Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 10 - Evidence, May 29, 2012

OTTAWA, Tuesday, May 29, 2012

The Standing Senate Committee on Transport and Communications met this day at 8:35 a.m. to examine the subject matter of those elements contained in Division 41 of Part 4 of Bill C-38, An Act to implement certain provisions of the budget tabled in the House of Commons on March 29, 2012, and other measures.

Senator Stephen Greene (Deputy Chair) in the chair.


The Deputy Chair: Ladies and gentlemen, it is a pleasure to call to order this meeting of the Standing Senate Committee on Transport and Communications. We are very pleased today to have appearing before us the Honourable Christian Paradis, Minister of Industry. As you know, the Government of Canada under Prime Minister Harper has been aggressive in its efforts to promote competition in the telecommunications industry. In 2008, the government auctioned a portion of the wireless spectrum, making a cool $4.5 billion from selling air. More importantly, the government's position in this industry has succeeded in creating competition in Canada's wireless industry, and Canadian consumers have saved money.

Minister Paradis is responsible for the next movements in this industry. With broadcast television off the air, this beachfront property of the wireless spectrum is now up for sale. Minister Paradis will be tasked with the historic auction of spectrum that will bring the full power of modern communications to all Canadians. The spectrum the minister will be auctioning will have a large impact in rural areas.

Minister Paradis is here today to speak to a related area in our pre-study of Bill C-38, the budget implementation act — more precisely, the level of foreign ownership permitted when this auction takes place.

I might also add that it is with great pride that I introduce the minister who is working to bring the cost of wireless services down in Canada, making their powerful benefits affordable to all Canadians. Canadians have been paying too much for too long now, and thanks to Minister Paradis' work, those days will be behind us.

These changes are fundamental to the success of our country, and I hope all Canadians see how your efforts today are helping them to save money on their wireless plans tomorrow.

Minister, the floor is yours.

Hon. Christian Paradis, P.C., M.P., Minister of Industry: Thank you very much, Mr. Chair. It is a pleasure to be here this morning. I would like to thank senators for agreeing to an early start to today's meeting.

I hope that I and the officials who are here today are able to provide you with the information you need to better understand the rationale for the important changes contained in the budget implementation act. I am here today with Marta Morgan, who advised us during all of the process. She did fantastic work.

Before turning to the specifics of amendments to the Telecommunications Act that are in this important bill, there are changes to telecommunication foreign investment restrictions and support for the National Do Not Call List. I would like to provide the committee with some context regarding the government's larger telecommunications agenda.


The amendments we are discussing today are part of Canada's plan for jobs, growth and long-term prosperity. Our goal is to strengthen the financial security of Canadian workers and families, and to help create good jobs and long- term prosperity in every region of the country.

When he presented the budget to Parliament, the Minister of Finance said that, in this budget, our government was looking ahead, not only over the next few years, but also over the next generation. That statement rings especially true in the case of the government's telecommunications agenda.

This is a critical time in Canadian telecommunications. Private sector decisions on massive capital investments are being made for all forms of telecommunications services. As a government, we need to ensure that the right regulatory framework is in place to encourage investment, so as to ensure that Canadians have access to high-speed broadband networks and to innovative wireless services at competitive prices.

The government has a strong record of encouraging competition and consumer choice in telecommunications. In the last spectrum auction, held in 2008, our government took action to encourage new entry in the wireless market. Since that time, the Canadian wireless landscape has changed.

New players have entered the market, offering more choice to consumers. In addition, both the incumbent companies and the new entrants have made investments to better serve their subscribers. Consumers are seeing the benefits of access to more advanced services, greater choice and lower prices.

More recently, on March 14, I announced a set of measures for the telecommunications industry, including the reform of foreign investment restrictions and the framework for the next 700-MHz and 2,500-MHz spectrum auctions.

I also announced specific measures for improving and extending those policies in order to further support competition and slow the proliferation of new cellphone towers for the benefit of Canadians.

Those decisions are based on three objectives. The first objective is sustained competition in wireless telecommunications services. The second objective is robust investment and innovation in that sector. The third objective is the timely availability of advanced services for all Canadians, including those in rural regions.

These decisions will help new market entrants acquire that important frequency spectrum and improve their ability to compete. This spectrum will allow telecommunications companies to provide Canadian businesses and consumers, including those in rural regions, with the latest fourth-generation mobile networks based on long-term evolution technology, known as LTE.


Turning specifically to the matter of increased foreign investment, as part of this telecommunications agenda I also announced at that time that the government would be proceeding with the changes that are now included in Bill C-38. This amendment to the Telecommunications Act will lift foreign investment restrictions for telecom companies that hold less than a 10 per cent share of the total Canadian telecommunications market. The government is not lifting the foreign investment restrictions for broadcasting.

The Telecommunications Act came into force in 1993. Section 16 of that act specifies that telecommunications common carriers need to be Canadian owned and controlled. To meet this requirement, they must satisfy three criteria: No more than 20 per cent of voting shares can be held by non-Canadians, what is often called the 20 per cent direct limit; no more than 20 per cent of the board of directors can be non-Canadian; and the corporation must not otherwise be controlled by persons that are not Canadians. This is often called the "control in fact'' test.

A number of review bodies have investigated reforming these restrictions, and they have been the subject of extensive consultations by our government. I would like to draw your attention to two of these reviews in particular.

The first is the Telecommunications Policy Review Panel, which reported in 2006. It found that among OECD countries, Canada had maintained one of the most restrictive and inflexible set of rules limiting foreign investment in the telecommunications sector.

This panel paid particular attention to the impact of the restrictions on the wireless sector. It concluded that the quality, pricing and availability of wireless services would improve if Canada's foreign investment restrictions were liberalized.

While supporting opening the telecommunications sector, the panel recognized the complexity posed by the cable industry, which offers both telecommunications and broadcasting services. These service providers are subject to investment restrictions under both the Telecommunications Act and the Broadcasting Act. As a result, the panel recommended a phased approach to reform, proposing that foreign investments in firms holding less than 10 per cent of the Canadian telecommunications market be liberalized immediately.

Two years later, in 2008, the Competition Policy Review Panel examined how to raise Canada's overall economic performance through greater competition. The competition panel echoed the recommendations of the telecom panel, including lifting the restrictions for telecommunications companies with less than 10 per cent market share.


Following these policy reviews, in its Speech from the Throne on March 3, 2010, the government announced its intention to open Canada's doors further to foreign investment in key sectors, including the telecommunications industry.

Consultations on potential reforms were launched in June. The government received almost a hundred submissions, and the Minister of Industry met with all of the companies with an interest in both these changes and the upcoming spectrum auctions. The changes proposed today in Bill C-38 reflect both the feedback received through consultations and the work of the independent review panels.

I would now like to talk about the portion of the bill related to the Do Not Call List investigation and enforcement expenses. The National Do Not Call List is a successful program that many Canadians rely on to protect them from unwanted telemarketing calls. With these amendments, the government is reinforcing our commitment to protecting consumers. The National Do Not Call List, which was established in 2008, allows Canadian consumers to register free of charge to reduce the number of unsolicited telephone calls they receive.

Telemarketers are prohibited from calling consumers who are registered on the list. To date, the list has more than 10.7 million registered telephone numbers.

Currently, the operation of the National Do Not Call List is fully funded by telemarketing companies, while investigation and enforcement costs are funded by the government.

The amendments in this bill would allow the CRTC to recover the costs of the Do Not Call List investigations and enforcement from the telemarketing industry. The CRTC will be able to establish fees for that purpose. The CRTC will hold consultations this summer on the fee structure, which will be implemented on April 1, 2013.

In conclusion, Mr. Chair, theses amendments are part of an integrated strategic program focused on the future in terms of telecommunications that is part of our broader program for jobs and growth.

These changes, along with the recently announced decisions on the auction framework, will facilitate the timely availability of world-class wireless services at low cost for Canadian families, including those living in rural regions. This program is based on the measures our government took in 2008 to support competition and will help improve consumer connectivity and increase company productivity. These reforms are part of the government's plan for creating strong foundations that will help Canadian companies create jobs and growth by taking advantage of opportunities in Canada and abroad.

As the Minister of Finance said, we will take decisive action to ensure our economy will create good jobs and sustain a higher quality of life for our children and grandchildren.


Once again, I want to thank you for giving me the opportunity to speak to you about the importance of these amendments. It would be a pleasure to answer any questions you might have.

The Deputy Chair: Thank you very much. To begin, I will introduce our senators. To my left is Senator Mercer from Nova Scotia, Senator MacDonald from Nova Scotia, Senator Zimmer from Manitoba, Senator Boisvenu from Quebec, Senator Unger from Alberta, Senator Doyle from Newfoundland and Senator Verner from Quebec. We will begin our questioning with Senator Verner.


Senator Verner: I want to thank the minister and his assistants who have joined us this morning. I would like to begin with the National Do Not Call List.

In 2007, Bell Canada was given a five-year contract to operate that list. According to the information I have here, as a result of complaints, Bell Canada was fined $1.3 million for violating the list requirements.

You are probably going through the process of designating a new administrator for the list. If it has not been done already, I assume that you will select that administrator soon. Seeing as how Bell Canada was fined heavily, has that company been left out of this process?

Mr. Paradis: When it comes to the process, I would like Ms. Morgan to explain it because past and future contracts are awarded at the administrative level.

Marta Morgan, Assistant Deputy Minister, Industry Sector (Industry Canada): The CRTC is in charge of renewing the contract. I also want to add that there are two different questions here. The first has to do with the fines imposed on Bell Canada in the telecommunications services market. The second has to do with that company's administration of the list, which, to my knowledge, was done competently. Bell Canada met the contract standards. However, the question regarding the process and the timeline should be put to the CRTC representatives who will, I think, appear before the committee soon.

Senator Verner: I will certainly ask them the question. It seems to me at least somewhat questionable — I am not saying that it is inappropriate — that a company that was fined so heavily can compete for a contract to administer the same list.

Regarding Canada's anti-spam legislation passed by Parliament in February 2011, my understanding is that the process is different when it comes to the Do No Call List because consumers have to register in order to appear on the list and not receive telephone calls at home. However, in the case of Canada's anti-spam legislation, the situation is reversed. Companies must ask consumers whether they are willing to receive telemarketing or advertisement products. So we will have two pieces of legislation with different processes, but will one of them eventually have precedence over the other? What do you think that means for consumers?

Mr. Paradis: Those are two different technologies. The Do Not Call List concerns telephone solicitation; while Canada's anti-spam legislation applies to new Internet technology.

Canada's anti-spam legislation was introduced based on the consultations. At this time, we are also in the regulatory phase. Consultations have been held following the initial publication in the gazette. Stakeholders and industry have voiced their reactions. So we are currently in the process of proposals, which I hope will be final and will enable us to move forward.

However, practically speaking, we cannot know everything in terms of the Internet; that is why the legislation proposes a more compulsory approach. We can take action as soon as a complaint is submitted, whereas the Do Not Call List is managed by the CRTC. That organization is already in place and uses existing technology. So far, the initiative has been working. There have been 131 violations, 54 notices of violation for more serious violations and 42 administrative monetary penalties. Marketing companies have been fined a total of $2 million since this process was implemented.

In addition, you are raising an important issue by saying that these are technology sections that can be integrated. We know that telecommunications, wiring and telephone services will increasingly move toward a one-size-fits-all approach. Clearly, the CRTC will have to look into these types of issues in the future. As for us, we are always open to any suggestions for adapting to the rapidly evolving technology in that sector.


Senator Doyle: Minister, you mentioned in your opening remarks that the broadcasting sector will not be affected in any way, even if you lift restrictions on the telecommunications industry. I believe that about a year ago, the CRTC chair argued that the Telecommunications Act and the Broadcasting Act probably should be replaced by a single act. Do you have any thoughts on doing that? If that were done, would the broadcasting sector be in more danger of change? We hear a lot about Canadian content and the domino effect that telecommunications ownership might have if it led to changes in the Broadcasting Act. In view of what the CRTC chair talked about a year ago, are there any thoughts about changing the Telecommunications Act and the Broadcasting Act by replacing it with a single act?

Mr. Paradis: This question has been raised several times, and the Telecommunication Policy Review Panel addressed it in part. At the time that was said, the conclusion was to go ahead with lifting restrictions for telcos only, and this is what we are doing here. The reason is that they saw at the time that it was a logical step to achieve and the telcos do not have any control over content; it is only a matter of technology. After that, if we decide to evaluate the Broadcasting Act also, it will need a public hearing, which has not been undertaken. It would be premature to say what we want to do with this. The report mentioned as well that we have to go through public hearings first.

Senator Doyle: Are there any concerns that foreign carriers who might come here might want to expand telecommunications in the large urban areas instead of concentrating on rural areas? Would any guidelines be built in that might prevent a foreign carrier from coming in and operating only in the large urban areas? In my province there has been quite an improvement actually in telecommunications access. However, sometimes when you drop restrictions, large foreign carriers come in who want to develop only in the profitable urban centres.

Mr. Paradis: Yes. The 700-megahertz spectrum is very prized, and people want to get it. Less spectrum is available than there are requests. We set up conditions to ensure that we have a fourth player everywhere that we are located in the country. As you know, there are 14 zones of the 700-megahertz spectrum, so there is a lot of competition. Instead of setting aside, as was done in 2008, we decided to go with a cap that limits a holding to two blocks of spectrum for the B and C blocks; but A block is not included.

Practically speaking, it leaves a block, but the government does not decide which block it will be. The market will decide that. We are confident that everywhere in the country, four players have an opportunity to go. However, if you decide to go with a second block in the 700-megahertz spectrum, you have an extra requirement about deploying in rural areas. You have to deploy 90 per cent of your network within five years and then 97 per cent within seven years, which is a pretty strict criterion.

Frankly, if the foreign carriers decide not to go with a second block, other guys will. Either the incumbents or a company somewhere will end up with two blocks, or they will operate jointly on a network with two blocks, which will once again trigger these requirements.

Down the road, it will give Canadians in rural areas a company that will have the requirement to deploy these extra requirements. We are very confident about that, because from what we heard in the consultations, people do want to get this spectrum. This is very effective. It travels a lot. It goes through concrete. There are many practical issues here. It is less expensive than the usual spectrum because you need fewer towers. It goes on and on. We are confident that rural areas will be better served.

Senator Doyle: How important is the further introduction of strong competition for urban and rural Canadians? Obviously you are viewing it as being important to have this competition there. How important is that? Tell me about the practical effects that the competition will have out there in the community. I am not totally familiar with the act and how it will improve service delivery in rural Canada.

Mr. Paradis: Let us go with what we learned from the past. Back in 2008 when we went with the AWS spectrum, new players came into the game, which was not the case before. The new players now have about a million subscribers. You now have cheap packages or affordable packages. You can pay $15 a month and have a package of unlimited time, for example, with cellphones. It does exist. There are examples of that. Even the big guys have some packages to compete against these new packages. It is a new kind of market that is covered now. This is what we saw in the urban areas. The prices went down on average 11 per cent since 2008.

I also come from a rural area. We want this competition, but we want to make sure that, wherever you are in Canada, you can have new technology deployed at the same time. We are talking here about LTE. You can see now that it is more active in rural areas, but it will be more and more active because of the 700-megahertz block. If a company holds two blocks by itself or if it operates a joint network with another company, then there will be extra requirements to get in these areas with the requirements I just told you about. You will see in the future that even if you are in a rural area, the technology will come faster.

Of course, after that, when you go with such a spectrum, there will be competition and people in rural areas will have better choices, but they will have access to service, which was not the case only five or six years ago. We can see now it goes more and more in escalation, and it will be a good-news story. We are very confident that with a fourth player everywhere in the country, it will just boost and enhance the deployment, but also it will provide better choices for consumers and hopefully better prices, too. This is the fundamental point of this rationale.

The Deputy Chair: Before we move to Senator Mercer, Senator Zimmer has a supplementary question to Senator Doyle's.

Senator Zimmer: I apologize for being late. Minister, thank you for your presence. Senator Doyle has asked some very good questions. As a supplementary, I think it is very good that you are limiting it to two spaces, but what has happened in the past is hoarding. They would get the spectrum, but they would sit on it. Are there any regulations now that there is a time limit to the amount that they have to enact this spectrum?

Mr. Paradis: Absolutely. We do not want any speculation on the spectrum. This is too fundamental. It is use it or lose it. There are requirements, after 10 years in general, depending where you are in the country, from 20 per cent up to 50 per cent of the network has to be deployed. If you do not meet these criteria, you just lose it. Beyond that, in the 700-megahertz spectrum, as I said, if you have two blocks, if you are operating a joint network with another company so it gives you in practice two blocks or if you have two blocks yourself, you have to deploy in rural areas with the requirements I just said. It is progressive. We never saw such criteria in the past, but given the potential of the spectrum, we are quite confident that it will bring benefits for the entire country.

Senator Mercer: Minister, thank you for being here. This is a complicated piece of legislation and it involves a couple of different aspects. I am always surprised that this government takes this and bundles it into the budget implementation bill when it really is a subject that should require full-scale examination of a stand-alone bill. I will not fight the politics of that this morning.

I want to draw your attention to the fact that the Standing Senate Committee on Agriculture and Forestry a number of years ago filed an extensive report on rural poverty. In the examination and travels across Canada, there were four particular items that came up in almost every community that the committee travelled to. The one I want to draw your attention to was accessibility to the Internet and the service that was provided to rural Canadians.

You have mentioned, minister, that you represent a rural area. I happen to live in a rural part of Nova Scotia. To be kind to suppliers, I would say service is spotty at best. When my wife and I sit beside each other in our home in Nova Scotia, she is a client of one supplier and I am a client of another supplier. I sit there and get reasonably good service. She does not get any service. She has to drive five kilometres from our home before she gets any service and, quite frankly, she pays a premium to the firm involved to get that.

Minister, when Canadians say, okay, let us get out of one contract and go to the company that will provide you with a better deal, there is a cost involved. Have you considered the fact that many, many Canadians find themselves with service contracts with service providers that are not worth the paper they are written on because they cannot get service? To get out of that contract, it will cost them hundreds or thousands of dollars, depending on the contract. At the end of the day, they get nothing in return for their hard-earned money. It is particularly a problem in your community and in my community in rural Canada.

Mr. Paradis: Of course we have considered it, and this is why we want to seize the opportunity with the spectrum. Beyond that, back in July 2009, we had this broadbrand program that we announced. The idea was to work with the provinces to understand the mapping to make sure that we could have a good deployment for the network, especially in rural areas. It had benefit. I can testify that, in my riding now, it is better than it used to be, but it is a work-in- progress.

We had a federal-provincial meeting last March, and once again we raised the question to ensure that the federal and provincial governments could work together and complement each other.

There are technologies involved in this. You can go with wireless, satellite or cable. Therefore, we have to understand exactly what is going on to ensure we can continue to provide this accessibility.

We had a good deployment with this program. Ninety-eight per cent of Canadian households have access to high-speed Internet through the different technologies, including wireless. However, after that, we have to ensure we can offer more choices, better competition and better prices, and attract investment from these companies. This is why we go with the 700- megahertz spectrum auction. This is why we put extra requirements for rural areas.

We have to keep in mind that the 2,500 megahertz is coming after that. It will be in the year following the 700 auction, and that spectrum is interesting, too. I think there will be 70 zones; is it 70 licences? Some of the companies looking at business cases in rural areas are quite interested. This is what I heard from my consultations as minister, and the officials have heard it, also. Once again there will be caps there, so there will be an opportunity for new players to jump into the game.

Yes, the accessibility is there. Sometimes the service is not quite as much as we would like it to be, but we are getting there, no doubt. This is why we put these criteria with these two new auctions coming, because there is big opportunity.

Regarding the BIA itself, once again, as I said in my remarks, we are following the Telecommunication Policy Review Panel. This has been discussed a lot. We put it in our Speech from the Throne back in 2010, so it was a huge commitment for us. We had to link it with these spectrum auctions coming, because in this business you need money. It takes so much investment, so if we seriously want to have a fourth player in the country, we need to ensure the fourth player has access to capital and can have capital expenditure. It costs so much and it is so long before becoming cash- positive that it was a tool that was linked with this.

This is why we had to announce it at the same time — to ensure this auction would be a good one. The 700 spectrum is a crucial one and we needed to have all of the tools to achieve these goals.

Senator Mercer: Thank you, minister. You have not addressed the other issue of how the contracts that suppliers have been allowed to operate under bind Canadians to pay for services that they do not receive. It is a well-known fact that Canadians pay some of the highest rates in the world for service. I know in talking to some of my American colleagues and as we compare cellphone bills and access across the border, they are shocked at what we pay.

Many people think that getting one of these licences here in Canada is a licence to print money. My concern is that it has not worked with homegrown companies to reduce the costs.

Are you saying, minister, that the foreign competition that you will try to allow under this act will equal lower prices for Canadians? If that is your contention, how will you guarantee that?

Mr. Paradis: Unfortunately, there is nothing we can guarantee, but we can seek to put in place the best tools possible to achieve our goals. If I go with the lessons from the past with the AWS spectrum, we set some aside at the time but it was not the same dynamic, and the competition grew. There is a fourth player in a lot of areas and the prices went down 11 per cent on average in Canada.

Can we do more? Yes, we can. This is why we put other requirements in the 700 spectrum. We are very confident that we can continue down that road, and this is also why in this auction we announced that we will review the policies regarding the towers. You have an issue with roaming and sharing towers. More and more people want to have access to Internet but they do not want to have towers in their backyards, so that is the reality here.

Also, there is a matter with roaming and seamless issues. We heard a lot about that. This is why we said we will put consultations in place.

We want to ensure that we can have the disputes resolved faster than now. We want more transparency from the company when they exchange communications, and we want to ensure that the roaming now will be extended indefinitely instead of five years. This is a tool that will help a lot.

Down the road, we keep in mind to ensure we have a fourth player everywhere in the country, with the possibility of having access to capital and access to infrastructure at a reasonable price — not prohibitive — because, on the other hand, the incumbents will say, "We had to pay in the past and we do not want everyone to benefit from that.'' This is a fair point. The idea is to strike a balance here.

We heard two different stories, depending on where we were with the new players or with the incumbents. We put in place these policies to ensure we could strike this balance. Down the road, yes, if we achieve what we could do in 2008, hopefully this is a good recipe to have better prices, better choices and more investment from these companies in the future.

Senator Mercer: Thank you, minister. I want to ask a question about the Do Not Call List, but before I get to that, the government's decision to cancel the Community Access Program across Canada is not helpful in this whole process of having Canadians plugged in, especially in smaller communities where they do not have good service. The CAP was very helpful for people to have a place to go where they could get access through a system provided at a community level.

Regarding the Do Not Call List, I come from a sector that is very interested in do not call lists. I have worked in the charitable sector most of my life. Charities have been exempt from some of the regulations with respect to do not call lists, but we are obviously very interested in how it is working.

What is the cost to manage the National Do Not Call List today? Do you have a number?

Mr. Paradis: The government had to pay $3 million. We put money up front to help to cover the start-up costs, and then the company running it can collect fees from the telemarketers, but the government assumes the start-up costs. Now, when we go with what I would call the amortization, when the start-up costs are paid, there is a way we can achieve a point that you can cover the costs incurred by the CRTC in the inquiry process by fees instead of having the government pay $3 million a year.

To make a long story short, when you see the bottom line, when the start-up costs are covered, which will be the case at the end of the year, the government can get out of there and you can have the fees that will be paid instead. For the consumer, there will be no difference, but it will no longer cost the government $3 million a year.

Senator Mercer: To roll back the clock of this committee by several weeks when we were discussing about the cost of the airline business, we discovered that governments sometimes seize these opportunities as a revenue source for government, and I see you shaking your head "no.'' I agree with you. I want to raise a world of caution that we would not want to see that in the future.

Mr. Paradis: That is a very good point. I tried to recap the explanation, but what we have to understand is that it will be cost-neutral. The taxpayers will have assumed the start-up costs to get up and running, which will be the case at the end of the year, and then after that the system will run on its own.


Senator Boisvenu: Good morning, Minister. Congratulations on your work.

I also hail from a rural area in Abitibi. I do not think it gets any more rural than that. I still remember that, even in the early 2000s, many households had to share the same telephone line. I remember that, while I was living in a small row in a village called Granada, six of us shared the same telephone line. It was almost like church steps. Those people have had a very hard time obtaining Internet access.

Over the last six years, our government has invested a lot in those areas to introduce broadband Internet access and make sure that those households have access to such an essential tool as the Internet. I think that we must commend our government for delivering the goods in that area.

This is an introduction because I want to establish a connection with the bill you are sponsoring, still with regard to rural areas. I was in Abitibi no later than last year. As soon as I crossed over onto Abitibi territory, my BlackBerry no longer worked because it was configured for 3G technology, and they still used old bands in that region.

Therefore, rural areas are often very disadvantaged compared with urban areas in terms of service access and quality. How will your bill contribute to fairness for rural areas?

I think that one of your concerns is to treat rural area dwellers the same as urbanites. So how will your bill ensure that people in remote regions can have access to those services that will become essential for some of them?

Mr. Paradis: I was actually in Val-d'Or a few months ago to announce a broadband Internet access project, and we could see that the infrastructure is unfolding more and more in the Abitibi region. A number of projects were announced, and you could feel that people were very enthusiastic.

There are several problems involved. For instance, a dairy producer said that he could not do dairy genetics because he had no access to the MAPAQ database, or similar databases, through the Internet, and we know that all this now happens in real time. There you have the first point: the broadband program announced in 2009 that is ongoing. Things are still developing. There are some results. Infrastructure is in place, and it is unfolding.

The next issue concerns the network — in other words, ensuring that it works once infrastructure has been implemented. Technically, 98 per cent of Canadian households can have access to high-speed Internet in one way or another — be it cable, satellite or wireless access. However, that requires a corresponding network. As it was said earlier, if your device is configured for 3G, and the technology is still only available on other frequencies, it must be ensured that services can be provided in a suitable manner.

With regard to fairness, we want Canadians to have access to new technologies regardless of where in the country they live, including urban and rural areas.

I talked about LTE 4G earlier. That is a new technology. The 700-MHz spectrum is really popular, rare and effective. It travels far — and through walls — it costs less and requires fewer communication towers. In short, companies are looking into that option closely.

There are two sides to this. It is said that we want a fourth player, regardless of where in Canada we are. That provides consumers with more choices, creates competition and forces people to invest in order to always offer better options. We basically hope that this will lead to a drop in prices, as was the case in 2008, when we managed to lower prices by an average of 11 per cent across Canada.

We have taken things further this time and have established a historic and never-before-seen criterion: the rural criterion. In the 700-MHz technology, you have block A, and blocks B and C. The last two blocks involved competition. Of course, what may happen in the end with the way the auction is set up is that companies will sooner or later have two blocks. Another possibility is that they will have one block and operate a network jointly with another company.

In practice, there are two blocks. Whichever situation you are in, if you end up with two blocks either directly or indirectly, you have an extra requirement in deploying your network. You have to deploy 90 per cent of your network within five years and then 97 per cent within seven years.

Those are strict criteria, but we feel that companies will be able to do it if they have a focussed business plan. It is a manageable risk. Going beyond it would be too expensive or too hard to do, but not going that far would mean that some Canadians might miss out on the opportunity to have access to these new technologies. The goal was to aim for a balance.

We must also bear in mind that everyone has their attention set on the 700-megahertz spectrum because of its particular features. It is so powerful that there are only 14 zones in all of Canada. Some people asked us to break the zones into smaller pieces, but we cannot do that. There would be interference because the waves are so powerful.

But we also have the 2,500-megahertz spectrum on the way. Its wave has a shorter range, but it can hold a lot, such as multimedia, for example. It will cover a number of regions; I think that there will be 69 or 70 zones.

Senator Boisvenu: They are in smaller pieces.

Mr. Paradis: Exactly. We know that companies are looking at that with great interest because it could be really useful in rural areas. I am thinking of satellites, for example. Some people are waiting for it before they go looking for smaller zones and establishing their business plans. It will all come; it is not going to happen overnight, but at least the basic parameters are established with a view to achieving balance and access. That is what we want.

Senator Boisvenu: This whole area is often linked to the economy and to economic development. I do not want to ask you a trick question, but how will this bill create jobs in Canada so that our workers can reap the rewards rather than see the jobs created outside the country?

Mr. Paradis: It is a matter of access. We know that it will help with productivity. I was speaking earlier about the dairy farm or the small business that wants to bid on tenders online. We know that is done very quickly now: there is no more need to mail in sealed bids and no more process that takes days. People have to have online access, right here, right there and right now.

There is also the whole question of infrastructure. With the network and with strong competition, the sector will work to get access to it and to create investment, which will also give the consumer more choice. That is what we are talking about here.

Industry Canada has just announced a pilot project of $80 million per year for two years to encourage SMEs to invest in order to get access to the technology and to make them aware of the fact that they will be more productive if they have Internet access. The project is spearheaded by the NRC. The pilot project is proving to be very popular and we anticipate seeing good results from it.

We realize that we are sort of limping along in terms of productivity. We have to address that problem rather than putting our heads in the sand. One of the ways we can do that is to make sure that our companies have high-quality Internet access. That is a basic tool. Where we once talked about rural electrification, we now talk about Internet access. That creates jobs because, if productivity increases, so does performance. And if performance increases, we can look forward to increased sales. Then we are managing growth, not negative growth.


The Deputy Chair: That concludes our questions for this morning, unless we have another one.

Senator MacDonald: Minister, I know this probably does not come under the direction of what you have approached here in the amendments to the bill and the act, but it is my understanding that in terms of the 911 system in Europe and the United States, the technology used is an enhanced system, a system that is not yet in place in Canada. The carriers have not spent the money that is necessary to put this system in place. I know it is a substantial investment; I am told about $5 billion.

I am curious as to whether this issue has been broached with the carriers in Canada, or any new carriers. Can you give us any insight as to whether there is a timetable in place for the implementation of an enhanced 911 system and those technologies in Canada?

Mr. Paradis: Thank you for the question. I am not in a position to give you any insight this morning. I can follow up with the officials, who are probably more informed, but I do not have the information here this morning.

Senator MacDonald: That is one reason I was hesitant to ask, because it does not directly relate to this bill. We are a big country, and response time is very important. The quality of the technology that is in place is obviously significant when it comes to response times.

Mr. Paradis: I will be pleased to follow up. I will ask the officials to look into this and provide a written response to the committee.

Senator MacDonald: There are big carriers in Canada that are very profitable, and I think they have an obligation to look at the new technologies and put them in place.

Mr. Paradis: Thank you.

The Deputy Chair: Thank you very much, minister. We appreciate your appearance before us today. I am sure you have illuminated not only our panel but also Canadians from coast to coast.

Mr. Paradis: Thank you again for accommodating me. It is very much appreciated. I now have to run across the street.

The Deputy Chair: I would like to remind our audience that the committee is currently doing a pre-study of Bill C-38 or, more precisely, the elements contained in Division 41 of Part 4, dealing with the Telecommunications Act. Tomorrow evening the committee will hear from the CRTC.

(The committee adjourned.)

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