Subject: Building.Canada's.Info.Infrastructure.April94.txt

THE CANADIAN INFORMATION HIGHWAY


Building Canada's Information and
Communications Infrastructure



Spectrum, Information Technologies
and Telecommunications Sector
Industry Canada
April 1994



The Canadian Information Highway and many other Industry Canada
documents are available electronically on the Internet computer
network. Anyone with the ability to use Anonymous file transfer
(FTP), Gopher or the World Wide Web can access these documents.
Below are the Internet addresses:

Anonymous file transfer (FTP)
debra.dgbt.doc.ca /pub/isc

Gopher
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World Wide Web
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c Minister of Supply and Services Canada 1994
Cat. No. C2-229/1994E
ISBN 0-662-22189-3
SIT PU 001-94-01

Aussi disponible en francais sous le titre
L'autoroute canadienne de l'information : Une nouvelle
infrastructure de l'information et des communications au Canada.



MINISTER'S MESSAGE:

A new knowledge-based economy that is emerging in Canada requires
a new advanced infrastructure -- the "electronic highway."

This discussion paper raises some of the public policy concerns
with which we must collectively come to grips as we engage in
adapting to very rapidly changing technology. The issues outlined
here are by no means an exhaustive list, but they do affect all
of us to some extent. I encourage you to comment on the matters
that we have raised and to let us know about the areas that we
may not have considered. It is essential that we consider all
aspects of this issue as we develop Canada's strategy for the
information highway.

We want to hear from you. To let your concerns be known, you
may contact the Information Highway Advisory Council by phone
(613) 990-4268, facsimile (613) 941-1164, electronic mail
(Internet) at I.H..Council@Banyan.dgim.doc.ca, or conventional
post, Industry Canada, 300 Slater Street, Room 640, Journal Tower
North, Ottawa, Ontario, K1A 0C8.

Sincerely,

The Honourable John Manley
Minister of Industry



CONTENTS

Introduction

1.   The Challenge of the Global Information Economy
     1.1  Market and Technology Trends
     1.2  Responses by Our Competitors
     1.3  Implications for Canada

2.   Canada's Information and Communications Infrastructure --
     National Vision and Strategy
     2.1  A Canadian Vision for the Information Highway
     2.2  The Information Highway -- A Transformative Role
     2.3  Outline of a Canadian Strategy
     2.4  Objectives
     2.5  Implementation Principles

3.   Canada's Existing Infrastructure -- Building on Excellence
     3.1  Communications Networks
     3.2  Research Facilities
     3.3  Information Technologies Industry
     3.4  Content Providers

4.   Public Policy Issues
     4.1  Building a Competitive, Advanced Network Infrastructure
     4.2  Content on the Information Highway
     4.3  Benefits of the Information Highway

5.   The Road Ahead



INTRODUCTION

The terms information highway or electronic highway denote the
advanced information and communications infrastructure that is
essential for Canada's emerging information economy. Building on
existing and planned communications networks, this infrastructure
will become a "network of networks," linking Canadian homes,
businesses, governments and institutions to a wide range of
interactive services from entertainment, education, cultural
products and social services to data banks, computers, electronic
commerce, banking and business services.

In the Speech from the Throne and in the budget, the government
announced its intention to implement a Canadian strategy for an
information highway. The information highway will have broad and
transformative effects throughout the Canadian economy and
therefore must be consistent with our overall social and economic
goals -- including long-term growth and job creation.

The enabling effects of the information highway will be felt in
all industry sectors and regions of Canada. It will stimulate
research and development (R&D) in leading-edge technologies; it
will facilitate the diffusion of innovative technologies and
information-based services; it will strengthen the
competitiveness of large and small Canadian businesses; and it
will provide cost-effective access to high-quality health care,
educational and social services. The information highway
initiative is essential for Canada's success in a new global
economy in which value, jobs and wealth are based on the
creation, movement and application of information.

Our objective is to build on Canada's strengths in communications
technologies, and to give Canada and Canadians the competitive
edge needed to attract business investment and create long-term,
high-paying jobs. Canada has an advantage in having one of the
most advanced, extensive and universally accessible
communications infrastructures in the world. Indeed, the Canadian
information highway is now a work in progress. The private sector
is deploying and interconnecting advanced networks as well as
developing innovative products and services. Businesses,
institutions and consumers are demanding greater choice and lower
prices. The federal government is a key player through
legislation, policy and regulation governing communications
systems and R&D, and is a major user of information products
and services.

This paper sketches the background to these developments and
identifies a number of public policy issues raised by an
information highway system. Many of these issues are readily
apparent, but many others have yet to be articulated. Over time,
the issues will evolve and change as advanced networks, products
and services are introduced. A Canadian strategy must be flexible
to help us address and adapt to a complex and rapidly changing
environment. Informed participation of all stakeholders and
coordinated investment of the collective resources of Canada will
be essential if the benefits of the information highway are to be
realized. Government leadership is required to develop and
implement a national strategy.

The strategy will be made in Canada, by Canadians, for Canadians.
It will be consistent with our regulatory history, our economic
realities, our market size, our industry structures, the
international context and our unique cultural and sovereignty
requirements. Recognizing the economic, cultural and social
implications of the information highway, the government proposes
three objectives to be pursued by the strategy:

     -    create jobs through innovation and investment
     -    reinforce Canadian sovereignty and cultural identity
     -    ensure universal access at reasonable cost.

Four principles are advanced to guide the development and
implementation of the strategy:

     -    an interconnected and interoperable network of networks
     -    collaborative public and private sector development
     -    competition in facilities, products and services
     -    privacy protection and network security.

The federal government intends to provide the national leadership
needed to mobilize the necessary commitment, resources and
participation of all stakeholders. Only by working
collaboratively will the many economic, social and cultural
benefits of the information highway be realized by all Canadians.



1.   THE CHALLENGE OF THE GLOBAL INFORMATION ECONOMY

1.1  MARKET AND TECHNOLOGY TRENDS

Developments in communications and information technologies are
transforming the way that Canadians interact and do business in
almost every field of endeavour, opening up new opportunities and
challenges in both domestic and international markets. These
technologies influence where and how we work, play and study; how
we do research, design and manufacture products; how we get our
banking done and pay our bills and taxes; how we learn about
what's going on in the world, educate our children and retrain
ourselves for changing jobs; and how we interact with friends and
family and spend our leisure hours. The global integration of
markets makes the timely exchange of information a critical
competitive advantage. New businesses are rapidly developing to
feed new markets. In an information-based economy, most of the
new jobs created require the ability to generate, access, analyze
and use information. These capabilities have become essential for
economic growth and social well-being.

The key technological innovation driving this transformation has
been the conversion of information, whether as sound, pictures,
text or numbers, into streams of digitized "bits." Digitization
means that information can be manipulated at high speed by
computers. The exponential increase in computing power over the
past 20 years, coupled with dramatic reductions in cost, have
made computer applications essential to business and government,
and much more affordable for use in homes and schools. At the
same time, the development of inexpensive fibre optic cable, new
wireless technologies, digital compression and switching
techniques allows these digital bit-streams to be communicated at
high speed over a wide variety of wireless and wireline networks.
It is now possible to exchange information anywhere in any format
and to conduct transactions electronically over any distance.
These trends have accelerated both the demand for and the pace of
introduction of new products and services. They have also
stimulated the demand for broadband networks capable of
transmitting high-quality voice, video and data.

These new technologies are causing the "convergence" of
industries -- historical distinctions among telecommunications,
broadcasting, computing and data information services are
starting to blur. By upgrading their networks, cable companies
could offer competitive local telephone services, and telephone
companies could compete in the delivery of broadcasting or video
services. Both these industries, along with the computing,
publishing and entertainment industries, are beginning to explore
the markets for new information and interactive services.
Information providers and carriers are aggressively seeking to
expand their activities beyond their traditional borders. Some
analysts have estimated that the size of the worldwide market for
information technology products and services currently exceeds
US$1 trillion, and will double by the year 2000. Governments are
moving to update their regulatory and policy regimes so as to
open up these markets to competition.

1.2  RESPONSES BY OUR COMPETITORS

Canada's major trading partners -- the United States, the
European Community (EC) and Japan -- are responding to the
challenge through ambitious infrastructure investment programs
and regulatory and legislative reforms. National communications
and information networks are being modernized in these countries,
attracting a continuous stream of innovative value-added products
and services.

The Clinton Administration in the United States announced the
National Information Infrastructure (NII) initiative in September
1993, calling for joint industry and government action to create
a seamless and interoperable national broadband information
infrastructure. The NII will be built by the private sector
within the enabling policy and regulatory framework provided by
the government. Through the High Performance Computing and
Communications Program and other initiatives, the government
plans to allocate up to US$2 billion per year for advanced R&D,
the development of education, health care and government services
applications that will run on the network, and network access and
training programs. In a speech on 11 January 1994, U.S.
Vice-President Al Gore challenged U.S. industry to connect all of
the country's schools, libraries, hospitals and clinics to the
information highway by the year 2000. In addition, U.S. cable and
telecommunication companies have begun to form strategic
partnerships and alliances to take advantage of the convergence
of technologies and the expected relaxation of regulations
prohibiting cross-ownership and competition.

The EC has recently approved the budget for the Fourth Framework
Programme for Research and Development for 1994-98, which
includes a US$3.8-billion component in support of the development
of a new information infrastructure. This investment will support
advanced communications R&D and the evolution of the underpinning
technologies as well as the development of distance learning,
health care and other services of public interest. The Europeans
believe that this new information infrastructure will consolidate
internal markets, provide a platform for more efficient
government administration, and promote a more balanced economic,
social and cultural development.

In Japan, the Nippon Telegraph & Telephone Corporation has
announced its intention to wire every school, home and office
with fibre optic cable by 2015. Japan's Ministry of Posts and
Telecommunications (MPT) estimates the total cost of building
this domestic fibre network to be between US$150 billion and
US$230 billion. In parallel, the Japanese are investing heavily
to ensure that users will have access to a wide variety of
services. In spring 1994, the MPT will launch a US$50-million
three-year pilot project to assess the feasibility of integrated
telecommunications and broadcast service applications through
fibre-to-the-home networks. The project will include 300 homes
and offices, and will test video-on-demand, high-definition
television, videoconferencing, teleshopping and telemedicine.

1.3  IMPLICATIONS FOR CANADA

If Canada is to succeed in a global economy based on the
creation, movement, storage, retrieval and application of
information, our communications networks must be knitted into a
seamless and powerful information infrastructure serving all
Canadians. If Canada does not match the efforts of its
competitors in accelerating infrastructure development,
opportunities for network, product and service development -- and
the resulting economic growth and new jobs -- will be seized by
firms in other countries. The critical services and connections
that Canadian businesses need for international competitiveness
will be provided by our competitors, and Canadians could find
their communications systems almost devoid of Canadian content,
products and services.



2.   CANADA'S INFORMATION AND COMMUNICATIONS INFRASTRUCTURE --
     NATIONAL VISION AND STRATEGY

Since the invention of the telephone by Alexander Graham Bell in
1876, Canada has always considered it essential to have strong
communications networks -- owned and controlled by Canadians --
for trade, competitiveness, cultural vitality and national
sovereignty. The government has actively supported the
development of such networks: the Trans-Canada Telephone System
was set up in 1932, the Canadian Broadcasting Corporation (CBC)
was established in 1936; transcontinental microwave networks were
built in the late 1950s; the first in a series of domestic
communications satellites was launched in 1972; cellular
telephone services were rolled out in the late 1980s; and fibre
optic networks have been laid coast to coast over the last
two years.

In the January 1994 Speech from the Throne and in the February
federal budget, the government reinforced its commitment to a
strong communications capability by announcing its intention to
implement a Canadian strategy for an information highway. The
success of this effort will be measured, in large part, by the
extent to which it creates opportunities for Canadians to succeed
in the fast developing global information economy.

2.1  A CANADIAN VISION FOR THE INFORMATION HIGHWAY

The goal for Canada is to build the highest-quality, lowest-cost
information network in the world, in order to give all Canadians
access to the employment, educational, investment, entertainment,
health care and wealth-creating opportunities of the Information
Age. In short, the vision is to make Canada number one in the
world in the provision and utilization of the information
highway, creating substantial economic, social and cultural
advantage for all Canadians.

Canada's information and communications infrastructure will be a
"network of networks," creating vital communications links among
Canadian businesses and their clients; among industry, government
and universities; among artists, cultural organizations and their
audiences; among hospitals, clinics and patients; among schools;
and among communities, large and small, from one end of the
country to the other. It will accelerate the pace at which we
exchange ideas, and will revolutionize our way of doing business.
It will act as the catalyst for Canada as a vital and competitive
knowledge-based society.

2.2  THE INFORMATION HIGHWAY -- A TRANSFORMATIVE ROLE

The Canadian information and communications infrastructure will
be a key factor in Canada's successful transition to an economy
in which value, jobs and wealth are based on the creation,
movement and application of information. Like the railroads,
waterways and roads that formed the transportation infrastructure
of the industrial economy, the information highway will carry
peoples' ideas and the information services that drive the new
global information economy. Creation of this network of networks
will stimulate the development and introduction of new products
and services in a wide variety of fields with significant
economic potential -- in strategic business information,
electronic commerce, arts and entertainment, education and
training, and health care.

For the Private Sector

The widespread use of communications and information technologies
has already transformed banking and financial services as well as
the travel and retail sectors through applications such as
on-line banking, electronic data interchange, electronic funds
transfer and computerized reservation systems. Automated teller
machines, point-of-sale systems, and credit and debit cards have
changed the way consumers bank, shop and make payments.

The information highway will play a similar but even greater
enabling and transforming role across the Canadian economy as a
whole. It will allow previously disparate industries, sectors,
groups and individuals to link and interact with each other in
new ways, to create new products and services, to search out
markets and trade globally, and to organize solutions that will
meet an endless variety of needs -- individual as well as
organizational.

The information highway will set in motion a number of other
positive outcomes. Competing in global markets is encouraging
Canadian industry to work better and smarter, to improve product
and service quality, and to differentiate themselves from their
competitors. The key to competitiveness will be the ability of
firms to develop, acquire and adapt new and state-of-the-art
information and communications technologies, products and
services -- the tools that will be available on and through the
information highway system. In addition, the timely distribution
of strategic information held by the government (for example,
patent data and international marketing opportunities) could
increase the competitiveness of Canadian businesses. It will
improve the competitiveness of small and medium-sized enterprises
(SMEs) by giving them access to a new range of information,
tools, services and electronic commerce capabilities that
normally is available only to large institutions.

The information highway will act as a powerful enabling tool for
the development and growth of the Canadian information, cultural
and multimedia industries. The broadband capacity of the highway
will be needed if images and video are to be exchanged over
networks. Canadian cultural holdings found in such places as the
National Film Board, the CBC, museums and archives are more
likely to be successfully marketed if they are packaged in Canada
for electronic distribution and sale both at home and around the
world. The information highway is an ideal vehicle for these
industries to display and distribute their wares domestically and
to the world. Recently, the CBC became the first major
broadcaster in the world to use the Internet, a worldwide
cooperative research and education computer network, to explore
these possibilities.

For the Public Sector

Soaring costs in health care, education and training coupled with
large federal and provincial deficits are stimulating interest in
the electronic delivery of public services. In his February 1994
budget speech, the Minister of Finance stated that the federal
government will ensure that its services to Canadians are more
affordable, accessible and responsive. Delivery will be easier
and more efficient via an advanced information and communications
infrastructure.

The existence of such an infrastructure will act as a driver for
experimentation and testing of new ways for service delivery. For
example, the Telemedicine and Educational Technology Resources
Agency (TETRA) system connects 207 sites in approximately
112 communities in Newfoundland and Labrador to provide better
educational services and health care through the electronic
exchange of medical data, community health education programs and
other services.

Distance education services and the electronic networking of
schools and universities are also being used to improve the
availability and quality of education. The River Oaks Public
School in Oakville, Ontario, has networked all of its
240 computers and reoriented its curriculum to emphasize use of
information technologies. Observers have noted increased interest
and participation by students and reduced disciplinary problems.
The Yellowhead school district in Alberta is considering linking
all 17 district schools with 250 kilometres of fibre optic cable
to provide high-speed voice, data and video communications for
remote learning and to reduce school board administration costs.

The federal government has launched the SchoolNet project, a
cooperative venture with provinces, universities, colleges and
industry. The objective of the project is to foster improved
learning performance at the elementary and secondary school level
by providing subsidized links to the Internet, and to produce a
school graduate population with a strong command of information
and telecommunications technology.

In addition to applying information technology to streamline its
internal operations, the federal government is using it to
improve the delivery of services to businesses and the public.
For business, initiatives include an electronic open-bidding
system, which gives firms across Canada equal opportunities to
bid on government contracts; the implementation of a single
business registration number; greater use of electronic commerce
for procurement, payment and revenue collection; and electronic
document distribution pilot projects using electronic bulletin
boards and the Internet. As of April 1994, five Canada Business
Service Centres were opened by Industry Canada, in cooperation
with provincial governments and the private sector, and five more
are planned. These will provide single-window access for
information, assistance and referrals on all government programs
and services for business. SMEs in particular can benefit
directly from all these initiatives.

For individual Canadians, improved service delivery initiatives
include the nearly 300 Government of Canada InfoCentres opened by
Human Resources Development Canada as of April 1994, which
provide client-centred, one-stop shopping for a range of
government information and services; the use of toll-free numbers
combined with touch-tone telephones to provide inquiry services
such as Revenue Canada's tax information phone service
(T.I.P.S.); and the EFILE system for the electronic filing of
income tax, used by two million people out of some 16 million who
filed returns in 1992.

In 1992-93, the federal government spent $41.9 billion in
transfer payments to individuals, including income support
payments to some three million elderly Canadians, child benefits
to some 3.7 million families with children under 18 years, and
Unemployment Insurance benefits to an average of 1.4 million
people each month. Projects such as the Income Security Programs
Redesign will be used to test the electronic delivery of social
safety net payments and services (for example, Canada Pension
Plan, Old Age Security and Guaranteed Income Supplement, Family
Allowances, the refundable Child Tax Credit and Unemployment
Insurance benefits). Cooperative arrangements are also being
worked out with provincial governments for the single-window
delivery of services such as training, employment and
counselling; the program is intended to save millions of dollars
by reducing federal and provincial duplication.

2.3  OUTLINE OF A CANADIAN STRATEGY

Given the broad transformative effects that the information
highway will have across the Canadian economy, there is a need to
ensure that its development contributes to Canada's goals and
objectives. The government, in consultation with all
stakeholders, will develop a national strategy that will ensure
an appropriate balance between commercial and public interests,
and among the needs of big business, SMEs, public institutions
and individual Canadians. This strategy will be uniquely
Canadian, respecting our regulatory history, our economic
realities, our market size, our industry structures, the
international context and our unique cultural and sovereignty
requirements.

Clearly the strategy must go beyond developing a plan to put more
wire in the ground or more computers into offices and homes. It
involves preparing Canadians to use new technologies and services
so that they can benefit from the enhanced capabilities. It means
reviewing and updating statutes that may unintentionally
constrain our ability to use new technologies to conduct
business. It involves government using new technologies to
deliver services more effectively and efficiently, and creating a
fiscal climate that encourages investment and innovation.

2.4  OBJECTIVES

The government has identified the following three objectives as
central to its vision for the information highway.

(a) Create jobs through innovation and investment

Job creation and economic growth are the top priorities. The
government will work with the private sector to create a
world-class information highway and opportunities for businesses
in Canada to invest in innovative products, services and new ways
of doing business as a way of creating new and desirable jobs
for Canadians.

The widespread availability of the information highway will
enhance Canada's attractiveness when large Canadian and foreign
firms make location decisions for their head offices, research
labs, and production and marketing facilities. The existence of
an advanced communications infrastructure and competitively
priced services has become a necessary condition for the location
of many types of business activities, and will become
increasingly critical in the North American Free Trade Agreement
environment embracing Canada, the United States and Mexico.

In fact, all sectors of the economy will benefit from the ready
availability of such services. To improve the competitiveness of
Canadian businesses in both domestic and international markets,
the government will examine ways of accelerating the exploitation
of new information technologies and services.

The government's policy framework will encourage the creation of
new products, new services and new firms within the information
technology sector -- one of our most dynamic. The government will
review its R&D programs and spending to ensure that existing
resources are appropriately directed toward the timely
development and diffusion of information-based products and
services. The government will examine ways to improve access to
government information as well as its use and resale by the
private sector. In addition, methods of using government
investment in information technologies to stimulate innovation
and product development in Canada will also be considered.

(b) Reinforce Canadian sovereignty and cultural identity

Canadians have always accorded cultural and communications
industries a special status in recognition of their strategic
role in defining and maintaining Canadian sovereignty and
cultural identity.

The strategy for the information highway will respect
long-standing policies that serve these ends. These policies
include Canadian ownership and control of the telecommunications
infrastructure and of the broadcasting system as well as
continued support for the production, exhibition, distribution
and export of Canadian cultural products and services.

The information highway can make our cultural institutions more
accessible to both Canadian and export markets. Canadian artists
and cultural industries will find that the highway offers new
promotion and distribution channels to help them reach their
audiences in Canada and around the world. The government will
propose policies and other mechanisms to ensure that competitive
Canadian cultural products and services will have a prominent
place within the diversity of information to be delivered by the
electronic highway.

(c) Ensure universal access at reasonable cost

Access to the services carried on the information highway will be
an important factor in Canadian employment, economic growth and
social well-being. The federal government will work with its
regulatory agency, the Canadian Radio-television and
Telecommunications Commission (CRTC), and with network operators
to ensure universal access to essential services on the
information highway for all Canadians at reasonable cost --
including those living in rural areas and those in the
lower-income groups -- as well as schools, universities,
hospitals and research institutions.

Virtually all Canadians now have access to basic telephone
service and most have cable television. As new products and
services are introduced, the range of services considered
essential will change. The government will review and modernize
the concept of essential services to ensure that Canadians have
access to an adequate range of services at reasonable cost.

Equity and ease of access will be important government
priorities. The information highway could change the economic
geography of Canada by creating new opportunities for regional
economic development and by making it easier for businesses to
compete anywhere in Canada. Similarly, Canadians from coast to
coast should have improved access to social services such as
education, training and health care.

The widespread availability of enhanced services and products,
through easy-to-use interfaces on the information highway, should
broaden public acceptance of electronic ways of doing business.
Video-on-demand, interactive games, access to multimedia
libraries as well as access to government information and
services could be a profound stimulus to those who currently lack
the knowledge or skills to make use of electronic services.

The government will explore the need for public awareness and
education measures to ensure that would-be users have both the
knowledge and skills to benefit from use of the information
highway. The technical standards for the infrastructure must
provide easy-to-use interfaces for business and the public,
including Canadians with disabilities and other special needs.
A demanding and sophisticated domestic consumer base will
contribute to a healthy information economy.

2.5  IMPLEMENTATION PRINCIPLES

Implementation of the national strategy will be guided by four
principles.

(a) An interconnected and interoperable network of networks

Public and private networks, including existing and planned
telecommunications, cable, satellite and wireless networks, will
be linked together to create a seamless Canadian information and
communications infrastructure. Entering through any one network
will provide a gateway to all others and to a rich variety of
Canadian information, entertainment and cultural products and
services as well as to those produced by other nations. The
infrastructure must be available coast to coast, and must be
interactive and able to provide whatever bandwidth capability is
required. Only with these characteristics will it be possible for
voice, video, images, text and data to go easily and efficiently
from one place in Canada to any other place in Canada or around
the world.

(b) Collaborative public and private-sector development

The Canadian information highway will be built and operated by
the private sector within a strategy that meets Canada's goals
and objectives. With few exceptions, Canadian communications
networks are owned and operated by industry. The development,
interconnection and upgrading of facilities and networks will
remain their responsibility.

The federal government will continue to play a key role in the
development of a coherent and flexible policy environment that
will not only stimulate private sector investment and innovation,
but will also oversee the interests of all Canadians --
especially in areas such as universal access, privacy and
Canadian sovereignty. The federal government will also coordinate
the national strategy for the information highway with other
levels of government in Canada and with other countries.

As a major user of information products and services, the
government will also examine ways to improve government
operations and public services to Canadians, thereby accelerating
the deployment of new networks, products and services. The
government will consider the need for public funding to assist
specific projects that might not otherwise be provided by the
private sector (for example, ensuring access by Canadians with
special needs).

(c) Competition in facilities, products and services

Traditionally, firms in the telecommunications, broadcasting and
information industries have operated in separate markets, with
little synergy occurring by way of either competition or
collaboration. For example, the lack of competition in Canada's
telecommunications market has been blamed for our falling behind
the United States in the provision, pricing and use of advanced
telecommunications services.

The government will apply pro-competitive policies, to the
greatest extent possible, in all aspects of the information
highway. This will mean competition between traditional and new
network operators. The transition will be handled carefully to
ensure that the benefits of competition are realized. The
regulatory framework will be flexible enough to keep pace with
rapid changes in technology and the demands of the marketplace,
and changes will be debated and effected in an open manner.

An open network architecture, open access policies and common
technical standards will permit the entry of all firms (or
individuals) who wish to supply equipment, products or services.
This will encourage new ideas, new technologies and new partners.

The government will also review copyright and intellectual
property legislation to ensure that it remains appropriate in a
digital age.

If market forces are allowed to work as they should, Canadians
will benefit from greater choice and lower prices. Encouraging
and safeguarding competition, working to eliminate bottlenecks,
and protecting consumers against market failures will be public
policy priorities. Besides a wide range of competitive products
and services delivered on the highway, there should be
non-commercial, public services.

(d) Privacy protection and network security

Public concern about privacy protection is growing in Canada,
as are business and government concerns over the security of
sensitive information. The information highway will multiply
the flow of information and the related privacy and security
challenges that must be addressed. The basis of a solution
already exists in the Radiocommunication Act, the
Telecommunications Act and the Telecommunications Privacy
Principles. Clearly, it is in the best interest of industry to
take appropriate action. However, the government is prepared to
take the required measures to ensure that privacy concerns are
addressed, should this be necessary. Services on the highway must
be secure from piracy and unauthorized access. The highway itself
must be reliable, and able to provide uninterrupted service in
emergency situations.



3.   CANADA'S EXISTING INFRASTRUCTURE -- BUILDING ON EXCELLENCE

Some of the basic building blocks for the Canadian information
and communications infrastructure are already in place. This
section provides an overview of Canada's existing public and
private networks, research capabilities and the information
technology and content industries that will supply its products
and services. Implementation of the information highway will
have a major impact on the structure and performance of the
information sector. It will lead to more competition, open
markets and more synergy between firms in the expanding
information sector -- the backbone of the new economy.

3.1  COMMUNICATIONS NETWORKS

Canada's communications networks can be grouped into two broad
categories: public and private networks. Public networks are
operated by regulated entities like telecommunications carriers,
broadcasters and cable TV firms. Private networks are implemented
and operated by end users or by third-party suppliers. They are
unregulated, with access and use generally limited to closed user
groups.

Public Networks

The public telecommunications system is by far the largest part
of Canada's existing communications infrastructure. It consists
of over 250 million kilometres of public switched telephone and
data networks as well as satellite, cellular telephone and mobile
radio networks, all of which are interconnected. Although
telephone networks are constructed and managed on a regional or
national basis, interconnection and revenue-sharing arrangements
have in effect created a global network, which permits any
telephone in Canada to call any other telephone in the world.

Today, almost 16 million access lines connect more than
98 percent of Canadian households, as well as virtually all
business and institutional users, to basic telephone service.
This is a monumental accomplishment, given Canada's size and
population distribution, and one that represents a substantial
investment by the private sector. In 1991, the value of past
investment in telephone network was estimated at $32 billion,
after depreciation, with an additional $4.6 billion in that year
in new capital expenditures (33 percent of their $14-billion
revenue).

The major telecommunications carriers are regulated by the CRTC
under the Telecommunications Act. Exceptions are some smaller
companies, which are under provincial jurisdiction, and
Saskatchewan Telecommunications (SaskTel), which is exempted from
federal regulation until 1998. Where the use of the radio
frequency spectrum is involved, carriers are regulated under the
federal Radiocommunication Act. Regulated common carriers are
obliged to provide access and tariffed services to all users on a
non-discriminatory basis.

Over-the-air broadcasting and cable television networks are
another important piece of the public network infrastructure. In
1992, over-the-air broadcast facilities included 617 AM stations,
1 009 FM stations and 2 025 TV stations, which served 99 percent
of the Canadian population. Of these, 355 AM stations, 301 FM
stations and 140 TV stations originated programming. In addition,
2 124 cable systems passed by 95 percent of Canadian homes
(72 percent of Canadian households subscribe to basic cable
service). In 1992, the cable industry spent $400 million, some
20 percent of revenues, on capital investments. There are about
250 000 satellite dishes in Canada, and television programming
broadcast directly from satellites may provide serious
competition to cable TV systems in the future.

Broadcasters and cable TV firms are regulated by the CRTC under
the Broadcasting Act, and are subject to Canadian content rules
for broadcast programming. They are not required to provide
third-party service suppliers with access to spare capacity on
their networks.

Private Networks

Canada also has a large number of private networks serving
business, government, research, education and community
interests. Most of these lease private lines from
telecommunications carriers to establish dedicated networks that
provide services customized to the specific requirements of their
users or at a lower cost than their public network equivalents.

Local Area Networks (LANs), which are high bandwidth networks
used to link personal computers with shared servers and other
networks, now are the most common type of private network -- they
are found not only in large businesses and institutions, but also
in many SMEs. A LAN may link a few computers in an office
building or extend over a university campus, a hospital complex
or a factory. LANs may be further linked in regional, national or
international networks.

Large organizations such as banks, insurance companies,
utilities, airlines and governments have long used private
networks for direct support of their operations, marketing or
related activities. Examples include the Society for Worldwide
Interbank Financial Telecommunication (SWIFT), the international
network for interbank transfers (used by some 2 600 banks in
90 countries), and the Sabre and Gemini computerized airline
reservation systems. The federal Government Telecommunications
and Informatics Services is the largest private network in
Canada. The best-known example of an international computer
communications network is the Internet, which interconnects some
10 000 networks and over 20 million users in the United States,
Canada and 150 other countries. Internet growth is explosive --
the number of users doubled over the last year and is growing at
10 percent per month.

Canada also boasts a hierarchy of research, education and
community networks. These are organized by particular interest
groups or communities for the exchange of information and
communications geared to specific tasks such as research,
education and access to public information. Canada's national
backbone research network is CA*net (see the section on CANARIE
for a description of plans to upgrade CA*net), which
interconnects 10 provincial research networks -- BCnet, Alberta
Research Network (ARnet), SASK#net, MBnet, ONet, Reseau
interordinateurs scientifique quebecois (RISQ), NB*net, Prince
Edward Island Network (PEINet), Nova Scotia Technology Network
(NSTN), and Newfoundland and Labrador Network (NLnet) -- and also
provides access to the Internet. SchoolNet is planned as a
national network that will link Canada's 16 000 schools to the
Internet. The Ottawa Carleton Research Institute network
(OCRInet), which was introduced on 23 January 1994, is an example
of a high bandwidth, metropolitan area network. There are 10 such
metropolitan area networks planned for Canada. FreeNets are
community-based networks that are open to all users; three are in
operation (in the National Capital Region, Victoria and Trail,
British Columbia) and another 18 are in the planning stage.

CANARIE

In June 1993, the federal government, in partnership with the
private sector, announced the creation of the Canadian Network
for the Advancement of Research, Industry and Education
(CANARIE). CANARIE is an important building block in the
information highway, and can be seen as a prototype of the
large-scale public and private sector collaboration that will
be required.

CANARIE will connect researchers and educational communities
across Canada by 1999 with a high-speed broadband highway and
will upgrade the gateway to the Internet and other international
networks. Phase I of CANARIE, to be completed by March 1995, will
upgrade the transmission speed of CA*net to T-1 (1.54 megabits
per second). Another objective is to accelerate the development
of new network products, applications and services through joint
funding of innovative projects. A third objective is to establish
a high-speed experimental test network. Total planned investment
for Phase I is $115 million, with the government contributing
$26 million and the private sector $89 million. A non-profit
corporation, CANARIE Inc., has been established to manage this
investment. Plans for future phases of CANARIE will likely
include expanding its user community beyond research and
education.

3.2  RESEARCH FACILITIES

Comprehensive R&D will be required for the information highway to
evolve from today's diverse networks to a fully interconnected
information and communication infrastructure. These technical
challenges include work on network architecture, standards,
harmonization of numbering schemes to identify users,
communications systems, network security, service applications
and user privacy. All of these technologies will influence the
optimal design of the information highway and the timing of its
full implementation.

Building the information highway from the existing networks will
depend on having appropriate bridges and links. It will be
critical to maintain the functional use of current networks while
upgrading and implementing new features.

A major challenge in the development of the information highway
will be the provision of image- and video-based information and
communications services over both narrowband and broadband
networks. Significant parts of the present infrastructure are
limited in their bandwidth at the local loop or lack
interactivity, which will impede the introduction of new
services. The telecommunications infrastructure provides for
interactivity with narrow bandwidth while on the other hand the
cable industry with its broadband delivery lacks full
interactivity. Mobile users who depend on narrowband
communications links as well as remote locations that are
connected via wireless channels will present a particular
challenge.

Technologies being developed in Canada and elsewhere will have an
important influence on the privacy and security of networks, on
the user interface and on the design of service applications.
Canada's challenge will be to implement the best of these
technologies and to contribute some of the best from our own
laboratories.

Canada's information highway R&D activities are best focused on
areas where we have already established expertise and world
leadership. Dominant players in the Canadian telecommunications
manufacturing industry are Northern Telecom and its research arm,
Bell Northern Research -- both universally recognized as
world-class in their field. Canada also has a number of excellent
medium to large-sized organizations, such as MPR Teltech, Mitel,
Newbridge, NovAtel, Canadian Marconi, Spar and COM DEV, with
substantial research capabilities in terrestrial and satellite
communications. On the computing side, IBM Canada has a major R&D
program in software development, and SHL Systemhouse is a major
player in systems integration. Canadian universities also have
strong R&D programs in wireless communications and in network
technology.

A number of government laboratories, both federal and provincial,
have also established expertise in areas that will be important
in a national information highway R&D program. The National
Research Council Canada (NRC), the Communications Research Centre
(CRC) and the Centre for Information Technologies Innovation
(CITI) are examples of federal government laboratories. The focus
of the R&D activities of CRC and CITI is on those elements that
expand on the main backbone network infrastructure, for example,
integration of wireless networks (terrestrial and satellite),
integration of cable TV and telephone networks, enabling
technologies that maximize the use of networks, user-friendly
delivery of applications in a multimedia/multimodal environment
and development of government service applications.

3.3  INFORMATION TECHNOLOGIES INDUSTRY

The information technologies (IT) industry is an integral
component of Canada's information and communications
infrastructure. One of the fastest-growing sectors in Canada, it
encompasses telecommunications equipment and services, computers
and office equipment, software and computer services,
instrumentation, microelectronics and consumer electronics. The
industry consists of some 13 500 establishments, which employ
278 000 people. Revenues have expanded at an average annual rate
of 7.4 percent over the past six years. In 1992, revenues
exceeded $43 billion -- $19.1 billion on the manufacturing side
and $24.3 billion from services. The sector contributes
5.8 percent to Canada's gross domestic product (GDP), exceeding
the combined contributions of the aircraft and parts, motor
vehicle and transportation services sectors.

While concentrated in Ontario and Quebec (close to 80 percent of
manufacturing shipments are from central Canada), the IT industry
features clusters of expertise across the country. It contains
one of Canada's most successful global firms, Northern Telecom,
as well as other large Canadian firms (such as Bell Canada,
Mitel, Newbridge and SHL Systemhouse) and the subsidiaries of
foreign multinationals (such as IBM, Xerox, Digital Equipment and
Hewlett-Packard). However, the industry is primarily composed of
SMEs, with the vast majority of these in the software and
services sector, for example, Cognos, Corel, Alias, Softimage
and DMR.

The value of Canadian exports in the IT industry has climbed
steadily over the past five years, reaching $9.9 billion in 1992.
However, Canada is heavily reliant on the import of finished
products such as computers, fax machines, cellular and cordless
telephones and consumer electronics. As a result, the industry
had a trade deficit of $9.3 billion for 1992. Among the IT
subsectors, only telecommunications equipment held a trade
surplus in 1992.

Nonetheless, the sector is well positioned to be a source of
products and services for Canada's information and communications
infrastructure. The need to be flexible, fast to market and
innovative fits the Canadian mix of small, adept, niche players.
International attention is increasingly turning to content,
software and services. These are areas in which Canada has
several competitive advantages -- a demanding domestic
marketplace and an educated labour pool as well as
internationally recognized expertise in systems integration, data
communications and switching, network computing, geographic
information systems, full-text search tools, graphics software
and computer-aided systems engineering.

While Canadian firms can compete on the basis of technical
excellence, many have difficulty in international marketing, in
selling to government markets in Canada and abroad, in securing
adequate financing, and in managing high growth in a rapidly
changing market. As IT R&D continues to grow in cost and risk,
there will be increased pressure for Canadian firms to form
strategic alliances to maintain technological excellence.

The information and communications infrastructure can be an
important agent in helping IT firms improve their core business
competencies, reduce costs and provide rapid access to
researchers, suppliers and customers around the world. It
can also serve as a test bed for new networking products
and services.

3.4  CONTENT PROVIDERS

The ability to transmit, combine and reproduce digitized voice,
text, graphics, images, sound and full-motion video will open up
new markets and opportunities for creators and producers of
cultural and other content-based products and services.
Production and distribution in broadcasting, film and video,
sound recording and publishing will all be affected. Moreover,
new technologies are being combined with existing media and
content to produce new multimedia products, applications and
services. This increased activity in both cultural and
content-based industries will create opportunities for economic
growth, job creation and exports. While statistics on newer media
are scarce, Frost & Sullivan, a U.S.-based market intelligence
company, estimated the worldwide multimedia market to be
$7.2 billion in 1993, and forecast a jump to $24.3 billion
by 1998.

Canada has already produced stable and growing industries in the
cultural sector, in addition to the electronic publishing and
database industries. Statistics Canada estimates that, for
1990-91, the arts and culture sector directly contributed
2.4 percent of GDP ($14.7 billion), and generated direct
employment exceeding 332 000 jobs. Revenues for the cultural
industries alone totalled $13.4 billion, divided as follows:
broadcasting and cable ($4.1 billion), newspapers ($3.5 billion),
film production, distribution and exhibition ($2.6 billion), book
publishing ($1.6 billion), periodical publishing ($0.9 billion)
and sound recording ($0.7 billion).

There is a potential to develop a dynamic multimedia industry in
Canada that is capable of providing a wide variety of content
services. One challenge will be to encourage cultural industries,
including agencies such as the CBC and the National Film Board,
to seek wider markets, to work with technology suppliers where
advantageous, and to support Canada's creators in developing new
information commodities in such areas as entertainment,
personalized learning and business training. Distribution
channels must be strengthened, and Canadian firms must act
quickly to exploit markets for new services. Otherwise, they risk
being pushed aside in both foreign and domestic markets for new
information services and products.

Canada's electronic publishing and database industry also has
grown steadily, branching out from the electronic publishing
subsidiaries of the Southam and Thomson communications companies
to establish specialized strengths in financial and legal
information. A 1992 survey ["The Information Industry in Canada:
The First National Survey of An Emerging Industry," a survey
performed by Optima Consultants in Applied Social Research for
the Information Technology Association of Canada, Willowdale,
April 1992] found some 90 Canadian firms selling information for
profit and generating annual revenues of $250 million.

The content holdings developed by federal, provincial and
municipal governments is enormous. The federal government alone
has over 7 500 electronic holdings involving annual expenditures
of $1.5 billion for their collection and management (for example,
statistics, georeference and polling data). Statistics Canada is
the largest publishing house in the country, collecting,
compiling, analyzing and publishing statistical information on
the commercial, industrial, financial, social and economic
activities of Canadians.



4.   PUBLIC POLICY ISSUES

Canada already has in place many of the building blocks for a
national information highway system as well as many of the
industrial strengths and technological skills for the successful
completion of this initiative. However, a number of public policy
issues must be addressed before further progress can be made.

4.1  BUILDING A COMPETITIVE, ADVANCED NETWORK INFRASTRUCTURE

Issue 1 -- How fast should the advanced network infrastructure be
built? How will network improvements be financed?

The cost of upgrading and ensuring full interconnection of
existing networks in Canada will be high. Some analysts have
estimated the cost of a universal broadband fibre optic network
to be in the order of $30 billion. The private sector has stated
its commitment to building advanced network infrastructures, but
timing will be crucial and financing a key consideration. Many of
our competitors have set specific targets for interconnection.
The Japanese have called for a fibre link to every home by 2015;
the Americans have called for every library, classroom, hospital
and clinic to be linked by the year 2000. How fast a pace should
Canada set for the development of the infrastructure? How can
public policy or regulatory measures accelerate the process?
Should public funding be used to accelerate network expansion? If
so, how should it be funded and targeted?

Traditionally, regulation has ensured that carriers eventually
recover their capital expenditures in full from the general body
of subscribers. Demand for enhanced network services will be
heaviest from business and institutional users, yet these same
users need and continue to press for lower, more competitive
rates. At the same time, an increasingly competitive environment
will encourage innovation and risk-taking among network service
providers. The question is, Who should bear the risk of building
the enhanced networks? How can the advanced infrastructure be
built without reversing the drive toward lower rates? In an
increasingly competitive environment, is it appropriate that
regulation guarantee any carrier recovery of capital
expenditures? Should all carriers, including telephone and cable
companies, be expected to assume a much larger share of the risk
associated with capital investment? Should the price charged for
services better reflect the cost of providing them?

Public policy has been "technology neutral," letting service
providers choose the most appropriate technology (for example,
fibre optics, coaxial cable, copper wire or radiocommunication).
Should this continue to be the case or should public policy
favour certain technologies for certain uses? For example,
over-the-air television broadcasting still places heavy demand on
the radio spectrum, even though most Canadians receive television
programs via cable. Should broadcasters be encouraged to exploit
the advantages of non-spectrum distribution in order to free the
airwaves for other uses?

Issue 2 -- What is the proper balance between competition and
regulation?

The Canadian telecommunications and cable TV industries developed
as natural monopolies due to the high cost of the networks and
the need to ensure universal service. This context has changed:
new technologies have stimulated the growth of competitive
service providers; the goal of universal access has been
achieved; and global forces of deregulation and free trade have
increased market demand for a wider range of competitive services
and prices. Government policy and regulation have moved away from
supporting monopolies toward greater reliance on market forces.
This transition must be handled carefully, however, to ensure
that the benefits of competition are in fact realized and that
new monopolies do not result.

How quickly can pro-competitive policies be applied to all
aspects of the infrastructure and services? Given the high cost
of the advanced network infrastructure, can market forces alone
ensure effective competition? How should the issue of market
dominance be dealt with in the transition to greater competition?
Can different levels of competition be anticipated in urban and
rural areas? Will regulation continue to be a long-term
requirement in some services or geographic areas? Wireless
technologies have great potential to contribute to network
competition -- how can this potential be realized?

The telecommunications, broadcasting, cable and satellite
industries were established with different technologies to serve
separate markets. They were subject to different degrees and
types of government regulation and intervention. Cable firms, for
example, cross-subsidize Canadian broadcasting and program
production. In a more competitive environment characterized by a
network of networks and converging technologies and services,
line of business and cross ownership restrictions may no longer
be appropriate.

What legislative, policy and regulatory changes are required to
provide a forward-looking, integrated and market-oriented
environment? How can we build enough flexibility into these
frameworks so that they stay abreast of rapidly changing
technologies? Can restrictions on cross-ownership and lines of
business between telephone and cable companies be relaxed without
undermining competition or cultural policies? Would full
interconnection between cable TV and telephone networks produce
overly complex and litigious rate structures designed to address
various cross subsidies? To the extent that cable companies offer
telecommunications services, should they be subject to the same
non-discriminatory access obligations as common carriers? In a
competitive environment, should these obligations be altered for
common carriers? Video-on-demand services may be an important
economic driver for the deployment of advanced networks, yet it
is unclear whether they would be subject to regulation under the
Broadcasting Act. This ambiguity could stymie investment. Should
government take the initiative in clarifying the status of
video-on-demand?

Issue 3 -- Should requirements for Canadian ownership and control
of communications networks be reviewed?

The Telecommunications Act requires 80 percent Canadian ownership
and control of facilities-based carriers. Draft regulations
published in the Canada Gazette in July 1993 provide for investor
corporations with at least two thirds Canadian ownership to be
considered "Canadian," allowing carriers access to broader pools
of capital. Broadcasting law and regulations impose a strict
80-percent Canadian ownership requirement on broadcasters and
cable TV networks, with no flexibility for holding corporations.

It has been common practice in many countries to limit the
foreign ownership of domestic telecommunications carriers and
broadcasters. For example, the U.S. Communications Act requires
companies using radio systems that provide telecommunications
services to the public to have a minimum of 80-percent ownership
by Americans. Japan has similar rules applicable to its major
domestic and international carriers. Even developing countries
anxious to obtain foreign financing for upgrading their
telecommunications infrastructure usually insist on control,
i.e., 51-percent ownership by domestic interests. In most
countries, the major broadcasters are owned by the government,
while those countries with private broadcasters usually prohibit
or severely limit foreign ownership.

Full implementation of the Canadian information highway will
require large investments. Should we continue to require that the
majority of that investment be provided by Canadians? Foreign
investors often provide advanced technology and services in
addition to capital. Can the capital and organizational needs of
developing advanced information networks be met within existing
ownership rules, or should these restrictions be relaxed? Would
the relaxation of domestic ownership rules open up new foreign
markets for Canadians? Independent of the actual level of foreign
investment permitted is the issue of standardizing the foreign
ownership rules; i.e., would it be beneficial to have common
Canadian ownership rules for telecommunications, broadcasting and
cable TV companies?

Issue 4 -- How quickly can Canadian industries move toward
universal standards, and how should these standards be
determined?

The adoption of universal technical standards will be a key
element in ensuring the interconnection of existing and planned
networks and the interoperability of information systems and
services. By design, different networks have their own unique
interfaces and standards. Interconnecting them in an equitable
manner will require open standards (as opposed to proprietary
standards) to ensure full interoperability. Technologies are
being developed to connect the pieces of the information highway,
to allow users the means to create information in text, graphics,
video and sound, to compress this information so that it will fit
into smaller bandwidth transmission lines, to code, encrypt and
store information, and to organize information for access and
delivery. Open standards for these various networks and services
will ensure interoperability.

Canadian businesses are creating hardware, software and services
for both domestic and international networks, and must be
involved in the standards-setting process. Canadian standards
must be internationally compatible, but not simply through the
passive acceptance of standards formulated elsewhere. In a free
trade environment, standards are an important tool to foster
domestic economic growth and to gain a share of world markets.
Both the Canadian government and Canadian businesses need to take
a more active stance in the development and exploitation of
international standards.

The current processes for establishing technical standards are
complex and involve several organizations at the national and
international level. Given the limited resources available,
should opportunities in the standards process be identified and
targeted? How should priorities be established and how should
Canadian participation be funded? How can Canadian involvement
and influence in domestic and international standards fora be
improved?

The present process for disseminating information on standards is
inadequate since information is only readily available to firms
which participate in the standards process. SMEs traditionally do
not participate in these processes due to resource constraints
and lack of knowledge that the process even exists.

Industry Canada, in collaboration with the Standards Council of
Canada, is in the process of developing a database of standards
information to address the needs of SMEs. Should more be done to
improve the processes for disseminating information on standards
and assisting in the exploitation of standards information in
product design and development? Are we taking appropriate actions
to ensure that SMEs in all regions of Canada are able to
participate in and benefit from the standards process?

Technical standards can also advance public policy objectives,
e.g., requiring television sets to include capability for closed
captioning for the hearing impaired. Issues such as access for
persons with disabilities and protection of personal privacy and
security could be partially resolved by the setting of captioning
standards for the hearing impaired and encryption standards for
secured communications. How should the standards process be used
to address these issues in a timely fashion? Should more effort
be made to involve consumer and special interest groups in these
and other standards processes?

Issue 5 -- How can the federal government coordinate its
activities with other governments?

Other levels of government in Canada are funding the development
of a broad mix of research, education and community networks. In
addition,several provinces have identified telecommunications as
a key sector for economic growth, and some provincial initiatives
are already under way. The federal and provincial governments
need to work together to stimulate industry investment and
innovation, facilitate development and deployment of advanced
applications, explore joint service delivery to businesses and
the public as well as increase public awareness and the capacity
to exploit these new tools. How can the two levels of government
coordinate their strategies to reinforce initiatives and maximize
the economic, social and cultural benefits for all regions of
Canada?

Canada's information highway must be linked and integrated with
the networks of our trading partners as part of a seamless,
global information infrastructure. This global reach will allow
businesses and individuals to access information, markets,
clients and partners around the world. The strategy for the
information highway must clearly address Canada's role within key
international fora, such as the development of international
standards, and determine how Canada should proceed in areas such
as joint projects between countries, access to offshore
technology by Canadian firms, and R&D collaboration with trading
partners. A key concern will be to ensure that international
strategies complement and support domestic policy developments in
areas such as SMEs, R&D initiatives, and science and technology
objectives.

4.2  CONTENT ON THE INFORMATION HIGHWAY

Issue 6 -- How should copyright and intellectual property issues
be addressed?

Professionals in multimedia research, marketing and policy who
attended the Multimedia Communications Conference, hosted by the
federal government and private industry in Banff in 1993,
identified copyright as a critical issue affecting the
development of new products and services for Canada's information
highway. Content-based products and services such as books,
computer programs, audiovisuals, sound recordings and databases
will increasingly rely on electronic distribution channels to
reach their markets.

Existing copyright law in Canada and internationally does not
provide adequate protection in an electronic world in which
intellectual property can be reduced to digital form to be used
and reproduced, in whole or in part, in new and unintended ways.
The new media environment is posing intellectual property
questions that require review of the present copyright framework.
This review would determine whether the present framework can be
marginally amended or whether it needs to be fundamentally
transformed.

Solving copyright policy issues is a time-consuming process for
government and key stakeholders. It is very difficult to strike a
balance between what often appears to be uncompromising
interests. This balance is crucial, however, in an economy
increasingly based on knowledge and information. Creators' rights
for authorizing the use of their works and obtaining fair
compensation must be ensured as well as providing businesses and
the public with reasonable access to these works.

Furthermore, international obligations are such that an entirely
new policy framework would need to be supported at the World
Intellectual Property Organization (WIPO) and at the General
Agreement on Tariffs and Trade (GATT), which administer
international instruments regulating copyright and neighbouring
rights. Outstanding questions relate to the varying regimes in
copyright and neighbouring rights legislation, which are defined
according to traditionally distinct types of works, for example,
books, musical scores, films and videos, live and recorded
performances. All these works and the information they contain
potentially will be easily accessed and amended as a result of
digitization of information and increased interactivity. What
should be Canada's position with respect to various international
conventions?

Should a multimedia work be defined as a distinct category of
work for the purposes of copyright legislation? Who would then be
the "creator" of the work: the producer or the "multimedia
maker"? Are new additional rights such as display rights required
to cover such features as the "look and feel" of software-based
products? More fundamentally, are commercial contractual
arrangements, as opposed to arrangements imposed by legislation,
sufficient to protect rights holders and avoid unnecessary
litigation?

Are present mechanisms for rights clearance and their
remuneration adaptable to growing multimedia markets as creators
of new multimedia works wish to use previously existing works?
For example, should there be, for these instances, mandatory
clearing systems, collectives and rights registries, to
facilitate business activity for electronic suppliers and
distributors? What mechanisms should be in place for payment by
end users? How should moral rights, which allow creators to
protect their works' integrity, be managed once a work is
distributed throughout the system?

Also, is there a need to review exceptions to copyright related
to the use of electronic data in schools, libraries, and on-line
and CD-ROM-based media? How should we address concerns about
Canada's deficit in royalty payments to foreigners?

Issue 7 -- What measures are needed to support Canadian cultural
and other content-based products and services?

Traditionally, the creation and exhibition of Canadian cultural
products has been supported through a wide range of measures,
including restrictions on foreign ownership, public funding to
support production, tax measures and regulations such as content
quotas in broadcasting. Governments and regulators in Mexico and
some European countries have adopted similar measures; the United
States opposes them vigorously. As digitization and global
networks erode the boundaries between formerly distinct types of
media (audio, video, data and publishing) and distribution
systems (broadcast, telecommunications, cinemas and book stores),
traditional cultural policy measures may no longer be workable.
The government, however, is committed to reinforcing Canadian
sovereignty and cultural identity.

What are the implications of the information highway for Canada's
cultural industries and artists? How can long-standing policies
aimed at fostering the creation, exhibition, distribution and
export of Canadian cultural content in broadcasting, publishing,
sound recording, and film and video production be adapted to the
new environment? Will new measures be required, for example, to
support digitization of current content holdings? Should support
for domestic production be extended to other categories of
content-based services, such as databases and software used by
schools, hospitals and other public institutions?

To what extent can market forces provide news, information,
entertainment and other content-based services with a Canadian
focus and perspective? Is the Canadian market large enough and
willing to support domestic production in all categories of
content services? To what extent is increasing reliance on
foreign cultural and information-based products and services
acceptable to Canadian consumers, businesses and educators? Can
we take advantage of electronic networks to expand domestic and
export markets for Canadian cultural and information products?
What joint alliances with international partners should be
undertaken to produce content that would be more economical and
more widely marketable?

Issue 8 -- What controls, if any, should be placed on the
information that is put on the network?

Canada is a democratic society that tolerates diversity of
expression. Nonetheless, some forms of expression are considered
illegal or obscene under the Criminal Code. Distributors of such
materials can be prosecuted, and customs measures prohibit their
entry into Canada. Similarly, provincial legislation protects
children from violent and sexually explicit material through
labelling or display requirements, and broadcasting regulation
has begun to deal with public concerns about excessive violence
in programming. Pornographic, obscene and hate-mongering
materials have already begun to appear in various computerized
and electronic forms, such as on electronic bulletin boards. In
this form, they are much easier to obtain but are more difficult
to monitor and take action against.

Should there be a gatekeeping function to control what is
available on the information highway? Is this possible in a world
where anyone with a video camera, a personal computer and a modem
can become a movie producer and distributor? Is censorship
compatible with freedom of speech and freedom of association? Who
should carry out the gatekeeping role, if required, -- the
networks, a regulatory agency, user-controlled technologies, or
all three? What is the appropriate role of government in this
area? How can Canadian solutions to these problems be harmonized
with actions taken by other countries? Are there effective
technical screening solutions for users that will allow them to
control reception of undesirable content? Should we pursue the
development of technologies that could trace the authors of
illegal content?

Beyond the issue of censorship, there is the question of whether
or not the carriers or network providers should be able to
control or influence the information or services carried over the
infrastructure. Should single companies be allowed to control
both infrastructure and content, or will this restrict freedom of
choice by users as well as access to the networks by competing
content providers?

Judging from the extensive use made of the Internet and similar
systems for personal communication and discussion groups, the
rising use of electronic bulletin boards, as well as the rapid
deployment of electronic mail and messaging systems, it is
obvious that users value the ability to converse freely with each
other. Are measures required to ensure that the information
highway meets these needs, rather than simply providing newer and
more powerful channels for electronic consumption of commercial
goods and services? Should the network of networks be
deliberately designed to provide a public space for information
sharing, public debate and electronic democracy? How can the
government ensure that citizens have access to the tools and
knowledge they need to use the networks as producers as well as
consumers?

Issue 9 -- How can the information highway be used to improve
government services to the public?

The federal government is the largest collector and distributor
of information in Canada. How can the information highway best be
used to improve public access to information collected by
government? The recent budget, for example, noted the
difficulties of small businesses in easily accessing the
programs, services and other forms of assistance available to
them, and announced the opening of new Canada Business Service
Centres. How can the information highway improve access to the
immense store of information and programs useful to the
small-business community?

In 1991, Canada spent some $67 billion on health care and
$53 billion on education. Many observers claim that significant
savings (and improved quality of service) are possible in both
areas through the use of information and communication
technologies. For instance, Stentor, a partnership of Canada's
major telecommunications companies, estimates that health care
applications could reduce costs by some $6 billion. Should
governments take a more active role in financing the development
and deployment of applications or services in areas of their
responsibility such as health, education and training?

Issue 10 -- How can the personal privacy and security of
information be protected?

Governments, public institutions and businesses already gather,
store and transmit vast amounts of personal and business-related
information electronically. Interconnection of networks will
increase the amount of information -- such as electronic
transactions, credit ratings, financial accounts, educational
records, and medical and driving records -- that can be assembled
and collated into comprehensive profiles of individuals or
companies. These records can be sent across national borders,
resold or reused, or integrated with other databases without
consent or remuneration, for purposes unrelated to those for
which the data were originally collected. The ability to access,
update, alter, repackage and resell information can benefit
individuals as well as firms, and create new employment
opportunities. On the other hand, public concern about privacy
protection is growing, as are business and government concerns
over the security of sensitive information.

Does government need to take stronger measures to protect the
privacy and security of information? Are stronger measures needed
to protect personal data in the private sector, or can we
continue to rely on voluntary compliance to protection
guidelines? Is a uniform national level of privacy protection
needed to cover all types of personal information flowing on the
network? Do we understand exactly what information privacy means
to various users of the network, and agree on what level of
privacy is required for different tasks? How can the government
ensure that Canadian privacy protection standards meet
international norms? Failure to meet these norms can restrict
Canada's trade with these countries and can result in transborder
data blockages.

Should one of the factors influencing the choice of technologies
and standards for the information highway be the implications for
privacy protection or erosion? Are there affordable technical
solutions that would protect the privacy of individuals? Who
should pay for improved privacy protection -- network or service
suppliers, or individual citizens? Will governments need to
intervene to regulate the use of electronic surveillance and the
subsequent or third-party use of transactional data generated by
use of credit cards and government services? What measures should
be adopted to ensure the security, reliability and integrity of
the information highway network? What kind of encryption
protection should be provided and who should pay for it?

4.3  BENEFITS OF THE INFORMATION HIGHWAY

Issue 11 -- How can we ensure that Canadian information
industries take full advantage of the R&D and technological
development opportunities presented by the information highway?

The process of innovation is a long and expensive one, stretching
from basic and applied R&D, through the assembly and
demonstration of prototypes and market testing, to final
production. In Canada, this process is primarily funded by the
private sector, although the government plays an important role
by providing a positive environment, some funding of strategic
R&D and the transfer of technology from government research labs.
Many of our competitor nations have launched large-scale programs
to support advanced research and stimulate the development of new
products and services. How can Canadian industry be encouraged to
develop information-based products and services on a timely
basis?

The scale and scope of the purchasing power of all levels of
government can also be a powerful stimulus in both the deployment
of advanced networks and the development of new products and
services. For example, the New Brunswick government is
stimulating private sector development by acting as a catalyst
and model user/customer of information highway applications. The
federal government alone spends $2 billion each year to procure
information technology goods and services. Can and should
government purchasing and investment in the development of public
sector applications be targeted to stimulate and accelerate
private sector innovation and product development in Canada? If
yes, how should this be done? A transparent, open and nation-wide
electronic procurement information system, for all levels of
government, could open up market opportunities to Canadian
industries, big and small, and help eliminate interprovincial
trade barriers. Should the government make the establishment of
such a procurement system a priority?

Issue 12 -- How can the information highway best be used to
improve the growth and competitiveness of all Canadian
businesses, especially SMEs, throughout Canada?

The Canadian information and communications infrastructure will
have a profound impact on how Canadian businesses organize and
operate. A recent Statistics Canada study, for example,
demonstrated that the implementation of technologies such as
electronic data interchange, just-in-time inventory systems and
statistical process control was the leading management strategy
for successful SMEs in Canada. Many legislative provisions state
that commercial arrangements are invalid, unenforceable or not
admissible as evidence unless documented in writing bearing the
signature of the parties. How can the concept of personal
signature be updated for the digital world? Are legislative and
regulatory amendments required to remove impediments to
electronic commerce by businesses and governments? What other
measures are needed to encourage electronic commerce? How can
Canada harmonize its efforts with those of other countries?

A recent issue of The World Competitiveness Report, published
annually by IMD in Lausanne, Switzerland, points to poor Canadian
performance in applying new technologies to streamline work and
develop new products and services. The budget noted that Canadian
companies, particularly small businesses, have not integrated
leading technologies as rapidly as their competitors abroad. Are
Canadian businesses sufficiently aware of opportunities to
improve competitiveness through new technologies? Should more be
done to improve industry and institutional awareness and use of,
as well as benefit from, these technologies? Are
technology-transfer mechanisms sufficient? Are incentives of some
kind required to encourage and assist Canadian industries to make
more use of these technologies? Should the tax treatment of
capital depreciation be enhanced to speed the deployment of new
technologies?

Are special measures needed to assist SMEs? What else must be
done to encourage Canadian business and industry to exploit
enabling information and communications technologies? How can the
information highway be used to put businesses in smaller cities
and in rural Canada on a more equal footing with their
counterparts in major centres?

Issue 13 -- How can Canadians be assured of universal access to
essential services at reasonable cost?

Public policy has long sought to ensure that all Canadians,
regardless of their income or place of residence, along with
schools, universities, hospitals and research institutions, have
access to basic telephone services. Universal access has been
supported through cross-subsidies from long-distance to local
services. In a competitive environment, prices move toward the
cost of providing services, and there will be increased pressure
to reduce or eliminate cross-subsidies. As new and enhanced
services are introduced, the widest possible customer base will
be increasingly necessary for the viability of electronic
delivery of commercial and essential public services. The
information highway system will play a critical role in
employment, economic and social well-being, and the exercise of
democratic values and citizenship. Without appropriate public
policies, we run the risk of creating classes of information
"haves" and "have-nots," with potentially serious downstream
implications.

How far should the concept of basic telephone service be
broadened to include new types of services? Who should determine
the range of essential services to which all Canadians should
have access? How can we ensure that all Canadians continue to
have access to their government and its services as we move
toward electronic delivery? What measures will be needed to
ensure that all Canadians, including those in remote communities,
Canadians with disabilities, those who are functionally
illiterate, new Canadians and other groups with special needs,
have access to an adequate range of services? Should the
government play a role in establishing and/or promoting pilot
networks -- for example, community or specialized networks?
Should pricing structures be designed to ensure access by
individuals and public institutions? Will there be a continuing
need for subsidies -- as income supports, rate subsidies or some
combination of measures -- to ensure that basic services are
affordable?

Issue 14 -- What consumer awareness and learning opportunities
should be provided to enable Canadians to be effective users of
the information highway?

In the information society, success in school, the workplace, and
everyday life will depend on learning new and more efficient ways
to rapidly access a variety of information- and knowledge-based
resources. The information highway will stimulate the development
of an enormous range of education, training and lifelong learning
applications that will provide access to courses, libraries,
museums, specialized databases and other people, regardless of
location. Users will need to understand how to access and use the
information highway effectively if they are to derive the full
benefit of these services.

How will Canadian consumers and small businesses be encouraged to
explore the opportunities that the information highway will
present? How will they be guided in making choices and navigating
among the many possibilities offered? Are public awareness and
training programs needed? In effect, do we need the equivalent of
drivers' education courses to learn how to navigate the
information highway? If so, who should pay for these? Who should
be responsible for designing and delivering these programs? What
vehicles should be used to provide this training -- schools,
libraries, community centres or community television channels?
Are other vehicles needed to meet the needs of small businesses,
new Canadians, the elderly, Canadians with disabilities, those in
remote communities, or other groups? In view of emerging personal
and mobile communications services, users will likely need
assistance in directory services to easily find correspondents'
addresses. How can we best develop familiarity and confidence so
that all Canadians take advantage of the opportunities for
learning, working, creating new jobs and interacting on new
economic, social and cultural levels?

Issue 15 -- What opportunities does the information highway
present to improve government operations?

In an environment of continuing financial restraint, the
re-engineering of government operations through the application
of communications and information technologies has become a
priority. The Treasury Board of Canada Secretariat has published
a discussion paper titled "Blueprint for Renewing Government
Services Using Information Technology," which describes an
integrated approach to the delivery of government services while
significantly reducing associated costs. The approach proposed
builds on the experience gained from program renewal projects
under way at agencies such as Revenue Canada, Health Canada,
Human Resources Development Canada, Public Works and Government
Services Canada, as well as from the work of the Council for
Administrative Renewal. How can this federal government
infrastructure be made an important component of the Canadian
information highway?

The federal government will explore cost-effective, innovative
means to meet its infrastructure needs, such as making use of
available systems and forming partnerships with the private
sector and other levels of government, rather than relying on
unique and custom-tailored in-house solutions. What steps should
be taken to make government a more sophisticated and effective
user of these technologies, products, services and networks? How
can the private sector take advantage of this situation to
develop products, services and solutions that, while meeting the
needs of the federal government, can also be sold to other
customers?


5.   THE ROAD AHEAD

The Canadian information highway is now a work in progress.
Actions being taken on a day-to-day basis are influencing its
development. The private sector continues to invest in new
technologies, deploying advanced networks and developing
innovative products and services. Businesses and consumers
continue to seek and demand new choices, lower prices and greater
performance.

The federal government is also a key player. It is responsible
for a number of important legislative, policy and regulatory
instruments that will influence the development of communications
systems in Canada. Government R&D activities are contributing to
the emergence of new technologies, applications and services, and
will continue to do so. The federal government is a major user of
telecommunications and information products and services, whose
needs can, and do, generate substantial business.

Many of the questions raised in this paper are being confronted
now, but they will evolve as advanced networks and new products
and services are introduced. Our answers must therefore be
flexible enough to remain relevant over the longer term. These
public policy issues are too important to be left to any single
organization or narrow set of interests. They are also too
important to go unanswered for long.

The Canadian information highway can only be achieved
collaboratively through the informed participation of all
stakeholders and the coordinated investment of our collective
resources. It is time to start the process of study and
consultation with other levels of government; with the industries
that will build the information highway system; with those who
provide the content it will carry; and with the businesses,
hospitals, schools, libraries and individuals who will benefit
from its availability.

With this purpose in mind, the Minister of Industry has
established an Advisory Council representing industry, labour,
consumer and public interest groups. The Advisory Council will
make recommendations to the Minister of Industry on a national
strategy to govern the evolution of Canada's advanced information
and communications infrastructure respecting the overall social
and economic goals of the federal government.

