/The company behind Toronto’s subway internet wants to do way more than just help you surf

The company behind Toronto’s subway internet wants to do way more than just help you surf

The Bloor-Yonge subway station handles more than 200,000 passengers on a weekday, making it the busiest stop in Toronto. Any delay — and there are many — leads to a crush of people and a generally uncomfortable commute.

Such overcrowding is unlikely to abate anytime soon, but an office located directly above the station may hold the key to eventually addressing it. There, as would-be passengers below wait and possibly contemplate a move to a quieter city (say, Peterborough), a big screen records the number of devices that have logged on to the station’s Wi-Fi network.

That data has value to BAI Communications Canada, which built and operates cellular and Wi-Fi networks across the Toronto Transit Commission’s underground system of subway stations. In May, the TTC and BAI signed a $420,000 contract (plus a combined monthly operating fee of around $35,000) to provide overcrowding notifications and count passengers, services the transit agency said it expects to start in November and January, respectively.

The services are just part of what BAI hopes to eventually offer the TTC, its customers and, possibly, other Canadian transit agencies. The company’s business plan includes helping serve ads to a captive commuting audience and providing cellular service to telecom customers, with the profits one day ending up in the pockets of retirees, since BAI is owned by Canadian pension funds.

“We know where the devices are,” said Ken Ranger, chief executive of BAI Communications Canada. “And so there’s a bunch of things that you can do with that.”

But BAI’s business plan involves collecting information about people at a time when they are becoming extremely sensitive about how their data is used. For instance, plans by a Google LLC sister company for a smart-city development on Toronto’s waterfront have run into staunch opposition over privacy concerns.

Ken Ranger, CEO of BAI Communications Canada.

Peter J. Thompson/National Post

Documents obtained by the Financial Post following a freedom-of-information request suggest that the $420,000 contract calls for BAI to use its existing Wi-Fi data “to estimate passenger flow, in and out of all subway stations.”

There is a “strong correlation between Wi-Fi device counts and passenger counts at subway stations,” a TTC presentation dated February 2019 states. Algorithms could use the Wi-Fi data to help estimate passenger volume, it suggests, while real-time overcrowding notifications could be provided “through (a) Web Portal, email, SMS message, etc.”

Furthermore, a service BAI would like to provide to all commuters has led to a public confrontation with Canada’s biggest telecommunications companies: BCE Inc., Rogers Communications Inc. and Telus Corp.

The Big Three own 90 per cent or so of the mobile market, but they have declined to pay BAI for the privilege of allowing their customers to send text messages and make phone calls via BAI’s underground network. Only Shaw Communications Inc.-owned Freedom Mobile has agreed to terms with BAI at this point.

At an impasse, BAI in September launched a campaign to highlight the Big Three’s reticence.

The Big Three own 90 per cent or so of the mobile market.

Peter J. Thompson/National Post files

“Cellular service is available… Let the Big Three know you want access,” reads a login page when commuters connect to the subway Wi-Fi. The page includes a link to a petition commuters can sign. Similar ads have also appeared inside subway cars.

So far, the telecoms have not come to the table, Ranger said, even though the number of petition signings has exceeded their expectations.

“Our surveys that we have conducted show people overwhelmingly want cellular service within the system,” he said. “But at the same time, a similar amount of people aren’t aware that there’s actually facilities in the subway that can provide service to all licensed carriers in Toronto.”

Although deals with the Canadian telecoms have proven elusive, elsewhere, they have not.

BAI Communications Canada belongs to Sydney, Australia-based BAI Communications Pty Ltd., the subsidiaries of which have also installed a communications system for Hong Kong’s public-transit system, provided wireless connections for New York subway riders and own and operate a network in Australia that transmits national television and radio broadcasts.

In New York, cell service is provided for the customers of AT&T Inc., Sprint Corp., T-Mobile US Inc. and Verizon Communications Inc. by Transit Wireless, a company in which BAI is the majority shareholder.

People overwhelmingly want cellular service within the system

Ken Ranger

“It’s something that, certainly, when I talk to my neighbours, they don’t understand,” Ranger said of the Toronto impasse. “We’re an infrastructure provider. We built a highway that anyone could put their proverbial cars on to get to their customers.”

But some telecoms have suggested Toronto should be more like Montreal, where Bell, Rogers, Telus and Vidéotron Ltée all chipped in to build the network.

“Canadian wireless providers including Bell look forward to building out the wireless infrastructure required to serve customers on the Toronto subway system, but have been denied access to do so,” said Bell spokesperson Nathan Gibson in an email.

Ranger disagrees that access has been denied.

“Our statement would be, ‘Well, if you can work with your competitors, please work with someone who isn’t your competitor,’” he said.

In the meantime, BAI is looking for more ways to provide money-making services with its network, which Ranger said was “purpose built” to accommodate future technological changes, such as the shift to 5G cellular networks.

BAI has laid down more than 75 kilometres of fibre-optic cable and installed about 1,000 boxes throughout Toronto’s subway system that can be popped open and filled with whatever tech is required.

A subway tunnel at the TTC York University Subway Station.

Ernest Doroszuk/Toronto Sun/Postmedia Network files

The TTC said BAI provides public and employee Wi-Fi networks, a hard-wire connection to a TTC data centre from a TTC-leased building, and cell service for Freedom customers at underground stations, the downtown tunnels and in the subway extension to Vaughan. Ranger said BAI’s network also supports the electronic fare payment system known as Presto.

Not even halfway through its contract, BAI Canada has spent around $50 million on building the wireless network, including subcontracting construction and tunnelling, but is seeing earnings before interest, taxes, depreciation, and amortization, according to its chief executive.

“We’re cash-flow positive,” said Ranger, without giving specific numbers.

Some of the earnings are destined to wind up in the pockets of Canadian retirees. Canada Pension Plan Investment Board owns the majority of BAI, and Ranger said its other shareholders are the Alberta Investment Management Corp. and a number of provincial funds managed by InstarAGF Asset Management Inc.

Canada’s flagship pension fund taking a stake in the company providing subway Wi-Fi makes sense given the need for public-private partnership on technology projects.

Such partnerships are not that unusual anymore, said Matti Siemiatycki, interim director of the University of Toronto’s School of Cities, and the rise of all things digital has municipal governments turning to businesses for help in that particular area.

“The reason (for such arrangements) in many ways is governments don’t always have the expertise to provide those services, or they’re not core services,” Siemiatycki said. “And, in some cases, if they have a revenue stream, the government can find a way to provide the service without having to fund it themselves.”

If the Big Three telcos were hoping to change the TTC’s model, they might be out of luck given that the transit agency seems willing to deepen its partnership with BAI, which began in 2012 when BAI agreed to pay $25 million for the right to install and operate a wireless network in the city’s subway system.

The TTC’s 2018-2022 ridership growth strategy states that the agency, along with its provincial counterpart Metrolinx and BAI, would “Leverage Presto, mobile and Automatic Passenger Counter (APC) data to analyze trends and gain customer insights.”

A TTC spokesperson said that program has started with Presto and APC data.

A commuter uses a Presto pass at a Toronto subway station.

Jack Boland/Toronto Sun/Postmedia Network

Ranger said BAI is working with the TTC on a number of pilot projects to harness the company’s hardware.

BAI’s interest in Canada is not limited to Toronto, either. Ranger said it has had “lots” of talks with transit agencies in Western Canada and Quebec, and suggested BAI’s technology could be applied to other sorts of transit hubs, such as airports.

“Today, we’re very focused on our investment here in the Toronto subway,” he said. “That’s not to say that we wouldn’t be keen on investing in the right conditions in any other market, and particularly globally.”

Yet inviting more private-sector participation in public transit could increase political pushback. News about Ontario’s Progressive Conservative government weighing the sale of naming rights for GO Transit stations, as well as ridership data, prompted outrage from the opposition, which called on the province’s privacy commissioner to intervene.

Ontario’s information and privacy commissioner also recently recommended the provincial government review and modernize existing laws “to address the risks inherent” in smart-city technologies.

“While (the Municipal Freedom of Information and Protection of Privacy Act) provides a foundation for privacy protections, it is outdated in the face of current digital technologies and practices such as sensors, big data analytics and artificial intelligence,” the commissioner’s annual report said.

The privacy policy for BAI’s TCONNECT Wi-Fi network states it collects information about riders’ devices and the services they use, and that BAI and its affiliates may use cookies or record media access controller (MAC) addresses, which are unique numbers that can identify devices on a network.

Ken Ranger using the WIFI at a Toronto subway station in February 2016.

Peter J. Thompson/National Post files

BAI takes steps to anonymize information it collects, and is not interested in individual behaviour, just the aggregate information and how devices are moving around its network, Ranger said. The company also consults with various experts and has a global privacy committee.

“I think that’s a societal issue that we take incredibly serious,” he said. “We don’t look to just comply with the local legislation and check a box; we want to know what the best practices are globally.”

Some of BAI’s cash flows come from advertising, which Ranger said help allow them to offer the free Wi-Fi. For example, earlier this year, commuters logging onto the subway Wi-Fi were guided to a page with a big ad for eBay Inc. In September, ads for the Toronto Public Library popped up on the log-in page, a partnership the library said came at no cost to it.

But without ad dollars, “the TTC would have to reflect that in their fare box or in a subsidy,” Ranger said.

Advertisers are not given access to the data BAI may collect, he said, though that assurance might not appease everyone.

“I think TTC riders are happy to be getting a Wi-Fi service that is at no cost to them,” Ranger added. “And I think that people understand that advertising-supported means that somebody … is trying to get something out of it. What we’re trying to get out of it is just an advertiser to know where the person is and get their message delivered to them.”

At the very least, Toronto subway riders have an internet connection to entertain them as they suffer through yet another delay.

Financial Post

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