:
Good morning, everyone. I now call this meeting to order.
Welcome to meeting number 12 of the House of Commons Standing Committee on Industry, Science and Technology.
[Translation]
I want to acknowledge the presence of our colleague Mr. Généreux and welcome him to the committee.
[English]
Today's meeting is taking place in a hybrid format pursuant to the House order of January 25, 2021. The proceedings will be made available via the House of Commons website. The webcast will always show the person speaking rather than the entirety of the committee.
To ensure an orderly meeting, I'd like to outline a few rules to follow. Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of “floor”, “English” or “French”.
Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. We do not have any MPs in the room, so we won't need the proceedings and verification officer to turn it on and off. All comments by members and witnesses should be addressed through the chair. When you are not speaking, your mike should be on mute.
With regard to a speaking list, the committee clerk and I will do our best to maintain the order of speaking for all members, whether they are participating virtually or in person.
Pursuant to Standing Order 108(2) the committee is meeting today to resume its study on the accessibility and affordability of telecommunications services in Canada. We have two panels today. In our first panel are witnesses from BCE Inc.: Robert Malcolmson, executive vice-president, chief legal and regulatory officer and Jonathan Daniels, vice-president, regulatory law.
In our second panel we will have Raymond Noyes from ACORN Canada. From SSi Canada, we have Mr. Jeff Philipp, founder and chief executive officer and Dean Proctor, chief development officer.
Each witness will present for up to seven minutes followed by our rounds of questions.
I will now turn the floor over to BCE.
Madam Chair and honourable committee members, my name is Robert Malcolmson. I'm the chief legal and regulatory officer at BCE and Bell. With me today is Jonathan Daniels, BCE's vice-president of regulatory law.
I would first like to point out that Bell Let's Talk Day, the world's foremost event when it comes to raising awareness and driving action on mental health, is taking place two days from now, on January 28, and we enthusiastically invite everyone to join the conversation.
Turning to the matter at hand, our goal at Bell is to advance how Canadians connect with each other and the world. To help achieve this objective, we invest approximately $4 billion in networks and services every year. We also work with governments at every level, and communities of all sizes, to ensure as many Canadians as possible have access to high-quality connections.
For almost a year now, the COVID-19 pandemic has put the capacity, and capabilities of Canada's communications infrastructure to the test. At Bell, we're very proud that our networks and services have met this unprecedented challenge.
Importantly, at the outset of the pandemic, Bell adopted a wide range of measures to maintain the health and safety of our customers, and to help Canadians manage through the crisis. Consumers, businesses, governments, educators, students, health care workers, first responders and mental health providers have all relied on Bell for the communication services and equipment they need, and we've delivered.
Despite the many COVID-19 challenges facing our own business, including declining revenues, tens of thousands of employees working remotely, and significant changes to our retail and local news operations, we made the strategic decision early on to accelerate our new network builds, especially in rural areas.
We did this because, now more than at any other point in Bell's 140-year history, it's more important than ever before that as many Canadians as possible have access to reliable connectivity to better navigate life and work.
As CRTC data for 2019 shows, while about 92% of rural households in Canada were able to access the commission's previously targeted download speed of five megabits per second, and almost 78% could access download speeds of 25 megabits per second, the gap widens as broadband objectives and needs continue to evolve.
To help close this digital divide, at the outset of the pandemic, we ramped up deployments of our wireless home Internet service to reach 137,000 additional rural households by the end of April. We also pushed forward an important upgrade to the service, doubling download and upload speeds to 50 and 10 megabits per second, respectively, by late 2020. We continued to accelerate rollouts in the second half of the year to reach an additional 80,000 rural households, including the start of deployments to rural areas in Atlantic Canada in the fall.
Today, our wireless home Internet is available to approximately 480,000 rural households. We expect the service will ultimately reach one million homes and businesses in Ontario, Quebec, Atlantic Canada and Manitoba.
To be clear, Bell increased and accelerated deployments of wireless home Internet without any direct government funding. However, we are also ready, willing and able to work with governments, and indeed we are, and local communities where there is simply no business case to expand and improve broadband connectivity without some level of government support.
Today we are participating in a range of funding programs, including provincial programs in Quebec and Nova Scotia and the first phase of the CRTC broadband fund, the latter leading to significant additional investment in Canada's north.
We are also submitting applications to the improving connectivity in Ontario program, the second phase of the CRTC broadband fund and, of course, the federal government's universal broadband fund.
Finally, we have taken actions to improve access by regional service providers to our existing support structures, especially in the province of Quebec. These programs and initiatives combine available private and public sector resources to ensure Canadians in remote and underserved areas of the country can access better broadband.
However, there are also practical actions that we think government and regulators could take to address Canada's rural broadband needs faster and more effectively. These include the following. One, without delaying pending projects, consider combining federal government broadband funds currently available from three sources—the UBF, the CRTC broadband fund and potentially the Canada Infrastructure Bank—into one superfund that could support large-scale rural broadband projects. Two, direct additional sources of funding, such as proceeds from auctions of public spectrum, towards rural broadband projects. Three, incentivize public-private partnerships through existing entities like the Infrastructure Bank. Finally, and importantly, adopt balanced regulatory policies that prioritize investment in networks by companies that are prepared to risk private capital to build connectivity.
For our part, Bell continues to fully fund deployments of world-class networks and services, and we believe it's in the public interest that government and regulatory policies support these ongoing investments.
Our next-generation, all-fibre connections are now available to 5.6 million customer locations, and as I mentioned, our innovative wireless home Internet service is also meeting the broadband needs of growing numbers of Canadians in rural and suburban fringe areas where the costs to deploy fibre to the home are exceedingly high.
We are also moving Canada forward with investments in 5G wireless technology. Having launched our initial 5G service in urban centres in 2020, Bell is poised to offer 5G far more broadly in 2021. Importantly, the availability of spectrum as well as ongoing policy and regulatory support for facilities-based competition will be major factors that determine how far we are able to go with 5G.
To conclude, in 2020, we saw with remarkable clarity the benefits of supporting facilities-based competition. Canada's network infrastructure, bolstered by billions of dollars of private investment over many years, has delivered despite unprecedented demand.
Thank you.
:
Certainly there is an affordability problem for low-income families. This is a problem that will exist across the board with all sorts of consumer products.
We have participated and continue to participate in a program known as the connecting families program, whereby we offer $10 home Internet to qualifying low-income families. We're proud to say that this program is rolled out to, I think, 52,000 Canadian families. Of that group, Bell Canada is the largest provider to this subset.
Moving on from low-income families to the general population, we've heard lots over the past few years about wireless affordability, so I will start there. Then I would ask Jonathan to talk a little about wire line or home Internet affordability, if time permits.
On wireless, I think we made extremely great progress. If you look at the CRTC's data from 2016 to 2019, for example, which is the most recent data available, the average price for a five-gigabit wireless plan has decreased by 37%.
Another recent study by PwC in 2019 found that wireless services were more affordable in Canada than in peer countries such as Australia and the U.S.
StatsCan recently published a wireless price index showing that wireless cellular pricing has declined by 19% versus the overall price index for all consumer items, which had increased by about 3%. I think, then, we're making great progress. We offer low-cost wireless plans.
I'll give you one example. We launched a prepaid wireless service known as Lucky Mobile, which offers a $15 wireless service. Our flanker brand, Virgin Internet, offers one gig for $28. We're making, then, very good progress.
We're also making progress on ISED's 25% price reduction, which was mandated across the two-, four- and six-gigabit plans and we work closely with ISED to be active participants in that. We're about halfway to the goal of a 25% price reduction.
Finally, I would just comment that unlimited plans, which are the function of the vigorous competition in our Canadian wireless industry, have really transformed the market. Gone are the days when consumers were getting extremely expensive overage charges on their wireless bills. Now, if you are a heavy user, you can get an unlimited plan, which we offer in the range of $65. There have been competitive offers that have been much lower than that.
To answer your question, then, I think that on the wireless side progress is being made and will continue to be made, given the competitive intensity in the marketplace.
If you want to hear about wire line or home Internet, I can ask my colleague Jonathan to give you a brief comment. I'm in your hands, Madam Chair.
:
Thank you for having us at this committee hearing.
My name is Ray Noyes and I live in Ottawa. I've been a member of ACORN Canada for the last nine years.
ACORN is a grassroots community organization that has been fighting on a range of issues that affect low- and moderate-income people. Ensuring that everyone has access to the Internet has been among our core campaigns.
We have 32,000 members in the Ottawa area, and more than 140,000 members across the country.
I must begin by saying that even to appear before this committee has been a challenge. The Ottawa ACORN staff has gone to heroic levels to get me connected today, and spent hours working on it and drove me here to the ACORN office, whereas an affluent person could just turn on their computer and get on in seconds. Therefore, I think this illustrates the point.
I've been invited to a number of Zoom meetings, but I cannot be seen or see anyone. I've also been interviewed multiple times where I've shared my personal experience and what it means to be without the Internet, particularly during the pandemic.
I'm a disabled person who lives on the Ontario disability support program, with an income of $1,169, which is well below the poverty line. As you all know, the federal government, in instituting the CERB, considered $2,000 as a living income, and the ODSP rate is far below that. I'll be turning 65 and will be off ODSP, which means I will see my income go up slightly, but it will still be below the poverty line.
ACORN did a study in 2019 and found out that many low-income Canadians found themselves in the difficult position of deciding whether to pay for home Internet or pay for basic necessities such as food, clothing or transit. A quarter of them told us they had sacrificed food in order to pay for Internet services, and almost one third have made multiple sacrifices.
I listen to CBC Radio and I have three to four TV channels through a digital antenna, but it's extremely frustrating to hear all the time on the radio and TV how important it is for anyone not to feel isolated, to have access to health information, information about the virus itself and mental health supports that are available, yet I am here with no Internet.
Until recently, we'd been asking the federal government to work with telecoms and provide $10-a-month Internet to all low-income people and seniors on fixed incomes, but the government hasn't heard us. We know that it's possible. We won the connecting families program, which I notice has been mentioned, but that program needs to be expanded to cover all low-income people and the Internet speed needs to be enhanced to 50/10, something that the CRTC itself recommends.
Recently, the U.S. has set a precedent by providing $50 a month off Internet bills to all low-income people during the pandemic. The aim of the U.S. benefit is to connect low-income households to broadband networks at affordable rates. Broadband providers will be reimbursed up to $50 per month per low-income household, and at $75 per month if the household is on tribal land. It's a time-limited fund that extends for six months after the COVID emergency ends. It's important to note that this is additional money on top of existing affordability and accessibility funds to help low-income people, called “lifeline”.
We are demanding that the Canadian federal government immediately create a $50-a-month Canadian broadband benefit, or CBB, during the remainder of the COVID-19 emergency. The CBB should be extended to all low-income Canadians, fixed-income seniors and those Canadians with job or income loss due to COVID-19. However, this must be done urgently, not in five or 10, or even two years. We need the Internet now.
We met with the then in 2017 and he announced on that day that the Internet was a right. It's past time to make this a reality.
The Canada broadband benefit must be instituted as soon as possible and backdated to January 1, 2021, and run to six months after the official declarations of pandemic emergency have been revoked, in part to make up for full ISP pricing for those months from July to December during the pandemic. A lot of existing relief and support programs could be leveraged to determine the eligibility of people.
I want to end by saying that if I had access to the Internet I would have been able to see my family during the pandemic. I would have been able to attend more ACORN meetings on video, which are important to me, access mental health support, get broad access to general health information and see my doctor's face.
Thank you once again for having us today.
:
Thank you, Madam Chair and committee members.
My name is Jeff Philipp. I'm the co-founder and CEO of SSi Canada, and with me today is Dean Proctor, SSi's chief development officer. We thank you for the opportunity to contribute to the study on the affordability and accessibility of telecommunications in Canada.
SSi has been working on these challenges for the last three decades. We have achieved a lot and learned a lot, some of which I would like to share today. From our experience, even in the smallest and most remote communities in Canada, it's competition and the existence of competitors that will deliver the most lasting benefits of affordability and accessibility to Canadians.
This is not news. It's been part of Canada's telecommunications policy since 1993 and was reinforced by directions issued by the Parliament of Canada to the CRTC in 2006 and again in 2019. This committee itself recognized in 2018 the vital role of competitors to overcome the digital divide. In fact, you stated:
…incumbents tend to only invest in high density areas that are more economically profitable. However, small providers, non-profit providers or non-incumbent providers could deploy broadband Internet in rural and remote areas in an economically profitable manner should the Government of Canada adapt the regulatory framework to their means, especially with regards to spectrum and network management, along with funding allocation.
This is not theoretical. In fact, SSi's history and work with partners proves that competitors deliver benefits and that we're in this business for the long haul. If I can ask one thing of your committee, it's to continue to pressure government to support not just competition, but the competitors themselves.
By way of background, SSi is a northern company. Our headquarters are here in Yellowknife where I am today, and I heard comments of the weather—it's supposedly feeling like minus 41 this morning out there. Our team members are spread across two territories and six provinces, and we continue to grow.
We specialize in remote area connectivity and energy solutions, providing broadband and other services across Canada's north. We have also worked in Africa, Indonesia and the South Pacific, with the common thread being infrastructure and solutions to transform communities and improve socio-economic outcomes.
Some of our better-known projects include QINIQ, Nunavut's award-winning broadband network, which we built in 2005. Prior to QINIQ, even dial-up Internet did not exist in most communities in Nunavut. Sixteen years later, we are still the only provider offering an equal-level service to all 25 communities in Nunavut, no matter how small.
In 2016, we upgraded all of Nunavut to 4G LTE broadband service. I was happy to hear the previous speaker from B.C. note how innovative that was.
Two years later, we launched SSi Mobile, bringing cellular service to the vast majority of Nunavummiut for the first time ever, with packages that rival southern Canada. It's to be noted that this is delivered over satellite, which is a huge backbone cost compared to fibre.
Given the size of the territory, this achievement did not go unnoticed, and we were honoured with a national Startup Canada award that same year.
In 2019, we celebrated another first when we co-founded a new mobile telecommunications company with Eeyou Companee, which is a Cree investment firm, and Eeyou Communications Network. Eeyou Mobility Inc. is currently building out an extensive cellular network in the Eeyou Istchee-James Bay region of northern Quebec.
We're not stopping there. We're developing partnerships with Inuit and other first nations to improve and extend telecommunications across Canada. In each case, we invest alongside our partners, leveraging existing systems and expertise. This model works to deliver early and successful service launches with engaged local partners, and our model in Nunavut is no exception.
Just last week, SSi was very pleased to announce a new partnership with SES Networks, the world's largest commercial satellite operator, to deliver badly needed net new satellite capacity into Canada's north. We have crews currently in Nunavut—right now in late January—turning on that net new capacity.
To be clear, with the right partnerships and a fair playing field, we do an excellent job of delivering innovative broadband and mobile services in even the smallest, most remote communities. These are places the monopoly phone companies prefer not to go unless threatened, and this has been on example in the north since we started.
All governments can make a huge contribution to bring vital information technology to underserved areas with their significant purchasing power. Simply end single-source supply situations in telecommunications now; there is no need to delay. Where there are alternatives, you should cap the share of any single supplier to a maximum of 50% of the government’s business.
Working with multiple suppliers is a great way to benefit from better pricing, better service, customization and innovation. Just as consumers benefit when there's true competition, so does the public sector.
In the north, government is usually the biggest purchaser of telecoms. Competitors should be encouraged and sought after to supply government with these services, not single sourcing.
This is important. Government cannot just support the concept of competition. To receive the benefits, government has to support actual competitors. It makes no sense to rely on a single supplier to meet all these needs.
With that, let me turn it over to Dean Proctor to continue this presentation.
Thanks.
:
Thank you, Mr. Philipp.
Madam Chair, I'll try to be brief because there isn't much time left.
We all know the positive impact of information technology. It's vital to all citizens, governments and businesses. This has become even more evident as we cope with the COVID-19 pandemic. So it’s no surprise that we believe that broadband and mobile are must-have services everywhere.
[English]
They are essential services.
[Translation]
To meet and improve upon the universal service objective of 50 megabits per second, all competing service providers would need to contribute, not a single monopoly. This must be recognized and acted upon by regulatory agencies and governments at all levels.
We believe that the reason many Canadians, especially those in rural and remote parts of the country, still don't have access to affordable and high-quality telecommunications is that our regulatory system remains focused on the profitability of telephone companies—as you heard earlier—at the expense of competitors and, ultimately, consumers.
SSi is living proof that true, long-lasting and facilities-based competition is feasible in northern Canada. However, the CRTC and the Government of Canada mustn't work against competitors.
I'll stop here. I'd be pleased to answer your questions.
:
Thank you very much, Madam Chair.
To all our guests this morning, thank you for your contribution.
I know when we talk about low-income Canadians and the cost of their services, and then we compare the cost for satellite service, there seems to be quite a spread.
I have a couple of comments. I know when our committee went down to the U.S. a number of years ago there was a Senate hearing on rural and remote broadband. We had a chance to talk to SpaceX, and they were talking about the rollout they had planned. Of course, now we're starting to see that happen here in Canada.
I think it's rather interesting because the project they have in mind takes us to 51.5°, and, of course, there's only one provincial capital that is further north than 51.5°, but there are three capitals in the territories.
There seems to be a bit of a gap between the south end of my riding and the territories as far as coverage in satellite is concerned.
Could the folks from SSi, perhaps Mr. Philipp, talk about the satellite coverage you have, the costs and how the competitiveness works as far as what others in Canada are paying for wireless services?
:
I'm happy to answer that great question. I can give you a fairly high-level summary. I will be careful. Dean may have to raise the red card if I start going outside the boundaries of an NDA, but let me try. I don't have the best filter, as you will find. I usually just tell you what I'm thinking.
For satellite-served markets, to your point, SpaceX is talking about.... Actually, they are from 47° and they may get up as high as 55° within the next six months. By this time next year, in fact, if they are fortunate with their space-based lasers, they may have the polar regions starting to deliver service.
SpaceX is the unicorn, I would say. It really solves a lot of the problems with broadband connectivity. We have worked in Africa, Indonesia, the South Pacific and every community in the Northwest Territories and Nunavut. I was born in one of those small indigenous communities of 800 people. That's where my family business started. That's where SSi started. The Snowshoe Inn is the family business.
SpaceX is going to solve a huge problem by bringing low-latency.... That is not to be lost; it's not to be missed. Latency is a huge aspect. When people talk about geostationary satellites, there is a big latency to get up and down. SpaceX solves that.
Telesat is also talking about a LEO platform, which would be out a few years later. SpaceX, by this time next year, would probably have terminals available. Telesat is talking about three years from now. SES, our newest partners as we just mentioned.... That's a huge deal. I don't think a lot of people recognize it.
I won't go quite as deep. You have current C-band capacity or geostationary capacity. Actually, let me start at fibre, which costs $2 to $10 per megabit per second, depending on where you live. Delivering a couple of megabits—and when we talk 50 down and 10 up, that's not the dedicated bandwidth; that's the burst. That's as far as your car could go. If you look at ISED's own oversubscription guideline, which is 25:1, that really means you divide that 50 down by 25, that's 2 megabits down, so about 0.4 megabits up—2.4 megabit. For fibre, its $2 to $10 a megabit, so your input costs $20 or $25 to service that. That's dark fibre—not lit up, no electronics and no support.
For the cheapest satellite, you're getting into $300 per megabit. You're going to go up from there to about $1,000 a megabit. That's going to give you unlit—the equivalent of dark fibre on the ground. It's $300 to $1,000, compared to $2 to $10. Your input cost, if you have to deliver 2.4 megabits to somebody, and your cost is $1,000 a megabit, it's $2,400 a month for that service to deliver 50 down and 10 up with ISED's 25:1.
Bandwidth prices in satellite-served markets are extremely complicated. Is that going to change? With the new partnership with SES, we started working on that some time ago because there is not enough capacity in space. We've been saying this for five or six years. Over Canada, without significant investment by the federal government to buy capacity, that won't be there.
For the satellite-served market, there is not enough capacity in space and it takes a couple of years to ramp up that capacity. It's very difficult to get ahead of it. When COVID hits, you just have a shortfall.
What are we doing right now, in January? With no federal funding, we committed a significant amount of our investment money—and I say that because my wife is the CFO—into Nunavut to be able to bring net new capacity with SES. That new capacity is being rolled out now and by the end of this month, it will be in place to support Nunavummiut, but there is no funding at this point for that.
:
Oh, we don't have enough time for that.
I will read what I wrote down at one point because I think, honestly, Mr. Malcolmson was on the hot seat; there's no question.
We've come up against Bell and Mr. Daniels. I do love him, and he's a warrior in his craft, but he's on the wrong side.
So, what did I write down? I do agree with some of what Mr. Malcolmson said about fund access and timing. I probably agree with the other side of the fence about spectrum and set-asides. I certainly disagree with the fact that there's no ability to have competition and that we need monopolies. I don't agree with that one little bit, as well as open gateways.
If you really want to see a website, check out Qimirluk. It's the Inuktitut word for “whalebone”. It is spelled qimirluk.com. It stands for “come here, look,” which is how I explained it to people in Ottawa from Yellowknife.
This has been 20 years. I started this company because of my dissatisfaction with Northwestel, which is a wholly-owned subsidiary of BCE.
What I wrote down was this: “Judge folks by their actions not by their words because, frankly, I've been through the modernization plan, I've been at the hearings in Yellowknife 15 years ago, I've been in Whitehorse 10 years, I've heard the partners who then come back later when they've been disenfranchised and set aside the indigenous partners that helped. I've been there while the CRTC ruled to sell them the cable company after they had DSL and because they promised to put cable in the other communities, including mine. After they got the cable company in Yellowknife, they shut down cable and all the other markets.”
I've heard them threaten to shut down even the investment they got funded from the CRTC to build out the Northwest Territories. I've heard them threaten the GNWT that if the Government of the Northwest Territories supports our request for open access to their infrastructure, specifically TPIA, they may not be able to invest in the Northwest Territories. This is ludicrous.
Frankly, there is room for competition in every market. I grew up in a town of 800 people—95% indigenous—and we are still competing 20 years later. We're the incumbent. We built this long before they got here, and we don't get the subsidies that they get. We fight every four years to get the federal subsidy to bring to the people of Nunavut. I like to say to people that we're the cheapest delivery agent of the federal government's broadband dog food of any department or any organization. We do it cheaper. We co-invest: $80 million by us and $75 million by the federal government since 2004 in Nunavut alone.
:
Thank you, Madam Chair.
Thank you to our witnesses for being here.
I have no apology to make to Bell with regard to any emotion. I remember one of my first committee days here when the Bell CEO—Michael Sabia at that time—was an obstacle for pay equity for women in the union fighting to get the remuneration that was awarded to them, with its taking many, many years longer than it should have. It was very disappointing. There also were the deferral accounts, where Bell overcharged by far more any other provider, with almost up to $1 billion that had to be remitted to Canadians, including persons with disabilities. It fought by itself; as the rest of industry fell in line to rebate Canadians, Bell continued that type of behaviour for a long period of time.
I really am not surprised by what we heard here with regard to its culture of employment and how it wants to continue to receive a lot of different government programs and services—which is fine; they're there for anybody out there. However, at the same time, the mere threat of the CRTC to them would actually disable their commitment to Canadians for rural and remote in the future, and that is something that's alarming and needs to be taken into context.
Mr. Noyes, you bring up a really good point in being here. It's people in rural and remote areas that haven't even connected quite a bit, but it's even people who are getting disconnected in the cities because of the affordability issue. One thing that we, as New Democrats, proposed is to use the spectrum auction to guarantee low-cost services from those who bid at the spectrum auction. The spectrum auction has netted Canada's coffers around $22 billion in the last 20 years. That money has not been all sent back into service provision.
Is that something that you think ACORN would support: having the next spectrum auction with the inclusion, similar to a request for proposals, that we actually make sure there are going to be some low-cost provisions from those that are going to use the public airwaves? That is the spectrum auction. Again, that is a public asset. I'm wondering whether ACORN has a position on that.
:
That's a good question. The backbone problem is going to eventually resolve itself. Whether it be SpaceX in a year, Telesat in two or three, or medium-earth orbit platforms from our partners at SES, the backbone capacity problem will never be resolved. We're going to continue to drive capacity through the roof. It will get easier and cheaper in the north. What we need now in rural Canada is to solve the training, the human resources, the job creation and the open gateway infrastructure, right?
If we build open gateways, meaning full location facilities and towers, and we put in fibre to the homes in those markets that make sense, put in the antennas we need for the last mile distribution and allow all competitors into that gateway, we could even structurally separate them like we do with an airport in a community. Rural Canada does not need a separate airport for every carrier. We need one airport for the community that all carriers share. It's the most effective way to do it.
Also, in space, we need a longer-term commitment to purchase capacity, because what happens is that we go through four-year beauty cycles, beauty contests, right? Every four years, when there's a change in government, there's a new funding program and a new strategy for broadband, which means that competitors like us, Northwestel and Bell are competing on a four-year program. Investing in the long term is difficult with a four-year program, and for satellite service providers, investing in capacity is very difficult. They're investing $100 million to $200 million in a platform with a 15-year life and with no financial commitment.
The challenge is to look at this holistically. The backbone solutions are coming and are getting cheaper. Competition on the backbone, whether it be fibre, SpaceX, Telesat or MEO from SES, is going to drive that price down.
What we need in rural Canada today is different from urban centres. In urban centres, yes, everybody can afford to build their own last mile and their own open gateways, their own gateways and their own towers, and they protect them fiercely. They don't want to share them. In rural Canada, you can't have that. You can't have five towers popping up in a community of 600 people. It's going to look goofy. It's not going to make sense.
We have this in Nunavut now. When we put in our building and Northwestel is across town, how do we pair with them? How do we share data with them? Well, somebody has to run fibre to the other guy. We want to, and they don't want any part of that, because they'd rather have our customers have to go all the way south by satellite and all the way back. This is not something I'm making up. This is something that is historically proven with fact and with programs.
We need open gateways in rural Canada. Competition will come, whether it be on the backbone or on the last mile. That open gateway is the barrier, the moat, to little companies like ours, and we're not so little anymore. We're 100 people spread across the country, but we started as one person in a little town. Luckily, we had the funding to build the infrastructure that we're building, but we firmly believe in open gateways and competition in the marketplace—any marketplace.
:
No, I don't think there is one strategy that I've seen. I think that every time somebody proposes some new backbone option it seems to distract us in our quest to connect rural Canada. I don't think there is any move by the federal government towards one backbone satellite or fibre. I see lots of proposals to fund fibre. I have seen some discussion about funding going to Telesat to prepay some capacity on their LEO to make it more affordable in rural Canada.
I won't take us too far off the path, but there are some fundamental and very simple questions that we need to ask. I think Mr. Noyes touched on them. How do you subsidize low-income families, first of all, without requiring rafts of proof and more bureaucracy to make the program work? That will just take away from the funding. That's point one. Then, how do you encourage that competition to come? Those are two actually very simple questions with very simple answers. We've proposed this in the past, actually. It's by way of a reverse auction.
You go in and you say, “Who will build in these markets?” There's public competition for the funding. There has to be an open gateway to allow any competitor to come in. To the winner of this final round, the one that is the cheapest, you say, “You have to operate for this many years.” You know what? You have to operate that open backbone for all competitors. Now you are required to deliver service in that market at this level of service to the end-user, but anybody else can come in.
If Mr. Noyes signs up with the competitor running the backbone, the competitor should get the subsidy. Subsidies should go to the service provider that wins the business of the residential customer only if a subsidy is required. That means that if the backbone is operated cheaply enough in a fibre world, then you won't need that consumer subsidy.
In cases where you have families, it would be different in every market. In Nunavut you have five people per home. They need more than $50 because they're satellite-served. I think it's not a matter of saying that $50 should be the number. It should be dependent on the market and what it requires. The proof is simply that you are buying Internet and the service provider is selling it to you. You qualify, and the service provider gets a subsidy from the federal government: reverse auction.
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Thank you very much, and with that, because we are over time, I have permission from the last two MPs for us to stop there.
I would like to thank our witnesses for being here today. As you can tell, I think we are all united in terms of the importance of not only accessibility but affordability. When it is not affordable, it is not accessible for many Canadians, and it's something that we are working as a collective to address. Thank you so much for your assistance.
I'd like to now provide an update to the members of INDU in terms of our schedule, as we have multiple subjects still going. For this week, on Thursday at our next meeting we will be considering the draft of the ICA report, further to our December 10 meeting. We will finalize that, hopefully. Next week, we have on Tuesday the president of PHAC and the presenting with respect to vaccine manufacturing. Next Thursday, we have Minister and Minister , again with respect to the study for vaccine manufacturing in Canada.
I understand from the clerk that we are still waiting to hear back from the vaccine task force representatives for the following week.
Of course, given the next study that we are commencing on vaccine manufacturing in Canada, if parties can make sure to submit to the clerk names of any additional witnesses that they would like to see, we will make sure they get invited to a subsequent meeting. I'm just going to turn to the clerk and see what would be the best in terms of timing: sooner, I guess, rather than later, so that we can start reaching out to folks to line those up.
Again, to our witnesses who are here today, if there are any additional briefs that you would like to submit to the committee with respect to this study on affordability and accessibility, please get them to the clerk immediately so they can be considered for the report we will be working on.
With that, are there any other questions from members? If there's a change to the schedule, I'll make sure the clerk sends that out to you.
With that, I'd like to thank all of you again.
[Translation]
I want to thank the interpretation and IT services for their hard work, as usual.
I also want to thank the clerk and the analysts for their assistance.
[English]
We are looking forward to eventually being all together in a physical room. For those who will be participating in person on the Hill, I ask that you please notify the clerk in advance so we can make sure that any lunch that needs to be ordered is ordered, and that we're not ordering too many by anticipating six MPs in a room when there are none.
With that, we will adjourn. Thank you so much.