Proceedings of the Subcommittee on
Communications
Standing
Senate Committee on
Transport and Communications
Issue 2 - Evidence - November 6, 1996
Ottawa, Wednesday, November 6, 1996
The Subcommittee on Communications of the Standing Senate Committee on Transport and Communications met this day at 3:50 p.m. to study Canada's international position in communications.
Senator Marie-P. Poulin (Chair) in the Chair.
[English]
The Chair: Honourable senators, I should like to call this meeting to order.
Good afternoon, Mr. Peeters, and welcome to our meeting of the Subcommittee on Communications.
Mr. Peeters, as you know, we are a subcommittee of the Standing Senate Committee on Transport and Communications. Our objective is to review Canada's international competitive position in communications. Although it is a wide subject, we wish to pay special attention to four areas which are of special interest to us. They include the technological area, the human resources area, the cultural area and the commercial area.
Mr. Jan Peeters, Chief Executive Officer, fONOROLA Inc.: Madam Chair, I appreciate the opportunity to address this body today. I have a series of slides, in English, which I will be delighted to translate for you, if necessary.
The working paper which was sent to me helped me to organize my thoughts. What I would like to do first is give you a synopsis of who fONOROLA is, what our history is, what our plans and commitments are and what we are on record as doing and wanting to do. I will then give an overview of the trends that affect the telecommunications industry, after which I will take a look at the technologies themselves and try to answer the following questions: How competitive is Canada's infrastructure? What are the benefits and drawbacks of innovation in these technologies? There are drawbacks as well as benefits. As a matter of policy, what could government do to ensure that Canada is as competitive as, or even more competitive than, other countries?
With respect to markets, I will give an overview of the Canadian market and point to trends in pricing and consumption in that marketplace. I will address one specific question that is in the handout that relates to bypass, because I think there are a lot of misconceptions about bypass. I am not endorsing it, but there are some misconceptions about what it is and what it might represent.
I want to talk about competing internationally in the provision of services, because, yes, it is important. As regards services, as distinct from manufacturing, by and large Canadians do not do it.
With respect to jobs, there are changes in employment patterns. I will discuss what happens when different sectors and different technologies come in. I will talk about what is growing and what is shrinking. I will look at the threats and opportunities with respect to jobs and the changing in the balance of our economy. I will also talk about culture. I am a mining engineer and not usually asked to speak on the subject of culture at any length. However, I will try to give you my views and tell you what communications does do to cultural issues. It is very important.
fONOROLA was founded in 1989 in the early days of competition in Canada. In those days, the only thing you were allowed to compete in was reselling private lines going to the United States. From 1989 to 1996 we have grown to about $270 million in sales, which is what we will also have this year. We had a weighted average this year of about 500 employees. We will close out the year with about 600.
Simple resale was allowed in Canada in 1990. That means that we could resell long-distance services in Canada. Therefore, we installed switches in Toronto and Montreal. Subsequently, in 1992, we installed switches in Vancouver. In 1993, we opened up our switching facilities in Calgary.
At that stage we had more switching centres than anyone else in Canada outside the Stentor group. We did an initial public offering in 1993 and raised $30 million in the Canadian equity markets. The year 1994 was a pivotal year in Canada. It was the year we gained something called "equal access." That is a process whereby people from their homes or offices can tell their local monopoly carrier whom they want to have as their long-distance carrier. From that point on, in a practical sense, you did not have to punch in secret codes in order to start using a company other than the local telephone company. The equivalent year in the United States was 1984. At that point, we were a decade out of synch with the United States.
Since then, growth has continued rather spectacularly, not just for ourselves but for our industry as a whole, including our competitors Sprint and AT&T Canada.
In 1995, we reached our break-even point in terms of profits before interest and amortization. I wish I could say we had positive net income; we do not. The flip side of it that is every time we do make a dime we invest two dimes into the building facilities. That is the state of our industry today, and will be for the next few years.
In 1996, we expect to have an operating cash flow in the order of $27 million.
fONOROLA was one of the first, and one of the most adamant, to advocate and to build competing facilities in Canada. The map that you see projected on the wall shows in yellow the fibre-optic facilities that we have built or are committed to build. The facilities which serve Edmonton to Vancouver and Edmonton to Calgary are in place today. We signed a contract some weeks ago to build a $120 million link from Edmonton to Toronto. This will be the first competitive trans-Canadian link fibre-optic facility, something which is long overdue.
In 1995, we created facilities between Montreal, Toronto and Buffalo, New York. Also in 1995 we built facilities in southwestern Ontario. We then sold portions of those facilities to Rogers and Sprint Canada.
We announced recently the construction of a facility, which should be finished before Christmas, which links Montreal to Quebec City with the largest fibre-optic cable in that corridor. It is a joint venture involving ourselves, Cogeco, Hydro-Québec and Metrics Interlink, which is a U.S.-controlled Internet service provider.
There is some serious unfinished business on the map. It is not all done. We want to get to the maritimes, obviously. We made a commitment to get there.
We have also participated with another company in a consortium which would build a second ring across Canada so that we will not require reliance upon Americans for back-up facilities. It remains to be seen whether other parties in Canada want to build additional facilities. The proposal is now in front of all the key competitors in the industry to see if they want to participate in it.
That gives you an overview of our commitment to building facilities and of who we are.
This next slide is very important. I am trying to present an overview of what is happening in the industry, going back ten years and going forward roughly ten years. There are trends in ownership, technology and corporate organization. The slide is divided into long distance versus local access. Long distance is the business I am in today. By local access I mean not only local telephony but cable TV services for television, cellular telephones and things like that. You probably know that for long distance a cellular phone uses fibre-optic cables. The radio bit works only for the first five miles. It is a local service.
In the long distance business we started seeing movement in Canada, and certainly in the United States, in 1984. In 1984, AT&T was broken up into several different companies, local being separated from long distance. In 1984, there was a largely unwired long-distance infrastructure. There were mainly microwave towers going from city to city and we used satellite links to make long distance calls to Europe and Japan. That is not 100 per cent correct, but it is a pretty good overview of capacity.
By 1994, in Canada and in the United States, and in a number of other key countries, although certainly not all the countries in the world, we had gone to a competitive environment in terms of long distance. We had also gone largely to a wired basis. Fibre-optic networks had pretty well replaced the bulk of transmission capacity in long distance, including under the ocean and on land. Satellites have not disappeared, but they are much less important than they were.
By the year 2004, it will clearly still be a competitive environment. Fibre-optic facilities will clearly continue to dominate, but there will be a couple of other long-haul transmission types of structures, including low-level orbiting satellites and so on. By and large, the bulk of all communications will still be wire-based.
Locally, there are some similar trends and some contrasting trends. Similarly, there is migration from monopolies to competition; it is just not at the same time. It is about a decade out of synch. Today it is largely still a monopoly world in local services.
There has also been a technological migration. A decade ago, local was absolutely based on wires -- copper wires mainly for telephone companies; coaxial cable mainly for cable companies. Today, that is still largely true, but no one can ignore the impact of cellular telephones. They are everywhere. They represent a big chunk of phones being used.
In the next few years, the unwired component will displace the wired component significantly, although not completely. You can add to the cellular telephones that we have today the PCS systems, which have been licensed and will come into service in the next little while; MMDS, which is a form of wireless cable service; and LMCS, which can be a form of wireless bi-directional communications.
The world is going unwired, because, for instance, it would be cheaper to plough fibre-optic cable from Halifax to Vancouver than to redo the local service of the city of Toronto. Digging up streets is very difficult.
Also on that slide is illustrated the migration from what has been, for the last half decade, a segregation in services where one guy gives you long distance, one guy gives you local, one guy gives cable and one guy gives you cellular telephone. There may be some cross-ownerships, but largely they are segregated services.
Within five or six years, we will have largely convergent services. The mental image I like people to have is that the phone jack in your house will handle everything. It will handle telephones, cable and burglar alarm circuits, and it will tell your hydro company whether you are using too much electricity. Right next to it there will be a jack from the cable company -- whatever that becomes as time goes on -- and it will handle all of those things as well. Next to that, there will be another jack or two from the company handling LMCS. Of course, they will use a radio link to get to your house, but those jacks will also essentially be handling all of those things.
As a buyer of the service, you will be able, in a sense, to unplug from one jack and plug into another. To make matters more complicated, the company which owns the jack is not necessarily the one you will be buying the service from. That company may be providing it to you through resellers and distributors. Our world will be quite different from what it is now. It will be mostly characterized by the fact that consumers will have much more choice than they do today in the supply of all the different services.
A question I have been asked is whether our infrastructure is competitive. The obvious question is: Compared to whom? I think that we have to compare largely with the United States. In my case that is true, because most of my customers, if they operate beyond Canada's borders, tend to operate in Canada and the United States. The overseas volume of traffic emanating from Canada is less than 5 per cent of the volume. The U.S.-bound traffic emanating from Canada is about 20 to 25 per cent of the volume. So it really is a Canada-U.S. issue from my perspective.
Our infrastructure beats that of many countries in the world at every level and in every regard. However, the United States is the benchmark we have to use.
On local access, is our infrastructure competitive? It is not. As evidence of that, 55 per cent of my revenues go toward paying for local access. Intercity transport is actually the smallest component of the expense. Local access is the biggest component. In the United States, the same people running the same business, selling at the same price, would only be spending 40 cents of their revenue dollar on local access, because there is more developed and advanced local access and more competition in local access in the United States than there is here.
Competitive access providers in Canada do exist. I think of Rogers' network services. There are also some people in Calgary and Edmonton. However, they are, relatively speaking, weak. They do not compare with the ubiquitous presence of Metropolitan Fiber Services in the United States, for example. That does not mean they are not growing; we are just not at the same place as the Americans are.
The regulators have proposed to unbundle local access; that is to say, to make it possible for people to resell individual components of local access, which I think is a very good step. That means we will be able to resell local access much as in 1989 we were able to resell long distance business. Reselling is a good step. It is a good step in terms of capturing market share, but until you have competing facilities-based people, you have not made a step forward in getting the cost to the consumer down in a material way. I think more must be done there.
Direct-to-home satellite policy thus far has not been particularly successful in creating competition to the cable company. There are reasons for that, including some unfortunate events in space and so on. However, in the U.S. you have competition. In Canada, if there is competition, it is bootleg competition, which is not a great situation.
Cable licences and LMCS licences, which have been recently awarded, are awarded on a monopoly basis. That is the premise of it. You get a cable licence for the city. You get a wireless licence for the city. It is yours and you have no competition on that technology. Therefore, as things now stand, I would say the U.S. leads.
On long distance, I think we are getting there. Much of our infrastructure remains to be developed. For instance, not having competitive transcontinental fibre-optic facilities in Canada in 1996 puts us a few years behind the United States.
On the other hand, companies like Fundy Cable in the maritimes are putting in a lot of infrastructure. I think we can be seen to be catching up with the United States. In some ways, we have an advantage. A lot of the American infrastructure was done with earlier and more primitive technology, so we are actually getting more through-put out of our existing structures than the Americans are on some of their existing corridors where they used more primitive technology. There is an advantage to being the latest guy up to bat. So we are getting there in respect of long distance.
There are benefits and hazards to technology. I realize that with slides like these I risk getting into platitudes, but I will try to give some substance to the claims I make here.
One benefit is that there are jobs for the young. fONOROLA now has 600 employees. As I have mentioned, six years ago it had none. The average age of our employees is about 27.
The technological benefit is that you have enhanced standards of living. For either the same or fewer dollars we are able to provide much more than people used to get. Long distance prices today, for most consumers and certainly for business consumers, are 40 to 50 per cent cheaper than they were two or three years ago. Obviously, that is a benefit. Had it not happened, we would have seen an increasing tendency of communications-intensive businesses to move south of the border. We saw that prior to 1994; we have stopped seeing that kind of thing now. It is good for us.
There are trading opportunities associated with being involved in technology. I will address that later, because I think we are hitting some and missing others.
The flip side is the hazards. There is a dislocation of older workers -- that is, people who work in the established telephone companies and who are finding that their particular side of the pie is shrinking. The established monopolies are reducing the number of workers and, unfortunately, a number of those workers were trained on other technologies.
We must pay some kind of attention to the retraining of older workers and reintegrating them back into the work force. That is an issue that I call a hazard as opposed to a down-side. It is something around which you can find your way, but you must recognize that it is there. People do get dislocated.
There is also the marginalization of the uneducated. This summer we had a population under 500. More than 10 per cent of that was represented by students. Most of those students were in the last year of engineering or in the first or second year of their masters degrees in engineering. Good for them, but what happens to the kids who dropped out of high school? That is not good for them. They tend to get marginalized; they do not fit there.
There are fewer and fewer of the kinds of jobs that were the bread and butter of the old telephone companies -- that is, work on telephone poles and down in ditches, and work requiring that a tool belt be worn. Those types of jobs are disappearing in a hurry. We are moving towards a software-driven, knowledge-driven communications industry. It is tough on people who do not meet those educational standards and, unfortunately, it will get a little tougher.
The other hazard that we must bear in mind is that we must not overlook past triumphs. I often go to speak in the United States. In the United States, the same standards are not reached in terms of local telephony -- that is, cable service, the price that people pay for local telephony, and the concept of universality that we have here in Canada. We want to achieve many things, including getting new technologies in place and being more competitive at the high end.
We accomplished quite a few things in the past with our telecommunications policy in Canada, and we must take care not to toss out the baby with the bath water. It is a hazard that can be managed, and the regulators are keenly aware of it.
Next, I will address the issue of ensuring competitiveness. In every decision that we make -- whether it is decisions made by the Department of Industry in its "process of licensing out" spectrum or decisions made by the CRTC -- we should try to make Canada the world's laboratory for advanced telecommunications technologies. We should try to make this the place where everyone who has a stake in technology wants to come to try it out. In that respect we have both the advantage of being one of the G7 countries and the advantage of having two world class languages available for people to try to develop their software and customer-interface tools. We have a lot of advantages -- that is, if we take the attitude that we will be open to people entering our country.
Recently, we made an application for a licence for LMCS, the local communications network. We were proposing to do high speed bi-directional links to the home. We received a lot of interest from the manufacturers of key electronic components, who wanted to know whether this meant that they could redesign their televisions so that they could be numerically fed and not fed by analogue conversions. That is, you would not have Npeg 2 chips and this sort of thing. There was interest from Japanese and European manufacturers.
However, if we decide that we will be the last people either to install a new technology or to open up the competition, we run certain hazards. I will provide you with a couple of experiences with that.
In 1991, when we were attempting to buy switches to install in Montreal and Toronto, we wanted to buy Northern Telecom's DMS-250 switches. They are state-of-the-art switches that resellers use. You could not buy one in Canada. We spent nine months trying to get Northern Telecom Canada to send us a sales representative to sell us one, and we asked the president of Bell Canada to intercede. In fact, we asked everyone to intercede. We called up Northern Telecom in Dallas and 36 hours later, the deal was completed and we purchased two switches.
That state-of-the-art equipment in communications was being delivered, developed, supported and maintained in Dallas. That is where their help line is located; that is where the jobs are. Why? Because the Americans had deregulation and long distance a decade before Canada. Northern leapt at the opportunity. They put their facilities and their engineering technology down there. So, when deregulation finally came to Canada, there was no talent here that could answer the call. Had we deregulated first, a lot more of that talent, if not all of it, would have been here. If you are amongst the last to come in with the new technology, guess where the engineers will move? Where the opportunities are. We must try to be early in the implementation of new technologies.
Another phenomenon that we must try to encourage is the cross-town rivalry phenomenon. Before fONOROLA was founded, I spent a dozen years with an engineering company in Montreal called S & C. We used to hate another engineering company called Lavalin. We used to hate each other, for example, in Bangkok, Caracas, Ankara, Turkey, and Canada. Subsequently, the two companies merged.
At the time, this was stimulation towards getting the job done and getting out there. We must encourage these cross-town rivalries. In the case of the LMCS application with which we were involved, we were able -- and I am sure that the other people who submitted applications did variations on this theme -- to get Newbridge, Nortel and IBM Canada to compete with each other to come up with the most advanced specification, the best prices, the best delivery dates and the highest Canadian content. This is healthy rivalry.
Sometimes there is a tendency in Canada, as there is in a lot of small economies, to try to favour one guy. It is a mistake to favour one guy. You want to have that cross-town rivalry. The players on the worldwide stage are stronger for having a cross-town rival.
An overview of the Canadian market from my perspective of it might be of some use at this time. Approximately 8 million homes are addressable in the top 400 cities and towns in Canada. The average home pays about $19 per month and 99 per cent of those homes have phones for basic service.
For long distance and advanced local services such as call waiting, and so on, the average homeowner pays about $39 a month, and 99 per cent of the houses have it. Approximately 81 per cent of the households in Canada have cable television, for which they pay about $30 a month versus approximately 66 per cent in the United States.
Today, Internet use represents approximately 7 per cent of the market. That statistic is moving so fast that, if you wait one week, it will be up to 10 per cent. It costs about $25 a month.
The residential market represents approximately an $8-billion market. Average purchase by the average household is $83 a month. That represents the average buyer.
Interesting as well is the commercial breakdown. The commercial sector represents a $7.2-billion industry. Approximately 99 per cent of the businesses have phones -- that is, about 600,000 businesses. They pay about $400 a month for local telephony and almost $600 a month for long distance telephony. Not many people in the industry have cable television in their offices. A few months ago, the Internet was not that far advanced in commerce, but commerce will overtake residential service, in that businesses will use it more than residences. However, that trend might take a few years to develop.
The average use by business represents $1,000 a month. That average use includes the Canadian government, Royal Bank and some big businesses. If you stripped a way the Financial Post's 100 top companies, you would find that the average use by businesses is approximately $250 or $300 a month for local service. The average business in Canada has about five or six phones and a fax line. That is the core of the locations in which our knowledge-based industry takes off to a significant degree. They all want to grow and become large, but that is where they take off. We must focus not only on big businesses but also on small businesses, because that is where the growth lies.
We have a huge advantage in that this is a growing sector. People are spending more dollars every year on communications. This is true in Canada and in the United States. It would be a different story if people were deregulating an industry that was shrinking; but it is not. Even people who are not winning look like winners when the industry as a whole is growing.
In the last decade in the U.S., long distance grew by 5.9 per cent per annum. That is how much people were willing to pay for long distance. During that time frame, prices went down by 40 per cent. Canada has not had competition that long but has grown over the five years by 3.4 per cent in long distance and we have had about a 50-per-cent decline in prices in that same time frame. In fact, we had that decline in one period of about 18 months.
Over the next five years, the compounded rate of growth will be approximately 4.5 per cent per annum. That is a very healthy industry, in terms of dollars spent. Usage will grow even faster than that.
There are a number of companies in Canada in the telecommunications industry: the Stentor companies, Sprint Canada, AT&T, fONOROLA and Teleglobe. I have broken them down broadly into whether they are active in the international marketplace as service providers. A number of us are doomed if we are not in the international marketplace. As the monopoly disappears, it is obvious that if Teleglobe does not have the strategy to transform from what they are today, they will be doomed. They are taking some large steps to deal with that, including getting a licence to operate in the United States and building facilities across the ocean, which they have commissioned but which they did not have available until fairly recently. fONOROLA does 30 per cent of its business from the
United States -- not a warning but an indication of trends to come.
I mentioned earlier that the jobs these days, and in more advanced phone companies, are not up-the-pole and down-the-hole, in-the-field jobs. They are management jobs and network control jobs.
For instance, fONOROLA has 70 per cent of its population in one single office, even though 30 per cent of its business comes from the United States. Approximately 50 cent of the business comes from outside of Quebec; the one single office I am referring to is located in Montreal. It does not mean we must remain that centralized, but it gives you an idea of the degree to which jobs will not necessarily be spread out across the country as ubiquitously as they used to be in the old order of telecommunications.
Under the damned-if-they-do category, what happens to the following folks if they go offshore? The answer is that they cannot go offshore because they are branch plants. GTE owns British Columbia Telephone and Quebec Telephone. I do not expect them to compete with their parents overseas or in the United States. Sprint Canada is effectively controlled by Sprint in the United States. AT&T Canada is effectively controlled by AT&T in the United States. Their branding rights and everything else would come under a huge fire if they went into the United States to compete with their parent companies. They are unlikely to be participants in the international marketplace.
I categorize the remainder as disinterested. This is probably an unfair categorization to a degree, but the other members of Stentor -- that is, to the extent that they are portfolio managers and do things such as taking a 20-per-cent stake in the New Zealand telephone company -- are not actually running long distance businesses outside the confines of Canada. That is a shame.
BT has effectively taken over MCI. Nothing would have prevented Bell at some stage from attempting to do the same sort of thing, or something equivalent to it. It is a question of vision and daring.
It is important that the companies in Canada who are in this business -- and, it certainly is for me -- decide that they must attack the North American marketplace at the very least and not simply say, "We will do the local marketplace." This is important. We will see more changes in that in the next three or four years.
If I can move to the next slide, bypass is one of the great no-nos to which people continue to refer. Especially some of the established monopolies complain that there is bypass. The perception is that the problem is material and that a lot of it occurs. The other perception is that it reduces investment in local infrastructure. These are my views of reality, so take them with a grain of salt. I do not think it is a significant problem. I do not think there is much of it. I do not think anyone goes out of his way to bring traffic to the United States in order to bring it back to Canada -- that is, unless someone has made a pricing goof in Canada.
It is a phenomenon that exists in the marketplace because the existing dominant carriers offer better terms to Americans than they do to Canadians. AT&T can get a minute terminated from the United States in Saskatchewan cheaper than fONOROLA, Sprint Canada and AT&T Canada can. Why is that? I do not want to beat up on SaskTel particularly, but that company and other companies have tried to keep out Canadian rivals. They make it more difficult for Canadian rivals to terminate traffic in those marketplaces so the Canadian rivals, who can be companies of our size, or small resellers, or even individual corporations, say, "To heck with that. I want the same deal as the best deal going around. I want the same deal as my competitors."
This is rapidly disappearing. Basically, everyone is coming into the fold in terms of being in an open-to-competition market in Canada. Facilities are being built in Canada. The whole issue about bypass is not big and is rapidly declining.
Even though people complain about bypass -- that is, the owners of monopoly facilities that wish to charge more than the market would bear in the free market for the service -- it remains a solution to the problems that small businesses have.
Traditionally, large businesses and governments have leased large private lines that travel across the border and have struck their own deals with AT&T, MCI, Sprint or what have you. Little guys cannot. Where is the fairness in that? To the extent that bypassing took place -- now it hardly takes place between Canada and the United States, although there is still some overseas bypassing -- it was because the little guys needed a break and intermediaries were willing to provide it to them. There is nothing glorious about bypass but it is a double-edged sword. It was created by pricing anomalies that were inflicted on the market by the dominant carriers and it is rapidly disappearing.
The next slide deals with jobs. I break the industry down into the sector I am in and the sector I am not in. I am in the transport sector. fONOROLA is not a content provider. In some ways, I wish I was in the content business, because it will be growing faster,
producing more jobs and creating more wealth than the transport sector. But you must choose your specialities in life.
Fewer people will be needed to do today's jobs. Today, there is approximately one job for about $160,000 in yearly sales if you are looking at a company like Bell Canada. Today at fONOROLA, there is one job for every $500,000 in yearly sales, but then, again, I turn around and get my local services from Bell Canada. On a weighted average, we are probably one running at about $160,000 of annual revenues per job. Within a few years, the ratio will be one job for about every quarter million of revenues.
If you took that statement as is, you would be saying that there will be fewer people working in this industry in a few years. But this is also an industry that happens to be growing by about 5 per cent per annum. With the change in the skill levels required of people, the decline in jobs will be largely offset by the fact that there is growth in consumption. You have a dislocation issue there with respect to people.
There are many more jobs in content. That is purely an upside, not much of a downside. Again, the result is more sophisticated jobs. There are jobs like those at Softimage, which creates all sorts of specialized applications for the movie industry. These are highly skilled jobs. There are massive opportunities here. To a degree, what you are seeing will be an overthrow of the traditional links between content and transport.
The cable company will no longer own the broadcast entity. That is to say, the broadcast entity will not rely upon the cable company to get its message out because there will be six other ways to deliver its message to the home. Consequently, there will be opportunities for people to advertise through other methods. I will talk a bit more about that when I come to the content slide.
Another area of particular concern to me is the effect not only on areas of entertainment but also in areas of education. Again, this relates to the next slide, dealing with cultural issues.
I will give you an example. I sit on the audit committee of McGill University. From that vantage point, I take an interest in what happens at that institution. It is clear to me that it is conceivable within five years, and almost a certainty within ten years, that the method of teaching will not be a professor standing
in front of 72 students, that professor being a research director in one of the labs upstairs. In a few years' time, you will have a tutor who will suggest that you listen to the lecture given by so and so, who happens to be doing his work at Cern or Stanford this year.
In fact, the intellectual content of education itself will become server-based. The question then arises: Which servers and where are they?
As I mentioned, to have a mining engineer speak on the subject of culture is a bit of a stretch. I will give you a few passing thoughts, and please consider the source.
I do not think any of the traditional control points affecting content can possibly apply to server-based education or entertainment. One will not be able to stop what is on a server from getting through. Therefore, the customer and not the regulator will decide content. Not this year, not next year, not two years from now -- five years largely; ten years dead certainty. There is a time frame around these transitions.
The Chair: Could you give us the traditional control points from your point of view?
Mr. Peeters: First, there are the broadcast licences. You want Channel "X" to include sports, and Channel "Y" must have Canadian content. There is the balancing between Canadian content and foreign content and trying to disallow certain levels of violence, and so on. Your choke points are gone. If people are not relying on broadcast licences to get the message through, where is the choke point? Where is the faucet to turn off the tap? There is no tap; it is sitting on the Internet. That is not the Internet as we know it today, but a rather higher-speed device where you decide what you want and the server which provides it to you can be in any jurisdiction, including outer space. We have a transition there, and there are threats and opportunities with that transition.
Second, the concept of television and radio channels should start disappearing within five years. People will approach you and say, "What would you like to see?" You will say what you would like to see, and it will arrive. There will have been no channel; it will come over a server. The people who control production and arrive at deals with distributors and advertisers will find that all the old handles are being changed. That does not mean that they will not survive, but they will be looking for new handles. How will you control the advertising revenue on something that sits on a server in Connecticut or in the Caribbean? There is advertising with it, but where was the show produced? Who controls it? You are the one who asked for it. No particular body controls the pipeline. The whole lock of who was the producer, the distributor and the advertiser will come under assault. I cannot tell you where it will end, but it will create opportunities for people who feel locked out and challenges for people sitting on top of today's kind of power structure.
Third, Canada will not be able to control the content. We can get a disproportionate weighting in its production if we are the first to connect homes, schools and small businesses with high-speed, bi-directional links. For example, if the de facto standard for learning for mining engineering emanates from the Faculty of McGill or the Faculty of Queens; and, if the people in Colorado plug into that to learn, Canada wins. But if the de facto standard comes from Colorado and we all plug into that, Canada loses.
Every one of our institutions and our small businesses, not just the big ones -- and, the Royal Banks can fend for themselves -- must have access to high-speed bi-directional links fully capable of doing all the sophistication of video and song. They must be fully capable to do so in terms of capacity so that we can try to occupy, ahead of the United States, a disproportionate amount of the intellectual content space which people then dial into in order to receive their program, their education and their entertainment. If we do not do that, then we will absolutely have lost control over those kinds of cultural issues and we will be kind of cipher in terms of the cultural impact that our nation has on the rest of the world versus what the rest of the world does to us.
I am a mining engineer, so consider the source of this. I can see it very much by the people who work with me and approach us and want us to provide them with transportation and the transportation service.
That brings me to the end of my presentation. I would be delighted to answer any questions that you might have.
The Chair: That was an interesting presentation, Mr. Peeters. Each of us here have about 50 questions. However, we will try to limit ourselves and control our enthusiasm.
Senator Rompkey: I underline what you said about the mine of information that the mining engineer just supplied us with.
Have you heard about what is happening at Acadia University and the fact that they have provided each student now with a computer, that it is mandatory there and that the institution is wired? Is that a step forward in your view? Will that assist them in plugging into servers and accessing information?
Mr. Peeters: It is definitely a step forward. If students do not come out of universities and high schools with a great deal of facility in using the basic tools of the industry, they are at a huge disadvantage.
When we hire folks, much of the time we do not ask them questions such as if they have an engineering or an accounting degree but what they can do in PowerPoint or Excel and whether they prefer Microsoft Word or Corel. If they answer those questions, then we ask about the degree -- and we do not necessarily get into which one. Our schools must get the idea across that this is like basic literacy. It is like reading and writing.
Beyond that, the point you raise is an important one because we need to put processing power in the hands of people, especially people who are the agents or the creators of intellectual property. However, that is the computer. What about the network? Communications is largely an exercise about plugging intelligence, whether human or machine, into a network and getting some kind of throughput. The great frustration from all the people who play with the Internet is not that there is not much to see but that it takes so long for the next screen to fill up and there is a bottle jam. That is because the throughput is so slow. It is not high-speed communications, and we do not have high-speed communications. Neither does any anyone else, in a big way. Some of the universities have it on an internal campus basis, but once you go beyond the confines of the school, you find that it does not work any more.
It is a necessary step in the right direction. The next step is to have the communications network live up to its promise by being a high-speed, high-throughput vehicle.
Senator Rompkey: You talked about the fact that there are no choke points any more and that no one is in control. Since we are speaking about Canadian policy, to what degree can we have any sort of Canadian policy? There are many "unrestrictions" placed on us.
Mr. Peeters: I was addressing that issue in the last few slides. The Canadian policy cannot be based upon the premise that we will be able to erect barriers. It is Luddite thinking. It is "King Canute out up to his ankles in water" thinking. Barriers will not do it. The Canadian thinking must be that we will be flooded with someone else's content unless we produce more than they do and unless we capture the marketplace.
To give you an idea, someone starts a web site or a training site for education in some issue and makes it a success. The cash flow will come through that person continually improving that product and that service until, eventually, it dominates its marketplace, or two or three of them dominates the marketplace. I mentioned earlier my concern about where university education might go in Canada and that precisely the opposite might happen. We might find ourselves -- that is, our universities -- subject to budget constraints as everyone world-wide is saying, "Why not plug into Stanford's courses so that the cash flow goes to Stanford and Stanford's body of what is contained on their web site starts to dominate one, two or three disciplines North American wide?" We then find the cash flow, the intellectual job and the graduate student is going south and the drain is going that way.
The key is to occupy the intellectual territory fast and early to get the cash flow coming this way. We must have the high-speed links, and we must get into small businesses. We must perfect -- and, it is not an easy task -- the business of tolling. How do you get cash back into the hands of the guy who created the intellectual content? As those of you follow the Internet might know, that is not a perfected art. But it is improving. That must be our policy, but it is not a policy which lets us take time out. There is no time out on this policy.
It must be a policy that says, "Let us get there first. Let us be the laboratory where everyone who is making a product or putting something on a server or launching a new technology says, `I want to go to Canada because they have the best infrastructure'."
We have examples from the maritimes where investments in infrastructure have paid back in jobs. NB Tel is a great example. We have to do that as a Canada-wide challenge and to a much higher degree of throughput to the home than is done by any telephone company or cable company in Canada today. If we understand that clearly, we can get there and we can stay ahead of the pack.
Senator Rompkey: I wanted to ask how the regions of Canada might be affected. Before I ask that, I want to know more about the effect of higher education. You may not be able to give us as full an answer as you would like to, but can you point us to anything that we might read or any source to which we might go? You might even want to provide something more for us yourself.
If we are talking about jobs for young people, then we must know what must happen in the education system in Canada if we are to produce the kind of literate people you talk about. I would be interested in not just higher education. There is SchoolNet now. I do not know enough about it, but I want to know more about what must be done in education in Canada with technology and with the production of content if we are to address this situation.
Mr. Peeters: I do not have a handy book that I can pass to you. This is a broad question because it touches upon a whole bunch of areas.
First, what do I need when I am hiring someone? I hire a lot people. We have tended to beat up our suppliers so that whenever we buy a piece of equipment, they will supply us with 100 days or 300 days of training so that we can bring our people around to be trained on the piece of equipment, recognizing that three years later we will toss that piece of equipment out and start all over again with our employees. That is our pace.
Does that come out of a school? No, that does not come out of a school because schools do not have DMS-250 switches hanging around. This must be done by industry. Industry has some serious responsibilities.
In our case, we are a young company. We have relied a lot on being able to hire experienced people from some of the telephone companies. At any point in time, approximately 10 per cent of our population is in training.
I spoke earlier about the use of computers and the ability to do a spreadsheet, to use word processing systems, to use files and to access the Internet. That is Literacy 101 out of high school, or it should be. We should get our minds around setting that as a standard. If you do not have it, I will not hire you. I will not hire you even if you have a doctorate. You must be able to do that.
No one who is in senior management has a secretary. You do your own work. You send it in and someone proofreads it. Literacy 101 is such that everyone can sit down and work on a computer and everyone can do their spreadsheets. When there is a spelling mistake on this presentation, it is because I made it, not someone in the art department or someone working in the PR department. People must come out of high school with this level of literacy. We are very far from that in Canada.
For whatever we put in high schools by way of computers to train children on, you must recognize that the software has a life expectancy of about 12 months. Every 12 months, scrap the software; every three years, scrap the computer at today's pace. It will not keep going like that forever, but right now that is the pace.
Is it a big investment? Yes, it is. If people happen to have this technology at home, they get the jobs. If they do not have that, it is pretty tough.
Senator Rompkey: There is no Canadian education department and no Canadian education policy, but several departments of government have programs that might impact on this. For example, Industry Canada has some programs that we should learn more about. They have a program that will help put computers in schools. I should like to know more about that, and perhaps the committee would, too. It is something we should focus on.
If this is a Canadian problem or a Canadian challenge, then what is Canada doing about it? Is John Manley focusing on this? Who else is focusing on this and trying to meet the challenge? We should focus on that as a committee.
When you said that you will be investing in things, what will you be investing in?
Mr. Peeters: In terms of physical assets, we build fibre optic transmission facilities linking cities. Earlier, I had a map showing the yellow line linking the cities. That is Canada's first transcontinental fibre optic system that is owned outside the Stentor Group of companies.
Fibre optic transmission facilities are what you need as a backbone to do the high-speed transmission of data. High-speed transmission of data can be a phone call, an Internet service, telephone signals and education signals. That is what I build. I build the long-distance portion; I do not build the local portion. That is the object of other people with other licences.
We invest a lot in that. For a company of our size, we have built more fibre than anyone else in Canada in the last few years. We have been doing that or have been the principal builder of that. We believe this is important.
We also build switching facilities. I am talking about Northern Telecom switches in Montreal, Toronto, Calgary and Vancouver. It is the most extensive switching platform outside the Stentor Group. We have also built one in the state of New York and one in the state of Washington because we are going into the United States. We will capture market share in the United States just like the Americans come up here and capture market share.
The investments and investment commitments we have are in excess of $140 million so far. For a company that did not exist five years ago, that is quite a bit. Those are the investments we make in physical assets.
Senator Rompkey: How do you differ from AT&T Canada, for example?
Mr. Peeters: First, we are smaller. In some ways we differ, and in some ways we do not. They also have transmission facilities. In fact, in the Unitel days, they built quite a bit. As a matter of fact, from the CNCP days, they built quite a bit. We share some of those fibre optic cables because we bought up the CN side after CN left that arrangement and we put them into service. We compete with them head-to-head in all sorts of areas.
The big difference between fONOROLA and the two largest non-Stentor members -- that is, AT&T and Sprint Canada -- is that we tend to concentrate on wholesale markets. We tend to be a carrier's carrier. Approximately 40 per cent of the business we do is carrying other people's business. There are many other small resellers in Canada, companies that distribute communication services, for instance, to ethnic communities or geographic regions. They rely on fONOROLA. Our customers tend to be more sophisticated users of long distance.
We have not been in the mass marketing campaign. To give you an example, Bell and the Stentor Group will spend about $400 million on mass advertising this year, which is about 2.5 times the American rate of investment in mass advertising. It is pretty frenetic.
The AT&T and Sprint people have brought their brand names to bear to compete with that. That is a little tough for fONOROLA to do because we are a home-grown product. I am counting on the fact that the name is quirky enough that eventually people will remember it. We do not do as much mass marketing to the home as they do.
Otherwise, the services we provide are the same. We tend to concentrate on the more sophisticated users of services and higher-end products or more high-tech products. We provided the seed capital to start i-Star Internet, which is based here in Ottawa. That was a form of fONOROLA seed capital. We lent them the funds to get going, and now they are now a big customer of ours and of other companies.
We provided the seed capital group to get the Milky Way Group going. They are based here in Ottawa, and they make what are called black hole devices to provide security so people cannot crash into your local network. We do that because it creates the kind of knowledge-based user that we need in order to thrive.
I could go on for hours about how my company is different from others. I think I had better stop there, but thank you for asking.
Senator Rompkey: I have one more question. I want you to speculate about the new divisions in Canada. We have had divisions east and west, French and English, have and have not.
What is ahead for rural areas in terms of access to technology? Can you speculate on that?
Mr. Peeters: I appreciate the opportunity to do so; it is one of my favourite topics.
We were a licence applicant in LMCS, where we proposed to serve not 66 major cities, but 367 cities and towns.
I mention in one of the slides that there are hazards with all of this great stuff that is happening in technology. One of the hazards is that you create a number of technological black holes where small towns and rural areas are not included.
That is something where, in setting government policy, going forward and giving out licences for whatever application, we must recognize that we do not give out licences only for Toronto, Montreal and Vancouver. When that licence is awarded, a burden is imposed on the winner to do other things.
I was a believer that what should have competitive licences for high speed local access not only in the big cities but also in the small towns.
If you give me a monopoly and you give me a whole bunch of towns, I tend to do the smaller ones later. If I know another guy will get there first, I want to get my flag pole antenna up first. Rivalry is a good thing.
As a consistent matter of policy when licences are given, you must get the easy with the difficult. That is to say, you get the small town with the big city, with the rural area. The burden is always imposed.
You should also have competitive services in the small town. It should not be the case that big cities will have competition; small towns will have monopolies. That is not a good idea because the small town ends up falling behind technologically or has the risk of that occurring. The small town also ends up being a milk cow for what happens in the bigger cities, which is not right.
There are some examples of remote areas. I am thinking of the Orkney Islands off Scotland, which is quite remote and where you see fibre optic services. That is an amazing thing.
Senator Rompkey: How did it happen?
Mr. Peeters: Government policy ensured that it happened. I do not know off the top of my head whether or not it was subsidized. When you give out a licence for Toronto, you must insist that someone has a licence for Moosonee as well.
The key is not to treat small towns as second class citizens. We work on the premise that there will be competition in Toronto and Montreal, but not really out in Noranda or Sudbury. That is wrong. That is an area where you can have government policy that says: No way. You must compete in both the small and the big jurisdictions.
We have always made our bids consistent with that philosophy. I think it is an important philosophy; otherwise, you end up having black holes in places where you cannot have a knowledge-based industry. A knowledge-based industry requires access and it does not matter where you are as long as you can plug in.
We should try to avoid the Canadian habit of saying: Small towns will be monopolies; big cities will have competition. Big cities have 66 television stations and small towns have 12.
Senator Rompkey: What is the policy now?
Mr. Peeters: Currently, policies are made on a case-by-case basis. In the case of the latest decision at Industry Canada with respect to licensing LMCS, they made monopolies in every city. One guy gets Toronto; one guy gets Sainte-Marie-de-Beauce. In both cases, there should be competition.
I also happen to think that small towns are a pretty good area for capturing market share. If I show up in Sudbury with 100 channels of television, Internet access, cheap telephones and long distance rates cut in half, I might scoop the pool in terms of market share because they are frustrated people. That is an opportunity which sometimes people overlook. It is not totally altruism. I believe there is money to be made if you have that attitude.
In other areas, Canadian policy has been very good. Generally speaking, we have a higher penetration in Canada in terms of how many homes have phones compared to other countries.
It is not a thing of beauty when you go into areas of the United States and you look at local telephony there. It would be unfair if I were to leave the image with this committee that I think Canadian policy is goofy. I think we should keep our eye on the ball and not throw out the notion of universal access in the frenzy to access advanced technologies. I am a huge believer in advanced technologies; I just think we should stick with the old religion which says it must be ubiquitous.
Senator Adams: Do you have a more open market right now for a communication or telephone system to get into business, or do you have to go to the CRTC and receive approval to get set up in business?
Mr. Peeters: The CRTC has the right to regulate long distance for carriers. They will not do it because they believe that there is enough competition, that we are killing ourselves enough in terms of reducing prices and expanding services, and that they do not have to sit there and micromanage the issues.
There are areas where we are dependent on what the regulators do. As I allude to here, local telephone access is very much a monopoly. It is the bulk of my costs. It is the barrier to high speed communications. It must be renewed and refreshed. The CRTC must make decisions with respect to regulation. The Minister of Industry should make decisions with regard to licensing radio modes of access to try to create more of a horse race in those local markets.
CRTC has held hearings on unbundling, which means opening up every one of the individual components in the local service so they can be resold. You do not have to get it from Bell or New Brunswick Tel, you will be able to get it from a reseller. I do not think you have gone the last step until you get facilities-based competition locally. That is the same thing we saw in long distance, namely, a radical evolution in the quality of service.
If you read the tea leaves, it is government policy to go that way. However, I always want it to be faster.
Senator Adams: What about the provinces that own telephone systems as opposed to people like yourselves? I am thinking, for example, of Bell Canada in Ontario. Is that a concern in other provinces?
Mr. Peeters: You have two phenomenon. First, provinces with financial pressures are selling, privatizing telephone companies; and, second, we made a huge step forward with the Telecommunications Act, in 1993, where we consolidated all telecommunications in Canada under one jurisdiction and made certain commitments towards getting to deregulation and competition in all aspects of communications.
It is not that pretty in the United States where you still have local utility commissions involved in rate settings and everything.
Competition has been slower to come to certain areas. Earlier, I mentioned that Saskatchewan was part of a deal that was made some years ago, wherein Saskatchewan would stay outside the competitive framework until this year.
You had other phenomena where people were not competing in the smaller centres, particularly, until early on. Our commitment to build these transcontinental fibre-optics facilities is precisely to break this mould. We will go everywhere, not just Toronto, Montreal or Vancouver.
The problem has been not only a government problem or a government-created problem but also a decision on the part of the business community to get on with the job.
Senator Adams: What about long distance? I hear it can cost more to phone from Fort Smith to Frobisher Bay than it costs to call Vancouver. Fort Smith is about 30 miles south of Yellowknife. Does the government regulate that or does CRTC regulate that?
Mr. Peeters: The phenomenon that allows such anomalies to persist is the absence of some effective competition in those marketplaces. Those things disappear very quickly if you are allowed to compete. I know the tariffs better in the Rouyn-Noranda area. The prices that people pay there for long distance are nuts, to the point that residents who want to call Montreal try to get the people from Montreal to place the call. Things get silly.
When you open up the marketplace to competition, those kinds of anomalies disappear. I used to spend my summers working in the Arctic. In areas like Povungnituk and Iqaluit and what was then known as Wakeham Bay, such small and very remote areas, then you must rely on satellite systems and things that will bounce off satellites. There, government policy must intervene. There will be no competitive, terrestrial-based communications to those cities. Government policy must intervene there if it wants services which are ubiquitous and of a common level.
Canada is a very urban country. By the time you go to the top 300 cities and towns, you have reached over 95 per cent of the population.
Making the commitment to cover off those centres is not as big a burden as it is to do the same thing in, for the sake of argument, the United States. They have a much higher percentage of people who live in small towns than does Canada.
Although this goes against some conventional wisdom, I think we can bear that burden more easily than can certain other countries, and I think we should.
Senator Adams: You mentioned a switch machine. Can you switch over until you get more customers? You mentioned equipment made in the States. Can you compete with other telephone companies to get more customers? How do you do that switch-over? Do you take over so many calls? How does that system work?
Mr. Peeters: We have a telephone switch. People who want to make long distance calls tell their local telephone company to send the call to my switch.
In image, it is very much like the old switch, where you pull and plug cords, except the plugging of the cords is done by a computer program, not an operator. In the circuits, it is identical.
For examples, the phone company programs its switch to send your long distance call to my switch, which then has a series of decisions programmed into it. No human need get involved. The computer decides how to handle each call through its programming.
All of us in the industry must ensure that all our switches can work together. For all that we compete and claw at each other, the fact is that we all adhere to certain communications standards. Otherwise, the whole system breaks down. Those standards are developed by Bellcore, and we all adhere to those standards.
The Chair: It was quite surprising to hear on the weekend news that 80 per cent of the world does not have access to a telephone.
Mr. Peeters: I can believe that.
The Chair: We forget so quickly that, in the area of communications, we are an extremely advanced country.
If you could give us, today, three recommendations of any nature to help our country continue to progress in the area of communications, what would they be?
Mr. Peeters: Do you mean other than the ones that would be of personal benefit to myself?
The Chair: We know that you have a generous soul.
Mr. Peeters: I would lean towards competition and local access. Local access is the bottleneck for Internet service and for profitability for people like myself. It is the bottleneck in a number of regards. I do not say that with any malice towards existing phone companies. It just so happens that it is a huge physical asset base, so replacing it does not happen overnight.
I would strongly encourage the government to quickly open up more competition and local access. The people who have that access network working at high speed and high efficiency will give a leg up to the knowledge-based industries in their territories. Since we do not want to fall behind in that race, it would be very important to make sure we do not lose it. That would be key.
Also -- and, this is not so much a government policy as it is using moral suasion -- I would prod the existing telephone companies such as Bell and Manitoba Tel. I would prod them a bit in their backsides to get on with the business of entering the telecommunications market throughout North America. The old Stentor group, with its trading arrangements and profits and regulated rates of return, is a comfortable club. Now that they get an extra $2 per household, they make even more money. That is fine.
Why should they go to the United States? Why should Manitoba Tel, for example, go to Minneapolis-St. Paul? They should go because Minneapolis-St. Paul will come to Manitoba. If Canadian companies all sit back and refuse to go south, the Americans will still come north to Canada to compete and it will be a one-way street.
The Chair: What tools do we have that we can use for moral suasion?
Mr. Peeters: You have many and various tools. You make decisions on licence applications and on the timing of local unbundling. Those are tools of moral suasion. I would have to get my nefarious heart thinking about it.
There are many decisions that telephone companies want from governments. There should be some quid pro quo where the telephone companies can get on with it.
Our existing telephone companies are still monopolies in local service; they are ex-monopolies in terms of long distance. They have a tendency to take a 20-per-cent stake in somebody somewhere else.
This is not a purely Canadian phenomenon. I was asked to speak at a Northern Telecom equipment sales and marketing event. They also asked the president of Ameritech and the president of Bell to speak. There was a sort of anomaly between the balance sheets of the people who were speaking at the podium.
The president of Ameritech said that they were absolutely committed to listening to their customers; that they were driven by their customers' desires and that was their only focus; and, by the way, they just bought 20 per cent of the Norwegian national cellular telephone company. What possible connection does that have? It does not have any connection. It is a pins-on-the-map kind of idea.
I have my pin on the wall. It does not do anything. They should return the money to the shareholders and let them decide if they want to buy 20 per cent of the Norwegian National Cellular Telephone Company.
The flip side is that they should try to compete out of their own jurisdictions. I would love to see Manitoba Tel compete toe-to-toe with Saskatchewan Telephone and both of them go to North Dakota, and so on. They should get on with it as opposed to being comfortable. I think they are comfortable.
Sprint and AT&T have not been content to do nothing about Canada. Yet we seem to have many well-established Canadian telephone companies that have been content to do nothing about the United States, which is perilous.
The Chair: You said that you were proud to be a transport provider but you regretted that you were not a content provider. You felt there was a lot of opportunity for development, for jobs, for revenues and for contributions to Canadian culture.
Mr. Peeters: Yes.
The Chair: In previous testimony, some witnesses suggested that these two providers should be amalgamated or divided. What is your feeling?
Mr. Peeters: They should be clearly divided.
The Chair: Why?
Mr. Peeters: There is a history behind how cable companies got to be where they are and how many of them were associated with the local television station when it was a question of getting their signal over the hill and to the neighbourhood. If you control the pipeline, today there is a tendency to try to define what will go through the pipe.
We have had a fear in Canada about what happens if the movie studio in Canada controls the cinema in your hometown. Guess what you will watch? You have the same sort of phenomenon. If I control the pipe that goes into your house, do I get to control what you watch? Maybe a regulator intervenes in the process. But maybe the thing I do not want you to see so much is channel 99, which is fuzzy. Maybe I want you to see channel 1, crystal clear. All sorts of games can be played between a party that is both a content provider and a transporter against a competitor who, in that territory, is only a content provider. You should not put temptation in front of people like me. It is best to keep them completely separate, for obvious reasons.
I told you that I go down to the United States once in a while. We got a licence to resell in the United States. Canada takes four days; the U.S. took two and one-half years. There is a slight dichotomy there.
One of the things that would make Americans particularly pleased at this juncture would be to see us muck up culture with transport. Since we have only a limited amount of time before the wave comes in because of server-based technology and everything else, in the meantime we must do some work with our cultural industry. We must get them on a competitive industry and make more investments in them. I am not an expert in that, but nothing would please the Americans more than to have culture and transport muddied up. That is one more good reason not to do so. Keep them separate. We only have a limited amount of time to get our cultural industries strong enough to withstand the wave.
The Chair: Mr. Peeters, we could go on and on. We appreciate the extra time you have given us and we thank you very much.
If you have any additional comments to make, please do not hesitate to communicate with us. It has been an interesting presentation and an interesting exchange.
Mr. Peeters: Thank you very much for your time and your patience. If I am inspired by anything, I will communicate with your staff. If there are questions which arise, I would be delighted to deal with them.
The committee adjourned.