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April 8, 2014

On Digital 150: A Missed Opportunity

Last week the Government of Canada released its long-awaited Digital Canada 150 strategy. According to the press release, the strategy “represents a comprehensive approach to ensuring Canada can take full advantage of the opportunities of the digital age.” While I’ll acknowledge that the strategy does present several positive initiatives, on another it’s hard to understand how this represents “taking full advantage” of what the digital age has to offer.

First, the positive. As work we’ve done here at DEEP notes, the adoption of technology amongst Canadian SMEs remains one of the primary impediments to ongoing growth, both revenue and employment. The allocation of $200 million towards technology adoption is subsequently viewed as a good step and should be applauded. So too is the pledge by Industry Moore to create more competition in the telecommunications sector. This pledge, however, is far from new, and as the past 24 months of machinations in the sector have shown, might mean little for consumers of telecommunications services outside of major centres. The moves on privacy seem all-together quite positive.

Less clear is what  $300 million towards venture capital (VC) funds investing in digital firms means. While it might sound very good, the need for such funding is worth discussing.  (We should also note that this seems to be a re-announcement of old news.) Over the past several months we’ve had dozens of discussions with early stage companies and startups. All together I’ve received mixed messages as to the need for this type of public capital. While early stage, very high risk ideas seem to indicate an ongoing lack of access to capital, this does not seem to be the case for the more mature startups and SMEs that tend to attract VC attention. As one firm in the mature category noted, there’s a “flood of cash available” to firms with lower risk profiles. Subsequently, the allocation of these funds towards bridging capital for earlier-stage, higher-risk firms (too immature for VCs) may have been a more appropriate target.

Onto the less positive. The strategy touts an explicit goal of providing 5 Mbps download speed to 98 percent of Canadians by 2019. This goal is a far cry from what is possible. As Michael Geist writes, this in fact represents “one of the least ambitious connectivity goals in the developed world.” Harsh. Yet while we aim to connect at 5 Mbps, Australia, Germany, Sweden and a slew of others all aim for 100 Mbps. As Bill Hutchison, chairman of I-Canada – part of the Canadian Advanced Technology Alliance (CATA) – notes, “we’re still not moving as fast as some leading nations.”

Moreover, while the investment of a subsequent $300 million into firms through the Business Development Bank of Canada (BDC) is a welcome infusion, one might ask as to where the CAN$5.27 billion raised in February’s spectrum auction is headed.[1] If we’re going to take full advantage of what is on offer technologically, we should be earmarking these funds for the development of a digital infrastructure that places Canadian firms on equal footing with their competitors. Moreover, taking full advantage of the digital economy should mean significant investment in skills development and training, notably through a focus on university and college-led entrepreneurial programs.

Finally, while some have touted the strategy as a means of taking advantage of the “age of big data,” they might want to think about what this really means. Big data means information, reams of it, and the ability to dive deep into a statistical picture of what is happening, be it on the commercial or public side. Significant cuts to Statistics Canada, and to streams of research therein, are increasingly making it difficult, if not impossible, to obtain clear understandings of the state of affairs in Canada. Our work at the DEEP Centre has encountered these deficits repeatedly. So too have others, including the research team’s at Canada’s biggest banks. A digital strategy that ignores the need for reliable data completely misunderstands what the promise of the digital economy is.

So while Digital Canada 150 does offer some important elements of a digital strategy, it lacks ambition and vision, and ignores a glaring back hole in relation to research and data, all of which mean we’re not close to taking “full advantage” of what a digital economy could offer Canadians.

[1] Note: the BDC is a client of the DEEP Centre’s.

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