Evidence of meeting #65 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was spectrum.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Mirko Bibic  Executive Vice-President, Chief Legal and Regulatory Officer, BCE Inc. and Bell Canada
  • David Coles  President, Communications, Energy and Paperworkers Union of Canada
  • Gary Wong  Director, Legal Affairs, Data and Audio-Visual Enterprises Wireless Inc., Mobilicity
  • Bruce Kirby  Vice-President, Strategy and Business Development, Public Mobile
  • Simon Lockie  Chief Regulatory Officer, Wind Mobile
  • Len Zedel  Memorial University of Newfoundland, As an Individual
  • Bob Kingston  National President, Agriculture Union
  • Philippe Bergevin  Senior Policy Analyst, C.D. Howe Institute
  • David Skinner  President, Consumer Health Products Canada
  • Matthew Holmes  Executive Director, Canada Organic Trade Association
  • Richard Wright  Manager, Exploration, Oil and Gas, Nalcor Energy
  • Richard Steiner  Professor, University of Alaska, Conservation and Sustainability Consultant, Oasis Earth Project, As an Individual
  • Erin Weir  Economist, United Steelworkers

7:40 p.m.

Conservative

Brian Jean Fort McMurray—Athabasca, AB

And especially something that I think has been missed a little are the e-health apps, the advanced apps that are going to be able to be used by this technology as well. Consumers are going to be much better off.

7:40 p.m.

Chief Regulatory Officer, Wind Mobile

Simon Lockie

Absolutely. The simple, practical reality is that the world is going wireless, and wireless requires spectrum.

7:40 p.m.

Conservative

Brian Jean Fort McMurray—Athabasca, AB

You mentioned you're not 100% satisfied with the move forward to access more capital. What would you recommend as far as that goes?

7:40 p.m.

Chief Regulatory Officer, Wind Mobile

Simon Lockie

It gives me an opportunity to observe one thing. The first is that the Investment Canada Act is still in force, and it has application in these kinds of moves. A lot has been made out of the spectre of these foreign companies coming in. The second is the 10% thing. I think it's a cautious, wise, incremental approach. I don't object to lifting the barriers because I think it would be irrelevant. They have no trouble getting capital. They're giving capital away in dividends. I don't think it's that meaningful a move. When I talk about more needing to be done, I'm talking about the fact that there's a massive spectrum imbalance, and that is at the heart of what is going to be a competition issue in this country for a long time unless the government steps up and does something meaningful.

Candidly, and I've been very on the record with this, I don't think the measures taken in the recent policy, which Mr. Bibic is complaining about, go nearly far enough. The government set aside effectively 75% of it for the companies that have all the spectrum that we've been talking about today and 25% for everyone else. It boggles my mind.

Thank you.

7:45 p.m.

Conservative

Brian Jean Fort McMurray—Athabasca, AB

I understand. Thank you.

7:45 p.m.

Conservative

The Chair James Rajotte

Thank you, Mr. Jean.

I'm going to use the rest of Mr. Jean's time. I didn't want to follow up on the cost of capital issue because, as Mr. Van Kesteren said, this issue has been discussed for a long time. Our report of the industry committee back in 2003 recommended lowering it for all. But we have had two reports since then, as has been pointed out by witnesses, in terms of a TPR, and the Red Wilson report, which said we should do exactly what the government is doing in this budget bill.

Mr. Bibic, you referenced not setting up two tiers of capital. The argument of the new entrants, plus the argument of the Red Wilson report and others, is that there is a two-tier capital structure now. Bell, because of its size, and Rogers and Telus have a cost-to-capital structure, and new entrants have a cost-to-capital structure that is higher. So that's the essential argument they are making. That's what the government is acting upon.

If I could, Mr. Bibic, perhaps get you on the record in terms of responding to that, and then maybe Mr. Lockie responding to Mr. Bibic, I would appreciate it.

7:45 p.m.

Executive Vice-President, Chief Legal and Regulatory Officer, BCE Inc. and Bell Canada

Mirko Bibic

Everyone would like lower cost to capital. Ours may be lower than theirs, but you always want a lower cost to capital. That's the first point. What I'm saying is actually being misconstrued in many respects, because what we are saying is the rules are lifted for these folks. Good. Let them do what they need to do once the bill is passed and they will have an opportunity to bid for two blocks of spectrum. We will have an opportunity to bid for one. We don't quarrel with our friends here, nor with the government's policy on that. We are bigger than they are, and the government had to balance a number of competing interests. We respect that.

Our fundamental point, though, is that the AT&Ts and Verizons of the world are also ten times bigger than us. We don't want any advantage over them. We simply want a level playing field if they come in to bid. If they don't, then leave the rules the way they are. That's the only fundamental point we're making.

7:45 p.m.

Conservative

The Chair James Rajotte

Okay. I appreciate that.

Mr. Lockie, a brief response to that.

7:45 p.m.

Chief Regulatory Officer, Wind Mobile

Simon Lockie

I already said that I think it's a wise, incremental approach to do the 10%. I think it's an important thing to observe that the Investment Canada Act continues to apply. I also think it's very important to observe that at today's revenue levels, that's a $4.2 billion company that you have to get to before these rules start to apply to you again. That is a long time away. Candidly, I wish it weren't, but it's a long time away.

Given that, there will be ample opportunity for the government—I can't even put a timeframe on it—to consider whether or not it makes sense to expand it beyond that 10%. If they get close, deal with it then. This is an incremental approach and it was the right one.

7:45 p.m.

Conservative

The Chair James Rajotte

I appreciate very much the discussion tonight. It has been a very good one. On behalf of all my colleagues, I want to thank you for being here and for extending time because of the votes

. We will suspend for a couple of minutes, colleagues, and bring the next panel forward.

Thank you.

7:50 p.m.

Conservative

The Chair James Rajotte

I call this meeting back to order. I want to thank our witnesses for waiting patiently. There was a slight delay caused by the vote earlier.

We have eight witnesses here, two by video conference. I'll list them in the order they will present.

First of all, we have Professor Len Zedel from Memorial University of Newfoundland. From the Agriculture Union, we have the national president, Bob Kingston. From the C.D. Howe Institute we have someone familiar to us at the finance committee—Philippe Bergevin used to work for our committee. From Consumer Health Products Canada, we have the president, David Skinner. From the Canada Organic Trade Association, we have the executive director, Matthew Holmes. From Nalcor Energy, we have Richard Wright.

By video conference from Anchorage, Alaska, we have Professor Richard Steiner. By video conference from Toronto, from the United Steelworkers, we have economist Erin Weir.

We'll have you present for up to five minutes in the order that I read the names.

We'll start with Professor Zedel, please. You have an audio clip for us, I believe.

May 30th, 2012 / 7:50 p.m.

Professor Len Zedel Memorial University of Newfoundland, As an Individual

Yes. We'll get to that in a second.

Mr. Chairman, committee, thank you for the invitation to present here. By introduction, I'm a physics professor at Memorial University, and my research areas are physical oceanography and sonar systems. My goal is to provide a bit of background to inform the deliberations of this committee.

To describe seismic systems a bit, they use sound to probe beneath the ocean floor. The sound sources are impulsive and loud. They're louder than normal physical sources of sound in the ocean, save perhaps lightning strikes and earthquakes. They're certainly louder than any biological sources—louder than shipping noise.

It's hard to describe what these sounds are like. There are discussions of so many decibels and things like that, so I thought it would be useful to play a recording. This is my little sound bite. This is from the south coast of Newfoundland.

[Audio Presentation]

That's a seismic shot. It's from a ship that is about 15 kilometres away from the recording. Seismic surveys like that would go on for weeks at a time, and those shots are fired, nominally every 10 seconds; it depends on the exact details.

I should recognize Dr. Jack Lawson, from DFO, for providing me with that recording.

With regard to the impacts, there are acute impacts on animals from these sound sources. Animals within a hundred metres can suffer physical damage, hearing loss. That effect is restricted to within about a hundred metres or so. So that restricts the overall impact of that kind of effect.

Much more of a concern is the chronic exposure, because that sound will propagate for easily a hundred kilometres in the ocean, both because it's so loud and because sound propagates so well. Whales certainly react to seismic survey vessels. It's recently been demonstrated that they have stress response to chronic noise.

There's also an economic twist to this, because fish catch rates have been noted to decrease in response to seismic surveys. There's anecdotal evidence that crab and shrimp catch rates off Newfoundland have been decreased due to seismic surveys, so that implies an economic consideration here. In Newfoundland, the crab and shrimp market was worth somewhat less than $500 million last year; that's an industry that carries on year after year.

There are mitigations that the industry applies to these systems. Most of them target the acute exposure. They rely on visual observers to spot endangered species within about 500 metres of the survey vessel. Because they rely on that visual observation, they don't work at night. They don't work well in fog or rainy conditions, which are known to occur on the Grand Banks.

Surveys can also be timed to avoid critical times for biological processes, critical migrations, things of that sort, but that happens to occur in the summer in Newfoundland, and that also happens to be the time that's most suitable for seismic surveys.

7:55 p.m.

Conservative

The Chair James Rajotte

You have about one minute left.

7:55 p.m.

Prof. Len Zedel

Lovely.

The intention of the present legislation is to provide easier access for oil companies to seismic survey vessels, but if it has the desired effect, the concern is that you'll have more seismic survey operations and significantly more environmental impact and a cumulative impact to be concerned about. There is also the associated impact on the fishing industry. This could argue, in fact, for greater control of the industry rather than less, to constrain and manage that impact.

Thank you.

7:55 p.m.

Conservative

The Chair James Rajotte

Thank you very much for your presentation.

We'll hear from Mr. Kingston, please.