Industry Committee on Feb. 7th, 2007

[Luc Lavoie]

Or even if the minister should wait for the results. You have been elected and elected representatives are sovereign in this country. They are the ones who govern and I think that it is up to them to make this decision.

Our position with respect to this issue has not changed. We have already established a position in the market which we feel is strong enough to deal with competition and we will comply with the rules that will be set. I do not believe that I have read or heard anyone say that the minister broke the law.

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

Mr. Lavoie, the first eight recommendations contained in the proposed strategic framework call for amendments to the legislation. We are not saying that the minister acted illegally, but that he exercised a right in a manner that has upset the apple cart.

I heard your opinion and I would like to hear from the others.

[Luc Lavoie]

Obviously I am not going to be the one to say it. He did act in an unusual fashion, in that what he did is rarely done, but we can also see it as a sign of courage.

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

At any rate, the committee found that it was disrespectful.

[Luc Lavoie]

This is a debate about values.

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

And politics.

[Luc Lavoie]

And politics, I would agree.

[Yves Mayrand]

I don't want to give the committee members the impression that our company and the industry is suggesting that we postpone liberalization of telecommunications and deregulation indefinitely.

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

I'm talking about a postponement of two months at most.

[Yves Mayrand]

That is certainly not the message that we want to give you.

However, on behalf of Cogeco Cable Inc., we are telling you today, as we did on October 19, that we are concerned about the way that these orders are made.

Our company as well as many other parties—not only industry people but consumers, telephone service users and all kinds of interest groups as well—have spent a great deal of time and effort to make presentations and submit accurate documents to the Canadian Radio-television and Telecommunications Commission, the CRTC, about competition issues in certain geographic markets. We are under the impression that no consideration has been given to any of this work, that it has been dismissed. We still don't have the master plan, which is a new telecommunications act, whose objectives would reflect the vision provided to you by the panel of experts appointed by the government itself. That concerns us. We do not want to cause any undue delay, but it is important that this work be done properly.

With respect to the forbearance order specifically, we are troubled in particular by the fact that this whole notion of significant market power, regardless of geographic market, has been dismissed.

You need to understand that the development of competition does not occur at the same rate everywhere, but is in accordance with the size and location of the markets. In small rural region markets, competition develops more slowly, it is more difficult and the economic base allowing for competition is much smaller.

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

Indeed, with respect to that aspect, we heard from the competition commissioner yesterday. She told us that she could not consider market share in her evaluation criteria if there were a monopoly. You are saying that given the way you view the market, this aspect as well as market size are important.

[Yves Mayrand]

I think that we need to have an understanding of what is meant by the relevant geographic market. Competition agencies have a method for defining geographic markets throughout the world. This is not something that is used in Canada alone.

We could spend a great deal of time debating what should constitute units as small as the local exchanges or larger units. However, we have to be able to define what is meant by a geographic market and we have to view these things on a geographic market by geographic market basis.

I find it passing strange that, when an established telephone company in a given geographic market is deregulated, there is no concern for the fact that this company may have up to 100% of the market, whereas companies that want to combine their activities in order to obtain a market share that is considerably less than 100%, through mergers or acquisitions, would be subject, in the same market, to a review by the Competition Bureau.

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

In my remaining time, I would like to ask Mr. Engelhart and Mr. Brazeau to answer my first question, which was whether or not the minister should wait for the result of our consultations before making a decision.

[The Chair, Conservative, James Rajotte]

Go ahead, Mr. Engelhart.

[Kenneth Engelhart]

Thank you.

I do think it's a good idea, because one of the concerns I have, along the lines of what Yves was saying, is that the CRTC reads thousands and thousands of pages of evidence. They hear from all these witnesses. They have oral hearings. There are huge books of transcripts.

Cabinet ministers are very busy. I imagine that when these proposed orders are dealt with, they often get briefed for an hour or two. They just don't have access to the same level of information as a regulator has. So if the committee could have, as you're planning to, eight days of hearings, I think it would be a very valuable body of information that could assist the minister in making his determination.

[The Chair, Conservative, James Rajotte]

Thank you.

Go ahead, Mr. Brazeau.

[Jean Brazeau]

I think it goes without saying that you certainly would like to make sure the minister has the best information possible to make a decision; however, time is money. I think we have to move, and move rapidly, because right now there's uncertainty as to what the regulatory regime will look like. That just creates difficulties for companies like Shaw to move forward. So we would like to know what the rules of the game are as quickly as possible, and then move on with them.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

Thank you very much for coming here today.

I do want to clarify something, though. The opposition asked an interesting question about policy direction, but we've been talking about forbearance. I think you know the opposition voted to put a six-month moratorium on the implementation of the policy direction. Given that date, which I think was March 1, and given that the minister tabled the policy direction--I believe he listened to what you had to say, and moved forward with it--do you think waiting an extra six months was a good idea or would have been prudent? I'm talking about the policy direction now.

[Kenneth Engelhart]

I am very concerned about the policy direction. I think that sometimes government does something that seems on the surface to be a good idea, and then it has unintended consequences, and the policy direction may be an example of that.

The policy direction talks about maximizing the use of market forces. I think all of us, and certainly I myself, strongly believe that market forces are to be preferred to regulatory actions, so how could one really be overly critical of the policy direction? But what we see now that it's in force is that it's thrown a huge spanner into the works of everything the CRTC does.

Just to give you one example from the world of telecom that we live in, the phone companies provide what are called colocation facilities. They are little rooms in their central offices that are used when you acquire unbundled facilities from them. You pay rent for those rooms, and you've got hydro and all sorts of other things.

Well, the CRTC determined that we were being overcharged for the hydroelectric power and overcharged for some of the other elements. They felt that the costing studies done by TELUS, in this case, were faulty. They so ruled. TELUS then appealed back to the CRTC, as they're entitled to do, and said that they couldn't overturn TELUS's own costing estimates, and that anyway they--the CRTC--had started this hearing five years ago, and it was too late to give a refund back to the competitor. Those are the sorts of battles we have all the time.

Now TELUS has filed documents with the commission saying that because of the direction, TELUS has to be right. Because of the direction, you can't challenge our costing studies and you can't challenge our legal opinion on the issues before you. They're creating this argument--which I hope the commission doesn't buy--that says the direction changes everything, and now all the old decisions have to be rewritten and all the old rules have to be thrown out.

[Colin Carrie, Conservative, Oshawa, ON]

Do you think studying it further is going to make much of a difference?

[Kenneth Engelhart]

I think a little more study might have let people put a little more flesh on the bones. My concern with the direction always was that it was motherhood statements; you can read a lot into them, and I'm afraid that's what's happening today.

[Colin Carrie, Conservative, Oshawa, ON]

Do you think Bill C-41 would help in that regard?

[Kenneth Engelhart]

Do you mean the fining power?

[Colin Carrie, Conservative, Oshawa, ON]

Yes, with the Competition Act.