Hon. Dennis Glen Patterson: I would like to ask Senator Woo a question.

Senator Woo, thank you for that informative speech. You have urged that the bill go to committee; however, it covers a broad area and a number of existing statutes. Do you see one committee being a main committee? How would committees of the Senate deal with such a broad piece of legislation? Thank you.

Senator Woo: Thank you, Senator Patterson. The question and the decision on which committee or committees the bill goes to are now beyond my pay grade. I know the leaders are discussing this issue. I believe they are contemplating sending the bill to multiple committees. I think we can roughly guess which committees are suited for which amendments.

I do agree with you — if, in fact, this is what you were suggesting — that there should be a master committee; again, I leave that decision to the leadership.

What I will say, though, colleagues, is that if we agree that regulatory modernization is a good thing and that we should do it on a regular basis — sort of like housecleaning, right? — if we have to do spring cleaning every year, let’s think about how best to do it in the Senate and how best to organize ourselves so that we don’t have to debate which broom to use and which mop is the most efficient.

Personally, I would like to see us play a leadership role in the broader issue of regulatory reform for this country and to provide some leadership in Parliament in terms of pushing forward this agenda on a regular basis, regardless of the government in place. This bill will give us the opportunity to think about what some best practices might be.

(On motion of Senator Martin, debate adjourned.)

The Senate proceeded to consideration of the fourth report of the Standing Senate Committee on Legal and Constitutional Affairs, entitled Report relating to Government motion 14 (taxation of the Canadian Pacific Railway in Saskatchewan), presented in the Senate on March 31, 2022.

Hon. Dennis Glen Patterson moved second reading of Bill S-242, An Act to amend the Radiocommunication Act.

He said: Honourable senators, I rise today to speak to Bill S-242, An Act to amend the Radiocommunication Act — or, as I call it, “the use-it-or-lose-it bill.” This bill would amend Canada’s spectrum policy to ensure that this public resource is used to connect Canadians and not as a speculative vehicle for billionaires.

Canadians in rural, remote and northern communities deserve connectivity. Senators know that I have long railed against Canada’s spectrum policy, which prioritizes urban competition over rural connectivity. Communities anywhere from 15 minutes outside of Calgary to those in the Far North — such as Grise Fiord, Nunavut — are deprived of connectivity. While there are many factors that contribute to the lack of connectivity, one reality is that some communities lack access to sufficient internet connectivity thanks to spectrum that remains unused.

What is spectrum? Senators, spectrum refers to the airwaves that telecommunications companies use to deliver wireless services, like cell services or wireless broadband. These companies need enough spectrum to deliver high-quality wireless services.

I want to take a second to note that when I say “companies,” I don’t just mean the big telcos, like Rogers, Bell and TELUS. When I say “companies,” I mean anyone that uses spectrum. This could be the big telcos, but it could also be small companies like the many mom-and-pop wireless broadband companies that are present in so many rural communities.

Access to spectrum is particularly important as we move towards 5G. We hear frequently about the promises of 5G — which I’ll address in a minute — but one of the most important developments is the high-quality wireless broadband that will be available.

Spectrum is first and foremost a public resource. The government often auctions it off to make it more available to Canadians to improve connectivity. That’s why spectrum is so important — the more you have, the better your services can be. This is incredibly important because without enough spectrum, no company can offer a good service, be it cellphone service or wireless broadband. What it means is that without using spectrum efficiently, we cannot expect to connect all Canadians. Given that the government has the goal of connecting all Canadians by 2030, this is a substantial and material policy problem.

What is the current policy? Spectrum policy today is focused on encouraging competition in urban Canada. While this goal is laudable, competition alone is not enough. Competition means little to those Canadians who are not connected.

The policy today revolves around how the government carries out spectrum auctions, the next being scheduled in 2023. These auctions cost companies billions of dollars — and the government, to encourage urban competition, sometimes sets aside up to 60% of the spectrum available for smaller players. While this is great for urban competition, it means that a lot of spectrum sits idle outside those urban cores. That spectrum could be used to connect rural, remote and northern communities all across Canada. Instead, what happens is the companies who receive subsidized spectrum turn around and sell it for hundreds of millions of dollars.

In 2017 — and this is only one example and maybe the most egregious, dear colleagues — Pierre Karl Péladeau’s Videotron sold subsidized spectrum for a profit of $243 million over what was paid for it. This was spectrum that was supposed to support Videotron’s expansion into Toronto and the rest of Ontario. Instead, the taxpayer subsidy was funnelled directly into the pockets of a very wealthy family.

In an effort to increase competition, the government has been deeply discounting spectrum for smaller regional carriers who consistently fail to deploy it. In every geographic region across Canada, there are areas sitting unserved by broadband because of limited access to spectrum resources. That spectrum is a scarce public resource but has been squandered because it has been licensed to regional carriers who prefer to flip it for profit rather than use it to improve the lives of Canadians.

Did you know that less than 20% of rural spectrum has been deployed nationally by regional carriers? That matters because that other 80% is held by companies that often do not have the resources to deploy it.

Senators, we must create a policy environment where spectrum squatting, as I call it, and speculation should not be permitted. This is especially important in the context of the auction rules that set aside lots of spectrum and allow some players to obtain the spectrum at subsidized costs without a meaningful timeline for deployment. It is safe to say that set-aside-eligible companies have received over half a billion dollars of cash by selling spectrum that they originally purchased at a deep discount thanks to Canadian taxpayers. There must be a policy of “use it or lose it.” This is responsible long-term policy-making that will protect Canadians. We all agree the end goal is to drive the best outcomes for Canadians, so we should agree that companies should have to deploy the spectrum that they purchase. That’s what it’s there for.

The second thing we need to consider is the cost of spectrum. A dollar on spectrum is a dollar not spent on expanding connectivity. Other countries appear to have learned this lesson. The governments of Japan and South Korea both have provided spectrum to their carriers for free. Smaller economies like Ireland and the Czech Republic both charged an average of 4 cents per each unit of spectrum for the same unit U.S. carriers paid on average $1.19. Meanwhile in Canada, national carriers paid more than 2.8 times as much as the U.S. for 5G spectrum. Canada’s latest auction, the most expensive in the world, drove close to $9 billion in revenue for the Canadian government. This is important because it would take that same $9 billion to fully close the rural connectivity gap and provide full 50/10 megabyte per second download/upload service to every single Canadian household. This comes from a study from the Institute of Fiscal Studies and Democracy at the University of Ottawa using data from the CRTC that estimated it would cost between $6 billion and $10 billion to provide 50/10 Mbps service to the 14% of Canadian households currently underserved.

Senators, we must seriously consider how wise it is for us to endorse a policy that outright prevents companies from building in rural Canada.

Here is another number that might surprise this chamber. Through cellphone bills, a typical family of four now pays $400 annually — or $100 per person — for the cost of spectrum. This is up 12.5% since the latest auction. That’s essentially two months of wireless bills every year per customer that goes straight back to the government.

Senators, there is an opportunity cost to having the highest spectrum prices in the world. First and foremost, it’s preventing our goal, which is universal access. Second, it’s driving slower economic growth. In fact, the GSMA, the global mobile industry standard-setting body, estimated that bringing 5G spectrum policies in Canada in line with international best practices would deliver well in excess of a total of $30 billion in additional GDP growth for the entire 2020-2040 period.

The third consideration around spectrum is a bit technical, but it actually might be the simplest to fix. We need to make sure that providers with a successful track record of deployment have enough spectrum to achieve the best networks. Even in the early stages of 5G deployment, carriers will need access to spectrum to satisfy the needs of consumers, businesses and the public sector, including for cellphone services and wireless broadband. Experts agree that the maximum benefit of 5G comes with 100 megahertz channels. However, ISED allocated much less than this in the most recent 5G auction and then set aside a significant amount for regional carriers. The result was that the most expensive spectrum auction in the world was one that didn’t allocate enough spectrum to launch next-generation networks.

Senators, I need not remind you that these networks are the key to rural, remote and northern connectivity. For the next spectrum auction — which, as I say, is scheduled to take place in 2023 — the goal must be to ensure that coming out of it, every carrier has access to 100 megahertz of 5G spectrum as long as they are ready to put it to use. It’s the only way that we can continue to offer world-leading networks to Canadians.

Honourable senators, several of you have spoken in this place about the need for new thinking when it comes to spectrum policy. Namely, we must think hard about whether past policies are working in our interests. I would posit they are not. For the upcoming auction, I would propose we abandon the current policy — set-asides — entirely in favour of an internationally recognized alternative: caps. Caps ensure carriers get the spectrum they need while making sure costs stay under control. A recent study found that most OECD countries use caps in their auctions and did not see the same prices we saw here in Canada. So we know this policy works. In the upcoming auction, there is enough spectrum to go around. Let’s not have a repeat of the last auction. Instead, let’s focus on the goals that really matter: connecting Canadians.

Honourable senators, we must see spectrum for what it is: the key to future productivity, core to economic development and a catalyst for innovation. Most importantly, it is a tool to connect and enable our vision for Canada. In the North, increased connectivity means we can access better medical services and do more procedures in the territory. It means we no longer have to travel as much or as far in the administration of justice. As I mentioned in my second reading speech on Bill S-4, better connectivity in Nunavut means students can connect with world-class institutions and take online courses, and it means something as simple as being able to apply online for services and grants.

Honourable senators, we all want the same thing: for Canada to be the world leader in productivity, quality of life and sustainability. For this to happen, we must have ubiquitous access to fast and reliable networks. If we can reach this vision, we will unlock untold potential for growth, innovation and prosperity. I want to use an industry we’re all familiar with to illustrate the economic importance of broadband: agriculture.

It’s estimated that next-generation 5G connectivity will add as much as $40 billion to Canada’s GDP within five years, and another $500 billion in value could be added to the global gross domestic product if connectivity is successfully implemented in the agriculture industry. The lack of reliable connectivity in rural communities leaves farmers behind. Farmers, as we know, are the backbone of our economy, working hard to feed Canadians and the world. So let’s help our farmers produce more food and produce it sustainably by giving them better access to connectivity.

As technology develops and as connectivity becomes more prevalent in rural, remote and northern communities, thousands of sensors will enable real-time decision making on farms based on data from those devices to produce more, maximize inputs and further increase sustainability across the supply chain. Connectivity will help farmers automate precision agricultural technologies to produce more wheat, canola and other crops while optimizing inputs and time, creating a more sustainable product without cutting their yield.

Looking ahead, we unlock the possibilities of data-driven agriculture to get an even deeper understanding of how to best raise crops. With automation, our farmers will be able to use data to practise the four R’s: right time, right place, right rate and right source. In particular, 5G will also literally drive semi-autonomous to fully autonomous tractors. A multitude of sensor devices, augmented reality and real-time decision making on farms will be based on data from those devices. Smart tractors and robotics are a viable option for many remote agricultural operations that struggle to find workers, but they need to be connected.

We’re also seeing a rise in advanced livestock sensors, whereby large herds can be connected to sensors that monitor every aspect of what is going on with the animal, such as heart rate, to ensure that they can receive the best and healthiest treatment possible. To enable these technologies, connectivity is the key.

Improved connectivity on the field will allow for easily accessible cloud computing and responsiveness to data that is gathered and used in precision agriculture, and help unlock the potential of ag-tech innovations. Connectivity through 5G will help future-proof the sector as tech develops to higher capacities. To make sure we don’t leave our farmers behind as 5G rolls out across Canada, we need to make sure companies make good use of spectrum they receive through auctions and deliver for all Canadians, not just urban Canadians.

Fundamentally, this bill is about making sure those that buy spectrum actually use it. When you buy a public resource, especially at a significant discount, you should be buying an obligation to connect Canadians. This bill does two important things. It clarifies the minister’s powers to ensure the minister takes away licences when companies refuse to connect at least 50% of Canadians in a given licence area, and it allows Canadians to sue companies that under invest in connectivity. If the minister takes away a licence, and the former licensee cannot find someone to continue connectivity, the former licensee becomes liable for damages.

The first element is key because while the minister technically has this power implicitly, it has never been formally set out in law. By creating this provision in law, the minister will have a clear mandate to withdraw licences when it becomes clear that the company that bought the spectrum has no intention of using it. Then it can go to another company or group that will actually deploy the spectrum to connect Canadians. This is a policy that balances the industry’s need for rules that governs fair spectrum use with Canadians’ need for connectivity. If passed, “use it or lose it” would apply to all spectrum licences. I expect that would create an incentive for companies to build quickly — a positive thing — before the government can take away licences once the grace period expires.

The second element here is the liability of a company to a community that loses connectivity. It’s possible that if a company is providing connectivity to one community, but not the rest of the communities in the licence area, the loss of the licence could mean a community is disconnected. This is obviously unacceptable. The solution is elegant: mandate the company to find another company to take over the licence, or pay massive penalties to the community.

Honourable senators, I believe this will be enough of a disincentive to prevent any company from actually disconnecting a community, and instead work hard to build the infrastructure needed to connect all Canadians. The bill is important because it sets the stage for a modern connectivity policy, one that is rooted in increasing Canada’s economic productivity and ensuring that Canada has the highest quality of life globally. This bill is important because it means that Canadians will be connected faster to better broadband to build the future we all envision.

Honourable senators, we were all appointed to represent views that are not always present in the other place. We’re constitutionally obliged to represent minority perspectives. In this case, it is the perspectives of rural, remote and northern Canadians who have been deprived of connectivity for so long. This is an issue that I believe transcends party lines; “use it or lose it” was present throughout the Conservative Party platform in 2021. I know it’s also present in Minister Champagne’s mandate letter, so I hope I can count on all of your support and your help in moving this bill to committee. It is imperative that we hear not just from experts on this matter, but also from communities affected by poor or no connectivity. I’m ready to work collaboratively with all of you to improve connectivity across Canada. Thank you. Qujannamiik.