Information & Ethics Committee on Feb. 13th, 2018

[The Chair, Conservative, Bob Zimmer]

I call the meeting to order.

Good morning. This is meeting number 91 of the Standing Committee on Access to Information, Privacy and Ethics. Pursuant to Standing Order 108(3)(h)(vii), we are undertaking a briefing on net neutrality.

This morning we have Rogers Communications, Quebecor Media Incorporated, Bell Canada, and Telus.

I have to let the committee know we need about five to 10 minutes for committee business at the very end just to consider PIPEDA and the draft report. There are just some formalities there.

We'll get started, starting with Rogers for five minutes.

[Pam Dinsmore, Vice-President, Regulatory, Cable, Rogers Communications Inc.]

Good morning, everyone. My name is Pam Dinsmore and I am vice-president, regulatory, cable, with Rogers Communications.

Rogers welcomes the opportunity to provide input to the Standing Committee on Access to Information, Privacy and Ethics. My remarks will cover the recent developments in the United States with the FCC repealing its 2015 Open Internet Order, as well as the net neutrality regime in Canada.

I will start by reiterating that Rogers fully supports net neutrality. All legal content must be treated equally by Internet service providers. We were the only major ISP to support the CRTC's differential pricing practices decision. We believe the Internet is a vital resource in our digital economy. Businesses, consumers, and families deserve fair and equal access to the Internet pipe.

Internet service providers, or ISPs, should not be allowed to abuse their position and act as gatekeepers, giving privileged access to this vital resource to a select few. Canadians win when they have the freedom to make their own choices and are not artificially forced to use a particular product or service and are not subjected to their ISP determining winners and losers in the online environment.

In 2015, the Federal Communication Commission's Open Internet Order classified broadband and wireless services under title II of the Communications Act as telecommunication services. This moved jurisdiction away from the Federal Trade Commission over to the FCC. The order prohibited carriers from blocking, throttling, or offering paid prioritization of Internet traffic.

On December 14, 2017, an FCC panel voted along party lines to repeal the 2015 Open Order, thereby eliminating all net neutrality rules. It replaced them with a new transparency rule of disclosure. Blocking, throttling, and fast-laning or prioritizing content is no longer banned as long as the Internet service provider informs its customers of its policy on an easily accessible website.

The FTC will be responsible for policing the accuracy of disclosures and the FCC will enforce the requirement that ISPs make disclosures. The FCC order is still making its way through the legislative process in the two houses and is likely to be the subject of legal challenges. At this time, we do not believe that these changes in the U.S., if they are ultimately passed into law and upheld by the courts, will have an impact on Canadian's access to U.S.-based websites or services. Like many others, we are following developments very closely.

Unlike in the U.S., net neutrality in Canada is already well protected by our current statutory and regulatory regimes. These Canadian safeguards are based on the common carriage principles enshrined in section 27.2 of the Telecommunications Act. They ensure that no carrier will give an undue preference to themselves or another party, or subject any person to an undue disadvantage. The CRTC has used this authority in a series of key decisions to ensure the fair and equal access to information.

The first decision dates back to 2009, when the commission set out its Internet traffic management practices. In doing so, the commission recognized that there are reasons that carriers may need to manage the traffic that flows through their networks, but at the same time sought fairness and transparency around any practices the carriers might use. As such, the commission allowed carriers to engage in traffic management practices, but only when an entire class of traffic was treated in the same manner and only when there was full and transparent disclosure of the practice.

Subsequently, in 2017, the commission's decision on differential pricing practices related to Internet data plans reasserted this strict net neutrality approach. In virtually all aspects, it reflected the position put forward in the proceedings by Rogers. The CRTC determined that prohibiting differential pricing practices that favour specific content or a specific class of subscribers ensures that all stakeholders are treated fairly by ISPs.

Pursuant to the CRTC's decision, carriers are not permitted to zero-rate or advantage specific traffic, other than account management and billing traffic. Rogers believes that by virtue of section 27.2 of the Telecommunications Act, the CRTC has all the necessary tools it needs to protect net neutrality in a fast-changing environment, while maintaining the flexibility to adapt to future changes occasioned by new technologies.

As an example, the next evolution of wireless service, known as 5G, may require a flexible approach to ensure continued innovation. With 5G, certain services will require different levels of connectivity.

For example, connected cars and remote medical services will require higher reliability and lower latency levels than networked parking meters. The current regime will allow the CRTC to make these essential accommodations to promote innovation without endangering fair access to information. As such, we do not consider that any changes must be made to the Telecommunications Act to in some way enshrine net neutrality in Canada. We believe it is already enshrined appropriately.

I look forward to any questions you may have. Thank you very much.

[The Chair, Conservative, Bob Zimmer]

Thank you, Ms. Dinsmore.

Next up is Dennis Béland, from Québecor.

[Dennis Béland, Vice-President, Regulatory Affairs, Telecom, Quebecor Media Inc.]

Mr. Chairman, committee members, good morning.

My name is Dennis Béland and I am the vice-president of regulatory affairs and telecom at Quebecor Media Inc. Today, I am representing Vidéotron, a wholly owned subsidiary of Quebecor Media Inc. Vidéotron would like to thank the committee members for inviting me to appear before them today and providing me with an opportunity to discuss Net neutrality.

Before getting to the heart of the matter, I would like to begin by telling you that Vidéotron is the main high speed Internet service provider in Quebec, with over 1.7 million customers. Furthermore, it is an increasingly large presence in Quebec's wireless market, due to a strategic decision made at the end of 20th century to integrate this business segment into its future.

Less than a decade later, recently therefore, Vidéotron's has more than one million wireless telephony service subscribers. None of these successes would have been possible without massive investment on our part. Vidéotron has in fact invested over $1.1 billion in its wireline network over the past five years. As to the wireless network, since 2008, it has invested over $2.3 billion in acquiring wireless spectrum licences as well as building and constantly upgrading its wireless network. Vidéotron made these investments while maintaining an exceptional reputation as to the quality of its services. In a recent survey conducted by Léger, Vidéotron was recognized, for the 12th consecutive year, as the most popular telecom business in Quebec.

Let me now turn to the subject of this morning's meeting, Net neutrality. As you all know, there are as many possible definitions of Net neutrality as there are passionate commentators on the topic. If you have been following the debate on neutrality for long enough, you will know that there are two recurrent themes: the importance of treating traffic in a non-discriminatory way and the fact that network operators must not dictate what citizens can access on the Internet. Those two themes are in reality two concepts that are already covered in Canadian law. Indeed, both are covered in the Telecommunications Act, more specifically in subsection 27(2) and section 36 of the act.

In other words, the CRTC already has the discretionary powers to apply Net neutrality. The challenge for the CRTC is deciding how to exercise those powers in the broader context of its policy objectives. In Canada, those policy objectives are set out in section 7 of the act and include a range of social and economic goals. The key objectives include expanding high-quality and affordable services and networks in all areas of the country, national and international competitiveness, research development, and innovation.

As everyone knows, Internet technology is evolving extremely quickly. If anything, the pace of change is only increasing. For example, wireless services are on the cusp of being revolutionized by 5G, a new technology that will transform not only the wireless industry itself, but countless other economic sectors, including retail, agriculture and the automobile sectors. New possible ways to deliver public services are also emerging, from smart cities to telemedicine.

Vidéotron wants to be part of that revolution. However, such participation will require not only massive investment in infrastructure, but also and especially a flexible and pragmatic regulatory framework that does not close the door on innovation before we can even determine what is feasible.

We urge the committee to reflect on the discretionary power that the CRTC already has with respect to Net neutrality and to listen cautiously and warily to those who want you to limit the CRTC's powers in this respect. You must ask yourselves whether any of these proposals will stimulate innovation and risk-taking among network builders.

That is the best way to serve the public interest.

Thank you for your attention.

[The Chair, Conservative, Bob Zimmer]

Thank you, Monsieur Béland.

From Bell Canada, we have Mr. Malcolmson.

[Rob Malcolmson, Senior Vice-President, Regulatory Affairs, Bell Canada]

Thank you, Mr. Chairman.

Honourable committee members, my name is Robert Malcolmson. I am the senior vice-president of regulatory affairs at BCE. Thank you for your invitation to provide Bell's views on the topic of net neutrality.

Bell is Canada's largest communications company, employing 51,000 Canadians and investing $4 billion per year in advanced networks and media content. These investments allow us to provide advanced communication services that form the backbone of Canada's digital economy.

Today we serve approximately 3.8 million high-speed Internet customers. We are also in the midst of a very ambitious fibre-to-the-home deployment that will expand our high-speed fibre footprint to approximately 4.5 million locations by the end of 2018.

We are also expanding our high-speed Internet service into rural and remote areas. Whether it is Flin Flon or Lynn Lake, Manitoba, the first nation in Stratton, Ontario, Mont-Saint-Pierre in Quebec, or Cook's Harbour in Newfoundland and Labrador, both on our own initiative and in partnerships with federal and provincial government programs, we are investing capital to bring more Canadians the infrastructure they need to participate in the digital economy.

We are also a key supporter of Canada's cultural and democratic system. BCE is the country's largest television provider, with operations that include Canada's largest over-the-air television network, CTV; many of Canada's most popular specialty channels; and CraveTV, our over-the-top video streaming service.

Our broadband network also supports Fibe TV and Fibe Alt TV, a low-cost application-based TV service that does require a traditional TV set-top box. In 2017 alone, Bell invested approximately $900 million in the creation and production of Canadian programming.

As a media company and one of Canada's largest ISPs, Bell understands and supports the concept of net neutrality. What does this mean? As Minister Bains said in January, net neutrality means “an open internet where Canadians have the ability to access the content of their choice in accordance with Canadian laws.” In other words, our government believes that all legal content must be treated equally by Internet service providers. That's why our government has a strong net neutrality framework in place through the CRTC.

Today, Canada has some of the strongest net neutralities in the world. Section 27 of the Telecommunications Act prohibits any form of unjust discrimination, and section 36 of the act prohibits blocking or interfering with the content or meaning of any of the traffic an ISP carries, except with the permission of the CRTC.

Under these provisions, the CRTC has developed and enforced a robust net neutrality framework. That framework ensures Canadians have access to the free flow of legal content described by Minister Bains by prohibiting ISPs from prioritizing Internet traffic, throttling traffic, and zero-rating data. The CRTC also regulates differential pricing practices, and requires ISPs to obtain the prior authorization of the CRTC before controlling or influencing the content of a message that travels over the network.

It is important to appreciate that regardless to the changes to the net neutrality policies in the U.S., Canadians' access to and use of the Internet will remain governed by our domestic net neutrality rules, which are developed and overseen by the CRTC.

Canada is also well positioned as a result of the competitiveness of our broadband market. Canadian ISPs operate in a highly competitive environment, with the vast majority of Canadians being able to access high-speed Internet over both multiple wireline and multiple wireless networks. There are also dozens of resellers, who use regulated access to our networks to compete aggressively on price and unlimited service offerings.

I know that one of the questions you and your colleagues may be considering is whether changes should be made to the Telecommunications Act on this topic. We do not believe that any changes to the act are needed in this regard. As I mentioned, Canada already has some of the strongest net neutrality laws in the world under the existing act. There is no need to change them simply because there's been a change in the United States. In our view, this is one of those situations that falls into the old adage, “If it ain't broke, don't fix it.”

Last week, you had Christopher Seidl, the executive director of telecommunications for the CRTC, appear before you. We agree with him that enshrining something more rigid than the current provisions in the act could pose a risk to future innovation or could quickly become outdated during the development of 5G and the Internet of Things. In our view, this is simply too big a risk to take.

Thank you for the opportunity to provide our views on this topic. We look forward to your questions.

[The Chair, Conservative, Bob Zimmer]

Thank you, Mr. Malcolmson.

From Telus, we have Mr. Woodhead.

[Ted Woodhead, Senior Vice-President, Federal Government Relations and Regulatory Affairs, TELUS]

Thank you very much, Mr. Chairman.

My name is Ted Woodhead. I am the senior vice-president and strategic policy adviser at Telus Communications. With me today is Dr. Michael Guerriere, chief medical officer, vice-president, and chief strategy officer with Telus Health.

Net neutrality stands for the principle that all Internet traffic should be treated equally. There should not be fast lanes and slow lanes, or one group unjustly discriminated against or unduly preferred over another in the management of Internet access services.

Canada's Telecommunications Act gives the Canadian Radio-television and Telecommunications Commission broad discretionary powers to ensure all rates are just and reasonable, and that the offering of any service or rate to a person is not unjustly discriminatory. The principles of net neutrality are thus fully embraced by the act and the regulatory policies put in place by the CRTC.

While how to address net neutrality is not an issue in Canada, the broader issues of how other non-neutral policies can impact the provision of innovative technological solutions for services vital to Canadians wherever they live is an important issue, and one that is critical, in our view, for Canada and Canadians.

Preferring certain companies over others in auctioning spectrum assets through spectrum set-asides has led to spectrum trafficking and the allocation of urban and rural spectrum on a preferential basis to carriers who will not for the foreseeable future deploy it, if ever.

Why is this important, and why should you be concerned by this? In essence, it is a question of fairness and the proper management of a scarce public resource. There are many analogies between net neutrality and spectrum neutrality. The rationale behind the two concepts is the same. Discrimination brings similar results in that it materially impacts the provision of innovative broadband solutions. Giving more 5G spectrum to some players is no different from biasing Internet bandwidth flows. Preferential policies—in this instance, spectrum set-asides whereby only a category of companies can bid on extremely valuable and scarce spectrum—distort auction outcomes and oftentimes lead to spectrum being allocated to carriers who will not deploy it.

In the current draft consultation paper issued by Innovation, Science, and Economic Development in August of last year concerning the 600 megahertz low-band spectrum, the department proposes to set aside 30 of a total 70 megahertz of available 600 megahertz spectrum for mobile broadband, or 43% of the available spectrum. The set-aside subsidy is for regional operators, including well-financed cable companies such as Shaw, Vidéotron, and Eastlink. The 600 megahertz spectrum is important, especially for rural and remote areas, because it can travel long distances between towers and cover large geographic areas. It will be important for rolling out 5G in rural areas. The government should not pick winners or losers by leaving certain companies in the slow lane.

[Dr. Michael Guerriere, Chief Medical Officer and Vice-President, Health Solutions, TELUS]

It might be helpful to examine how non-neutral policies will impact the delivery of a range of health services and why fair access to spectrum is critical to the effective delivery of health care today and in the future.

Applications will be enabled as 5G networks are deployed over the next few years. The 5G networks using wireless spectrum, including the 600 megahertz band, will ensure remote patient treatment, better data accuracy, greater patient empowerment, and better patient outcomes, most particularly in rural areas.

To put this in context, when we look ahead to what a world of 5G will offer, we break it into three unique use cases.

The first is called enhanced mobile broadband, which will empower things like home and remote health monitoring, remote imaging diagnostic applications, and virtual reality training for physicians. The second is massive machine-type communications, which will be a true enabler of e-health, the Internet of medical things, smart buildings, hospitals, and cities. The third and final contribution of 5G is what we call ultra-reliable and low-latency communications, which will empower remote surgery; autonomous vehicles, including ambulances; and vehicle-to-vehicle communications.

For Canadians, 5G will enable more equitable access to quality health care at affordable prices, especially in rural regions. This is why fair access to 600 megahertz and other spectrum is critical to harnessing and leveraging these innovative applications and technologies to make them available to the broadest number of Canadians, both urban and rural alike.

At Telus Health, we have 5G-ready initiatives that we can make available when sufficient spectrum resources are made available. For example, we have Telus Health Exchange, which is a national, standards-based, open electronic communication platform that connects Telus and third party systems to deliver an array of new tools to health providers and citizens.

With fair access to 600 megahertz spectrum, Telus Health could further enable virtual care applications, including mobile health applications that will bring positive impacts for patients in remote and rural communities and savings to Canada's health system.

These are just a few of the benefits that Canadians will be able to take advantage of, provided that sufficient amounts of spectrum are made available and that non-neutral spectrum allocation policies—

[The Chair, Conservative, Bob Zimmer]

Excuse me, Mr. Guerriere. You had five minutes in total between the two, so I would like you to finish your comments, if you could.

[Dr. Michael Guerriere]

This is the last sentence.

—and that non-neutral spectrum allocation policies such as those proposed in the current 600 megahertz consultation document are eliminated.

At Telus Health we hope to make the promise of 5G available to the broadest number of Canadians possible.

[The Chair, Conservative, Bob Zimmer]

Thank you, Mr. Guerriere.

We'll go first of all to Mr. Saini for seven minutes.

[Raj Saini, Liberal, Kitchener Centre, ON]

Good morning, and thank you very much for coming here.

I want to go back to some of the consultation papers that you guys had given as your final submission to the brief.

I'll start with Telus. In your briefing, you said:

Similarly, DPPs do not render carriers gatekeepers of content. There is generally agreement that, because a DPP by definition is unrelated to blocking content, there is no chance that a subscriber will be unable to access the content that he or she wants. The entire Internet remains available; the only difference is the price the consumer will pay for a given site.

I'm taking this directly from a brief that you submitted I think about a year ago.

[Ted Woodhead]

That's a Telus submission on the DPP?

[Raj Saini, Liberal, Kitchener Centre, ON]

Yes.

I think there are some differences amongst all of you when it comes to DPPs. Assuming that a regime was permitted, what, if anything, prevents an ISP from making a particular website prohibitively expensive, rather than simply favouring one site over another with a price discount or coupon?

[Ted Woodhead]

In the context of the DPP proceeding, we were looking not at that....

The core of our business is providing connectivity to people to access the legal content of their choice. In the context of the statement that you just quoted, we were thinking not in the sense that you posed the question, but in the sense that of wanting to price something differently to a customer who took more of your services.

For example, there's a practice called zero rating, which my friend from Vidéotron attempted to—

[Raj Saini, Liberal, Kitchener Centre, ON]

Yes, with the music streaming service.

[Ted Woodhead]

Yes. We felt that this was a legitimate practice, and the regulatory regime should not prohibit, ex ante, offering consumers discounts or cheaper prices for services as a static rule. That was where we were.

[Raj Saini, Liberal, Kitchener Centre, ON]

But when you do that—let's say you're offering certain websites or certain services—you're forsaking the other companies, and if it's prohibitively expensive, then you are indirectly steering the traffic to those websites or to those services with that price discount, whether it's zero-rated or whether it's sponsored data.

[Ted Woodhead]

Theoretically, yes, I agree with you, sir. That's why the broad discretion encapsulated within section 27 in the Telecommunications Act exists. It gives this broad discretion to the CRTC to make determinations on a case-by-case basis, as some of the other folks have gone into in more detail, and that's what protects Canadians from non-neutral practices.

Generally speaking, for example, in virtually every.... I'm sorry if I'm being overly expansive, but in a great number of jurisdictions in the world, these kinds of practices are widespread. In the United States, T-Mobile offers unlimited access to a variety of curated websites and applications. That isn't an issue. In Canada, it would appear, it is an issue, and I question whether that's the right course.

[Raj Saini, Liberal, Kitchener Centre, ON]

What would be the strategic advantage of doing that? It seems to me you're suggesting there is a better deal for the customer when you do that. You're looking at it in terms of a price point and saying that when you offer this bulk of services, there will be a discount for the consumer. My worry is that when you're doing that, you're forsaking other content that's on there because you're steering the traffic. To have net neutrality, the information should be equal to everybody, but indirectly, through pricing and through that strategy, you're leading the consumer in one direction. That's where my worry is.

[Ted Woodhead]

You know, the most popular applications and services available today are available to everyone. They all grew up without net neutrality protections—Google, Facebook, Amazon, any of these. I think it's a hypothetical harm. I understand the premise on which your question is posed, but that is not the business we're in.

You've suggested that it's a pricing decision. Yes, because if you, sir, are a customer who pays us $40 a month for whatever range of services, and you, ma'am, are a customer who pays us $60 a month, we may wish, as a pricing decision or as a marketing tool, to give you a discount on accessing certain services. I don't think that's a problem.

Where I think you need to worry, and where it would be important for the regulator—and they're obviously on this file and have been very active on it—is around when there is an actual harm that is observed, and then I accept your premise.

[Raj Saini, Liberal, Kitchener Centre, ON]

Ms. Dinsmore, I want to ask you a similar question. You also submitted a brief, and I'm quoting from your brief. You said:

Permitting ISPs to offer differential pricing of data services essentially places them in a position of gatekeepers, deciding which Internet services will thrive and which will not. This gatekeeping function is antithetical to the role of common carrier and would serve to undermine the principles of net neutrality.

Can you give us your take on it? You've heard Mr. Woodhead, and obviously there is a difference of opinion.

[Pam Dinsmore]

Fair enough. When listening to what Ted is talking about, I think there is some conflation between what is a marketing practice and what is a violation of net neutrality.

What Rogers does as a practice, as we spoke about at the hearing, is offer, in certain circumstances, a bundle of services. Maybe you take a certain level of television service, a certain level of Internet service, and a telephone service, and bundle those together, and with that we might provide you with something like a six-month discount on your Netflix subscription. It doesn't have anything to do with the zero rating. We don't zero-rate the bits that are associated with your use of that Netflix subscription, but for six months you might get it for half price. We might do the same thing with Spotify.

[The Chair, Conservative, Bob Zimmer]

Thank you.

Mr. Saini, you're out of time.

Next up is Mr. Kent, for seven minutes.