NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, March 11, 1999

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[English]

The Chairman (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)): Good morning, colleagues and witnesses. I would like to call to order this March 11 meeting of the Standing Committee on Natural Resources and Government Operations.

We are continuing our study of the issue of rural telecommunications, particularly from the perspective that there seems to be an absence of even minimal services in many parts of rural Canada. Individual members of the committee have experienced that themselves, including me.

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We are pleased to have with us today officials from Industry Canada. Doug Hull is the director general, information highway applications branch. Allan MacGillivray is the director, industry framework, telecommunications policy branch. They have two other officials with them, Wayne Tosh and Leonard St-Aubin.

We welcome you to the committee, gentlemen, and thank you for being here. Our normal practice is to invite our witnesses to speak for about 10 to 12 minutes on the issue at hand. Then members, starting with the opposition, will be pleased to ask you some questions.

Mr. Hull.

Mr. Doug Hull (Director General, Information Highway Applications Branch, Industry Canada): Thank you, Mr. Chairman.

We'd like to make a presentation, if we could, on two subjects. The first will be on the issue of the “Connecting Canadians” agenda, which focuses on the use of the Internet and its access to Canadians across Canada, including in rural areas, of course. If you all have copies of the presentation, I'll try to go through it as quickly as possible and then leave lots of time for questions.

The Connecting Canadians agenda, which is the Industry Canada initiative to universally connect Canadians to the information highway, comes from the overall economic thrust of building a more innovative economy for the 21st century. We know from the work we do in terms of international competitiveness that to be more competitive in the world we need to be a more knowledge-based economy. That means Canadians need to be at the cutting edge in terms of their skills and their access to information and services of various sorts.

From that basic perspective, the government launched an attempt to literally connect the country—to wire the country up for access to the Internet, which is one of the more powerful tools available to countries as they approach the 21st century.

The budget in 1997 indicated a number of initiatives under the heading “Connectedness Agenda”, the key piece of which was to connect all Canadians and give all Canadians access to the information highway by 2000. There are a number of different initiatives related to that, and I'd like to go through them quickly for you today.

The thrust is not just an economic thrust. It also has to do with other powerful impacts a connected country can have to create a learning culture, for example, and allow Canadians to access learning and training materials more conveniently from within their local communities using the information highway; to build a more cohesive society where values can be shared back and forth across communities using information and telecommunications technologies; to build a stronger democracy that has more citizen participation in it by allowing them to get in touch with their legislators on various matters.

The overall thrust of the various initiatives can be characterized under the pillars identified. I'll go through some of the major elements. Canada Online is really an attempt to link all Canadians and their communities through telecommunications technologies. The key pieces there would be the CANARIE and CA*net backbone structure, which is a major band-width carriage system across the country for research and industrial development.

The most recent budget committed $60 million to fund the development of 12 smart communities that will really push the boundaries in terms of utilizing information technology for social and economic transformation. Another initiative is to make Canada a world leader in electronic commerce by establishing the right sort of policy legislation regulatory frameworks; and to also have us handle the issue of Y2K among the very leading countries in the world, so the impacts of that technological bug effectively get resolved quickly.

Another initiative is to move Canadian governments on-line—not just federal governments but also municipal and provincial governments, to encourage the transformation of public services into electronic delivery. At the same, we want to ensure all Canadians have access to that delivery system.

We want to encourage the development of Canadian culture on-line. We don't want to be awash in a sea of foreign cultural content. We want Canadian cultural content to be prominently featured on the Internet.

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Finally, on connecting Canada to the world, we are among the leading countries in the world in terms of the use of information technology. How do we share that technology with the other nations in the world—our trading partners and our development partners—to indicate to them that not only is Canada a world leader and a world supplier of information technology, but we also have some important models they can use for their own personal development?

Under the Canadian on-line piece, which is the first pillar, there are a number of different elements, as I mentioned before.

On the Community Access Program, the way we are moving toward providing universal public access is to establish public access points in communities. Many Canadians can acquire information technology from their home or from their place of business through a computer hook-up; many can't afford it. Affordability is improving as prices drop, and so on, over time, but in the meantime we have to provide public access points for many Canadians who want to get connected to find a way of doing so.

The government is committed to establishing up to 10,000 public access points across Canada. We started in rural Canada. The program has been in place since 1993, with a few sites, and it's now gearing up to accomplish the goal of 10,000 public access points.

The first portion of the program was the rural community—and I'll show in a few minutes the achievements we've made there—and the second was to link our education system to the Internet as quickly as possible. Here we work very closely with the ministries of education, school boards, and the school system across Canada. Canada will be one of the first countries in the world, in fact, to achieve the goal of connecting all its schools by the end of this month to the information highway. That is a very powerful force in terms of allowing the next generation to develop the skills of using information technology in a learning environment, which they then will go on to do in an employment environment later on.

To expand the amount of computer equipment that we're recycling back into the school system, the goal that was established in the budget was 250,000 computers, which is the equivalent to one computer in every classroom in the country. This is a major program run in conjunction with industry, with the education system, and of course with other levels of government. We're actually quite well along in terms of the amount of equipment that's being recycled.

We've expanded across the country the CA*net3, the high-speed backbone, which is the key strategic piece of Canada's information architecture on the information highway area. This is where we can test out the leading edge applications from industry and from education. The new CA*net3 initiative is going to actually result in a backbone that's a million times faster than what was available in Canada as recently as 1993.

We're linking the volunteer community across the country. There are 200,000 organizations in the volunteer sector. We're helping at least 10,000 of those organizations use the Internet for increased outreach in terms of their information to attract new members and new contributions. We hope the impact will be larger than the 10,000 organizations, but we'll see how that works over the next year.

In terms of the Community Access Program, which is the key piece that I think you might be interested in, the objectives are, really, to connect all Canadians by March 2001, to establish up to 10,000 public access points to do so, and to then make these public access points sustainable so that they can continue playing the role of universal access and as distribution points for public services, for electronic commerce, and for volunteer information into communities.

The secondary role is really to help foster the early and rapid conversion of government services into electronic form to foster on-line learning, which is another major need and interest on the part of users of the Internet, and then to encourage electronic commerce to emerge most quickly, particularly in the communities in which these public access points are located.

The program, as I mentioned, started in 1993-94. The rural portion of the program was the first part that was handled. There's a commitment on the part of the government to make sure that every one of the 5,000 rural communities in Canada have public access points that are convenient to their citizens. In fact, 2,200 of these public access points are operational now, another 1,800 are in the process of being created through the latest selection process, and we expect 1,000 more to be established in the course of the next two years, but probably more quickly than that. So the rural portion of the program is very well advanced.

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The urban portion of the program has yet to be launched. The government has provided the funding for this, but we're just about in the process of launching that across Canada. There are 85 cities across Canada that will be eligible for this program. Rather than piecing them out one and two at a time, we will be asking these major urban areas to come forward with a plan to achieve universal connectivity and then provide funding for them in one shot, effectively, in each community. So the rollout will be very quick. It will go very fast in the urban areas.

The reason the Community Access Program is so successful is basically captured on the next slide. There's a high degree of local ownership and management of the sites. What we basically do is contract with the communities to establish a public access point, but the community itself has to put the plan together as to how to best achieve that. We don't try to tell the communities where they should put the access point. They can use a library, a school, a community centre, or any public location that can provide general and convenient access for the community. Then we basically give them a contract to help them establish that site and sustain that site over time.

They're responsible for the overall management of it. There's a high degree of community buy-in in terms of contributing volunteer time, finding the appropriate location, making computer technology available locally. They can use the funding that they receive from the federal government on any particular aspect of the operation of the community access site that they like.

The Government of Canada is working very closely with provincial governments. In some cases we're now managing this program jointly with provincial governments in terms of establishing and sustaining these sites. So there is the issue of local ownership, there's community buy-in, and they're also targeted at those who need the service most. We're not effectively aiming at those who would have access in their home, but rather the portion of the population that wants to get connected but can't afford to do so.

There's a three-phase approval—

The Chairman: Excuse me, Mr. Hull, but I wonder if there's maybe a way to get through the rest of that quickly, because it isn't going to be the CAP site in that program that will be of most interest; it will be those areas that, because they don't have basic telephone, can't even use the Internet. So I might get you to wrap up this part as quickly as you can.

Mr. Doug Hull: All right.

The next slide shows the approval process, which is basically an arm's-length process. The sites are basically announced by MPs. The information is there. You can see several different slides that describe the usage being made of CAP sites and the kinds of services for which individuals are using the sites.

The following slides are maps showing the location of CAP sites in particular areas. I'll just show you the density of public access points that are available to Canadians.

The Chairman: I do want to say that this is definitely very important to Canadians and it's an excellent program, but I want to try to make sure we stay focused on the immediate concerns of the committee, which are the lack of even the most basic of telecommunication services in many parts.

I think there was a second part that maybe dealt more directly with those. Mr. MacGillivray, were you going to do that?

Mr. Allan MacGillivray (Director, Industry Framework, Telecommunications Policy Branch, Industry Canada): Thank you, Mr. Chair. I also have a presentation, which I'll try to summarize very quickly.

Basically what I want to touch on very briefly is who does what in our system in terms of telecom policy, where we've come in terms of that policy and what the impact is, and finally, finish on some of the things we're doing under the Radiocommunication Act, which I think might be of interest to the committee.

We have a very modern legislative framework, with jurisdiction having been established in the AGT case, and also we have a single regulator for both telecommunications and broadcasting, which is the CRTC. You'll see that slide three sort of sets out the split in responsibilities in this area. While the Telecommunications Act is the policy responsibility of the Minister of Industry, it's actually up to the CRTC to administer that act.

With respect to the Radiocommunication Act, while it's the Minister of Industry's responsibility also, it's also the responsibility of his department where I come from to actually administer it. Finally, the Broadcasting Act is the policy responsibility of the Minister of Canadian Heritage, but it's also administered by the CRTC as well.

On slide four I've extracted two of the many policy objectives of the act. I think one is very relevant to the deliberations here, but I want to mention the other as well—and this is right in the act. The objective is “to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective.” That's right in the act. Also in the act is a requirement “to render reliable and affordable telecommunication services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada.”

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Slide five just summarizes some of the major milestones in the evolution of Canadian telecommunications policy. We have been pursuing a competitive agenda, I think, going back to 1984 with the competitive licensing of cellular services, followed in 1989 with the establishment of federal jurisdiction over the major telcos.

In 1992 the Telecommunications Act was tabled and it was passed in 1993, and that's really the cornerstone of our policy as we have it today. I think we've seen a number of CRTC decisions that have been in line with those objectives and consistent with the act, which I'll mention—the competition in long distance as well as competition in local.

Most recently, in 1998, we've eliminated virtually the last monopoly in Canadian industry, and that is with respect to overseas services. The final monopoly, which is in fixed satellite services, is going to end next year, March 1, 2000—that is Telesat.

I would also point out to the committee that it was not until 1994, with the Supreme Court decision in Guèvremont, that the federal jurisdiction over the independent telcos was established. So it's taken us a little while longer to deal with the independents because we were starting pretty far back with that.

On the next few slides I'd just like to summarize overall what some of the impact has been of these policies. First, I'd like to say that I think next to maybe Iceland, Canada has the highest penetration rate of all countries in the world. Almost 99% of Canadian households have access to a telephone. That is quite a remarkable achievement. We are significantly above the United States, as well as ahead of all of our member countries in the G-7.

At the same time, we have the lowest residential rates of all G-7 countries. We also have, we think, the lowest rates on business services for G-7 countries. I think some of the members may have noticed the Yankee Group study that was just published about two weeks ago, which compared Canada with the U.S. In certain circumstances they found that costs were twice as high for certain cities in the U.S. relative to Canada, and consistently they were 50% higher in the U.S. With respect to Internet services, we have the lowest Internet costs of all G-7 countries.

I think the other aspect of the competitive framework is that we have seen a substantial increase in capital investment in this industry as the new competitors have entered the market. That's what we show on slide five. Certainly with the most recent data in 1997, some 44% of capital expenditures came from the non-traditional telcos—not merely the wireless providers, but also the alternative long-distance providers.

Finally, slide eight is a slide that most of the members might be interested in. It shows how we stand on party lines. If we go back to 1987, there were over 800,000 party lines in Canada, and these have dropped consistently since that time down to around 145,000 in 1997, which is the year we have the most recent data for. I guess the good news is the achievement that we've been able to eliminate these lines. The bad news is we still have 145,000 lines. In other words, there's still a lot of work to be cone.

I was here last week for David Colville's testimony, the vice-chairman of the CRTC, and I think he explained a lot of the things they are doing. We can't really speak to what they're doing. I was certainly quite impressed with how sensitive he was to the concerns of the committee. I understand the commission held one of their hearings on the high-cost area proceeding in Timmins and heard from a lot of residents who are having some of these problems.

Also, Mr. Colville alluded to the whole issue of contribution as it affects some of the independent telephone companies. We, like you, are awaiting the outcome of both of those processes. I think he left you with the impression that they're going to try to do something.

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The last thing I'd like to touch on is the Radiocommunication Act, because whereas the Telecommunications Act is left to the CRTC to administer, and it's they who have to get involved in the nitty-gritty, with respect to radiocommunications it is we who do that; that is to say, Industry Canada. The Radiocommunication Act governs all radios, from garage door openers to cellular phones, and they're all regulated by us. I think we can skip over the objectives of the act.

On the wireless side, we have also pursued a policy of competition, as I said before, beginning with the licensing of competitive cellular services. We gave four new PCS licences, the digital cellular services, to new companies such that in many urban areas in Canada we now have four providers. We are following through with DTH services and mobile satellite services.

Slide 14 just summarizes the tremendous growth in wireless services. I think the latest numbers for 1998 show there are over five million subscribers, and the chart shows the tremendous growth in that. Certainly I attribute a lot of the growth even last year to some of the prepaid services the new providers have brought in. In other words, it's the competition that has stimulated them to be innovative, and we have a lot more people using these services.

Lastly, what I'd like to touch on is some of the things we have tried to do that are of particular benefit to rural areas. Way back in the seventies we opened one spectrum band particularly for service in rural and remote areas, and actually that was applied in northern Ontario and in some outports in Newfoundland.

Most recently we've done a couple of things that I'd like to mention to the committee. First is our policy on third-party cellular access. This is basically a policy designed to allow that where one of the incumbent providers is not providing service, even though they are allowed to do it, we will allow a third party to come in and offer service in that area.

We're pleased to say there has been a lot of interest expressed in the corridor between Thunder Bay and Rainy River. I believe that Thunder Bay Tel, in cooperation with a number of entities, is well on the way—I think they're about to receive their approval tomorrow formally—to putting in service all along Highway 11 between those two cities. That would also afford the opportunity to put in trunks or links off that, if there are other people who want to do so, or even they themselves. So we're quite pleased with the service improvement people in that area can receive.

With respect to fixed wireless access, we expedited approvals for the use of the band at 3.4 gigahertz, and we had to push very, very strongly to get this out the door. Working with Bell there was a trial run in Thetford Mines, just to test the technical feasibility, and then there were two actual demonstration projects, one in Verona, Ontario, and the other in Chatham. Both of them proved to be very successful. I understand that at least the one in Chatham is going to be expanded. This is taking people who are on party lines, some with no service, who are getting a private line with Internet-quality service using a fixed wireless access. They have a little dish on the side of their house. So we're very excited with that process.

I understand there's also some interest being expressed in northern Ontario in this particular technology. So it's our intention to make the spectrum available. Certainly having talked to our regional offices, I think the words they gave me were they're prepared to bend over backwards to expedite the approvals that are necessary to allow these services to get rolled out.

Finally, not to dwell on them, but we also have a number of satellite systems we have authorized in Canada. These can be expensive, but they nevertheless mean that now, to take the example of the Iridium system, which is already operational, if you have the money you can take phone calls anywhere in the world. They're already operational now.

There's another system that's going to light up this fall, which is GlobalStar, and finally Teledesic, which is the Bill Gates proposal for Internet in the sky. It's going to happen, and that's going to offer the broad-band service anywhere in the world.

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The Chairman: Does that pretty well wrap it up?

Mr. Allan MacGillivray: Yes, it does.

I think our policies of competition are working. We have made great strides with respect to rural service, but obviously we have a way to go before we're finished.

We in Industry Canada are doing all we can on the spectrum side. We're waiting for, like a number of you, the outcome of the CRTC's proceedings on high-cost area and the independents.

The Chairman: Thank you, Mr. MacGillivray.

On a point of clarification, which may be helpful to all members, did you say that Industry Canada regulates exclusively the wireless side? I take it from this that the CRTC is not involved in the wireless side?

Mr. Allan MacGillivray: No, in fact the CRTC's responsibility is to regulate common carriers. For example, if you want to take Bell Mobility, they are a wireless provider operating under licences from Industry Canada, but because they operate as a common carrier, they offer service to the public, they're also subject to regulation by the CRTC.

The Chairman: Okay.

Thank you very much, gentlemen.

We'll ask Rob Anders to start the questioning. It's up to you, Rob.

Mr. Rob Anders (Calgary West, Ref.): Sure.

I'll start off by saying that generally I'm a believer that smaller government is better government. However, I'll put a caveat to that. I recognize that governments' investment in things like transportation and communication has paid far greater dividends to society and business over a long period of time than a lot of other things government has worked its way into.

I'd like to tell you a little story, though. This summer I had a young man in his twenties who called up our office. I don't know the exact department he worked for, but he was with Industry Canada. He phoned us up and he said “We're looking for people to talk to about government, Internet, and what not, and we're wondering if we can come by and give you a tour around the Internet and some of the sites we have for the Government of Canada.” Being a pretty open fellow, I said “Sure, why don't you drop by and show us what you have.”

So he came by and he went through a little tour of the Internet sites with our staff, and I asked him, “How are things going? You have these sites set up and your job is to go around and tour people through them. What is happening with that?” He said “We create our own presence with it. Not a lot of people are actually asking for us to do this stuff, so part of my job is to go ahead and phone around and make sure I find places I can go and present to, and make people aware.”

So I said, “Out of curiosity, are small, medium, and large-sized businesses gung ho about this? Are they really interested in this?” He said “No, actually, they're the ones that have some of the least interest in this, because they already have Internet accounts and they're already doing their own thing. That's one of the reasons we're phoning MPs' offices and what not.”

I think sometimes about how government as an institution lags behind the free market. There was discussion today about increased reliance on free market forces. When people talk about government initiatives, I can't help but think of molasses on a mission. I think that's awfully difficult to do. I wanted to touch on some of those things, and you can comment on that in terms of how effective you think you are or are not being.

I wonder, sometimes, when I look at the fact that we're losing computer programmers, who I talk to on the planes when I travel in this country. They're not leaving Canada because we don't have enough Internet access; they're leaving Canada because our taxes are too high and because the job opportunities aren't here for them that are there in the United States. That's despite the fact that they like Canada for the lower crime rates and for the education system it offers.

I look at these things and there's a juxtaposition there. We have a government that's trying, in a sense, to get out there and get people connected and all the rest of this, and yet the Internet is such a market-driven thing. It's driven by consumers, not the other way around, with government having to go ahead and solve it. It's not like a railway. The Internet will happen in and of itself, without government having to be there. There's some suspicion whether if government hadn't been there the Canadian Pacific Railway would have stretched a ribbon of steel from coast to coast in this country. But the Internet's not that way.

I'll let you comment on that broader point. If the market's driving this, why are we doing it when guys who are twenty-some years old are looking for work to go ahead and find themselves an opportunity to present to an MP's office? Is that really the most productive thing we can be doing with taxpayer dollars?

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The second thing is when you talk about education I wonder how the provinces are reacting in terms of jurisdiction issues on this. Shouldn't this really be a provincial initiative if it is to be a government initiative in education?

Mr. Doug Hull: There are really two issues. Let me take the second one first, because I think it's the easiest one, and then get to the first point.

The SchoolNet program, which is actually a collaborative effort of the provincial, federal, and local areas in terms of school board administration, has been in place since 1993-94. The aim was to try to foster more rapid connectivity to the education system than would be the case otherwise. It really requires a combined effort simply because a number of the schools in the country, through the first nations program, are reporting to the federal government, and the bulk of the schools of course are provincially administered. But because it also is an area of telecommunications, where we could work collaboratively with the provinces we went ahead to do so.

Yes, in fact school connectivity would have happened anyway. Inevitably all schools probably in North America will be linked to the Internet. The question, though, is if we want more programmers to be developed so that we enrich the labour pool in Canada in the programming area and are able to attract more firms because of our expertise and because we have a significant portion of the labour pool available that has IT skills, then getting it done earlier is very important.

Countries that are winners in the knowledge-based economy will be the ones that embrace things like the Internet more quickly and expose their citizenry and their young people to that technology more quickly. In fact we are about the first country in the world to have linked all the schools in the country to the Internet. There are many other countries in the world that in fact are looking to how Canada did that and to acquiring a lot of the services we're in the process of developing to service that important new market.

The provinces aren't in any way objecting to this. In fact we're working in common cause with them. We basically have the same goal. We've done our piece in terms of linking the first nations schools, and they've done their piece in terms of linking their own schools. By the way, we'll be jointly celebrating with them the complete connectivity of Canadian schools very shortly.

On the issue of should we have young people out “wasting their time” talking to people who already know about the Internet, the answer to that is no. We should probably better target people so we get those who really want to get connected or get a little bit more training. But there are many businesses in Canada and there are many individuals in Canada who in fact are clamouring for exactly that kind of training.

In Industry Canada, through the youth employment program that's operated by Human Resources Development Canada, we employ about 3,000 young people a year, or more in fact, in supporting the business community, supporting non-profit groups within the non-profit sector, and other potential interested individual Canadians in terms of Internet training. We do a lot of that through the community access program. While I don't have the numbers available, if memory serves me right we trained easily more than 21,000 businesses across Canada or individuals in businesses across Canada one way or another, either in situ in the business or having business people come into community access sites to get training in terms of how to use the Internet, not just in terms of the skill or what the Internet is about but how to utilize that to promote the growth of their business either in acquiring resources, finding new markets, getting access to competitive prices on various kinds of products, etc.

Generally speaking, I think it's been an extremely successful endeavour. I think we're findiing that most of the students are actually meeting a felt need on the part of the individuals they meet.

Mr. Rob Anders: I have to let you know I have a distinct impression that a lot of what this is about is a public relations exercise. I see a lot of talk in the briefing notes you've given us about how many youth have been hired, what the percentage of female usage is of this, and how much aboriginal outreach has been done. I have to tell you, when I look at that type of stuff and I hear you talk, I wonder whether Industry Canada is more concerned about looking as though they're doing something good on this, as opposed to actually achieving some net results based on what that young man who was in my office told me.

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Mr. Doug Hull: I'm not sure he would have been typical, but I can tell you that the feedback we've had from communities where we are hiring individuals to be in these community access sites, the kind of training they're providing to the communities, the communities themselves are clamouring for more young people to work in those sites. They are really making a big impact on a lot of communities in terms of raising the skills with regard to the information highway.

In Canada we're putting an enormous amount of money in terms of what we can do into driving the Internet more quickly into Canadian communities, etc. Having that last interface where individuals get trained... It's not the technology, it's the content and the training that is really key to this exercise. We're finding that a lot of young people who have very advanced skills, even upon leaving high school, can really play that interface role very well. So I can assure you that it isn't just glamour. In fact there's very little glamour in it. What it is is a really useful service that is being rendered to Canadians by young people.

The Chairman: Is that okay for now, Rob? We can come back to you.

Mr. Rob Anders: Yes, sure.

The Chairman: Benoît, please.

Mr. Benoît Serré (Timiskaming—Cochrane, Lib.): Thank you very much, Mr. Chairman.

Frankly, Mr. Chairman, I was listening to this presentation this morning, and I felt like throwing my arms in the air and just walking away. After two years of talking to Industry Canada and all the different telephone companies, it seems that nobody is listening. It seems that you guys have it all backwards. In your presentation this morning there's a lot of patting on back, saying we've done so much, we're first in the world, we're ahead of everybody else. We've heard a lot about how well we're doing in urban Canada. I haven't heard much about how bad we're doing in rural Canada. Apart from the CAP program and a few comments off record or off text, as Mr. MacGillivray said, there's nothing in rural Canada.

I'm not interested in hearing this morning how good we're doing in urban Canada and what programs are on the net, because we can't access the net. The focus of this meeting is on rural economic development and how it is affected by the lack of telecommunications. In my riding, as you heard if you were there when I gave the presentation to Mr. Colville, we have 5,000 people on party lines. All those nice programs by Industry Canada are not going to help us out. We need private telephone lines. That's number one. Before we can do anything else, we have to have a way to access this Internet. We have to have private telephone lines. When we talk to the phone companies, they say that it's because of the CRTC. I have met with your officials four or five times now, and it's the same story: we have to deal at arm's length with the CRTC and we should let private enterprise or the CRTC deal with that.

If I understand well the mechanism of government, the Ministry of Industry sets the policies. The CRTC is a regulatory body that will regulate and implement the policies of Industry Canada. My point is that Industry Canada is ultimately responsible. The buck should stop someplace, and it should stop there. If the companies, private or whatever, are not doing their job, Industry Canada should be there and force them somehow through regulation to do it.

The answer I got from your officials in the different meetings I've had was we don't have any money. Didn't you give a company here in town about a year ago a grant for about $55 million? Is that so? I can't remember the name of the company, but it was right here in Ottawa.

Mr. Allan MacGillivray: I'm sorry, I have no knowledge of that particular case.

Mr. Benoît Serré: I won't mention the company because I'm not sure, but there was a grant of $55 million given to a company in Ottawa to do research and whatever on the information highway. I think it's CANARIE, but I'm not sure. Now, $55 million would probably connect all of northeastern Ontario to private telephone lines. Where is the priority of the Department of Industry in Canada?

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You talk in all your presentations about how we should connect all Canadians, universal access. The Telecommunications Act says “to render reliable and affordable telecommunications services of high quality”—high quality, yet we still have rotary phones and four on a party line—“accessible to Canadians in both urban and rural areas in all regions of Canada”.

Are rural Canadians second-class citizens? Shouldn't we have at least a private telephone line before we give hundreds of millions of dollars to private enterprise in Ottawa, where the unemployment rate is about 6%? We have 23% unemployment. The main reason is because we were depending on resource-based industries, and now all the new jobs are created in the information highway knowledge base, and we cannot access that. We cannot even start our own businesses because we can't access the Internet.

I had a call from a lady who wanted to move to my riding in rural Ontario. She said “I have a business, and I need the Internet. I can't operate without that.”

I've said a lot, and I think you heard my statements to Mr. Colville the other day. My point is—and I want you to comment on it—I think Industry Canada has done a very pitiful job in terms of helping rural Canada. You've done a terrific job in helping Montreal, Toronto, Winnipeg, and the bigger centres. To your credit, the CAP program is a very good program. Many municipalities in my riding have benefited. But I think right now you should reverse and put the horse before the cart and start by giving every Canadian a private telephone line and the information they need, and then maybe spend a little money in Toronto and Montreal.

Mr. Allan MacGillivray: Maybe I can just comment generally. If I left the impression we are complacent with the situation now, that certainly was not my intention. I was trying to explain what our policy is globally and the impact it's having. It's Parliament that is giving us the authority to do what we do, it is Parliament that approved the Telecommunications Act and those authorities, and it's Parliament that has established the CRTC. I think you know that we do not have any direct authority over the telecommunications companies themselves. It's our responsibility to put the framework in place. I think someone asked Mr. Colville last week if he lacked the legislative tools to do what he wanted, and I believe his answer was no, I don't.

Actually, just last year, some of the amendments, which were included in Bill C-17, were passed, which I think were a specific response to some of the needs they had in a regulatory sense to keep the act modern. The minister sponsored and Parliament approved those, and they were brought into force last fall. So our role as a government is to keep the legislative framework fresh, available, and useful. It's up to the CRTC to take that and to implement it and to try to address the problems that do exist.

At the same time, as I thought I explained, under the—

Mr. Benoît Serré: You are putting the blame on the CRTC.

Mr. Allan MacGillivray: Pardon me?

Mr. Benoît Serré: You're passing the buck to the CRTC.

Mr. Allan MacGillivray: I'm only explaining that—and I don't think Mr. Colville said we're done, we're not doing anything. What I thought he said was we have some processes in train—

Mr. Réginald Bélair (Timmins—James Bay, Lib.): We know what the process is.

Mr. Allan MacGillivray: As he explained, they are an independent regulatory body. We cannot interfere in their—

Mr. Benoît Serré: Why do we give $55 million to a private company in Ottawa when we cannot spend... We spent maybe a couple of hundred dollars under the CAP program in my riding. Where is the priority? Don't you think the priority of Industry Canada is wrong in that instance?

Mr. Allan MacGillivray: All I can do is explain that with regard to telecommunications policy and based on the legislation we have, the requirement is that the private sector deliver the services.

Mr. Benoît Serré: You're not answering my question, sir, with all due respect. I know and you know how government works. The minister is driven by bureaucrats. Basically, you set the policies for the minister. I'm asking you, in your opinion, do you think we should spend $55 million to give private telephone lines to some Canadians so they can call an ambulance, call the firemen when they have a fire, go home from the hospital and have a monitor... Now they have to remain in hospital because you cannot have a monitor on a party line. So they can create their own jobs or give $55 million to a private enterprise here in Ottawa, where the unemployment rate is only 6%. In your opinion, which should be the priority?

• 1150

Mr. Allan MacGillivray: Unfortunately, I'm not allowed to have a private opinion. All I can do is explain the policy of the government with respect to telecommunications policy. In that context, it's not the policy of the government to directly subsidize the provision of telephone service. I don't think my personal opinions are relevant. At the same time, I'm sensitive to some of the concerns you have.

Mr. Leonard St-Aubin (Director, Business and Regulatory Analysis, Telecommunications Branch, Industry Canada): I think one of the other points that has been made, I believe by Mr. Colville and by some of the other people who have appeared before the committee, is that there is currently in place a system that does provide a fair amount of subsidy to rural areas to maintain affordability of local service generally across Canada, but the trend in the regulatory decisions over the past several years has been increasingly to direct more and more of that money toward rural and high-cost areas. The commission is looking at that whole issue again in the current proceeding that's before them.

If I look, for example, at Northern Telephone in particular, my understanding is that the level of contribution going to that company now is in the order of almost $15 million per year from long-distance services through the contribution mechanism that all the long-distance carriers pay.

Mr. Benoît Serré: Which is paid by the consumer of Northern Telephone, because we are still in the situation—I think it's unique in Ontario—where we have a provincial government monopoly, which is named ON Tel and which happens to be in Premier Mike Harris's riding. So the great Tory privatizer doesn't want to privatize it, because he would lose jobs in North Bay.

So we cannot access print, we cannot access the competition, and we're tied in with high costs. Not only don't we have private telephone lines, but we're stuck with high-cost long-distance charges and we can't access the competition. We have a double whack there. We're hit from both sides.

Mr. Leonard St-Aubin: My understanding is that the CRTC has indicated that they will be eliminating the monopoly for ON Tel.

Mr. Benoît Serré: Partly—by the year 2002, I believe, and you can correct me if I'm wrong. But it's only partly.

Mr. Leonard St-Aubin: I can't speak on behalf of the Ontario government—

Mr. Benoît Serré: I know that, but I hope you can speak on behalf of the federal government.

Mr. Leonard St-Aubin: —and that organization, but I just wanted to point out that there is currently a significant amount of subsidy going into and cross-subsidy going from long-distance services, and competition has maintained that level of subsidy flowing into rural areas in particular. As rate rebalancing has proceeded, what that's allowed to happen is more and more of that subsidy is targeted to higher-cost areas through the mechanism the CRTC has put in place. They are looking at that issue again, and if they determine that there's a need for fine-tuning there or there's a need for a complete relook at the way that is happening, the commission has all of the authority necessary to do that.

Another thing that I think is worth pointing out—it was mentioned earlier—is the CRTC has only been responsible for the independent telephone companies since 1994. Now, I wouldn't underestimate the amount of work and the transition that has occurred for those companies and for the CRTC itself. We're talking about roughly fifty companies across the country that previously were not regulated by the commission and were subject to frankly quite divergent approaches to regulation.

When you look at the situation in Quebec, for example, the Quebec regulator, for a variety of reasons, chose to require the telephone companies there to match much more aggressively the level of service of Bell Canada, whereas in Ontario that wasn't necessarily the case. So you end up with a collection of about fifty companies, some of them municipally owned, some of them privately owned, some of them with very, very high contribution rates, ranging anywhere from four cents a minute up to about twelve cents or more a minute, as compared to Bell Canada, which has a contribution rate in the order of half a cent a minute.

So I wouldn't underestimate, in a period of about since 1994, the complexity of the transition going on here for the independents and for the CRTC and trying to adapt the regulatory framework for those companies and bring it into harmony with what's been happening at the national level. I recognize that it's not as quick as one might like, but I think there is some progress being made.

Mr. Benoît Serré: I agree with you in one aspect—

The Chairman: Can you come back, Ben? I'm just trying to be fair to everybody here. I know you have some good points to make. I've got you back on the list.

Antoine, please, and then Roy.

• 1155

[Translation]

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): Some days you can see that there's not much of a difference between a member in the opposition and one from the governing party. I can understand my colleague's frustration because even though I now live in Lévis, a semi-urban area, I actually come from the east of Quebec where I still often go back and where it still happens.

I'll start with a specific case. There's an area in my riding, a specific municipality, that was part of Bell Canada's territory and where no one had the service. After deregulation, Québec- Téléphone became another possibility and that company was interested in serving that sector and even in offering private lines. Bell Canada didn't offer service in that area, amongst other reasons, because it cost too much. Québec-Téléphone wanted to use a part of its competitor's infrastructure, Bell Canada, who refused. This is an aberration because all kinds of money could have been saved. To offer service in that area, you have to use Hydro-Québec and Vidéotron's networks. It's always possible, but you have to... It's only recently that people in that area have managed to be connected to the phone network. Before that, the only means of communication was the cell phone. But you know those systems aren't perfect and that reception isn't always all that good. Anyway, maybe satellites will improve the situation.

In such cases, it seems to me we can't trust competition and believe that the clients will be well served. I don't know if we should ask Industry Canada or the CRTC to get involved to facilitate that kind of cohabitation and force a company to make things easier for another if it doesn't want to serve a specific area. What do you think?

Mr. Leonard St-Aubin: The CRTC certainly has the necessary powers to solve such situations. As I'm not aware of the particulars of the case you're mentioning, I can't really venture into it too far because I don't have enough information.

I know that Québec-Téléphone is a particular case because, as you doubtless know, it's a foreign-owned company. According to the grandfathering clause that came into force with the 1993 Telecommunications Act, a company can only serve the territory it covered before a specific date and I think that's 1972, if memory serves.

Mr. Antoine Dubé: But I think there's a date where this requirement disappears, isn't there?

Mr. Leonard St-Aubin: No, the grandfather clause applies, essentially, in perpetuity. It's entrenched in the Act. As long as Québec-Téléphone remains a foreign-owned company, it will only be able to serve the territory it served at that time.

Mr. Antoine Dubé: But as this other company can't get into this territory, Bell Canada has a monopoly situation.

Mr. Leonard St-Aubin: No. There are other companies that could serve that territory if they wanted to. Even if Québec-Téléphone is the closest company, nothing prevents Vidéotron, COGECO Câble or any other cable company or any other interested competitor from serving the territory in question. As I was saying, I don't know that territory and I don't know if there are any other companies who might be interested in venturing there. Anyway, that's another question.

Mr. Antoine Dubé: You mentioned the case of the 145,000 Canadians who are still on party lines. Wouldn't satellites and digital systems be something to look that to connect these people? We know that the digital system affords its users total confidentiality. I support what my colleague Serré was saying when he wished that we could accelerate the process in the rural areas while making sure that people don't have to pay higher costs.

• 1200

Logically, as Mr. Hull's speech indicated, and he's quite right, the future of our economy lies in knowledge.

I'm the Bloc Québécois critic in matters of regional development. We think that if it's true and if we don't want to increase the imbalance between urban and rural areas, we absolutely have to compensate for that. This would be an excellent regional development policy. The Department of Industry, of which you are part, should look at the possibility of a regional development program that would at least ensure equal access even though some expenditure must be provided for. If we don't correct the situation quickly, the exodus from rural areas will continue while the lack of social housing in Toronto and Montreal will only get worse.

Mr. Leonard St-Aubin: First of all, as my colleague was saying, the number of homes using party lines has decreased to 145,000. Even though that remains a problem, we should remember that since 1987, when there were 800,000 homes in that situation, the figure has gone down by 75% or even more.

Mr. Antoine Dubé: What are your forecasts for the next five years?

Mr. Leonard St-Aubin: Within the context of submissions for rate increases for local service by Bell Canada and Stentor the CRTC recently approved, it also approved Bell Canada's program to solve this problem over the territory it serves by the year 2000 or 2001. According to Bell, all customers wishing to have a private line will have one by then.

Mr. Antoine Dubé: How about the other companies?

Mr. Leonard St-Aubin: That varies. In several provinces, including those served by TELUS and more particularly in Saskatchewan, that goal has already been attained.

The problems persist mainly in those territories served by Bell Canada and some independent companies and it varies enormously. For example, Québec-Téléphone is an exceptional company that offers not only private lines but also access to Internet at the local level to all its customers. Other companies, unfortunately, don't do as much. One must admit there are historical reasons and all kinds of other factors that come into play to explain this state of affairs.

To get back to your question about satellites, I would like to say that we think wireless service offers major possibilities for delivering service and settling private service problems in many of these territories. Bell Canada and Northern Telephone are actually experimenting with the 3.4 gigahertz service, the fixed wireless service, which allows companies to provide local service for a far lower cost than a wired service. Bell Canada is very confident as to the possibilities of this service.

Mr. Antoine Dubé: Now, I'd like to join my Reform Party colleague who had questions concerning provincial jurisdiction. I'm not asking you to defend the government's policy, but I'd like to know more about the implementation of the "Connecting Canadians" program which, according to Mr. Hull, allows for the propagation of Canadian culture. You can see where I'm coming from. In Canadian culture, we have different viewpoints: what I call the Quebec culture, my colleagues Serré and Bélair call the French Canadian culture. In the context we're in right now, what are you doing to reflect this element of Canadian culture in the service?

You say that you have a good relationship with the provinces and I'd like to know a bit more about the nature of that relationship. When you talk about connecting the schools and the municipalities, how is that perceived, especially in my province, Quebec? How does it work? Do you subsidize the schools and municipalities directly? Do you have to get the approval of Quebec's municipal affairs department? That was a short question that might lead to a long answer.

• 1205

[English]

Mr. Réginald Bélair: Start skating.

Mr. Doug Hull: In terms of linking the school systems across the country, the only time we actually get in and provide a subsidy to a school directly is with the first nations schools. The system we use there is a satellite delivery system, because many of those schools are remote schools. The Stentor family of telephone companies provides free access to a high-speed satellite channel, and the federal government provides the schools with a subsidy so they can make long-distance calls out, because it's basically a one-way system.

It's worked very effectively. The schools are connected with very good telecommunications for carrying educational content, basically.

In the case of all the other schools across the country, the provincial governments have to connect them themselves. We do a lot of work to try to gain better prices or provide places where students and teachers can go to find useful information, but it's really the provinces' responsibility for curriculum development and content of an educational nature.

[Translation]

Mr. Antoine Dubé: But isn't there a matter of money?

[English]

Mr. Doug Hull: We do provide support for certain kinds of things in the educational area. For example, we foster research that looks at the use of telecommunications in the learning area, or we provide funding support to learning-ware companies that develop commercial products that can be used in Canada or abroad, etc. But generally speaking, the provinces are the ones that are responsible for the use of telecommunications in the school system.

[Translation]

Mr. Antoine Dubé: How about at the cultural level?

[English]

Mr. Doug Hull: It's very important, in terms of the development of the information highway in Canada, that there are significant quantities of Canadian information available. We don't want Canadians to effectively get connected and then find themselves just using other people's materials, whether they're cultural materials, economic materials, social materials, etc.

The Department of Canadian Heritage is really responsible for the government's programs with respect to Canadian cultural presence on the information highway, but the Department of Industry has been doing a number of things in that area. For example, through the youth employment program we hire a significant number of Canadian students and youth to work in national museums, for example, to digitize Canadian content in cultural collections on the Internet. We stimulate learning-ware through industry subsidies to business activity. And in a lot of the community access points, the communities are actually putting their own content on line through local materials and local services, etc.

So we're not looking at so much Canadian content as being just things that are promoting the national identity; it's to get Canadians to put content onto the Internet. That's the biggest source of supply that we're going to hopefully be able to stimulate in the country.

The Chairman: Maybe we can come back to that, Antoine. Thank you very much.

Roy Cullen, please.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chair.

I've been listening for the last few sessions to this discussion, and I must say I've been frustrated, as we all are. My riding is in Etobicoke North, so I don't have the same kinds of issues as my colleagues here from northern Ontario, but I have a large empathy with their problem.

I'd like to come at this from a slightly different direction, because I'm getting frustrated in terms of the buck-passing, if I can use that term. Let me come at it in a different way.

Let's talk about a hypothetical situation. Let's say that one Tuesday your minister and deputy minister called you to a meeting and the minister said “The government has decided that by the year 2000 we're going to eliminate all multiparty lines in Canada. At least it set that direction. Cabinet has asked me to come forward with how that might be implemented. Is that feasible? What would be required? Would we have to put in new legislation? Would we have to amend regulations? Would there be a role for the CRTC? Would we be required within our own department to reallocate resources? Would we be required within our own department to seek new resources?”

Some of those questions we may need to address to the ADM or the DM, but what would you advise?

• 1210

Mr. Allan MacGillivray: Well, all we do is develop options. It's up to ministers to decide what they want to do. Certainly if—

Mr. Roy Cullen: As a policy issue, the government, through your minister, has hypothetically said this is what we want to implement. He's asked you some very specific questions. Is it feasible? You heard my questions.

Mr. Allan MacGillivray: Firstly, what we'd have to do is sit down and estimate what the costs would be, just in terms of a global number.

Mr. Roy Cullen: So you're saying that the government would have to change its policy with respect to subsidization. Would that be the only way?

Mr. Allan MacGillivray: No, I'm just saying that when you do policies, you try to gather all the facts first, and then you try to make—

Mr. Roy Cullen: But not all policies require resources. On my first question, the minister has asked if we would need legislation if it is feasible. Would we need new regulations? Would we need new or reallocated resources? How could we accomplish this?

Mr. Allan MacGillivray: Well, the reason I focus on cost is that, first thing, someone has to pay. The first question they usually ask is how much has to be paid. The second question is who is going to pay it. That's why I say the first thing we would do is try to get a handle on how much that would cost.

Mr. Roy Cullen: How much it would cost irrespective of who would pay for it at this point.

Mr. Allan MacGillivray: Exactly.

Mr. Roy Cullen: Okay, that's fair enough.

Mr. Allan MacGillivray: Obviously we would then have to develop options for the minister, based on our assessment of different possible approaches. One of the implications we would have to point out to him is that one option is a direct expenditure program. Certainly a new program requires the approval of Parliament, and I'm not on that side of business.

Mr. Roy Cullen: No, but I'm saying you have carte blanche at this point. If the government makes a decision, it would have to stickhandle it through the House of Commons. Let's make the bold assumption at this point that the government could do that. I'm not asking you to make political or policy decisions; I'm asking you for your advice on how to implement it and whether or not it's feasible.

Mr. Allan MacGillivray: The obvious option is an option under which the government bears the cost itself, 100%, directly. There's another option on the other side under which the regulator, perhaps through legislative change, would make it a requirement of the companies themselves. And maybe there's a hybrid in the middle under which there's a sharing of the cost. Those are the three basic models we would probably look at.

Obviously what we would have to do is assess the implications of taking those directions. For example, if it's 100% government, where is the money going to come from? Is that consistent with all of its other policies, etc.? Certainly under the option in which the regulator would be doing the implementation it would require a change in the act, because they would not have authority to do that. The current act does not contemplate that.

Secondly, we would have to assess what the implications of that would be for our overall policies. You can't just drive in, focus on party lines, and assume they can be severed from high-speed Internet access in Etobicoke. There are different levels of service availability right now. Different parts of Canada have different levels of service, even with those that have party lines.

That's basically what we would do.

Mr. Roy Cullen: Let me just come back to that. Let's say the minister said he needed to know, in a first blush, if this is feasible. What would you say to him?

Mr. Allan MacGillivray: There's a price for everything in terms of consistency, in terms of policy, and in terms of who pays. We don't render the judgment as to the trade-off between those two. If they're prepared to take the pain in the other areas, then I guess anything is technically feasible. My concern is that it could render the whole policy framework that is authorized in our act invalid. We don't deal with the industry directly like that. It would be inconsistent with ten years of federal telecommunications policy.

Mr. Roy Cullen: So as far as regulating the companies to do it is concerned, I think what you're saying by implication is that there's an economic cost there, and it might be unrealistic to burden them unless there was some kind of subsidy from other users. But you seem to be focused on the idea that it needs new resources in terms of some government cost-sharing, as opposed to some cross-subsidy.

• 1215

Mr. Leonard St-Aubin: The cross-subsidy is always a possibility. There are cross-subsidies in the system now.

I think one of the things Allan is getting at is that over the past several years... Maybe we could go back a little bit. When telephone service was provided as a monopoly—

Mr. Roy Cullen: Excuse me, but I'd just like to come back to the primary question if I may. In terms of the cost, let's say there is an economic cost, regardless of who pays for it. Do you have any guesstimates? In terms of that economic cost, if you were asked by your minister to give him a ballpark figure for moving to no multiple-party lines by 2000, what are we looking at?

Mr. Leonard St-Aubin: I'm sorry, but I wouldn't want to hazard a guess at that off the top of my head. The costs for individual companies that are out there now vary significantly. What I would point out is that Bell has already said it will achieve that objective, and that it covers a significant portion of the party lines that are outstanding now.

Mr. Roy Cullen: But would we be talking about bringing that forward in terms of time? If Bell said 2000 would be hurrying it up a bit, would it be?

Mr. Leonard St-Aubin: Perhaps slightly.

When Bell Canada came in and was talking to us about the service improvement program, a point its representatives made was that about 75% of the job they have to do will represent about 25% of the cost. The last 25% of party lines will represent about 75% of the cost, because in many cases you're talking about very long loop lines and much heavier investments. So as the number gets smaller, the relative cost of solving the problem is quite high as compared to overall costs.

As a regulator—

Mr. Roy Cullen: Excuse me for just a moment, because the chairman's going to cut me off. I'll just throw out some ideas. If the committee has any interest, I would suggest that maybe the gentlemen here can come back with some broad answers to those questions. What would be the cost in economic terms? What legislative changes would be required? Is this feasible? What regulatory changes are required, etc.? What new resources are needed, if any? What are the options?

The Chairman: Is it fair that you could get back to us with answers to those questions? If you can't answer a question, just say so, and we can go from there.

Mr. Allan MacGillivray: Working with the companies, I'm sure we could probably get a sense of the costs. I think there is some information we could probably gather and could share with the committee. We'll go as far as we can, obviously.

Mr. Leonard St-Aubin: It might take a little bit of time to get this information from the companies, but we'll do what we can if we can have a little indulgence that way.

The Chairman: Sure. Thank you.

Mr. Cullen, thank you for your pointed, poignant questions.

I have Rob, and then I'll finish off with Ben.

Mr. Rob Anders: Listening to the discussion today, I would far rather see the $55 million spent on Internet research going toward servicing rural communities, whether it be your riding or across the country, to make sure they have single lines rather than party access. As you say, that's going to allow them to get Internet access and all the other good things, like emergency services and what not.

It's funny, I appreciate some of the frustrations of a government sitting here today. I'm sure you're all aware of the show Yes Minister. Madsen Pirie, with the Adam Smith Institute, wrote a wonderful book called Blueprint for a Revolution. I think it's recommended reading for all policy implementers.

A voice: She's out of the U.K. I know the book well.

Mr. Rob Anders: Yes, it's very good stuff, in that Madsen Pirie talks about how bureaucrats are intelligent people, they're well educated and they do what they do, but part of the way they advance themselves is by building an empire. The higher they climb within that empire, the more people they have underneath them, and the more money they're responsible for, the more money they make.

It was fascinating that one of the responses we heard today was that it would be inconsistent with telecommunications policy over ten years. Yet we have a pretty clear indication from the opposition here today, and from the government members I've heard speaking on this, that rural phone lines are more important than some of the other issues you folks are addressing with some fairly substantial sums of money. Government is always a question of priorities.

Anyhow, I think I'll leave it at that. I think those are just interesting things as observations. I agree with some of what many of my colleagues have said around the table today in terms of priorities and what is a higher priority relative to other things. I couldn't agree more with some of the things Mr. Serré and Mr. Cullen have said today, in terms of the frustration ministers, or even government members or opposition members, sometimes feel with bureaucracies.

• 1220

The Chairman: Thank you.

Last bat to Ben.

Mr. Benoît Serré: I don't want to overstate my case. I think you gentlemen understand where I'm coming from and the kind of frustration I've been living with in my riding. I have probably 10,000 letters in my office right now, and I'm trying to respond to all of them. I'm sending 2,500 replies to constituents telling them what I'm trying to do, in terms of telecommunications.

I believe a department is responsible for implementing government policy. Is that your understanding? Roy was talking about a hypothetical question. I mentioned to him it's not hypothetical. You have it right on the first page of your presentation, so I'm glad you did it.

We will make the information and knowledge infrastructure accessible to all Canadians by the year 2000, thereby making Canada the most connected nation in the world...provide individuals, schools...

We've provided the schools, most libraries, and most large businesses—certainly not the small businesses—in my riding with that capacity.

I'm more interested at this point in the meeting in finding solutions. I've dealt with the CRTC quite a bit, and I think they're on the right track. I'm very confident that in their report in June there'll be a provision for some kind of universal fund, cross-subsidization, or whatever mechanism they choose.

I pushed an idea a couple of years ago—I don't know if it got to you—to the political people in the minister's office, to set up a federal-provincial industry I would call the telecommunications infrastructure program. It would be similar to the national infrastructure program we had a couple of years ago, but instead of dealing with municipalities we would deal with the industry. Both levels of government could come in with 20% each, or whatever the case, depending on the need and cost in that company or area.

Would you favour such an approach? How do you expect to meet that policy statement and throne speech before 2000? If you cannot provide answers to these questions, would you be prepared, as advisers to the minister, to make rural telecommunications one of the top priorities of your department?

Mr. Doug Hull: Perhaps I can address those questions, although I think there is a mix between the Internet connectivity and strict telecommunications.

The federal government has put rural Internet access at the top of its priority list. Of course rural Internet access isn't just a matter of telecommunications; it's a matter of computer technology skills and affordability of the equipment necessary to connect. We also realize many Canadian families, even once they get single-line access, may not be able to afford computers and the additional technology necessary to get connected to the Internet. That's why the aim has been to provide these public access points that will allow individuals to use publicly accessible facilities for their Internet needs. Over a period of time prices will drop, people will be able to afford Internet access from their homes or places of business. In fact the Internet access rate in Canada is among the highest in the world. It is over 30% right now and is up by leaps and bounds over previous years.

As awareness grows about the usefulness of the Internet and more and more services become available, people will have the motivation to try to get connected. So that's the first point you mentioned. It is an extremely high priority, and that's why the rural portion of the program has been running for three years. We haven't even begun the urban portion of the program.

• 1225

You mentioned the $55 million grant to CANARIE. That really wasn't for research; that was to upgrade the high-speed backbone network across the country. That infrastructure is absolutely essential to make accessibility available to all Canadians across the country.

Mr. Benoît Serré: Is it a private enterprise?

Mr. Doug Hull: CANARIE is a non-profit corporation. It is a partnership between the non-profit sector of private enterprise and government to drive out this high-speed backbone infrastructure, not so much to do research as to support research being done across Canada, within both industry and the academic community.

It's also used for public access purposes. A lot of what are called regional points of presence on the Internet are really supported through the CANARIE system. In the Yukon, for example, it was a real challenge getting a number of the colleges and post-secondary institutions connected to the Internet. A portion of the CANARIE money went to actually providing that broad-band access to the Yukon. So it is making public access available.

Mr. Benoît Serré: But that's been my point, sir, from day one. Iqaluit and remote communities have access to the Internet and private lines. I guess it's made possible through satellite communications, whereas it's probably more difficult in small rural areas because they're not concentrated. Those communities are concentrated within a mile or whatever, and they're really close-knit. You can put up 200 or 400 lines.

There's certainly a hole in the whole strategy. I can't understand why eight months from 2000, the second millennium, we're still on rotary service with no private lines. I agree with the general trend of the department in terms of connectiveness and whatever. That's all nice. I think we're on the right track and we're doing well as a country.

I'm aware of all the cost analyses he was mentioning in terms of comparison with the United States and whatever; this is all to our credit. But there's a portion of Canadian citizens that has been neglected. I think we should turn things around or put a stop to a lot of the stuff that's going on and say let's address this first and then go back.

I don't know if you follow my drift.

That will be all, Mr. Chair.

The Chairman: Maybe we can hear concluding comments from our witnesses and then adjourn. Are there any concluding comments?

Mr. Allan MacGillivray: I think I've said all I can say.

The Chairman: On behalf of all members, I want to thank you for being here and adding to the debate. Clearly, some frustrations were expressed on both sides, but without your presence we couldn't have made some progress today in our understanding. There may be, to some extent, some frustration from the civil service or bureaucratic side, as well.

We thank you for this. I suspect we'll be having further meetings.

We're adjourned until next Thursday, when the secretary to the Privy Council, Mel Cappe, will be here. We will leave Tuesday open in case Bill C-66 comes up, but it doesn't look likely at this point.

We're adjourned. Thank you all.