ITAC Update on Digital Economy Strategy

April 7, 2011

Almost a year has passed since Ministers Clement, Finley and Moore announced the release of the National Digital Economy Strategy (DES) Consultation Paper. The strategy was to be completed by the spring of 2011, but now with a possible federal election looming, it is unclear whether this deadline will be met. We note with interest that in its March 17 Budget, the Québec government has placed significant emphasis on a digital economy strategy and its implication for productivity and prosperity in Québec. Considering these circumstances, the time is right for an update from ITAC on the DES.

ITAC was pleased with the breadth of the federal government’s consultation paper, and we submitted a response that hit on the five key areas outlined in the consultation paper:

- Capacity to Innovate Using Digital Technologies,
- Building a World Class Infrastructure,
- Growing the Information and Communications Technology,
- Digital Media: Creating Canada’s Digital Content Advantage, and
- Building Digital Skills for tomorrow.

You can read our response here: http://itac.ca/media_details/1652.

The last official update on the strategy took place in November, when Minister Clement spoke at the annual IIC conference in Ottawa (http://itac.ca/site/media_details/1828). The key point ITAC took away from that update was that the true raison d’être for this strategy is to ensure that Canada becomes and remains a leader in ICT – a leader in developing ICT skills, a leader in rolling out broadband infrastructure, a leader in creating public policy environments that encourage financial investments in technological innovation, and a leader in the use of digital technology to improve our productivity and our public services.

In order to demonstrate ITAC’s support of this idea, this will be the first in a series of written reflections on the status of the DES and what it needs to accomplish. They will take on a Q&A format to encourage maximum participation among ITAC members and other key players in the Canadian ICT industry. We encourage you to submit any questions you may have, as well as any feedback on our responses to them.

To begin, let’s focus on the fundamental underpinning of the strategy: broadband.

What is ITAC’s stance on the development of broadband infrastructure in Canada?

Canada must become and remain a leader in broadband.

After extensive consultation with our members, as well as some outside our membership (many of whom study broadband climates in competitor nations), we have come to see that a key criterion for successful broadband rollout is the setting of goals and targets for all Canadians – not just those in easy-to-reach urban areas. We must avoid a “digital divide” by extending our aspirations and goals to both urban and rural Canada.

Second, we have found that in establishing our goals in this area, we are focusing too heavily on download speeds, as opposed to taking a more holistic approach to broadband. While download speed is an important metric, we also need to keep our eyes on how much capacity is available for download each month, for instance, in order to fully determine how functional our population can be within this new digital age. If we focus too concertedly on one metric, we risk missing the bigger picture.

Third, broadband is not only about building physical infrastructure. It’s also about being sure we have comprehensive strategies for enhancing things like digital literacy, the digitization of public services, the promotion of broadband adoption by SMEs, and so on. This is not an “if you build it, they will come” scenario. We must build the necessary infrastructure, but we must also be sure our population knows how to use it.

Fourth, making full use of broadband involves the adoption of numerous technologies. In our business and policy decisions, we must be cognizant of the fact that wire-line, fixed wireless and mobile technologies all have a role to play. The minute one pillar is neglected, the strength of the entire structure is compromised.

Finally, our objective should be to rely mainly on private sector business investments to roll-0ut our broadband infrastructure. We do need help from the government on the establishment of an economic environment that promotes business investment. The government can help do this by making an increased amount of spectrum available for purchase, for instance, and by avoiding the taxation of broadband.

Recently, one aspect of broadband use has sparked significant controversy in Canada: usage-based billing. The CRTC decision involves wholesale rates for one carrier. Other carriers have been allowed for years to apply usage-based rates for their wholesale customers. Yet the reports and commentaries about the decision would lead you to believe that retail rates (which are not even regulated by the CRTC) were about to increase massively for all Canadians. However, the discussion around usage-based billing showed that we were prescient in saying that we need to consider more than just download speed, and include questions of capacity in setting our broadband aspirations. Whether we talk about download speed or capacity, one thing is clear: we will need massive amounts of investment in both wire-line and wireless networks to meet the ongoing enormous growth of traffic on the internet and in terms of internet used by Canadians.

Recent data has stated that Canadians are among the heaviest internet users in the world. For instance, comScore’s March 2011 report, “Canada Digital Year in Review 2010” states that the average Canadian spends 43.5 hours on the internet per month, nearly twice the worldwide average of 23.1 (http://www.comscore.com/Press_Events/Presentations_Whitepapers/2011/2010_Canada_Digital_Year_in_Review). Canadians also ranked first in the number of website visits per user per month, and second in the number of pages viewed.

Furthermore, we’re consistently at the front of the pack in peer-to-peer file sharing at very high levels. This shows that the internet here, in general, must perform well. However, projections of growth in internet use spurred by the increasing use of video and explosion of social networks mean that even with tremendous advances in technology, our wireless networks and even wire-line networks will be hard put to keep up with traffic demands. And yet we already invest millions of dollars every year into those networks.

In closing, ITAC would like to salute the federal government for taking such steps as freezing spectrum rates, in an attempt to foster an optimally healthy broadband environment in Canada. It is clear this is a priority for them, and ITAC is committed to working together with the government toward this end. We would encourage government to continue working toward freeing up as much spectrum as possible in order to achieve this goal.

In our comments on broadband, it is not ITAC’s intent to wade in between our members, some of whom are wholesale customers while others are wholesale providers. We will work tirelessly, however, as an advocate for this industry, as well as the health of our economy and society. From there, we will rely on the CRTC to take all facts into account when determining what is best for competition and what’s right to promote the abundant and sustained investment in this technology that is so necessary to our nation’s economic health.

We welcome your comments on this DES update. If you have any thoughts you'd like share with ITAC, please contact Brendan Glauser at bglauser@itac.ca. Thank you.