The Internet of Things and the Future of Canada’s Telecom Industry

The Empire Club Presents

Anthony Lacavera in Conversation with Amanda Lang: The Internet of Things and The Future of Canada’s Telecom Industry

February 5, 2015

Head Table:

Distinguished Guest Speaker:

Mr. Anthony Lacavera, Chairman & CEO, Globalive Group and WIND Mobile

ssGuests:

Ms. Amanda Lang, Senior Business Correspondent, CBC News & Host of The Lang and O’Leary Exchange

Dr. Gordon McIvor, Executive Director, National Executive Forum on Public Property; Director, Empire Club of Canada

Mr. Lou Natale, Vice President of Sales, Nokia Networks and Solutions; Director, Empire Club of Canada

Ms. M. J. Perry, Vice President and Owner, Mr. Discount; Director, Empire Club of Canada

Mr. Brice Scheschuk, Co-Founder, WIND Mobile; Co-Founder, Director & CFO, Globalive Communications; CFO, Pragmatic Conferencing

Mr. Demi Russo, President, Nokia Canada

Ms. Andrea Wood, Senior Vice President, Legal Services, TELUS; President, Empire Club of Canada

Welcome Address by Dr. Gordon McIvor, President-Elect, Empire Club of Canada

Our speaker today is a true entrepreneur, what in other times would have been referred to as a ‘Renaissance Man’. While the focus of many of his business activities has been the telecom industry, his interests are wide ranging and passionate. While the inventor of the telephone may not have understood the technology that Mr. Lacavera excels at, Alexander Graham Bell would have recognized in Tony Lacavera a kindred spirit, a businessman with vision, dedication, commitment and an almost inexhaustible well of focused energy.

Not surprising that he is very often placed on all manner of achievement lists from being named Canada’s CEO of the Year in 2010 by the Globe and Mail’s Report on Business, to one of the 50 Most Influential Torontonians by Toronto Life magazine in 2013. That same year, he was welcomed into the University of Toronto’s Engineering Hall of Distinction, a special honour for a former grad of that institution.

Mr. Lacavera founded Globalive in 1998 and co-founded WIND ten years later—that up-and-coming telecom that many investors strongly believe will continue to give Bell, Rogers and TELUS a true run for their money. As to Globalive, it has, in the past 15 years, founded, seeded, financed, operated and divested a number of companies in the internet communications and technology sectors. Not surprisingly, Mr. Lacavera supports other entrepreneurs and has proven time and time again that giving back to the society that was good to you inevitably is a win-win situation. The SHAMBA Foundation that he founded eight years ago regularly raises hundreds of thousands of dollars for a variety of social and charitable causes.

Now, we could not think of a better person to interview Mr. Lacavera than the journalist who many believe is our best business commentator in the country, Amanda Lang. Whether we watch her on The National or on her own highly successful television show, her vast knowledge of the business and those who excel at it is undeniably the reason she has become one of CBC’s most successful on-air personalities. We are very fortunate to have them together today.

Ladies and gentlemen, would you, please, join me in welcoming to the Empire Club of Canada, Tony Lacavera and Amanda Lang.

Anthony Lacavera & Amanda Lang

AL: Thank you so much for that kind introduction, Gordon. And it is great to be here. I have interviewed Tony many times, as you might imagine, over the course of the last few years. I was trying to remember when I would have first interviewed you, but—

TL: Seven years ago, yes.

AL: Seven years ago, so when you were nine.

TL: Yes. Eight years ago, maybe.

AL: I want to get a little bit to the story because not everybody will know the story, and you might be tired of it, but we are not. But, Gordon referred to something, which is you do have a kind of a boundless energy. You have needed it in the last few years with WIND and some regulatory hurdles and going right back to when you thought, “I’m going to make my own business,” which, increasingly, young people are inclined to do. What was it about that experience that kept your energy levels for it high and still do? You still have high energy for it—I guess this is a personal question to start—but what is it about you that says “Yes, I am going to keep my optimism up?”

TL: You know, Amanda, I think, for me, I guess I am good at tuning out things that I do not want to hear. That is good and bad, so, I am really good at picking a direction, and, for me, no matter how many people tell me—and in the case of WIND, hundreds, if not thousands of people told me—“You’re crazy; it’s never going to work,” I just completely tune it out. And it is a path that I want to go down, and so, I am able to not lose focus or lose energy because I can just keep going in that direction.

The bad news in that, though, is that I can sometimes have a hard time listening to people, like Mr. Lockie, sitting here in front of me, who often have really good advice. So, I have to balance it because I have to make sure that I do not get myself too far off track by not listening.

AL: How many companies have you built? If you had to sort of count?

TL: So, I mean, many of them have failed completely. AL: Yes? Congratulations.

TL: So, the ones that are—yes—still around—we have started I am going to say about a dozen companies within the Globalive Group. Seven or eight of them would be still great going concerns. WIND is, of course, the largest. We have sold a number of companies that we started that we just felt it was the time to exit, but it has always generally been in the Canadian telecommunications space. I have for my entire career, at this point, believed that a key pillar to a competitive economy to Canada’s global competitiveness is cost-effective telecommunications for all Canadians. I just think that and, increasingly so, it has become as important as electricity, as important as highways for the success of our country.

AL: It is now a basic human right in Estonia. TL: Yes, that is right.

AL: Internet access. I want to just point out to the folks here that we want your questions, and we are happy to make this as conversational and about what you want to know as possible. I will prod you as we go along, but there are people with microphones in the room. When you talk about kind of competition in wireless, I think I am right in saying that you got into that space and conceived of this mobile company before the government sort of took it on as sort of a cause that it would champion. Am I right about that—that you were really taking on some big incumbents without any kind of sort of regulatory help?

TL: Definitely, so for the first eight years of Globalive’s history, we competed rather below the radar, and we were sort of a cute little competitor to the big guys.

AL: Yes.

TL: And in 2006, we acquired a company called Yak Communications, and that really kind of brought us sort of into the purview of the big guys and sort of put us on that path to, really, ultimately, make a very big infrastructure investment and find the backing to do that, which we were successful doing, so that we could have our own network and our own infrastructure instead of constantly relying on a regulatory regime to allow us to access the Bell infrastructure, for example. So, that was a big pivot in our history where we really decided that we were large enough that we really needed to find a significant investment partner that could really help us build our infrastructure. And that is what we have today.

AL: And how hard was that to find that partner, to get that investment because you were young; the company was young. It was bad odds? What was that like?

TL: You know, very similar to the start of the conversation. People ask me all the time how do I go about, you know, raising capital for my own business, and I support a lot of the accelerators around the Toronto community and the incubators and so on and talk to young entrepreneurs all the time, and it is very similar to how I started the conversation: Raising capital is really just about ignoring all the noise around you and just believing in what you are doing and just, you know, again, taking input where you need to, but believing in what you are doing and just moving ahead with it relentlessly. And I cannot stress that enough. Even today, with the track record that I have and that we have at Globalive and WIND, every day, we get told, “There is no way you are going to be able to do that. There is no way you are going to be able to do that; it is not going to happen; that is not going to happen; that is not going to happen.” So, you know, you basically have to just tune that out and move ahead.

AL: One of the things that happened along the way for you on the capital side was that you had investors, and the climate around that became complicated and political and changed.

TL: That is the nicest way I have ever heard it said.

AL: Right? I am trying to be a little careful here, but, well, then I do not know if you have ever heard O’Leary describe it, but…

TL: I have. I have been there!

AL: Probably closer to your interior monologue. TL: Yes. Well, no, he has come after me about it. AL: Because he blamed you for that, which is— TL: Yes.

AL: —sort of unfair. Let us say that. TL: Thank you.

AL: But, just describe that process because it was a—I mean, I am sure most people are somewhat familiar with the story, but what was that like?

TL: Okay, so, when we started WIND, the capital to build the infrastructure to start WIND was, you know, over $1 billion necessary, really secured—not prospective capital or not availability of capital; it really needed to be committed in order to actually build entirely our own wireless network. And I could not find that money domestically in Canada—not even anywhere close to what was needed to really make a go of it. And so, we started to search abroad, and we were successful at securing a major investment from, initially, an Egyptian-based company.

And then we got into all sorts of regulatory and legal trouble that you are very familiar with, and, for everyone’s benefit here, it was, really, in many ways, legal and regulatory challenges that went on throughout the history of WIND up until actually four months ago. So, for the entire history of WIND, it has had a number of life-threatening moments between regulatory and legal challenges, mostly surrounding the incumbents successfully lobbying a regulator that more competition is not needed, that Canadians are actually pretty happy with their wireless service and that we should not provide any preferential regulatory conditions for competition to materialize. So, while the incumbents did that, we ended up into a great deal of difficulty, as you know. They were partially successful in convincing the regulator—well, initially, they were entirely successful. We were blocked from launching in November of 2009.

AL: Yes.

TL: That was an incredible moment where we had invested about $800 million. We had about 700 people hired at WIND, and we had stores built, the network built and ready to launch and then the CRTC rejected our operating application or our license, and we were not able to—

AL: For reasons of the ownership structure.

TL: For reasons that we had brought all this capital into the country, foreign capital, that I could not find domestically in order to build a real competitor of the big guys.

AL: I interviewed Mr. Sawiris right around that time. I cannot remember how soon after. You will remember, he was in the country, and, boy, he was mad. I mean, he was—

TL: It is one of my—

AL: He is probably still mad about that whole—for me, it was a real kind of indicator of how complex this industry is because, not just our country, but every country has very strange kind of relationships and regulatory laws around telecoms, and I think they are getting worse, not better. Actually, we will talk about that, but what was that like? What was it like dealing with a big investor like that who was your lifeline and being kind of powerless to change the thing that was driving him bananas?

TL: The thing that got us through that period was, I think looking back, was that, first of all, here was someone with a risk profile. I knew in order to be successful in wireless in Canada, not only did we need all that capital, we also needed an investor group with a risk profile to really look beyond short-term challenges, no matter how big they are. And also, Mr. Sawiris—who is the investor that Amanda was talking about who gave us that first big boost into WIND of a big injection of capital into WIND—could look beyond the near-term regulatory issues and look at the really, the long-term opportunities, so he and I had a real excellent meeting of the minds and formed a great partnership, actually, over that, because I am completely unaffected, you know, completely, largely unaffected by, you know, setbacks like that.

You know, as much as inside I must be frustrated and upset, I am able to, as I said, not lose focus. So, that was what got us through that period. It was his ability to look beyond, the investor group’s ability to look beyond short-term issues.

AL: You talk about how difficult it is to raise capital in Canada. And that is not, obviously, an unfamiliar story at certain levels of the process, certainly, at an early stage. I think angel is tough, sort of pre-A—pre- series A is tough in Canada. I think we would all agree on that. Just given your experience—and this is not a political question—does it behoove us to think about the world as our capital base as a result? I mean, do we need to be a little less, I guess parochial about where money comes from?

TL: I could not agree more with that, and I tell young entrepreneurs that all the time that you need to not restrict yourself to Canada when you think about capital. The marketplace today is global; the internet and many, many new businesses are the marketplace; it is by definition global. Why would you be thinking about the VCs in the Toronto market or the VCs in the Montréal or Vancouver market? Why would you not be thinking about, you know, capital from any place you can find it? And what I have found is there is a big world out there, and we lose sight of that sitting in Toronto, which feels like a big city to us. This is a very small city with limited capital for early- stage companies. If you put all the big cities in the world together, there is a lot of early-stage capital available and a lot of growth capital available and a lot of investors that want to invest in a great place like Canada.

I mean, there are a lot of great things to be said about investing in Canada, you know, despite the regulatory legal challenges we have had. You have a stable government, a basic thing that we, that investors take for granted. But people investing in India or people investing in China do not have the benefit of a necessarily stable government, you know—consistent rule of law and enforcement of law and property rights and those types of things that we just take for granted. So, I love it here. It has definitely been a fun road, an adventure, and we now have a very solid business in Globalive and in WIND Mobile, and we will pass one million customers this year at WIND, which is a huge milestone in our industry.

And, you know, from here, we will continue to grow. And, to me, I am excited about the future, so I do want to talk a little bit about the future today of wireless, where I see the world going. And it is an extremely exciting moment in the history of humanity, I believe, where in our lifetime, we are going to see every device, every object, everything we interact with become part of a connected society. And no one really knows where that is going to go, but the Internet of Things becoming the Internet of Everything is an amazing topic, an accelerating direction that our society is taking, which leads me to the conclusion that I believe that wireless networks are as important as electricity or as roads, as water, as infrastructure is to the success of our country and the growth of the global economy.

So, it is a big—and I am thrilled to be part of that. I feel privileged to be part of it, and, for Canada, I want to make a big contribution to that.

AL: So, from that point of view, the infrastructure is still as relevant as ever. Sometimes it can feel as though we are operating on two tracks, where the old regulatory environment is sort of looking backwards, and this new technology is just being enabled so quickly.

TL: I think infrastructure is more important in telecommunications than ever. I think that, you know, when you think about what the modern highway is, the modern highway is a fiber connection between Toronto and Vancouver. You know, 100 years ago, it was the Canadian Pacific Railway that let this country, you know, enter a new economic era. Connectivity of our citizens with fiber and with wireless networks is now this next great wave of economic and social welfare, if I can say that, social welfare progression.

AL: And I guess I do want to ask whether you think the fight for the fourth carrier is over. Is it won? Has that agenda settled?

TL: You know, I am the eternal optimist, so I think I declared victory with you five years ago.

AL: You did, yes. I may have been less enthusiastic about that point of view, but…

TL: I have been watching all the interviews where you said that you may have started this company when you were 11, and I got it from you again today.

AL: Sorry. You are very youthful looking, Tony; it is not my fault.

TL: Okay.

AL: But you are, I mean, the big goal here was four players. There are still three huge incumbents, and they are more threatened. In some ways, their businesses are more threatened by the things you have just mentioned.

TL: Yes, they are.

AL: More so than they have ever been. TL: Yes, that is right.

AL: So, they are not likely to be feeling warm and generous about—

TL: No.

AL: —profit margin erosion.

TL: No, and I think that the legacy networks, the legacy terrestrial networks, cable, copper—those are going to come under fundamental threat in the next three, five, ten years as wireless becomes faster and better, and it is already ubiquitous, but, beyond, it will be in everyone’s hands, and everyone will have a connected device. You are not going to connect your refrigerator or your car to a terrestrial network, right. You are going to connect it to a wireless network. You are going to connect your thermostat to a wireless network. So, I think when you think about the Internet of Things and every connected device and every Canadian having 20 or 30 or 50 or 100 connected appliances, devices, things in their life, wireless becomes the medium to do that, and fast wireless networks become increasingly important. So, yes, incumbents are definitely under threat.

To answer your question about, you know, the fourth. The fourth carrier battle is never going to be over. It is great for Canadian consumers and Canadian businesses that there is a viable competitor. We are in Ontario, B.C. and Alberta, and, where we operate, prices have come down 20%. That is kind of a near- term benefit. A long-term benefit is that there is more infrastructure investment in wireless networks that will lead us to a 5G world with, you know, a very fast internet everywhere and the Internet of Everything. So, I think that is really good when you think about it that way, but, yes, I do not expect the fight to be over with the big guys. And, as long as I can wake up, I am going to get up, put the suit on and keep swinging and…

AL: The vision that you are offering makes the spectrum auction, makes the spectrum that is available even more valuable.

TL: Yes, increasingly. So, Spectrum is the real estate of our business, and we bought a certain amount in 2008, and there has been follow on auctions. There is an auction coming up next month, and, obviously, more wireless spectrum is needed to continue to increase the speed of wireless networks and increase, you know, the coverage of networks as well.

AL: Do we have the technology on our networks in Canada to do what you are picturing when we talk about Internet of Things and everything connected? Do we need another upgrade?

TL: I think with all things, you have three large players that dominate the market that do not want evolution to happen too fast, that have a natural, I guess inertia there. And it really comes from the investment levels in the legacy networks that have been made. So, there has been an enormous investment by Rogers and Shaw in cable. There has been an enormous investment by the telephone companies in each province—Bell in Ontario—in copper and in fiber, now, to the home, fiber to the home. So, you definitely are going to have a long tail on that, if you will, but I think what we are here to do is help accelerate innovation in our country, accelerate that change and be a driving force behind that change. That is what we are here to do. That is what WIND is about. We are about driving and accelerating change innovation for the benefit of Canadian consumers and business and, obviously, we want to do that profitably.

And so, I am pleased to say that we have got to that critical mass now where, you know, we have to still service our customers well. We have to show up every day, and our customers can go across the street to our larger competitor anytime. There are no contracts; there are no commitments with us, so we have to earn your business every day. But we have got enough critical mass of customers, enough Canadians on board today such that, you know, now, it is a viable business. Now, it is about how do we drive change in the country to a positive effect?

AL: I want to talk to you about the security piece of the equation—and I am going to backtrack a little bit—but it is hugely important as we get into that kind of future view of connectedness.

TL: Certainly.

AL: You had a front row seat to some of those security concerns. I mean, I do not think many of us identified Orascom as a sort of geopolitical security concern, but maybe they were, given what happened with MTS Allstream. We certainly know, now, because of the NSA and CSAC, there is concern about who runs the network, what equipment is on the network— and, again, you know that very firsthand. Are those legitimate concerns? Are we overreacting to this? You know that Huawei equipment might become embedded with listening devices that the Chinese are—? Are we overeating?

TL: I do not think we can overreact. I think we have to be extraordinarily diligent and, again, I will use the word relentlessly: We have to relentlessly tackle emerging cyber threats, and cyber threats are particularly dangerous because you do not see them; you cannot feel them, and they mutate really fast. They can come very quickly from a different direction that you were not expecting very quickly.

So, I think, at the federal level and throughout all provincial and municipal governments as well, but, starting at the federal level, we need to be, as Canadians, thinking about the need to allocate a lot more resources to protecting our country from cyber threats. I think we are underfunded, and I think it could not have enough focus. So, I do not want to be an alarmist because I think that, at the same time, I do not believe that there is a systematic—I mean, there are a lot of accusations and allegations out there. Enemies or threats to Canada that we would have from a military perspective probably exist or do exist in the cyber world as well, and we have just got to be very diligent.

AL: Where do you think the responsibility lies because we have not quite cracked that from a policy point of view? So far individual companies are expected to manage cyber security. Is that the right approach, or do we need to elevate it to a kind of a more national level?

TL: I think it has to be on the minds of every Canadian; it is not at just a business level. I think we, as individuals, have to think about this, and there are lots of things we can do to protect our own security online. What does scare me is how willing 8-, 10-, 15-year-old Canadians are to put their entire lives online with no security whatsoever. It is a cultural thing and millennial thing that we have to tackle.

So, there has to be a mindset that a lot of people are going to use that information to yours and the country’s detriment, and you are giving it to them as easily as you are giving it to your friend across the street or whatever. It is a social change has to happen very quickly in my view. I do not see it happening, though. So, again, it goes into funding education. Education has to play a significant role right from grade one.

Right now, we have to be talking to people, grade one kids, about what the threats there are to them and what they should do to protect themselves. They know not to cross the street without holding their mom’s hand; they know not to play in the schoolyard with so-and- so, but they do not know that, when they go on the internet, something bad can happen.

AL: That and there is a kind of a built-in contradiction, of course, in the world that we want to inhabit, which is we want this world where our fridge tells us when the milk is out and, for that matter, orders it from the grocery store and has it delivered without us even being involved, but we do not want our kids to be so connected and open that they put everything they do up on Instagram or whatever is cool these days. Are those not kind of contradictory?

TL: I think so. I do not have the answer how to navigate that. That is a needle we have to thread. Of course, we have to navigate carefully, but we are not going to stop it now. I mean, Instagram is part of people’s lives; Facebook is part of people’s lives. So, I think, in our case, going back to WIND for a sec, we were pioneers in many respects in that we brought Chinese infrastructure equipment to Canada, and that has been an ongoing challenge, and it was compounded for us when we had the investment from, originally from the Egyptian group, but also then from a Russian group.

And when things got very negative between Canada and Russia, last year, in particular, we were in deep trouble. I think that was a layer that was beyond our control and ran into geopolitical problems that almost killed WIND, actually. We were able to power through that. And we are big customers of Nokia as well— and growing customers of Nokia. There are solutions out there. In the case of Nokia, for an example, our sponsors stay. There are alternates that are there. We did not anticipate in any way, shape or form how difficult it would be to have investors from abroad, and when you put the Ukraine situation and Crimea on top of it, it just became untenable. So, I do not think that that should shy Canadians away from raising capital abroad.

AL: Right.

TL: I think it was a perfect storm of problems for us.

AL: And there is at least one book in your Russian experience in you. I suspect you are working through all of that.

TL: Yes, I have had some fun in Russia, for sure, with a challenge. I mean, their perspective is that they have invested a lot of money and that now their assets are being threatened by stuff that is out of their control. Their view would be that Canada is supposed to be a safe place to invest: “We should not be getting the kind of scrutiny we are getting.” There are arguments on both sides, for sure. It is not a clear path.

AL: It is funny because when the Huawei situation was kind of blowing up in Canada, I interviewed the guy who runs the Chinese investment council here, and he said, “We had no idea that this was possible, that your servers could spy on you. We run Cisco servers. Is Cisco spying on us?” I was really disingenuous, I have to say. Do you assume, just from where you sit, because you kind of have a weird responsibility as the head of a company like yours and yet no control over it—which is an awkward combination—that this kind of listening and watching happens on your networks? Do you assume that it will happen? I mean, we know more and more every day about what governments are doing and those are the good actors, so who knows what everybody else is doing.

TL: So, I lean probably pretty conservative on this topic in that I am all for monitoring that leads to increased national security. So, I, obviously, value my privacy, and I control what I put online for that reason. But, as a citizen and a taxpayer, I would lean towards the view that it is a good thing that our government is talking about how they can cooperate globally with allies to make sure that threats are mitigated, that the risk is reduced. Because, why? Stability in our economy leads to prosperity for everyone in Canada, and, if there is not stability, unfortunately, a bad event can be so disruptive and create so much volatility and so much uncertainty as we all saw over the last, well, in New York in 9/11, and we have seen it since then. There is such a crazy negative reaction, and I think that is an overreaction, but that is just the way people are. We cannot afford that risk; we need that stability to be there, so I would be an advocate, generally, of respecting people’s privacy, of defining the laws the way we need to. And we need to spend time talking about that as a nation, but then, once we do it, let us listen and pay attention where we need to.

AL: When you talk about this future, connected future, Internet of Things, you are not a guy who just talks about things because you think it is interesting. I am assuming you are investing, that you are beginning to think and—

TL: I am a huge believer, yes, that the dream is that everything will be connected. The future is that, and a fast wireless network, great wireless infrastructure that we are building will help bring us into that place in a faster, more efficient way. And I think it is pretty exciting to think about where it could go. I think we are good at thinking about the near-term opportunities are if it is a connected home and connected car. There are a lot of technologies already in the marketplace like that.

Wearables are obviously emerging quickly and it is pretty exciting to think that you can have a wearable that monitors your health and monitors tons of inputs about your health and be more predictive, or, instead of being more reactive, you can anticipate so much more and be so much more in front of your potential health risks, health concerns. Those personal security opportunities when clothing and devices are all connected, I think, are pretty amazing—and to think about what can happen in the relatively near term with technologies that are out there today. It is not a pipe dream about what might happen. Way down the road, I think in a 5G world, you can just see that the entire world being wireless, and you can see every citizen having 50, 100 connected appliances, connected devices and getting real utility out of those. That is the dream, right?

AL: And where do you see Canada playing in that? Obviously, we are playing a little bit. I have interviewed some of the companies myself, but you think of sort of the places that tend to be out front in this. Are we in the game?

TL: As I said, I think that it is fortunate we have challengers to the incumbent operators on the ground in every region of the country because, I think, that we, as the challengers, help spur that innovation, and I think that while an incumbent will be thinking How do I protect the existing businesses that I have? How do I make sure that those don’t erode too quickly? we can just think about how we grow into this new world as fast as possible. So, our structure and our position in the marketplace lets us play a leadership role in that, and we will play a leadership role. So, I would say Canada is in line with other countries as far as I can tell, which is really that, well, I mean, other than Japan, which is clearly—or, you know, there is an amazing case study in South Korea in the City of Songdo, where the entire city is already entirely connected. Songdo is an amazing experiment where every appliance is connected, every road is connected, every traffic light is integrated with the smart grid, and, I mean, talking about now how they can optimize fuel consumption by being a lot more smart about when lights change or they do not change and controlling traffic flow a lot better, controlling electricity flow a lot better. Amazing, actually. So, if anyone is interested, Songdo is a great thing to read up on.

AL: Do the people seem happy?

TL: I do not know. Actually, that is a great question. I tried to research that, actually, and I could not find—I mean, I do not speak Korean, so I had a hard time reading. I could not really read anything; I got quickly into languages I did not understand.

AL: Do we have any questions out here? We have got a microphone there, and I think a microphone back here. Yes?

Q: With Tony’s entrepreneurial background, of course, and your exposure to the business, what would you offer as recommendation or advice to students today, in business? Because one of the things that I have been told a number of times by my children, more than once, is, “Thanks for paying for school— really love it, but frankly, school’s teaching us things that aren’t aligned with where the world is going.” And that is always a disconnect. So, what would you say to them?

AL: Oh, no, you are much closer to that one.

TL: You have a kid; I do not.

AL: Well, my son is ten, so, no, I mean, okay, I will take it while you collect your thoughts, because, actually, you have got real-world experience for them. I do think, I mean, increasingly, your experience is going to be the one that young people can actually be empowered to have, which is I can make something for myself; I can make a business for myself because the ability to build a business that capitalizes on something somebody else has done is so much better, right, the kind of peripheral businesses, if you will.

The biggest thing I think we need to do is to stay hungry. This whole question of kind of thinking of the world as our source of capital and the world as our market. I think this is a generation that thinks that way, anyway, because of the level of connectedness, but that would be my message is not to, while staying as Canadian as you want and as you deserve to be, because it is a great place—

TL: I would say that. I would say spend some time outside of Canada. I would make it part of your life to spend some work time, entrepreneurial time even outside of Canada, and get a perspective on not necessarily America; it can be in Europe; it can be anywhere. Some of the biggest growth opportunities are in Asia, and I think getting a broader view of what is out there, as I said earlier. The world is a huge place, and we lose sight of that in Toronto. I mean, we lose sight of that between here and Pearson Airport. You have got to get to Pearson, and get out and see what is out there.

AL: The other thing I would add is not to believe the headline gloom. It is really easy, but I could go back and pull headlines from 1790 saying that this generation is going to have the bleakest future—1910. There are periods in history where we kind of collectively say our children are screwed. It is never true, and it is not true because you do not want it to be, so let us be gloomy and pessimistic for the moment, but our kids should not be.

Q: Amanda and Tony, excellent discussion. I would be interested, Tony, in your thoughts on two things. Number one, who do you think does this competitive practice of telecommunications well, what country? And two, my recollection is what beat you—and I do not feel like you are beat—what challenged you the most besides the foreign investment, was the ads from your competitors that said he does not care about our community in New Brunswick. And you said in Ontario and Québec, which we care about, and B.C., that you are aligned; you are perfect for us, but, you know, that national network—it does take time. So, in retrospect, how do you overcome that criticism, and who does get it right?

TL: So, an early goal we had was to be a fourth national carrier, and we got into a great deal of regulatory trouble, as you know, and that slowed our deployment and changed our business plan. So, midway through 2010 and in early 2011 when it was clear that we were just getting behind and other competitors had launched in those markets, we completely changed our business plan to focus on Ontario, B.C. and Alberta, and that has been what we have been focused on and what we have been saying we are focused on since then.

Fortunately, in markets like in New Brunswick, another competitor Eastlink, in that example, has emerged as a challenger to Aliant, the challenger to Rogers, so there is that competitive dynamic in that marketplace as well which, again, will spur innovation. And adoption of Internet of Things will happen faster because there is that competitive dynamic in the marketplace.

By the way, the best benefit of a competitor like us being in the marketplace is that incumbents move faster themselves, right? Everybody benefits, whether you are a WIND customer here today or not, which I hope some people are. If not, give us a shot, but even if you are not, you are getting a better level of service, and you are getting more innovation out of your carrier faster because there is a competitive presence in the marketplace. So, that is what I would say about that one is that we changed our plan, and maybe we did not do a great job of trumpeting that, but there is a competitor in New Brunswick.

What was your other question?

AL: What country does get it right in terms of real competition?

TL: Look, I think I have to say America, as much as we can be critical of the United States on a lot of fronts. It has actually got to the point now where the wireless industry in the United States is similar to the airline industry, in my opinion, where they are on a treadmill of just having to invest more and more capital and getting less for it, and it is spiraling into the ground right now.

AL: Hopefully, not the same bankruptcy treadmill as the airlines.

TL: Hopefully not. I think it would be tough to bankrupt Verizon or AT&T, but the competitors are on that treadmill. You look at sentiment online from U.S. internet users—20-year-olds, 25-year-olds complaining just incessantly about how slow and crappy AT&T is or Verizon is. It can just never be good enough now, and they want more for less. The competitors T Mobile and Sprint are trying to provide more for less, and all four of them are having to invest capital—like, got to buy that next big airplane, got to buy that next big thing to keep that customer. You have got to be able to charge them less, so, structurally, in the United States, I think the industry is not sustainable, but there is an enormous amount of innovation in wireless in the United States because it is cheap for everyone to get pretty much unlimited use, and you have got four in every market, some of the markets five, six carriers. You have got a choice that is a very cost-effective choice.

I think it is the strongest argument that bringing a fourth carrier to the Canadian market makes sense, but it has to be managed in a way that is actually sustainable. So, I would say the U.S. right now has it right and has the best, most competitive environment. Japan is very competitive, too, but it is so competitive in the United States, and the industry has been structured in a way that actually we might actually have a formula in Canada. We might say in five years that, amazingly, the Canadian government, after a long road that got me some grey hair and cost him the rest of his hair, we actually may have got it right in Canada.

AL: I think we might have time for one quick question if there is another question. Yes?

Q: Thanks. So, Demetrio from Nokia. I am Italian, so I do not know how quick I can be, especially, with the microphone in my hands. So, thanks first of all for being here. It is an honour for Nokia to sponsor this event. I took some notes, and so, you said it is an exciting moment, definitely. So, I think for us in the industry, it is one of the best times.

You have been touching on very interesting points, like the regulatory challenges, the competitiveness that is in the market, and you say, for example, that AT&T Wireless has to offer more for less, right. My question to you is how do you see new players in this market? You say we connect things to internet and that it is equal. I connect everything to a cloud, right? So, cloud means you will have new players like Google for example, now they have a project to put the best stations on the balloon, right. So, they have the biggest data centre in the world. So, they will challenge the OTT. Okay, so how do you see the role of the OTT in this new world, which is there, right?

And you are right: The States is now driving the innovation, so Silicon Valley is where everything is happening. With some of the people from my team, we have been there already two times in the last three weeks, and it is amazing, so it is there, right. Google and Nokia—I think it is out now: We are partnering together, so Google will run a 3 ½—so they will host; they will share the net, the radio network. They have already brought the challenge to AT&T and Verizon, right, so they will become a strong player. So, how can the OTT differentiate themselves and become not just a pipe, okay, because then we will not talk about the fourth operator, but to eleven or five, six, seven whatever?

TL: I do think there is a real prospect that that is the direction the Canadian market goes, which is a direction where there are carriers that are providing major connectivity for providers like Google. And I think that there is an opportunity for us in that as well, but I think that that is really far out. I mean, when you look at the relationship that Google developed with T Mobile and Sprint, there is no doubt that they have the resources to steamroll into the wireless market in a retail or commercial basis in a model similar to what is out there today. I do not think they are going to do that at all. I think it is all about cloud computing. It is all about providing a fat pipe, if you will, to the home over wireless and doing that in a way that lets Google deliver all of its OTT, all of its applications to consumers without having any reliance on AT&T or Verizon. I think that is the strategy.

I think that we have a similar opportunity in Canada, as WIND, again, because we are not encumbered by the legacy of infrastructure of cable or copper, and we are building a wireless infrastructure. We can, potentially, be a partner for a company like Google because we are prepared to only look at the future, only look at how we get the fat pipe to the home. And we will only look at how we can really be an alternative to terrestrial networks because we are not encumbered by that legacy. So, I think that it is an opportunity for us, and we are not scared about Google coming to Canada. We think that would be a great thing.

AL: I know you changed your strategy. We are out of time, but is there a time in WIND’s future and is part of the plan that it is a full national footprint—every province?

TL: I would say, so I am 40 now. I started this company when I was 24. I started WIND, I guess, when I was around 33, 34, and I am not going to stop. I will keep going until I am 90. Where it goes from here is—there are 50 or 60 years ahead. Hopefully, health permitting, I am going to continue to bring more competitive choice to the Canadian telecom market.

AL: Well, I will count myself among the Canadians who are looking forward to seeing what it is you do bring.

Please, join me in thanking Tony Lacavera.

TL: Thank you.

Note of Appreciation by Lou Natale, Vice President, Sales, Nokia Networks and Solutions; Director, Empire Club of Canada

Thank you very much for your attention. I think it was fantastic. Another hand for Amanda and Tony. I guess I would like to thank Tony for coming here for a couple of reasons: One is for inspiring us all because, as you have heard, against all odds, he has gone through a few of those as he has told you. And Amanda, of course, for her clear understanding of the business environment here. So, thank you for a very, very interesting and engaging day.

And to the students there and everybody here, I hope that you listened to the story about never giving up and going forward. But, a couple of things. Tony came all the way from Toronto to be here, and it was not far, but, thank God, that Brice and Simon got him here on time at the right place. And Amanda was almost not going to be here, so we were a little concerned, and then we got notice that she was. So, she has been to New York on a ferry and on a plane to be here. So, thank you very much for that.

I thought long and hard about what I would say about Tony because he is well known, famous—sometimes an infamous personality—and Amanda, too. I asked myself what I could actually say of interest, but I hope what I am about to say makes some sense. I wrote it today. It was clear.

I asked myself if Tony is an entrepreneur, and he is an engineering grad from the U of T—actually David Naylor, the former President of the University of Toronto, congratulated him, thinks very highly of him and worked with him. So, he started Globalive a few years ago, as he has told you and what happened after that? As I turn my page, I will tell you. Not content with great successes, he decided he wanted to become a wireless player in his country.

So, I come from Italy. When I was a little boy, off the boat, so I am bit in limbo or a bit like purgatory because I am Canadian, and I love the country and what it did to many, many, many people, and it is a stable country we take for granted. The other part is that we are a very polite bunch, are we not? But, we really do not—I do not know if we are socialist, communist, democrats. I do not know. It is an interesting country.

So, he wanted to become a wireless player. I thought I would get that out. As we all know, Tony is a shy, introverted kind of guy as you can tell. He realized that he needed a boat load of cash to get this thing off the ground, and he kind of looked around Toronto, and thought, “Hmm, ain’t going to happen here.” So, what did he do? He decided there was a guy by the name of Naguib Sawiris in Cairo who had lots of cash—Weather Investments and a big player, so he though “What do I do?” So, he decided to go to Cairo and ask Naguib for $750 million or $1 billion more or less and, obviously he got it, so he is here.

So, what happens when you do that? He started WIND five years ago. He has been, as he has told you, fighting obstacles day after day after day. These are public record, public facts of record, I should say. They paid $422 million for a license. So, when you pay someone $422 million, you think, “Okay, I am assuming you are going to let me play.” No, no, but thanks for the cash. We are not going to let you play. So, that was an interesting one. Then CRTC decided to actually stop the—sorry it is either the corporate structure of the company was not appropriate enough for the Canadian world, so they said you cannot launch, as you were told, and it was a lot of money, so you had gotten $1 billion ready to go and then stopped. So, cabinet reversed the decision. Then that was not enough. WIND and the federal government became co-defendants in court to win this.

So, never one to give up, where is WIND today, and what have they brought to Canada? This is not a commercial about WIND, but this is just in terms of this spirit of Canada and what we should be doing. So, they have put in about $1.5 billion in investments. That is a lot of cash. They created 5,000 jobs. They have contributed about $5 million in charitable donations to the community in sponsorships. They have generated about $1.1 billion worth of cash or revenues since the inception. The moral of the story is some would say or call him crazy or a dreamer, and/or they might say, “That kid is too young; how can he compete against me? I am the guy.”

So, unfortunately, things change, and thank God for people like Tony. He is an inspiration to the youth of the country to dream the impossible. Thank God for people like Tony. As I have told you before, this is not a commercial for my son, but the Ryerson students wanted to come here to actually listen because reading it in a book and watching it and—where is Thomas? He is a professor of international business and is also on our board of directors, and he will tell you that there is a difference when you actually listen to the person who actually went through it, so it is a great inspiration.

As you know, 80% of Canada business or our backbone—80%—is small business, quite interesting. We also rank somewhere between 13–16 OECD competitiveness innovation, so our Assistant Deputy Minister, Anthony, Tony La Mantia, was here, and he will tell you that that is a concern, and we should do better. And despite the fact that we have a rich, western society, education—things that people in other parts of the world would crawl over glass, anything, to have this much—and we do not seem to be able to get it off the ground. I do not know if that is just complacency or not having enough Lacaveras in town.

Anyway, he has contributed time and money to many university entrepreneurship programs. He believes it. He was also the first patron, I think, an investor in The Next 36. Look it up on the web. It is very cool. He started Shamba. Why? Well, it is an organization to help other charities who do not have the capabilities or the smarts, if you will, to try and generate cash; he is a member of the Italian Canadian Chamber of Commerce, boards and he was also here not long ago with Amar Varma another entrepreneur in Canada, John Ruffolo and Mike Eppel talking about where is the real venture capital community in Canada.

So, last thing I would leave you with is I would remember a couple of things: TELUS started as a small company in Ajax, Ontario, called Clearnet. George Cope was the President, you know, the guy who is the President of Bell now. Rogers started as Cantel, a small organization of people a few years ago. I remember Ted Rogers saying in one of the meetings, “You know, I hate monopolies until I own one.” Fido started as Microcell, now a Rogers company. So, thank you to Tony for never giving up and inspiring a new generation and being a role model, especially, to people like my kids of his age because, clearly, it will be their world. Thank you both.

Concluding Remarks by Dr. Gordon McIvor

Thanks very much, Lou. And, lastly, thank you very much to our generous sponsors, especially, Nokia for sponsoring our event today. And it has been delightful to have Mr. Russo with us. Thank you for being here. And to Pragmatic Conferencing for sponsoring our VIP reception. Thank you, BMO Nesbitt Burns, for sponsoring our student table this afternoon.

I would also like to thank the National Post, which is our print media sponsor and, of course, Rogers, which is our broadcast sponsor. This event will be re-broadcast many times over the coming days and weeks across the country. Please, follow us on Twitter at @Empire_Club and visit us online at www.empireclub.org. Thank you all for coming, and, lastly, please, join us next week when we will have the President and CEO of Royal LePage, Phil Soper, who will talk about that eternal, interesting question to all Torontonians, particularly, When is that real estate bubble going to burst? So, thank you once again for coming, and this meeting is now adjourned.

Thank you.