Albert --
If my memory serves me correct, we discussed Canadian interest in ADSL a while back. The following speech was given earlier this month and I find the reference to wireless licenses a bit disturbing. Perception often affects a sector momentarily and I wonder if ADSL stocks might have stumbled as a consequence of this action.
I welcome your comments and others.
Regards,
Pat
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Opportunities in Broadband Services
Carol Stephenson
President and CEO
Stentor Resource Centre Inc.
Broadband Multimedia World Forum
International Engineering Consortium
November 11, 1996
Colorado Springs
Good morning.
First of all, my compliments to the IEC for convening this world forum on broadband and multimedia services. As those of us in our various telecommunication administrations work to clear the obstacles to our information highway construction, we sometimes lose sight of the global picture.
We are all engaged in building, not just an interstate but a truly pan-global highway. The products and services that will run on it will reach a global market. So opportunities like this to learn what's going on in other jurisdictions are valuable indeed. I'm pleased to be here to share our experiences in Canada and to learn more about what's happening elsewhere.
My primary purpose here today is to outline the strategy the Canadian telephone companies are pursuing as we evolve toward a multimedia interactive future. But I recognize that many of you may be unfamiliar with the Canadian regulatory and business environment. So I thought I'd begin with a brief chronology of key milestones.
The Canadian telephone companies put the first stake in the ground back in 1994 with the announcement of the Beacon Initiative. This is an $8-billion commitment to build a national broadband network in Canada over the next decade. Beacon envisioned a network of networks in Canada and a fully competitive marketplace in all information services including local telephone and cable.
Later in 1994 the federal government announced its blueprint for the development of broadband information services. This was followed by a major public proceeding in 1995 on convergence.
In August of this year, following the report from that proceeding and extensive consultation with the carriage, content, software and equipment industries, the government issued a policy statement on convergence.
We welcomed the Federal Government's policy statement on convergence. It finally brought clarity to an area that had been clouded with uncertainty since we first coined the phrase "information highway".
The convergence policy statement explicitly lays out the terms and conditions by which the cable companies and the telephone companies may enter each other's market. The process will ensure that neither side will have a head-start. For example, before telephone companies can begin to offer cable services,issues surrounding local telephone service competition must be addressed. Similarly, before cable companies can offer local telephone services, we must resolve issues such as resale of cable services and access by other service providers to coaxial inside wire.
Meanwhile, on another front Industry Canada decided to accelerate the process of developing LMCS - based broadband services in Canada. In February, they called for expressions of interest from prospective licensees for services in the 28 GHz band.
That was the good news. The bad news was that in calling for applications, Industry Canada deliberately excluded both local operating telephone companies and cable companies from the process. The logic was that this would create a third competitive wireless option to the wireline broadband networks we are currently developing. Industry Canada is reserving additional LMCS spectrum for license two years from now. We're told we'll be allowed to bid on it then. But for now, we're sidelined from the exploration of the potential of LMCS.
Obviously we view this as a set back. Since our earliest Beacon vision back in 1994, we've come to the conclusion that while our wireline technologies may offer a springboard into the convergent world, they will only furnish part of the solution. The information highway will not be built exclusively on a road-bed of copper, coax or fibre. It will rest on a full spectrum of technologies, including wireless solutions like MDS, LMCS, PCS and direct-to-home satellite, as well as others.
If I have one message to deliver today, it is quite simply that no single sector technology will be able to cost-effectively give Canada the information highway it needs. All of us in the information industry , including our policy makers, must recognize this. Until they do, however, we'll continue to pursue our strategy for a ubiquitous fibre based broadband network.
This strategy has four components:
1.experimentation
2.customized solutions
3.infrastructure spending, and
4.vigorous competition
Experimentation
Experimentation is at the heart of a variety of technical and marketing trials we have underway or planned.
New Brunswick was first out of the gate with its VideoActive network trial that began in August. This trial provides fully bi-directional broadband services to 5000 homes in central New Brunswick. NBTel will announce it1s VideoActive suite of services tomorrow. They will include very high speed Internet access, on line access to the provinces daily newspaper and access to InfoCosm - an on-line phone store. NBTel will roll this market trial out to 15,000 more customers in 1997.
Broadcast distribution licenses are the key ingredient in many of
the market trials the telephone companies are developing. Last month the government tabled a bill to end the prohibition on Bell Canada holding a broadcast license.
This will clear the way for Bell to explore bundled cable and telephone services. Bell has applied to the CRTC to conduct market trials in London, Ontario and Repentigny, Quebec. Our hope is that the license applications will be approved quickly and that the trials will be underway in early 1997.*
Telus of Alberta has also applied for permission to begin similar
trials in Calgary and Edmonton this year. Other trial programs are under development by the other Stentor members.
There is a real sense of urgency about this. It is November of 1996 and as yet no one in Canada is free to acquire the knowledge so crucial to getting our information highway right. Elsewhere others are acquiring that knowledge. We are aware that many trials are currently underway in the United States right now. We believe our policy makers need to understand that knowledge and experience will be the real foundation for the Canadian information highway. And, once acquired, that knowledge will be exportable in a fiercely competitive global
marketplace.
These trials are important because they will finally help us come to terms with one of the great enigmas of convergence: If we build it, will they come - and if so, for what and at what price? We have been driven throughout much of the convergence process by the belief that customers will increasingly demand choice and flexibility. The "killer app" if it exists, has yet to be identified. The aggressive trial program we are undertaking will help us to find out.
Customized Solutions
The trials combine with some of the customized solutions development we've done all across the country for clients in all sectors of the economy.
In Newfoundland where the economy is undergoing a major overhaul from a resource to a high tech base, we're developing tele-engineering applications. These applications will assist the burgeoning IT sector to complete virtual-lab engineering projects with contributions from engineers working all around the world.
In central Canada we've developed a major Intranet application
for the automotive industry that links the big car companies in real
time with their community of suppliers and distributors.
In New Brunswick - the most wired jurisdiction on earth we1re working closely with the provincial government to develop a comprehensive electronic delivery system for government services - everything from moose licenses to social assistance.
In Alberta we're exploring a wide array of tele-medicine applications including the development of a custom designed portable tele-medicine unit complete with all the peripherals necessary for remote diagnostics and monitoring.
In B.C. we're an active partner with the Tele-learning NCE group at Simon Fraser University. Tele-learning has provided a major impetus for post secondary distance education all across Canada and we're proud of our association with them.
We believe that the educational sector, in particular, holds great
promise for exportable Canadian expertise.
We believe that Canada can be a powerhouse in the development of educational information highway products and services. We believe Canada can play a role in educational content similar to the role the U.S. plays in the creation of entertainment content. There is a multi-billion dollar market globally for primary, secondary and post-secondary programs. We have what it takes to lead that market if we build our information highway right.
Building it right also means ensuring that our community of users
grows along with our network. To help make that happen, Stentor has committed $12 million to link all Canadian schools to the Internet by the end of this school year. When we're done, Canada will be the first nation of its size to have accomplished this. We estimate we'll be ahead of the U.S. initiative to put its schools on the information highway by about three years.
Infrastructure spending
In the area of infrastructure spending, we1re also hard at work
ensuring that our networks and technology meet the challenges of the information highway. Since January, ACT and EdTEL have been conducting trials of ADSL. The telephone companies have a huge investment in the tons and tons of copper we have running under our streets and across our rural areas. ADSL is an important element in ensuring we can deploy information age services as quickly and economically as possible. Bell Canada initiated an ADSL trial of its own on September 16. Others in other telephone companies are planned.
Canada is the most wired nation on earth, despite the fact that it
has the world's second largest geographic area. More than 98 per cent of Canadian households have both a telephone and a television, and about 80 per cent have cable TV service. Over 96 percent of our customers are connected to a digital switch. All our backbone transmission is digital and largely optical. Cellular and paging services are available to more than 94 per cent of the population and there are 2 million users in Canada.
Stentor's share of this far reaching infrastructure is one of the assets that makes us confident we can continue to provide information highway services now and into the next century.
We are putting every effort into the delivery of the services
Canadians have heard about for so long. As we do so, we1re increasingly aware of the tremendous size and cost of the job ahead of us. While so much of our energy is devoted to exploiting our current platforms to the fullest, we cannot escape the fact that in some circumstances, the best, most cost effective answers for high-bandwidth, bi-directional networks may lie in wireless platforms such as MDS and LMCS.
Digital MDS is an interesting and promising technology platform
with the capacity to deliver up to 80 channels of programming
over a wire-less infra-structure. Analog MDS has been deployed in rural markets for many years. Now digital MDS is poised to show the citizens of both urban and rural Manitoba what it can do. MDS is so promising that we're anticipating a more widespread introduction of this technology into markets such as Southern Ontario in the near term.
LMCS, while still substantially unproven, seems to have great promise as an integrator of voice, video and multi-media services delivered on one wireless platform.
We believe there are serious risks attached to the course our government has chosen for LMCS deployment.
First of all there's the risk that, in excluding the best network connectivity experts in Canada from this exploration, we may not
get it right. And secondly, there's the real prospect that even if
we do get it right, the knowledge gained from the exploration will
profit companies outside Canada. And finally, there is the risk that our two year wait may have devastating implications for the wireline carriers. This possibility hasn't escaped our national newspaper. They articulated it this way in a recent editorial:
"Last week Industry Minister John Manley chose broadcasters over telephone companies in doling out three new high frequency wireless cable licenses. He says the telephone companies can reapply in a couple of years. Will they be around that long, as we know them?"
We certainly plan to be. But building walls to keep us out of an
important technological advance doesn't seem to us to be in the
best interests of Canadians even if it is done to advance the march of competition.
Competition
Like our government, the Canadian companies are deeply committed to the idea of a fully competitive information services market.
A competitive market provides consumers with lower prices and
greater choice. We've seen the impact of lower barriers in long
distance calling. Many companies have entered the field and prices have dropped.
But efforts to over-manage the growth of competition can be disastrous. We've already seen how this can happen in the long
distance telecommunications market. In spite of the fact that
Canadian telephone companies have lost anywhere from 20 to 50 per cent of market share, telephone companies are still playing in the marketplace with two sets of rules. We have to tell our competitors what we1re going to do and wait for regulatory approval before we do it. Other companies are free to set prices and offer services pretty much at will. This tilted competition was designed to protect small Canadian competitors. Instead it's protecting companies like AT&T and Sprint. We believe there's a real danger of over-managing competition in the multi-media broadband market too.
The stakes in the development of Canada's information highway are huge. We're not just building a network, we're determining the kind of resources that will fuel Canada's economy in the information age. Our leadership in information technology is at risk. So is our survival as a knowledge exporting nation.
This debate has been portrayed as a fight between big cable and big telcos for too long. To build Canada's information highway we will need to muster all the resources at our disposal. We need all the best of Canadian expertise brought to work on all dimensions of the problem. We need to work together to build the best infrastructure we possibly can. Canadians of this generation and generations to come deserve nothing less.
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