Evidence of meeting #42 for Industry, Science and Technology in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was market.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Jean Brazeau  Vice-President, Telecommunications, Shaw Communications Inc.
  • Yves Mayrand  Vice-President, Corporate Affairs, COGECO Inc.
  • Kenneth Engelhart  Vice-President, Regulatory, Rogers Communications Inc.
  • Luc Lavoie  Executive Vice-President , Corporate Affairs, Quebecor Inc., Vidéotron Ltée
  • Ted Chislett  President and Chief Operating Officer, Primus Telecommunications Canada Inc.
  • Chris Peirce  Chief Regulatory Officer, MTS Allstream Inc.
  • Joe Parent  Vice-President, Marketing and Business Development, Vonage Canada Corp.

4:25 p.m.

Executive Vice-President , Corporate Affairs, Quebecor Inc., Vidéotron Ltée

Luc Lavoie

I'd go along the same lines. Essentially we have supported the minister quite strongly. We were asked to make some recommendations as to how we should proceed so that it would be done in an orderly fashion. We made some recommendations, but overall it hasn't changed the basis of our position. Our basic position is that the market forces are what is best for Canadians at the moment because the prices will come down, the services will improve--and we strongly believe that.

4:25 p.m.

Conservative

The Chair James Rajotte

Thank you.

We'll go to Mr. Shipley.

4:25 p.m.

Conservative

Bev Shipley Lambton—Kent—Middlesex, ON

Thank you, Mr. Chairman.

Welcome back to a number of you who have been here before. I look forward to the questions that are still to come, even though I guess we are running out of time.

I want to go to you, Mr. Engelhart, regarding the winbacks.

It's been estimated in every telecommunications market in Canada that it's really about prohibiting the ability to call back, as you've mentioned, within 90 days. The telecom panel, I think in its March report, talked about how making offers and counter-offers to the same customers is the very essence of competition and, in general, how winback campaigns should not be restricted by the regulator. I'm wondering if you could make a comment on that.

4:25 p.m.

Vice-President, Regulatory, Rogers Communications Inc.

Kenneth Engelhart

Of course, in a normal competitive market, these sorts of things are perfectly natural. Even in a communications market where competition has had a chance to become established, I think that the winback rules enhance competition. The trouble is that when you're dealing with a market that has a 100% telephone company monopoly, a monopoly that's been there for 100 years, what happens is that when a new entrant goes into that new market it costs them maybe $300 to acquire a subscriber--a common number--because they have to roll out a truck, install equipment, do advertising, and what have you. When they call that customer up and give them $400 to come back, and that happens to your second, third, and fourth customer, and maybe you lose two out of three of those people, now it's costing them maybe $1,000 to acquire a customer. The project never breaks even. You always lose money, and at some point you give up.

That's what monopolies will do to try to hang on to a monopoly in a market. That's why the CRTC has had these winback rules for cable television and the long distance market, and they've worked. Once the competition gets established, you get rid of the rules, as they did for the long distance market, and customers benefit.

4:25 p.m.

Conservative

Bev Shipley Lambton—Kent—Middlesex, ON

You've been in business, you're actually a substantial company, I think, worth $23 billion. Are you concerned about regulatory protection to keep you competitive?

4:25 p.m.

Vice-President, Regulatory, Rogers Communications Inc.

Kenneth Engelhart

If you would indulge me, let me read to you what Bell said about the winback rules in the cable market. This is a statement they made on January 28, 2005, in a publication called Canadian Communications Reports, a statement by the director of regulatory matters supporting the winback rules in the cable market.

They said:

You invest a lot of money in a building to put a facility in there, to market to the building, and so on. When you make that investment, you have to count on a certain penetration just to break even, he notes. It really doesn't matter if it's a TV service or anything else. When you're selling to a building, you have to count on a certain penetration level just to break even. If you open a donut store or something in the lobby, you have to assume a certain volume of sales to make your presence worthwhile. And if the donut store next door came along and suddenly said, “Don't buy donuts from him, I'll give them to you for half price”, you have no opportunity then to make a business. So are you going to go into another building and lose money there too? The cable company can chase you all over town until you run out of money. (The revised winback rule) is another measure that the commission has put in place to give competition an opportunity to get established...It's only a 90-day opportunity to prove to customers that you have the ability to provide the service they want.

So that's Bell—big company, big satellites already launched—and they felt they needed that protection just to get established, and they still have that protection today.

I agree with you, sir, that protectionism is something that normally makes us all question whether the regulator is doing the right thing. But this formula of having winback rules in place has worked. I'm concerned that we're going to come to some small market five years from now that won't have phone service, because of the elimination of these rules.

4:30 p.m.

Conservative

The Chair James Rajotte

Last question.

February 7th, 2007 / 4:30 p.m.

Conservative

Bev Shipley Lambton—Kent—Middlesex, ON

I was going to get some comments on it from some of the others.

Just one. In our position, we've asked for support for Bill C-41in terms of the competitive productive practices. The opposition obviously is not supporting that. We want to get it moved as quickly as possible. If it were passed, do you believe that would maintain the fair practices in the telecommunication market?

4:30 p.m.

Conservative

The Chair James Rajotte

Quickly. We'll go down the line.

4:30 p.m.

Vice-President, Regulatory, Rogers Communications Inc.

Kenneth Engelhart

The Competition Bureau really can't help in the telecommunications market because their procedures and their practices take too long. They take years and years. They're not designed to take a monopoly market to competition. Quite frankly, they won't even begin their investigation until you're bankrupt.

4:30 p.m.

Conservative

The Chair James Rajotte

Mr. Shipley, your time is up. I'm sorry.

Anyone else want to comment further to Mr. Engelhart? You all agree?

4:30 p.m.

Vice-President, Corporate Affairs, COGECO Inc.

Yves Mayrand

I would add that we are on record as saying it really doesn't make any difference for administrative monetary penalties to be added to situations of abuse of dominance, for the very simple reason that history shows that this particular tool under the Competition Act as it exists--i.e., abuse of dominance--is so complicated to prove and so long to bring to a head that it really doesn't make any difference whether you add monetary penalties or not.

4:30 p.m.

Vice-President, Telecommunications, Shaw Communications Inc.

Jean Brazeau

I think Shaw is of the same view, that the tool is too blunt a tool to really be effective in the telecom sector.

4:30 p.m.

Conservative

The Chair James Rajotte

Monsieur Lavoie, do you have any difference of opinion?

4:30 p.m.

Executive Vice-President , Corporate Affairs, Quebecor Inc., Vidéotron Ltée

Luc Lavoie

I concur with my colleagues.