introduce yourself, and you have 15 minutes for your presentation. Thank you.

Présentation

3638 MR. SHAW: Thank you, Madam Chair, Commissioners.

3639 It is a great pleasure to appear here today, representing our five-hundred-plus northern employees of Northwestel. Each of us shares a proud commitment to building a more connected North.

3640 My name is Curtis Shaw, and I have the honour of being President of Northwestel. I’d like to introduce those appearing with me here today. On my left is Tammy April, our Vice President of Customer Experience. On my right is Jonathan Daniels, Vice President of Regulatory Law at Bell Canada. While we have our own Northern-based management team, we rely on Jonathan and his team for regulatory support. Jonathan will chair our panel today. Next to Jonathan is Kate Southwell, Senior Legal Counsel, who works with Jonathan on his regulatory team.

3641 I’d like to begin today to acknowledge, as others have, that we are meeting here today on the traditional territories of the Kwanlin Dün First Nation and the Ta’an Kwäch’än Council. We are thankful to live and work on this beautiful land. And we are so proud to be partnering with the Kwanlin Dün’s Development Corporation to build Northwestel’s new corporate headquarters building on Kwanlin Dün land just a few blocks from where we sit here today.

3642 Northwestel has the honour of serving 96 communities across the traditional territories of many First Nations, Métis, and Inuit people. As we seek broader reconciliation, we are committed to moving forward in continued consultation and collaboration with local Indigenous governments and communities.

3643 This week we have heard various responses on how to address affordability, reliability, and competitiveness in Canada’s North, as well as how to best advance on our path to reconciliation.

3644 These questions are being asked in a period of tremendous change in northern telecommunications. In the last few years since the Commission launched these proceedings, we have seen the expansion of high-speed unlimited internet to tens of thousands of northern homes. We have experienced the market entry of Starlink, a well-financed, global, facilities-based provider. And we have seen increasing economic involvement and partnerships by Indigenous development corporations in the telecommunications industry.

3645 I have heard through this week a common desire to continue this rapid pace of progress in the North. I look forward to sharing our thoughts on how we can continue to accelerate private and public sector investments to the benefit of northern communities and consumers.

3646 Madame Chair, as recently as 2019, zero households in Canada’s North met the Commission’s universal service objective, defined as 50/10 unlimited internet. Today, I am proud to report that in the Yukon and Northwest Territories, over four in every five homes now have access to internet that meets, or far exceeds, this standard, with speeds up to five hundred megabits per second. With help from the CRTC’s Broadband Fund, and through Northwestel’s own significant investments, we have brought Canada’s best fibre technology to homes and businesses in twenty-one rural communities. Some communities, like Tulita in the Northwest Territories, have no permanent road access. Despite relying on air travel and hundreds of kilometers of ice roads, they are now connected by the same leading technology that powers Canada’s largest cities.

3647 We are very proud of this achievement. It’s a testament to the power of strong partnerships and a policy framework that encourages investment in upgrading and expanding telecommunications facilities, to the benefit of Northerners. And Madam Chair, these investments continue. Nineteen more communities are set to receive full fibre to the home service this year, with thousands more Northerners gaining access to the fastest unlimited internet in the North.

3648 Further investment and strong partnerships are going to remain vital in the years to come. As far as we have come, many Northerners remain on the wrong side of the digital divide. In our satellite-served communities, high-costs and bandwidth constraints mean tens of thousands of Northerners cannot access reliable Internet that meets the Commission’s objectives. These are fly-in communities with some of the highest costs of living in Canada. They are some of the costliest communities for Northwestel to serve. This past year, we have invested millions of dollars to transition thirty-five communities from the failing Anik F2 satellite to a combination of alternative LEO and geostationary satellites. And we have done so without raising internet rates.

3649 Even in our fibre and hybrid-fibre coaxial (HFC) communities, we know that we must continue to invest to meet emerging global competitors like Starlink. Starlink is competitive right now, and we fully expect Starlink to continue to innovate to bring more capacity and lower rates to Northern Canada. In order to match these innovations, we see investments to bring one-gig speeds and beyond to customers in our fibre and HFC footprints. We also see continued investments in network resiliency and reliability, driven by our need to be nimble and respond to competitive threats and the changing needs of our own customers.

3650 There remain, of course, areas where there is no sustainable business case for the private sector to close the digital divide on its own, and we have put forward to the Commission proposals for targeted public investments. Given the success of the Broadband Fund in the North, we propose that the Commission create an ongoing mechanism to continue the deployment of fibre-based next-generation networks, available to all eligible ISPs. We also propose a mechanism to fund improvements for satellite communities, again available to all ISPs. This funding mechanism will allow northern ISPs to create customer benefits and plan for next-generation satellite technology.

3651 Tammy?

3652 MS. APRIL: Let me speak to the important social issue of affordability. With the rising cost of groceries, travel, fuel, and other necessities, there is no question affordability is a top-of-mind issue in the North. Due to the North’s long distances, remoteness, and very low population density, things cost more in the North.

3653 This is a systemic social issue that goes far beyond telecommunications. In the last ten years, Canada’s overall cost of living has increased 26 percent. In that same period, Northwestel’s residential retail Internet rates have not risen, and in many cases have decreased. Since the COVID-19 pandemic, we have taken significant action to reduce rates on our most popular plans and add new value like unlimited internet to our customer products, all while ensuring our rates meet the regulatory standard of being just and reasonable.

3654 Madam Chair, we know we all need to work together to address the issue in the North. And we know that each of us has a role to play in addressing this significant issue, particularly when it comes to low-income households. We’ve listened to our partners this week, and I would like to announce today that Northwestel intends to join Canada’s Connecting Families program, subject to Commission approval, of course. If the Commission decides to take further steps to address affordability in the North as a policy matter, we think the most efficient way to do so would be a funding mechanism for mandated reductions to regulated retail rates, which we would pass on dollar-for-dollar to consumers.

3655 Let me take a moment to speak about the early impact of direct-to-customer LEO satellites to the North. It is clear that real facilities-based competition has emerged. It has been six months since the Starlink service has been available in the Northern Territories, and they are already having an impact on consumer behaviour and on Northwestel’s operations. We have taken significant action to ensure that our products can remain competitive to Starlink’s unlimited offerings at national rates. This includes introducing higher speed plans and reducing rates on all our unlimited plans. This has been facilitated by the Commission-granted flexibility to make customer-friendly adjustments to internet speeds and rates without lengthy cost studies. We have already used that flexibility to introduce a new, affordable, entry-level fibre internet plan and drop rates on our highest-speed packages.

3656 Real, facilities-based competition is already putting pressure on Northwestel revenues. It is also increasing the urgency of targeted investments to ensure our network and our customer service operations keep up with the continued growth of Starlink. Starlink sets its rates on a country-wide basis, but our rates are tied to the high costs of serving the Far North. Starlink is nimble in its promotions, just this year introducing a special promotion that cuts its hardware fees in half country-wide.

3657 By contrast, Northwestel, even with more flexibility, remains the most highly regulated internet service provider in Canada. We appreciate the Commission’s flexibility to allow our northern-based Canadian company to compete against an emerging well-financed international player on an open playing field while delivering value to our customers.

3658 On the question of reliability, we recognize when fibre cuts and significant outages occur, these have a major impact on customers and businesses in the North. This is why Northwestel has taken significant steps to build a more robust network. And that’s why we prioritize effective communication to our customers and government partners. When service issues occur, we have over one-hundred-and-seventy trained Northern technicians to help resolve them.

3659 We know there are remote low-population communities where service issues can take longer than anyone would like to resolve, including me. Often our technical teams have to manage availability of charter flights and accommodation, as well as weather conditions, worker safety, and the availability of equipment. We know there are national processes going forward to look at outage procedures, and we look forward to participating in those proceedings.

3660 Commissioners, we know the path to greater reliability runs through continued investment. We know that the upgrade from legacy copper services to fibre in terrestrial communities will significantly reduce last-mile degradation and service issues. We have implemented several redundant fibre paths to protect against the inevitable cuts in remote areas. And we are working with the Yukon Government to connect the longest remaining strands of single-line fibre via the Dempster Highway. As Curtis described earlier, we invested significantly to upgrade and diversify our satellite broadband delivery to protect service as a major satellite degraded.

3661 Investing in resiliency does not bring added revenue, and there are some sections of our network where the long distances and remoteness make adding full redundancy uneconomical for us to achieve alone. This is why we have put forward a funding proposal for the Great Slave Lake fibre line, to bring redundancy and resiliency to all the communities surrounding the Great Slave Lake in the Northwest Territories, including the North’s second largest city of Yellowknife. Such redundancy would offer protection to the majority of the territory's residents, businesses, and the overall financial wellbeing of the Territory.

3662 Curtis?

3663 MR. SHAW: There has been discussion this week about attempting to stimulate additional competition through wholesale high-speed internet access, an approach that does nothing to address the real needs for continued investment in the North. It’s an approach that is thoroughly unnecessary as we compete against a global ISP, with more LEO providers launching soon. A reseller would not be able to offer faster internet speeds than currently exist. It would not be able to deliver better quality and reliability. It would not be able to expand high-speed internet access to a single new household or advance infrastructure repairs. Instead, a reseller will have a negative impact on our continued ability to invest in and expand service.

3664 The wholesale HSA model was developed to serve high-density locations in Southern Canada. It is not appropriate for an operating area with lower population density than the Sahara Desert, spanning across multiple territories and provinces. We still have retail rate regulation in the North and we have global facilities-based competitors entering the market. Given these developments, we believe that mandating wholesale access is at best unnecessary and at worst destructive to the expansion of facilities in the North.

3665 The Commission has asked some really important questions about the relationship between Indigenous governments and the Crown that we will respectfully leave to others to answer. Our focus as a service provider is on fostering deeper relationships over the long-term with the Indigenous governments across the ninety-six communities we exist to serve.

3666 Canada’s Truth and Reconciliation Commission has put forward very specific calls to action for businesses in Canada. This is the foundation of Northwestel’s detailed reconciliation plan, with measurable targets, developed following consultation with rights-holders across the North. Our plan focusses on the Commission’s calls for meaningful consultation with Indigenous governments, equitable employment opportunities, and employee education and training on the history, culture and governance of the North’s Indigenous people.

3667 This plan is overseen internally by Northwestel’s Community Advisory Board, which includes Indigenous representation from our three territories. We have published our plan publicly as a first step to further dialogue with Indigenous governments and communities on how to make it better. There is no question much work is left to be done, but we have made an important start.

3668 In our consultations with Indigenous governments, many expressed that improved internet service was a good start, but Indigenous people also want to play a role economically in northern telecommunications. This was the impetus for the Yukon’s Shared Pathways Network, where thirteen First Nations purchased our in-community fibre, leasing it back to Northwestel for guaranteed community benefit over the next twenty years. Similarly, in the Northwest Territories, Northwestel is now delivering full fibre to the home service with the help of the Whatì Fibre Line, built by the Tłı̨chǫ Government and leased by Northwestel with guaranteed community benefit over the coming decades.

3669 In Northern British Columbia, we have clearly heard from the Taku River Tlingit First Nation and their frustration that jurisdictional issues were getting in the way of real service improvements. Madam Chair, we have worked in partnership with the TRTFN and with Telus on a collaborative approach to improve connectivity in the Atlin region, with funding from both companies. As part of this approach, Northwestel will apply to become the ILEC and provide service in Atlin. Northwestel and TRTFN have been collaborating on solutions to improve internet and wireless access in the region, and we will pursue these with urgency.

3670 These important partnerships are only a start. We know there is much more work to do on the long path of reconciliation across the North. We appreciate every opportunity to build closer ties to the customers and communities we exist to serve.

3671 Thank you. Merci. Shäw Nithän. Gunalchish. Massi Cho.

3672 THE CHAIRPERSON: Thank you very much for your opening remarks this morning, for your submissions throughout the proceeding, and also for being here with us today.

3673 I will start with the questioning for the CRTC, and then I will turn it over to my fellow Commissioners to drill down on our four areas of focus, which you’re very familiar with, you’ve spoken about -- so, affordability, competition, reliability, and reconciliation.

3674 So, maybe we can start with access and reliability, perhaps where you just ended your opening remarks, and you just spoke about Atlin. So, you heard on Wednesday what we had heard from the Taku River Tlingit First Nation about their situation -- no broadband, no DSL, no cell service, no 9-1-1, no 9-8-8, and the impact that that has on community members, including students and their education, and safety concerns. So, we understand and hear you in terms of the agreement in principle that you have, but could you talk to us about the timing of when the community will start to see a change?

3675 MR. DANIELS: Thank you, Commissioner -- Chair.

3676 Let me -- let me just start. I’m going to hand off, and Curtis will give you sort of a rundown. The one thing I just wanted to sort of set out in terms of -- because there’s been discussion and references to it -- but just to explain the situation as to what it is today, and then Curtis can tell you about what we’ve been doing, and now the recent agreement with Telus.

3677 So, the situation today. Atlin is a community in Northern B.C. where Telus, as everyone knows, is the ILEC. It has just copper equipment there reaching the homes that it serves. Northwestel owns the microwave fibre that runs from our network into Atlin. So, we’re just the backbone provider. We have a transport into that community. And on that transport, from that we have in a couple of cases for a couple of customers -- business customers such as you heard reference to -- the First Nation itself came to us and asked, could we build fibre? We built fibre to their actual office, connecting it back to our microwave facilities, but we haven’t been the provider there. And so, I’d just -- that’s sort of the -- the setup that -- while we’re -- we’re the transport provider and we’ve been selling services to Telus primarily; it’s our main client there -- that that’s sort of the situation today, but we haven’t been the service provider in the community other than a couple of exceptions.

3678 So, with that background, I’ll turn it over to Curtis, who can talk about what we have been working on before the Telus deal and then as a result of the agreement with Telus. Thank you.

3679 MR. SHAW: The work over the next little while -- maybe we’ll back up. We’ve been working with TRTFN for a couple of years. It started a number of years ago or a couple of years ago, as Jonathan mentioned, in selling internet to the -- their First Nation office -- administration office for better connectivity. In the background, we’ve been working to bring fibre to the community. We serve the community by microwave transport today. We want to bring it with -- upgrade that microwave facility to fibre. A couple of months ago, we applied to the B.C. Government to run fibre to Atlin and replace that microwave facility.

3680 The other thing we’ve been doing here in the last couple of months is facilitating a discussion between TRTFN and Bell Mobility, and they are working on an agreement to put a cell site in Atlin. So, some of these activities were well underway before the announcement of this week. In terms of moving the customers of Atlin on to Northwestel’s network, we just talked to our engineering team about this yesterday. There is some work to be done. We want to make sure the work that we do has no customer disruption, and we’re going to work that in parallel with any other upgrades we’re doing in the community, whether it’s fibre transport access, fibre funding applications, or construction of the cell site.

3681 MR. DANIELS: So, just to be clear, from our perspective, we have to -- you’ve heard reference to Telus yesterday laying out the time for an agreement that we’ll work on -- on an agreement, but that’s not going to stop us from turning around right now and working with -- with TRTFN to actually apply to get fibre to the home. So, we can do both in parallel. It may take us time to move all the customers over, I think is what we’re saying because it’s complicated and there’s things -- we don’t know what we’re going to encounter on that aspect, but that’s not going to stop us from working right now to do the timelines and -- and we’re going to look at coming to a couple of different funding agencies, and potentially the CRTC.

3682 THE CHAIRPERSON: Okay, great, thank you. And maybe you could just provide a little bit more detail in terms of the legal agreement itself and the timing -- the transfer, and then the next steps after that.

3683 MR. DANIELS: Yeah, we heard Telus say yesterday that they were aiming for the end of May. I reached out to our team to -- back at Bell, who has actually helped coordinating the -- this nature of these types of agreements, and we think that doing an agreement by the end of May is possible. The key thing is actually going to be over the next month, as we find out what kind of transition we need, and services. Because if we -- if we buy it from Telus, we’re not ready on day one to take over the asset itself; right? It's -- it’s -- and we don’t even know -- we haven’t done the due diligence to find out what’s in it. So, I have a feeling we’ll probably have an agreement, probably -- not that we’ve discussed this with Telus, but I suspect they made reference to it, it -- logically that there be a transition period, that they provide the services to Northwestel over that -- over a period of time. And that we would have -- so that we’d have time to move people from Telus’s network to our network in a way that’s seamless to the customer. That would just obviously be for voice. As to how quickly we could get funding and then look at, you know, construction -- that’s really dependent on how successful we are in terms of our various different applications that we’re going to have to look at for both bringing fibre into the community as the transport, and separately, fibre in the community itself for fibre to the home.

3684 THE CHAIRPERSON: Okay, thank you. And Telus did agree to provide an update to us as part of the final submissions, by June 9^th. So, will you be doing the same?

3685 MR. DANIELS: Absolutely.

3686 (Engagement)

3687 THE CHAIRPERSON: Okay, great. So, thank you.

3688 So, staying with reliability, you’ve heard a lot this week -- we’ve heard a lot this work in terms of issues around service, access, reliability beyond the what I would call unique circumstances of Atlin. We’ve heard very serious concerns. You’ve heard them as well -- unreliable networks, months to hook up; you know, months to repair. And then again, the very serious impact that that has had. We heard, you know, children not being able to access education for one, two, three years. Very serious safety issues that were expressed. Impacts on business. And the list goes on.

3689 Could you respond to that?

3690 MR. DANIELS: Yeah. I’m going to ask Tammy to.

3691 MS. APRIL: Thank you.

3692 I think we are very proud to have connected twenty-six-thousand homes across the North to unlimited high-speed internet, and we continue to do so with -- in the third year of our Broadband Fund rollout. What that means is by the end of this year, over 94 percent of our Yukon and Northwest Territories terrestrial communities will have access -- terrestrial customers will have access to 50/10 high-speed reliable modern network infrastructure. We know because we've seen the results ourselves through our rollouts that this is a far more reliable and dependable network, and this is where we need to look to ensure that all customers across the North are able to achieve the Basic Service Objective. And to that end, we have some proposals in our interventions around how to ensure that the law remaining customers are also able to access this.

3693 Additionally, we carefully look at our outage reports on a regular basis. When we look at individual trouble tickets, we have -- our external service desk is the first point of contact for our customers. So they talk to the customers, they try to diagnose the calls, and about -- certainly the majority of calls that come in through the external service desk are able to be resolved through that phone call.

3694 We call that first-call resolution. We monitor it closely and we continue to invest in training for our front line as well as additional tools for them so that more things can be repaired over the phone. That's also where modern networks come in. With fibre-to-the-home there's more opportunity for remote fixes.

3695 Our second line of defence are the technicians. As I said, we have over 170 scattered across the three territories and they work hard and diligently to ensure that their friends and neighbours are getting repairs as quickly as possible.

3696 We are occasionally at the mercy of weather, of transportation, of technicians who fall ill or resign, and all of these can cause delays. We do, however, watch carefully and try to balance out availability of technicians and manage trips into locations where we don't have technicians to ensure that people are being served as quickly as possible.

3697 Do we do it right every time? Absolutely not. And it's hard to hear the submissions, but it's important, just as it's hard to read any escalations when there are complaints to the CRTC or CCTS. When customers are escalating internally, they're crossing my desk, they're crossing Curtis' desk. We understand and we evaluate our operations to make sure that we're closing any gaps that these things may have fallen into and ensuring that our response times are as robust as possible.

3698 MR. SHAW: I would just maybe add one component to what Tammy is talking about on the service side.

3699 One of the challenges we've had with reliability as a company over the last decade, our communities are connected with single fibre connections and so we've had instances in Whitehorse where there's a landslide, a forest fire or road construction activity that severs the fibre cable and we have technicians that have to drive 700-800 kilometres to fix that, fly in a helicopter.

3700 There are a couple of projects that I can talk about that are going to dramatically improve resiliency in the North.

3701 The first one is the Dempster Highway fibre. It's being run by the Yukon Government. They are going to own it. We are a funding partner with the Government of Canada. That is an $80-million project connecting Dawson City to Inuvik. And what that means is we are going to have a ring that will have reliability or redundancy in both the Northwest Territories and the Yukon. So if any part of that ring is impacted by a forest fire or landslide, the traffic will go in the other direction. So that's a major reliability activity that we have been working on for five or six years now and it's expected to be completed next year.

3702 The other one we talked about in our opening statement is the Great Slave Lake fibre. Yellowknife two summers ago was the subject of vandalism, three vandalism acts in one summer. It cripples the economy when fibre gets cut. Airlines are impacted, banks are impacted, ATM machines are impacted and it's a major issue. I know the Government of the Northwest Territories has said repeatedly that this is a major priority for them, is to build fibre across the lake, form a ring in the Yellowknife area.

3703 MR. DANIELS: This is something coming back to what can the CRTC do. Our actual request is to fund us in partnership and we will put some money in, as you can see from our proposal, for the Great Slave Lake fibre. It's something that would make an immense difference to the North, we believe, and it's something the CRTC can do.

3704 THE CHAIRPERSON: Thank you very much for your responses.

3705 I hear you on the submissions being hard to hear. I think they are hard to hear on many levels, hard to hear as the telecom regulator that it's taking months, which is what we heard. And, you know, I guess in terms of the months to hook up, the months to repair, are you following up on what you've heard this week?

3706 MS. APRIL: Where we have the details, we absolutely are. In fact, some of my team members are here today and they can certainly tell you that they've been peppered with emails and questions.

3707 As I said, we do monitor our time to repair and certainly months are not our standard. Last year we rolled 25,000 trucks and, you know, we have heard a handful of stories and they're not good, it's not acceptable, but it is the margin. We do pride ourselves on being there when customers need us and doing the very best that we can to resolve customer issues as quickly as possible.

3708 THE CHAIRPERSON: Okay, thank you.

3709 So sticking with that same theme of network improvement and you have touched on this. With respect to network improvement plans, you are completing your three-year plan. You've submitted that you have plans for significant network improvements over the next five years. You've said that a CRTC-mandated plan is not necessary.

3710 We've heard from others such as PIAC that we should be mandating a plan and my question is: If you're doing this anyway, why shouldn't the CRTC mandate it?

3711 MR. SHAW: So starting with the pandemic, we leaned into our capital investment and I think we've shown on the record that our capital investment has increased over the last number of years and it's largely due to competitive forces and with Starlink's entry.

3712 We have major projects underway over the next few years to bring 1 gig to the home. Across our fibre footprints, our HFC footprints, we're spending upwards of half of our capital on network resiliency and reliability projects and there's continued investment to reduce our copper footprint and push fibre more into our network.

3713 So from my perspective, we're being pushed right now by consumer needs, by community needs and competitive forces to accelerate our capital spending.

3714 MR. DANIELS: I think one other thing I would just add on that is it's also without -- not to have the -- the ability to have the flexibility to respond without having to come to a regulator to talk about that issue.

3715 I'm thinking specifically like we had a crisis last year, as you may know, about satellite, which made us change a bunch of things, and if we had a network improvement plan, we would have to go to you, ask for permission. Like it seems unnecessary, considering the amount and the extension that you've had of service in the North in the last few years has all been without an official network improvement plan.

3716 THE CHAIRPERSON: Okay, thank you for that.

3717 We have heard, and you have heard, this week communities talking about the need for meaningful investments. We heard an intervenor ask, you know, when will Northwestel make meaningful investments in the Northern Rockies. Other parties have asked how they could get transparency around upcoming investments, timing, et cetera, and I was wondering if you could speak to that.

3718 MR. SHAW: So in Northern B.C. specifically, we've been challenged with funding proposals in Northern B.C. We made one application to the CRTC Broadband Fund to replace a microwave link that runs from Watson Lake in South Yukon to a location called Dease Lake. It's a microwave transport system today. We made that application a couple of years ago.

3719 That's one key investment that would enable faster backbone capacity into the region. But we've struggled with the business case. I know the team has looked at it. We were planning on applying to the CRTC Broadband Fund and, frankly, the rules of the Broadband Fund, our application would not have been accepted. The networks weren't sustainable and in some cases we couldn't make a business case with 100 percent capital contribution. And that's just the nature of some of the high-cost serving areas we serve.

3720 One of the things we have as an aspirational goal for the company is I would like to see every customer in the North in our operating area have at least 50/10. We're not there in Northern B.C. yet. We're not there in Nunavut.

3721 We've got pockets. We've got -- 20 minutes from the Kwanlin Dün Cultural Centre we've got customers on Fibe and ADSL today. And for whatever reason they may be not included in the Broadband Fund, there wasn't a hexagon, they weren't eligible to be bid on. Those are investments that we're going to need to make over the next few years, getting customers off DSL on a more modern technology like fibre-to-the-home.

3722 MR. DANIELS: Sorry, if I could just jump in to just sort of explain.

3723 When Curtis says -- and I appreciate that especially some of you are new, but even so -- how the Broadband Fund works in terms of well, can't you just ask for more subsidy, the way the Broadband Fund works is that you have to apply and you have to show that you -- one of the key criteria is that if we give you the capital, and it's only capital that's eligible to build it, that you can actually cover your costs of operating it over the life of whatever period is being applied. It's a logical statement, right? "We're subsidizing the capital and we want to make sure you can run it." It's a key criteria.

3724 And I think we have done that with all of our communities where we could and I think the issue in B.C. is that the communities -- and Atlin is different because it's larger -- that the other communities are so small that even getting 100 percent of the capital in of itself would not have been able to -- like we couldn't prove to you that we could cover our operating cost. There's not enough revenue there from it.

3725 So that's why we're saying there might be a need for other looking, you know, and that's something we will be talking to you more about, Northwestel and others, in the Broadband Fund proceeding that you have coming up this summer in terms of how to design the fund.

3726 So I'm not trying to be -- suggestions at all about critical or whatever. All I'm saying, I just wanted to explain that comment from Curtis, what's the problem with B.C. Capital isn't enough with really, really small communities.

3727 THE CHAIRPERSON: Okay, thank you.

3728 Maybe I will leave the issues around quality and reliability. I know Commissioner Naidoo will have some questions on outages as well.

3729 Perhaps I can move into affordability, and you have announced this morning that you will be taking part in Connecting Families. I will leave that with Vice Chair Scott, who I think will have some questions around timing, scope and how that would work.

3730 We have heard every day about overage fees and we've heard them being called by more than one intervenor, they've been called usurious. PIAC has told us that overages are seemingly a significant cause of the affordability issues we've been hearing about. And, you know, we've heard $700 in overage fees, $800; $1,800 was a number that was given yesterday by IRP, I believe.

3731 You said in your October submission that overage fees are necessary -- that's the word that you used -- and that they're a widely used tool. You also said that fewer customers are paying overage fees and you expect that number to continue to decrease.

3732 You gave some numbers in terms of a forecast of how many customers would have access to unlimited plans. And maybe just as a point of clarification, I saw the 94.3 percent number for 2023, but I also think it said for 2025. But I think it's 2023? Yeah.

3733 So you've said that 94.3 percent by the end of 2023, I think, will be able to avoid the overage charges unless they choose to have a capped package. Again, we've heard this week, access does not equal affordability. So the fact that customers would have access to these plans, they may not be able to afford these plans, leaving them subject to these overage fees that we've heard about.

3734 So it may be and what we've heard is that these overage fees may be hitting the most vulnerable customers, if I can put it that way, the hardest. So I'm wondering if you could respond to that.

3735 MS. APRIL: Thank you.

3736 As you've stated, our focus has been on building out fibre and ensuring that people have access to unlimited plans, and I would like to explain why that's important, not just having access to it.

3737 When we look at our subscriber numbers in communities where we've built fibre-to-the-home, we have about a 75 percent migration rate overall right now. Of that 75 percent who have moved to fibre, 75 percent have chosen to take unlimited plans. Of the remainder, you know, single-digit number, less than 5 percent are experiencing overage fees. So we do know that access to unlimited plans allows people to make a choice.

3738 For people who are on DSL or our fibre or cable capped plans, we take our internet code of conduct obligations very seriously. When you call in to subscribe to a capped plan, our procedures are very clear. Our CSRs will work with you to explain the notification process and enrol you in notifications. Again, very few customers are not enrolled in notifications. For those that aren't, we monitor their usage and make telephone calls to them to let them know that they should be watching their internet, that they are at risk of an overage.

3739 Furthermore, when we look at overage charges, we did say they were necessary. The reason we said it is necessary is because of the realities of our network. We have, you know, I would say two substantive groups of customers who are subject to capped plans without unlimited options available to them. The one group are customers in our satellite communities and, as you heard from other intervenors, the capacity is just not there today.

3740 So we use overage plans as a way of ensuring that the network doesn't become overly congested. We don't have a way to increase the transport capacity and we know -- you know, whenever we increase caps, we do it very judiciously and we do often see congestion happening in the network, which degrades quality for customers.

3741 For DSL customers, the difference is really almost the opposite. Often we have sufficient transport capacity, but the DSL network, the gear itself was engineered at a very different time, when data usage was far lower than it is today, and the network elements that give our customers DSL are not equipped to handle the level of data that would be required in order to allow customers unlimited usage.

3742 So again, where we can we are increasing caps because we know that it is a very real concern. But we also know that when we reduce caps, such as when we eliminated overage charges in our HFC plans during the pandemic, we do see an incredible spike in data utilisation.

3743 So the data caps are there for a very important reason. They prevent the tragedy of the commons. They ensure that there is a quality level of network access available in those communities. And that is also why it is so important that we focus on ensuring that people have access to higher-quality modern network technology and that's why we've put proposals forward to ensure that those who currently don't have access to the universal service objective are able to get it.

3744 MR. DANIELS: And so, I would just say there. I don't know if you -- we can wait because I suspect we are getting some questions about subsidy and how that would work.

3745 But I think the point that I just wanted to tie it back to from what Tammy had just said, our proposals around subsidy have to take into account, in a manner that doesn't undermine the limited network in the areas where we work, because we can't stimulate -- this is awful to say but it's the reality -- we can't stimulate demand by lowering rates if the network is not capable of handling it. And that's not an issue in fibre, but it's an issue in DSL and it's an issue in satellite.

3746 So again, we're happy to talk about how our subsidy proposals would work with that, but I don't want to get ahead of where you want to go, so I will stop there and leave that to you.

3747 THE CHAIRPERSON: Okay, thank you. And yes, Vice Chair Scott will have some questions on subsidy.

3748 Just to follow up on one point about compliance with the internet code. We have heard this week that there have been a lot of challenges in terms of accessing and figuring out how to access where customers are at with the overage fees. Could you comment on that?

3749 MS. APRIL: Certainly. There are a number of areas that people can access it.

3750 First, when you subscribe to a capped plan, part of the information that is sent to you for your reference over time is the type of notifications that happen, the type of overage charges you're subject to and how you can access information.

3751 The second tier, which is probably the easiest to use, is an email. So we have automatic emails set up so that as you start getting close to your data threshold, whether that's -- I think it starts at 75 percent and continues from there, with multiple notifications over time letting you know that you're approaching your data cap. And those continue even once you've passed your data cap. So we continue to send messages at 110-120 percent to ensure that people are aware of what is happening.

3752 We also have a tool on our website so that you can go in and not only see how much usage you have but you can look at it by hour and by day so that, you know, if you're surprised, you know, you have a 75 percent or 90 percent reminder and you go, "Oh my goodness, how did that happen", you can look at the daily usage indicator and go, "Oh, it happened on Saturday. My kid was over visiting. They had friends over. Were you guys streaming high-quality -- high-resolution video and you left YouTube just running and running and running?" You know, like how did that happen, how can we prevent it in the future?

3753 Additionally we have a site on our webpage specific to usage and how to deal with usage caps. So it includes things like ensuring you have a password on your WiFi network, which is important of course for privacy reasons but also because you don't want your neighbour using your internet and leveraging your usage. It includes things like how to reduce data resolution on a lot of the streaming services. So we have a lot of useful information. It's highlighted by categories that you can drill down into the ones that you feel might pertain to you. So not only do we give notifications but we try hard to educate customers on things they might do.

3754 And then finally we have our contact centres. So if there are ever any questions about usage or, you know, "Hey, I got this email, it says something about 75 percent usage, what does that mean, what do I do", our CSRs are all well versed with the tools that customers have at their disposal to help manage their usage and they're there and ready and willing to help customers to understand and walk them through if it's a little more technically challenging for a customer, to help them understand what it is they need to do or where they can access the information.

3755 THE CHAIRPERSON: Okay, thank you.

3756 We've heard that overage fees should be eliminated and our very first intervenor this week, the Council of Yukon First Nations, said that there is no justification for them. I've heard you just now talk about network capability. Could they be eliminated and what would the impact be on Northwestel?

3757 MR. SHAW: I'll speak more to the network upgrades required.

3758 We've looked at this. We looked at this during the pandemic and we reduced -- or we eliminated overage charges in our major HFC communities, Whitehorse, Yellowknife, during the pandemic, the early days before unlimited was approved in our tariffs. And then we doubled caps in many communities and increased caps in many of our communities, and we saw congestion.

3759 The challenge we have is some of our DSL infrastructure is now approaching 15 or 20 years old and there's middle-mile components coming out of our DSLAMs, coming out of aggregation equipment. There's a fixed speed pipe coming back to Whitehorse, even if it's on fibre. Right now I don't think we would have technology in the environment that we could swap out ADSL equipment that was put in 15 or 20 years ago with new ADSL equipment to facilitate this.

3760 If they're just -- if overage charges were just eliminated tomorrow, I do believe in a number of communities we would see a pretty significant degradation of service. And satellite is completely out of the question. Satellite, the network would stop working in an unlimited situation, given the capacity we have from our satellite providers.

3761 THE CHAIRPERSON: Okay, thank you.

3762 Maybe I could just ask one further question on this and we can leave affordability and subsidies to our Vice Chair.

3763 We've heard about people getting cut off from their service because they can't pay overage fees and I'm wondering if you can comment on that.

3764 MS. APRIL: Obviously, cutting off a customer is not something that we enjoy doing. We work with customers. Not only do we have the usage notifications to try to ensure that customers are able to manage their Internet usage effectively when they're on capped plans, but we also have very flexible payment arrangements. We work with our customers one on one to see what's affordable for them when they do run into a situation where they have, you know, a large usage charge. So we work with them to ensure that there are payment arrangements that they feel comfortable with. If they're not meeting their payment arrangements, we have, you know, a collection process to remind them, to let them know. Suspension or disconnection, especially, of service is very much a last-case scenario.

3765 During the pandemic, we realized how important Internet was to our customers. And because of that, we actually loosened the length of time and the steps to get to suspension so that customers would have more time to try to deal with an unexpected overage charge without having an impact on their Internet.

3766 MR. DANIELS: If I could just jump in and take us back a second, I just -- I'm sitting here. If I was in your shoes, I'd be wondering about, well, what about you mentioned if there's a limitation, like something like the DSLAMs, can you just buy a new piece of equipment? Like why don't you modernize your network and buy a new piece of equipment?

3767 And I know back behind me there's some engineers who are back with Northwestel who are saying, Explain to them that no one's selling, you know, DSLAMs anymore. We tried to buy one and it got manufacturer discontinued.

3768 Whether you could find one or not find one, the key point is if you're going to invest, there's no telco today who's investing to buy DSLAMs that I can think of in new locations. All investment, if you're going to invest, you're going to want to replace it with fibre.

3769 So I just -- I wanted to close that gap because I think it's a logical question if I were you sitting at the other end. I'd have in my mind, Well, wait a minute, does this mean you're not investing if you're telling me that the capacity of a piece of equipment -- go buy a piece of equipment. And that's just -- I don't think, you know, practically, it's hard to find, if it exists at all. And but even if you could, no one is going to put money into -- that's not what you do. You want to invest to build long-term solutions with fibre, which is where our focus is.

3770 THE CHAIRPERSON: Okay, thank you for that.

3771 So let me just very quickly touch on competition in really just one aspect. So you've talked about the impact of LEO, and you've said that competition will intensify.

3772 At the same time again we've heard this week that the initial hardware costs are very high. We heard this morning from CNOC even higher numbers than we had previously heard that were 800 versus I think over 3,000 this morning. We've heard that that would be a barrier to many consumers.

3773 We've heard from other parties that we need to be cautious. PIAC on Tuesday used the word skeptical. You know, we've heard words like uncertain. We've heard about the problems with Starlink this week. So the Moose Creek Lodge example, where it only works one hour in the morning, two hours in the evening, and that's it.

3774 And we heard from CNOC this morning that it would be "a huge evidentiary leap of faith to rely on LEO as a competitive option." (as read)

3775 So I'm wondering if you can comment on that.

3776 MR. DANIELS: So I'm going to have Tammy start to talk to you about the reality of how we're facing it and what we're doing as a result. And then I'm going to come back, if you don't mind, and give you sort of the regulatory take on this.

3777 MS. APRIL: So we certainly have seen an impact from LEO. And as we've indicated in various submissions, and as our customers have seen in our behaviour, we've taken specific steps to try to be more competitive to what we see and our feeling as a very real competitive threat in our market.

3778 We have reduced our price, as I've said, on some of our highest priced plans, some of our -- and all of our unlimited plans. So if you look at our top-tier package today versus back in 2021, our customers are not only paying $30 less per month, but they would be receiving twice the speed that they were in December of 2021. So we have done, you know, undertaken a very concerted effort to reduce our price points.

3779 As I mentioned in my opening statement, we also developed an affordable entry level plan on March 1st. We rolled out a 15-meg package with the same cap and a lower price than our previous 10-meg package for HFC and fibre customers. And we've been doing this to make sure that we continue to be a viable competitor in this market to Starlink.

3780 Again, as I said in my opening statements, we definitely are feeling a very real impact. We have customers clearly telling us, I am disconnecting my service because I am moving to Starlink.

3781 Beyond that, we are looking at our trends of Internet customers, and we are seeing very real declines, you know, certainly in some markets more than others. The customers are seeing this as a viable option. LEO has only been here for six months, and we are already seeing it.

3782 We also know that this is a very nascent industry, so we continue to see Starlink being nimble in terms of price points. They just launched a hardware discount recently. They've introduced different types of plans. So we believe -- we also know that they're launching more satellites, which does improve their quality. So they're at the very early stages of, you know, what they have indicated and we believe to be an ongoing evolution to improve their quality of service as well.

3783 And I would also state that to my knowledge none of our customers who have moved to Starlink have come back. So while I certainly, you know, understand some people may be having service challenges with them, they haven't been enough to leave and return to a different service provider, at least, again, as far as I am aware.

3784 When we look at the LEO space, as well, we know that Starlink is not the last entrant that we would see. Amazon has clearly indicated that they're bringing out Project Kuiper, and they expect to be launching within the next year. We don't know what sort of plans or service or quality that they will have, but that is another entrant into what could be a very competitive LEO space that would be, you know, very much looking to our base to try to serve them.

3785 MR. DANIELS: So I was just going to say before I get into my regulatory, just point out from, you know, I know I've been living this because I keep getting calls from these people saying, I need to respond. What do I need to do? We've got a crisis which led us to do the application to the CRTC where you gave us some pricing flexibility, which is much appreciated, in order to respond to the market.

3786 So I can tell you from all of the discussions, the focus at Northwestel has been about how to compete and respond to Starlink. And but Starlink is not paying attention to us. That's the irony; right? They're not paying attention to us. They're not at this hearing.

3787 They came out. They price on a national basis, so they price their service. They have -- they came out -- I think Tammy referred to I think it's 50 per cent, like $350 right now instead of the regular almost $700 to have an installation. And this is just -- they're still in the initial stages. We're expecting a lot more from them. We obviously don't know what they're going to do.

3788 So in that sense, I can tell you, you know, inside this is very real and we're responding to it.

3789 When I look at it and heard some of the comments this week about, well, it would not be appropriate, or fibre is better, you know, why would I switch to Starlink, fibre is better -- I agree; right? Like that is our purpose. That's why we're investing. That's why we're talking about upgrading our network.

3790 We need to compete. That's our focus is to make a better service so that people make that decision that fibre is better. Because Starlink is going to continue to get better as they put more satellites up. They're going to be able to have higher speeds, greater capacity, and so on. So the notion from that perspective is, yes, we think we're going to have and do have a superior product, and hope to continue to have a superior product for that. But we have to continue to invest and compete in that.

3791 Now, from a purely -- and I promised you the reg side -- from a purely reg notion, if we look at this on an economic standpoint, you know, Starlink is a substitute to people. They're willing to look at it. And as we -- if we have to respond to them, and if people choose Starlink, we have to improve our service, lower our rates, whatever. We'll respond.

3792 That doesn't mean -- and this is sort of I think the key that people have been missing in some of the presentations about Starlink this week -- people have been sort of implying that, well, you know, Northwestel service is better, so it's not really a competitive factor.

3793 You know, in the south, take a major city, you know, in all the major cities in the south, whatever, you have your cable company and you have your telco, like Bell, for example, versus Rogers in Toronto. Bell's building fibre to the home. Rogers has mostly relied on their HFC, hybrid fibre coax, so you know, cable network. And right now in Toronto, Rogers' fastest speed that they offer is 1.5 gigs per month. Bell's fastest speed is in some cases 3 and in some areas 8 gigs that we offer.

3794 You look at those and you can say, someone could argue, they're not in the same market. One service is way superior to the other. But we all know that's not true. We all know that clearly people are choosing, and they're willing to switch between Bell and Rogers based on price, and that Bell is investing to put in to bring it to 8 gigs in order to have a superior product to Rogers. But Bell's not even the market leader. It doesn't have the largest market share, even though it's got the fastest speeds and, you know, dare I say best network.

3795 So I'm not trying to -- all I'm trying to say is that from a purely economic standpoint and from a regulatory policy standpoint, Starlink is definitely a competitor, even if we believe -- and I do believe -- that our service is superior.

3796 THE CHAIRPERSON: Okay, thank you for that. Maybe we can leave it there for competition. And I know that Commissioner Desmond will come back on wholesale HSA and some other aspects.

3797 So maybe I can just finish with a couple of questions about reconciliation before turning it over to my colleagues.

3798 You said in both your comments and your further comments that your engagement process with Indigenous communities is transparent, flexible, and responsive and that you've adopted recommendations from the Truth and Reconciliation Report as guiding principles for your engagement.

3799 You've heard parties on the record this week saying that the current engagement process does not meet their needs.

3800 I was wondering if you could comment on that. I know that you have a detailed reconciliation plan in place. But maybe you can talk to us about this comment and also specific concrete actions, if you could share those with us.

3801 MR. SHAW: Thank you for the question, Madam Chair.

3802 We've been on this journey for several years. And I can't say it's done or ever will be done because it's an evolutionary journey for us.

3803 If you look at our organization, you know, it starts with employees and employee engagement. And we developed a training program for all of our employees on Indigenous people in Canada, what are the obligations, what is engagement, what is consultation. And it's a custom-developed program for Northwestel. It's assigned to all of our employees. It's mandatory for our management team. It's mandatory for anyone that's customer-facing. And so from my perspective, you know, that's one of the founding things that we did as an organization is really look at how can we increase the level of education.

3804 You know, we did form a reconciliation plan, and that came out of our consultation partly with the Broadband Fund. You know, we had 300 community engagement sessions over a course of four months, and we came up with four pillars. And to paraphrase them, they're posted on our website, but connecting our community is with the best network. You know, that's the fundamental one. And largely, the work we've been doing with the Broadband Fund the last couple years is a key component here.

3805 We will seek a shared pathway to an even better North. Those are our economic partnerships. And there's a lot. There's many I can talk to and come back to. But economic partnerships has been a big item for us over the last number of years.

3806 We're striving to have our operations reflect the Northern demographics and the communities we serve. So you look at our employees, we've raised our Indigenous participation in the workforce by three per cent in the last two years. We've got goals to raise it another three per cent over the next two and a half years. So our teams are very focussed on training and recruitment and retention. And I can come back to that, because we're doing lots in that space.

3807 And the final pillar is around engagement and consultation. Engaging early, engaging on a community's terms, engaging often, and trying to take the feedback into our construction projects. So you know, from an organizational standpoint, we're going a lot. It's right across the organization. I'm committed to reconciliation in our plan. I'm committed to seeing real progress and change as a private sector company. And from a northern employer's standpoint, you know, we've really said that we want to set leadership for the northern private companies across Canada.

3808 THE CHAIRPERSON: Thank you for that. Maybe I can just ask two more questions along those lines. So you've heard us ask intervenors throughout the week what we should be asking you about. And what IRP Consulting said to us yesterday was that we should ask you what you are prioritizing when it comes to reconciliation and how you're resourcing it.

3809 MR. SHAW: The two items that are really top in line for us right now is, well, engagement consultation is how we do our job. It's day to day. But economic partnerships have been a big area. And I'll maybe start there.

3810 There are projects when you go out and engage, and we consult, and we apply for a fibre permit, there's a base level of regulatory requirement we have at a local level. So in the Yukon, we have YESAB, which guides projects in the territory. And there's a check in that process around adequacy. And what we've tried to do with that is make sure that we're not adequate; we're meeting and exceeding any regulatory requirements in that space.

3811 When we did the Broadband Fund, we were hearing a lot about economic requirements partnerships. And you know, coming out of the Broadband Fund, I've got lots of examples. Shared Pathways network, selling the fibre to 13 Yukon First Nations is a really good one and a really positive one we've had lots of feedback on. And it's been replicated by other businesses in the North.

3812 From a construction standpoint, we'll go into a community a year ahead of construction. We'll talk about the benefits fibre will bring to the community. We talk about the price points. We talk about how to get hooked up. We'll bring samples of what fibre looks like.

3813 And then we also will work on how can we engage your community. And every community we go into looks a little different. I can think of examples where we've stayed in an Indigenous-owned hotel. We've purchased gas from a local First Nation.

3814 One example that we had as an organization this last year is we constructed fibre to Faro and Ross River. It was along the Robert Campbell Highway. Since we went in there early, our engineers went in early with the plan, and we didn't engineer it yet. We didn't decide where the cable was going. And we got feedback from the Lands Department where to put the cable. So they got into the engagement really early on the cable routing would be a good example.

3815 Coming out of that, we formed a partnership with one First Nation who brought us a camp. So all of our camp workers stayed at a camp that was opened by a development corporation in Ross River. But they couldn't find the staff for it. So we went to another First Nation along the route, throughout the beginning of the route, and they found all the staff to run the camp for us.

3816 So that was an example where we brought two development corporations together to house our workers, feed our workers, make sure they were comfortable over the summer months while we constructed the fibre. And again, that was going beyond I would say base engagement. It was something that was just the right thing to do.

3817 You know, at the end of that project or as we got going on construction, I can think of a time where we brought the elders out to tour the fibre facilities. How are we impacting the land? How are we dealing with nesting and birding? How are we routing this in the ground? And how are we remediating the soil? So that was an example, we brought an elders tour out to take a look at it.

3818 So everything we do in the space, I like to say that we're trying to meet or exceed any of our existing regulatory requirements.

3819 THE CHAIRPERSON: Okay, thank you. And maybe before I move to my last question, which is actually on Shared Pathways which you were just speaking about, could you speak to the point about how you're resourcing this? This is one of the questions. You're prioritizing, and how many resources are you putting behind this?

3820 MR. SHAW: So it is a good question. So you go back four or five years ago, we had a single person in the space, or maybe two. And so we've increased the team. We've got a government relations, Indigenous relations group permanently staffed. We've got five employees, one in Iqaluit, one in Yellowknife, and we've got the other three here based in Whitehorse. And that's an area that we've really built up over the last little while, and it's been training, education, engagement.

3821 We don't have that group do the engagement for us. They give us best practices. So in the last year when we were working in the Northwest Territories on fibre construction, a year ahead we went in as a community tour. And it was the engineer that was working on the project or designing the project, the project manager, maybe someone from our Indigenous engagement unit.

3822 So from a staffing standpoint, we've gone from one employee to five employees in the last three years. But we're really trying to have the whole organization rally around consultation, engagement, best practices, and look to that team for best practices and advice.

3823 THE CHAIRPERSON: Okay, thank you for that.

3824 So maybe I can just end my questions on Shared Pathways, which you just spoke about. We've heard different things about Shared Pathways. Certainly, you've referenced that in your submissions.

3825 We heard from the Council of Yukon First Nations in their submissions -- they were our first intervenor this week -- that it's a step in the right direction, but it's a financial deal.

3826 We heard yesterday from IRP Consulting that Indigenous groups have no power at the table.

3827 So I'm wondering if you can comment on that.

3828 MR. SHAW: Yeah, so we announced this last April. And it was maybe a year in the making. And it was done through brainstorming. What would work? What's possible? The Shared Pathways network, we have 13 Yukon First Nations come together to buy fibre assets. And we have small First Nations at the table. We have large ones at the table. They all have an equal share in the network.

3829 I can't think of another example in the private sector where 13 Yukon First Nations came together to collaborate on a project. So it's something, like for us, it hasn't been done in the North. I don't think it's been done anywhere in Canada.

3830 And there's a lot of excitement around it. I know there's some, you know, comments and detractors, and it may be some people that haven't been fully informed on the project. And we will continue to engage on it. But from my perspective, there was a lot of excitement about it. It was ground breaking. And it's a first step.

3831 So I think from a Northwestel standpoint, what I would say is we're really open to creative solutions. And this is one that was brought to me. And you know, and maybe years ago, it would have been just, No, this isn't going to work. But it was like, What works for what nations? How can we bring people together to collaborate?

3832 And it was really exciting, I think, for all the First Nations that participated that they own an asset. They formed a company; it's First Nations Telco Limited Partnership. They all have an equal share at the table, and really fantastic, I think, from a community engagement standpoint.

3833 The other thing I would add is what we have is a community advisory board. The community advisory board also provides us with direction. And that's another way that we can get regional voices, Indigenous voices into our business. They've supported some of the projects in the space and provided me advice on what we should be doing in the space as well.

3834 THE CHAIRPERSON: Thank you for that. Thank you for answering my questions.

3835 I will turn things over to Commissioner Naidoo.

3836 COMMISSIONER NAIDOO: Hi there. Thank you so much for being here today.

3837 My line of questioning is going to cover, just to give you a map so you know, outages and access and connectivity. So some parties, as you've probably seen, have submitted that Northwestel's process for notifying its customers in the event of an outage is inadequate. Can you tell us a little bit about what your protocol for notifying communities is?

3838 MS. APRIL: Certainly. When a major outage occurs, our network operations centre is our team in Yellowknife that monitors our network equipment. So they are our first responders. So they send out notifications to community leadership as well as emergency services in that community. They also ensure that our communications team is engaged, and we put out notifications on social media.

3839 So we do our best to ensure that everyone is up to date on what is happening. And we will continue to update until the outage has been resolved.

3840 COMMISSIONER NAIDOO: Have you done any consultation or any surveys on how effective your process has been for outreach?

3841 MS. APRIL: Well, we have a living distribution list for outages. So one of the things that occurs, you know, in, for example, consultations if there are additional people who need to be on the notification list, we include them so that the next time there is an outage, they will receive notification as they wish.

3842 COMMISSIONER NAIDOO: And as far as guidelines and timelines go for informing customers and liaising with them about outages, is that something that you can provide us with in an undertaking?

3843 MS. APRIL: Yes.

3844 (Engagement)

3845 COMMISSIONER NAIDOO: All right. So we’ll make a note of that. Thank you very much.

3846 Some parties have also raised the issue of receiving timely information on outages in their communities, including information with respect to root causes and updates to related resolutions. For instance, you probably saw earlier that during their appearance, the FNNND noted that consumers were often faced with the inability to access this information if they were lacking internet connectivity. Obviously, that’s an issue.

3847 Can you speak to whether you offer any alternate methods to -- for people to get in touch with you in an outage?

3848 MS. APRIL: Today we rely primarily on social media. We do, for significant outages, put notifications on our inbound contact centre lines and, when voice is working in the community, people can certainly call and say, “I’m not sure what’s going on”. Because we’ve also notified community leadership and emergency services, we also rely on those resources to help in the case of a complete communications blackout.

3849 COMMISSIONER NAIDOO: Thank you for that.

3850 We've also heard from parties, for example, Daniel Sokolov and NRRM that even Northwestel’s scheduled outages can be disruptive to communities as well and that those plans aren’t really communicated effectively with advance warning, so I’m wondering if you can tell us a little bit more about your scheduled outages and how they work. And I’ll just give you some sub-categories to start with.

3851 So how much notice do you typically give communities and does Northwestel have a standard in place with respect to notifications of those outages, those scheduled outages?

3852 MS. APRIL: Thank you for that.

3853 We do generally strive to let customers and communities know at least a week prior to a scheduled outage. There may be circumstances where there is some sense of urgency where we feel we can’t wait a week in order for the planned outage, but that would be unusual.

3854 We work with the community, so there have been examples where we have offered to change the time so, you know, we’re planning to switch this piece of equipment, it’s going to create a network outage. If, you know, Tuesday the 5^th doesn’t work for you, what is another day that would?

3855 So those are the sorts of things that we do.

3856 Additionally, when there are concerns, particularly when there are concerns raised from the people within the community, we will -- and it’s not unheard of for us to -- even our Director of Operations to be awake because we’re doing these over -- usually overnight. It’s usually in the, you know, midnight, 2:00 a.m. timeframe, again, to minimize customer disruption.

3857 They will be in contact with the SAO or leaders of the community if that’s required during the outage to let them know it’s progressing, you know, whether it’s happening sooner, it’s taking a little bit longer and then when it’s complete. You know, more typically it would be project resources, but we certainly are willing to adapt.

3858 And again, we do our best to plan it. In fact, we had a recent circumstance where one of our technicians had to drive about two hours at 2:00 a.m. after doing a cut-over in a community because there weren’t accommodations there, so you know, we try to ensure our -- obviously, our staff are safe as possible, but I would say we definitely go out of our way to minimize those disruptions and ensure that there is clear awareness of what is going to be happening.

3859 COMMISSIONER NAIDOO: All right. And which communities do these planned outages typically affect and I guess the question would be part of that is, you know, what is the purpose of planned outages.

3860 MS. APRIL: Well, they affect all our communities. Most recently, a lot of them have been to do with our fibre rollouts, so you know, there are pieces of equipment in our central office that need to be switched over because they’ve been running on copper. Now we have to put in a -- you know, a fibre box instead.

3861 And to do that, you pretty much literally have to unplug customers from one piece of equipment and plug them into another. In that case, you know, it could be a several-hour outage, but for each individual customer it may be a matter of minutes.

3862 We have planned outages for things like software upgrades. There are times where, you know, as Curtis and Jonathan indicated, we have 20-year-old equipment in our central offices. You know, if you can think of a 20-year-old car, there are going to be times that you need to replace parts and, you know, if you’re the one who’s driving the car, you’re going to have to pull over by the side of the road.

3863 So you know, it’s part of ongoing network maintenance and repair and just, as well, increasing the modernity of the equipment that’s serving customers.

3864 COMMISSIONER NAIDOO: Would additional redundancies in Northwestel’s network help to alleviate the impacts of planned outages?

3865 MS. APRIL: In some cases. In other cases, not.

3866 So you know, for example, if your home is being served out of this box and I’m going to move you to that box, any amount of redundancy is not going to affect the fact that the actual physical mechanism coming from your home is going to be effectively unplugged and plugged in again. I’ve got engineers cringing at me right now, I’m sure.

3867 But when we deal with the access, when we -- when we think of redundancy, redundancy is really about the transport mechanism so, you know, those are the highways of our network and it’s important that they are up and running.

3868 When we’re talking about the access network, we’re talking about neighbourhood roads so, you know, if the city has to come and dig up the road right in front of your driveway, you know, the fact that there’s another main thoroughfare that you could take isn’t going to help your situation.

3869 COMMISSIONER NAIDOO: Okay. Let's talk about outage response times. I know you touched on it a little bit. I just want to dive a little deeper into it.

3870 In its presentation at this hearing, you may have seen that CYFN stated that if an individual or business has an outage in the community, that’s almost more problematic in the sense that it can take a week or two for them -- for that outage to be alleviated.

3871 What efforts has Northwestel been taking to improve your response time?

3872 MS. APRIL: Thank you.

3873 Again, I would indicate that with our fibre rollout, which will be out to over 94 percent of terrestrial communities in Yukon and Northwest Territories by the end of this year, outage response time becomes much more improved. It also reduces the amount of outages that we see.

3874 We and other partners in the industry see significant decreases in terms of troubles when we move to a fibre-based access network. When they do happen, we have, as I said, technicians across our operating area.

3875 One of our challenges is often there’s -- you know, there may be one person in a community. They go on vacation. We’re now having to fly somebody in often from another location so, you know, a next-day situation is not always viable.

3876 Even when we have someone in the community, there are circumstances where you need a specialized skill set. Particularly when we’re relying on one or two resources in the community, they may not have that specialized skill set so, again, we’re needing to bring in specialized tools or somebody with different training in order to come and resolve that outage.

3877 You know, this year alone, even in our smaller communities, we have multiple examples of scheduled trips for technicians going in because they have a skill set that is not currently present in the community.

3878 Beyond that, we have to work with flights. The schedule of flights -- I think we’ve all been impacted by changes in flight schedules and availability since the pandemic. In the north, it’s become more acute and we certainly haven’t seen a rebound.

3879 My understanding is we have a shortage of both planes and pilots across the Territory, so looking at scheduled flights, you know, it can be $5,000 for flights in Nunavut, so -- sometimes 10, so we’re booking flights in advance as much as possible.

3880 Accommodation is also a challenge, and I referenced the planned outage where we had a technician having to drive two hours in order to get to accommodation.

3881 In a lot of communities, there’s not a place two hours away to drive to for accommodation, so there may be, you know, only a couple of rooms that are available for rent for short-term rental and, especially during construction season, there can be competition for those from other service providers, whether, you know, it’s power, whether it’s government folks coming in, perhaps a doctor or nurse coming in to the community.

3882 So you know, for some of our communities, it’s really important that we schedule it and that we’re able to have a little bit of leeway.

3883 Unfortunately, that means that customers in that community may have to wait a while to get it repaired. And logistically, we’re really not sure how there’s a great way to get around that.

3884 It’s exacerbated when, you know, for example, we had a situation in Old Crow where we had sent a technician to go and do some repairs and in Old Crow we have, you know, telephone poles that our services come off of. That flight also had food going up to the community and it was determined that there was too much cargo so they took some bags off.

3885 And Murphy’s law, our technician’s climbing gear was one of the bags that was taken off the plane, so now we had a flight, we had accommodations, we had a technician with the right skill set who could not climb the pole.

3886 So you know, we had -- we had made all the efforts we could. We sent the fellow up there. We had to bring him back down or make arrangements to get his gear up there on the next available flight.

3887 So there are definitely real challenges for us.

3888 You know, I think we’ve heard about the situation in Haines Junction. We generally go on Thursdays. If there’s a reason that we can’t go on Thursday, I think the person indicated, we’re there the next Thursday. We certainly are there the next Thursday, but we also watch for the level of trouble tickets in a community.

3889 So if the person going on the first Thursday was going to be really busy, we’ll adjust our schedule to get somebody out there earlier than the following Thursday where demand requires.

3890 COMMISSIONER NAIDOO: Well, that was the perfect segue into my next question. I wanted to ask you about Haines Junction.

3891 They say that, of course, that they only receive calls from Northwestel once a week every Thursday, which means that residents have to wait until the appointed day for a resolution. We’ve heard that that issue is also further compounded by backlogs and delays in service calls. Weather conditions, of course, have an impact.

3892 Can you provide additional insight into, you know, what you would say to the residents of Haines?

3893 MS. APRIL: Absolutely. You know, and I do talk to the residents of Haines. I was, in fact, there just a couple of months ago when we launched Fibre to the Home in Haines Junction.

3894 And you know, I think the relationship we have is very strong. We explain the reasons. I think we heard from the individual talking that, you know, we are concerned for the safety of our technicians as well, but we also balance that with community need.

3895 So as I said, if there is a situation where we have a number of customers waiting for service, we will send a technician earlier. We can’t always do it the next day because we have other customers in other communities who are waiting for it, but we continually are looking at our schedule.

3896 It’s really, I would say, more of an art than a science in terms of the number of trouble tickets, the availability of technicians, people who call in sick. That was a significant theme, as you can imagine, during the pandemic. So we work hard to make sure that we are being adaptive.

3897 It’s not a robotic, “Oh, we only go to Haines Junction on Thursdays and, you know, we didn’t get it all done, too bad, see you next Thursday”. That’s not at all the situation.

3898 They know that they can rely on us to come on Thursdays, but I think most of them also know that we will go there on Tuesday and stay till Thursday if that’s what’s required in order to resolve the issues or do the installations that are happening in the community.

3899 COMMISSIONER NAIDOO: And so the reason for this service standard is because of staffing issues, remoteness of communities, that kind of thing?

3900 MS. APRIL: Definitely. For I think it’s, you know, certainly around 40 of our communities, we have less than five trouble tickets a month, so for, you know, just context, we would typically schedule a technician, you know, in Whitehorse or Yellowknife where we know there’s more than enough work for them, they would do at least five appointments every day.

3901 So we do have community service technicians in many of our smaller communities, and they are part-time resources hired from within the community to help support particularly trouble tickets. When you get to communities where there is, you know, maybe one, two trouble tickets a month, you start to have problems both retaining that person, like this is not the most fulfilling job I’ve ever had, but you also end up in a situation where they’re having problems retaining their training.

3902 You know, I think any of us, you’re trained on something and then you only have an opportunity to do it a month or two later, it’s not going to be, you know, a resilient skill, so we -- you know, these are all parts of the things that we balance, demand in the community as well as operational challenges.

3903 COMMISSIONER NAIDOO: All right. Thank you for that.

3904 I want to move on now to transparency and reporting.

3905 For improved transparency and reporting, CYFM and -- sorry, CYFN proposed an annual report on service outages which would help service providers to identify challenges and work directly with communities on their specific needs. How do you respond to that proposal?

3906 MS. APRIL: So for us, we feel that there is transparency. As I indicated, for our major outages we publish them on social media, so there is a public record already of all the major outages that we have suffered over the course of a year, you know, going back multiple years, so I would say that information is readily available to people.

3907 In terms of working with specific communities, we firmly believe that our Every Community Project, which we’ve undertaken in conjunction with the Commission, is the thing that is really going to make the difference for the communities. For the terrestrial communities in Yukon and Northwest Territories, they are already -- those who have been built out, they’re already seeing that improved service.

3908 The other issue, as Curtis mentioned, is transport redundancy. And we are, you know, in the very last part of the Canadian north fibre line completion.

3909 So that project will be up and running within the year, and that’s why we’ve also asked for your help on the Great Slave Lake fibre because those are the cuts that have, I would say, the largest impact. And there’s -- you know, it’s very difficult to deal with. It’s often challenging conditions even trying to find where the cause of the breakage is.

3910 Having the ability to flow the traffic, you know, as happens in most locations in the south, through another side of the ring would really improve the experience of customers in all our communities.

3911 MR. DANIELS: If I could just jump in here.

3912 There’s also -- there’s a proceeding that’s going on right now to look at having national requirements that you’re running, so you fully know. There’s been some references, I’ve heard a couple of people say in some of the submissions that it doesn’t apply to Northwestel. That’s news to us. It does. It applies to all Canadian carriers. We’re a carrier.

3913 We’ve been participating. We’ve been adhering to the interim requirements that were established, and so -- and I think that’s the place that this should -- that this issue should be resolved in terms of if you’re going to establish an industry standard or an industry practice or something like that, Northwestel will sign up and adhere to whatever you decide for the industry.

3914 What’s unique about the north is not that we have outages. It may be the frequency because of the nature of our network especially. We’re hoping to solve that with the redundancy point. You see a theme coming from us on that aspect.

3915 So I’m not trying to say that it’s not -- it’s not more of a concern because there may be more frequency, but we think that in terms of how we respond to it and the outage requirements can fit right into whatever the Commission decides in that proceeding and we will be actively participating in that just like other TSPs.

3916 COMMISSIONER NAIDOO: All right. Thank you very much for that.

3917 The Government of Yukon recommends that the Commission examine Northwestel’s network reliability and performance in comparison to other Canadian telecom service providers and make the reliability information public. They want us to also look at requiring more detailed reporting of service outages and network performance problems, including plans for remedial measures, establish a mechanism for assessing penalties -- penalties came up quite a bit, as you probably saw earlier in the week -- or customer compensation, which also came up a lot, if an additional incentive is approved -- sorry, an additional incentive is required to improve performance and direct the company to disclose future network plans to address resiliency and redundancy.

3918 So can you respond to that proposal?

3919 MS. APRIL: Certainly. I think, as Jonathan indicated, we’re aware of the proceeding that will be taking place on outages, so we feel that, you know, while certainly some of the circumstances in the north are different than downtown Toronto, I think we also heard from a provider in northern Manitoba who deals with the same issues that we do. We feel that we would be bound by the outcome of that proceeding and we’ll be happy to participate in it and to live up to and meet and exceed anything that comes out of it.

3920 MR. DANIELS: And just to break it down because there’s two different -- I’m going to be annoying lawyer here for a second.

3921 There’s two different proceedings. You have a proceeding about outages that you’re running that’s already launched and that we’re, as I said -- we’ll be covered for.

3922 You mentioned customer compensation, and that specifically -- that’s not in your outage proceeding, but in your outage proceeding you said, “We’re looking at a future proceeding”, implying that you’re going to have a discussion about whether it will be refunds.

3923 And so Northwestel follows the same procedures as other providers in the country, has the same sort of approach on internet refunds, and so from that perspective, I don’t know if that’s what you will be referring -- you read compensation, so I assume that we’re talking about the refunds and, again, we think that whatever is established for the industry will apply and should apply to us as well.

3924 COMMISSIONER NAIDOO: All right. Thank you for that.

3925 I want to move on now to access and connectivity. So earlier this week, we heard from NRRM that they have serious concerns with the state of telecom services in their region. Some of the issues that they noted include the digital divide between their community, other northern residents as well as those across Canada. A lack of affordable access came up and low-quality internet services offered over aging infrastructure, even though fibre backbone is within reach of their communities.

3926 They further noted their uncertainty with respect to Northwestel’s plans to improve services in the NRRM and a concern that their region will be left behind.

3927 The NRRM has commented in its submission that despite FTTH already being available to Northwestel customers in bordering communities such as Watson Lake and Fort Liard, Northwest Territory, FTTH is currently unavailable in their community and that they’re unaware if there are any specific timelines from Northwestel to upgrade the infrastructure in Fort Nelson or anywhere else in the northern Rockies.

3928 They also urged the Panel to ask Northwestel when Northwestel would invest in that part of the service area.

3929 So on their behalf, I wanted to pose that question to you and find out what your response is to their concerns.

3930 MR. SHAW: Thank you for the question, Commissioner Naidoo.

3931 Our government relations team, I think they’ve been meeting with NRMM weekly and we’ve talked to them about some of the challenges we’ve had with funding programs.

3932 I would say at the highest level right now, our goal is to bring 50/10 or faster to every resident in our operating area. That is our aspirational goal. Unfortunately, the programs that have been put in place for northern B.C., we haven’t been able to have a sustainable business case. We haven’t been able to meet the rules, and I don’t think any other providers have as well.

3933 So we’re going to be looking for potentially some rule changes, rule flexibility and whether there’s a funding partner of the B.C. government, with ISED, with the CRTC’s Broadband Fund. Our goal here is to close the digital divide. I don’t have a time when we’re going to do communities like Toad River, Muncho Lake. They’re on the side of a highway and they’re small. They’re really small. And to date, even with 90 or 100 percent capital contribution, there hasn’t been a sustainable business model to upgrade them.

3934 So I hear the frustration. I absolutely hear the frustration and our goal here as a company is to find a way to get fibre to the home in all those communities over the next couple of years.

3935 MR. DANIELS: Actually, if I could indulge, Curtis, to ask you to sort of explain... There was a question yesterday and I think your question references it. If fibre is passing to a community, why can’t you just -- like, what’s the cost to actually install -- and I think you -- Curtis, maybe you could explain that, because that could help sort of --

3936 MR. SHAW: Yes, there’s been some frustration of a single business along the Alaska Highway, or a cluster of homes along the Alaska Highway -- “The fibre is running through my property,” or, “running outside my front door. Why can’t I access it?” And there’s a few requirements, and we’ve been through this a number of different times, and we’ve done some breakouts.

3937 So, in a transport fibre network, first and foremost you need an access point. You need a splice point. So, if it was designed 10, 15 years ago, and that home or business wasn’t there, the access point may not -- you can’t just break into a fibre. The other thing that we see with these communities is, number one, you need power. You need power to power a fibre to the home architecture or any internet architecture, and some of these highway locations don’t have power that we can access -- commercial power, and so the alternative is diesel generation. So, when we’re putting in fibre access to, say, three homes along the highway, you have to be able to find the splice point or the breakout. It might be a kilometre, two kilometres, five kilometres away, and then back -- backhaul it to that -- that location. You have to pour a cement pad, you have to put electronics in, and you have to have access to commercial power. And we’ve found in some of these situations maybe two, three, four-hundred thousand dollars to serve three customers. That’s the extent that we’re dealing with in -- in Northern B.C. to do the civil engineering, the implementation work. Just think about $300,000 to serve a customer or two. That’s where the business case challenge really, really is highlighted for us.

3938 COMMISSIONER NAIDOO: All right. So, in a nutshell then, I think NRRM’s request really is to get some clarity on when they can see or expect some improved infrastructure in their area. Do you have a -- like, an answer for them?

3939 MR. SHAW: I -- I don’t, and I -- at the end of the day, we’ve done engineering for this region. We’ve done business cases for the region. We will continue to work with the NRRM on a -- on a solution that will have 50/10 across their entire region in all of Northern B.C., and again, we’ll be working with the B.C. Government, ISED, CRTC’s Broadband Fund on potential rule changes that we can partner with NRRM and bring 50/10 down there. It’s not in our plan for next year because, as I mentioned, we just don’t have a sustainable business case.

3940 MS. APRIL: Just to build on that, you know, Curtis indicated earlier that we’ve looked at funding mechanisms and -- and have gone so far as to prepare the engineering in preparation for an application. Some of the structural issues -- and we can go into this later at the Broadband Fund proceeding, but we -- we were hampered by two specific things that differentiate Northern B.C. from most of our other operating territory.

3941 We put in only one submission for all of terrestrial Yukon, and one for all of terrestrial Northwest Territories. And we did that very consciously, and it was because of the need for the ability to prove that we would be able to continue to operate it. We have larger communities, like Watson Lake and Dawson City, that have, you know, close to a thousand homes. But we also have communities in NWT and Yukon where there are ten or twenty homes. Those communities wouldn’t have been able to stand on their own. By packaging them together, we were able to show that we could make a case with capital investment from a funder to deliver the architecture.

3942 The other thing that most of the funding -- so, most of the funding has required that it be done according to provincial or territorial boundaries. And that limited us. We weren’t able to take Northern B.C. and roll it in, effectively, to Yukon. So, I think that’s some of the frustration, which you can understand. Like, “I live on this side of the border. My town’s just as big as that little town, you know, on the other side of the border.” But it was -- it was part of the mechanism of funding.

3943 The second component -- and this has been again a fairly standard feature of applications -- is to tie the rates offered to the community to that of the capital city of the territory or province that it’s in. You know, you’ve -- you’ve heard that our rates are higher than in Southern Canada. In this case, it was a bit of a benefit for us because we were able to show that we had revenue to support the costs of operating the infrastructure. When we look at Northern B.C., not only did we not have a larger city that was available for funding to tie to, but we were also tagged with a lower revenue base.

3944 So, the combination of these factors meant that it has been unsustainable. We’ve been working with NRRM, and I think, you know, if you -- if you note -- and we included some quotes in our submission as well -- the consultants that they brought on -- I believe they’re called Tanex -- had referenced as well the challenge of business cases.

3945 So, I think when we look at these underserved areas, it does require more flexibility or creativity than perhaps some of the first funding rounds were able to provide us.

3946 COMMISSIONER NAIDOO: Thank you for that.

3947 Sticking with NRRM, they criticized Northwestel’s argument against a subsidy that would be available to any TSP on the grounds that they would have the option of serving only lower cost areas, by pointing to Northwestel’s exclusion of B.C. and Nunavut from its Every Community Projects. The NRRM added that NRRM -- that this exclusion is precisely based on Northwestel’s being driven by not wanting to reinvest profits into less profitable areas.

3948 I wanted to give you an opportunity to respond to that.

3949 MR. SHAW: I think it was the nature of how we bid on the Broadband Fund projects. You know, that’s first and foremost. Every community project -- the Yukon, Northwest Territories -- the first call for applications was north of 60. So, we bid on applications that were at the 60th parallel. And could we have rolled Toad River and Muncho Lake in? Under the existing rules -- the rules at the time were no. And, like I mentioned, we are going to work with our funding partners. Our aspirational goal here is all those communities are upgraded, they all receive faster internet service over the next couple of years.

3950 COMMISSIONER NAIDOO: And do you have plans to expand the project to communities outside of the Yukon and -- and the Northwest Territories?

3951 MR. SHAW: We need -- we need public support, and we likely will need some -- some rule changes in these existing funding programs, to accomplish that, yes.

3952 COMMISSIONER NAIDOO: All right.

3953 We’re getting to the end, and then I think we’re going to break for lunch. I just have one more -- a line of -- one more question to ask, basically.

3954 Northwestel has stated on the record that 94 percent of residential customers will have access to an unlimited internet plan by 2023. Daniel Sokolov told us earlier this week that this will not alleviate the short-term affordability challenges. He indicated that having access does not mean customers are able to afford service.

3955 So, could you please respond to this statement from Mr. Sokolov?

3956 MR. DANIELS: Yeah, I'm going to hand this over. I mean, I think the answer to that is -- is sort of twofold. You’ve heard us a little bit about in terms of Connecting Families specifically, that we are -- we need to apply. We actually had said, “Oh, we’re going to do Connecting Families,” but we realized we’re actually regulated and we need your permission to. So, we are going to apply to you for a tariff notice to join Connecting Families. But in terms of how we address it generally, that our rates are higher in the North because our costs are higher -- that’s our subsidy proposal. So, we’d be happy to go into that now. I don't know if you want to -- to go into that now, and I also heard there’s references -- more questions, but... So it’s up to you --

3957 COMMISSIONER NAIDOO: I think the Vice Chair is -- is going to be talking about that coming up after we break for lunch. So, I think we’ll just leave that there and let you address it at that point. Does that sound good with you? Yeah, okay. So, so let’s just put a pin in that for now. All right.

3958 So, that’s my line of questioning for now. Thank you very much.

3959 MS. MOORE: Thank you very much. We will break for lunch and we will take one hour, which means we will be back at 1:15. So an hour and five minutes; sorry.

--- Suspension à 12 h 08

--- Reprise à 13 h 15

3960 MS. MOORE: Welcome back. We are ready to resume. Thank you.

3961 THE CHAIRPERSON: Excellent. Thank you so much.

3962 I think we’ll go right to Mr. Daniels, and then we’ll come back to Vice Chair Scott.

3963 MR. DANIELS: Thank you very much, Madam Chair.

3964 We were just discussing that there’s -- we had talked a lot about network performance in terms -- and there were some questions about -- we were telling you some stories, and so on. And we wanted to offer, if you would be willing or would be interested, that we could take an undertaking to put some metrics behind some of the discussion that we had earlier today in terms of some of the numbers about our network performance and -- and relate it to what we have done. If the Commission found that helpful, we would be prepared to make that undertaking.

3965 THE CHAIRPERSON: Excellent. Thank you, we will accept that undertaking.

3966 And maybe now I can just turn things over to Vice Chair Scott. Thank you.

3967 (Engagement)

3968 VICE CHAIR SCOTT: Good afternoon. Welcome back.

3969 So, I’m going to start off the questioning on affordability, and I think I’d like to start with the late-breaking news on Connecting Families. I expect there are a lot of people who are excited by this news, and I expect there are a lot of people who have questions, so I’ll do my best to capture those. It’s a fairly long list. I expect there are some where you might prefer to take an undertaking. If you could answer what you can, and then we’ll wrap up with an undertaking at the end.

3970 A lot of these are simply clarification questions. So, could you confirm that you’ll be participating in the recently expanded program with the 50/10 targets and the expanded eligibility?

3971 MS. APRIL: Yes.

3972 MR. DANIELS: Sorry, I'm just going to hop in and clarify. I have a lot of background in Connecting Families because I -- as some may know, I was involved in the negotiation in the first place. So, we will -- yes, we will be connecting families in terms of 50/10, where 50/10 is available; 50/10 is not available in some of our communities, and in those others we will do the best service that we possibly can, which is consistent with the -- with the program.

3973 VICE CHAIR SCOTT: Thank you for that.

3974 Do you have a sense yet of when this would be available to consumers in your territory?

3975 MS. APRIL: No. As I said in the opening remarks, we’ve just made the decision this week, so we’ve yet to reach out to ISED -- you know, submit a filing. You know, there are, I think, some database things we’ll have to work out. I’m not sure if they have statistics for the North, since we would be the first northern service provider to participate. So, I think there is some stuff on us. I -- I don't know. We’ve kind of sprung this on ISED today, as well. I -- I’m sure in the coming weeks we’ll know more.

3976 VICE CHAIR SCOTT: Okay. I suspect they will be motivated. So, hopefully you’re getting fast answers.

3977 Would the intent be to allow eligibility in all communities that you serve? Specifically, I’m interested in whether or not satellite-dependent communities would be eligible, recognizing what Mr. Daniels noted about some constraints on service that may be available.

3978 MR. DANIELS: No, satellite wouldn't, but there’s actually an exclusion in the -- in the program for satellite communities. So, no one is providing satellite communities as part of Connecting Families. So, this is limited to terrestrial communities.

3979 VICE CHAIR SCOTT: Thank you for that.

3980 Is this a long-term commitment -- a multi-year, or is it time-limited?

3981 MR. DANIELS: There is a standard contract. It expires in 2027, I believe. So, we would be signing up like any other provider until 2027, and, you know, addressing renewal like every other provider.

3982 VICE CHAIR SCOTT: Thank you.

3983 You had mentioned earlier that you would be seeking CRTC approval -- again, just to clarify -- that’s simply a tariff filing making the necessary adjustments?

3984 MR. DANIELS: That's correct, because we don't have the option to set our own prices, so especially we’d have to ask for -- you’re not allowed to offer service below cost generally, so we’ll have to file a – what do they call it – UPEE (ph) to ask you guys for permission as an exception to your standard rule.

3985 VICE CHAIR SCOTT: Okay, thank you.

3986 You had mentioned a little bit already about the potential need to modify the service offering based on available services. Have you given thought yet to what those types of modifications might include? Is it mostly capacity? Is it mostly speed? Is it -- what are -- what are the variables that you will need to adjust?

3987 MS. APRIL: We're not anticipating making any adjustments. I think what -- what Jonathan was talking about is that where 50/10 is available, we will make the Connecting Families 2.0 available. Where 50/10 is not available, like I think most other providers, we will continue -- we will offer what had been Connecting Families 1.0.

3988 VICE CHAIR SCOTT: Okay, thank you.

3989 Could customers on the Connecting Families program incur overage fees?

3990 MS. APRIL: I believe today the program -- and, you know, again, we’re just into this. The program, as I understand it, today has a cap with overage fees as part of the program. I know a number of providers do offer different options to customers, including unlimited. We’ll have to see, you know, how that works, what it might look like for us.

3991 MR. DANIELS: I think the program today is -- if memory serves, it’s 50/10, it’s 200 gigs that is included, and if you’re in the not 50/10 -- so, in our non-fibre communities, you know, like a DSL community, it would be 10/1, or the closest speed that you can do to 10/1, for $10, and that’s 100 gigs. And so, we just haven’t had any chance to discuss what kind of -- what we would do with overage in that. As you can appreciate from what we said earlier, it’s different in a fibre community as opposed to what we may be able to do in a non-fibre community.

3992 VICE CHAIR SCOTT: Okay. Maybe just a note then, that as those details become clearer, the Commission would certainly be interested in learning them.

3993 Recognizing it’s a bit of a sensitive question, plans to cap the total number of customers that you would serve under this program -- have you turned your mind to whether or not you would be capping participation?

3994 MR. DANIELS: I think like every provider who signs it, there’s a -- there’s a cap formula as to limit that, and we’ll have to see how demand is, and I don't think we’ve made any decisions one way or another on that, and in terms of anticipating take-up, and we’ll see what -- you know, as you know, we had concerns about that it -- that may be more, but we haven’t made any decisions, and I think we would just exercise -- reserve the right to exercise -- let’s put it that way -- like any other provider, as per the formula that’s in the -- that’s in the agreement. But -- and hopefully we never have to worry about that.

3995 VICE CHAIR SCOTT: Okay. In addition to any obligations you have with ISED in terms of reporting uptake, would you be willing to report to the Commission on your success with offering this program?

3996 MR. DANIELS: Absolutely.

3997 VICE CHAIR SCOTT: Thank you.

3998 And can you speak for a moment about how you plan to advertise the program to ensure that people who would benefit from it are aware of it and have an opportunity to engage?

3999 MR. DANIELS: I'm going to jump in here, which is kind of to surprise Tammy -- “Wait, what are you talking about advertising?” Because, you know, with all due respect, I have some experience of this. There’s no advertising that goes on with the Connecting Families program because the way it works is ISED is the one who sends the notification, working with CRA, to actual people who are eligible. They send it and say, “Here it is. Here’s the details. You are eligible to sign up here.” You know, we don’t know who is eligible. We don’t know who is -- who is available.

4000 We would -- and I’m guessing here -- you can tell me if I’m wrong -- again, this is all new -- probably set up a website for -- like, a page for a landing spot. I’m basically basing this on what I know another company I may have a lot to do with (laughs) does in terms of how it operates. But there’s no advertising or anything like that done for the program generally because it’s -- it contains customer -- like, the eligibility is limited, right, in terms of, “Do you qualify?” and you’ve got to be careful about how you do that, and even if you are eligible, it’s about when ISED decides to send the letters to the very individuals. There’s a whole program around how that all works.

4001 VICE CHAIR SCOTT: Yeah, so, I’m familiar with the letter process, and I raised the question because I do know there have been some concerns about whether it’s the distrust of the government, distrust of the phone company, somebody loses their letter -- also to the extent that people are looking to this proceeding, and if this is being brought forward as one of the -- one of the measures through which Northwestel is addressing affordability, which has been raised by a large number of constituents, I would hope that all potential beneficiaries have some means of at least becoming aware of the program.

4002 MR. SHAW: There will be some communication that goes out, obviously, with us, respecting privacy, and -- and we’ll be working through this over the next few weeks.

4003 VICE CHAIR SCOTT: Okay, thank you.

4004 Would you be able to share with us any information that you have regarding -- and maybe it would come as part of the filing -- any information regarding the difference between the rates offered as part of this program and your underlying costs?

4005 MR. SHAW: I think we would take that as an undertaking, or it would be in the tariff filing. I think the rates -- none of those rates would pass an imputation test today.

4006 MR. DANIELS: Yeah. I mean, the short answer is we have -- we have costs for fibre-to-the-home that you’ve recently been using in terms of what it would cost. So, we -- we have that one. I’m just struggling -- we have older costs for DSL, but it’s -- it’s going to be far; right? At $20 and $10, it’s going to be very far from the actual costs. It will be severely below an imputation test.

4007 VICE CHAIR SCOTT: Noted. And maybe we could get an undertaking to provide additional information -- not to generate new, but if we could get it filed as an undertaking?

4008 MR. DANIELS: Yeah, so -- just -- just for clarity, are you seeking an undertaking as part of this proceeding? Or with -- I mean, we will do it as part of a -- if you want, as part of our tariff notice at that point, but -- or we can do it in this. Whatever you want, it’s --

4009 VICE CHAIR SCOTT: Yeah. Maybe I'll just turn to legal and ask if we see any advantage of having it filed as an undertaking versus a tariff application?

4010 MR. HOGAN: Yeah, we’d like it as part of this proceeding.

4011 MR. DANIELS: We so undertake.

4012 (Engagement)

4013 VICE CHAIR SCOTT: Thank you.

4014 Okay. Jumping to broader questions of affordability. So, you filed significant evidence detailing the challenges with defining and operationalizing an affordability standard. But do you see that some form of affordability target or standard might be a necessary precursor either to measuring progress towards affordability or towards structuring various forms of subsidy regime?

4015 MR. DANIELS: It's my pleasure to hand this over to Kate, who has been waiting for some subsidy questions so that our subsidy expert can start participating, and has a lot to offer.

4016 MS. SOUTHWELL: Thank you for the question.

4017 In our position, an affordability standard is unnecessary, and it’s also complex and burdensome to administer. So, it really would be an academic exercise rather than a practical solution, and it’s not necessary to implement a subsidy. If the Commission does believe it’s necessary to implement a subsidy to address affordability issues that are systemic to the far North, then it could do so on a basis aimed at achieving parity with the South. Perhaps there is -- there is other, less burdensome ways that it could measure what a subsidy should be.

4018 Setting a standard -- as the Commission has acknowledged and as many parties acknowledged, affordability is an inherently subjective concept that varies from person to person even over one given person’s lifetime. And so, there have been some proposals from other parties about what such a standard would look like, and I think the consistent thing among all of those proposals is that it’s not consistent. There’s not agreement. There’s often several parties have proposed -- you know, would need a great deal of statistics gathering, updating, whereas for a practical solution, to set a subsidy -- to take it back to your question, if it had to be measured, we would defer to the Commission as to what an appropriate measurement might be, but parity with the South seems like a very simple, easy to measure standard that the Commission has information today that it could set those rates.

4019 VICE CHAIR SCOTT: Okay. Since you mentioned that, and a number of other parties have as well, and while it may have the virtue of being easy to administer or easy to calculate, it certainly wouldn’t be easy to achieve. So, are you mentioning that as an example of kind of a target or a metric? Or are you suggesting that that would be an appropriate target that the Commission ought to pursue?

4020 MS. SOUTHWELL: Ultimately, we’d -- we defer to the Commission and what you think is appropriate. We suggest that parity with the South would in our view be an appropriate measure to address the systemic affordability issues that are specific to the far North. As Tammy said earlier, I think things cost more in the North.

4021 VICE CHAIR SCOTT: Okay. So, in order to achieve such an objective, we’ve heard all manner of proposals on various formulations of a subsidy -- everything from infrastructure funding like broadband programs being viewed as a form of subsidy -- we’ve seen proposals for means tested subsidies, proposals for subsidies that are more akin to the local service subsidy, so to make up the differential between an approved rate, the underlying costs, and the difference is the subsidy. Are we going to need all of those to achieve pricing parity in the North?

4022 MS. SOUTHWELL: We've proposed three separate subsidies, as you will have seen in our submission. The first, as I believe Curtis spoke to earlier, is aimed at closing the digital divide with respect to satellite communities and the infrastructure needed there. The second is an extension of your Broadband Fund, with some slight tweaks to reflect the success of that program, and some tweaks that might be needed. But with your specific question to affordability, we’ve proposed a funding mechanism that -- on a dollar-for-dollar basis would put dollars in the hands of the end-users, that ultimately flow through to them to directly lower their costs, as we’ve set out in our proposal. So, it would be subject to mandated rate reductions to our retail regulated rates, and on a dollar-for-dollar basis we would pass those through to end-users.

4023 VICE CHAIR SCOTT: Okay. How would you respond to concerns that some parties have raised that such a formulation would serve to further entrench your incumbency?

4024 MS. SOUTHWELL: Thank you for the question.

4025 In our proposal, that formulation addresses three issues -- the formulation of providing a dollar-for-dollar subsidy only to retail rate regulated services. One, it addresses the risk of gaming. Two, it addresses the risk of subsidizing providers beyond their means. And three, it minimizes a potentially significant administrative burden.

4026 So, the risk of gaming is that other providers, who aren’t rate regulated, or providing a subsidy other than on mandated rate reductions, could lead providers to artificially inflate their rates, pocket some or all of the subsidy, and then those dollars are dollars that are not flowing to the end-users. Other parties have recognized that risk and thus proposed complex mechanisms to -- to calculate these -- I believe PIAC suggested that the Commission would have to gather proof of all costs from all providers and gather rate information and ensure -- try to follow the dollars, make sure they’re passed along.

4027 The second issue obviously is subsidizing providers beyond their costs. Again that would be an inappropriate use of funds intended to benefit end-users. So, to prevent both of those, the Commission could establish an administrative mechanism, but again, that could be really administratively burdensome both for the Commission and for providers to -- to basically provide full costing information, rate information, keep it up-to-date, updated statistics -- and ultimately those are administrative dollars that are not winding up in people’s hands. So, in our formulation it would be really administratively simple to -- to mandate Northwestel to reduce its retail rate regulated rates, and those dollars would go directly to end users.

4028 MR. DANIELS: If I could just jump in here for a second, Mr. Scott, I think it’s just helpful to -- I think, to be clear, we’re tying this to the fact that we’re retail rate regulated, and our proposal is limited to only areas where we are retail rate regulated. And part of the reason I think Kate just explained to you in terms of -- because you know a dollar is going to the customer and -- and that’s the best way, and you know that because our rates are regulated and set by you.

4029 I just want to be clear -- in satellite, it would be open to anyone, but satellite -- it’s not -- we’re not proposing a dollar-for-dollar subsidy because it’s not just about making it cheaper. Making it cheaper is going to cause all the problems we were talking about before in terms of capacity. Satellite -- it would be whoever bids with the promise of, “Here’s the retail rate I’ll charge; here’s how much subsidy I need in order to achieve that retail rate and expand the capacity to be able to do it.” So -- so, our -- like Kate keeps saying, and I just wanted to make sure it was picked up that we’re talking terrestrial retail rate regulation is the only place we’re talking about this third level of subsidy. But that doesn’t mean that we’re saying satellite shouldn’t be subject to subsidy, but that’s tied to capacity along with whoever, and that’s available to anybody who would bid.

4030 VICE CHAIR SCOTT: Noted. Thank you.

4031 There was an additional model that was proposed. At least two parties -- I think SSi and the Government of the Northwest Territories -- what they described as a wholesale subsidy model, where a subsidy goes to Northwestel so that they can make wholesale service available at a much lower price than they otherwise could if it was based strictly on costs. Have you had an opportunity to look at that model, and is it notably different than other variations of a portable subsidy?

4032 MR. DANIELS: So my understanding, that’s not -- unless I’m missing something, there’s portable subsidies which, you know, are dollar-for-dollar we’re not proposing be portable for the reasons that Kate went into. That, to me, if it’s just geared towards only wholesale who are on our system, is just subsidizing competition, which we quite frankly and not surprisingly think that’s bad public policy and generally do not support. So, unless I’m missing some nuance on this, we would -- our -- you know, we would submit -- we would submit to you that that’s not a good idea.

4033 VICE CHAIR SCOTT: That's clear.

4034 I just have a couple more questions on affordability. They're getting a little bit more tangential.

4035 Can you speak to any affordability benefits that flow through from broadband infrastructure funding programs? So clearly there's a direct line between government infrastructure investment and connectivity resiliency/redundancy. Can you speak to flow through of affordability benefits to consumers?

4036 MR. SHAW: If you look at our Broadband Fund projects, we bid on this three years ago with the existing regulatory rules that were in place.

4037 The other thing that I would look at, the Commission has our underlying economics and financial models for that build and they're very, very razor thin. We barely made a payback after seven years and there's a very small net present value calculation in there. And since then we've had significant inflationary factors and we've kept the project going and we've just covered the incremental capital.

4038 So the challenge right now is yes, conceptually, there's a public infrastructure program that requires open access. In this situation there were tens of millions of dollars of our own private investment that went in that, into that project, and today, as I mentioned, we're sitting at a negative business case.

4039 MR. DANIELS: I just want to make sure I understood your question. Are you asking in terms of do we see that as a result of that that consumers will actually see a rate difference in terms of what they're paying to us? Is that the nature of the question?

4040 VICE CHAIR SCOTT: In part. I think it's maybe a broader question than that, speaking to is this an efficient means of addressing affordability challenges or does it primarily focus on establishing connectivity where it's not up to adequate standards?

4041 MR. DANIELS: Right. And so, I guess the answer, the way I think we would look at it is to say it's absolutely essential for providing access. What we do is all of our rates for fibre-to-the-home are the same across our territory, right?

4042 We don't make a distinction and it's actually been an issue generally that we try to keep our what we call HFC -- and I know telecom is full of TLAs, three-letter acronyms, but HFC is cable, right, hybrid coax, fibre coax. And so we've really tried to make sure that all of our rates -- so in a fibre-to-the-home community it's the same as in every community, as Whitehorse and Yellowknife. So we have a standard rate.

4043 I think what we are recognizing is that rate, even in Whitehorse and Yellowknife with the same rate, is it high relative to the South, yes, and so could there be a subsidy to address that?

4044 So, as we add a new community, say Atlin, to fibre-to-the-home, it would be at, under our proposal, the same rate as Whitehorse and Yellowknife, the same across our territory.

4045 And then you turn around and say, but are those rates relatively high? Well, if you want to create a subsidy for that, we are prepared -- well, you know, we would be prepared to pass that on, dollar for dollar. Every dollar you give us would reduce the actual rate for it.

4046 Just give me a second.

--- Pause

4047 MR. DANIELS: I just want to check with Tammy whether you wanted to talk about in terms of in a fibre community our rates being lower, in terms of when, unlimited and so on.

4048 MS. APRIL: So, yes. I think the quick answer is yes. We have heard concerns about overage charges over the course of the week and when we look at our fibre communities, we are able finally to provide unlimited usage to these homes. We know that there's huge demand for it.

4049 As I said, even though, you know, in some communities we've only been there with fibre for a matter of months, we on average have 75 percent of people migrating proactively to the fibre infrastructure, and of those, 75 percent are taking unlimited plans. And we're seeing very little overage charges from those who choose not to take the unlimited plan.

4050 So I think through the lens of overage charges and repeatable expected billing, which is important for everyone, our fibre-to-the-home builds definitely provide that.

4051 It also, as Jonathan mentioned, ensure that there is equity. We've heard concerns that there's a feeling that if you're in a smaller community you're paying more than you are in a large community. Across Northwestel's serving area we have consistent pricing. So, you know, if you are purchasing Internet 100 package here, if you're purchasing Internet 100 in Burwash Landing, you're paying exactly the same price.

4052 VICE CHAIR SCOTT: Thank you.

4053 Mr. Sokolov earlier this week put the question nicely, where he noted that customers with the lowest-speed services tend to be the ones who have the most stringent caps applied to them, despite the fact that they're least capable of exerting undue demand on the network.

4054 We heard you this morning talk about some technical reasons. Like I think in a satellite-dependent community, capacity constraints are fairly evident. And I heard you talking about DSL equipment approaching end of life, where it's simply not technically feasible.

4055 Apart from those two examples, how would you respond to Mr. Sokolov's concern about lowest speeds apparently being most subject to what's being cast as a network management technique?

4056 MS. APRIL: Our packages have been designed with the lowest speeds having the lowest caps and typically there has been, you know, sort of a -- I think we had seen people traditionally moving up. So if you felt you needed a higher cap, you were moving to a higher speed.

4057 I know Mr. Sokolov indicated that having a decoupling of those he felt would be important. I think if you look at our price catalogue, you will see that it's fairly incremental steps. So even if we decoupled the speed from the caps, you wouldn't see a lot of price differential for the customers.

4058 Additionally, and the reason that the plans were built this way, as I think you see traditionally in capped plans, is that people with less demand for internet are typically not as interested in higher speeds.

4059 So, you know, my parents don't really need a lot of speed, they don't need a lot of capacity. They look at Facebook once in a while, they do the odd thing, that's it. If they're on a lower speed and a lower plan, that's fine. If one of my kids went to live with them for the summer, they would probably need not only more capacity but if they didn't get a higher speed, they would be hearing about it.

4060 We find that the two are similar and I think our experience with launching unlimited -- because we're pretty new at it, it's only been a few years -- we've seen people that speed has its own value. So, you know, we saw people generally moved, in many cases we migrated them to an unlimited plan from a capped plan and then they were calling back saying, "Wow, now that I have all this capacity, I've realized I really want more speed. Because I'm using more computers, more devices, there's more demand on my network and I need more speed."

4061 MR. SHAW: I'll just add one additional thing, Tammy.

4062 If you look at our internet regulated rates, they haven't changed in over a decade. They've been regulated, some of them regulated below cost. Our entry level DSL package, I think it must be one of the lowest internet prices in Canada, it's at $37 a month, $38 a month and it hasn't changed in 10 years. At the same time the cost of living has gone up 30 percent, 26 percent. So that entry level package from an affordability standpoint, if you're not streaming it's $38 a month and I don't think you will find any other providers in Canada at that price point.

4063 VICE CHAIR SCOTT: Thank you.

4064 My last question ties together LEO, overages, affordability and competition.

4065 So you spoke about LEO, particularly Starlink as a competitive threat, but what about other configurations of LEO services which could presumably be used to enhance your access to backhaul, therefore maybe take some of the pressure off of the need for overage charges and improve the outcomes for satellite-dependent communities?

4066 MR. SHAW: Thanks for that question. We've been using OneWeb services in communities in the Northwest Territories after Anik F2 failed and we've been using it as a community aggregation model. So this situation, instead of using C-band to backhaul internet traffic out of the community, we've put in four small OneWeb dishes in the community and what we've been able to do with that network is increase the speed to the community. Some communities before would have been at 10 or 20 megabits per second. Now they're at 100 megabits per second for backhaul.

4067 So, as satellite technology evolves and has more LEO alternatives come on, we will be looking at ways that we can get to the 50/10 standard in the community using an aggregation model. So that's largely putting a larger dish array in the community, backup power on it so it's more carrier-reliable.

4068 In the Northwest Territories example, we custom-engineered steel platforms that could withstand snowstorms and windstorms. There was backup power put on them. So it's more of a carrier grade LEO than what you would see at the direct-to-home level where you're putting a small dish up on your roof.

4069 The other four dishes we have in these communities are in geodomes. They're protected from the elements. They can't blow off.

4070 So we can engineer a community-based LEO solution and then fan out copper, wireless or eventually fibre-to-the-home service in our satellite sites.

4071 MR. DANIELS: It goes without saying but apparently not because I'm going to say it, but it's all subject to whatever the cost associated with the amount to transponder.

4072 So OneWeb we have a solution. There's a limited amount of capacity, but we were able to expand it.

4073 We're hoping that more LEO providers are going to have greater capacity. We will be looking at everyone.

4074 We have partnered historically with TELUS Sat in an application. And the Government of Canada, you may remember, has since an arrangement to subsidize their transponder cost to -- like all of these things will result in greater speeds at lower rates.

4075 There's -- like it must be very frustrating for these communities. I think I would be very frustrated in terms of the time it's going to take for all of that to happen. But it is starting to happen and it's kind of exciting from that perspective, when we look at it from ours, that we're going to be able to do a lot more than we've ever been able to do before. And not just us because it's open to other people and, as you know, SSi for example is a large provider in Nunavut with satellite as well.

4076 MS. SOUTHWELL: Just to add to that and to take it back to your question about subsidies and the satellite improvement subsidy we've proposed which would be open to any provider. It's, as you will see, formulated not just to be for capacity but also for technological changes.

4077 So if a provider, whether us or SSi, wanted additional funding to build the infrastructure, as Curtis said, dishes or whatever is needed to take advantage of LEO technology, the subsidy is aimed at that as well.

4078 VICE CHAIR SCOTT: Thank you, Madam Chairperson. Those are my questions.

4079 THE CHAIRPERSON: Okay, great. Let's keep going along the table then. I will turn things over to Commissioner Anderson. Thank you.

4080 COMMISSIONER ANDERSON: Hi there. Thank you for your submissions and thank you for appearing here today. I'm going to try to get through my questions as quickly as possible because I'm sure that my colleague has more questions to ask.

4081 We heard from several First Nation intervenors this week that there are several ways that service providers, and in particular Northwestel, could address their needs. Four suggested areas were: to offer services in Indigenous languages; utilize Indigenous providers in deploying services, and you spoke a bit about that when you were speaking about utilizing local contractors to help do fibre expansion; there was a discussion about reinvesting in the communities you serve in and profit from; and there was a discussion about recruiting and retaining local Indigenous employees.

4082 So I was wondering if you could please respond to those items. And if there any applicable policies or data that you would like to refer us to, that would be helpful. I know that you discussed some of it in your opening remarks and in our conversation today. So rather than have you repeat, you can just allude to the fact that you've already answered the question if that's what you would prefer.

4083 MR. SHAW: It's a four-part question, so we'll start with language maybe in our customer service area first and I'll take some of the other ones.

4084 MS. APRIL: Thanks.

4085 Today we do provide service, including billing information, in two Inuit languages. In order to support that, we have two people who speak those Inuit languages in our contact centres. We receive approximately 100 to 150 calls each month that leverage those services.

4086 If any of you have received an email from someone at Northwestel recently, you will see that in our auto-signature we've translated thank you. Because we operate in such a broad territory with so many different First Nations and Indigenous cultures, it doesn't make sense over email to do a specific land recognition, so we said thank you in all of the Indigenous languages for the area that we serve. It's 18. That's a lot.

4087 So having two people -- you need two for redundancy -- to speak each of those languages would be challenging from an employment, recruitment, operational perspective.

4088 Furthermore, we have paid attention and when the question came up, I had a meeting with our customer service director about it. And not only have I not seen escalations, but he reached out to his leadership team as well. There have not been incidents that we found where customers have been unable to communicate with us.

4089 Now, in some cases I'm sure there are elders -- I know there have been elders who have a younger person who speaks English to help them communicate with us. It's something we're definitely keeping our eye on, but I think at this point it would be challenging to be able to fully support that, given the diversity of our territory.

4090 COMMISSIONER ANDERSON: Thank you.

4091 So you spoke about having some customer service available in Inuit dialects and you spoke about land, acknowledging the land. Are there any other ways that you incorporate reconciliation at a customer service level?

4092 MS. APRIL: I think one of the ways --Curtis will be talking about shortly in terms of recruitment, but we do work hard to try to have our workforce as reflective as possible of the customers that we serve. We do -- as we said, we specifically try to recruit Indigenous people. We try to recruit people from the community. Our front line areas are two of the areas that are definitely beneficiaries of that, both our field staff and our contact centres.

4093 COMMISSIONER ANDERSON: Okay, thank you.

4094 MR. SHAW: Commissioner Anderson, just to talk about the other questions you asked.

4095 In terms of providers, we try to use Indigenous northern business where we can and this ranges from camps, hotels, airlines.

4096 When I think about all of our suppliers, our second largest supplier contract -- and it's been this way for probably now 10 years -- is with a joint venture of Atco with NASCo. And that joint venture fuels all of our remote helicopter sites, all of our fuel tanks. They deal with all of our aircraft charters, helicopter charters, fixed wing charters. It's a pretty strategic pivotal partnership for us.

4097 Power is so critical in reliability in telecommunications. We lean on an Indigenous service provider to provide all the mechanical support to our network. So if we have a mountaintop site that goes down, we call our Indigenous partner and they fix it. They monitor the network, help us monitor the network.

4098 So that's one example of a supply arrangement we've had in place and I think right now it's still the second, maybe third largest supplier we have in the company.

4099 In terms of reinvesting, it cuts across capital, infrastructure, but one of the things I can highlight on the reinvesting in our communities is our community investment program. We spend anywhere from $700,000 to $800,000 a year in community investment.

4100 The key focal areas are health and mental health. That's probably about a third of our spending today. Mental health is really critical across Northern Canada, whether it's Whitehorse or one of our smaller communities.

4101 We also spend about a third in Indigenous cultural activities out of our community investment fund.

4102 The last area you asked about -- and this again probably cuts across providers, employment, investments. Tammy mentioned earlier we have 171 technicians and I think right now we have 20-25 open positions.

4103 In the small communities we've been posting ads on the bulletin boards in an office, a First Nations office, the recruitment centre, and we sometimes just don't get staff, we don't get any applicants. So this year we're trying something a little different to try to increase workforce participation and get youth excited about telecommunications.

4104 So just today we're closing our first ever work placement program. So we've encouraged Indigenous youth from across the Yukon to apply on this program. We'll bring them into Whitehorse and put them in the Yukon University for six weeks. And it's not only that they go to university for six weeks and take some basic training in computers, IT, telecommunications, but you earn two university credits and get paid while you do it.

4105 So at the end of the program -- I think this intake we've had over 20 applicants just this week. It's going to close later today, so a bit of a commercial announcement. But we'll have 12 applicants to this program. They will come into Whitehorse, they will go to Yukon University for six weeks, and then we will offer them a job or a career. And it can start I think in customer service. We are really looking for technicians in the communities.

4106 That's one way we can really close our educational gap, is just hiring local youth, get them excited about computers, get them excited about IT and careers in telecommunications.

4107 There's lots of stories here. We've had a technician start in Northwestel and they're now a director. So I do think there are significant career opportunities and it really starts in kind of that grade 12 level, getting out there that we're a great employer, there's some really cool jobs at Northwestel and that's a big thing we've been trying to focus on.

4108 So our HR team, our community investment team and our Indigenous relations team, they've been collaborating on something different in this space really to drive youth engagement and Indigenous participation in the workforce.

4109 COMMISSIONER ANDERSON: And do you have similar programs that you had just mentioned that you provide in the Yukon? Do you have similar programs in other areas within your operating territory?

4110 MR. SHAW: We don't yet. We've been really working hard on the recruitment angle in the Northwest Territories and Nunavut, but this is a pilot program. We're doing it for the first time. Today is the closing date. I think if it works and works well, we will be looking for educational opportunities at some colleges in the East. If we could replicate this in other areas, absolutely.

4111 MR. DANIELS: And if I could just jump in just so we're clear.

4112 It's my understanding, because specifically when -- I know when the Taku River Tlingit First Nation was up here, they actually mentioned the desire to have -- that we have some youth who want it. The first thing we did after that email, "The program is still open. Please apply." So even though, Atlin B.C. would be eligible for the program.

4113 COMMISSIONER ANDERSON: Thanks, great.

4114 Okay, I'm going to move on to my next question then. It relates to Champagne and Aishihik First Nation's submission and it was about a submission that they made with respect to 60 households being missed during a fibre installation project due to inadequate consultation.

4115 I was wondering if you could please speak to your general engagement practices and why the households were missed. Thanks.

4116 MR. SHAW: That's a really good question, Commissioner Anderson. I'm quite familiar with that and we've had lots of discussion with Champagne and Aishihik.

4117 When the Broadband Fund was first released, it was based on hexagons and bidding on hexagons, and we had a number of different issues we were faced with.

4118 One, the timeframe for bidding was quick, I think it was three or four months, and so we were focused really on engineering how can we engineer a fibre-to-the-home solution in all these communities. And as we got started to get through to the implementation -- or the bid process, there were some communities that actually had zero population the database, so there wasn't an eligible hexagon to bid on. So the rules of the program at the time didn't allow us to put a bid forward because there was no population there according to the maps. So that was one scenario.

4119 Another scenario that we uncovered is there were hexagons with population that there was really no population in the area.

4120 So what we did with Champagne and Aishihik in the early days of getting the construction going, we were meeting with their administration team, their leadership team, and they identified there were three subdivisions they wanted to serve. And so what we worked on with them was a change request that we were successful with. And so the following year we built facilities out to Mendenhall, Takhini Subdivision and I don't know if Champagne was included in there as well.

4121 We basically corrected some of the mapping databases. So that's an example where I think, through some ongoing dialogue and discussions about where they had need for infrastructure, we were successful with the change request. And those 60 homes are being constructed and hooked up this year.

4122 So I think it was an example where, you know, we might have caught it with earlier consultation, but I don't know if we would have been successful by a non-compliant bid at the time.

4123 COMMISSIONER ANDERSON: Have you taken any steps to ensure that that type of event would not occur again, to act more proactively I guess, as you said?

4124 MR. SHAW: Yes. So what we've been doing with the Broadband Fund each year is doing a community tour before the engineering is finalized and before the bids close. And so that's an example where we've learned from the early days of the Broadband Fund that mapping isn't 100 percent accurate.

4125 So in the Northwest Territories this year I know we had a team that went into all the communities where we were constructing, and we were looking at maps and households and where new construction was happening. We were also trying to find accommodations, supplier agreements, things of that nature where we can, you know, have full local participation in the construction build.

4126 COMMISSIONER ANDERSON: Thank you. Thanks so much.

4127 I'm going to move on to transparency because that was also a topic of conversation, particularly amongst Indigenous intervenors.

4128 And so one of the suggestions was about more transparency over outages, but in particular with communities. I believe my colleague already asked questions about that, but in particular, did you want to make any remarks given that many of the outages have been affecting remote communities, which are predominantly Indigenous?

4129 MR. SHAW: Yeah, I think after this week we'll be having a really good look at notification and communications and what we do more in the space.

4130 Our whole engagement and consultation, it's evolutionary. And I think in some examples, Commissioner Anderson, we do extremely well. There's other areas where we heard this week we need to do more. So like I'd be honest with you that that's saying everything's perfect. You know, we do have a small team. We're 500 employees. We've got a team of five in the government relations team, and we're going to continue to evolve this process and work their communities on meeting their needs.

4131 I was up with the Chief and Council in the Yukon a couple months ago, and they gave me feedback around outages notification. We took some actions from that meeting. And I think just the more outreach we can do, the more communication we can do -- I don't disagree with transparency comments we've heard.

4132 COMMISSIONER ANDERSON: Okay, thank you.

4133 The next area I wanted to talk about was transparency around the network improvement plan, because that was certainly something that was raised by First Mile Connectivity Consortium. And I believe it was through the lens of encouraging Indigenous communities to know more about the activities that are going on over their territories, but also potentially to start introducing the idea that maybe Indigenous service providers might want to connect onto the network. So I was wondering if you could talk about transparency as it relates to the network improvement plan.

4134 MR. SHAW: So we've done a lot of communications and engagement on the Broadband Fund. And that's been a big portion of our capital work the last couple years. We've got a website that explains which communities are being built, when they're being built. We've done community outreach, community engagement, community open houses. We reach out to customers ahead of launches. So we've really tried to step up what we're doing in the space around construction for the Broadband Fund.

4135 Where there is a major activity in a community, whether it's replacing a power generator, upgrading a building, I think our philosophy in terms of engagement is get there early, get the feedback, make sure the community is onside with the plan to work.

4136 The one example I'll give you is with Anik F2, the satellite failure we saw last year. When we were notified of this with Telesat, there was really kind of three points of feedback. We needed Telesat to disclose this to the CRTC and to ISED.

4137 And the first thing we did was pick up the phone and call the communities impacted about this is what's happening, we need your help. And so in a four- or five-month period, we were able to find land. Finding land in the Northwest Territories, that's unheard of in four or five months. And I think we were able to be successful in that project with early engagement with community leadership.

4138 And explaining how urgent a situation this is, if we lost connectivity to a community, RCMP would be down, 9-1-1 would be down, long distance, Internet, the whole community would go dark. That was the urgent situation we started engaging on in the first weeks of knowing about Anik F2.

4139 COMMISSIONER ANDERSON: So when you speak about reaching out to communities and letting communities know about, say, capital engagement plans or if there's any kind of technological challenges that are going to be anticipated, do you mean that you're speaking out to First Nation or do you mean just communities more general, like talking about, say, Carcross or Carmacks, the Village of Carmacks. Or are we talking about Little Salmon First Nation in particular?

4140 MR. SHAW: It really is situational dependent. Generally, if we're working on rights-holder land, we're dealing with the government. You know, it's a government conversation. Sometimes Chief and Council will delegate that down to a lands department or a community manager or an administrative manager and the team. The economic development opportunities or partnerships are largely with the dev corps, the dev corps either at a regional or community level. They're really situational dependent.

4141 COMMISSIONER ANDERSON: Okay, thank you.

4142 Sorry, I just want to make sure that I'm not going to miss anything.

4143 FCC has also suggested using -- sorry, FMCC suggested FCC's process of using a form -- it was form 481, and that was provided in their written submissions -- whereby tribal governments could obtain both financial and operational information for projects that received broadband funding over their territories.

4144 Is this something, an initiative that you would be comfortable with?

4145 MR. SHAW: I don't know about 481. I'd have to take a look into it in more detail, Commissioner Anderson.

4146 COMMISSIONER ANDERSON: I was wondering if I could get an undertaking to have a response to that information.

4147 MR. SHAW: Sure.

4148 (Engagement)

4149 COMMISSIONER ANDERSON: Okay. Now I'm going to ask about consultation reporting because we've had, as you're aware, several different intervenors say that there ought to be more transparency when it comes to consultation with Indigenous communities. There were suggestions about making it public. There were suggestions about providing notification about who was at the meeting, what was discussed, any issues that or disagreement that the Indigenous community had with proposals set forward. And parties also raised concerns about privacy issues, which I understand, and that's clear. But one of the intervenors had suggested that as long as the community had a chance to review the consultation report and sign off on it or be able to provide comments, that that would be helpful.

4150 Do you think this would be a good way to ensure that service providers are engaging with Indigenous communities properly?

4151 MR. SHAW: That's a good question. And I agree, I don't know if we saw consensus in the room on this point. I think it's really community-specific. And I think learning from past consultations, I think the one thing our team would likely do if any of this is going to be recorded on the public record is get permission to do that ahead of the meeting, and then potentially send a copy in to the meeting participants ahead of it being published.

4152 And I think again it's I think up to the individual community level, up to the community leadership. Do they want to have a private closed-door meeting? Or do they want it in more of a public forum? And I think we can accommodate both of those models, depending what the individual community is wanting to see.

4153 COMMISSIONER ANDERSON: And then we --

4154 MR. DANIELS: But just -- just -- like so we were mandated to do consultation as a result after we received the broadband funding and to report on it, which was good, because as Curtis just told you, we didn't have a lot before because we had a very short period of time to put in. We went and did the consultation, then we reported on it. And I think what we're saying is we reported in confidence, but after we sent to every community what we had said in confidence to them. So every community got to see it.

4155 The mistake -- lessons learning, is probably a better way of putting it -- is that we should have clarified that before in the meeting, which is what I think we're -- but given them the option. Well, I want to have a closed-door. Okay, in that case, we will send you after the meeting a summary of it for as to this is what we intend to file, summarizing it for the CRTC before we filed it. That was probably the key learning for us, that we didn't. You know, we could've done better. And I think we intend to.

4156 Others would probably say, No, no, we're happy with it being public. It still means we should still send it to them beforehand, summarized, you know, beforehand. But then we would put it on the public domain. We just didn't feel we had the authority to do that because we hadn't asked.

4157 COMMISSIONER ANDERSON: Of course.

4158 In any event, regardless of whether or not it becomes public, do you think it would be feasible to provide Indigenous communities an opportunity to review any kind of consultation reporting or engagement reporting and provide an opportunity to comment?

4159 MR. SHAW: Yes.

4160 COMMISSIONER ANDERSON: Perfect, thank you.

4161 There were questions or comments about having community monitoring or third party monitoring to help monitor the network, both on a regular basis and under exceptional circumstances. And it was also raised as an area where you could get some community involvement, engage the community. And then there was talking about just also sending reports about, say, what speed service is available. Do you have any thoughts on community monitoring and in particular from a third party or from an Indigenous community?

4162 MR. SHAW: I think it goes hand in hand with increasing employment in the small communities and just what I talked about trying to hire another 10, 12, 20 technicians.

4163 We have a 24-hour, seven-day-a-week network control centre. They monitor the network. They know the temperatures of our building, if a door opens, door closes, what network elements are up, which are impaired. So we've got a pretty good network map of the community.

4164 What we do miss in those situations is if a road construction crew cuts a fibre or there's a flood or there's a fire in a community. We might find out about it hours or a day or two later. And so I think that local community involvement of monitoring the base physical network that we may miss from the control centre standpoint would be helpful. And that's something that we rely on our technicians as eyes and ears on the ground in 40-plus communities.

4165 COMMISSIONER ANDERSON: Okay, thank you.

4166 We heard from a lot of the First Nation intervenors that one way to seek equity with the south -- and you've certainly mentioned having parity with the south in several different aspects -- but one of the First Nations, and I believe it was Champagne and Aishihik, said that they wanted to have competition as a means to equity because people in the south have the ability to choose.

4167 So I'd be interested to hear what you have to say about that, in particular noting that you've made certain commitments towards reconciliation and in light of the fact that several intervenors have spoken about free, prior, and informed consent, which of course comes from the United Nations Declaration on the Rights of Indigenous People.

4168 So if Indigenous intervenors want competition as a form of equity, are you willing to change your views on competition in the North?

4169 MR. SHAW: So I don't believe it's my place to define reconciliation means at an individual First Nation level in Indigenous governments of the vast communities that we serve.

4170 When I travel into these communities and when I engage with governments, I'm hearing many of the same things we heard this week, concerns about affordability, liability, opportunities for ownership, opportunities for employment and training for youth in the telecommunications industry.

4171 So as a service provider, we've really prioritized building solutions on collaboration. And that goes back to the Shared Pathways network as a first step.

4172 You know, from an HSA -- a wholesale HSA perspective, I can speak to it from a business standpoint. And today, wholesale HSA as it's implemented in southern Canada really doesn't work for Northwestel, you know, due to a number of reasons that we've put forward in our interventions.

4173 COMMISSIONER ANDERSON: Okay, so you would not change your position on HSA or wholesale, even if that is what First Nations wanted to feel as though they were being treated equitably as the rest of Canadians?

4174 MR. SHAW: I think it would go back to from a partnership standpoint, we've done lots of economic partnerships, and we're trying to hit affordability, reliability, increasing investment. And I think we've proven over the last three, four, five years that we're open to creative business models. And you know, I think if there was an ISP or an Indigenous ISP wanted to start up, first thing we'd do is sit down and see how we can meet their needs.

4175 COMMISSIONER ANDERSON: And speaking of alternative business models or alternate business models, several intervenors, including competitive ISPs, have discussed not needing to own the assets. And several intervenors also discussed not having exclusivity agreements with Indigenous communities that decide to have some of their infrastructure.

4176 Did you want to provide any comments in this regard?

4177 MR. SHAW: I think there's many different business models we can work on. So Shared Pathways in the Yukon is one business model where it was ownership and it was financial benefits, stable cashflows, something that met the needs of the development corporations.

4178 I can think of another example in the Northwest Territories with Whatì. The Tłı̨chǫ government built the fibre. They own the fibre. They lease capacity back to Northwestel. So they're in the fibre optic delivery business. They have fibre optics that they can use for their own networking between communities. And so it's a different model that we've put forward.

4179 And I think from my perspective, we're going to continue to engage and try to find creative solutions to meet the affordability challenge and closing the infrastructure divide that we see.

4180 COMMISSIONER ANDERSON: Okay, thank you.

4181 And my last question, it goes back to Indigenous and local ISPs. And there were comments on the record, I believe from First Mile Connectivity Consortium, about having local ISPs to operate and support infrastructure who can provide for local business opportunities. And they would be in a good position to respond very quickly if there is any kind of issue with the network.

4182 Is there anything that you wanted to say about having competition at a local community level or within Indigenous communities?

4183 MR. SHAW: Probably not a lot other than, you know, having people in the communities is very important. I can't disagree with that. I don't think Tammy would disagree with that. You know, the power of Northwestel in our presence, it's not the network, it's the people that run the network. And you know, we have technicians in 40 communities. We have 500 employees. They live, work in the North. They volunteer in the North. And I think having that local community presence is highly important. So I can't really disagree with those comments.

4184 COMMISSIONER ANDERSON: Thank you. Those are all my questions.

4185 Thank you, Madam Chair.

4186 THE CHAIRPERSON: Thank you so much.

4187 Let's go to Commissioner Desmond.

4188 COMMISSIONER DESMOND: Good afternoon. I'm going to talk about competition wholesale. Some of my colleagues have touched on this issue and have covered some of my questions, so I'll try not to duplicate the questions they've asked you. But if I do, I apologize in advance.

4189 I'm going to start by asking you a question that relates to CNOC's submission this morning. I don't know if you had the benefit of hearing their submission, but they did suggest that section 10 of the 2023 policy direction, which states that the Commission must mandate the provision of aggregated wholesale high-speed access service, is not limited to southern Canada. And as a result, it's a model that should be applied across the country.

4190 So I'm wondering if you could comment on your views as to the applicability of section 10 of the policy direction.

4191 MR. DANIELS: So in our view, I mean, if you look at the policy direction, there's also section 2(c) which says that rural areas that

"ensure that affordable access to high-quality, reliable and resilient telecommunications services is available in all regions of Canada, including rural areas, remote areas and Indigenous communities."

4192 So our first comment is our position on HSA, wholesale HSA is the impact it will have on the communities in terms of our incentive to invest and expand. So is there a contradiction there?

4193 We also note that the wholesale -- that, you know, section 4 says about efficiency and proportionality:

"The Commission should ensure that the measures that it imposes through its decisions are efficient and proportionate to their purpose."

4194 And in that regard, I guess I disagree with the characterization. I could get into the little wording of the section -- I'll spare you that.

4195 In terms of that from CNOC, my main point of disagreement is I don't think you're being directed that every single community anywhere in the country that someone has an ISP as a result of this has an obligation to provide wholesale access. I think it's -- the essentiality of the -- sorry, I shouldn't use the word "essentiality," because it could come back in a second, but it's the proportionality aspect of it doesn't make sense in the North. And I'm happy and I'm sure we're going to get into it in a minute as to why I think it doesn't.

4196 But if you're asking me at the outset just legally are you required, I don't believe you're required because that interpretation would say every single location that anyone who is an incumbent -- and there's a lot of small incumbents all across this country -- suddenly would have that obligation, by that interpretation. And that, to me, is a misreading of the policy direction.

4197 I'm not trying to dispute that the policy direction has a push towards maintaining the aggregated services it does unless, you know, there's removal. So I'm saying, you know, I'm sorry, I don't want to get into -- again, I'm going to fall into my legal trap, which I will avoid.

4198 But my short answer on a high level, and I think the Commission's own test, you have an essentiality test and then you had a policy on top of that, that allows you to mitigate that, is consistent with the policy direction. So that's my legal answer. And of course, I'm happy to get into the substantive one.

4199 COMMISSIONER DESMOND: No, that's fine. I guess the only maybe follow-up I have with that is, you know, I think you've taken us to the extreme where you say every single small community. What about more generally in the far North? I mean, is that not sort of the direction that has been provided to us? Or do you take a different perspective on that?

4200 MR. DANIELS: I guess what I'm trying to say is that legally speaking I am taking the extreme to say every single community; that can't mean what the policy direction and doesn't mean what the policy direction -- so which means that generally speaking there isn't a requirement per se. It's a decision to be made by the Commission.

4201 And there's a direction here that I'm acknowledging, you know. And so you're having a proceeding and rightfully asked does it make sense in the far North. And all I'm saying at this point is legally speaking I don't think it's a requirement.

4202 I take your question to mean, But isn't the government giving us sort of a direction that we should go in this manner for greater access? We have a number of proceedings. Got another one on Monday we'll have to file on and so on. On that, and we'll obviously -- but in this proceeding here, is it -- it's the right topic, the right conversation. There's definitely people expressing interest.

4203 And we have reasons that we believe it shouldn't. And all I'm saying is that legally speaking I think that the policy direction allows you to make -- for you to make your judgment. And then we'd like to get into why.

4204 And you know, so we'll -- my colleague's reminding me, rightfully so, that there's also reference to the need to invest, which is all part of -- in the policy direction, which is part of my argument when we get into the policy, what the test is and where it comes in.

4205 COMMISSIONER DESMOND: Okay. Maybe I'll keep moving forward in the interest of time, and we'll continue to have that conversation.

4206 If the CRTC were to move to a competitive model, just assuming for a moment that was a decision that was made, what impact would that have on your business plan?

4207 MR. DANIELS: So I'm going to hand it over to Curtis. And I just want to reserve at some point we'll get to discuss why we think that's a bad idea. I'd like to.

4208 MR. SHAW: One thing we haven't really talked too much today about is all the cross-subsidies in the business. Tammy highlighted that with the Broadband Fund, the only reason we went forward with it is there's three or four large communities in each territory that cross-subsidize the small communities, even within the Broadband Fund. If you look at our Internet base, half of our customers are in Whitehorse and Yellowknife. That's where they're clustered. That's where the revenues are. It's over half of our Internet customers.

4209 In the competitive scenario, our revenue drops and we're forced to prioritize any discretionary investment. So things that may come off the table could be Internet upgrades, expansion to uneconomic areas. Looking at customers, I gave you the example of 20 minutes out of Whitehorse, here, you've got DSL connections today that we need to close. So from a business standpoint, as we see competitive pressure, as we see revenue reduction, there's a corresponding impact to our capital program that hits at some of the discretionary spending we would do as an organization.

4210 And I can't spell out exactly what that's going to look like over three years. We've got Starlink in the market today, reducing our revenues. And then it's the cumulative impact of other regulatory shocks in the business.

4211 COMMISSIONER DESMOND: Okay, thank you.

4212 And some of my questions will relate to kind of the alternative scenario, so I just want to give you a chance to comment on, you know, if that was the path the Commission chose, how would you respond.

4213 So my next question, then, is if the Commission were to mandate a wholesale high-speed access service, do you -- could you comment on whether the Commission can set rates that are both high enough to ensure that you're profitable as an organization, but yet low enough that wholesale ISPs can also profitably enter the market?

4214 MR. DANIELS: So I take that question as to mean -- are you asking me, like, how would you go about setting the rates for a wholesale service if it was mandated despite our opposition? Is that -- because -- or I just want to make sure I'm properly understanding the question, where -- what you would like me to opine on.

4215 COMMISSIONER DESMOND: I don't know that we need to get into a rate-setting exercise this afternoon. But is it possible, in your view, to actually set a rate, if the Commission were to say, Okay, we're going to go down this path, do you envision that a rate could be set that would allow you to ensure your profitability but yet also allow for competitive entrants to start up and survive?

4216 MR. DANIELS: I think the short answer is that we’re concerned about our ability to continue to invest and what’s it going to do to our incentives to invest, so I don’t want to be -- to say to you, oh, no, if you mandate, it means we would be losing money everywhere as providing wholesale service as a result of that.

4217 I’m saying what it would do is the impact of the kind of things Curtis was just talking about, about our future investments, that they wouldn’t make sense. We wouldn’t do those types of things.

4218 So I think that’s why we think it’s not the right policy on that, but I don’t want to be, you know, interpreted as saying it’s impossible that we would be able to be, you know, as a company entirely not able to make -- to make money. We wouldn’t be able to justify future investments.

4219 MR. SHAW: I'll just add one thing, Jonathan, if -- on the record of this proceeding, I believe you have the underlying residential internet costs. Our residential internet costs in the communities are already priced below cost, so I don’t know how you set a wholesale rate that would be lower than our current costs. We’re not covering costs today, so I think if that was the case in the communities you’re subsidizing competition, it’s a difficult thing to stomach in terms of future investment in the smallest communities in the north.

4220 COMMISSIONER DESMOND: My colleague asked you the question about achieving economic reconciliation and I’m just going to maybe ask again but in a slightly different way because I do think it’s very important. If there was a mandated wholesale HSA service, do you see that as a mechanism to promote economic reconciliation?

4221 MR. SHAW: I think you would have to have -- if that was the desire, you would have to have Indigenous participation. If it was wholesale HSA and it’s a reseller to Toronto that’s marketing into high-cost serving areas and not generating employment, it’s not going to do anything on the reconciliation agenda.

4222 COMMISSIONER DESMOND: Okay, thank you. Can we speak now about the rate-setting methodologies?

4223 Again, if the Commission were to go down this path, we’ve had different proposals put on the table. We’ve had SSi talk about retail minus. We’ve heard about negotiations.

4224 So perhaps you could maybe address those different methodologies. What, if any, concerns would you have if the Commission were to use a retail minus approach?

4225 MR. DANIELS: The Commission has a proceeding on about how to set wholesale rates and we have been waiting for that decision and, you know, I think CNOC has suggested that we should align to whatever that decision is.

4226 In that proceeding, Bell proposed -- so I say Bell because I was involved in that, obviously -- but we proposed as the solution that it should be a negotiate first with a backstop of final offer arbitration with certain protections. Not just final offer arbitration, but certain protections that are necessary to make it work for all parties in the country.

4227 And so Northwestel takes the same standpoint, but we will also abide by whatever decision there’s -- that the Commission makes.

4228 There has been some discussion this week about whether retail minus -- you’ve heard some discussions about some of the flaws from retail minus, from CNOC earlier today. You know, it really depends what you’re trying to achieve, if you’re looking at small Indigenous groups, a small Indigenous First Nation who wants to have an ISP in there, would not be the preferred model, be easier to operationalize from Northwestel’s perspective. So we would understand it really goes to what you’re trying to achieve.

4229 But from our perspective, we think that the best solution if you are going to mandate it, which, of course, we’re opposed to, would be a negotiate first solution.

4230 COMMISSIONER DESMOND: And just to give you the opportunity to comment on this, but of course, you probably heard other intervenors say how difficult it can be from their view to engage in negotiations or final offer arbitration with respect to rate setting, so I just wanted to give you a chance to respond to that.

4231 MR. DANIELS: I appreciate that because we fundamentally disagree with what was said earlier today by CNOC.

4232 They used an example -- they talked about how what’s different about broadcasting than telecom is that in broadcasting, a BDU who wants to buy service can choose between service A and service B and, you know, if they don’t like what happens in final offer arbitration with service A, they can go make a deal with service B, so they have greater power, whereas that’s not the case in telecom.

4233 And I was listening to this and I now have more experience because in the last couple of years I’ve taken responsibility for broadcasting for Bell, and I’ve gone through some of this process and it’s just -- it’s the opposite.

4234 So if you’re a BDU and you are -- in broadcasting, if you’re a BDU and you want to carry sports, are you going to say, hmm, I’m going to choose between TSN or Sportsnet and I’ll go and see which one gives me a better rate because they’re both -- you know, they’re both sports? No. If you’re going to sell those sports, you better have TSN and Sportsnet because if you want to watch a Maple Leafs -- sell to somebody who likes the Maple Leafs, you know, half the games are on one and half the games are on the other, and so on.

4235 So the fact that the parallel between that service -- in fact, in broadcasting it’s much more unique than it is in telecom because in telecom in -- you know, generally speaking, if there’s more than one option, which I’m not saying that there is here, but if there’s more than one option, you know, the service provider can actually go and say, hey, do I choose? I have two options to choose from and, therefore, final offer arbitration creates greater risk for the incumbent than it does for the new entrant in that circumstance.

4236 So -- sorry.

4237 So with that in mind, I look at it and say, “But what’s been the experience?”. And it’s very funny, in my role as -- seeing it is that everyone thinks on their side that they’re at a disadvantage, so when I’m with my Bell Media folks because I do Bell Media, who’s the programming undertaking final offer arbitration, I hear, “We’re at a complete disadvantage with the BDUs” and then when I’m at Bell TV and doing negotiations, they think they’re in a disadvantage on it.

4238 And everyone thinks that, but the thing that I have seen in my experience is that it works pretty well, final offer arbitration. It encourages parties to actually make a deal. You get down to the nitty-gritty of negotiating and, at the end of the day, you know what your alternative is because you put in your bid and you have to decide am I going to take the chance or not take the chance.

4239 And so you know, I think the argument to talk about the disparity and bargaining power or something like that works -- it really works in broadcasting and, in fact, they refer to it as baseball and it works in baseball, that same argument, it’s really unfair because the individual doesn’t -- you know, the team could choose a whole bunch of players, but the actual player only wouldn’t work, it’s very successful. It’s why it’s being adopted in a number of different models.

4240 And so I really do think that it can have immense success.

4241 COMMISSIONER DESMOND: Okay, thank you. We've heard a lot about Maple Leafs and baseball arbitration, and I do appreciate your views on that, so thank you.

4242 I just have a couple more questions, and I do want to make sure we have enough time to kind of circle back, so I’m going to move on to shared pathways.

4243 We’ve had some conversation about shared pathways and, as I understand it, you identified in your opening statement at paragraph 70 about how First Nation communities have purchased the in-community fibre and have leased it back to Northwestel, if I understand that properly.

4244 So I’m hopeful you can give us a little bit more information about that arrangement. Is it an exclusive lease?

4245 MR. SHAW: Yes, it is. It was based at an IRU, so we sold all the fibre assets in the community that were built as part of the Broadband Fund and it was done in three tranches.

4246 So the three are construction and the first year -- the Broadband Fund was settled out last March or April, and then we had just the second tranche, second year of the Broadband Fund. And at the end of the Broadband Fund construction, the First Nation Development Corporations will own the fibre assets that are in the ground and hanging on power poles across the Yukon.

4247 COMMISSIONER DESMOND: Okay. So how does that impact competition? If competitors wanted to operate maybe as a service competitor in the Yukon, what would be their path forward to do so?

4248 MR. SHAW: So from a Northwestel standpoint, we are still operating the network today and so, really, it has no difference on the Broadband Fund.

4249 The fibre, in and of itself, isn’t an end-to-end service. There’s no server services, email services. It isn’t enough to create an ISP. It’s the infrastructure in the ground in one of those communities.

4250 MR. DANIELS: But also, to be clear, like because it’s leased to us, it’s still subject to regulation, so all of our tariff supply Wholesale Connect applies, so if someone wanted to set up an ISP in a particular community and wanted to access that fibre for transport, it’s available under Wholesale Connect under our tariff.

4251 COMMISSIONER DESMOND: Thank you.

4252 And then at paragraph 71, you refer to another agreement that was reached in the Northwest Territories. And could you just speak briefly about that and its impacts as well?

4253 MR. SHAW: Yeah, the Tlicho government were building an all-weather road at the community of Whati. Previously, Whati was served with an ice road.

4254 And when they were building the road, they looked at can they put fibre alongside the road, and that was a few years ago. And they started asking us, “Could you help us with this? Could you purchase electronics? Would this make a difference to put fibre to the home into Whati?”.

4255 The community of Whati wanted a better cellular experience. They wanted faster internet speeds.

4256 So we worked out a partnership with the Tlicho government. They built the road, they built the fibre, and we helped them with some of the design on it, and they continue to own that fibre today.

4257 And I believe we’re leasing, I don’t know if it’s six fibres or eight fibres. We’re leasing enough to power the network in the community and then the rest of the fibres have full control and ownership by the Tlicho government.

4258 That’s the high-level model that we have today.

4259 So it’s slightly different than shared pathways. Again, it was a partnership that we worked on to try to facilitate hitting the affordability, reliability, speed issues the community had previously.

4260 COMMISSIONER DESMOND: Okay, thank you.

4261 I did have questions around the essentiality test, and I suspect perhaps this will tie back to the policy direction as well in our conversation about the mandating of wholesale access.

4262 Perhaps I’ll just start by asking you why you do not think that the essentiality test has been met.

4263 MR. DANIELS: Thank you for that. As you know, I’ve been kind of waiting for that one.

4264 Can I break that, if you don’t mind, into two parts?

4265 Before I give you the very specifics of the essentiality test and I’ll walk you through every component as to why I don’t think the essentiality applies, like we meet these -- the criteria here, I’d sort of -- with your indulgence, I’d like to start off with why don’t we think wholesale HSA is a good idea beyond just the essentiality test and come back to the second part of the test because there’s the essentiality test that has the three prongs, but even if you meet the essentiality test, the Commission established a second part, which is policy considerations. And there’s three specific policy considerations that can decide whether, even if you meet the essentiality test, it applies or it doesn’t.

4266 And I think it’s worth starting there, if you don’t mind, because it sort of explains our approach on this. And really, it fails, in our view, the policy consideration on investment, which brings back to what my colleague was trying to make sure I got in about the investment -- reference to the investment, the need to incent investments that’s found in the policy direction.

4267 The reason why we say that is if there is any benefit that would be had from wholesale HSA, we fundamentally believe that the cost associated with it will exceed the benefit. And the reason why I say that is twofold.

4268 The costs are high, and I’m going to talk about that in a minute, but also talk about that there’s other ways to achieve the benefits without having -- enduring the costs.

4269 So why do I say the costs are high? What costs am I talking about? I’m talking about two types of costs, direct costs and indirect costs.

4270 The direct costs are just the cost of actually building the systems to do it, the ISIT systems. We’ve submitted in confidence that number. It’s in the millions, and it’s a pretty expensive proposition to undertake.

4271 I can make the same argument in the south for some other companies I represent. But what’s different about in the north is you’re talking about 30,000 terrestrial homes. That’s it. That’s what we’re talking about, 30,000 terrestrial homes. How are you going to recover the cost over a footprint of 30,000 homes?

4272 And not only that, let’s say you can solve that issue. The second point is, it’s a very small company. There’s only 500 people, as Curtis keeps saying.

4273 What’s also small in there is the ISIT department, so if they’re doing this, they’re not doing a whole bunch of other things for a very long, detailed -- like it’s a big deal to build this for us and it’s going to impact us to be able to pull that off. So there’s a distraction that happens, and it comes at the expense or, you know, economically speaking, the opportunity costs of other things you could be doing because your ISIT department is small.

4274 So that’s my first category, direct costs.

4275 The indirect cost goes to the impact on investment. This is the one that we’ve written about extensively that everyone knows that we’re going to talk about and so on, and it’s the one that Curtis actually gave you the examples of how that would happen. But it really comes down to the lack of access, so it’s why is that we know that the biggest issue is we need to expand and build service to areas that don’t have it in the north, and what you’ve heard today is that there’s more to come and it’s the harder ones that still -- that need to be done.

4276 And with that in mind, you’ve got to -- you’ve got to say, well, okay, but -- if I were you, I’d be wondering, I don’t really get this. You guys are saying Starlink’s going to make you do all these things. You’re going to have to invest more and more. And then you say competition, not wholesale. No, no, that’s going to not invest. Make up your mind. Where are you coming from on it?

4277 Let me try to square that circle because I think this is actually perfectly consistent.

4278 Facility space competitors like Starlink, we have to invest because we have to make ourselves look different than them. That’s -- I think I talked about that earlier today in terms of, you know, we have to invest. That’s what we’ve put in because we have to try to win from the facilities-based provider. But if you have wholesale HSA, any dollar you invest to expand your network, to increase speeds, to do anything immediately benefits your competitor, so there’s no incentive to do it. You sit there and say, “Why would I do this? Why would I put money into this if I get no advantage out of doing it?”.

4279 It’s totally the opposite, which is why I come back to this whole notion that the incentives to invest really matter.

4280 So that’s my whole difference about the costs are high, both direct and indirect, in terms of the impact of investment.

4281 So why is the north different from the south besides the fact that we’re very small, 30,000 homes?

4282 And the answer to that is because you have other tools. You’ve got retail regulation. What you have not heard a single iota from Northwestel today is, “We are looking for permission to increase our rates”. You haven’t heard that.

4283 Curtis talked about we’re looking for permission -- like we need to respond to competition and, in fact, we have submissions about looking for further rate reductions, the ability to reduce rates. Curtis mentioned we haven’t raised our rates in 10 years, and we’re actually looking for the flexibility to do that.

4284 We’re worried about responding to Starlink and other LEO competitors and looking for flexibility, so -- but we’re subject to retail rate regulation. And to the extent that you’re concerned that our rates are too high relative to the south, rather than introducing mandated wholesale competition with all of the negative costs, you can achieve that back to what Kate was talking about by subsidizing, directly doing -- and achieving that. It makes way more sense for a company that only serves 30,000 homes.

4285 Like that’s it. I know we’re big, relatively speaking, in the north, but we are so much smaller than a lot of other companies that don’t have that obligation in the south.

4286 So anyway, that is sort of my -- thank you for giving me the chance.

4287 Now, if you want me to walk you through the essentiality test, I could also do that as well.

4288 COMMISSIONER DESMOND: No, that's -- I mean, we've read your written submissions and I am certainly aware of your views on that.

4289 Just perhaps to finish the conversation, and I’d like to pass it back to the Chair, would be maybe just two points.

4290 You’ve talked about the cost to set up the infrastructure for wholesale, but is it fair to say that some of those expenses would be shared with your parent company?

4291 So I’ll just leave that question with you to respond.

4292 And then my second part to that is, as you are well aware, the essentiality test also has a policy consideration. And just to finish up our conversation on this point, I’d like to go back to the policy direction and does that impact, then, even if the essentiality test -- you know, is there a policy reason why we should still proceed?

4293 So I’ll just finish on that with those questions and then I’ll pass it back to the Chair.

4294 MR. DANIELS: So the first one about the parent, I think maybe I’m going to turn to Curtis to describe how Northwestel makes its own decisions and how that works in terms of investment.

4295 MR. SHAW: Our capital plan is built here by our management team. It’s recommended.

4296 If there’s requirement to build a wholesale HSA, it comes at the expense of other items in our plan, so that’s pretty simple. It’s really no different than any other business in Canada. It’s -- I see it as a business decision on our side what to cut.

4297 MR. DANIELS: And if I can, I appeared before the Commission the last time you had this proceeding a number of years ago and this issue came up then, and I think it’s probably worth just spending a minute to talk about the benefit of why Northwestel is a separate company and operates as a separate company from Bell.

4298 It really brings the lack of -- it ensures the proper attention is placed in the north by having the management team who’s making their decisions within the north. There’s advantages that Northwestel gets by being part of the Bell in terms of companies or whatever, which Curtis can talk about and I hope he chooses regulatory support as his number one aspect, but I don’t think he would, but -- you know.

4299 But putting that aside, there’s a number of advantages he gets that he can talk about, but from the Bell perspective, Northwestel is based here, it serves here, it has a management team here, it has call centres here. It’s very different from how Bell operates and it has the advantage of being able to focus on the north in a way that a big company like Bell can’t do to the same extent.

4300 And so it’s really served the north, in my view, really well by having Northwestel as a separate company which can take some of the advantages associated with Bell but really operate and focus on the north and make decisions on the north, but that also means that its investments decisions like wholesale HSA cannot just be solved by turning to Bell.

4301 COMMISSIONER DESMOND: Okay.

4302 MR. DANIELS: Right, sorry. My colleague’s reminded me that I didn’t answer your second question.

4303 So -- and I just want to make sure I understood the nature of your question and if you could just give me a minute, I just want to confer with Kate on it.

4304 COMMISSIONER DESMOND: Absolutely. I just want to be really mindful of the times because we do have a hard stop and I want to respect my other colleagues’ time as well, so I just -- I don’t know if it’s something you can respond to very, very briefly before I turn the mic back to the Chair.

4305 MR. DANIELS: And the question is specifically how does -- how can we, in accordance with the policy direction, be able to not provide --

4306 COMMISSIONER DESMOND: I just wanted to circle back because we had had our conversation about the policy direction early in our conversation and I think you wanted to, at some point, come back to that, but perhaps you’ve already covered what you needed to say.

4307 MR. DANIELS: Yeah. No, I have.

4308 Like basically, what it comes down to, just in a sentence, is I was just simply trying to say legally speaking, the policy direction does not require -- in my view, that every company in every circumstance, you have discretion. I think that when you look at all the various different components of it, not just Section 10 in and of itself, allows you the discretion to determine whether it should be mandated or not wholesale HSA, for the reasons that I pointed to of the other clauses in the policy direction. And then I wanted to explain, which you gave me the chance to do, as to why we thought -- now that you have that discretion, why you should exercise that discretion.

4309 COMMISSIONER DESMOND: Okay, thank you very much.

4310 THE CHAIRPERSON: Thank you very much. Thank you for answering our dozens and dozens of questions and for spending the better part of the day with us.

4311 We will give you the last word before we give our closing remarks to close the hearing, so back to you.

4312 MR. DANIELS: Do you mind if you just give us a minute to confer? I appreciate we’re --

4313 THE CHAIRPERSON: Absolutely.

4314 MR. DANIELS: -- late, but I’d just like a minute to just talk about what we want to -- would like to take advantage of that.

4315 THE CHAIRPERSON: Absolutely.

--- Pause

4316 MR. SHAW: We’re cognizant that we’ve taken up a lot of the time here in the last hour with some difficult questions. I just want to thank Madam Chair, Commissioners, Vice Chair Scott, all the staff taking time and travelling to Whitehorse. I know it’s a pretty big exercise to set this up outside of Ottawa, so I really appreciate you travelling north and wish you all the best in deliberations.

4317 Do you have anything else for us?

4318 THE CHAIRPERSON: No, that's great. Thank you again for participating. Thank you for being here with us and again for answering all of our questions. Really appreciate it.

4319 MR. SHAW: Thank you.

4320 THE CHAIRPERSON: Thank you.

4321 So maybe what I'll do is just take a moment to close the hearing. And before I do, I would just like to say to the Kwanlin Dün First Nation and the Ta’an Kwäch’än Council, thank you for welcoming us to your traditional territory.

4322 I would also like to thank the Kwanlin Dün Cultural Centre for hosting our hearing this week. I heard somebody say this is the nicest CRTC hearing room they had ever seen, so thank you again for that.

4323 I would also like to thank Kwanlin Dün Elder Ann Smith for opening our hearing with a traditional prayer. It’s hard to believe that that was on Monday. I feel like the week has flown by very, very quickly.

4324 We feel very fortunate to have spent the week here in Whitehorse. We’re very appreciate that we have been so warmly welcomed, and we were talking about this today. I think we’re going to feel very sad leaving the Yukon, but I think that we all have plans to come back soon.

4325 We really appreciate everybody who has participated in this proceeding, everyone who participated in the hearing, both in this room and, you know, there have been a lot of people here, so thank you to everybody who has participated virtually. Thank you to you as well.

4326 Alors, merci beaucoup à tout le monde qui a participé dans l’audience cette semaine.

4327 We’re grateful for everyone having taken the time to share your perspectives, your stories and your proposed solutions. I think it wouldn’t be surprising to anybody who’s been following the hearings this week that, you know, a lot of what we heard concerns us in terms of telecommunication services in the far north. We were very troubled by some of the stories that we heard and the very real impact on people of where telecom services are falling short, and in particular on education for children and safety.

4328 And we also heard that we at the CRTC have some work to do, so we have all taken note of that as well.

4329 At the same time, I would say we’ve heard a lot of hope and we’ve sensed a lot of hope and a lot of maybe, I’ll say, cautious optimism over the past week and it’s along those lines that we would like to move forward. We’d like to build on that as we work toward proposed solutions to these pressing issues that we’ve heard about with respect to reliability, affordability, competition and reconciliation.

4330 In terms of next steps, I would just say we have public opinion research that will be published shortly. Everyone will be notified. Everyone can comment. May 9^th is the date to file responses to undertakings and information will follow on that.

4331 There will be some targeted questions in writing and the date to respond to those will accompany the questions. And June 9^th, as we’ve talked about, is the date for final submissions.

4332 I hesitate to talk about additional steps and additional process because we know this has been a long proceeding. We know there are pressing issues. We know that we need to move quickly, so I would just say that we will be moving as quickly as possible and whatever additional information we will be seeking will be very targeted. It will be the information that we need to make a decision.

4333 So again, just a big thank you to everybody. Thank you to our stenographer, to our interpreters. Thank you to Commission staff, Encore Global, who broadcasted the hearing, everyone in the room, outside of the room who worked as a team to ensure a smooth hearing, and always with a smile as well, which was very lovely. You pulled it off, so thank you.

4334 Alors, on sait que l’organisation d’une audience demande beaucoup de travail, et nous vous remercions beaucoup. Alors, merci beaucoup.

4335 And I will now bring this public hearing to a close, so have a great afternoon, everyone, and thank you.

--- L'audience se termine à 14 h 54

Sténographes

Kristin Johansson

Monique Mahoney

Bill Curley

Lynda Johansson

Tania Mahoney

Brian Denton