THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Tuesday, March 21, 2023
The Standing Senate Committee on Transport and Communications met with videoconference this day at 9 a.m. [ET] to study Bill S-242, An Act to amend the Radiocommunication Act; and, in camera, for the consideration of a draft agenda (future business).
Senator Miville-Dechêne (Deputy Chair) in the chair.
[English]
The Deputy Chair: Honourable senators, I am Julie Miville-Dechêne, a senator from Quebec and deputy chair of this committee. I would like to invite my colleagues to introduce themselves.
Senator Simons: Hello. I’m Senator Paula Simons from Alberta, Treaty 6 territory.
Senator D. Patterson: Dennis Patterson from Nunavut.
[Translation]
Senator Cormier: I am René Cormier from New Brunswick.
Senator Cardozo: I am Andrew Cardozo from Ontario.
Senator Clement: I am Bernadette Clement from Ontario.
[English]
Senator Manning: Fabian Manning, Newfoundland and Labrador.
Senator Quinn: Jim Quinn, New Brunswick.
Senator Bernard: Wanda Thomas Bernard, Nova Scotia.
Senator Dasko: Donna Dasko, a senator from Ontario.
Senator Wallin: Pamela Wallin from Saskatchewan.
[Translation]
The Deputy Chair: Thank you. We are meeting to resume our study of Bill S-242, An Act to amend the Radiocommunication Act. We are pleased to welcome the following witnesses:
[English]
From Storm Internet Services, Mr. Birket Foster, Chairman and Chief Executive Officer; Mr. Andreas Tornow, Vice President, Network Infrastructure; with us by video conference, from CanArctic Inuit Networks Inc., Ms. Madeleine Redfern, President; and as an individual, Mr. Gregory Taylor, Associate Professor, University of Calgary. Welcome and thank you for joining us. We’ll begin with opening remarks from Birket Foster, followed by Madeleine Redfern and then Gregory Taylor. Mr. Foster, you have the floor.
Birket Foster, Chairman and Chief Executive Officer, Storm Internet Services: Thank you very much, Madam Chair and senators, for inviting us to talk about this very important topic.
Storm Internet has been serving the Ottawa Valley for 25-plus years. We have three offices across the territory. We service more than 10,000 customers with our own fibre to the home projects, as well as our own wireless network. We also have local customer service. All our customer service is from the valley. We provide both residential and commercial solutions and employ more than 50 people, especially during the summertime when the build season is May to October.
Our wireless coverage is across the Ottawa Valley from about Sharbot Lake to the Quebec border. We not only provide internet but we also provide services back to the community, things like the International Plowing Match, various county fairs in the area, and we do a lot of work to help campgrounds and marinas be able to also connect wirelessly in the countryside.
We do work on this wireless a lot, and in fact, the last three years, it has been the largest-growing segment within our company. We’ve added over 600 per year in the last three years. We’ve spent $3.1 million in capital costs over those three years to provide over 200 upgrades during the pandemic so that people could work from home and learn from home. We did that at our own cost. No government funding was involved to make that happen.
From a business case point of view, we have a formula we use to be able to go through it. We can talk about that if you would like to, but often an area needs three or four different towers to cover the area. We have to get around trees and hills, and these kinds of things need to be talked about. Even in Clayton, where we have a large fibre to the home project, we still augment our service by providing wireless into the countryside for areas that are not close enough to the fibre to be economically feasible to join in. Ottawa itself is 80% rural. Let that sink in for a second. There are 1,100 farms inside the border of Ottawa. Less than 10% of the population is there.
We also want to make a distinction here between fixed wireless access and cellular access. Cellular is what the big telcos talk about, and we’re one of 200 small internet service providers, or ISPs, that provide wireless in the countryside. I think it’s important, even if the frequency is the same, to look at purpose-built to be able to connect houses and businesses rather than just hotspotting off a cellphone. It’s way better when you have five people in the house who need to be connected at the same time to work from home or learn from home.
We use spectrum, both licensed and unlicensed, for backhaul as well as distribution, and we have a playbook that we use when we are actually going out to do a build.
In terms of the bill, we have some comments. Proposed subsection 5(3) talks about revocation. I want the senators to be aware of the consequences of doing a revocation. Right now, we’re in a clawback of 365 spectrum, which means we have 180 customers we have to make a business decision on. Do we support them? Do we build out a whole new infrastructure for no money? What do we do with it? We have that kind of thing. If you revoke spectrum, you want to think about what actually happens to those people.
In terms of proposed section (7), civil liability, we did a little exercise on what could go wrong. We know construction delays are possible. I think that if you go in at a year and a half in and do an inspection to see that people have propagation maps and plans to build, I think you will be okay, but I would not want to be in a position where we get stuck because of supply chain issues.
The other one is major business case changes might happen, in which case we want to have the right to return the spectrum. But if you give us spectrum, we will use it.
If you look at the map around Ottawa, there’s a Tier 4 area that covers off the Ottawa area. It’s actually composed of 11 Tier 5s. In those 11 Tier 5s, you only need to do one to meet 82% of the population. Therefore, we have a recommendation that the bill be changed slightly to include 50% at the Tier 5 level, which would force the issue of having to put things in the rural areas and perhaps be good for the small ISPs because the big guys could partner with us. After all, they get 13% from us for the transit backhaul down to Toronto, 151 Front. They’re going to make money anyway, even if we win the area.
Those are the summary comments. Thank you very much for the opportunity to speak.
[Translation]
The Deputy Chair: Thank you for sticking to your allotted time, Mr. Foster.
[English]
Ms. Redfern, the floor is yours.
Madeleine Redfern, President, CanArctic Inuit Networks Inc.: Good morning and thank you. I am the Chief Operating Officer for CanArctic Inuit Networks Inc., which is looking to build approximately 5,000 kilometres of subsea fibre to Nunavut and through Canada’s Arctic. We are also looking at working with ISPs to offer effectively the services to our communities in Inuit Nunangat and much-needed redundancy. I’m also a member of Connect Humanity, which is working to address Indigenous participation, building capacity and support for Indigenous communities and businesses to participate in the telecommunications and digital sector.
It’s incredibly important to ensure that Indigenous participation in this $70 billion-plus sector is supported and facilitated by the Government of Canada for Indigenous reconciliation. While I understand that there are Indigenous or Native broadcasting licences, there is not the dedicated spectrum to facilitate more Indigenous participation in the sector.
An additional sort of amount of funding is also required to provide the communities with the information that they need to know to be able to access that spectrum to build out the infrastructure and to provide the services to the communities. There are a lot of barriers and challenges, and they are very much systemic and structural.
While I’ve listened to Mr. Foster, there are a lot of important services that the smaller companies can and should be able to provide. I agree with Mr. Foster that, even in urban areas, there are a lot of rural populations that need access to these services in an affordable manner that is competitive and with a system that provides that, especially in more remote and Northern Indigenous parts of Canada.
Thank you.
The Deputy Chair: We will hear now from Mr. Taylor. The floor is yours.
Gregory Taylor, Associate Professor, University of Calgary, as an individual: I am a professor at the University of Calgary, where I specialize in the areas of broadcast and telecommunications policy.
Thank you for asking me to speak today. It’s fortuitous in that I have a paper that will be published next month entitled Use It or What? Spectrum Policy’s Empty Threat where I address this whole area of “use it or lose it” as a spectrum policy. If I may quote myself here, I refer to it as a:
… memorable rhyme of a policy that has shown little substance in its application in the Canadian context, despite appearing in policy documents for more than a decade. As a regulatory threat, it has proven an extremely idle one.
My point is that “use it or lose it” is something that’s been around for some time in spectrum policy, not just in Canada but across the world. It is rarely used as an actual policy. In Canada, it has become politically trendy in the last few years. In the last election, both Liberal and Conservative official platforms referred to “use it or lose it” with regard to spectrum. It has also been used in Alberta by the Conservative government and the NDP as well, even though provincial governments have no jurisdiction in this area. It is something that seems to be getting a lot of coverage. It seems catchy for a lot of people, but as I point out in my paper, it rarely actually happens. This is one of my concerns about the bill before this committee right now.
I’d like to commend Senator Patterson for bringing forth the essential yet under-examined area of spectrum deployment conditions. For Canadian users, particularly in rural areas, deployment conditions are where the wireless rubber hits the road, but it rarely receives the kind of public attention that is necessary. The problem is that people often don’t pay attention to it until they realize they’ve got poor deployment in their area, yet those who have the licence can say that they’ve met the conditions.
ISED has for years had inadequate deployment conditions as part of their conditions of licence. I’ve written repeatedly to ISED about this in the past. In some of the major auctions of the last few years, we’ve had extremely weak deployment conditions, which is one of the reasons why we’ve had this problem of inadequate rural rollouts. I would argue that this bill does at least bring some attention to this area in ways that we have not seen before.
All of that said, I do think ISED has made a significant change within the last year or so. That needs to be brought up before this panel and is in regard to their consultation on a non-competitive local licensing framework of last year. What it outlined might make this bill in some ways unnecessary, but it’s important that the consultation has not yielded any official decision yet. My point on the bill today is simply this: Wait. I say that because the access licensing framework that has been outlined by ISED might actually be more effective than what has been proposed in this bill.
I strongly agree that it is essential to get spectrum to small service providers. The question is about the best way to do it. My concern with the bill currently before this committee is that it will result in a lot of legal tie-ups. It will result in a regulator that is hesitant to deploy this new tool that they have, which is bringing back or revoking the licence. I think the access framework is actually more effective. It allows small players to access unused spectrum. It’s more of a “use it or share it” approach. One of the things I point out in my paper is that, around the world, regulators are hesitant to use “use it or lose it.” It’s too big a stick. In a lot of cases, they simply don’t want the legal hassle of removing spectrum from an incumbent.
I think if ISED does follow through with its access licensing proposal, much of what is written here might not be as necessary. For example, the bill says that within 60 days of being revoked, the licence should be auctioned again. I think a lot of small players in Canada are simply not capitalized enough to participate in a spectrum auction, and the regulator will be hesitant to put together an auction within 60 days. It’s a very complicated procedure.
My point on this bill is that it raises a key issue that needs to be addressed, which is spectrum deployment, but I do have real reservations about it. Additionally, I think that ISED might be addressing some of these issues in the days and months to come — so I hope. In fact, I would argue that the key points being brought up in the bill should be brought up as part of the spectrum policy framework, which has not been updated since 2007. I think it is so important that it needs to be in the framework, but I’m not convinced this bill is the way to do it.
Thank you.
The Deputy Chair: Thank you, Mr. Taylor. Do you think you could send us your paper? That would be useful. Maybe we have it already, but I don’t think so.
Mr. Taylor: I don’t think you do, but I’d be more than happy to send it.
[Translation]
The Deputy Chair: All right. Thank you for your presentations.
[English]
Senator Manning: Thank you to our witnesses.
Mr. Foster, in your remarks, you touched upon the 50% at the Tier 5 level. Would you elaborate on that to give us some indication of exactly what that encompasses?
Mr. Foster: Sure. Canada was divided into 500-and-something Tier 5s and then a number of Tier 4s. Ottawa is Tier 4 with 11 Tier 5s inside it. If you were to look at it, in a Tier 4, you only need to provide 50%, which would mean the 82% that comes from Ottawa-Gatineau, and you wouldn’t have to do anything outside that area to make the 50%.
Our suggestion is that we actually would like to see that so the smaller players can be involved and deliver stuff in the rural areas. The holder of the spectrum, if it’s a Tier 4 licence, would be required to have availability of the spectrum for 50% of the population in the Tier 5 zone, which would mean that all of those areas would get something rather than just the downtown core.
Senator Manning: It is 50% of Tier 4 now. You’re talking about in Tier 4, you have the Tier 5s. You want 50% of each Tier 5. Is that correct?
Mr. Foster: Yes.
Senator Manning: The goal of the bill is to deploy spectrum to at least 50% of the population in a geographical area covered by a given licence within three years of it being issued. How does Bill S-242 attempt to address that? In your opinion, what are the strengths and weaknesses of Bill S-242?
Mr. Foster: Andreas actually builds these networks, so I’m going to ask him to respond.
Andreas Tornow, Vice President, Network Infrastructure, Storm Internet Services: Was the question, “What are the benefits of Tier 5?”
Senator Manning: In Bill S-242, what are strengths and weaknesses?
Mr. Tornow: It’s written so that it excludes Tier 5. The benefits for 50% coverage in a Tier 4 is negligible. Only one Tier 5 would service 82% in an Ottawa Tier 4 area, so it’s not a benefit to the rural market. They’re only going to service the urban market, and that will complete their obligations for that licence.
Mr. Foster: I think it might also be useful, Senator Manning, to mention that the downtown cores of Ottawa and Gatineau already have fibre, cable and DSL in the area, so you’re basically adding wireless coverage; that’s all. They already have good internet in the urban area. We’d be much better off if we can get more internet access in the rural areas.
Senator Manning: The goal is to try to get it out to rural areas. I come from Newfoundland and Labrador, and I live in a small rural community. Basically, the same rule would apply there, that the 50% would be met within Tier 5 and then Tier 4s could possibly end up not having any service? Would that be a possibility?
Mr. Foster: No. They’re going to do Tier 4; there’s money in it.
Senator Manning: Thank you.
Do you have any recommendations in regards to the bill? You mentioned at the end of your remarks that you would like to see a recommendation put forward dealing with the Tier 4 and Tier 5. Are there any other recommendations that you would look at for the bill, or is the bill okay?
Mr. Tornow: Insofar as the 60 days to re-auction spectrum, that’s not the only way they can distribute the license. They can do it “first come, first served,” where whoever applies for it first can have it. There are multiple ways to do it. Sixty days is pretty short to get that all together for an auction. I think that’s something that should be examined.
Senator Manning: Thank you.
Senator D. Patterson: Mr. Foster, some of us were privileged to visit your locations, and thank you very much for that informative visit.
As I think you know, I’ve been working with CanWISP — you’re a member of that organization — and with other witnesses and my colleagues around the table to try to craft the best bill possible to address just one issue of many that affect equitable access of Canadians to the internet. One change that I’m thinking about making is this question of reallocation. I’m planning on submitting amendments to allow for other ways to reallocate revoked licenses beyond the competitive bidding process, such as “first come, first served.” While crafting this amendment, it was suggested I consider creating some criteria for the minister to potentially use to evaluate the bids in order to ensure the most effective proponent is chosen. We considered things like favouring those with adjacent spectrum licenses or those with existing infrastructure in adjacent areas. Would you agree with adding those criteria?
Mr. Foster: I’ll start and then hand it over to Andreas. Typically, adjacent will be owned by one of the big players and not by one of the small players. There’s an opportunity to allow small players to do what they do best, which is serving the rural communities. The big players don’t really want to be in an area with less than 5,000 people.
Mr. Tornow: I believe it will give an unfair advantage to the larger providers by offering the adjacent frequency or the adjacent tier.
Senator D. Patterson: That’s very helpful. Thank you.
Professor Taylor, you’ve recommended that we wait until ISED concludes its consultations, which you said are promising, on a better access framework. You also say that ISED has sat on or neglected deployment conditions for years. They’ve had very inadequate deployment conditions. They haven’t really upgraded their policy framework for decades. So why would you say we should trust ISED and wait for the results of their next consultations?
Mr. Taylor: Thank you, senator.
I believe that’s a legitimate critique. I think ISED deserves much of that criticism. All I can say is that, within the last year or two and, in particular, in this one consultation that I have cited, there seems to be a bit of a change in their attitude toward deployment. For example, I mentioned that the access conditions are a fundamental change, and also to take a look at the length of spectrum licenses. We gave these out — “gave” is the wrong term. They were leased for 20 years, until very recently. Now, we’re looking at much shorter periods. I believe the last one was for five years. I’m not positive on that. I would have to look it up. I think some change is happening in the approach that ISED is bringing to some of this, but you are entirely correct to say that, in the past, the deployment conditions have been extremely weak and ineffective for rural areas.
I guess my point is just the access licensing framework, if it does go through, is a fundamental shift and would render some of the points you’re trying to make in this bill not as applicable. But your criticism is valid.
Senator D. Patterson: Thank you.
[Translation]
Senator Cormier: Thank you to the witnesses for their presentations. I’ll be asking my questions in French. My first question is for Ms. Redfern. Thank you very much for the work you’re doing, Ms. Redfern. When Eva Clayton, the president of Nisga’a Lisims Government, was here, she said that 9 out of 10 homes in her communities are connected to the internet. She said the problem wasn’t the deployment of services. Rather, the issue was the quality of the connectivity communities have because of their remote location, geography and weather conditions.
Would you say the reality of the Nisga’a Lisims Government reflects the reality of Indigenous communities overall? In light of what you know, can you talk about that and share whatever additional information you have? Do you have any data on spectrum deployment in remote areas and Indigenous communities? The committee would appreciate it if you could forward those data to us.
[English]
Ms. Redfern: Thank you so much.
It is a very large rural, remote and northern part of Canada that has very mixed coverage. In my part of Canada, we’re 100% satellite-dependent. There is coverage. With the introduction now of SpaceX with Starlink, we do have low-earth-orbits, or LEOs. I actually run both systems, a Northwestel and a Starlink system because I’m trying to figure out which network actually has any service at a given point in time so I’m able to participate on Zoom, such as this conference, and send and receive emails.
There is also the challenge of smaller Indigenous or Northern businesses getting into the sector. Spectrum is a component of it. Competition is absolutely good for ensuring that customers have choice. Generally speaking, competition also improves services — not always, in our case, but Starlink is cheaper. There is no horrendous huge overage cost. I’m not expecting $100 per day overage cost when I participate on Zoom, as I am now.
I’m happy to share information that I’ve worked on with Le Conseil des académies canadiennes, which produced a report called Waiting to Connect. There are also some new consultations and assessments of service in rural and remote Canada, both with CRTC. We’re also looking at, as Mr. Taylor has said, the ISED consultation.
A lot of things are happening, but I feel as if they’re not all integrated to really understand the current situation and how we do the big fixes that are needed. Spectrum allocation, “use it or lose it,” is just one consideration. I would like to know that there will be a review of all this other work that is happening. That way, we can begin to fix the system in a meaningful way for those who live in rural, remote and Northern Canada.
[Translation]
Senator Cormier: Thank you for that answer and the information. Given what you just said, how does Bill S-242 address your concerns? If it doesn’t, how should we amend the bill to better address the concerns you raised?
[English]
Ms. Redfern: Thank you for the question.
I have taken a look at the proposed amendment, and I would have to agree with Mr. Taylor in that here are so many other things that are happening that to look at this proposed amendment in isolation of that other work may unintentionally cause conflicts or problems.
It doesn’t address the issue of dedicated Indigenous spectrum, which is now the subject of consultation with CRTC. That is something I am very excited to hear. But Indigenous spectrum alone is only one smaller component of what is needed and necessary to facilitate the development of new companies coming in, Indigenous companies in particular.
With “use it or lose it,” we have tended to see the very large companies come in and get the spectrum. They can afford to pay for it. They can afford to hold on to it. The Indigenous companies or communities, if they had Indigenous spectrum, would need more than the spectrum alone, so “use it or lose it” could be harmful if we were able to access that spectrum but then not have the financial support and resources to build infrastructure and to develop the services for our people.
I would like to see a more integrated assessment and review, rather than specifically one tiny aspect of amending the CRTC Act.
[Translation]
Senator Cormier: Thank you very much.
[English]
Senator Simons: My question is for Ms. Redfern and Mr. Foster. Do you have any concerns that, by making a rule as hard and fast as “50% within three years,” that it may actually discourage smaller operations from attempting to take on that challenge for fear of ending up under revocation?
Ms. Redfern: Because spectrum is like a resource, it can help facilitate companies to go and get the necessary funding and financing or partnerships to be able to develop the business. Making it too short can be challenging on the funding and financing side, because there is no confidence by the financial lender or the investors that they are going to get a return on investment if the period is too short.
Mr. Tornow: Three years to deploy in a Tier 4 may be difficult, because you would have to service 50%, and you would have to go after the urban market, which would require more infrastructure, towers and equipment to get that completed. That might be a challenge for a smaller provider like ourselves.
Mr. Foster: That’s at a Tier 4 level, but at a Tier 5 level, what would it take, Andreas?
Mr. Tornow: On a Tier 4 level, depending upon size and topology of the Tier 5, it would take about 20 or 30 towers, and in three years, we would definitely be able to deploy within a Tier 5 at 50%.
Senator Simons: For a Tier 4?
Mr. Tornow: For a Tier 4, it would be more challenging.
Senator Simons: All right.
Professor Taylor, we on this committee are all still learning about regulatory law. One of the things that concerned me in the initial draft of the bill was that it gave power to the consumer to sue civilly if companies were not able to meet their obligations. I understand that is not as uncommon as I thought it was when I first read it, but could you tell us, legally speaking, is it typical to put the onus on the consumer to sue the operator for not providing the service? What kinds of legal challenges might that present?
Mr. Taylor: Thank you, senator.
I can’t speak to the wider law in this area, but I can speak to spectrum policy, and this is not something I see regularly in spectrum policy. It is one of those things in the bill that I suspect would become a bit of a quagmire if it were to become law. It is one that was fairly new to me as well. Again, I am not a legal scholar in that I am not a legal professor. I do study spectrum policy, and this was something that is not common.
Senator Simons: Okay. Just practically speaking, I wondered about putting the onus on the consumer to sue and to be the stick. What problems can you see that such a situation might create?
Mr. Taylor: In most cases, citizens won’t do it. It is kind of how our broadcasting system works too. If you want to complain about a television show, the onus is on the viewer to get in touch with the Canadian Broadcast Standards Council. Part of that is so that the regulator does not actually get tied up in this all of the time. There is a little bit of a “passing the buck” to the citizen this way. I think that having a firm regulation in this area and a firm policy are much better approaches. As I said, it is done in broadcasting but not as much in telecom.
Senator Simons: Thank you.
[Translation]
The Deputy Chair: I’d like Mr. Foster to clarify something.
Since the beginning, there has been reluctance. Some say that we should have faith in the government and wait for the upcoming reforms, because reforms are under way to change how things are done. In addition, we have Senator Patterson’s bill. As small internet service providers — well, you aren’t giant companies — you are directly impacted, so what is your preference? Do you think the bill is vital at this stage? Do you think the department is heading in the right direction and we should simply wait for those reforms?
[English]
Mr. Foster: Thank you for the question.
At the present moment, something people need to think about is that there are 200 small players who represent about 14% of the access to the internet in Canada. Those 200 small players need the spectrum and need access to it in order to be able to continue to develop in rural areas. While people talk about wireless access, they’re really talking about cellular access, which is not the same thing. I think the bill is necessary to get that spectrum out there, and it will hopefully have enough of a framework in it to help the larger players decide that they want to partner with smaller players in rural areas, because they do not really want to be in rural areas, as far as we can tell, except for maybe the 400 corridors.
Senator Wallin: I have a quick question to Mr. Foster. It is clarification. If there were a directive from government to go from 20-year leases to 5, is that a disincentive in any way?
Mr. Foster: It’s a shorter payback period. Thank you for the question.
Mr. Tornow: It comes down to the security of doing the deployment. You have invested a large sum of money, and you are not going to get your return on investment in five years. You need the larger 10- or 20-year licence.
Senator Wallin: Okay.
I would like to go back to Mr. Taylor on the question our chair has just raised. We often see in Ottawa, in government, that we put forward legislation because there’s a gap in a law. It is not designed to change the world; it is designed to put on a Band-Aid to fix a particular thing. It also sometimes acts to draw public attention and, therefore, forces the government to move a little more quickly. It is back to the same question: What harm would this bill do if it actually incentivizes government, or ISED, to move more quickly to resolve the issues on this file?
Mr. Taylor: Thank you, Senator Wallin.
I was asked to speak to this specific bill, and I do see some difficulties with the bill itself. I think you raise a legitimate point that maybe this is something to incentivize ISED to bring forth the main issue, which is access to spectrum for small providers. It is the details of this bill, things like the 60-day turnaround for an auction, that I have some difficulty with. The basic idea behind it and the points that have been brought up repeatedly here today about how large providers simply are not going into rural areas and that there is no incentive for them to do this are very real. That has been around now for 20 years. We know it is not going to happen at any time soon without government making some strong incentives to get them to do it.
As far as pushing ISED, I think it is a great idea. As far as the specifics of this bill, I do have some difficulty with the bill itself. If your plan is to get ISED moving on this file, then I would completely support that.
Senator Wallin: Yes. I think that often happens. If ISED decides to act and do the right thing more quickly, then it would simply preempt this bill, so there would be no damage done.
Mr. Taylor: Yes.
As I said in my talk, I would go further. I would want to see something along this line in the Spectrum Policy Framework. That might be something for the committee to look at. The Spectrum Policy Framework has not been updated since 2007. In 2007, when it was written, it was very much in the shadow of Maxime Bernier, who was then the Minister of Industry. He had a real impact on the last time the Spectrum Policy Framework was written. I think it needs a revision. I think there needs to be clear, explicit language about how we’re going to get some of this spectrum to the smaller providers that are going to finish the job of connecting Canada.
Senator Wallin: Great. Thank you.
Senator Dasko: My question is a bit of a segue from Senator Wallin’s question for Professor Taylor. You partly answered it through answering Senator Wallin’s question, but do you feel that there is a way to amend the bill that would actually address the issues that you identified in your comments? I took your comments to mean that there wasn’t a way to amend the bill, but I want to make sure I understand what you were saying. I understand you are looking toward the development of the framework to offer solutions to the issues that you have identified. I hate to belabour the point, but I will put the question out that way. Thank you.
Mr. Taylor: As far as the specifics of the bill, yes, I have some problems with some of the fundamental elements of it, including the auction framework. As has been brought up by the representatives of Storm Internet today, perhaps there are some other options.
Please note, though, as was raised earlier, where the minister would look at what the possibilities are, that is how it was actually done for decades in Canada. It was known as the administrative framework; in sexist terms, they called it a “beauty contest,” where the providers would try to sell themselves to the government as the most legitimate providers for this spectrum. That had all kinds of difficulties too. That raised issues of how it is determined. It had issues of transparency. To go another route and to do something more along the administrative line opens another can of worms.
I do have some difficulty with the bill itself. As I have said before, I think that the access licensing framework is probably a better approach, where the spectrum will be shared. As pointed out — and I will provide my paper — that is done now in the U.K., and it is being done in the U.S. to a degree as well, so we are not reinventing the wheel here.
Senator Dasko: Thank you.
[Translation]
The Deputy Chair: It’s now over to Senator Bernadette Clement. By the way, I want to thank you for that excellent list of witnesses you provided. The floor is yours.
Senator Clement: Thank you, Madam Chair.
[English]
Indeed, these are terrific witnesses.
I am struggling, though, because I really find this bill very interesting, and I want to go back to Mr. Taylor’s opening comments. This is an under-examined issue. Deployment conditions are just not on people’s radar. When you say, Mr. Taylor, that the licensing access framework would be a better way to deal with this and that it hasn’t been updated since 2007, that means it is not really encouraging. When I talk about this bill outside of this room, people seem really interested in getting at something that is going to work sooner, not later.
My first question is for Ms. Redfern. I was interested in how you were nodding your head as Mr. Taylor was speaking. If we want this to work, what do you think needs to happen in this bill? I know you spoke about dedicated Indigenous spectrum as one component. Are there other components that we could include in this bill while we’re waiting for this accessing framework, which will be who-knows-when?
Second, Mr. Foster, I know you said you could see some changes. What priority changes would you make to this bill in response to the valid comments that Mr. Taylor is making about backlash or unintended consequences?
Ms. Redfern: It is very hard when you are looking at a proposed amendment to a much larger act that fits within a suite of many other pieces of legislation and regulation, as well as a systemic framework. No disrespect whatsoever for the attempt of finding a Band-Aid solution, which I understand and appreciate. The problem is that the system is broken. Little Band-Aid fixes are not what is actually needed. That is why I am hesitant to do the heavy lifting and the work. How do we fix that by just focusing on this amendment?
I have taken a look at it. The three years is too short. The Indigenous spectrum is not there, nor the additional funding for small ISPs. Northern and remote companies would need a lot more resources to effectively offset the inability to get the financing or the funding in place so that the investors have a guaranteed sense of return on investment. Making it five years is not going to be sufficient. Not having it integrated with the other pieces of legislation, policy and funding is not going to — this little piece is not going to address and fix that. I can’t honestly propose changes to this tiny little piece of legislation as Band-Aid solutions that are going to probably assist in the longer term, or even in the short term. My apologies.
Senator Clement: No, no. That is fine. Thank you. Mr. Foster?
Mr. Foster: Thank you for the question.
We are of the opinion that sooner is better than later and that things have taken a very long time. As Professor Taylor pointed out, nothing has happened since 2007 on the framework. While people sort that out, let’s put this piece of legislation in place so we can roll things out to the rural areas until something better does come along that is firm and can be used to help the 200 small ISPs provide that 14% at good speeds to the rural areas.
Senator Clement: Do you have any response to what Ms. Redfern has just said?
Mr. Foster: I think that the three years isn’t too short. I think that if you did a review of what is going on at the one-and-a-half-year part, halfway through that period of time — I think that Andreas could speak to that and what we would have to do. We would have propagation and things like that, Andreas, by the time we got a year and a half in.
Mr. Tornow: It will come down to how they are going to measure the 50% coverage. Are they going to do it with propagation and calculations of that sort? I really have a hard time on how they are actually going to come to the actual verification of the 50% as well.
Senator Cardozo: My first question is for Ms. Redfern. You have talked about Indigenous spectrum. I wonder if you could share with us more about what you mean by that. Would it be allocated separately?
You provide services in the Arctic and Nunavut. Could you share with us any conditions that are particular to the region in terms of remoteness, low population, climate and so forth?
Ms. Redfern: Thank you for the question.
In the United States, they actually have an Indigenous spectrum set aside. It is automatically available for any of their Native nations to effectively apply for when the spectrum auction is open. They do not have to pay for it. There is also a national Indigenous office that assists and builds awareness as well as capacity in being able to access that spectrum. In addition, they also have dedicated Indigenous telecommunications funding to assist those nations in building out the infrastructure, building the capacity, the training and then providing the services to their people in their communities. New Zealand also has Indigenous spectrum, and even Mexico has awarded Indigenous spectrum in their country.
The Indigenous nations are starting to be aware that spectrum is a resource and that there is an opportunity. Having spectrum dedicated to Indigenous nations would allow and facilitate our participation in the sector in a significant way where we just simply haven’t had the resources to buy the spectrum and to compete with the large telecommunication companies that have been awarded it, and then we end up paying the most expensive communications services with the very worst service. That just gives you a little bit of a sense of what Indigenous spectrum could be like if we adopted a similar approach in Canada to New Zealand and the United States.
I’m trying to remember the other question.
Senator Cardozo: What conditions are particular to your region?
Ms. Redfern: We are 100% satellite-dependent right now. That means that our communities do have internet, but it is inconsistent, unstable service. At any point in time, we don’t know when it is going to drop, so when you are trying to buy gas at the station using your debit or credit card, it might not work, and similarly at a restaurant or buying groceries. You cannot just run to the ATM and get cash out, because it is completely down. We have even had instances where the RCMP, several months ago, was issuing repeated notices that anyone who needed their services would need to actually physically go to the detachment because their telecoms were down. It is very unstable, very unreliable and very costly.
To give you a sense, down south you can enjoy these bundled packages, and you get high-speed internet and your cable TV and your phone attached. For us, a family of two to five can easily be spending several hundreds of dollars, and then because there are data caps the overages are pretty horrendous. What happens is you either blow through your data cap in the first few days and then your family has scaled back or no communication services for the remainder of the month, or someone like me who can’t not be connected ends up getting these daily notices from my ISP that is, like, you are $100 a day, $100 a day, $100 a day. Then you have, just for your internet bills, it can be $1,000-plus a month.
This is why we need fibre into the region, strategic deployment, especially in Iqaluit. Iqaluit is one of 13 capital cities in this country, and we don’t have fibre. It makes a huge difference not only as a consumer or a customer to be able to connect to the internet but it tremendously impacts our businesses who can’t take advantage of the applications that their southern counterparts can.
We have got companies that send out their content. If they are building a website or doing a video for a customer, they end up editing that in Montreal, Toronto or Ottawa, uploading it to southern servers, so we have rich Inuit cultural content that the world has better access to than we do.
Also just lastly, the Government of Nunavut has been subjected to ransomware, and that whole entire territorial government system went down for months. It didn’t just impact the operations of the government being able to do what it needs to do; it impacted the residents in being able to access the services that the Government of Nunavut provides. We are very vulnerable. It is shocking that we’re a part of Canada, and many parts of the world, even Third World countries, have better access to communications than we do at a more affordable rate.
The Deputy Chair: Thank you very much, Ms. Redfern. I have to say that I have learned a lot through your testimony. Thank you for telling us all of this.
Senator Bernard: Thank you to all of the witnesses.
I have a specific question for Ms. Redfern, but you may have answered it in your response to Senator Cardozo. In an earlier comment, you said the system is broken. I think we have just heard from you in your most recent response some of the ways in which the system is, indeed, broken. I am wondering if you have any specific recommendations to fix this system that is so broken, as you have so adequately described.
Ms. Redfern: I think in the earlier comment I made, it is the fact that we are doing everything in sort of isolation from each other. The CRTC plays a really important role as our regulator. It has also provided funding for investments. You have got Innovation, Science and Economic Development Canada, or ISED, who has been under Infrastructure Canada as the primary funder. You have got these different pieces of legislation and policies, and unfortunately they are not as integrated or well written. There have been real biases. I think that you have heard that from Storm today where it tends to be very urban centric and large company centric, whether it is the spectrum, whether it is the investments that actually ISED have been making or whether it is a refusal to support redundancy. The current target of 50/10 megawatts for just the internet is wonky. You have the Indigenous Broadcasting Policy, and then the funding of $8 million has not been updated for over 30 years.
There have been a lot of experts who have actually said for many years, and the Waiting to Connect report really illustrates it, that we need to almost put a hard brake on while the status quo is what it is and figure out how we really deploy the spectrum and the resources through policy and through funding specifically in rural, remote, northern and Indigenous Canada. I’m not that concerned about the city centres. The urban parts of Canada are well served. There’s good competition. Yet, I’m seeing a lot of lobbying and advocacy that happens by the very large incumbents as they continue to sort of game the system in their favour. They make it really hard for any smaller providers to get the resources or the spectrum or the funding that they need or to facilitate new companies, especially in rural, remote and Indigenous Canada.
The Deputy Chair: Thank you. At this point, I know, Ms. Redfern, you have a hard stop at 10 a.m., so we will let you go. Thank you so much for your testimony.
Senator D. Patterson: Mr. Foster, when a group of senators visited your offices, you talked about the predatory practices of big telecoms that were actively undermining your efforts to deploy in rural areas. Without naming them, could you describe some of the pressures you’ve encountered from big providers that have frustrated your efforts?
Mr. Foster: Certainly. Both on the wireless side and on the wireline side — we have had an overbuild on one of our fibre projects. In another case, for the wireless, all of a sudden, a specific area ended up with access through the cell towers to fix wireless access, something that has not been made available in the third-party internet access to suppliers like ourselves. They came in with some very predatory pricing compared to ours, like $50 off per month.
Senator D. Patterson: You haven’t been able to use poles?
Mr. Foster: Yes. There is an issue with poles, generally speaking. We’ve been unable to get on poles, but I understand the CRTC is putting through a policy right now.
Andreas, maybe you want to talk a little bit about that?
Mr. Tornow: As of February — I’m not sure of the exact date in February — CRTC mandated the telcos and hydro to allow easier access to the poles, and “make ready” has been removed, forcing the pole providers to pay for any replacements of poles. That was the big holdback for us to get onto poles, where we would have to replace any poles that were damaged or didn’t meet code, to the tune of $5,000 to $30,000 per pole. Now that cost is pushed onto the pole owners.
Mr. Foster: As another thing about those poles, when we wanted to bring fibre from Union Hall into the village of Clayton, we were told we had to replace eight poles. We said, “Okay, that’s good enough, 8,000 a piece, so $64,000.” Then they came back and said, “Oops. We’re going to have to upgrade the insulators on the top of all those poles; therefore, you’re actually going to need a quarter-million dollars to be able to get these. We’ll replace all the poles required, and we’ll also put the insulators in. It delays your project by about a year as well.” We chose to drill and learned a lot about the Canadian shield, including that marble burns more drill bits than granite does.
[Translation]
Senator Cormier: If I understand correctly, Mr. Taylor, you would prefer that the Spectrum Policy Framework for Canada undergo a review and that the current consultations be taken into account, instead of Bill S-242 being adopted. However, that is the legislation before us.
I’d like you to talk more about the non-deployment of spectrum in rural areas and the role the minister might play. Let’s say the bill were amended to allow the minister to issue spectrum licences other than by auction, in other words, on a first-come, first-served basis. Given the issues you’ve raised, do you think that would address some of your concerns? If not, which methods would improve things on that front?
[English]
Mr. Taylor: Thank you very much for the question.
I certainly think that the auction, as tabled, is problematic. I guess the question is whether I would prefer or recommend a different option. I’d say “first come, first served,” yes, would work better. It would usually come from someone with knowledge of that area. That’s one option.
The other option regards the access licensing. I want to be clear on a couple of things because it was mixed up with an earlier speaker. Access licensing is a consultation from ISED that happened last fall, and it is not the same as the spectrum framework, which is the overarching policy objective that was set up in 2007.
On this fairly recent one, access licensing was more like “use it or share it.” That’s why I kind of liked the access-licensing approach. You don’t take the spectrum away from the incumbents, but they are forced to allow others onto the system and let them use it, usually with a guaranteed amount of time. I just think that it would speed up the process right now. Perhaps, after a period of time, they would lose the spectrum.
But the time frames on this bill are too tight. It would lead to a legal quagmire that would have us not moving forward as quickly as we want. That’s how I see the problems with this bill.
Senator Cormier: Thank you, professor.
Senator Cardozo: Professor Taylor, you talked about the need to update spectrum policy, and you said that the minister at the time was Maxime Bernier. I wonder what you’re getting at there. This is not to be political, but Mr. Bernier has positioned himself as being very libertarian. Do you feel the policy should be less libertarian, or different, or is it just a matter of 15 years has passed so we need to update? What are the issues that we need to be dealing with?
Mr. Taylor: The main issue that I have with the 2007 framework is that it turned everything over to market forces. The market forces have now had adequate time to provide what they would under the circumstance, and we need to look at other policy options right now.
The 2007 framework is very clear that the policy regulation should be used as little as possible. That was part of the Bernier directive of 2007, where he actually issued a directive to the CRTC. That is reflected in the framework.
We’ve had time. They’ve had lots of time to roll out into rural areas, and it hasn’t happened. That’s why I think there needs to be real policy initiatives, and that’s why I applaud the real thrust behind this bill. The general idea behind this bill is correct. I have problems with the actual workings of it.
Senator Clement: I want to come back to Mr. Taylor. You’ve expressed concerns. You’ve talked about potential backfiring. How would we mitigate those issues in this bill? You talked about timelines. Would addressing the timelines and changing those timelines be helpful in addressing what you’ve raised? What else might be helpful?
Mr. Taylor: Yes, timelines are part of the problem here. Timelines will be an issue. For example, I’ve talked about the idea of running an auction in 60 days after taking back the licence. I just don’t see that as feasible. The representatives of Storm were largely in agreement on that.
As far as some of the other issues in the bill, the very idea of taking spectrum back — as much as I agree with it in principle, my concern is the legal realities of doing that. When a company has paid for access through an auction, how is that going to be worked out?
The other concern I have is that the regulator would then be hesitant to act when it means going into reclaiming the spectrum in a “use it or lose it” fashion. I think that the regulator will hesitate, and that’s the wrong way to go about it.
I do see some fundamental problems with this bill beyond just the time frames.
Senator Clement: Timelines and revocation, then? Okay. Thank you.
[Translation]
The Deputy Chair: I would like to extend a big thanks to Mr. Taylor, Mr. Foster and Mr. Tornow for so kindly answering all our questions. Although we asked you some of the same questions, we appreciate your providing the detailed information we needed to really understand this complex technological issue.
We will now suspend briefly to proceed in camera.
Thank you again, gentlemen.
(The committee continued in camera.)