There Are No Limits—PCS and a New Competitive Advantage

Head Table Guests

Margaret Samuel, Manager, Capital Markets, National Trust Company and a Director, The Empire Club of Canada; Nicolas Chapman, grade 12 student, Lawrence Park Collegiate Institute; The Rev. William Middleton, Minister, Armour Heights Presbyterian Church; Fred Gorbet, Executive Vice-President, North American Life Assurance Company; Jay Bertram, Vice-President, Client Service Cossette Communication Marketing; Dr. Gordon Chong, Metro Councillor and a Director, The Empire Club of Canada; Stanley Hartt, Chairman, President and CEO, Camdev Corporation; Gwyer Moore, President and CEO, Deacon Capital Corporation; and Peter Barnes, Deputy Minister, Special Projects, Economic Development Trade and Tourism.

Introduction by David Edmison

In May 1844 with the immortal words, "What hath God wrought," one of the world's most dynamic industries was born. It was Samuel Morse's crowning achievement; a telegraph line from Washington to Baltimore. It marked the first time intelligence could be communicated instantaneously over long distances without yelling. It was a watershed achievement of how humanity communicated. Soon to follow was the invention of the telephone by that great Canadian, Alexander Graham Bell. And since then the growth in the communications industry has been nothing short of explosive.

Today, we can talk to each other from the car, the backyard, the beach or the poolside anywhere in the world. This has all been made available with the advances in wireless communications. The wireless telecommunications industry has grown exponentially thanks to new advanced technologies which will permit integrated voice, data and even video to and from mobile customers. As Canadians, we have the unique opportunity to establish our country as a global centre for excellence in this leading-edge sector.

One company which intends to lead the national effort to seize the opportunities in this dynamic industry is Bell Mobility. BCE Mobile and its subsidiaries, operating under the Bell Mobility banner provide cellular, paging, data and airline passenger communications services and are involved in the sale of cellular hardware and private radio systems. With us today to talk about opportunities in wireless communications, and his company in particular, is Mr. Robert Ferchat, Chairman and CEO of Bell Mobility.

Our guest has had more than 30 years experience at the senior management levels of some of Canada's leading organisations. Before joining Bell Mobility in 1994, he was Chairman and CEO of TMI Communications. Prior to this he held a number of top management positions at Northern Telecom, including President of Northern Telecom International and President of Northern Telecom Canada.

Mr. Ferchat is active in the business community, serving on the boards of several Canadian corporations including Costain Development Corporation, Gennum Corporation, Rockwell International, Hawker-Siddeley Canada and TMI Communications. He has also volunteered his time as a member of the board of the Credit Valley Hospital Foundation.

Ladies and gentlemen, 1 ask you to turn your phones off and welcome our distinguished guest, Mr. Robert Ferchat.

Robert Ferchat

Last weekend, I was in a shop to pick up some roses for my wife. While I waited for the flowers to be wrapped, I browsed through a rack of posters along one wall. In addition to the usual dolphins and tigers, there was one called

Kids' Letters to God. The first of the eight or 10 letters on this poster really caught my eye. "Dear God," the child wrote, "who draws the lines on the map between countries?" The answer, of course, is both simple and profound: we do. We establish our barriers. We set the limits.

It reminded me of the first time I drove with my children into the U.S. at Detroit, many years ago. My son in particular was nervous because I'd made a big deal about "crossing the border." In the middle of the Ambassador Bridge, I announced that we'd just crossed the border into the U.S. My son, bewildered, said, "But Dad, there's nothing there." He was right, of course. The border that I was trying to impress him with is nothing but an artificial construct. It is a barrier, a limit we have placed on ourselves.

We are much taken up with borders in Canada today, trying to find new ways or give new life to old ways of dividing ourselves from one another. I'm thinking, initially, of Quebec as we approach the referendum within two weeks. But I'm thinking too of other major schisms in our society that seem to be widening and hardening as we leave this century that was, as we all know, supposed to belong to Canada--race, sexual orientation, the haves against the have-nots, immigrants against those born here, First Peoples versus the sons and daughters of European settlers, us against them, me against you. What a debilitating and enervating litany. Would it not be better if we listened to our children, whether they're writing to God or talking with their parents--if we accepted the fact that it is we, ourselves, who put those barriers in place. And if we put them there, surely we can take them down and move on.

That's my message today. There are no limits except those that are self-imposed. We are the reason Sir Wilfrid Laurier's glorious vision for Canada in the 20th century has not yet come true. We can also be the reason it will come to pass, if not in the next four years, then shortly after. The choice is in our hands. As Pogo said, "We have seen the enemy and he is us."

Much of the debate over Quebec in recent weeks--and I suspect in the coming weeks as the outcome of the referendum gets increasingly problematic--has centred on what Quebec and Canada stand to lose should the "Oui" side prevail. Uncertainty would push the dollar down, interest rates up. Capital would seek more secure climates; job creation would dry up. Canada would be out of the G-7. Inter-provincial trade would be disrupted. And on and on.

As valid as those observations may be, they make me think of a bicycle rider on a path in the woods. Ahead he sees a big rock. There's plenty of room on both sides to go around, but because he focuses only on the rock--and not the open space--he hits the rock. So let me focus on the open space for a few minutes, and talk about what we have to gain by moving beyond our artificial divisions.

This is a country that nine Canadians in 10--including nine Quebeckers in 10--agree is the best in the world. A country that year after year ranks at the top of the United Nations' human development index. This is a country that has the world's most strategic geography, with privileged access to the world's richest market--the United States--plus frontage on both the Atlantic routes to Europe and the Pacific Rim. This is a country that 30 years ago exported only one-seventh of its output. Today we export one-third and heading for 40 per cent by the end of the century. Seven years ago, we signed the Free Trade Agreement. Since then, our merchandise exports to the U.S. have doubled to $200 billion a year. And Quebec has been a key contributor to all that, including the signing of the FTA. Firms based in Quebec are among the most aggressive in seeking international markets--in going beyond today's artificial national borders and creating jobs and wealth here at home. Names like SNC-Lavalin, Bombardier, Alcan, DMR and yes, BCE, including our company, Bell Mobility. Leaders in Canada's outward-bound, forward-looking business climate. These organisations--and hundreds and thousands of other Quebec businesses of all sizes--are focussed on the open spaces, not on the rock.

My sense, as an Ontarian who works in both Quebec and Ontario every week, is that Quebeckers as individuals feel the same. Their concerns are first and foremost human concerns:

• Will I have a job?
• Will I have good health care and superior education for my children?
• Will I have an opportunity to create a better life for myself, my family and my community?

An SOM poll last August for Le Soleil and The Gazette found that sovereignty is a priority for only six per cent of Quebeckers. Contrast that with 52 per cent who are concerned about employment, and 20 per cent about health services. On October 30, Quebeckers will vote. Our hope must be that they will choose to continue to build the bridges, to break down the barriers that keep us from realising all the opportunities within our reach.

For the next few minutes, I'd like to focus on just one of those opportunities, just one of the open spaces. The industry in which I've spent most of my career--telecommunications--is dedicated to eliminating barriers between people. And today, it represents an opportunity of truly astounding potential, particularly within the limitless world of wireless--cellular phones, pagers, mobile radio, air-to-ground, and soon mobile satellite.

It's interesting to note that Canada's world leadership in telecommunications is traceable not only back to Alexander Graham Bell. In the wireless world, Cape Race Newfoundland was the western terminal of Marconi's first trans-Atlantic radio transmission. And Canadian-born engineer R. A. Fessenden was the first person to broadcast human speech and music over radio almost 90 years ago. Given such a legacy, we see an unprecedented opportunity to build a world-leading wireless industry here in Canada, with all the benefits that come with it--from job and wealth creation to a better quality of life for all Canadians.

Canada today has more than two million cellular users, and half a million people who subscribe to paging services. You can also make and receive phone calls, or exchange data, aboard Air Canada flights. Next month, we'll be launching mobile satellite service that will extend coverage across North America, including up to 400 kilometres offshore. And in a few years, through the Iridium project--a constellation of 66 satellites--we'll cover the world. The industry worldwide is growing at dizzying rates--by 40 per cent or so a year in Canada, 50 per cent in the U.S., 60 per cent in Western Europe and more in some less-developed countries that see wireless as a way to get service to their citizens without the expense of traditional wireline networks. The OECD predicts that by the turn of the century half or more of all telephone calls will involve at least one mobile party.

Canada has an enviable position in the field of first-generation wireless communications. Bell Mobility, for example, together with its partners in Mobility Canada, has invested more than $2 billion in the last 10 years to create wireless networks second to none. We operate the longest uninterrupted cellular corridor in the world--from Windsor, Ontario to Sydney, Nova Scotia. The Yankee Group, an American industry watchdog, says the Canadian cellular networks--developed by Mobility Canada and Canted--are superior to those in the U.S. in three critical dimensions:

• the coverage was extended to a greater percentage of the population more quickly;
• the quality of service is better; and
• the cost to the consumer is less: our customers pay on average four per cent to 22 per cent less than Americans.

With a record like that, it's no surprise that in our first 10 years of existence at Bell Mobility, more than 20 countries have come to us for help with their systems. In fact, we helped build the cellular system in Bogota, Colombia in just two years--an extraordinarily short time in this business.

The opportunity facing us today, apart from managing the 40 per cent growth in the core wireless businesses, is managing the second generation of wireless, known as Personal Communications Services or PCS at two GHz. PCS at two GHz will allow us to combine voice, data and video in a device no larger than today's cellular phone. I can imagine myself, for instance, on a whale watching trip off Vancouver Island, or on the Saguenay River. I've programmed my PCS handset to send all calls elsewhere--except the critical ones. One of those critical ones is a call about our new television ad. The agency sends me the video which I view on my handset miles from shore, makes my comments and sends them back with the push of a button. Another tough day at the office.

Or imagine health-related uses. Wouldn't it be better, for instance, to have my vital signs monitored and transmitted to the hospital even while I'm at the theatre, or the mall, rather than stuck in a hospital room? Freedom for me; less cost to the health-care system. Wouldn't I want paramedics to have wireless access to my history while we're riding in an ambulance? Think of how we could revamp the health industry, reduce the enormous costs of institutionalised care, and still have at least the same level of care, if not better.

The potential uses for PCS are limitless, in every field. Wouldn't it be better to have my PCS network tell me where traffic jams are, in real-time, and plot alternative routes during rush hour? Wouldn't it be better to be able to monitor my home security system from the road? Or check on my teenage grandchildren by wireless video? That's part of the opportunity of PCS--the extraordinary range of life-enhancing applications that will be coming to market in the next decade.

The other part is the chance to create a Canadian PCS industry so that the world looks to us for the products and services that will make their lives better. As Germans are known for excellent cars, as the Japanese for quality consumer electronics, why not Canada for PCS? The benefits are real and speak to our fundamental concerns as human beings. For example, should Mobility Canada receive a licence for enough spectrum to fully develop PCS, we would invest $2.6 billion over the next 10 years to build the network. The results of our investment alone--not counting the spending by up to five other companies who will compete in the PCS world--are significant: 105,000 skilled jobs, an expansion of 0.3 per cent in the economy and a reduction in the public debt of $6.9 billion. Our vision of PCS and Canada's role is clear: apply the talents of Canadians to develop applications to improve our quality of life at home and to serve the world with our expertise.

No single organisation will do all that, and that is one reason we welcome the increased competition that PCS will bring, with the entry of at least half a dozen new players all seeking to develop applications that serve Canadians and the world. But, as we've seen in the computer business, the dominant applications and their designers won't emerge exclusively from Bell Mobility or Cantel, or AT and T, or Sprint or any other major player. They'll come from small- and medium-size businesses that may not even exist yet, or if they do are unable to focus on the killer application, finding it hard to get capital, enter markets, or manage their growth. And if small- and medium-size enterprises are the source of PCS applications, they are also the foundation of the industry. It's in that context that the members of Mobility Canada have proposed a $135-million PCS Advancement Fund in addition to our spending to build the network and conduct our own R and D. Thirty-five million dollars of the fund will finance pre-competitive research by public research laboratories across the country. The rest, $100 million, will be earmarked for the entrepreneurs to get them started on application development. Our commitment goes beyond dollars to include offering entry into national and international markets, and management expertise to enable them to handle the tremendous growth we predict for them.

There are no limits to what can be accomplished with such a model rooted in a country such as ours. Our multiculturalism, our openness to Asia and Europe, our geographic and demographic diversity, our economic vitality, the level and quality of our education--all these become even more valuable assets in a wireless world. Think of what our expertise could do to meet the needs of others:

• the Russians who struggle to cope with long distances and a harsh climate;
• the Irish with their tiny domestic market;
• Singapore with its insistence on technological excellence; and
• Chile, faced with building a network from scratch in a challenging environment.

There truly are no limits to what is possible if we move beyond the self-imposed barriers, the rock in the middle of the path, and focus on the vision, on the possible, on the open spaces.

As I said earlier, the arrival of PCS in Canada coincides with the arrival of a much more competitive environment. Industry Canada is now making decisions to allocate six blocks of spectrum among more than 15 applicants. Many of these applicants have strategic shareholders who are giant multinationals. Nothing wrong with that, as long as our own Canadian-based multinationals have an equitable shot to compete. We want Canada to be more than just another market. We want it to be the world capital of the PCS industry. We believe the work we've done to date plus our plans for the future can give Canada an indisputable strategic lead in this field and provide our country with yet one more means to be a powerful force in the global economy. The only thing that might get in the way are the limits we place on ourselves--the lines we draw between provinces, the schisms we invoke between groups of people and the competitive hobbles we might put on our own businesses in an increasingly competitive world.

We have many choices to make in the next few days and months--choices that will affect us for generations. My choice is for a unified country that looks outward and ahead, unfettered by the attitudes and habits of the past. My choice is for a community of interests that, rather than focussing on our differences, speaks to the fundamental needs of people--economic well-being, security in all its dimensions, and a strong sense of self-worth. My choice is for the future. There truly are no limits.

The appreciation of the meeting was expressed by Margaret Samuel, Manager, Capital Markets, National Trust Company and a Director, The Empire Club of Canada.