Evidence of meeting #65 for Finance in the 41st Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was spectrum.
A video is available from Parliament.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Mr. Coles, can you answer the question I've put to you? You only see a little. We've been here for a long time; we've seen a lot more documentation than you have. I give you that, but what about the spectrum for public safety?
Conservative
President, Communications, Energy and Paperworkers Union of Canada
Yes, if the rules are, as the friend beside me said, in the public's best interest.
Chief Regulatory Officer, Wind Mobile
I agree with Mr. Bibic and also Mr. Kirby and Mr. Wong. I'm not sure whether I agree with Mr. Coles or not.
As a practical reality, that spectrum doesn't have commercial value. The U.S. decision made that clear. As a practical policy observation, I think it's the wrong policy for the U.S. to have adopted. I don't think it's efficient.
Conservative
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Thank you, Mr. Chair. If you could let me know when I have two, two and a half minutes left, I'd appreciate it.
I have to say that I've really enjoyed Mr. Kirby's and Mr. Lockie's presentations and responses.
Mr. Bibic, are you a lawyer?
Executive Vice-President, Chief Legal and Regulatory Officer, BCE Inc. and Bell Canada
Yes.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
If I ever have a friend with a smoking gun in their hand, I would recommend you as a defence attorney. You are very good. I enjoyed your testimony very much.
Executive Vice-President, Chief Legal and Regulatory Officer, BCE Inc. and Bell Canada
I didn't know where that was going.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
I was also an attorney. That's why I respected what you said, notwithstanding the disagreement with it.
Data usage has tripled since 2008, and we've got some new technology coming out, such as iPads with 4G LTE. Canadians are using a lot more information. They're accessing a lot more. We've got a lot of changes coming forward.
Mr. Lockie, I'd like you to comment on that in particular, because for us as a government, it's all about responding to consumers—more choices, lower prices. How do you see the future unfolding if we don't get in more competition from around the world to create a more competitive environment for this high usage of data?
Chief Regulatory Officer, Wind Mobile
There are a couple of different elements to it. Competition forces innovation, and I think innovation is a big part of the answer to increasing data usage. When you have competition, you have limited resources, and then you get better at using them. Bell, Rogers, and Telus point to the behemoths, AT&T and Verizon down in the States. Those entities are themselves accused of having too much spectrum and hoarding it, yet they service 20 times the number of subscribers using their spectrum per megahertz that Bell, Rogers, and Telus do. Why? Because that's all they've got, and they've got that many subscribers. That's a lot of traffic. That's a lot of capacity getting eaten up. I think what you need is competition to force innovation, to force efficiency.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
That's true. With the future use and the demand that's going to happen—
Chief Regulatory Officer, Wind Mobile
Categorically. It's going to continue in that direction.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
And especially something that I think has been missed a little are the e-health apps, the advanced apps that are going to be able to be used by this technology as well. Consumers are going to be much better off.
Chief Regulatory Officer, Wind Mobile
Absolutely. The simple, practical reality is that the world is going wireless, and wireless requires spectrum.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
You mentioned you're not 100% satisfied with the move forward to access more capital. What would you recommend as far as that goes?
Chief Regulatory Officer, Wind Mobile
It gives me an opportunity to observe one thing. The first is that the Investment Canada Act is still in force, and it has application in these kinds of moves. A lot has been made out of the spectre of these foreign companies coming in. The second is the 10% thing. I think it's a cautious, wise, incremental approach. I don't object to lifting the barriers because I think it would be irrelevant. They have no trouble getting capital. They're giving capital away in dividends. I don't think it's that meaningful a move. When I talk about more needing to be done, I'm talking about the fact that there's a massive spectrum imbalance, and that is at the heart of what is going to be a competition issue in this country for a long time unless the government steps up and does something meaningful.
Candidly, and I've been very on the record with this, I don't think the measures taken in the recent policy, which Mr. Bibic is complaining about, go nearly far enough. The government set aside effectively 75% of it for the companies that have all the spectrum that we've been talking about today and 25% for everyone else. It boggles my mind.
Thank you.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Jean.
I'm going to use the rest of Mr. Jean's time. I didn't want to follow up on the cost of capital issue because, as Mr. Van Kesteren said, this issue has been discussed for a long time. Our report of the industry committee back in 2003 recommended lowering it for all. But we have had two reports since then, as has been pointed out by witnesses, in terms of a TPR, and the Red Wilson report, which said we should do exactly what the government is doing in this budget bill.
Mr. Bibic, you referenced not setting up two tiers of capital. The argument of the new entrants, plus the argument of the Red Wilson report and others, is that there is a two-tier capital structure now. Bell, because of its size, and Rogers and Telus have a cost-to-capital structure, and new entrants have a cost-to-capital structure that is higher. So that's the essential argument they are making. That's what the government is acting upon.
If I could, Mr. Bibic, perhaps get you on the record in terms of responding to that, and then maybe Mr. Lockie responding to Mr. Bibic, I would appreciate it.
Executive Vice-President, Chief Legal and Regulatory Officer, BCE Inc. and Bell Canada
Everyone would like lower cost to capital. Ours may be lower than theirs, but you always want a lower cost to capital. That's the first point. What I'm saying is actually being misconstrued in many respects, because what we are saying is the rules are lifted for these folks. Good. Let them do what they need to do once the bill is passed and they will have an opportunity to bid for two blocks of spectrum. We will have an opportunity to bid for one. We don't quarrel with our friends here, nor with the government's policy on that. We are bigger than they are, and the government had to balance a number of competing interests. We respect that.
Our fundamental point, though, is that the AT&Ts and Verizons of the world are also ten times bigger than us. We don't want any advantage over them. We simply want a level playing field if they come in to bid. If they don't, then leave the rules the way they are. That's the only fundamental point we're making.
Conservative
Chief Regulatory Officer, Wind Mobile
I already said that I think it's a wise, incremental approach to do the 10%. I think it's an important thing to observe that the Investment Canada Act continues to apply. I also think it's very important to observe that at today's revenue levels, that's a $4.2 billion company that you have to get to before these rules start to apply to you again. That is a long time away. Candidly, I wish it weren't, but it's a long time away.
Given that, there will be ample opportunity for the government—I can't even put a timeframe on it—to consider whether or not it makes sense to expand it beyond that 10%. If they get close, deal with it then. This is an incremental approach and it was the right one.
Conservative
The Chair Conservative James Rajotte
I appreciate very much the discussion tonight. It has been a very good one. On behalf of all my colleagues, I want to thank you for being here and for extending time because of the votes
. We will suspend for a couple of minutes, colleagues, and bring the next panel forward.
Thank you.