Industry Committee on Jan. 29th, 2007

[The Chair, Conservative, James Rajotte]

Members, I'll call this meeting to order. This is the 39th meeting of the Standing Committee on Industry, Science and Technology, the first meeting of 2007.

First of all, I'd like to welcome members back to Parliament. I hope they had a wonderful Christmas and New Year, and I hope they are back refreshed and ready to get back to work again.

I also want to acknowledge, recognize, and welcome a new member of the committee, the Honourable Scott Brison, who is the new critic for industry for the official opposition.

Scott, I remind you that this committee did put in a standing order that you're not supposed to outdress the chair at any one meeting.

[Some hon. members]

Oh, oh!

[Scott Brison, Liberal, Kings—Hants, NS]

Okay, I'll go home and change right away, sir.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, James Rajotte]

Welcome. We look forward to working with you, Mr. Brison.

Also, I believe Monsieur Lapierre has announced his retirement. I don't know exactly when that will take effect.

Mr. McTeague, will that be at the time of the next election?

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I understand it will be at the end of the month, so there will be a vacancy in his seat as well, Chair.

[The Chair, Conservative, James Rajotte]

Thank you.

Now we have two official libertarians on the committee, one on each side.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, James Rajotte]

Anyway, pursuant to Standing Order 108(2), we are here for a study on the deregulation of telecommunications. This meeting today is basically to review a letter that was sent to me as chair. Perhaps I'll just read the letter out, and then I'll ask Monsieur Crête to start off the discussion:

Dear Mr. Rajotte:

We are asking you to call a meeting of the Committee...to allow the members to discuss the positions to be taken with respect to the consultations of December 15, 2006 to January 15, 2007 announced by the Industry Minister with regard to the deregulation of telecommunications.

We will also discuss the Industry Minister's decision to disregard the resolution adopted by the Committee on October 24, 2006, asking the Minister to wait until March 1, 2007 to implement the policy direction he announced on June 13, 2006.

This is signed by four members: Monsieur Crête, Monsieur Vincent, Mr. Masse, and Mr. McTeague.

Since Monsieur Crête was the originator of this, I would ask him to lead off the discussion, and then members can just indicate to me whether you'd like to comment as well.

Monsieur Crête.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chairman.

I want to take this opportunity to wish everyone a Happy New Year in 2007.

When the letter was drafted -- and I thank my colleagues who agreed to sign it -- the circumstances were as follows. The Minister had announced to us that he would hold consultations on local telephone service between December 15 and January 15. We felt that this timeframe truly did not allow for a proper consultative process.

Moreover, the Minister informed us of his decision to disregard the motion passed by the committee on October 26, 2006 requesting that it be given until March 1 to review the instructions given to the CRTC and to report back to the House. The Minister ultimately disregarded the committee's recommendation, which in my view, is tantamount to being in contempt of court, or, if you like, to showing contempt for Parliament and the committee. For that reason, I feel it's important to call the Minister before the committee to explain his actions.

Regarding the second item, the issue is ensuring that these consultations can in fact take place during the month of February and up until March 1. The report on the manufacturing sector is ready to be tabled. All that's left is for the committee to hold an informal meeting, which it should be able to do on Wednesday. Unlike the Minister, who decided to disregard the motion that was passed, we want to uphold our commitment and present him with a report by March 1, or at the latest before the two-week break beginning March 5. Our objective today could be to agree to a motion that would read as follows: the committee requests that the Minister be called to testify as soon as possible to explain his decision to disregard the motion passed by the committee on October 26 and suggests a timetable for reporting to the House by March 1, as planned, on the issue of deregulation.

Included in this timetable could be scheduled appearances by members of the Telecommunications Policy Review Panel which drafted a report on telecommunications. We could then hear from groups that have already testified or may wish to do so, that is consumer groups as well as large companies, whether cable broadcasters or telephone companies such as Bell and Telus. The ultimate goal of this exercise is to hear again from the Minister on the regulatory process, to discuss perceptions with him and to report back to the House by March 5.

A motion is needed if we are to settle this matter and carry out our mandate. The Minister needs to explain his actions to us. In my opinion, he has failed to comply with the resolution adopted last fall by the committee. Perhaps someone could second this motion.

[The Chair, Conservative, James Rajotte]

Thank you, Monsieur Crête.

We'll go to Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Subject to Mr. Carrie's intervention—I would certainly leave my comments until then—we would certainly be amenable to supporting that motion. I think it became very clear, Chair, that we were in fact going to take the time, by resolution of this committee, to look at this issue. That would not have affected the minister's original timetable, but in his haste, he rushed ahead on December 16. So we would support this motion.

I'd like to hear if Mr. Carrie has any other interventions prior to laying out the case, which I believe it has to be stated. That case is very contrary to the December 16 declarations of the minister to the effect that this is somehow respectful of the TPR recommendations, that it is good for consumers, and that it is very much toward benefiting an open market. We disagree on all those fronts, but I'd certainly be willing to hear Mr. Carrie and then return right after that, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Carrie and then to Mr. Masse.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I wonder whether my honourable colleague from the Bloc would specify who else he would like to talk to. This whole process has been going on for over two years. I commend the previous Liberal government for taking this step. The previous industry minister put together a group of experts who listened and performed a study over a ten-month period, with two months writing it. Who else needs to be heard from who he feels is important, whom we haven't either already spoken to or who hasn't had the opportunity to relay us their submissions?

[The Chair, Conservative, James Rajotte]

You can speak after Mr. Masse, Monsieur Crête.

Mr. Carrie, do you have any more comments or questions at this time?

[Colin Carrie, Conservative, Oshawa, ON]

No.

[The Chair, Conservative, James Rajotte]

We'll go to Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

I'll be brief so that Mr. Crête can respond.

We support this motion. I think a lot has happened since the time we did the original studies and reviews. The minister has intervened on a number of different fronts, in the CRTC, and there's been a considerable amount of movement in the market.

As well, from my past experience in this committee, when we have had a motion, it hasn't been brushed aside in the context that this has been. I think it would be helpful to find out what exactly the minister's expectations are from this committee. If we pass a resolution and a motion that we believe in, he's not going to follow it.

So I would support this motion. I think it's something we can do following the wrap-up of our manufacturing study, which should hopefully be done on Wednesday.

[The Chair, Conservative, James Rajotte]

I'll go to Monsieur Crête.

Perhaps, Monsieur Crête, you can clarify. You want the minister to explain his position before the committee; I assume this is prior to the start of a study. Secondly, can you address Mr. Carrie's question about itemizing whom you would like to see brought before the committee on such a study? Would you address those two points?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Perhaps other committee members will have more to add, but I would simply like to remind Mr. Carrie that on October 24 last, the committee passed the following motion:

[...] the Standing Committee on Industry, Science and Technology recommends that the government impose a moratorium on implementing instructions respecting telecommunications policies recommended to the CRTC to allow the Committee to hear more witnesses in order to make a more thorough study and subsequently present a report to the House on the impact of the deregulation, no later that March 1, 2007 [...];

Following the adoption of the motion by the committee on October 24, the Minister took it upon himself to disregard the recommendation and implemented the regulations anyway. This is the first issue that I'd like to question the Minister about.

Secondly, in early January -- I don't know if you heard about it -- some consumer representatives and Internet services suppliers held a press conference to denounce the Minister's decision respecting local telephone services as neither relevant nor acceptable. Among others, Cogeco, a major cable broadcaster, stated that this was not a wise decision. The large companies agree with this assessment, but no public consultations were held. I'd like to see some public consultations because the report in question was produced by experts. I'm not calling into question their expertise, but the fact remains that there are public policy considerations here that warrant further study by the committee. That was the rationale for this motion.

As for groups that could potentially testify, these are groups that have already appeared before the committee. Others could possibly give us a different perspective on the issue of deregulation.

For now, I hope that answers the question.

[The Chair, Conservative, James Rajotte]

I have Mr. McTeague and then Mr. Van Kesteren.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Carrie, I thank you for the compliment, and flattery is certainly accepted, especially when it comes our way. It doesn't happen very often, but its greatest form is imitation.

I would accept your argument that the minister's proposal is respectful of the recommendations, but it is not. Let me give you three examples. There's no hybrid competition at CRTC that would be created following regulatory forbearance. That was a recommendation the minister chose to ignore. There's no respect for the CPR as far as establishing a market power test. Instead, what we have is some competition presence test, which I can assure you is a much more diluted, less rigorous form of review of the markets, to test whether or not there is an adequate presence of competition within a given market.

I understand the concern you may have raised as far as the act is concerned. Our first concern as Liberals is that the order that proposes to repeal subsections 34(1) and 34(3) of the Telecommunications Act appears to be flagrantly inconsistent with the Telecommunications Act and would therefore make the proposal ultra vires.

I submit to you that the first place the minister ought to go to make such a change ought to be here in the committee. It is not something that can be done by executive fiat. It is certainly not something that one can contemplate doing without the consent of Parliament. Given that it doesn't, I think it is far more important for us to create greater emphasis on having this committee study it, to determine if the minister so wishes in terms of the test he's going to be looking for, and to bring out perhaps representatives of the CRTC. That will be the 11 who voted against moving in this direction. It would also be the opinions of the Competition Bureau consumer groups.

I'm concerned, Mr. Carrie, as are you, and I'm sure within our constituency in Durham region and in other places, that we don't want to see a re-monopolization of the sector. There's plenty of experience in the United States to suggest that if you go without a proper test or an analysis of what constitutes the current market, then you're rushing ahead, and I'm not exactly sure how that haste would identify itself. But I am also concerned about the competition presence test that you put forward, or that your minister has put forward. It's inconsistent, obviously, with competition law principles as understood and applied both in Canada and abroad. This will obviously have an affect on Canada's reputation as it relates to regulatory authority.

The stand-alone competitor presence alternative to the bureau's test, which I will refer to you, has been of long standing. Many of us on this committee in previous times have not always supported these things, but we recognize that they are vigorous and effective, and they are quite capable of ensuring an ability to prevent the re-monopolization of a very critical and important sector for Canadians.

So I would draw your attention to some of the commentaries that have been made. You don't have to agree with them, and we can all suggest there is reason for Canadians to be concerned, but in my view, the structured rule-of-reason tests set out by the Competition Act--and the Competition Bureau has been used in many cases in the past--should be the standard that your minister has set aside and avoided.

What I think we're trying to accomplish here--and I would hope we are able to do so in the month we're able to study this--is to find out specifically where witnesses will come. I'd like to hear from members of the panel review. Obviously they can determine for you, and perhaps suit yourself, as to whether or not what the minister has declared, what the minister has put forward in a proposal, which I thought he was going to leave off for a little while, is correct.

I'd also like to talk a little bit, if I could, Chair--and I realize this is for matters down the road. I think we need to look at the questions Canadians are going to be looking at, whether or not the whole win-back scheme that has been proposed here is one in which only one or two players who happen to be the incumbents will win the day.

Consumers will not benefit unless of course they decide to leave. So while this is stuff that may be perceived as conjecture, I'm really concerned about the reality of this market. We've seen success from the CRTC as they've brought more competition in areas like long distance. Unfortunately, Mr. Carrie, you'll probably have to agree that in the area of local telephony, we are not at that point yet, especially when many of the new competitors rely on the major carriers to form a monopoly to provide their product.

Chair, with that in mind, I've enunciated half a dozen concerns that I think are legitimate, that are in the public domain. If we're going to begin the assertion--and I respect what you have to say, but I don't see how it adds up. If we have violated three or four key recommendations of the telecommunications policy review panel, then I think we are duty bound to ensure that that is in fact found back in the order.

I might also provide a recommendation for the minister before he does get here: give the committee the time to establish whether what he has put forward meets the test that has been established by that blue ribbon panel. If he can do that and satisfy that, it would allow the committee to review what it has to do.

I'm most concerned about this legislation being deemed ultra vires. For the sake of consumers and for the sake of the cases that have just been put before you.... I think that in the minister's haste to proceed, he may have unwittingly given rise to the re-monopolization of a key sector.

Canadians depend on innovation, they depend on competition, they depend on fair prices. But above all, there can't be a situation where only some in Canada, in the urban parts of this country, are advantaged because of concentration issues and other people across this country, in rural Canada, are simply frozen out or left with higher prices.

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Okay, Mr. McTeague. Thank you.

We have Mr. Van Kesteren and then Mr. Carrie.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

I thank you for the compliment you paid Mr. Carrie, but the one area where we do differ, Mr. McTeague, is that we're a government of action.

Your government did initiate this process, and rightfully so. This proposal was tabled back in June. We did have a number of witnesses. I recall that everybody had their opportunity to question those witnesses and bring up concerns. The whole process has pretty much been properly laid out, and I think we've had opportunity to do these things. But again, I say that if we go on in the direction you're proposing, we're going to be looking at another year or possibly even longer.

I think our minister has shown leadership by taking on something that's important in our industry today. The industry is moving rapidly. If we look at what's taken place in the last five years, let alone in the last ten years, it's time to make some changes. We're going to fall behind.

These are good changes. You talk about the public. The public has been polled. The public is in favour of these changes.

I believe the process is proper. The minister has done what is required, and we need to move on and forward. To slow this process down again is an area we don't want to walk into, and I'm of the opinion that this is all very unnecessary. I think we need to move forward at this point.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

We have Mr. Carrie and then we have Mr. Masse.