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Submitted by TeraGo Networks 2010–07–12 11:24:27 EDT
Theme(s): Digital Infrastructure

Executive Summary

Introduction

TeraGo Networks Inc. (TeraGo) is pleased to respond to The Consultation Paper on a Digital Economy Strategy for Canada (the "Consultation Paper"). Our focus will be on building a world class digital infrastructure and what it means to Canadian businesses and public sectors sustainability, and the steps the Canadian government can take to ensure it happens.

This paper will be separated into two parts to clearly address the challenges stated in the Consultation Paper from the prospective of the Canadian business owner.

  1. Building a World Class Digital Infrastructure: TeraGo will discuss the technology requirements for businesses and public sector institutions and how they differ from the average consumer. Canadian businesses as a whole are under serviced even in the largest city centres, and the ramifications of those needs are quantifiable. We will discuss limitations of existing technology, the myths perpetuated by the large telcos and the reality of a need for true "Business Grade" internet, data and redundancy to ensure the success and growth of all Canadian communities.
  2. Steps the Government Can Take to Ensure ICT's Prosperity: Government controls many variables that can either hinder or ensure the long term success of broadband coverage for its population, the following five of which we will cover in our submission:
  • Ensuring a fair market;
  • Access to spectrum at reasonable rates;
  • Access to foreign ownership capital;
  • Broadband stimulus directed at underserved communities; and
  • Other Government initiatives.

Submission

Submission by TeraGo Networks Inc.

Digital Economy Strategy
Prepared By: Jim Nikopoulos and Scott Benzie
Contact: Jim Nikopoulos
Phone: 905-326-8711
jim.nikopoulos@terago.ca

Introduction

TeraGo Networks Inc. (TeraGo) is pleased to respond to The Consultation Paper on a Digital Economy Strategy for Canada (the "Consultation Paper"). Our focus will be on building a world class digital infrastructure and what it means to Canadian businesses and public sectors sustainability, and the steps the Canadian government can take to ensure it happens.

Overview

This paper will be separated into two parts to clearly address the challenges stated in the Consultation Paper from the prospective of the Canadian business owner.

A: Building a World Class Digital Infrastructure

TeraGo will discuss the technology requirements for businesses and public sector institutions and how they differ from the average consumer. Canadian businesses as a whole are under serviced even in the largest city centres, and the ramifications of those needs are quantifiable. We will discuss limitations of existing technology, the myths perpetuated by the large telcos and the reality of a need for true "Business Grade" internet, data and redundancy to ensure the success and growth of all Canadian communities.

Image 1: TeraGo Networks
Image 2: TeraGo Networks
Image 3: TeraGo Networks

B: Steps the Government Can Take to Ensure ICT's Prosperity

Government controls many variables that can either hinder or ensure the long term success of broadband coverage for its population, the following five of which we will cover in our submission:

  • Ensuring a fair market;
  • Access to spectrum at reasonable rates;
  • Access to foreign ownership capital;
  • Broadband stimulus directed at underserved communities; and
  • Other Government initiatives.

A: Building a World Class Digital Infrastructure

"Business Grade Broadband"

In order for Canada to become on of the world leaders in ICT, it must first develop a plan to ensure 100% of its businesses have true "business grade" broadband. This applies to companies and public service industries in both rural areas and city centres. These entities run mission critical applications and must have fully diverse connections for 100% uptime.

What is "business grade" broadband? A few metrics can be used to quantify if a connection is suitable to run business applications on, including but not limited to:

  1. Service Level Agreements committing to uptime, throughput, time to repair and latency; II. Symmetrical Service; III. Access to static IP's; IV. 24/7 NOC support; and V. At least 5MBPS of speed.
  2. Symmetrical Service;
  3. Access to static IP's;
  4. 24/7 NOC support; and
  5. At least 5MBPS of speed.

True business grade broadband is at a critical shortage on the outskirts of our urban centres and in rural Canada. While DSL and Cable have historically been able to service some of these locations, their physical limitations are unable to grow with the demands of emerging technologies such as VoIP, Cloud Computing and diagnostic and system management.

New technologies such as HSDPA (High-Speed Downlink Packet Access), Satellite and other mobile data services are unable to provide the stability required for businesses to run on.

There are only 2 realistic options for businesses to operate in the new digital world: Fibre and Fixed Wireless. While Fibre is the perceived "best choice", it is limited by the capital expenditures needed to lay it, and its inability to connect less dense areas of the country.

Fiber vs. Fixed Wireless
Fiber vs. Fixed Wireless

Source: Mobile Backhaul: Fiber vs. Microwave. By: Tzvika Naveh Solutions Marketing Manager Ceragon Networks

Cellular Backhaul

Other countries around the world have turned to and invested in fixed wireless as a viable option for their cellular backhaul when the fiber footprint has become too restrICTive to expand, as evidenced by the chart below. TeraGo has recently been awarded such similar projects from 2 AWS new entrants that have launched cellular networks here in Canada.

Fixed Wireless is quickly becoming the most cost effective solution to quickly expand broadband and cellular into rural and underserved areas. With proper investments, fixed wireless companies such as TeraGo can ensure that every business, no matter how remote, can have access to the bandwidth they will need to run their companies.

Table 1: Fiber vs. Microwave
Country Carrier Legacy Installed Base Strategic Direction
Source: Mobile Backhaul: Fiber vs. Microwave by: Tzvika Naveh Solutions Marketing Manager Ceragon Networks
Italy Vodafone Mainly microwave, following a 1995 decision to avoid reliance on Telecom Italia's leased lines Subject to periodic review
U.K. Vodafone High reliance on leased lines Aggresive shift to microwave
U.K. "3" Relies mainly on leased lines. Decision made in order to avoid initial CapEx hit from self-building microwave on top of an $8B 3G license fee and aggressive network rollout expenditure Subject to periodic review, probable shift to microwave in the future
U.K. Orange High proportion of microwave, but early generation of point-to-point microwave now nearing end of life Considering update options including new microwave and fiber
U.S. Sprint High reliance on microwave, using multiple platforms Shift in balance towards microwave
France SFR High reliance on leased lines Aggressive shift towards microwave
Malaysia Maxis High proportion of point-to-point microwave Trialing Point-to-multipoint

Ramifications of Lack of Business Grade Broadband To Underserved Areas

As technology advances, businesses and public institutions are being forced to move to automated systems, software improvements, e-commerce and other similar applications. In order to keep up with the advances, such entities are becoming more and more dependent on the availability bandwidth. Existing technologies such as DSL, Cable and Satellite do not have the reliability, symmetrical speed or scalability to run these applications effectively. Businesses are being forced to move to areas where there is an existing telco presence. Large stable employers are moving their operations out of small towns to meet the needs of emerging technology. The need for broadband is growing exponentially faster than the telco companies are growing their infrastructure. In order to see these communities thrive and grow, they must have business grade bandwidth available to them. TeraGo has committed to serve these under developed markets to ensure that companies can remain a lynch pin in the success of their adopted homes.

The technology dynamics of the digital age continue to impact where industries and firms locate and cluster geographically

The Emerging Digital Economy 2006

Many of Canada's main industries have historically been resource based. Logging, Fisheries, Mining, and Oil and Gas are major drivers of the Canadian economy. They are also located in places where there is a dire lack of bandwidth. TeraGo recently received an RFQ from a major oil field in Chip Lake, where the oil company was running systems and programs that the local satellite providers could not provide the stability for. The customer turned to an ILEC for support and while they could solve some of their issues, due to the terrain and distance from infrastructure, they turned to TeraGo to complete the build of the broadband network. Fixed wireless became the only option to service this rural area with the business grade broadband required.

A second such case study is a company located in Central Ontario. With locations in Barrie, Collingwood, Ottawa and Belleville, one would think that bandwidth would not be an issue in these cities. Due to the type of access being DSL only, this company may be forced to move its Collingwood and Belleville locations to an area where there is a fibre or fixed wireless presence. Interoffice communication and the systems and diagnostics being run between the customer locations is causing the Collingwood and Belleville locations to reduce the effectiveness of this company's business model.

Network Diversity

More and more companies are relying on mission critical applications such as VoIP, e-commerce, web solutions and disaster recovery to run their businesses. While traditionally these companies exist in what would be considered a "broadband serviced area" they are only being provided one path to the Internet. We classify these one path connections as a "under-served area". Companies are starting to require two diverse paths for their broadband needs which the Canadian telco infrastructure does not accommodate. Companies are finding themselves without the diversity they require. If a company had a primary link with one incumbent, and a back-up with another incumbent, while on paper this company has access from two companies, these partners both use the same transit to get to the internet, which means if one fails, they both will fail.

Fixed Wireless provides a "fiber like" service and does not rely on existing Telco infrastructure to get to the internet cloud. As businesses rely more on bandwidth for their operations, the existence and expansion of a fixed wireless infrastructure will have to be invested in.

The following is a disaster that happened in 2008 and effected more than 22 countries, an example which highlights the need for network diversity.

Event

On 30 January 2008, the failure of two undersea cables knocked out Internet access and telephone service to large parts of the Middle East, Asia and North Africa. Failure of a third cable was reported on 1 February 2008. News reports said the outages may take more than a week to fix.

Analysis

Many areas of the world are connected by a relatively small number of Internet cables, and when several failures happen simultaneously, either by accident or deliberate attack, it seriously affects the ability to conduct business. These events should remind IT and business managers that they always need to prepare for catastrophes with service redundancy and business resumption plans.

Redundancy

This is difficult to achieve in areas that lack telecommunications infrastructure. Even if an enterprise in such an area uses multiple providers, they may all end up on the same undersea cable. If that cable goes down, all the providers go down together. The same goes for work-at-home options.

Some traffic in these circumstances can be rerouted, but that's not always the best bet. An earthquake near Taiwan in December 2006 also upset undersea cables, affecting service around Asia, so many telecommunications companies have added new landbased routes over Russia.

Satellite backup service is a good way to cope with a long outage, but it can be expensive, and the performance may not be good enough for applications that need near-real-time responses.

While this instance may not be close to home, Canada is behind some of these nations in its readiness for a mass outage.

Connecting the Public Sector

One of the key components of building a world class digital infrastructure is ensuring that Canada's public institutions all have access to digital networks. Focusing on Education and Health Networks provides a great example of where Canada is failing in its broadband architecture.

Education

Access to "Canada's Advanced Research and Innovation Network (CANARIE)" is becoming paramount to the success and innovation of our education institutions, in addition to across the country access to other such networks. These educational institutions require a "business grade" broadband solution. TeraGo is finding that the "last mile" to connect these institutions both in "unserved" and "under-served" areas is not cost effective when a fibre solution is required. The Ontario Research and Innovation Optical Network (ORION) is turning to TeraGo to connect schools not just in rural Ontario but also in the downtown core where fibre does not exist or where redundancy is necessary. In the interest of having all young Canadians educated at the same level with the same access to emerging technologies, a benchmark for the Canadian Government must be to see all educational institutions are connected to their respective networks.

The following is a case study representing a broadband connectivity issue that was solved by TeraGo for the Seven Oaks School Board in Manitoba.

Seven Oaks School Division

The Seven Oaks School Division in Winnipeg, Manitoba, is a community of students, parents, teachers and support staff, committed to achieving and providing educational and cultural excellence. With 9,200 students and 1,000 staff, Seven Oaks is comprised of 19 schools (three high schools and 16 Kindergarten to Grade 8), a board office, an Adult Learning Centre and a maintenance shop.

For years, Seven Oaks School Division's IT infrastructure ran on cable. The IT system was slow and unreliable, and the fibre-based service was getting to be too expensive for an educational facility faced with budget restraints.

In search of a more efficient and cost-effective alternative, Seven Oaks' IT Manager, Ray Sharp put out a Request for Proposal. "TeraGo Networks put forward a compelling proposal, and shortly after we installed their service, we realized that we made a really good choice," said Sharp. "We started with TeraGo's Internet connection and quickly discovered that the network was very reliable."

While speed, reliability and security were of utmost importance to Sharp and his team, privacy was also a big concern. "When you're sharing the Internet with a service provider, you don't really know where your traffic is going and how secure your information is," added Sharp.

Though a private network would be the ideal solution, Sharp didn't think it was a viable option in terms of cost. "But TeraGo really came through and built us a custom solution that met our needs," he said.

TeraGo manages the network infrastructure to maintain Seven Oaks' constant connection to its Internet service provider, MERLIN (Manitoba Education Research Learning Information Networks)

TeraGo Custom Built Network

To address Seven Oaks' challenges with respect to security, speed and reliability, TeraGo built a custom, private network using licensed radio spectrum owned by TeraGo. A tower was located at each high school to create the backbone network to support the division's 1800 computers and 40 servers. Each tower connects the junior schools within the range of the tower. TeraGo manages the network infrastructure to maintain Seven Oaks' constant connection to its Internet service provider, MERLIN (Manitoba Education Research Learning Information Networks). TeraGo also provides a VLAN (Virtual Local Area Network) connection between Seven Oaks and MERLIN as a back-up service alternative to the fibre network used by MERLIN to connect with local school distrICTs.

According to Sharp, Seven Oaks connectivity is now 20 times faster post-TeraGo installation. "We went from 10.5 MB half duplex to 100 MB full duplex," he explained. "The towers form a ring around the division, and if one side of the ring goes down, the traffic just flows the other way. So redundancy is built into the network, which means all schools stay up and running."

Division staff who conduct a lot of their work remotely have seen a major improvement in speed. "We can now move software around the division, from desktop to desktop, so much quicker," said Sharp. Another major advantage, Sharp added, has been the tremendous customer and technical service provided by TeraGo. "The Network Operations Centre in Calgary will notify us that a radio is down and we don't even know it."

Being able to educate all our students on emerging technology, and giving them access to that technology should be a key governmental priority. Not having this access will create a large educational gap between Canada's urban and rural citizens on emerging bandwidth dependent applications.

Health Networks

Medical service should be the same for all Canadians. That requires that all new technologies be available in every major hospital across the country.

Hospitals are almost always built as part of a "hospital network" with some specializing in different disciplines. In the realm of healthcare, access to data plays a critical role in day-to-day operations.

The ability for hospitals and healthcare facilities to share time sensitive mission critical information, including x-rays, MRI, and CAT scan images, should be a right (not a privilege) for Canadians in under served markets.

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B: Steps the Government Can Take to Ensure ICT's Prosperity

Ensure Fair Marketing

One of the many arguments made against the progress of Canada's digital infrastructure is that reported numbers and statistics from the ILECs do not ring true in reality.

The use of "theoretical statistics and speeds" from the ILECs to support their claim of coverage of the Canadian population is counter-productive to finding real solutions. This is more prevalent in the business sector than anywhere else. DSL speeds advertised at 21mbps, and the emergence of HSDPA and mobile data internet, while encouraging, are not a real solutions for any businesses.

TeraGo would like a level playing field when quoting and responding to RFP's. The use of "theoretical speeds" is misleading and not productive to moving Canada forward in its digital infrastructure.

Access to Spectrum

We agree with the Government's position in the Consultation Paper that "ensuring that radio spectrum is used efficiently and made available in a timely fashion is critical for growth and innovation in the wireless sector, and for users in the economy as a whole". Spectrum resources should also be available to all wireless operators on a cost efficient basis.

TeraGo applauds Industry Canada for its recent initiative to review its spectrum inventory with a view to better understanding where opportunities exist for more intensive use or reallocation. An updated Spectrum Release Plan that provides a 10-year blueprint identifying which frequency bands will be released, when and how, would allow operators and capital markets a greater measure of certainty and predICTability.

Given the need for additional spectrum by all wireless operators, not simply the incumbents, TeraGo submits that the release of key future spectrum resources, including the 700 MHz and 2500 MHz bands, include a set aside for new entrants, much like the recent auction for advanced wireless services (AWS) spectrum.

Foreign Ownership

Over the past decade, several independent review bodies have recommended that the Government loosen or eliminate these restrICTions, citing benefits such as increased access to capital, faster technological transfer, along with more competitive prices and choices for consumers.

TeraGo fully endorses the elimination of foreign investment restrICTions in telecommunications. Having greater access to capital would allow TeraGo to continue building out its network infrastructure to serve broadband needs for Canadian businesses in suburban and underserved business parks. One of the founding partners of TeraGo was a US-based private equity company. Without greater access to non-Canadian sources of capital, smaller entities such as TeraGo cannot compete against the incumbents and provide Canadians with the choice and competition they need when it comes to their broadband needs.

Broadband Stimulus Directed at Businesses and Public Institutions in Underserved Communities

TeraGo supports the Government's initiative in establishing the $225 million broadband stimulus program to extend a basic level of broadband connectivity to all Canadian households. At the same time, however, we believe that the scope of this stimulus program should have been expanded to cover the provision of broadband services to communities (not just households) and should have been more focused on "underserved" (not just unserved) areas. This broader scope was captured in the U.S. broadband stimulus program.

We believe that all levels of the Canadian government should continue to have an ongoing role to ensure that Canadian businesses are not left behind. Therefore, broadband funding initiatives need to continue being supported by all levels of government and should include the promotion of high capacity access to businesses and public institutions in underserved markets. As stated in our response, our definition of "underserved" includes communities in which local businesses and public institutions do not have more one "business grade" broadband connection. Access to a broadband service that is symmetrical with speeds at or above 5 Mbps is essential for businesses running their mission critical applications.

Other Government Initiatives

In addition to broadband stimulus programs, the Canadian government can encourage investment in a world-class digital infrastructure by introducing other fiscal measures designed to promote spending in broadband infrastructure in underserved areas. Examples include extending the SR&ED program to cover applicable sales and marketing costs, accelerating the capital cost allowance for broadband network equipment or other government cross subsidization programs.

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