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Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue No. 8 - Evidence - October 6, 2016


OTTAWA, Thursday, October 6, 2016

The Standing Senate Committee on Banking, Trade and Commerce met this day at 10:31 a.m. to study and report on the development of a national corridor in Canada as a means of enhancing and facilitating commerce and internal trade.

Senator David Tkachuk (Chair) in the chair.

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The Chair: Good morning and welcome to the Standing Senate Committee on Banking, Trade and Commerce. My name is David Tkachuk, and I am chair of this committee.

Today is our second meeting on the subject of our study on the development of a national corridor in Canada as a means of enhancing and facilitating commerce and internal trade.

We are pleased to welcome today officials from Innovation, Science and Economic Development Canada: Adam Scott, Director, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector; and Andre Arbour, Manager, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector.

Gentlemen, thank you for being with us today. We are pleased to be able to continue our hearings on this study with you both. Please proceed with your opening remarks, after which we will go to a question and answer period.

Adam Scott, Director, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector, Innovation, Science and Economic Development Canada: Thank you. We're happy to be here this morning as you consider the concept of a national infrastructure corridor. What I can speak to today that I hope you will find useful is Canada's telecommunications infrastructure as it relates to this concept.

My remarks will focus in large part on Canada's North, because as with other infrastructure in Canada, this is where we see some of the greatest gaps. I brought some slides that will guide us through why telecommunication networks are increasingly important, provide a very high-level overview on some of the technologies involved, discuss the current state of telecommunications infrastructure, and lastly, present some considerations specific to the notion of shared infrastructure within a corridor.

I'm joined by Andre Arbour, who works with me on broadband policy issues.

Turning to slide 2, when I talk about the value of the Internet these days, I don't need to give as strong of a sales pitch as I did in years past. The importance of the Internet to the social and economic well-being of Canadians is widely appreciated. This infrastructure supports education, government services and businesses, both large and small, in addition to transmitting Canadian culture and connecting families and friends.

I would like to highlight that in remote communities the need is even greater. How much more valuable is Internet banking, for example, when the nearest bank branch is an airplane ride away? How can you attract workers to a remote location if you can't offer them reliable communications with loved ones back home?

Slide 3: The importance of the Internet is clear and the demand is growing. With more and more services moving online, usage is increasing and continual network upgrades are essential. Network equipment provider Cisco estimates that Internet traffic will increase threefold between last year and 2020.

The job is never done and the network is never finished. That is true everywhere in Canada, including in the North. In fact, what we hear from northern service providers is that the network capacity they add gets consumed extremely quickly. No matter how big a pipe they build, consumers will fill it.

Slide 4: I would like to spend a couple of minutes talking about some of the specific technologies involved. We use an awful lot of analogies when we're talking about the Internet, so I find it useful to talk a bit about some of the physical infrastructure that makes up our digital networks. This is the actual stuff that would go into a corridor.

Specifically, I'll be talking about backbone infrastructure as opposed to what is often called the last mile. You can think of backbone as the major highways of the network, and the last mile is the equivalent of local roads that connect individual buildings.

Fibre optic cable is widely accepted as the fastest backbone technology with the highest quality of service. Deployment costs range from approximately $5,000 to $10,000 per kilometre for a simple above-ground deployment to over $50,000 per kilometre for a buried installation or for traversing more difficult terrain.

Fibre cuts do occur and can be extremely disruptive, which is why it is preferable, where possible, to design the network in a ring as opposed to a single linear cable. Redundancy is a key theme when discussing telecommunications, especially as our reliance on these networks grows.

Microwave is a more economical solution than fibre. It uses a series of antennas and radios mounted on towers to send information, hopping wirelessly from one point to another. Typical distances between radio towers are roughly 5 to 30 kilometres, and each hop on the network can cost in the order of a half million dollars for a new build in a rural area. While cheaper to build than fibre, operating and maintaining microwave towers in harsh remote environments is by no means a trivial endeavour.

Slide 5: I will talk a little bit about satellite technology, which is relied on heavily in very remote areas, such as the far North.

Satellites tend to have more capacity constraints and are subject to greater signal delay. The added delay is simply a function of the laws of physics; it takes a long time for the signal to travel to the satellite in orbit and back down to earth. However, this is still a very important technology for serving certain areas cost-effectively.

A typical remote satellite installation would have a large dish in the community that links up to the satellite and then local last mile infrastructure using either wireless or wired networks connecting the individual buildings.

We do on occasion hear of satellite outages. In fact, earlier this week, one of the key telecommunications satellites for Northern Canada was temporarily out of service, which caused significant disruptions for northern communications. It affects everything from the phone network to air communication, Internet banking, ATM and credit card payment systems, so it is a significant deal when the network goes down.

Slide 6: Overall the telecommunications infrastructure in Canada is very good. The private sector invests billions of dollars each year into network maintenance and upgrades. As a result, most Canadians have access to high-end telecommunication networks. Nationally, over 99 per cent of households have access to at least lower tiers of broadband Internet, and we are seeing very rapid improvement in the higher speeds as well.

Network speeds in the North are not as good. There is also less resiliency. It is worth noting there is significant variance even across the territories in the North, with Nunavut's remote communities proving among the most difficult to serve. The northern regions of the provinces, especially Manitoba and Quebec, tend to look similar to Nunavut in terms of the broadband coverage.

Slide 7: We brought a map. There is a particular challenge in improving connectivity to satellite-dependent communities, those that are not served by terrestrial networks. We've identified them on the map to show just how remote some of them are. Many of these communities are also not connected to the electrical grid and do not have year-round road access.

To give a sense of the scope of the connectivity challenge, I'd like to point out that the three territories have a population smaller than Prince Edward Island distributed across a land mass of over 4 million square kilometres.

Backbone transport remains the biggest challenge in communities that are currently satellite-dependent. There simply isn't enough capacity coming into the community to satisfy growing demand.

[Translation]

Slide 8 shows that the government role in deploying networks has been small in relation to the private sector, and focused on areas where the business case is especially challenging.

However, there are a number of government-supported initiatives under way, at various stages of implementation, to improve Canadian connectivity.

In Budget 2014, the government announced the Connecting Canadians program, which is on track to bring broadband to roughly 300,000 households.

In addition, in Budget 2016, the government announced up to $500 million in funding over five years to expand broadband to rural and remote communities.

On slide 9, you can see that there are a number of provincial and territorial projects at various stages of implementation. For example, the Northwest Territories is building the Mackenzie Valley Fibre Link, a fibre optic project that will run from Fort Simpson to Tuktoyaktuk. Construction of this project is well under way.

On slide 10, you can see that Yukon is prioritizing redundancy and planning a fibre optic network extension to create a ring infrastructure to help ensure continuity of service in the case of a fibre cut.

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Slide 11: There is a long-established symbiosis between telecommunication networks and other infrastructure. You can think all the way back to the telegraph lines that used to run alongside our railways. Today, not only do we use the analogy of information highways, but there are literally fibre optic cables running underneath our roads, and Internet service providers also run strands of fibre on utility poles over our heads.

Such coordination should be encouraged and enhanced. Digging up existing roads or laying new roads, in a planned and coordinated way, can minimize the cost and the public disruption of network deployment. Tower sharing can be used to keep costs low and reduce environmental and aesthetic impacts.

The European Commission recently released a study showing that efficient use of existing infrastructure can lower the cost of deploying a fibre network by up to 58 per cent.

On slide 12, I've highlighted a few organizations looking into various aspects of northern telecommunications infrastructure. Our experience cooperating with these groups has been extremely positive and productive. There are strong relationships within the federal family, as well as with provincial and territorial governments and the private sector. Significant work has been undertaken to assess needs, conceive of solutions and estimate costs.

This is a very big topic, and I've tried to cram a lot of things into my opening remarks. We're, of course, very happy to answer your questions.

Senator Black: Gentlemen, thank you very much for being here. It's very interesting.

I'm interested in understanding that if a so-called northern corridor were to advance, your view is that part of that northern corridor would be the technology, whether it's fibre optic or satellite or some combination thereof, to provide enhanced broadband service to the North. That's the essence of your testimony.

Mr. Scott: In essence, yes. In my view, the efficiencies are so great.

Senator Black: Absolutely. In terms of looking forward, do you have any view as to what the best form of technology would be, recognizing that we are literally looking decades forward?

Mr. Scott: Fibre is definitely the ideal. Given the choice and all else being equal, I think virtually everyone would choose fibre. It does become extremely cost prohibitive in certain cases. You're literally talking about booking special ships years in advance that can deploy fibre on the bed of the ocean floor. That's why I wanted to spend some time talking about the physical network, because it is that complicated.

Senator Black: If a proposed corridor was running from Labrador through Ring of Fire, up to Fort McMurray and through to Prince Rupert, which is conceptually the concept, does that meet the needs that you have described?

Mr. Scott: It would meet some of them. You'd probably want to overlay the two maps — our map of need versus the map of the proposed corridor — and I know there would certainly be some overlap. It would not meet all the need.

Senator Black: Your concern is broadband service to Northern Canada. That's what you worry about.

Mr. Scott: That's the area of greatest need for sure.

Senator Black: Are you able to comment in respect of this fibre optic network, if it were to be built through this northern corridor completely, do you have any sense of what that would cost?

Mr. Scott: Through the northerner corridor specifically, no.

Andre Arbour, Manager, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector, Innovation, Science and Economic Development Canada: If you were building such a corridor, it would involve actual all-weather roadways or electrical grid. The incremental cost of adding fibre optics is extremely low. It's such that hydro utilities, when they're extending electrification, will put in their own fibre for the heck of it or just for their own use because the incremental cost is so low in those cases.

Senator Black: That's helpful to know. If there were other assets going in there, and of course there would be, whether it's electricity or pipelines or rail links, you're saying the incremental cost to add fibre optic would be comparatively low?

Mr. Arbour: That is right.

Senator Tannas: Thank you for being here, gentlemen. Just so we get this out of the way: Are you aware of the study that the School of Public Policy has placed with respect to the northern corridor? You've mentioned that electrical transmission lines and the towers they use can also be used for fibre optics. Can they also be used as the transmitter towers, or is that more difficult?

Mr. Arbour: It is possible to use it for microwave. You tend to not because it's better to have a higher height, given the train, because they rely on a line of sight.

Also, if you're already stringing cable along telephone poles. you might as well just put in fibre.

Senator Tannas: The northern corridor obviously doesn't swoop way north in any spot that's being proposed, except maybe in Labrador it would cross 60, and it could vary a little bit, but if we had fibre running across that far north, does that help? There would still have to be a series of transmitters that would take it the rest of the way, but getting it that far on fibre so you can cut down on the number of times you have to retransmit in order to get up there, does it make a difference in quality?

Mr. Scott: Absolutely, and it's true in the south as well, the further you can push fibre out into the network. The core of the telecommunications infrastructure is heavily fibre-based. We hear now in urban areas about pushing fibre all the way to the home, so it's certainly advantageous to move that high-capacity fibre further out. It makes it easier to jump off from that trunk line with a microwave. By extension, it also reduces the need to rely on satellite, so that frees up satellite capacity for the areas where it's most needed. It's advantageous for everyone to move more people onto fibre.

Senator Tannas: My next question is brief. You are the Department of Innovation, Science and Economic Development. We heard testimony yesterday from these bright fellows looking for $800,000 to go the next leg of their study. Can you tell us who they need to apply to at your shop to for that kind of money? Do you dole out research grants or do you do them all yourselves?

Mr. Scott: Eight hundred thousand is six times my entire O&M budget for the year, so if they knock on my door they'll be disappointed.

Senator Tannas: That's okay; what can you spare us?

Mr. Scott: We'd certainly be open to talking to them and helping them negotiate through the department and finding what money might be available to advance. That's the only honest answer I can give.

Senator Enverga: Thank you for coming here, gentlemen.

I was looking at Slide 10, and I just saw that the cable, the fibre optic link, will be going through the water. Is that right? Is it cheaper through the water or through land-based cabling connections?

Mr. Arbour: It definitely depends a lot on the local terrain where you are. On average, submarine cables are much more expensive than building on roads, but all communities don't have any existing road access already so, for the most part, it would be prohibitively expensive to try and maintain and operate a cable through these long stretches above ground.

The submarine cable is more cost effective in these areas. These communities are only accessible by ship or plane, and they bury the cable in the sea floor where it's safe and secure.

Senator Enverga: I can still remember when there was a national corridor that they were trying to plan, and they were trying to eliminate the fact that they go close to the water. I'm hoping that on this particular fibre project, it will be easier to have a nationwide passage through the waters in the Arctic.

Because most of the Arctic would be affected by climate change, we will be sure to distribute communications under water. Is that easier for you, considering the environmental impact that they always claim whenever we contemplate a land-based system?

Mr. Scott: It is certainly preferable, in these specific cases, to go with the marine route, but I think what we are realizing very quickly is environmental impact depends a lot on the specific geography. The fibre itself is actually quite narrow, so an environmental assessment would be part of any infrastructure build. But we're talking a thin fibre, so typically, the impact is relatively small compared to other infrastructure. When you look at the map, you can imagine it being quite large given the territory it covers, but the fibre is so narrow that the impact is minimal.

Senator Day: Just so it's clear in my mind, would planners prefer to either bury or use submarine cable for fibre optic, rather than poles?

Mr. Scott: No. Where there are existing poles and infrastructure, that quickly becomes the most economic and efficient option. The preponderance of the aquatic delivery is only because we're talking about communities where there are no roads. If you get to the point where you are installing roads or even rail lines or whatever it may be, the economics change dramatically towards using that infrastructure.

Senator Day: Looking at what you proposed, there are a couple of questions that arise. You seem to be dealing in loops in the Yukon area and Nunavik, which is Northern Quebec. Is that so you have redundancy, and if it happens to get cut one way, you can go the other way?

Mr. Scott: That's exactly right. If you picture a ring and cut it, you can still go the long way around.

Senator Day: The planning for this would involve provincial and federal jurisdiction, and you're giving us the federal side here. The ideal would be that, whenever there is a road or a line being built, to put in fibre optic at the same time, and that takes away dependency on satellite, microwave or whatever other communication means. Is that just by encouragement? Are there regulations now that go beyond encouraging and require that? Where are we in the spectrum of getting this done?

Mr. Scott: There are no regulations requiring the installation, but there is a best practice; "dig once" is the trendy name for it. This is the concept, and some communities do a good job of it and it is starting to get a lot more attention. It comes down to information sharing. When the municipality is opening up the road, who are they sharing that information with, and how easy are they making it for Internet service providers to gain access?

In urban areas, it comes down a disruption issue. Digging up a street is hugely disruptive, beyond the economic cost of it. Citizens hate that, and they don't want their streets dug up every time they deploy a new network.

Senator Day: We see that in Ottawa on a regular basis.

Mr. Scott: We're seeing a lot of it right now in Ottawa.

Senator Day: A corner is dug up, some pipes are put in, and a little bit later on it's all fixed up. Then it's dug up again to put something else in. We understand this. "Dig once" would be very nice, but if there is no regulation and it's just encouragement, then your role is to communicate the idea that if you're doing something like building a stretch of highway, why not put fibre optic in.

Mr. Scott: It is an idea getting more traction. We talked to everyone, like the provincial governments and the Federation of Canadian Municipalities. This is becoming more broadly discussed, as is the Internet in general. It used to be we were pushing everyone and doing the hard sell and saying, "You need and want the Internet." It's more often the case now that the push is reversed. People are coming to us and saying, "We need this. What can we do?" So something like a "dig once" policy is definitely something to point to.

Senator Day: My next question relates to the cost of doing this. This all appears to be federally funded, but in some areas you can get private sector funding. Is there private sector involvement in the capital costs at the front end, or is it all recovered through the user?

Mr. Scott: It depends on the project. Nationally, the private sector is vastly outspending the government, on the order of $10 billion a year in capital expenses. The majority of that goes where the consumers are, which means it's mostly urban.

But the government projects we have run out of Innovation, Science and Economic Development Canada have always been in partnership with the private sector, and we run them as competitive processes. We go through the process of identifying need and finding where the gap is. We have an excellent mapping team that is overworked but produces great, detailed maps, in cooperation with the CRTC and the private sector, to get as accurate a picture as possible of where the gap is.

Then we go through the process of trying to identify the uneconomic portion of that. We know there are customers at the end of that network that will generate some revenue, but in the areas we're dealing with, it is the case where that revenue is not enough to make good business sense. But by running a competitive process, we encourage companies to bid down the government subsidy. Our approach has been to determine how little we need to contribute to make this viable.

Senator Day: What role would you play in bringing different interested private sector companies to the table? There might be a private sector company that is building a highway or another company building a development. It would be very nice to have communications — fibre optics — put in under the roads at the time they are being built, but that fibre optic is not the business of the developer. How do you bring these guys together?

Mr. Scott: That's an excellent point. By virtue of the work we do, our relationship has tended towards dealing with the Internet service provider, and you're bang on that this needs to go beyond that. There needs to be a discussion with the private sector writ large, not just one that's narrowed down to the particular industry.

Senator Day: Is that not being done now?

Mr. Scott: Not through us. It may be, as you say, that developers are not in the business of Internet service provision, but I think a lot of them are quite savvy and it is becoming more and more a standard practice to be cognizant of this when it's going in.

Senator Wallin: Welcome. I have a couple of quick follow-up questions.

On the gap issue, my home province Saskatchewan has the same issue as the North: There are few people in vast spaces. Are you mapping in the south or just in the north?

Mr. Scott: We do national mapping. We've got the whole picture.

Senator Wallin: Is there actually access to that information if a municipality wanted to find out why there is Internet here and here, but not there?

Mr. Scott: We can share some of it, and some we can't. We collect it from the companies, and some of it is considered confidential.

Senator Wallin: But is it worth asking?

Mr. Scott: It's worth asking.

Senator Wallin: On the question of information sharing with municipalities, you say you talk to them and meet with them. How formalized is that? Are they saying, "Here are six projects for this year," and you give them some information, or is it, "Hello, we're here and we should really be talking?"

Mr. Scott: For us, it's driven by the program cycle or budget cycle. We fall under the 2016 budget announcement of new funding. Our program delivery team has been consulting nationwide, and I believe they have consulted more than 500 organizations. Program details aren't available yet, so we can't say exactly what we're doing, but we're engaging them on exactly those types of questions, like "What is your local need?"

Senator Wallin: Is it mostly big picture, saying, "We're here and we exist?"

Mr. Scott: The big picture conversation happens, but our engineers talk to other engineers and they get into the weeds.

Senator Wallin: They get gritty.

Mr. Scott: Yes, exactly.

Senator Wallin: My third question has been raised in different ways. If there is no national plan and if we do not get our national act together and say that we are going to do a northern corridor or one of these things, you say you are proceeding in bits and pieces now. Can you actually deliver and provide that service that governments past and president have promised to the North and other remote regions if there is not at some point a national grid?

Mr. Scott: It's certainly easier to do it as a block. There are certain things that you can't do incrementally. You can't launch a new satellite in pieces, as the classic example. Other elements you can do incrementally.

Senator Wallin: Like fibre.

Mr. Scott: With fibre, you can connect one community and you're that much closer to the next. You can do it strategically even if you're not doing it all at once. That's the type of thing we look at with our mapping team. If we go here, what does that open up? If we can build here, could somebody else then build on?

Senator Wallin: What context do you operate on in terms of your own operating principles? Are you doing the bits and pieces strategy, or are you geared to the corridor strategy?

Mr. Scott: The corridor hasn't typically been our approach. Because the need is so diffuse, it doesn't necessarily — I don't need to move a railcar from here to here. I need to connect all these people. It's almost binary rather than linear. You're either connected or you're not. I don't need to connect this particular point to another point.

Senator Enverga: I was listening to your presentation, and you mentioned communication satellites, microwave or fibre optic. Currently what is the present state of the particular technology that we use in Canada?

Mr. Arbour: When we're talking about the backbone links, the intercommunity links, fibre is by far the most common. But microwave and satellite have particular importance in rural and remote regions because they are often the only economical choice in certain areas.

Ideally we like to get as much as possible onto fibre because it's the best quality. In some cases, for example, the operating costs would far outweigh even the capital cost of building it to begin with, so microwave and satellite are still critical pieces of the puzzle.

Senator Enverga: Are you planning to use the same infrastructure or make a different infrastructure across the country? Is that how you foresee the future or a different route?

Mr. Scott: The way we operate is program-driven. A lot of our planning depends on the proposals that are coming in from the private sector and the priorities identified by provincial governments or municipal governments.

In a lot of ways, we're a bit of a taker as opposed to a maker. Because it really is the private sector that has the best insight into exactly where the network is and what the business case is for going to the next step.

There are a lot of increments on the network build-out. Frankly, we don't have a budget to solve the national problem, so that steers us down a particular course for planning purposes, working with the best value we can deliver with the available funding, and how can we do that strategically? We never quite get the mandate to do that national solve-it-once-and-for-all.

Senator Enverga: We want to build more telecommunication infrastructure all over Canada. What is the opportunity loss? Is it economic or social? Are we missing a lot by not doing this right away?

Mr. Scott: I say yes, as someone who looks at this stuff a lot and hears from Canadians who don't have it. A lot of us in urban areas take for granted how much we depend on this. But if you have kids in school and inadequate access to the Internet, you hear so much about homework being delivered over Google Docs, if you can't access Google Docs or it's not working, your kid is not getting the education that a child somewhere else is getting, or if I have to fly to a bank branch to make a deposit or access my account. There are all kinds of day-to-day significant things.

Another example I like to use is I got a call from a small business owner who was near a big city but didn't have access to high-end communications. He was in the business of producing safety-training videos for companies, a video-based service. It used to be DVDs and VHS tapes, and he relied on the mail system. If he relies on the mail system, he is dead; he is out of that business. He needs to deliver video on-line, very high speed, very high volumes.

A lot of this is anecdotal. It's extremely difficult to quantify. As the importance increases, the ability to quantify it decreases, because we're talking about things like medical diagnostics and how do I quantify the value of improved testing for medical issues in the North? How do you quantify your kids' homework? It's extremely important and very hard-hitting for a lot of people, and very difficult to measure at the same time.

Senator Enverga: Since you're a federal entity now, what is your wish list? What do you want the federal government to do right away? Is there anything urgent we need to do?

Mr. Scott: We're on the right track. The Budget 2016 funding, that $500 million, will do a lot. The announcement is not ready yet. The minister will come out with an announcement on how that is going to go to work, but we're excited about it. This fits in nicely with the innovation agenda.

We're talking about transformative change in rural communities. We're on the right track. We need more. Provinces and territories are stepping up. We're engaged heavily with them. The private sector does interesting and innovative things, whether that's pushing out more fibre or new satellites that have dramatically higher capacity and new business plans for those satellites.

We hear from companies that are launching low-earth-orbit satellites, which reduce that vast distance; so it's a much closer and better technology. It is still early days for some of those, but that is the kind of thing that can dramatically transform.

There is a lot going on in this space. We are trying to identify the gaps that are least likely to be filled. We don't want the federal government stepping on the toes of a private-sector solution. Because it's a space that evolves quickly and there are a lot of players doing interesting things, we have to be careful and make sure that when we spend a federal dollar, it's not displacing a private-sector dollar. That's a balance.

Senator Enverga: Is the money for putting in new infrastructure or for standing infrastructure?

Mr. Scott: It will have some similarities to past programs where it's infrastructure money. It will be funding the roll-out of networks.

Senator Smith: As you look across the country, and looking at the information you have given us, you can't do everything for everyone. You have a pocket of money. Is there a geographic focus that you have been assigned?

You have given us pictures of the extreme west going right up to Tuktoyaktuk. Where is the federal focus? Besides everywhere? You can't be everything to everyone. If you look at the people that we met yesterday, they had this northern corridor concept. One thing they will face if they are able to move forward is where the priorities are. If you look and tie it into the trade game and you look at the growth in Asia, then some people will ask why we don't focus on the three Western provinces and build up.

I see your map here with the new-build fibre and the existing fibre going up to Tuktoyaktuk. That's where the new highway was built, and the TransCanada Highway was built up to Tuktoyaktuk. Where are your priorities? It's great to say, "I'll do everything," but you can't.

Mr. Scott: You're absolutely right. We can't. The model is a needs-based model.

Senator Smith: Who does a needs-based model?

Mr. Scott: We map exactly where folks don't have the Internet. It's not hypothetical, and we don't have a mandate to look at one particular region. Our priorities shift depending on where the area's greatest need is.

Senator Smith: What type of contact do you have with private enterprise? You said they play a big role and they are putting money into this. You also said you can't tell us some of the information you have because it's confidential, which we understand because there is competitiveness.

What are you gleaning from your relationships? What are the types of relationships you have with industry? Are you heavily connected to industry, or do you just wait for them to come to you? What is the interaction between the two groups?

Mr. Scott: We're extremely proactive with industry. The relationship is very good, as detailed as our engineers talking to their engineers: What exact type of equipment do you have in exactly what location and what speeds can that deliver? What is your planning over the next little while?

Senator Smith: What is the technical capability of your department in terms of engineering?

Mr. Scott: I think right now the engineering team is about 20 folks all told.

Mr. Arbour: For broadband programming specifically, but spectrum regulation, for example, is part of our ministry's mandate. The department has quite a strong technical background.

Senator Smith: How many engineers do you have? How many technicians?

Mr. Scott: Specific to broadband, I would say we have about 20 engineers working on broadband issues.

Senator Smith: And fibre optics?

Mr. Scott: Yes.

Senator Smith: So it's 20 total?

Mr. Scott: Twenty total, and then some related expertise. Some folks who do spectrum regulation issues also have expertise that's extremely relevant to the work we do.

Senator Smith: The reason I ask the question is because when we talked to Infrastructure Canada, I asked the same question: What engineering capability do you have? And they said, "None." Basically, they have bureaucrats who study forms. You would think that if you're going to build a transit project in Toronto, you would have some capabilities and if you're handing out millions and billions of dollars, you would be able to understand what people are doing. It seems you understand that and you have a technical capacity, which is helpful in terms of moving forward. Would you agree with that comment?

Mr. Scott: I would agree, and we're quite happy. It's not uncommon for us to share that expertise.

Senator Smith: Getting back to priorities, as you study this project that we've been looking at or listening to as of yesterday, you said you've had interaction with these folks. They need seed money to move forward.

If someone came — like our group — to you and made a recommendation that this northern concept is something that should be pursued, what would your recommendation be to us in terms of trying to connect with the right people to get seed money without getting you in trouble?

Mr. Scott: That's the thorny part. I'm not aware of any source of $800,000 that could fund such a study. We would absolutely want to be part of that conversation.

Senator Smith: So if we went to someone inside your department, would it be to the deputy minister or to the minister?

Mr. Scott: We can run up to the deputy that this request is being discussed.

The Chair: I think you'd leave the minister to us, senator.

Senator Smith: Just asking.

Mr. Scott: That would be another channel as well.

Senator Smith: Tell the deputy to expect our visit. Thank you.

Senator Day: I'm on slide number 11 where you talk about shared infrastructure, and I just don't understand the second bullet. The European Commission study found efficient use of existing infrastructure can reduce fibre deployment by 58 per cent. Do you mean the cost of fibre deployment?

Mr. Scott: That's correct.

Senator Day: We should put "cost" in there, because you are still deploying the same amount of fibre; right?

Mr. Scott: You are correct.

Senator Campbell: My question is pretty simple. I come from the days of when you had a Selectronic typewriter with the "x" on it, and it was super. So can you tell me what a petabyte is?

Mr. Arbour: It's just a very large measure of data.

Senator Campbell: How large is it?

Mr. Arbour: It's one million gigabytes. To put that in perspective, from our most recent data from 2014, the average home broadband subscriber used about 75 gigabytes per month. So this is the aggregate, all of the Internet traffic.

When we start getting into numbers that are so large, it's hard to comprehend them. The main takeaway I would say from the slide is not just that there is a large number, but the growth is quite strong. We're talking about a tripling of the network capacity within five years.

Senator Campbell: Do you think that it's fair to say that the capacity will continue in that way? It seems like every year it doubles or triples, the amount, the speed. Where does it end? Does it end?

Mr. Scott: Andre can correct me if I'm wrong, but I think the growth rate is starting to slow a little bit, so it's less of the hockey stick and it's levelling off a little.

Having said that, in some areas like the North, they are at an earlier point on that curve, so they haven't started levelling out to the same extent. In an area where you still have lower speeds, you're racing up exponentially. In an urban area, it's closer to being satisfied. A lot of the stuff spikes dramatically due to unforeseen technologies. Netflix comes along and all of a sudden you're back on that exponential curve.

Senator Ringuette: In regard to servicing northern communities, I'm absolutely not a tech-savvy person, but I'm wondering to what extent are we able to provide the current and future required service via satellite? Have you compared the possibility of the federal government providing that satellite service for free to northern communities to the cost of digging fibre optic? The geography is incredible. Have you done those things, compare the technology and the availability and the cost?

Mr. Scott: You're absolutely right. Yes, we have. We looked at the viability and the costing models not just behind binary choice but also different variations. Could we build fibre to the 13 communities where it makes most economic sense with fibre and then transfer more of that capacity over to the other satellite communities? We do run all those types of permutations.

Senator Ringuette: You're not answering my question. My first question was, in regard to the current and future needs of our northern communities for telecommunication and Internet, can we provide that with satellite? If so, what would be the cost in comparison to fibre optic? There has to be logic to it. So answer my first question, please.

Mr. Scott: Yes. With enough money and enough satellites, you could meet it. There is no constraint other than financial for meeting the need with satellite.

Senator Ringuette: Okay. So then we go to the second question, which is a financial question, cost and time to provide the service. What is the cost comparison between satellite and fibre optic to provide the same level of service?

Mr. Scott: Your questions get more difficult as we go along.

Senator Ringuette: That's the intent.

Mr. Scott: Do you want speak to relative?

Mr. Arbour: The answer is complicated is because it really depends on how far that community is from existing infrastructure and the nature of the built environment on the way. For a community that is 50 kilometres away from existing fibre optics, you can roughly look at it and say $30,000 per kilometre. There are some additional sophistications to that, but it's relatively straightforward.

However, for a community that is hundreds or thousands of kilometres away from existing terrestrial networks, the cost to service that incremental community is much higher over fibre optics relative to satellite.

Senator Ringuette: In Ottawa, the cost of our telecommunications are tremendous if you compare our cellular plans to what is available in the U.S. There is more competition and so forth. For the sake of expediency and cost, why not provide, free of charge, satellite communication and data service to our northern communities?

The Chair: That's a political question.

Senator Ringuette: But in order to answer that, all the cost analysis has to be done. I do not believe that we are at that phase right now.

The Chair: They are doing quite a bit.

Mr. Scott: We are doing quite a bit. We have never been asked to model a free — that doesn't come up. The free side hasn't been part of the equation.

In terms of looking at the costing and the various alternatives, there is an awful lot of work that goes on. And it's not just us. The Northern Communications and Information Systems Working Group —

The Chair: If you go to the presentation, Senator Ringuette, it's in there.

Mr. Scott: There are a lot of folks working on this. They are running the models. They are doing estimates on the fibre cost.

Part of the challenge, too, is that with the technology always changing, especially on the satellite side, you will see that from one generation of satellite to the next, it's a dramatic change.

Senator Ringuette: You'll see the same phenomena in regard to the requirement in fibre optic capacity. The growth is there. The volume of data and so forth requires a constant upgrade.

I'm saying this because of an experience I had 10 years ago in Mongolia. I was in a temple. We were attentive to prayer going on. All of a sudden, we hear a cellphone. The Grand Manitou took a cellphone out of his coat. They didn't go to the phase of wired residential phones that we did. They went from A to D. Maybe that's the way that we have to approach the concept to service the northern communities.

Mr. Scott: The concept of leap-frogging generations of technology is something we see a lot in developing countries that hit that phase where they make the decision to make that investment. They go right to current technologies.

We have the additional challenge of keeping the lights on. We can't save up 20 years' worth of program spending and then, once we have got our $2 billion, build a fibre network. So there is a lot going on, but I take your point.

Senator Enverga: The problem with communication is the more we use it, the more we cannot live without it. Organizations, people, infrastructure, even our security and in our daily lives, we're getting so dependent on these communications.

When you're planning, have you taken into account the fact that we would need some redundancy or backup? Is it being built into your planning or studies?

Mr. Scott: Yes. We're very aware of the importance of backup or redundancy. In rolling that fibre, we're always cognizant of the preference for a ring in case of a cut.

In some cases, it can be reliance on a different technology. If fibre is going in, you would also want to have a satellite backup. If you're relying on satellite, you would like to rely on two satellites. I would rather have half of two satellites than one entire satellite. At least if I lose a satellite, I've got something left.

Senator Enverga: That's part of the costing you're doing?

Mr. Scott: When anybody is studying connecting remote communities, redundancy would be a very common consideration.

The Chair: Thank you very much, Mr. Scott and Mr. Arbour. We appreciate your presentations today.

We don't have any further witnesses, so the meeting is adjourned.

(The committee adjourned.)