Evidence of meeting #47 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 competition.
A recording is available from Parliament.
February 26th, 2007 / 4:15 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
Thank you, Mr. Chairman.
You stated that deregulation does not favour the consumer or allow other small players to compete on a level playing field.
How will small companies be able to compete with the two major players in this field?
4:20 p.m.
Director of Reseach, Atlantic Institute for Market Studies
They can compete in the sense that they have the infrastructure in place, if you're talking about the smaller cable companies. I understand, again, to go back to Mr. Brison's point, that some of those small companies may not choose to enter the market in the short term. That may be the case. They have their own business reasons for doing what they do, and yes, that may mean that competition comes a little more slowly to the smaller areas.
I think it would be a mistake to follow a regulatory path that would deny the full benefits of competition to the many consumers in larger areas in order to allow the smaller areas to play catch-up, especially understanding that those smaller areas will remain protected by regulation until such time as the competitive environment is in place.
4:20 p.m.
Executive Director and General Counsel, Public Interest Advocacy Centre
I think you're right that it would be very difficult for new entrants or small competitors to compete in an effective way with the incumbent telephone companies and the cable companies. Once again, the best prediction of the future is probably the past in that regard. There's been a trail of failures in relation to that competition.
I think to some extent that is the reason we've seen a loosening or an effort to loosen the forbearance test--because effectively we've come to the conclusion that they're not going to meet reasonable estimates or a reasonable test for competition for a workably competitive market. Therefore, we'll water down the tests--say they make it--so we can have, effectively, deregulation.
I don't think the future is necessarily too bright for the small, new-entrant competitors.
4:20 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
Mr. Janigan, you often state in your submission that a 25% share of the market is too small.
Why do you think that? You claim that a 30% to 40% share of the market would allow for effective competition.
4:20 p.m.
Executive Director and General Counsel, Public Interest Advocacy Centre
Well, our submissions, particularly before the CRTC in this forbearance decision, were based upon the expert advice that was furnished to us by witnesses who were skilled in both competition and in the telecommunications industry, that effectively what you needed to have was probably three to four different competitors, all having at least 35% to 40% market share, before the market could be workably competitive. The CRTC attempted to whittle that down to some extent by allowing it to be a duopoly and allowing it to be a 25% share.
What we thought the CRTC arrived at was a pretty liberal test, or at least liberal towards the incumbent telephone companies, and we were fairly taken aback with the intensity of their opposition to this particular decision. It just doesn't accord with the views expressed by the experts we have consulted in relation to competition matters in telecommunications and what is required to have a generally competitive market.
What they have done is look at particularly the experience in such things as the wireless market or the long distance market or the broadband market in the United States and come to conclusions on when you see price discounts.
When do you see the appropriate kinds of measures that would constitute competition? You don't see them in duopolies. Duopolies don't compete in a very effective way. Eventually they settle into a pattern of conscious or unconscious parallelism. Well, to a large extent, that's what we're headed for here.
4:20 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
Fine then.
Mr. Munro, you mentioned small markets. How is competition even possible if there aren't already wire or cable facilities in place in a given small market?
You mentioned a problem in your particular region, that is in Prince Edward Island, noting that a large region would have to be subdivided into smaller areas.
However, if wire or cable companies provide the only competition in smaller regions, how will a new player be able to capture a share of these small markets if there is no money for facilities?
4:20 p.m.
Director of Reseach, Atlantic Institute for Market Studies
I certainly think there are some areas that are sufficiently small and remote that currently are not covered by cable networks. Yes, it probably will be quite a while until we see competition in those markets, because that's the nature of where they live. That's why we retain the regulatory regime to protect those consumers in those areas.
It would be nice to have a large number of infrastructure-based competitors covering every square mile of the country; I just don't think it's realistic. Again, that's why we retain the regulatory framework to protect those consumers where there's no business case for a competitor to enter.
4:25 p.m.
Conservative
4:25 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Thank you, Mr. Chair.
Mr. Janigan, you told us in your presentation that a Pollara survey in September of 2006 found that 80% of Canadians opposed ILEC setting their own local rates.
Would you quote for us, please, the question that was asked of those people to get this answer?
4:25 p.m.
Executive Director and General Counsel, Public Interest Advocacy Centre
Sure.
Right now, the rates for local phone service charged by the large local telephone companies (Bell, Telus, Aliant, Sasktel, etc.) have to be approved by an independent commission appointed by the Canadian Radio-television and Telecommunications Commission (the “CRTC”).
Please indicate whether you strongly agree, agree, have no opinion, disagree or strongly disagree with the following statement: “My local telephone company should be able to charge what it wants for monthly local telephone rates without having them approved as reasonable by the CRTC.”
4:25 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Do you think that to interpret those no answers in 80% of the cases as support for opposition to deregulation is honest? Do you think your interpretation is honest?
Did you tell those people that the rates would go down, if such was the case, before they said no?
4:25 p.m.
Executive Director and General Counsel, Public Interest Advocacy Centre
I don't understand that last question.
4:25 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
When you ask people the question you just quoted and they say “no” enthusiastically, is it because they are afraid that the rates would go up?
4:25 p.m.
Executive Director and General Counsel, Public Interest Advocacy Centre
Yes.
4:25 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Yet if deregulation starts now, the rates will go down. At that point my question is, was it an honest question?
4:25 p.m.
Executive Director and General Counsel, Public Interest Advocacy Centre
We thought it was, particularly since, notwithstanding the advice of our pollster, we put in the magic negative word of “CRTC” in the question to ensure that it was completely fair and objective. As you may know, when putting “CRTC” in a question that effectively supports their authority, it is not always the easiest thing to get an appropriate response.
4:25 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Was that the only survey in which you participated concerning this issue?
4:25 p.m.
Executive Director and General Counsel, Public Interest Advocacy Centre
We also participated in a survey together with the major telephone companies prior to the telecom review panel report. That was filed with the TRP and is contained in their submissions.
4:25 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Were the results of that first poll identical to the ones you got when you chose the right question?
4:25 p.m.
Executive Director and General Counsel, Public Interest Advocacy Centre
The questions that were asked with the joint poll were different questions, and to some extent the answers mirrored that result. To some extent they didn't.
4:25 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Did you stay on with that survey until the end, or did you move out when you started getting the results and dissociate yourselves with that survey ?
4:25 p.m.
Executive Director and General Counsel, Public Interest Advocacy Centre
Do you mean the one for the TRP?
