Finance Committee on May 28th, 2012

[Pamela Miller]

Organic growth is allowed, so that if you had a company in the marketplace that was below 10% right now and they subsequently grew simply by acquiring more customers over 10%, they would still be able to access foreign capital. However, if they acquired the assets of another company, that would not be the case.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

My question relates specifically to a company whose market share grows. I understand it cannot acquire assets or merge with another company. Because of the new foreign capital, its market share could rise to 15% or 20%, while an existing company's share could decline to 15% or 20%. Then we would have two companies: one that had access to foreign capital and one that would not have access to it. The two companies would be similar, but would operate under different rules. Am I mistaken, or is that the situation?

[Pamela Miller]

That would be the case. However, when we looked at this quite extensively, we found that it's extremely unusual and it has never actually happened that a smaller company would grow to that point in the marketplace to be below.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

You are talking about a small company, but it could be bought by a European or American giant. Then it would have the resources it needed to take over 15% to 20% of the market.

[Pamela Miller]

Even in the U.S. market, where we see a new entrance come in with foreign capital, they haven't exceeded the 10% market share of the total telecommunications market.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

To illustrate that question, take the example of WIND Mobile being purchased by AT&T. AT&T's market share would rise to 15% or 20% because of its market strength.

[Pamela Miller]

It's a very capital-intensive industry. It's an industry of scale. There are a lot of incumbency advantages. So as I said, internationally, we don't see examples of a fourth player, a new entrant, coming in and going to that length of getting to that size.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Right. You think it is unlikely that two companies of similar size would be operating under different rules. I think it is possible, however.

[The Chair, Conservative, James Rajotte]

Thank you.

Ms. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Chair.

I'm interested in making sure that you're allowed to answer the question posed by Monsieur Caron in a way that you feel you're satisfied with, so I want to go back to the question.

My understanding is that the industry committee studied this particular suggestion, this particular proposal at length, correct?

[Pamela Miller]

There were a number of INDU hearings that looked at all the options on this issue, yes.

[Shelly Glover, Conservative, Saint Boniface, MB]

A number of hearings meaning....

[Pamela Miller]

A full set of industry committee meetings were held.

[Shelly Glover, Conservative, Saint Boniface, MB]

Witnesses, interventions by other parties, etc.

[Pamela Miller]

Yes.

[Shelly Glover, Conservative, Saint Boniface, MB]

So what Monsieur Caron is suggesting is that, since it was introduced in the BIA at the beginning of the year, there be another extensive study done. I believe that's what I understood Monsieur Caron to suggest.

Is there anything that might have changed significantly since the time that not only the study was done but in all of the time that the department officials have been also studying this? Is there any significant change that's been realized that would warrant duplication, taxpayers paying more money once again, which seems to be the philosophy of the NDP, whereas this party believes in action, failing further complications or changes?

[Pamela Miller]

No. I would say there's nothing that has changed that would warrant that.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you—

[Pamela Miller]

I would also point out we had two review panels look at this issue in great detail. The telecommunications policy review panel in 2006 and the competition panel in 2008 looked at this extensively as well.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you.

I also want to go back to something that's in the binder. I take special note that we're always being told that we're running out of time, but many of the answers to the questions being posed by the other side are actually in the binder that we were provided with. One of the questions that was asked, in fact, deals with the whole idea of mergers and whatnot. I'm just simply going to ask the question that's in the binder. What happens if companies grow beyond the 10% limit? Do you have the answer to the question that's in the binder that was provided to all committee members?

If not, let me read it. The answer is:

If a company grows beyond the 10% limit through normal expansion of its business, it will continue to be exempt. But if a company exceeds the 10% limit through mergers or acquisitions, the company would no longer be exempt from telecommunications foreign investment restrictions.

I read that simply because I note that we are running out of time. We have a number of other divisions that are going to come before us. I would remind all members of our committee that we really do want to push forward so we can get this done.

The delay for the sake of delay, the repetition for the sake of repetition, the arguing for the sake of arguing just isn't helping the cause. We really do need to get through this, but I thank you for your time.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Brison, please.

On a point of order, we have Mr. Mai.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Just as clarification, let's not forget that we are here for Canadians and that not all Canadians have the binder, so I think it is normal that we ask questions so that we can actually have something on record so that people understand.

[The Chair, Conservative, James Rajotte]

I'll take it as a point of information, but it's not a point of order.

We will go to Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

Just to be constructive and to help answer Ms. Glover's question, there has been a fairly significant change since parliamentary committees last studied these proposed changes, and that would be the makeup of the Canadian Parliament. I can remember having sat up where Ms. Nash is sitting now, but my point is that there is a different group of parliamentarians who have a responsibility to Canadians to exercise due diligence and scrutiny. I think that it is important for us to recognize, with any of this legislation that is coming back, there are new members of Parliament—Monsieur Caron and Monsieur Mai as examples—so I think that's an important point.

On the issue of rural Canada and the potential impact on coverage service in rural Canada, to what extent were rural Canadian impacts considered as part of this?

[Pamela Miller]

This is part of the government's overall approach to telecommunications, and the minister also announced the rules for the spectrum auctions at the same time. Part of those rules have specific rural targets for companies that acquire spectrum. We also have a program in place, the broadband Canada program, that was specifically aimed at rural Canadians.