Industry Committee on March 1st, 2011

[Brian Masse, NDP, Windsor West, ON]

--that they had an opinion that there was an unfair process.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Well, they have an opinion that is guided by their corporate interests, but I'm not here for that. I'm here to execute good public policy.

[Brian Masse, NDP, Windsor West, ON]

The CRTC is not a corporation.

Thank you.

[The Chair, Conservative, David Sweet]

That's well over time. I tried to give the minister a minute to respond to your question there.

Now we're going to the second round of five minutes, and we need to keep that for fairness.

Mr. Rota, for five minutes please.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Thank you, Mr. Chair.

Thank you, Mr. Minister, for being here today.

The CRTC, as you know, is an independent organization. It regulates and supervises Canadian broadcasting and telecommunications systems. It's independent. It's there. It's supposed to do its job. Its mandate is to ensure that the broadcasting and telecommunications systems serve the Canadian public.

The CRTC gets its objectives from the Broadcasting Act and the Telecommunications Act, which guide its policy decisions. From what I can gather, it's using for its guidelines, its beacon, what was said by the industry minister at the time--your office--in 2006, which was that they were moving to market forces.

Now, market forces sounds good. It would seem to me that when you talk about market forces, you just open up the doors and let the market prevail. I hear it from the other side. It seems to be a Conservative mantra to just let the market take care of it, and everything will take care of itself. I have some reservations about that.

Earlier, when you were asked what you really meant and what the government policy is, it was choice in competition. It sounds good. It's fluffy. It sounds good, but it really doesn't give me anything to go to. Five years go by, and all we have to offer the CRTC as objectives is to go with market forces and choice in competition. If it doesn't suit your office, then it gets overturned.

What I see here is a return to what happened years ago. When I look at the UBB and what happened in the last month or so, it's almost as if there was a crisis that showed up again. It was created. Guess what. The minister comes across as a hero. Isn't that lovely? That's like saying that here's the guy who set the fire, and he's a hero, because he called the fire department. I'm sorry, but I'm having a hard time with this.

There was a series of decisions made regarding the UBB that are consistent with what I believe was given in 2006. Are you saying that these guidelines have been changed or that the CRTC didn't follow them? If they didn't follow them, what is it that didn't quite match up with the original policies?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Let me say a couple of things in answer to that series of questions.

First of all, of course, I'm distilling down competition and choice for the purposes of this hearing. But I think I referred to the whole process.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Did you say “stilling down” or “dumbing down”?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

No, I said “distilling”.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Thank you, I just wanted to clarify that.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I said distilling, but not in the alcoholic sense, I can assure you.

Certainly there was a whole process engaged in by the CRTC to implement the policy directive of 2006. As I said, they reviewed all of their purposes, procedures, and regulations. There's a whole architecture involved there. I think Canadians watching or listening to this hearing should be assured that there was a lot of consideration, a lot of good public policy making, by both the regulator and the government, in this regard. I just want to put that on the record.

There have been 2,200 decisions since the beginning of 2006. As I said, there are several that we feel are outside the policy directive and would have a deleterious impact.

On the UBB decision, I have been very clear. I hope I've been articulate; that's for others to decide. But I've said if you want choice and competition, you can't force down the throats of the independent ISPs a business model that means that they can't compete with their own business model. That's not choice and competition.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

I'm not debating that. I just thought it was kind of interesting that here's the policy that is given to the regulating agency. They make a decision based on what was there, given by the government, and all of a sudden they're being overturned. It just seems, again, that there's this confrontation.

Was there any discussion beforehand? It seems that all of a sudden, on January 25, at the eleventh hour, there was this overruling. Was there no discussion coming up to that?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I can speak to that. Based on the advice I received from the department, I was not able to speak to either the commission or the public about the issue until the appeal period was over. The first peep you heard out of me was after the appeal period was over.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Minister.

Mr. Rota, you're out of time.

Now on to Mr. Braid for five minutes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you very much, Mr. Chair.

Thank you, Minister and officials, for being here this afternoon.

Mr. Minister, in your comments in your presentation with respect to usage-based billing, the UBB issue, you've made this distinction between the retail and the wholesale and that we have this retail model of UBB being imposed, if you will, on the wholesale relationship with the independent ISPs. Why are you making the distinction between the retail and the wholesale, and why does this underscore why this is not an appropriate course of action to follow?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

As I think I mentioned, retail is not under the purview of the CRTC to regulate the prices or the pricing structure. Wholesale exists because of the determination, which I think is factually correct, that you have to carve out some of the broadband that's available for independent ISPs; otherwise you would have a monopoly or a duopoly situation. So the CRTC does have some regulatory weight in the wholesale area, because they are the ones that created the wholesale market on behalf of Canadians and said independent ISPs have to gain entrance to that bandwidth that is made available by regulatory authority, by Bell in that particular case. So that's why wholesale is different from retail.

The only reason why the debate has become enmeshed a little bit is that one of the arguments against the government's position is that if you allow wholesalers to create an all-you-can-eat buffet kind of pricing model, it will affect the retail. This is the scary argument that is employed to say to everyone else in the universe who isn't part of the 6% of the market, the other 94% of the market, that if we don't have a handle on this and force our business model on that 6%, it's going to affect costs in the other 94%.

I've been pretty clear on that. That's a worthy debate to have, but I've seen no evidence of that. I've seen no evidence that this 6% tail drives the 94% dog, and quite frankly there's no evidence of that. There's no evidence that there is congestion as a result of any of that, and there's no evidence that the pricing structure of UBB in the retail market is the solution if congestion did exist. Because if you look at the pricing structure, if you've got a 25 gig or 60 gig cap over which you're paying per gig, under that model if you're downloading Netflix at 3 a.m. and go over your cap, you're charged per gig, even though there's no congestion. No one is saying there's congestion at 3 a.m. Everyone's saying there might be congestion at 6 p.m. or 8 p.m., or who knows what they're saying, but there's no correlation in the pricing structure on the retail side to fix that problem, if it's a problem. And that's where I get my dander up.

But quite frankly, I'm not here saying I'm regulating that tomorrow, because as long as we create a worthy competitive choice-based market, then if you don't like what's happening at 6 p.m. on your Internet service provider, go to somebody else. That's the best solution, in my view.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you.

As we know, the CRTC is reviewing its original UBB decision through a 60-day process. As part of that, they're engaging in a public consultation process. In your mind, Minister, what would you consider an acceptable revised decision? What would an acceptable revised decision from the CRTC look like?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I appreciate the question, but I don't think it's fair to the CRTC or to the process that I rewrite their decision for them. They're reviewing their decision in good faith. I think that's a commendable thing for the CRTC to do. I will let them, of course, do that. When that decision was communicated by the CRTC chairman, I said it was great that they were reviewing the decision, but they should keep in mind that if they came back with the same decision they had before, that doesn't solve the problem, because we still believe that this does not facilitate competition and choice. So that's the prism through which we are observing the CRTC process. And really it's not only for Tony Clement or anyone else to decide what is acceptable; really it's up to the consumers. And let's give them the ability to say this is acceptable or they're going somewhere else. That's the best model, I think.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Minister.

Thank you, Mr. Braid.

We'll now go to Monsieur Cardin pour cinq minutes.

I understand you're going to be sharing your time with Monsieur Bouchard.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chair. I will share my time with Mr. Bouchard.

According to Mr. Lake, the 2006 Bernier decision is not supposed to favour certain independent or incumbent companies over others. However, Order in Council P.C. 2009-2007—I am getting back to what I was I talking about earlier—urges the CRTC, in different terms, to ensure that its decisions are not detrimental to Bell's IP Television. This is not a neutral position. The CRTC decision on speed matching ensured the survival of ISPs and thereby protected competition. Order in Council 2009-2007 asks that the decision be reviewed in Bell's favour. Why?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

There's a whole lot of detail in there, but I guess what you're seeing throughout the five-year period is a grappling, if I can use that term, of some of the important issues in the Internet age by the regulator, and the interaction between the regulator and the government that is, on a principle-based basis, trying to make sure there's more competition and choice.

Monsieur Cardin, there may be different decisions of the CRTC you agree or disagree with, or I agree or disagree with, but my personal opinion is that cabinet should ultimately intervene when a decision--if it were to stand--would have such an impact on the ability for choice and competition to exist that there would really be no other alternative to cabinet but to vary or refer back the decision.

We're trying to be fair and reasonable here. I don't think it's my place to overturn every single decision of the CRTC, nor is it my place to ignore every single decision of the CRTC if it has a deleterious effect on the marketplace. That's the balancing that we're trying to pursue here.

[Serge Cardin, Bloc, Sherbrooke, QC]

My colleague is dying to ask you a question.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Good afternoon, Minister. Good afternoon, ladies.

Following the CRTC decisions on usage-based billing, citizen Jean-François Mezei sent a petition to the Governor in Council asking that the government suspend the application of those decisions. Why has your government not published this petition in the Canada Gazette?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you for the question.

I first heard about this issue through a tweet from a citizen. When I received that communication I inquired through my office as to why that was the case. I learned that if the CRTC suspends a decision--which is what they did in this case--in the normal course it would not publish the petition. But I believe we have agreement with them that they will publish the petition. I think it's going to be gazetted in the next three weeks.

I want to thank the citizen on Twitter who brought this to my attention. We have acted because it's the right thing to do.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

This citizen is basically somewhat in agreement with you.

Would you be prepared to order the CRTC to pre-establish the basic status of gateway service so that it would be regulated proportionally and effectively, in the interest of consumers?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

As I said with regard to usage-based billing, it is important to have choices and competition. That's why we have reacted and I announced that the CRTC should make another decision. The original decision did not fit our system.

That's why I communicated that decision. If you're referring to retail, as opposed to wholesale--I'm not quite sure whether you're referring to all of UBB or just wholesale--I think I'll stand by my finely balanced remarks in my presentation where I said that there would be no need for further intervention on the retail side if competition were to exist. Then people would have choices. They could go somewhere else if they didn't like what their retailer, their ISP, was providing to them. So to me that is the key test of whether the market is starting to function in a way we can recognize.