Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 3 - Evidence, May 26, 2009
OTTAWA, Tuesday, May 26, 2009
The Standing Senate Committee on Transport and Communications met this day at
9:30 a.m. to study on emerging issues related to its communications mandate and
to report on the wireless sector, including issues such as access to high-speed
Internet, the supply of bandwidth, the nation-building role of wireless, the
pace of the adoption of innovations, the financial aspects associated with
possible changes to the sector, and Canada's development of the sector in
comparison to the performance in other countries.
Senator Lise Bacon (Chair) in the chair.
The Chair: Honourable senators, I have some notes from Mr. Geist, but
they are in English only. It is in your hands if you would like them to be
distributed. We do not usually distribute them when they are not in both
official languages, but I would like you to have something. However, it is your
Senator Cochrane: I would like to have them.
The Chair: We can have them translated and distribute them in the
other official language of Canada later.
Welcome to our committee Professor Geist. I hear you were also away last
week. We had a very good trip to Europe — France and U.K. — on our dossier. We
learned much in both countries. We look forward to hearing from you this morning
to complete the knowledge that we acquired last week. We are happy to have you
Michael Geist, Law Professor, University of Ottawa: Thank you for the
invitation. Let me apologize that the notes were not submitted in both
languages. I am simply a law professor on my own, and it was difficult given
that I only got back from Geneva yesterday.
I am a law professor at the University of Ottawa where I hold the Canada
Research Chair of Internet and E- commerce Law. I am also a syndicated weekly
columnist on law and technology issues for The Toronto Star and The
Ottawa Citizen. I served on the national Task Force on Spam and was a member
of the board of directors for six years on the Canadian Internet Registration
Authority, CIRA, which governs the dot-ca domain in Canada.
However, I appear before the committee today in my personal capacity
representing only my own views. I am grateful for the opportunity to appear
before you, but I am also grateful that this committee is taking on this issue
because it is critically important.
Canada was once a leader in the telecom field as you know. Nortel led the
world, and we consistently ranked near the top of most telecom measures
befitting a country with geography like ours. That is no longer true. While
Research In Motion, RIM, has carved out an important niche and become a
household name, the reality is that the Canadian telecommunications scene is in
a state of crisis.
That is no exaggeration. I do not use those words lightly. Following years of
neglect by successive governments, the absence of a forward-looking digital
agenda and a cozy, uncompetitive environment, we now find ourselves steadily
slipping in the rankings just as these issues take on even more importance for
commercial, educational and community purposes.
Your focus is primarily on the wireless sector, but our problems within the
telecommunications infrastructure are not easily divisible.
The Chair: I am sorry to interrupt; could you please speak a little
Mr. Geist: My apologies; my students ask the same thing.
I would like to talk about three issues, in particular, wireless, broadband
or high-speed network access and the issue of network neutrality. They are all
interconnected in many respects.
Let us begin with wireless networks. The promise of an always-on mobile
Internet — delivered through cellphones and wireless devices — has long been
touted as the next stage in the evolution of electronic communication and
commerce. That next stage is a reality in many countries, as you may have seen
yourselves last week. However, Canada finds itself falling rapidly behind even
developing countries as a consequence of overpriced mobile data services.
Canadian carriers, until recently, have treated mobile Internet use as a
business product, establishing pricing plans that force most consumers to
frugally conserve their time online. Indeed, the mobile Internet in Canada is
reminiscent of Internet access in the mid-1990s, when dial-up access dominated
the market and consumers paid by the minute for their time online.
The evidence is everywhere. Last year the World Economic Forum pointed to
problems in the wireless market as a key reason for Canada's slipping global
ranking for "network readiness." We moved from sixth worldwide in 2005 to
thirteenth today. Canada ranks seventy-fifth in terms of the number of mobile
subscribers, trailing countries such as El Salvador, Kazakhstan and Libya. It
lags behind countries such as the United Kingdom, Singapore, Italy, Sweden and
Norway on mobile pricing.
Research In Motion has expressed frustration with Canadian pricing,
predicting that carriers could sell eight or nine times more BlackBerrys if they
lowered the data prices to levels found elsewhere. Reduced sales are only part
of the story. High data prices mean that Canadians use the mobile Internet less
than people in other countries, which Google, for example, has noted leads to
lower Canadian usage of web-based email or online mapping services for their
The new entrants in the wireless market may help, but they appear to be
targeting the lower end of the marketplace, precisely where Canada's pricing
compares favourably with other countries. It is the medium- and particularly the
higher-end users that face significantly higher pricing in Canada than
What can be done about this wireless issue?
Last year's spectrum auction obviously opens the door to more competition,
but it should be viewed as a start to addressing the issue, not the entire
solution. Other possibilities include, first, more spectrum; we are hopeful in
getting that as part of the 700 megahertz, MHz, auction that should take place
within the next couple of years. This is a result of the transition in
television from analog to digital that will free up the current analog
Second is a move toward open spectrum. The next auction could include
mandatory open-access requirements that would allow carriers, device
manufacturers and service providers to use Canada as a sandbox for mobile
innovation, freeing that spectrum so that new companies — device manufacturers
and others — would have the freedom to interconnect and engage in innovation
here in Canada.
Third is a move toward white spaces. In addition to the auction spectrum,
there is the potential for some unused spectrum that currently sits within the
broadcast spectrum known as white spaces. It is used by the broadcasters, but
will be freed up by the move from analog to digital. There are those who believe
it can be used for other innovative new services.
Fourth, foreign investment should be put on the table. The emphasis on
openness could move toward telecom ownership where the current foreign ownership
restrictions may well artificially limit Canadian competition.
Fifth, it is critical that we remove consumer barriers. Restrictive long-term
contracts and the possibility of copyright legislation — as seen in Bill C-61
that died on the order paper last year — that could prohibit consumers from
unlocking their cellphones make it harder for consumers to move between
providers. Other countries place caps on the length of long-term contracts so
that consumers are not locked in for the terms we see in Canada, often three
years. Some countries in Europe have placed caps on roaming charges, which, as
many of you may have experienced during your trip last week, are enormous when
you try to call Canada. Some countries have rejected legislation that stopped
consumers from having the ability to unlock their phones and move more easily
between carriers. This is exactly what Bill C-61, the copyright bill, would have
stopped consumers from doing.
Finally, the Canadian Radio-television and Telecommunications Commission,
CRTC, may also play a role. It is committed to a deregulatory approach and has
largely left the mobile marketplace alone for years — with the exception of
undue preferences and unjust discrimination — yet the regulatory hole has not
served Canadians well. Our regulator may need to revisit the sector.
Those are a few of the ideas I have concerning wireless, but I think this is
connected to broadband access more generally. We all recognize the critical
importance of high-speed or broadband access. Whether for communication,
commerce, creativity, culture, education, health or access to knowledge,
broadband networks represent the basic price of admission for Canadians. If you
do not have broadband access, much of what is taking place online is
inaccessible to you.
We should recognize that Canada was once a leader in the area. In the late
1990s, we became the first country in the world to ensure that every school from
coast to coast to coast was connected to the Internet. Soon after that we
launched the National Broadband Task Force committed to developing a strategy to
ensure that all Canadians had access to high-speed networks.
In the years since that task force, Canada's global standing has steadily
declined. Many Europeans countries have eclipsed Canada in its broadband
rankings. The Telecommunications Policy Review Panel from a couple of years ago
undertook a detailed analysis of the Canadian marketplace with the goal of
identifying whether the market could be relied upon to ensure that all Canadians
would have access to broadband. Their conclusion was that it would not be relied
upon. The panel concluded that at least 5 per cent of Canadians — hundreds of
thousands of our fellow citizens — will be without broadband access without
public involvement. Last week, the Organisation for Economic Co- operation and
Development, OECD, released its latest report on global broadband, and the
results should be mandatory reading for anyone concerned with these issues.
Canada ranked ninth out of the 30 OECD countries on broadband penetration. That
is not great, but the situation becomes even worse once you delve into the
details on pricing and speed.
First, Canada is relatively expensive, ranking fourteenth for monthly
subscription costs at $45.65. By comparison, Japan costs $30.46 cents and the
U.K. is $30.63. Second, the Canadian Internet is slow, ranking twenty-fourth out
of the 30 OECD countries. It is truly a different Internet experience for people
in Japan, Korea and France, where the speed allows for applications and
opportunities that we do not have. Moreover, Canada lags behind in fibre
connections direct to home fibre with 0 per cent penetration, according to the
OECD. By comparison, Japan sits at 48 per cent, Korea at 43 per cent, Sweden at
20 per cent and the United States, which has been slow in this area, is at 4 per
cent. Third, when you combine speed and pricing, Canada drops to twenty-eighth
out of the 30 OECD countries for price per megabyte. In other words, as
consumers, we pay more for less — higher prices, slower speeds. Fourth, in
addition, Canada is one of only four OECD countries where consumers have no
alternative but to take a service with bit caps. That means the service provider
caps the amount of bandwidth that the consumer can use each month. In almost
every other OECD country, consumers at least have a choice between providers
that use bit caps and those that do not.
What can be done about this issue?
We need a firm commitment to universal broadband access akin to the same type
of commitment that we once had to universal telephone service. As I say, it is
the price of admission for much that the Internet has to offer. All Canadians
should have access to reliable, high-speed networks. In addition, we need a
strategy for faster networks because it is clear that we cannot rely on our
existing networks as we slip further and further behind. This might mean more
competition, market-based incentives and potentially community-based networks as
local communities take this issue into their own hands.
Finally, I want to touch briefly on the issue of network neutrality, which
cuts across both wireless and the broadband issue, that has generated an
increasing amount of attention in recent months. The definition of "net
neutrality" is open to some debate, but, at its core, it is a commitment to
ensuring that Internet service providers, ISPs, treat all content and
applications equally with no privileges and no degrading of service or
prioritization based on the content's source, ownership or destination.
Several concerns are often raised in the context of network neutrality. The
first is what is sometimes called a "two- tier Internet." As ISPs build faster
networks in some countries, there is reason to believe that they will seek
additional compensation to place some content in the fast lane and leave those
unwilling to pay consigned to the slow lane. Consumers already pay different
prices, but imagine a world in which Chapters cannot compete in the online book
space because its content is in the slow lane while Amazon's content is in the
fast lane. Imagine an Internet where U.S. television shows and movie productions
zip along quickly to consumers because U.S. studios have paid for the fast lane
while user-generated content by Canadians creeps along in the slow lane. Think
about an environment where two-tier health care is replicated online, such that
some health care providers find themselves in the fast lane and some find
themselves in the slow lane. This is a vision of the Internet that might well
become a reality. In the United States, major telecom companies, such as Verizon
and BellSouth, have talked about this type of activity. In Canada, Videotron has
publicly mused about a potential new tariff for the carriage of content.
The second network neutrality concern is that ISPs will block or degrade
content or applications that they do not like, often for competitive reasons. In
the U.S., one ISP, Madison River Communications, blocked access to competing
Internet telephony services. In Canada, we have had a spate of examples of such
activity. Several years ago, TELUS blocked access to a union that was supporting
a website during a labour dispute. In the process, it blocked more than 600
other websites. Shaw Communications has advertised a $10 premium surcharge for
customers using Internet telephony services, opening the door to creating a
competitive advantage for Shaw over third-party services. Currently, Rogers
Communications degrades the performance of certain applications, such as
BitTorrent, which is used widely by service software developers and independent
filmmakers to distribute their work. Bell Canada openly throttles BitTorrent
traffic, a practice that has been challenged before the CRTC.
In response to these concerns, there has been growing momentum for network
neutrality legislation. The provisions would require ISPs to treat Internet
content and applications in a neutral fashion so that the opportunities afforded
to today's Internet success stories, such as Google, Amazon and eBay, will be
granted to the next generation of Internet companies along with the millions of
Canadians who contribute content online.
It should be noted that network neutrality legislation concerns have grown in
Canada due to two problems in the marketplace — and this spans across wired and
wireless. The first is the lack of competition: Canadians have limited choice in
wireless providers and broadband, typically limited to cable or DSL — the phone
company — or neither. A viable third provider in broadband specifically rarely
exists. Markets with greater competition face fewer concerns about network
neutrality because consumers can make alternate choices. That is precisely what
we see around bit caps in other countries. The second is the lack of
transparency: When companies such as Rogers or Bell degrade the performance of
some applications, they rarely disclose these practices. In contrast, ISPs in
other countries transparently identify how they treat all forms of content and
The CRTC will conduct hearings on the issue of network neutrality this
summer. This is a welcome development, but the government should stand ready to
act — as other governments around the world are — in case the regulator were to
conclude that the current law is unable to address network neutrality concerns.
All of these issues are connected. They reflect a Canadian telecommunications
environment that is in crisis, lacking in competition and gradually declining in
comparison to peer countries around the world. I welcome your questions.
The Chair: Thank you, Professor Geist. We came to some of the same
conclusions on last week's trip. We are happy to hear about it from you this
morning. According to Industry Canada, 78 per cent of Canadians have access to a
3G — third generation — wireless network, while the other 22 per cent still rely
on first and second generation networks. What is holding up the expansion of 3G
Mr. Geist: Part of the reason is cost and part is the lack of
competition. Wireless providers that face no significant competition have no
incentive to provide services at faster speeds for better prices. The roll out
of the Apple iPhone was instructive. The long-awaited device attracted attention
from consumers in Canada and around the world. Only one provider, as you know,
was able to carry that device in Canada. Unlike other markets, where Apple was
able to negotiate with a number of different carriers to strike the best deal
for itself and for consumers so that they would buy the device, in Canada, Apple
had no choice other than Rogers to bring the iPhone to the marketplace. When the
iPhone was introduced in Canada, we saw higher data prices than in any other
country around the world for the device.
The very premise of these next-generation devices is that they are far more
than simply phones in that they are similar to pocket computers that run a wide
array of applications that depend on fast and affordable wireless broadband
access; yet in Canada the pricing was so high that most who looked at it
suggested that it would ruin the iPhone. Indeed, it led to a protest called
"Ruined iPhone." In response to some of that pressure, Rogers ultimately
lowered some of the prices and offered a better plan than at the outset, as this
turned into a marketing fiasco. The reality is that in other countries there is
no need for tens of thousands of people to protest data pricing because the
market addresses that issue through competition. The culprit is straightforward,
in particular in the GSM — global system for mobile communications — space,
where we have had only one provider for a number of years.
The Chair: Should we recommend that the government intervene to speed
up the process?
Mr. Geist: As I mentioned, the government can do a number of things. I
suspect that many will say, "Hold on a second. We know we will get a number of
new providers into this space, hopefully later this year." As I mentioned, the
initial sense, based on some leaks and on some other marketing materials, is
that they will come in with better pricing. They are targeting the lower end of
the marketplace to target Canadians who do not yet have cellphones. That is a
viable place in the market because we know Canadians run far below other
citizens in other countries, such as Europe, Asia and elsewhere, in terms of
wireless cellphone penetration.
However, when talking about how to transform the way in which people use
devices and telecommunications infrastructure, I am not convinced that we will
see the carriers compete directly in that space. For that, we need more
spectrum, the possibilities of new competitors through foreign investment and
more openness. Openness allows others to come into the marketplace, sometimes in
an unregulated fashion, to spur new competition and innovation.
The Chair: If we look beyond 3G, should local authorities push
wireless providers to install equipment to enable them to make the leap from the
current networks to fourth generation 3G networks? Would that be feasible?
Mr. Geist: The issue of the role that local communities ought to be
playing in this is interesting. A couple of years ago, this notion of
communities installing Wi-Fi within the communities was all the rage. The idea
was to have wireless access within the communities and focus not so much on
telephony, although it would apply to telephony as well. If you have a wireless
signal, in theory you can use Voice over Internet Protocol — VoIP — Internet
telephony once you pick up on that signal and make a call.
It is worth noting a couple of things. First, many of the providers
themselves have tried to stop that from happening because they see that as
competition. Although these devices can accommodate Voice over IP so that people
could use things such as Internet telephony on their cellphone, some of the
carriers have required the device providers to disable that functionality. They
intervened directly in the marketplace to stop consumers from being able to use
those sorts of signals.
In the context of local communities getting engaged, the results have been
mixed. Some communities have said that they will start providing this, and they
have found that it is not easy to run or to manage a network. Others have done
well. Fredericton is cited as one of the best examples today as a community that
has installed wireless access and used it for competitive advantages. There is
the prospect of a renewed opportunity for this type of service. As wireless
access, Wi-Fi in particular, has moved increasingly toward pay-based systems,
people are hanging out at Starbucks to gain some access when they are on the
road. There are opportunities for a community to set up these access points and
to do it in affordable fashion to ensure that all community members have access.
At the same time, to link that with the possibility of allowing people to use
this for basic telephone service in a Wi-Fi-enabled environment represents a
huge opportunity. We will see local communities trying to do just that, namely,
spur innovation and attract new, innovative companies, knowing that they have
that infrastructure built locally within the community and a ready group of
people prepared to use it.
The Chair: Research and development, R&D, are crucial for the
information and communication technology sector. I am trying to find some
recommendations that we could give the government when we submit our report.
Should the government revise its long-term funding policies for private and
public research projects to ensure the competitiveness of Canadian companies, or
should companies look for ways to diversify their R&D financing?
Mr. Geist: On a number of occasions, when I have run pieces talking
about this issue in the local media, you find that there are software developers
and other companies who are doing R&D who come forward and say that they may be
based here in Canada but are doing the R&D and the roll outs in other countries.
They have pointed to not so much the strategy for R&D, but, rather, the
marketplace conditions as the rationale either for leaving Canada altogether or
for ensuring that their innovation is tested and developed elsewhere.
The reality is that if you are developing a new mobile application, for
example, you have to depend on a marketplace to do it actively. I had a number
of real estate agents coming forward to say that mobile applications, for them,
are an ideal way to practice their business. They are rarely in the office; they
are always on the road. They want the ability to access everything that they
depend upon and do it in a mobile environment. We can think of doctors for
in-health care doing the same things. They indicated that in terms of the sorts
of applications that they are seeing, few are rolled out in Canada. Even those
who are targeting that market do not target the Canadian market at all. It does
not make any sense because the speeds are not fast enough and the prices are too
high. If we solve some of these marketplace conditions, there is the potential
that some of that innovation and R&D will follow. It will take more than
strategy or pronouncements on this issue. It will take a real change in some of
these marketplace conditions.
Senator Johnson: Thank you for coming here this morning. I find your
comments excellent. I really want to focus for a minute on network neutrality
because it is a specific area to come up with suggestions for legislation. You
said that there is a growing momentum for network neutrality legislation based
on lack of competition and lack of transparency. How would you fashion such
legislation, and what are they doing in other countries?
Mr. Geist: The situation in other countries breaks down in two. There
are countries that have enough competition that they do not have to deal with
the problem. The ability for a provider to discriminate is limited by the fact
that consumers can easily jump around. If you start degrading performance of
your services or limiting access to certain types of content or engaging in the
range of activities that we have seen, consumers have the ability to move more
In those countries where consumers do not have that ability, for example, in
United States, in some European countries and elsewhere, we are seeing
legislation that would ensure appropriate transparency. This is a no-brainer.
You cannot say that you rely on the marketplace where consumers make informed
choices and then have a marketplace where consumers are unable to make informed
choices because the carriers do not tell them what they are doing. In the case,
for example, of Bell Canada last year, they rolled out new types of throttling —
that is, ways to limit access to the bandwidth for certain applications — and
did not disclose any of it initially.
Senator Johnson: How can they do that?
Mr. Geist: They engage in deep packet inspection, DPI. At a deep
level, they try to identify the packets of information that are running through,
and based on what is the in those packets, they can figure out certain
applications. They can identify the application, and where it is an application
that overuses or is a drag on network performance, such as BitTorrent, they then
throttle or limit the amount of available bandwidth for that application.
Therefore, the end users, for example, were finding themselves facing degrading
of up to 80 per cent or more.
It is important to recognize that, for certain applications, when you
throttle at that level, it renders the service unusable. For example, your cable
provider or satellite provider wants to offers video on demand. Someone says
that they want to offer Internet-based video on demand, and they want to use
peer-to-peer client to do it; there are companies that do that now. You can
either click a switch on your remote with the cable provider or, using your
cable Internet, you find that it takes eight hours to download the same thing
because your bandwidth has been throttled. It affects not only consumers but
also businesses. There were multiple reports from businesses that were using
virtual private networks, VPNs, for employees working from home and connecting
in a secure fashion between their home computer and the home office. They rely
upon, in some instances, the same types of technologies. Some businesses were
finding that their VPNs — that is, the connections between the employer and the
employee — were being degraded as well. It is both a consumer issue and a
Senator Johnson: There are certainly ways around cutting into these.
You said that Rogers degrades performances of applications. Is that a common
Mr. Geist: Yes.
Senator Johnson: That is scary. How will this affect innovation in the
Mr. Geist: This is one where we get a bit of overlap between wireless
and Wi-Fi, in part because there is the same potential for the degrading or
limiting access in wireless broadband as in wired broadband. In home broadband,
we are already seeing what it means. If you are a Canadian creator, an
independent film maker who wants to distribute your film using an application
similar to BitTorrent using this protocol, you do not compete nearly as
effectively as you might with, say, the Hollywood studios that are not facing
that same throttling because they may be using a different application for the
way they disseminate their content. You face some real concerns in terms of your
ability to disseminate that content.
In the context of wireless, the same concerns begin to appear because as we
see more and more people move toward a wireless broadband solution, whether on
their phones or even on the stick — the device you can put into your personal
computer — using these wireless networks, they are subject not just to the
throttling but also certain caps.
We saw, as an example, a number of providers in Canada roll out what they
called "unlimited" service. You could get unlimited broadband on a wireless
basis, until you read the fine print. Once you read the fine print, you found
they excluded Voice over IP, so you could not use this for Internet telephony.
They did not want to compete with themselves, effectively. You could not use it
for certain multimedia applications, and they reserved the right to cut you off
if you started using more broadband. Therefore, "unlimited" was not unlimited;
it was very limited.
In the United States, the regulator ran into precisely the same issue with
Verizon and ultimately stepped in and said that this is unacceptable. If you
call something unlimited, it had better be unlimited, and you cannot bury all of
these restrictions in the fine print. We have not seen anyone take steps to
address those issues here in Canada.
Senator Johnson: That is exactly what we should be addressing.
Senator Zimmer: Thank you, professor, for your presentation. It was
refreshing and almost inspirational. It is frustrating. I have a BlackBerry, and
it is limited in what it can do. I saw the iPhone and its capabilities last
night on television; how creative. You can do calculations, you can level your
siding; how innovative. On a BlackBerry, you cannot do those things. I want to
change over to iPhone, but I cannot. I am told that, for some reason, there is a
secure system on the system I have that I cannot convert over. I do not know if
that is true, but it is very frustrating.
Then, in a world of competition and free enterprise, you hear verbs such as
"exclude," "limit," "throttle," "choke," "reserve the right," "not
allowed" and "degrade." Those words are not usually used in free enterprise.
Am I passionate about this? Yes; I am tired. It is so refreshing to hear someone
such as you come in and tell the truth.
Where is the blockage? Is it CRTC? Is it hoarding by the operators? What can
be done? What do you recommend we do and put in our report to whoever to get
Mr. Geist: Thanks for those comments. I tend to agree. I am an iPhone
user myself. The types of applications you can use are, frankly, nothing short
of remarkable. The cover of this week's The New Yorker was literally
created on the iPhone using a software program that allows to you create and
draw right on the iPhone itself.
Some of the other applications are remarkable, but even within the iPhone, it
should be noted restrictions still apply. As an example, just last week, Apple
reserved the right to approve the applications that can go on the iPhone. There
are tens of thousands of those. One group created a book reader for the iPhone
that would rely on public-domain books. There are more than 20,000 digitized
public-domain books. Apple, at least briefly, declined to approve this
application because the Kama Sutra was one of these public-domain books,
and they said that it was inappropriate to allow people to have access to this
type of content.
The truth is that there are ways, if we had unlocked devices and had a more
open space, we would encourage this innovation without the gatekeepers that we
see. Fundamentally, that is what we see taking place here. Certain gatekeepers
exist in the chain; sometimes it is the device manufacturers; often —
particularly in Canada — it is the carrier themselves who set limitations on
what can come into the marketplace, precisely because it is to their competitive
advantage to do so. We do not have enough competition to counteract that at the
Who is to blame? I think there is plenty of blame to go around. We have the
CRTC — to be honest — asleep at the switch, particularly on this wireless issue;
they have not been involved at all. On net neutrality, for example, a complaint
was brought against Bell Canada's activities. They found for Bell in a manner
that just last week was appealed asking for a reconsideration, noting that the
CRTC itself has acknowledged in public statements that they may not have had all
of the facts. Even when they do get engaged, the perception is that they may be
overly cosy with some of the companies that they regulate, so there is ample
reason to lay some of the blame at the CRTC.
It is not just the CRTC, however. I think we can blame the Competition Bureau
as part of this. It was the bureau that, when we had two providers in the GSM
space — Fido and Rogers — allowed a merger of those two services to go ahead,
taking away the only competition we had in the GSM space and leaving us with
just the one provider.
We can look to governments. This is not a partisan issue because this falls
under both the watch of when we had Liberal governments and now, more recently,
Conservative governments. In both instances, they let broadband task force
reports sit there. There has been no digital strategy for Canada for more than
10 years now, while we see other countries move ahead more aggressively. I think
we can look to all of these players to say that they have let us down, quite
The results are in the independent statistics. You can certainly get lobby
groups or association groups to come in and spin the numbers any way they like,
but if you take a look at statistics from the independent people — groups such
as the OECD that no one will question — the numbers do not lie. We are falling
behind other countries, and Canadian consumers know it intuitively. I suspect
many of you know it, based on the experience you may have had just last week
when you had a chance to compare what they have in Europe to what we have in
Senator Zimmer: Can you provide us with an update on the 700 MHz band?
From what I recall, it was presented at a round of spectrum auctions last year.
Do you know the current status of that?
Mr. Geist: The 700 megahertz spectrum is a spectrum — as I alluded to
briefly — that will be freed up once there is the transition from analogue to
digital. This is for the television broadcasters.
You will recall from years ago, television broadcasters used to be on very
low numbers on the dial before we had cable boxes and access to many channels.
They use analogue spectrum. That is a very good spectrum with easy access
because, as you know, if you put rabbit ears up on the television or something
up on your roof, you were able to get access to full television channels,
sometimes from a distant community. If you lived close to the U.S. border, you
would get some of the U.S. channels and the like.
However, it uses that spectrum in a very inefficient manner, and the move is
toward digital. Other countries, once again, are far ahead of Canada on this. A
number of European countries have already completed the transition. The United
States had a short delay but will complete its transition in a couple of weeks,
Once we do that, there are a number of benefits. First are the benefits that
come from having our broadcasts go in digital rather than analogue, and a number
of efficiencies come with that. Even more beneficial, we now free up this entire
spectrum that is being used inefficiently, and that spectrum can be auctioned
In the United States, they saw that as an opportunity, not just to auction it
off but to experiment a little to see if they could find new innovation into the
marketplace. Essentially innovate in the auctions themselves by bringing in
certain openness requirements.
In Canada, it is not clear if we will follow suit. Frankly, we should, at a
minimum, do as much as they did, but we should seek to surpass what they have
done. The timeline for Canada is 2011, for when we will see this transition that
we are supposed to see. However — and this is separate from some of the issues
you are following — there is reason to sound the alarm on the transition as
well. The CRTC, government ministers in the area, have now noted repeatedly that
the broadcasters themselves are behind on this issue. They have not been doing
what they need to do to ensure that Canada is ready for this transition.
Moreover, all the broadcasters have been quite up front in saying that they do
not intend to ensure that all Canadians have access to over-the-air digital
Therefore, whenever they happen to complete this transition, we will find
that certain Canadians — it is about 1 in 10 — who rely upon over-the-air
signals rather than a cable or satellite provider, no longer have access to
television in certain communities because the broadcasters have decided not to
service those communities. You will hear about that from people in your
communities, frankly, once that happens.
In order to be able to leverage the opportunities for digital broadcast and
around this wireless space, we need to make the transition. Frankly, we need
government and regulator to sit down with the industry players and say that we
must find a way to ensure this happens in a timely manner. We are already years
behind our peers, even those directly across the border.
Senator Zimmer: Professor, I was incorrect in my opening remarks; you
are an inspiration. Thank you for your testimony this morning. It was very
Senator Cochrane: According to the data I have seen, Ontario, Quebec
and British Columbia are the only jurisdictions in Canada where no one company
has over half of the market.
Can you tell us what it is about these provinces that enable them to enjoy a
greater level of competition? Is it simply the size of their markets or are
there other factors here at play?
I am from Newfoundland and Labrador. Bell Canada has 80 per cent of the
Mr. Geist: It is exactly what you pointed to. The carriers have
targeted those marketplaces that they view as potentially the most lucrative. We
saw that even within the context of the last spectrum auction, the advanced
wireless spectrum, AWS, auction. We are bringing in new providers, but it is not
as if all Canadians will benefit equally from the new competition that comes
into the marketplace.
Some of those providers are only targeting urban areas of Ontario and Quebec,
at least in the beginning. They focus on limited jurisdictions where they think
it is most profitable and there is the greatest number of consumers to gain.
That is not surprising. That is simply the market at work.
I agree with you that it is not fair at a consumer level. There is an obvious
preference for ensuring that the market does its thing. Robust competition takes
away much of the need for regulation.
However, in areas such as telecommunications, many countries have recognized
that this is too critical for the reasons I articulated — basic education,
communication, commerce, health care and almost every aspect of our daily lives
— simply to say that we will leave it strictly to the market. It might be a
light-handed touch that the government takes, but it has to be a touch
nevertheless. We need to recognize that unless we have some oversight, we will
have consumers who will not enjoy the sort of competition that Canadians in
other parts of the country enjoy. Note that these other Canadians are not
enjoying this competition all that much either; it is rather limited in terms of
the differentiation we see between providers currently.
Senator Cochrane: My main focus is education and medical care. We have
smaller communities where I come from. It would be wonderful if we could have
access to this information for doctors, et cetera within their small
communities. There would be savings for health care, and it would be beneficial
to all residents. Smaller communities should have access to many of these things
that they do not have.
Mr. Geist: Yes, absolutely. It is true for health care and
particularly for education. Think of the libraries that we have here in Ottawa —
the Library of Parliament, the University of Ottawa and Carleton University. An
inequity exists for many Canadians. You and I have access if we are here in
Ottawa. However, we do not have to go far outside of these larger communities to
find people who do not have that access to knowledge.
I wrote a piece calling for a national digital library four or five years
ago. I argued that if we made the commitment for a relatively small amount of
money, we could literally try to digitize everything ensuring that we would
create a digital library accessible to all. It would be a terrific export of
Canadian culture and content to the rest of the world. We have done virtually
nothing in digitization and many Canadians still do not have the high-speed
access that they need.
Think about what you could do in that regard in an education context. For
example, I have been running a virtual lecture series this spring. I take
several of the best videos on a given issue and put it together in a single
posting. If you were to spend three hours, as you might if you went to a
conference, you can watch these three or four experts lecture on this issue and
become well informed about whatever the issue happens to be.
We are already at a stage where experts on many issues are readily available
on websites such as YouTube and other video spaces. That is the kind of
experience people can have. My aunt lives in a smaller town in Ontario. She
tells me that when I send her a link to a video that I think she should watch,
she clicks on the link before she goes to bed in the hope that it is fully
downloaded when she wakes up in the morning. That is simply not acceptable in
the current day and age. The reality is that that is how many Canadians are
still forced to experience the Internet. It is a real barrier to that basic
Senator Cochrane: I realize all the organizations in which you are
involved. You are very knowledgeable about all these things and what needs to be
done. Is there an avenue in which you can get involved so that you could make a
difference for all of Canada?
Mr. Geist: Some consumer groups that have taken on this issue. Many
consumer groups have seen telecom as an important issue, but they are fighting
any number of different fronts.
Based on this discussion, it becomes clear that many of the issues we are
discussing overlap in many places. We are talking about telecom, but at the same
time we are talking about education, health care and copyright reform. All of
these ultimately have an impact on some of these issues. That is difficult for
any individual group to take on.
However, community wireless associations in some communities have tried to
solve some of the issues. Groups such as the Public Interest Advocacy Centre,
PIAC, based in Ottawa and some of the Quebec consumer groups, such as Options
consommateurs, have also been very active on these issues.
I do not know that we have seen this issue reach the level necessary to see
change. It is instructive. This is one of the first times I have seen either a
house committee or a Senate committee take on this issue in this direct fashion.
These issues arise from time to time, but typically it is as a result of a piece
of legislation and someone comes in to talk about it.
I am grateful you are taking on this direct issue because few if any have
bothered to do it. It is clear to me that it is essential that someone does.
Senator Merchant: What are companies' justifications for not providing
Mr. Geist: They argue that it is their network and that they should be
able to run it in the way they see fit. They argue network management is their
private concern, and it is a smaller number of users that are limited; it is a
more robust experience for everyone else in return.
The reality is that we see many network providers that do not feel the need
to follow suit. In the telecom area, I mentioned TELUS in relation to blocking,
but TELUS has denied that it engages in any kind of throttling to date. It has a
similar network to Bell. Bell throttles, but TELUS does not.
It seems like an easy solution. One submission from the Chief Information
Officer of the Government of British Columbia pointed out that in many ways
turning to net neutrality is seen as an option for not investing. Telecom
companies will potentially come before you to tell that you they need to be able
to throttle in order to ensure that they can invest. That is how you ensure
investment. I think it is a compelling case that it is the opposite. Once you
engage in throttling, you are actually trying to ensure that your legacy systems
last longer. If you can find a way to squeeze appropriate usage from your
existing network, it is an incentive not to invest in future types of network.
Throttling, in many ways, serves as a barrier to new investment because they
find a way to make the network last for another few years rather than making the
investments to ensure that all of their customers get the broadband experience
that they should be getting.
Senator Merchant: While travelling last week, we found that other
countries have comprehensive broadband plans. France has France Numérique 2012
and the U.K. has Digital Britain. Should Canada have a comprehensive broadband
Mr. Geist: Yes. If there is one crucial recommendation to be made from
a big-picture perspective, it is to recognize the need for a broad digital
strategy, not only digital broadband. Many other countries have done this.
Europe and Australia have done it. Some countries even have ministers directly
charged with dealing with these issues.
Looking at other countries, we see that not only are the three issues that I
pointed to in my opening remarks interconnected — not only wireless, wired and
net neutrality — but also it is an appropriate balanced copyright law; it is
broadcast as we move from analog to digital; it is the consumer issues we have
already discussed; it is privacy and how to ensure appropriate privacy; it is
consumer confidence in electronic commerce; it is access to knowledge; and it is
a digitization strategy that brings Canadian content online. All of this falls
within a broader digital agenda.
We had such an agenda in the mid- to late 1990s in Canada, when John Manley
was the Minister of Industry. As part of an OECD meeting in 1998, Canada mapped
out a digital strategy that we ran with for a number of years. We had privacy
legislation, a cryptology policy, an assurance of access to the Internet for
schools and consumer protection. As of last week, we have anti-spam legislation.
All of these issues came out of strategies back from the late 1990s.
However, it is amazing that while other countries over the last number of
years have recognized that you cannot target for 2009 only because you have to
look ahead to 2020 and 2030 from a strategic perspective, we have had an utter
void. Absolutely, we need a strategy that incorporates these issues and other
issues, recognizing that they are all connected and will all be critical. It is
almost guaranteed that Canada will continue to slip relative to other countries
because many of them have seized the issue and laid out a plan to address it in
the coming years.
Senator Merchant: The United States uses breakup power. A few years
ago, they broke up American Telephone & Telegraph Company when they created what
we used to call the Baby Bells. Does Canada need a breakup law, or are we too
conservative to do that?
Mr. Geist: I do not think we have the same situation that the U.S.
experienced back with Ma Bell. If anything, we went in the other direction when
we allowed a merger of the only two providers in the space. As I mentioned, that
was a mistake.
We might want to look at the potential for separation of carriage and
content. Some of the concerns that have arisen, such as the prospect of a
Canadian content owner facing restrictions that are not faced by a different
kind of content owner, stem from the fact that the provider is often providing
both carriage and content at the same time. For example, a major cable provider
can own an interest in a television station, a radio station and a baseball team
all at once. When that occurs, it is quite clear that those providers have some
built-in incentives to potentially favour their own content over other content.
There is a growing chorus of calls, not only in Canada but elsewhere as well,
that there might be some benefit derived from structural separation of the
carriage of content from the content providers because otherwise, at minimum, a
provider has an incentive to favour their own content or degrade the competing
Senator Munson: I was curious by your comment about the CRTC being
asleep at the switch and the Competition Bureau being not too far behind. Your
remarks are inspirational. We are living in a digital revolution. I am curious
to hear your view on the feeling at CRTC and the Competition Bureau. Is it a
case of old school playing by old school rules while not quite grasping what is
coming full throttle down the track?
In terms of the private sector, you talked about cover of The New Yorker,
which I saw. Is that type of thinking happening at the CRTC and the Competition
Bureau? I ask that in terms of attracting young, aggressive, innovative
digital-minded people in the private sector, which is a big-time operation. How
do you think things can change at these two institutions? Do we accept what
other countries have accepted?
Mr. Geist: It would be nice if there were one simple solution to
address some of the problems that we face with those regulatory bodies. I do not
think there is one single issue. Certainly, some of the newer leadership at the
CRTC understand some of these issues, but others who have been around might deem
it a bit of a threat to consider doing things in a new way. Some in the
community have the perception that there is an overly cosy relationship between
the regulator and the regulated given the movement back and forth between the
two. There are some benefits to that, for example to ensure that the CRTC
understands the marketplace, but it creates a problem when it becomes overly
At the same time, the CRTC has been hamstrung by its legislation. For
example, we have separation of telecommunications and broadcast under two
separate acts. This creates all sorts of problems because, in the current
environment, these are pretty much one and the same. It is difficult to
distinguish between telecom and broadcast.
This came up in the context of the regulation at the new media hearings
conducted by the CRTC in February and the issue of net neutrality. The CRTC
tried to argue that what they were doing as part of new media was a broadcast
issue and that net neutrality was a telecom issue, so it could not address net
neutrality. Fundamentally, I disagreed with them, as did many people who
appeared before those CRTC hearings. There ought to be recognition that we have
two statutes that should be updated and merged into a single communications and
broadcast act that would allow the regulator to at least have the tools to move
We have some problems with older mechanisms and some problems with the
statutes. This applies not only to the regulator but also to government more
generally: Often some of the incentives built in within regulators and
government are based on not taking risks. You get into trouble when you take a
risk, so the easy approach is to take the same conservative, safe approach. It
might not be very effective or keep pace with what we can do, but no one will
lose a job over it. We have to find a way to break free of that mindset.
We tell our companies, our educators and our researchers to try to be
innovative and think outside the box, yet it is precisely that kind of thinking
that is discouraged in some of these environments because it is considered too
risky. The CRTC has tried to do a couple of online consultations, but they have
been conservative in their approach because that do not embrace fully the
potential that the Internet has to offer. They are moderated by someone who runs
surveys to ensure that no one goes too far out of line. The consultation does
not take the full advantage that it could take. Others that we see trying to
embrace these tools are able to go much further. We might sense that the
regulators have failed to keep pace because of some of the experiences that
people have seen over the last number of years.
Senator Munson: That is why we have a confused public these days over
issues around saving local television that have prompted massive ads. No one
quite understands what is happening, but it has a great deal to do with
regulation. That is simply an aside.
I am curious about the Fredericton example. In simple terms, could you
explain why they took the initiative and whether others could follow that
initiative? What does it mean in a knowledge-based economy to such a community?
Why is it that other communities do not embrace it? It would seem to be a
Mr. Geist: The Fredericton approach is quite straightforward. At the
starting point in the downtown core, it was done to ensure free Wi-Fi access so
that not only residents could make use of it but also others, such as business
people or tourists. There are some great advantages to visitors having free
access when they come to the city.
Some of these attempts have taken place in larger U.S. cities as well as some
larger Canadian cities. For example, the Toronto Hydro Corporation attempted to
do this as well. We have seen a mistake in a number of places: Rather than offer
up the services as a value added for the community to benefit everyone and
create a competitive edge, at least until others emulate it, many communities
have tried to compete with the providers. They have tried to say that they will
offer the same service that Rogers, Bell, TELUS, or whoever, offers. For all the
criticism of these providers, they have experience and know how to deal with
customers and manage networks. It is not easy for a city to say that they will
do the same thing. In fact, they should not do so. The reality is that a city is
not able to do so — not without a steep learning curve.
The success stories are ones that see this as sitting along side the
commercial Internet, as it were, and see this as an opportunity to create a
non-commercial space of connectivity for the benefit of all within the
community. Once you try to go head to head on a commercial basis, you run into
objections from the commercial providers that say that you are trying to take
away their customers. Furthermore, you are not able to compete that effectively.
Those who have tried to do that have, by and large, failed.
Senator Munson: We are living in a recession, and we see prices
dropping everywhere. You talked about consumer advocacy groups, yet in your
discourse you talked about RIM expressing frustration with Canadian prices,
predicting that carriers could sell eight or nine times more BlackBerrys if they
lowered data prices to levels found elsewhere. Why is that not happening? It is
happening everywhere else, for example, with cars, computers, and so on. Is
there a push back here that should not be accepted?
Mr. Geist: It is strictly competition. If you take a look at the
statements from the larger players on broadband, they have noted that there is
ample opportunity to raise pricing. You alluded to the whole fee-for-carriage
issue. I see this as cash grab, but, on the issue of broadband, cable providers
have consistently raised prices. That is something people have noted. The prices
have been going up steadily over time and they have not been shy about noting
that they have the ability to raise prices — not just on your cable but on your
Internet access as well. That is strictly a function of lack of competition.
In other places, that type of pricing often goes down, not up, because you
are facing a tough competitive marketplace. In this country, we see prices going
up. With the services themselves, sometimes have you to pay more for less, and
we see the introduction of these big caps. The prices go up and the amount of
bandwidth that consumers can use becomes capped. That is what we have seen in
the marketplace over the last couple of years. You are correct; It runs counter
to what we see in almost every other sector, namely, that if you are in a tough
competitive marketplace, the way you get new customers or retain the existing
ones is to come up with a more competitive offering.
Senator Mockler: I know the Fredericton experience as I am from New
Brunswick. I also know the challenge we have in Northern New Brunswick versus
other parts of New Brunswick. Being in a border town, I know that if I want to
serve my community, I need two BlackBerrys or cellphones: one with Bell and the
other one with Rogers. When I am in one part of the province, I use Rogers; when
I am in another part of the province, I use Bell. When I go up the valley a bit
toward Edmundston, I am immediately connected with the U.S. satellite, so I have
another service. I am very sensitive to your presentation, and I think it is a
step in the right direction.
What incentives could we use? It must be not only the federal government but
also multiple governments looking at these issues. With your experience, could
you tell us what incentives you think we could embark upon to encourage and tell
the industry and governments what should be done in order to match our
Mr. Geist: I am glad that you identified the role that local or
provincial governments can play. If we take a look at provincial governments
over the last number of years, especially in the broadband area, many have grown
so frustrated with inaction at the federal level that they have taken matters
into their own hands. We have seen a number of provinces make significant
investments in their broadband infrastructure because they simply got tired of
waiting. They were saying, "We are becoming uncompetitive as we wait for some
strategy. It is not happening. It is time for us to invest." We are seeing that
in province after province.
In some ways, the amount of activity we are seeing at a provincial level is
creating the perverse incentive for the federal government not to act and to
argue that the provinces are addressing this issue; why do the feds need to do
that if we are seeing province after province trying to address it? That will
create a series of haves and have-nots. Those provinces that chose to make those
investments and can afford the investments will have citizens that enjoy the
benefits of those networks; those that do not will be left sitting on the
sidelines. That is why there is clearly still a role at the federal level.
The sorts of incentives in wireless come down to trying to accelerate to the
extent possible the availability of more spectrum, making it open, and
rethinking the foreign investment restriction so that other players can come
into the marketplace. It is fundamentally about getting more competition into
the space. Wireless is a tough place to do it unless you are creating more
opportunities. You must use spectrum. New spectrum is coming in, and we must
make use of that.
We should be following the lead of the Europeans. Over the last year, the
European Commission has become aggressive about the way in which consumers buy
these services. For example, roaming fees are incredibly high in Europe. As a
result, they are putting caps on roaming fees.
Other countries are noting that, even if they have competition, if they have
locked the consumer into a three-year contract, it will be years before they
enjoy the benefits of the competition. If I sign a contract today, since three
years is almost always the requirement, I sign a three-year contract. If a new
provider starts in November or in December, I will have to wait until 2012 until
I have the ability to move to another provider. Our consumers are locked in. We
must be careful about introducing new laws that have the further effect of
locking in consumers. Copyright was a good example of that. The bill introduced
last year prohibited someone from unlocking their phone and taking the phone to
another provider. That is another disincentive. Someone invests, especially in
expensive devices such as iPhones, and their ability to move between providers
is then blocked because of copyright. They are unable to unlock the phone and go
to a new provider or stick with the provider because they are not allowed to
unlock the phone. These things will not solve all of the issues, but they will
move us forward to freeing up consumers to move a bit and to try to inject more
Senator Mockler: On the same wavelength, professor, when I look at the
providers, this is a numbers game. What are your thoughts on accelerated capital
depreciation for Canada?
Mr. Geist: That is one opportunity to encourage investment. We need to
take a look at tax changes as one way to ensure that that happens. We see that
not only in this space but also in the media area, with new media and
encouragement that came up as the part of the CRTC new media hearings. Can we
find a way to create the tax incentives that we have for mainstream, traditional
media and bring that into new media as a way of creating incentives? I am glad
that you pointed that out. That is a way for government to create incentives
through the tax systems.
Senator Adams: Are you familiar with Nunavut and the comments about
the education system there? Nunavut is trying a new way to teach English, French
and Inuktitut in the schools. Right now we have slow broadband, but I think you
will see the use of computers to teach the children English, French and
I was in Halifax a couple of months ago and met a woman who does the
community's weather forecast. I asked her how they can translate the daily
weather forecasts into Inuktitut. She told me she does not have to do it; the
computer does it for her. She did the forecast in Inuktitut, English and French
using that system. Computers are able to do that now.
Sometimes we have difficulty, with more Inuit coming in to teach the language
in the classroom. Are you familiar with the fact that many Inuit people come to
Ottawa to go to university? Maybe we can teach them some way here in Ottawa. How
do you see the communication system in the future in Nunavut and teaching three
Mr. Geist: You are right that the translation technologies are, at
this stage, creating almost one Internet. For a long time we were concerned with
the inaccessibility of so much of what is said and written and created online
because it is written in whatever person's particular language and made
inaccessible for much of the rest of the world. English is the most common
language online, but there is an incredible array of stuff in hundreds of other
languages. Wikipedia has entries in hundreds of languages created by different
We are seeing lots of creation in many different languages. We are also
seeing the technology making this content readily accessible almost instantly.
For example, on my blog I have a little widget, a program from another company
that sits there and allows people to translate any blog posting, any article I
have written, into 20 or 30 languages almost instantly. You click on it and it
uses applications such as Google Translate to allow that content to be
translated very quickly. This technology succeeds in breaking down those
We are also seeing more of the move to distance education. It is clear that
tremendous opportunities can be brought out using these technologies to ensure
that the communities that do not otherwise have access — either access, as we
talked about, to the basic knowledge tools such as larger libraries or access to
educators or materials — use the Internet as a mechanism for doing that.
Barriers still exist, too. Part of it is the telecommunications structure and
another is copyright. For example, the last copyright law included a provision
saying that you could engage in some of these distance lessons, but the teacher
would be required to destroy the lessons 30 days after the class ended. This
struck many educators as absolutely ridiculous, yet that was the so-called
We need rules that help facilitate that, and it ties directly into the
question of a digital strategy. Education is a core part of that strategy,
particularly if you think about our current environment when we are in a
difficult economic recession and people are losing jobs; we will find more
people looking for retraining opportunities. Retraining opportunities should not
be limited to a local college or university but ought to be able to be accessed
through these networks at a time when more people, for lifelong learning
purposes, are looking to this network as the way in which they can access this.
We must ensure that they have the network, the appropriate access that can
provide what is already online.
Senator Adams: What do you think about the syllabics that we have in
the Western Arctic? Around the Kitikmeot Region they have Roman letters, and in
the Eastern Arctic, between Keewatin and Baffin, and in Northern Quebec, we have
Slavic letters, and Labrador has Roman letters too. I know when Apple first came
out it was able to write in syllabics; it may be better now as this was over 10
years ago. I was wondering about those things, whether there would be any
difficulty with a computer teaching in the different letters in the schools?
Mr. Geist: Many computers still have those capabilities. We are seeing
as well — and this would also tie into a national digital strategy — that many
communities, particularly those with languages that are not as widely used, move
toward open-sourced software tools, programs such as Mozilla's Firefox browser,
as well as Linux running on the desktop. These are software programs that are
freely licensed that can be changed and adapted with the consent of the creator,
are free to access and run on many of the web servers out there and are common
and well accepted. Because they can be freely changed, many communities will use
an open-source software program and then adapt it to their local language. Then
you are not dependent upon a larger software provider — Microsoft or Apple — who
looks at the marketplace and says that it is not a big enough market. Instead
you use open-source software tools because you are free to use it and create a
localized language version with the encouragement of the creator in the first
Senator Wallace: Thank you, professor, for what I would say was a
no-holds-barred assessment of the telecommunications industry in this country.
It certainly is an eye-opener for this committee. We have not heard it quite as
bluntly as you have stated it, and we thank you for that.
As you have said, the responsibility or how we got to where we are, and why
we do not seem to be competitive with other countries, resides in a number of
different directions. We have the industry, we have various governments over
time, both provincial and federal, and we have the CRTC as the regulator. As you
point out, to get to where we have to be, to be competitive in this worldwide
business and industry and education and health care, we need a comprehensive
plan. It is one thing to prepare the plan and it is another to implement it.
As we know in anything — business, law — there must be someone, some body
responsible to develop the plan, implement it and then follow up, and always
comparing what is happening in our country to what is happening in other
countries to ensure we are always on the leading edge.
When you look at what other countries have done — and they are ahead of us,
and we are lagging behind and falling even further behind — is there a model
that we could look to, or do you have any suggestions of what we should look to,
to develop perhaps a new entity that would have overall responsibility to deal
with the state of our wireless technologies and broadband access?
As you point out, there are a number of different issues. Frankly, it leaves
my head spinning with the level of knowledge you have and all the issues we must
bring together. It tells me that if we leave the responsibility to turn things
around in the hands of many, between different levels of government, CRTC and so
on, we will probably not get up to scale within the time frame that we must.
It was a long lead-up to this, but is there the need for a singular body to
be created to deal specifically with the realities we have with this technology
today and get us to where we have to be within whatever that period is, one
year, two years or whatever?
Mr. Geist: That is a terrific question. My response is I do not know
that we need a new government department, but we need — especially because you
focused on how to ensure that this gets implemented — to rethink the very top
For example, at the moment, all of this, or most, resides in the industry
minister's office. You can have the best industry minister in the world, but if
you take a look at how broad-ranging the mandate is for the industry minister as
part of the mandate, dealing with everything from university research to the
auto sector to foreign investment to telecom issues to copyright — you name it
and seems to fall under the industry minister's mandate — there is no way that
anyone can give these issues the time they need.
We have seen in other countries, if there is a difference, that they have
recognized exactly that. If you want to ensure the issues are prioritized, you
need to provide someone who has the ability to ensure that they are implemented,
who has a voice, preferably around the cabinet table, and has a more limited
mandate. This on its own, if we talk about the digital issue generally, is a big
We have seen other countries move forward with a minister specifically
charged with things such as the digital economy, innovation, digital issues;
different names in different places. Whether you are in Australia, the U.K. or a
number of other countries, they have created a specific minister. I am less
concerned about how the ministry underneath the looks; that is simply shuffling
people around. It is more about ensuring that someone is in a position to get
this on the agenda and argue for it forcefully. We find that the issue slips off
the agenda even with the best of intentions because other issues take priority.
Further, even without a minister, we can appoint a CIO, chief information
officer or a CTO, chief technology officer, as we have seen from the Obama
administration. Someone should be in charge of examining these issues in the
same way that companies often organize themselves with chief technology officers
and so on, and we can have someone in Canada. If you had both a CTO as well as a
minister responsible for many of these issues, the minister would be affecting
policy and pushing through that process and a CTO would be doing the research
and metrics to ensure that government is a leader and not a laggard in terms of
adopting some of these technologies and moving forward on open source and
We have seen this in other countries, but not in Canada yet. Part of the
blame is that we have an overburdened minister — regardless of the party or who
it is — where these issues come up, but it is one of dozens. There simply is not
the requisite time to deal with the issues effectively.
Senator Wallace: As you say this, I think of the work of this
committee for example. This is our focus today; it is critically important; and
we are happy to do it. However, we will move on to something else down the road.
The issue becomes who will be there to follow up and ensure that it happens in
the same way as in business or education.
I appreciate all the time and effort you have given us today and in your
other responsibilities. It would be helpful if you can offer us a particular
jurisdiction or essential principles that we might consider in putting together
this follow- up model to take control of this crisis we are in. Are there one or
two countries or hybrid models you can recommend as to how that might be
Mr. Geist: Yes, I can do that.
The Chair: We learned last week in the U.K. that it is a member of the
House of Lords who is responsible to apply the Digital Britain program. Maybe a
senator could do that. How about that?
Senator Dawson: Minister Carter was a specialist in his field before
he became a lord. The advantage he has is that when he stops being a minister,
he will still be a lord.
I apologize for arriving late professor. I would probably lose some points if
I was in class, but I will try to compensate by staying longer.
As you know Canada was once a global leader in the telecom field. A report
was tabled by this committee 10 years ago this month. In the introduction, it
said that Canada is in the vanguard of this movement in communications. I agree
that it is not true any more. Last week's experience with both the French and
the British made it clear that we are lagging behind. I encourage honourable
senators to go back to that report to see that 10 years is a century as far as
communications is concerned. They were not talking about RIM; wireless was an
issue, but not as it is today. We are not in the same generation of tools today
with Twitter and YouTube. There is also a picture in the report of Senator
Johnson and Senator Bacon. I think people can see what 10 years will do not only
I agree that we definitely have to look at the fact that there has to be
political responsibility. It is not a partisan issue. Both parties that have
been in power over the past few years have been neglectful. We know that
Australia has a minister who is responsible for this area. There is someone you
can go to and complain. We have examples such as The Weather Network being told
that they are being throttled because they are competing with products being
offered by the provider. That is unacceptable, but going to the CRTC is not the
solution, as you mentioned.
With respect to control of information, France has an organization that
supervises what is being collected by people, and they are obliged to destroy
information collected after a number of months. We do not have that. We used to
be at the vanguard of protecting confidentiality. Our Privacy Commissioner
probably does not have a section dealing with what is being collected on the
Internet by private networks currently.
You have awakened us and given us a large number of questions that we will be
asking of witnesses that will be coming forward. I agree that one of our
recommendations could be a minister concerned with these issues.
Is there a country that we should be inspired by from your studies?
Mr. Geist: It is an interesting question. It is almost as though we
should pick and choose from different countries. However, if I had to pick one
in terms of the way consumers experience it and have the ability to take
advantage of the networks, it would be South Korea.
In 1998, Canada hosted the first OECD ministerial meeting on electronic
commerce in Ottawa. It reflected the fact that the OECD had then recognized it
was an issue that was raised to the level of ministers attending. It was a big
issue, and it spurred Canada to move forward on things such as privacy.
Last June in South Korea, the OECD held what was, in effect, their follow-up
meeting 10 years later. It was called the OECD Ministerial Meeting: The Future
of the Internet Economy. I was part of the Canadian delegation and appeared on
one of the plenary sessions. You are struck by how different the Internet
experience in South Korea is from the moment you walk out of the airport. In
Canada, you would see a Tim Horton's plus a series of car rental agencies. In
South Korea, you see a series of kiosks renting cellphones that run on Internet
For example, we think of Skype as something that we might use on our
computer. It has a booth where for approximately $1 per day they will give you a
phone to use on an unlimited basis; it is readily available to use for voice and
Internet because it all operates with the same Internet connectivity. You arrive
at the hotel and find you have connection speeds unimaginable from what we are
When you start to see what the Internet means when you have those types of
speeds, I do not think it is an exaggeration to say that it is not the same
Internet. It is frustrating when our own providers keep telling us, as Rogers
did yesterday, that they are raising speeds for consumers, which they are and
which is good. However, it is still a fraction of the speed experienced in some
other countries. When you click on a web page or video, it is literally
available instantly. There is no delay. The things we have grown accustomed to
because our networks are slower simply do not exist.
The Korean government played a role to facilitate enough competition to
ensure an environment where you can have people competing to rent you a
cellphone rather than a car for your stay. They created an environment that
allows people to have that level of high-speed access so that the Internet
effectively becomes the telephone for many usage purposes. They have created the
environment that ensures that approximately 40 per cent of consumers have fibre
to the home that enables individual consumers to have those highest connection
speeds available. That is simply non-existent in this country.
It is not that South Korea or Australia got every issue right. France has
some great packages for consumers and amazing rates combining television,
high-speed networks and telephone for less than what we pay for just high-speed
Internet. We also mentioned Lord Carter and the U.K.'s digital plan. Many things
are taking place in many countries.
However, at a consumer level, it was in my experience in South Korea that it
was most readily apparent to see the difference between what they have and what
we have. People were walking around with cellphone devices experiencing
real-time streaming, television and range of other things all made accessible
through a network that simply does not exist in Canada.
Senator Munson: Briefly, my question is about taxes and how defensive
Canadians become when we talk about foreign ownership rules. When this issue
arises in another forum here, we talk about the rules and the need to protect
Canada. People get nervous that someone will take over. However, it is a great
big world, and there are really no borders in the wireless community. What type
of tax changes would be proposed and how much easing up would there be to
foreign ownership rules?
Mr. Geist: I am not a tax expert, so I am reluctant to wade into
specific tax measures. However, I have seen a number of reports that talk about
using the tax system to both create incentives for basic investment and provide
a levelling of the playing field between new and old media and between the
investments we might see take place in various networks.
I am more comfortable talking about foreign investment. We already have
foreign investment in our telecom networks. We are seeing all manner of creative
mechanisms in an effort to circumvent the current rules. Everyone claims to be
playing by the rules and that the voting structure of these new entities is in
the hands of Canadians, but it is a bit of fiction. Most people recognize that
it is expensive to establish new networks for new providers, and they have to
look for foreign capital.
Foreign capital from some of the larger players around the world, such as
Verizon, might want to enter the Canadian market, although I do not know whether
that is the case today. However, we ought to give them a shot by freeing up the
rules. The perspective of many companies is majority ownership, but I do not
know that the specific numbers matter. Certainly a company such as T-Mobile
would want to enter our marketplace under its own name so that it can take
advantage of its existing global efficiencies and potentially blow out of the
water some of the local providers that are not playing the same game or even on
the same playing field.
Senator Munson: On a personal note, I was at our massive Liberal Party
convention in Vancouver a couple of weeks ago. You talked about what is
happening in other countries and how it changes life as we know it. I stayed in
a very modern hotel. I walked into my room with my laptop and found that I had
to call the front desk to get a connection. They connected me to the hotel's
site and charged me about $15 per day for the service. In layperson's terms, how
would my life be different somewhere else in the wireless world of efficiency
Mr. Geist: Certainly, some hotel chains do a better job of getting
people connected. In communities where there is more universal connectivity, the
ability to connect is almost instant and the speeds are faster. It is less the
case in Canada because of the ability to roam more easily but becomes more of an
issue when you move elsewhere. This past weekend, I was in Switzerland, where my
daughters and I used Skype to communicate. That service provides both audio and
visual communication and was offered free by my hotel. It is an enhanced service
that avoids the usual roaming charges.
Imagine what it is like in Korea where you can access that communication
anywhere if you have a phone with a camera. Walking down the street, you can
Skype something that you see to someone back home on the other side of the world
at no additional cost. As well, you can turn the camera so that they can see
what you are seeing in real time. Such services are beginning to happen that
allow for real-time streaming off nothing more than a cellphone, including the
iPhone. However, you need the connectivity that for now is relatively rare in
Canada but more common elsewhere.
Senator Munson: The broadband connectivity you are talking about in
the North would be of immense value to health care or the environment, et
cetera, by transmitting the video along with the audio when talking to the
experts in the South. This is how a knowledge-based economy works.
Mr. Geist: The issue of the Canadian North is terrifically important.
I did a piece based on work by Bill St. Arnaud, Chief Research Officer for
CANARIE Inc., Canada's advanced internet development organization — a success
story in networks. He is involved with green IT broadband and how to marry
concerns for the environment with broadband connectivity in the North.
As many of you know, we are moving to what is often referred to as "cloud
computing" because much of our information resides in the clouds on large
computer servers often stored in the United States, for now. When you use Google
Mail, YouTube or Facebook and upload your content, all of the data sit on large
severs. I note that a competition is on to get the storage rights for this data.
One of the biggest costs involved is energy. When Google sets up large sever
farms to host their content, they do it in places where the cost of energy is
Mr. St. Arnaud has argued that Canada would be in a position to compete, as
Iceland is doing, by setting up these large server farms in the North because we
have fibre optic cable that can move the content fast, so it does not matter
where the sever farms are located. If we set them up in the North, we could use
geothermal energy to run the servers. The heat emitted from the hundreds of
thousands of servers would be recycled for northern heating purposes. The cost
of keeping things cool in the summer would be lower because it is in the North.
In terms of privacy and rules to protect the data, Canadian rules would apply
because the data would stay in Canada and not be outsourced.
We could do that. Countries such as Iceland see this as a potential
competitive advantage because it is very lucrative to attract large, global
information-heavy companies to set up their server farms somewhere. It does not
matter where that is as long as it is at the cheapest cost. Canada could do that
in an efficient manner with zero carbon emissions. There are huge opportunities,
but we have yet to see anything similar to that take place in Canada.
Senator Zimmer: You mentioned four times the overly cosy relationship
between the CRTC and the Competition Bureau. Perhaps that is what happened, to
some extent. I am sure that operators have gone to the CRTC and the networks as
the self-styled martyrs that provide the service in a way that will be extremely
good for the consumer. However, they have almost put fear into the regulators
saying that they will do this because the public does not know what is out
there, unless they go to another country. They did that with the telephone
systems years ago, when our telephone rates were humongous. Competition came in
and they dropped out of sight. One element that can accomplish this is
competition. The questions asked by Senator Wallace and Senator Dawson were
extremely good. We need a model that we can use to develop this. Otherwise, we
all move on to other issues and the matter falls off the table and the deal is
never done. As Senator Wallace asked, are there things we should know to
complete what we want to do about this?
Please send us this information as we go along. It will help us in closing
the deal to ensure that these things are followed up on; otherwise, it will
never get done.
The Chair: I was about to tell Professor Geist that we might need to
see him again. I hope you enjoyed the morning that you had with us as much as we
enjoyed it. We really know more about the study that we are conducting here. I
am quite pleased that we are conducting such a study. It is about time that we
do something about it. Thank you for your presence; it was beneficial to us.
Mr. Geist: Thank you.
The Chair: Senators, we will meet again tomorrow with Bill C-3.
Minister Baird will appear before our committee. New stakeholders have asked to
appear before us on Bill C-3, so we will decide what we do with it tomorrow,
after we hear from the minister. The meeting will be in the Victoria Building