Digital Economy Strategy Consultation Ericsson Canada Submission
Theme(s): Building Digital Skills, Digital Infrastructure, Growing the ICT Industry, Innovation Using Digital Technologies
It is widely recognized that Canada's ICT sector will play a vital role in the continued prosperity of Canada.
From its inception, Ericsson has been at the center of telecommunications technology innovation and evolution across the globe in order to bring communications to everyone, everywhere. Ericsson's success in the telecommunications field is attributable to its visionary approach to communications, its firm commitment to R&D and its continuous effort to transform inventions into customer oriented innovations. In Canada, in the past decade Ericsson has invested more than two billion dollars in R&D. These resources help support innovation in the Canadian ICT market, particularly in the wireless space.
Ericsson's R&D focuses heavily on standardized ICT technologies that help Ericsson and its customers to take advantage of economies of scale of the global ecosystem. The Canadian government can play an important role in the growth of standardized technologies by promoting and using mainstream and commercial off-the-shelf (COTS) products.
When considering policies for a world-class digital infrastructure, it is important to take into account not only speed but also mobility because the world is increasingly mobile. Therefore, a suitable spectrum environment should be one of the top items on the Canadian government's ICT agenda. Newer and wider bandwidths are needed as future services will require higher data rates and lower latency. Additionally, during the process of allocating spectrum for mobile applications, the Canadian government must also seek to achieve international harmonization to the fullest extent possible. Creating spectrum arrangements that are unique to Canada can create unnecessary hurdles for equipment manufacturers and undermine the timely availability of innovative telecommunications technologies.
There are, of course, many other important roles for the government to play in the continued growth of the Canadian ICT sector. Using large global R&D firms as anchors for the Canadian ICT industry, government policies could focus on helping to foster stronger relationships between industry, academia and small and mid-sized businesses. One of many positive results of this collaboration is the commercialization of Canadian inventions into value added innovative solutions not only for Canadian market but also for global markets. Furthermore, this will also help the SMEs raise the necessary capital to support the commercialization of their inventions. In another aspect, the current SR&ED program could be improved to make the R&D Tax Credits refundable, as it is the case in some provinces. Additionally, clearer Intellectual Property Rights are needed. This will not only simplify setting up agreements between partners but will also allow participating members to contribute their own IP's in a fair and equitable manner.
- 1. Introduction
- 2. Capacity to Innovate Using Digital Technologies
- 2.1 Promote a Strong Commitment to R&D Focusing on Standardized Technology Paths
- 2.2 Identify Consumers' Social and Commercial Needs Across Sectors and Address Those Needs by Leveraging Public/Private Resources
- 2.3 Promote Government Utilization of Mainstream Technologies and C.O.T.S. Products to Drive Adoption of ICT
- 3. Building a World-Class Digital Infrastructure
- 4. Growing the Information and Communications Technology Industry
- 5. Building Digital Skills for Tomorrow
Ericsson Canada Inc. ("Ericsson") is pleased to submit its comments to the Canadian Government's Consultation Paper on a Digital Economy Strategy for Canada issued on May 10, 2010.
Ericsson was founded over 130 years ago and is a global leader in implementing telecommunications solutions. It has had a strong Canadian presence since 1953 and has invested more than two billion dollars in Canada over the past 10 years.
With more than 2700 Canadian employees, Ericsson serves Canadian operators, enterprises and media companies by providing complete communication solutions including mobile and fixed network infrastructure, professional services, software, broadband, and multimedia solutions. As one of the top R&D investors in the country, Ericsson also fulfills worldwide mandates in the development, testing and support of wireless networks and advanced end-user multimedia services.
In this submission, Ericsson shares its views on the following themes outlined in the consultation paper:
- Capacity to Innovate Using Digital Technologies
- Building a World-Class Digital Infrastructure
- Growing the ICT Industry
- Building Digital Skills for Tomorrow
We trust that you will find these comments to be of value. As always, we are ready to discuss this very important consultation with various government ministries and departments.
Director, Regulatory and Government Relations
Ericsson Canada Inc.
Phone: (905) 206-6536
2. Capacity to Innovate Using Digital Technologies
Successful innovation is an important part of Ericsson's 130+ year existence. Innovation is also the prime reason that Ericsson is a world-leading provider of telecommunications equipment infrastructure and services to mobile and fixed network operators in more than 175 countries. Ericsson engineers have been at the cutting edge of communications advances and have contributed significantly to the invention and development of many of the most innovative wireless technologies to date, including Bluetooth, second generation and third generation mobile technologies. Ericsson holds 22,000 patents worldwide, files on average 500 new patents each year, and is a leading holder of patents related to various mobile and wireless communications technologies. With this dedication to developing the communications ecosphere, it is not surprising that Ericsson equipment connects more than 80 percent of Canada's mobile calls and more than 40 percent of the world's mobile calls. Through its Sony Ericsson joint venture, Ericsson also delivers mobile broadband and feature rich mobile devices, including those supporting mobile broadband and multimedia applications.
Ericsson is not satisfied with past successes, however, and is constantly looking forward.
For example, Ericsson is at the forefront of the research and development (R&D) of advanced technologies like Long-Term Evolution (LTE), which is slated for wide spread commercial deployment this year, and LTE–Advanced. These technologies promise unprecedented performance in terms of peak data rates, spectrum efficiency, and improved latency, all of which will improve the mobile broadband user experience. Both network operators and Ericsson are hard at work bringing these technological innovations to address consumers' needs, whether it is getting connected or accessing information and applications ubiquitously. For example, in May 2009 Ericsson and TeliaSonera unveiled the world's first commercial LTE site in Stockholm, Sweden.1 In addition, also in 2009, Verizon and AT&T announced their selection of Ericsson as one of the primary network suppliers for their LTE network deployments in the U.S.
It has been Ericsson's experience that in order to create an environment that facilitates further innovation public policies must help to:
- Promote a strong commitment to R&D focusing on standardized technology paths.
- Identify consumers' social and commercial needs across sectors and address these needs by leveraging public and private resources.
- Promote Government utilization of mainstream technologies and commercial off-the-shelf (COTS) products to drive adoption of ICT.
2.1 Promote a Strong Commitment to R&D Focusing on Standardized Technology Paths
Ericsson's sustained record of innovation is supported by a strong commitment to R&D. Ericsson's research program is one of the largest in the industry. In 2009, for example, about 16 percent of Ericsson's global sales were devoted to research across the entire breadth of the communications ecosystem. Ericsson Canada is ranked as one of the top ten R&D investors in Canada. Ericsson's R&D is done in such key areas such as access technologies and signal processing, fixed and wireless broadband technologies, multimedia technologies, service layer technologies and IP packet technologies.
In addition to multiple R&D centres worldwide, Ericsson continues to expand its research portfolio in both the US and Canada, including work done at its Advanced Technology Lab in Plano, Texas and its IP and Broadband division in San Jose, California. In Canada, besides the work done at its R&D centres in Montreal and Ottawa, Ericsson Canada supplies Vancouver-based Wavefront2 with High Speed Packet Access (HSPA) and Evolved HSPA (HSPA+) radio access equipment and access to Ericsson's leading-edge Montreal test facility. These resources will help to support the innovation and growth of the Canadian wireless market.
Equally important is the fact that Ericsson is highly committed to technology standards and provides global technical leadership to standardization organizations such as the Institute of Electrical and Electronics Engineers (IEEE), the International Telecommunication Union (ITU), the Alliance for Telecommunication Industry Solutions (ATIS), and the 3rd Generation Partnership Project (3GPP).
This commitment to globally accepted standards not only gives Ericsson access to the global talent and resources pool but it also maximizes the opportunity for innovation. Standards are important building blocks that support Ericsson's efforts, as well as others, to develop competitive new products and services.
Through accreditation procedures, patent policies, and broad technical participation, standards organizations provide the predictability and certainty needed to secure investment as investors are more apt to fund innovations that have a potential global market rather than non-standards based innovation that many only promise niche market potential.
Most importantly, standardization of key technologies enables industry to achieve economies of scale, which lowers costs and propels growth worldwide, even in rural areas with low technology penetration and high deployment costs. With R&D involvement in standard technologies, Canadian companies not only benefit from potential access to a global capital market but are also in a position to export products and services, and even knowledge, to the global marketplace. Additionally, Canadian consumers will benefit from lower costs and a wider choice of more timely products and services.
For radio mobile communications, based on information provided by the Global Mobile Suppliers Association (GSA)3, LTE has been endorsed as the standard technology by more than 640 public carriers in 31 countries. In addition, LTE is also the mobile broadband technology chosen by government and public sector organization such as the National Public Safety Telecommunications Council (NPSTC)4, the Association of Public-Safety Communications Officials (APCO) and the National Emergency Number Association (NENA)5 in the U.S. It is clear that limited and valuable Canadian R&D resources should be focused on the next phases of LTE in order to benefit from LTE's large, existing ecosystem.
Therefore, to encourage future, robust innovation, the Canadian government should establish a clear and concerted effort to focus available research and development resources on evolving and enhancing world-wide acceptable technologies rather than niche or regional specific technologies.
2.2 Identify Consumers' Social and Commercial Needs Across Sectors and Address Those Needs by Leveraging Public/Private Resources
From its start, Ericsson has been committed to bringing communications to everyone, everywhere. Ericsson seeks to continue toward this goal by focusing on innovative ways to bring wireless communications to new communities in partnership with existing stakeholders. Ericsson successfully leverages public and private sector interests with technological innovations to combat the challenges faced by populations around the globe in accessing healthcare, education, and commerce. Ericsson focuses on combining infrastructure deployments with targeted communications solutions that open the doors to social and economic development for communities around the globe.
Below are examples which illustrate that by using standardized technologies, Ericsson, in concert with various institutions, including academia, government and the private sector, has been able to take technological inventions down the path to applicable innovations that address current needs and improve consumers' economic and social well-being. While the following examples come from around the world, the innovations discussed have applications in Canada as well. Innovation on this front will continue because there are still numerous unserved and underserved areas here in Canada, as well as around the world.
2.2.1 Basic Infrastructure Deployment
Operators face real challenges when deploying infrastructure – such as gaining access to reliable energy sources – in many areas that do not yet have communications services. Ericsson has worked hard to bring core communications facilities that enable valuable services to the most difficult to reach locations. Ericsson has developed a number of products that operate using alternative energy sources thereby overcoming the challenge of an inaccessible electrical grid.
For example, Ericsson, in partnership with local providers, has deployed wind- and solar-powered radio base stations in rural Indonesia, Inner Mongolia, many parts of Africa, and Mexico. In India, Ericsson worked with the local operator Idea Cellular and the GSM Association's Development Fund6 to launch radio base stations powered by locally produced biofuels that are based on waste products from cooking oils. The India project extended the radio network into areas of rural India that previously had not had access to communications connectivity.
Ericsson has also developed site power management solutions to reduce energy requirements. For example, Ericsson combined a special type of battery with diesel generators ("hybrid" sites) to drastically reduce the fuel needed for remote diesel-powered radio base stations. Ericsson has also created power savings software and passive cooling solutions to stretch limited energy resources.
These solutions demonstrate that the wireless industry, with an appropriate environment for investment, has a history of ground-up innovation to ensure fundamental communications technologies are available even in very difficult-to-serve areas.
2.2.2 Improving Health and Access to Healthcare
Wireless technologies can be deployed to improve citizens' health by bringing access to healthcare to underserved communities. For example, Ericsson participated in a successful pilot project, the Alokito Project, that established the first-ever HSPA service in Bangladesh.7 Ericsson and three local operators collaborated to connect urban and rural communities in the Dhaka region with important broadband dependent services, like mobile health services, so that modern diagnosis and treatment techniques could be extended to previously unserved areas.
Ericsson is also engaged in many mobile health initiatives in other markets, in cooperation with ministries of health, universities, and government partners, including those in Sweden, Ghana, Uganda, and Tanzania. Ericsson has also built an e-health network in Croatia.8 Projects like these can serve as a blueprint for the expansion of affordable and efficient wireless services, like advanced healthcare solutions, into unserved and underserved areas in Canada.
2.2.3 Educating Communities
Access to the wireless networks can also bring education services to remote areas. In Australia, for example, Ericsson partnered with Multi-Ed Medical, a medical education company, to develop a multimedia application that sends CPR instructions to mobile phones.9
Ericsson also provided the connectivity for the Gramjyoti project, India's first mobile broadband trial network in rural areas. The goal of the Gramjyoti project was to bring mobile broadband applications like e-education, telemedicine, e-governance, and other broadband services to remote communities. Gramjyoti has been a true success. As of May 2009, the project has deployed high-speed Internet connections to three schools, serving nearly 5,000 students, and brought expert instruction to students via e-learning sessions.10
2.2.4 Protecting People
Public safety is also an area where wireless technologies have played an important role in meeting a community's needs. For example, in the fishing-dependent communities bordering Lake Victoria in Africa, residents are especially vulnerable to deadly boating accidents. Because these communities have no national or international rescue center to call for help, the number of deaths due to drowning is estimated at 5000 people a year. Together with mobile operator Zain, Ericsson built 20 new telecom sites around the lake and installed a Mobile Positioning System so that fishermen in distress could be found. Ericsson also worked with local stakeholders in the region to establish a search and rescue facility that will utilize state of the art mobile technology to rescue fishermen.11
In this same region, farmers and fishermen are susceptible to weather-related accidents.
Residents have access to limited data infrastructure so they have difficulty both receiving and distributing up-to-date weather information. Ericsson joined the Global Humanitarian Forum's "Weather Info for All Initiative" to ensure that accurate weather information is available to these communities. Ericsson has assumed responsibility for installing and maintaining 5,000 automatic weather stations and developing mobile applications to provide weather information via cell phones. Pilot deployments are already underway in Uganda, Tanzania, and Kenya together with help from the World Meteorological Organization (WMO) and the national Meteorological Services of those countries.12
The lessons Ericsson has learned helping to solve the public safety even when network resources are unavailable. For example, Ericsson has also developed a product that provides wireless access for critical emergency communications when existing networks are inoperable or incapacitated. The QuicLINK™ solution is a transportable, upgradeable, high speed WCDMA network that quickly provides mobile broadband (data, voice, and video) to areas where no other network exists.13 Products like the QuicLINK provide essential communications and mobility wherever and whenever the need arises - whether in remote regions around the globe or in metropolitan areas.
2.3 Promote Government Utilization of Mainstream Technologies and C.O.T.S. Products to Drive Adoption of ICT
Ericsson supports the view expressed in the consultation that "public procurement decisions can help drive smart ICT adoption in the private sector."
One particular government sector that relies heavily on communications technology is public safety and security. However, this group is relatively small and lacks the economies of scale that can be found in commercial networks. As such, the associated communications equipment is usually a lot more expensive than is found in the consumer marketplace.
In addition to cost, technical shortfalls often negatively impact the efficacy of the dedicated equipment used by the public safety community. For example, it is often that the radio system used by a public safety group from another region is not compatible with the local region's radio system. Therefore, it is not possible for the two groups to talk with one another.14
Many public safety organizations such as NENA, NPSTP and APCO already publicly endorsed LTE as the future technology of choice in the 700MHz spectrum range not only because of LTE's many technical features such as security, reliability, interoperability, broadband, low latency, priority/pre-emption, and multicast/broadcast but also because the adoption of LTE allows the "public safely community to take advantage of economies of scale, bringing the network closer to reality."15 APCO and NENA echoed this sentiment in the following statement: "public safety will reap substantial benefits by adopting LTE as the standard for its nationwide interoperable network from the start by capitalizing on research and development currently underway."16
Ericsson recommends that the Canadian government engage in similar investments and endorsements of standards-based and globally available technologies for various government organizations, starting with currently available advanced products and services built on HSPA and HSPA+ technologies.
By using standards-based, commercial off-the-shelf (COTS) equipment government users can benefit not only from economies of scale and timely availability of equipment but also from backward compatibility and continuous technology and services improvements.
Standards-based and globally accepted technologies also provide the confidence needed for industry to invest on a global scale. Global Investment creates economies of scales that further drive costs down, which is critical to bringing service to unserved and underserved markets.
Having Canadian companies involved in the R&D of standards-based products and services will maximize their business opportunities as Canadian know-how and Canadian products and services can be exported to the global market, increase the potential for incoming capital investment, and give Canadian companies the same level playing field as their global counterparts. Having government procurement policies support Canadian produced products and services is an essential part of a successful ICT strategy.
3. Building a World-Class Digital Infrastructure
Ericsson concurs with the view expressed in the consultation paper that "broadband networks are a critical component of the digital economy, enabling a range of new applications that include social media, video conferencing, new e-health applications and smart electrical grids."
Broadband technologies and applications promise interesting and exciting communications for today as well as for the future. However, the Canadian government must create the proper foundation for the growth of broadband networks in order to deliver this future. To create such an environment, the Canadian ICT policy must address the following broad policy areas:
- Mobility is Essential – both mobility and speed are important features of broadband networks. It is important, however, not to favour some technologies over others purely based a desire to have faster networks.
- Spectrum Policy Evolution - as the demand for mobile applications increases, Canadian spectrum policies must ensure a suitable spectrum environment for future, high-bandwidth, low latency mobile services and international harmonization.
3.1 Mobility is Essential
When regulators and legislators talk about broadband, they often focus on speed as an easy benchmark to demonstrate progress. For example, the consultation paper has expressly asked "what speeds and other service characteristics are needed by users." Although speed is an important factor in a broadband plan, the view that consumers must have high capacity, super fast, fixed networks everywhere to support broadband applications loses focus on the importance of how applications and services are being used. Mobility is a particularly important consideration because the world is increasingly mobile. Concentrating solely on measuring data rates ignores this fundamental fact.
Ericsson's definition of mobility refers to the ability for consumers to access information and applications on a multitude of devices, when and where they want them. Mobility drives consumer use and adoption. In an ever-increasingly mobile world, consumers will need to access information and applications on the go. Mobility adoption has been nothing short of astonishing. According to Ericsson's internal study, it is expected that by 2015 there will be eight billion worldwide mobile subscriptions. By that time there will also be three billion mobile broadband subscriptions, up from a little more than 500 million today.
Source: Internal Erricson
Mobile Broadband: CDMA2000 EV-DO, HSPA, LTE, Mobile WiMAX, TDSCDMA. Both mobile PC and handheld devices.
Mobile Broadband and Mobile PC are subsets of total mobile subscriptions
Fixed Broadband: Cable, xDSL, Fiber, PC-to-PC VoIP e.g. Skype not included in VoIP
This slide contains forward looking statements
Right now, speed and mobility are frequently counter-balancing considerations, where the importance of each fluctuates depending on the location of the user and the type of application or service needed at the moment. However, the speed distinctions between fixed and mobile networks will be irrelevant in the long run. Wireless broadband speeds are already on par with some existing wireline service delivery methods such as cable or xDSL17. In fact, HSPA can provide higher maximum data speeds than some forms of xDSL today.
LTE will push the maximum wireless speed past the 100 Mbps barrier. Ericsson has demonstrated an LTE link running at speeds of over 160 Mbps, and one industry test has shown that LTE is capable of delivering data of more than 300 Mbps18. Accordingly, a short-term focus on speeds alone is taking too narrow a view of broadband consumers' needs and of the importance of mobility.
In the future, both fast and extremely mobile access will be critical for commerce and daily living. To address growing energy and climate issues, governments and businesses will rely more heavily on communications tools, such as teleworking and collaboration applications, to manage and preserve scarce resources. Devices will be designed to dynamically select the most efficient network, mobile or fixed, for a particular application at a particular time. Mobility will be an important component of these sustainable communications solutions. Ultimately society will communicate across both physical and virtual borders. Therefore, it is important to consider mobility in the building of ICT infrastructure and protect against creating a de facto technology preference by focusing only on the speed aspect of broadband networks.
3.2 A Suitable Spectrum Environment
While mobility will be a key feature of future broadband networks and applications, spectrum is the critical component in wireless innovation. The following are important aspects that the Canadian government should consider for its spectrum policy to meet the needs of high-bandwidth mobile services.
3.2.1 New and Wider Bandwidth Allocations Are Needed
Wireless innovations are deeply impacted by spectrum availability. Future services will require higher data rates and lower latency than those available today. The ability of wireless technology to provide high data rates largely depends on the amount of spectrum that can be harnessed for its use. To allow for the future growth of mobile broadband, the Canadian government must identify new spectrum and allocate spectrum in wider bandwidths.
It is important not to delay identifying new spectrum for wireless services. At WRC2007, the ITU concluded that additional spectrum was needed by 2015.19 Having said that, the time needed to identify and allocate spectrum suitable for wireless services typically takes about 10 years. The Canadian government must act in a timely fashion so that wireless spectrum is available to support mobile broadband which will be integral in our ability to provide the richer, more bandwidth-intensive applications that will be in demand in the future.
Moreover, the smaller spectrum blocks typically in existence today (10 MHz or less) are not well suited for future, data-intensive wireless broadband services. Smaller spectrum allocations directly limit the services that providers can offer, impede the growth of the user base, and may discourage the development and use of innovative applications that use high data rates. Fragmented spectrum allocations are also less spectrally efficient and make it more difficult to create a high-speed wireless channel. Wider bandwidth allocations, on the other hand, offer distinct performance advantages and are more efficient because they enable operators to provide more bandwidth to more users thereby allowing consumers to take full advantage of the benefits of advanced, content-rich technologies.
3.2.2 Licensed Spectrum is Indispensable
In addition to establishing wider bandwidth allocations, Canadian spectrum policies must also maintain a licensed spectrum regime and take into account the performance and propagation characteristics of spectrum when it decides whether to license the spectrum or allow its use on an unlicensed basis.
Unlicensed radio transmitters can provide and enhance broadband connectivity in certain settings and certain applications. For example, unlicensed services rely on low powered devices that operate on a non-interference basis in spectrum often shared with licensed devices. Therefore unlicensed spectrum could be suitable for small area coverage and for non critical services in industry such as tourism, entertainment, etc. However, unlicensed services are not a substitute for licensed services and unlicensed use of some spectrum bands is generally not the most efficient use of that spectrum. Only through licensed spectrum, is it possible to provide services with predictable quality, high bandwidth, and over wide areas that are suitable for mission critical applications such as those found in banking, healthcare, government and public safety environments.
Because future generations of services will require even more robust networks, spectrum policies must continue to promote licensed use of spectrum, particularly when propagation characteristics are best suited for licensed use.
3.2.3 International Harmonization
During the process of allocating spectrum for mobile applications, the Canadian government must seek to achieve international harmonization to the fullest extent possible. Creating spectrum arrangements that are unique to Canada or, for that matter, any particular region can create unnecessarily hurdles for equipment manufacturers and undermine the availability of innovative telecommunications technologies.
The band 2500-2690 MHz offers another opportunity for improving international harmonization. This band has been identified by 3GPP for both FDD and TDD access technologies. Ericsson commends the Canadian government for its proposal on harmonizing this band with international arrangement, "given the benefits of internationally harmonized band plan".20
International harmonization of spectrum provides the clarity and confidence needed for industry to invest on a global scale. Global investment creates economies of scale that keep costs down, which is critical in bringing service to unserved and underserved markets. Very simply, when spectrum is not harmonized, Canadian companies and consumers are disadvantaged. Therefore, it is of critical importance to adopt spectrum policies that achieve, rather than frustrate, international harmonization.
4. Growing the Information and Communications Technology Industry
It is widely recognized that Canada's ICT sector is an important building block of the Canadian economy. In addition, as expressed in the consultation paper, "the performance of this industry is heavily influenced by global trends and major global firms" and "our goal is to increase the global competitiveness of Canada's ICT sector and grow its share of the Canadian economy and the global market place".
With the global economy having dramatic impact on the Canadian ICT sector, companies can not limit their focus to the domestic market regardless how robust and successful it has become. The first and most important benefit is that by expanding business globally with Canadian R&D know-how, Canadian companies will be in a leading position not only as advanced users but also as innovative developers of ICT technologies. Secondly, by diversifying revenue streams from a variety of countries and regions around the world, Canadian companies will be better positioned to achieve greater business stability and success. Growing businesses with a global market in mind will help Canadian companies avoid market stagnation as they will have increased opportunity to capture the potential from both mature and emerging markets.
Ericsson's recommendations, described below, will discuss how large global corporations with strong R&D commitment can help strengthen the Canadian ICT industry on the global stage, as well as how to improve and streamline the flow of existing funds to help cultivate a innovative R&D environment.
4.1 Building a Strong Canadian ICT Industry By Facilitating Joint Efforts Between Canadian SMEs and Global R&D Firms
As discussed previously, ICT is one of many sectors that is greatly affected by the interdependency and interactivity that occurs between the regions and countries of the world. Some companies have a footprint on every continent while others build partnerships with regional organizations that complement each other strengths. For those that use partnerships, these are created for a variety of reasons, not the least of which are cost reduction, expanded market presence, broadening product and service offerings and the sharing of complementary knowledge.
With these strategies in mind, in striving to become a world leader in innovations, it is important that the Canadian government understand the significant role global firms with a strong R&D presence in Canada, regardless of their roots, play in helping indigenous companies grow, expand and become the foundation of a strong Canadian ICT ecosystem.
Within the ICT ecosystem, large international firms are often best positioned to attain the critical mass necessary to raise capital investment, offer large-scale employment and build R&D facilities that contribute to the establishment of a strong Canadian ICT industry. Most importantly, the large international firms possess not only the R&D capacity but also the knowledge of how to industrialize and commercialize technological inventions into value added solutions for global markets. For example, Ericsson's global yearly R&D expense is about 16 percent of its global sales21. In Canada, Ericsson is ranked as one of the top ten R&D investors. In addition, Ericsson currently has more than 2,700 employees located in Canada with offices in Montreal, Ottawa, Toronto, Calgary, and Vancouver. The employees' competencies are in a wide variety of fields, some of which are directly related to the ICT sector such as software and hardware design, services engineering, and management. Others have expertise in fields that are necessary to support the operations of large international corporations such as human resources or finance. Products and services developed by our Canadian offices are not only utilized by many Canadian customers but also exported to users around the world.
For more than 130 years, Ericsson's strong commitment in R&D and its innovative mind set has helped transform many early-stage inventions across the entire breadth of the communications ecosystem, such as radio access, core network and multimedia technologies, into value added solutions. These solutions are the key ingredients of the advanced broadband wireless systems deployed world wide. These systems address consumers' needs, whether it is getting connected or accessing to information and applications ubiquitously.
It is often either high costs or lack of market awareness that prohibits Canadian SMEs (small medium enterprises) from exporting Canadian inventions, Increasing our export capabilities would help Canada take a leading position as advanced users and innovative developers for the global ICT market. Large firms, with their existing infrastructure, channels and global presence, will help complement local SMEs, whether it is offering insight into foreign markets or financial resources or, most importantly, the ability to understand and access potential customers. In other words, working jointly with large Canadian R&D corporations with international experience will help innovative Canadian SMEs understand the economic and social needs of global customers so that Canadian inventions can be commercialized into market-relevant innovations addressing global customer needs. Furthermore, this will also help the SMEs raise the necessary capital to support the commercialization of their inventions.
4.2 Improving Financial Incentives to Cultivate a Strong R&D ICT Environment
As the global market becomes more and more interdependent, the ICT sector is under tremendous pressure. As mentioned in the consultation paper, "the performance of this (ICT) industry sector is heavily influenced by global trends and major global firms" and "In the face of global competition, Canada needs to strengthen its ICT sector."
Because of the nature of global competition, companies will invest in countries with higher productivity and competence and where costs are lower and the return on investment is better. There is a tremendous pressure to move R&D to low cost emerging countries, especially since large R&D investments are also a prerequisite to access their lucrative market. This creates a fierce internal competition between the subsidiaries of large international companies.
Canadian subsidiaries use financial incentives such as Scientific Research and Experimental Development (SR&ED) Tax Credits to help reduce their costs. There is therefore an urgent need to improve the existing financial incentives to make them as effective, cohesive and accessible as possible. The improved financial incentives will create a better return on investment for the ICT industry in Canada and will entice more growth and expansion by global firms.
The current SR&ED program, where Tax Credits can only be applied against the income tax burden on realized profits, is not overly effective for innovative, R&D oriented companies. R&D investments made by these companies often significantly surpass the profits generated. A possible solution to improve the effectiveness of the SR&ED program would be to make the R&D Tax Credits refundable, as it is the case in some provinces.
Decisions to invest in Canada often take into account the SR&ED Tax Credits, provided that these credits are predictable ahead of time and stable over the duration of the investment project. The Process Review method introduced by the Canadian Revenue Agency, which allows for real-time assessments of projects, has greatly improved the predictability of the SR&ED program. This Process Review is a positive step forward and should remain in the future.
Another aspect affecting the effectiveness of the program is the consistency in evaluating a project's eligibility across Canada and from one scientific advisor to another. A project's eligibility should remain the same, no matter where it has been reviewed in Canada or by whom.
Furthermore, a new financial incentive that would target large Canadian R&D corporations to help innovative Canadian SMEs, as explained in the previous section, would greatly help grow the ICT sector in Canada.
Finally, it is important to ensure that Tax Credits for R&D and Innovation are managed and handled as incentives.
5. Building Digital Skills for Tomorrow
For the ICT and other vertical sectors to properly benefit from advancements in technology, it is not sufficient just to have a critical mass of qualified workers in the ICT sector. It is also very important that there is both the quantity and quality of qualified workers in other vertical sectors, those who use ICT applications and understand their potential impact on productivity. This idea is well illustrated in a message from the Minister of Human Resources and Skills Development, The Honourable Dian Finley: "In the labour market, digital skills are in high demand across all sectors, not just the information and communications technology sector. The ability of Canadian business to innovate and position themselves along the global value chain will depend heavily on having access to workers with the appropriate skills"
It is Ericsson's experience that in order to build an environment that facilitates innovation and cooperation public policies must provide leadership to help:
- Encourage and nourish a cooperative environment between universities, colleges, and private companies
- Establish fair and transparent Intellectual Property Right (IPR) treatments for collaborative initiatives between various academic institutions and private entities in government funded projects
5.1 Government Leadership is Required to Create Lasting Cooperation Between Industry and Academia
"Universities, colleges, research institutions and businesses will need to work more closely together to conduct and commercialize research, moving ideas form university and college labs into the marketplace, where Canadians and global economy can benefit from their discoveries". Ericsson agrees with this position put forward in the consultation paper.
Funding for projects handled within academic environments may result in many new inventions. However, it is often more beneficial for Canadians if funds can be redirected towards joint initiatives taking place between various academic institutions and private companies, those which already have not only advanced facilities but more importantly possess the necessary knowledge of commercialize inventions into value added solutions for vertical sectors.
Ericsson Canada, similar to many large Canadian companies, has invested heavily to build state of the art facilities designed to handle multi-discipline projects. These facilities exist at Ericsson's R&D centres in Ottawa and Montreal, as well as at the advanced wireless application testing centre at Wavefront in Vancouver22. At Wavefront, wireless developers are now able to test new wireless applications on a live 3G network, mimicking real-world situations over robust networks. This helps developers ready their technology for market. With these facilities, Canadian inventions could be successfully transformed into valuable real life solutions applicable to various vertical sectors. The market traction and potential impact on productivity of these solutions on particular vertical sectors could be studied and understood even before commercialization.
Besides being able to help take inventions to market, joint initiatives also take advantage of private companies' existing facilities. This helps funnel the limited financial resources that may exist to the more important aspects of these projects. If these projects are done in isolation the costs associated to bring them to market may become an insurmountable barrier. In other words, the utilization of private industry's infrastructure to complement national research and innovation will help focus the research funds on critical aspects of projects rather than building or buying what is already available.
5.2 A Fair and Transparent Intellectual Property Rights (IPRs) Policy for Government Funded Projects
As discussed, collaborative projects are essential in building digital skills and preparing Canadians for tomorrow's needs. Ericsson, as do other private Canadian companies, has numerous collaborative projects with universities. In the future these relationships will become increasingly common so that participating organizations will have access to complementary resources, facilities and pools of talent. However, often one of the impeding factors for such initiatives is the Intellectual Property Rights (IPRs) treatment.
There is a need to establish a clear and fair treatment of IPRs resulting from joint initiatives (especially for those with government funding). This includes such aspects as dissemination, exclusive or non-exclusive licensing and full or partial ownership. Having a clear IPR policy also allows various participating members to contribute their own IP's in a fair and equitable fashion. As a result, valuable time and effort can be devoted to essential work rather the setting up of the collaborative agreements.
The new Intellectual Property Policy, adopted in 2009 by NSERC23, is a positive step forward. This kind of policy is seen as being much more flexible and should help simplify setting up agreements between research partners. Even though situations may vary depending on partners and projects, it could be nonetheless useful to establish agreement guidelines in consultations with academia and industry members. These guidelines could help to simplify and shorten the initial setup process between participating members.
- 1 Ericsson Press Release, World First Commercial 4G/LTE Site Unveiled in Sweden by Ericsson and TeliaSonera (May 25, 2009) available at http://www.ericsson.com/ericsson/press/releases/20090525-1317187.shtml (Back to reference 1)
- 2 See Ericsson press release available at http://www.ericsson.com/ca/press/press_rel_031110.shtml (Back to reference 2)
- 3 Available at http://www.gsacom.com/index.php (Back to reference 3)
- 4 http://www.npstc.org/documents/Press_Release_NPSTC_Endorses_LTE_Standard_090610.pdf (Back to reference 4)
- 5 http://www.apco911.org/new/news/nena_endorse_lte.php (Back to reference 5)
- 6 See http://www.gsmworld.com/our-work/mobile_planet/development_fund/index.htm (Back to reference 6)
- 7 See Alokito Bangladesh, A 3G/HSPA Pilot Project, Power by Ericsson, http://www.alokito-bangladesh.com.bd/index1.php (Back to reference 7)
- 8 See Ericsson Sustainability and Corporate Responsibility Report 2009, Do you see what we see? http://www.ericsson.com/res/thecompany/docs/corporate-responsibility/2009/corporate-responsibility-2009_one_page.pdf (Back to reference 8)
- 9 See Ericsson Press Release, Red Cross Launches World First With Ericsson: CPR Instruction Direct To Your Mobile Phone, available at: http://www.ericsson.com/au/ericsson/press/2008/20080630_red_cross_launch.shtml (Back to reference 9)
- 10 See GSM Association, Case Study Series: Gramjyoti, India, available at: http://www.hspa.gsmworld.com/upload/papers/documents/26052009105212.pdf (Back to reference 10)
- 11 See Ericsson Sustainability and Corporate Responsibility Report 2009, Do you see what we see? http://www.ericsson.com/res/thecompany/docs/corporate-responsibility/2009/corporate-responsibility-2009_one_page.pdf (Back to reference 11)
- 12 See Ericsson Sustainability and Corporate Responsibility Report 2009, Do you see what we see? http://www.ericsson.com/res/thecompany/docs/corporate-responsibility/2009/corporate-responsibility-2009_one_page.pdf (Back to reference 12)
- 13 http://www.ericsson.com/solutions/news/2007/q3/20070712_quiclink.shtml (Back to reference 13)
- 14 National Task Force on Interoperability, 2003. "Why can't we talk? Working together to bridge the communications gap to save lives: a guide for public officials. Washington DC: SAFECOM. Available at: http://www.safecomprogram.gov/NR/rdonlyres/322B4367-265C-45FB-8EEA-BD0FEBDA95A8/0/Why_cant_we_talk_NTFI_Guide.pdf (Back to reference 14)
- 15 http://www.npstc.org/documents/Press_Release_NPSTC_Endorses_LTE_Standard_090610.pdf (Back to reference 15)
- 16 http://www.apco911.org/new/news/nena_endorse_lte.php (Back to reference 16)
- 17 WCDMA 3GPP Release 5, which incorporated the download portion of HSPA (i.e., HSDPA), has a maximum download speed of 14 Mbps. Release 6 added an upload enhancement (HSUPA) that provides a maximum upload speed of 5.8 Mbps. Release 7, known as HSPA+ or HSPA Evolution, supports data rates of up to 42 Mbps downstream and 11.5 Mbps upstream (Back to reference 17)
- 18 See Ericsson Press Backgrounder, HSPA, LTE And Beyond – Delivering Rich Communication, Connectivity And Entertainment Over True Mobile Broadband, at 2 (February 2009), available at www.ericsson.com/ericsson/press/facts_figures/doc/hspa_lte.pdf; See Michelle Donegan, LTE Hits 300 Mbits/s, Heavy Reading, (Feb. 6, 2008), available at http://www.heavyreading.com/document.asp?doc_id=145112&site=gsma; See Light Reading, LSTI Touts LTE Speeds (Feb. 5, 2008), available at http://www.lightreading.com/document.asp?doc_id=144980&site=gsma (Back to reference 18)
- 19 See Press Release, International Telecommunication Union, ITU World Radiocommunication Conference Concludes After Four Weeks: International Treaty Sets Future Course for Wireless, (Nov. 16, 2007), available at http://www.itu.int/newsroom/press_releases/2007/36.html (Back to reference 19)
- 20 Decisions on the Transitions to Broadband Radio Services (BRS) and Consultation on Changes Related to the Band Plan, DGSO-001-10, June 2010 – http://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/dgso001e.pdf/$FILE/dgso001e.pdf (Back to reference 20)
- 21 See Ericsson 2009 annual report at http://www.ericsson.com/thecompany/investors/financial_reports/2009/annual09/ (Back to reference 21)
- 22 See Ericsson press release available at http://www.ericsson.com/ca/press/press_rel_031110.shtml (Back to reference 22)
- 23 Available at http://www.nserc-crsng.gc.ca/NSERC-CRSNG/policies-politiques/ip-pi_eng.asp (Back to reference 23)
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