Finance Committee on Oct. 27th, 2016

[Gerry Harrington]

In fact, relative to the Health Canada decision, it's about two years. However, the impact of that delay leads to delays of up to seven to nine years nationally, simply because manufacturers have no incentive to initiate the switch in Canada because of the inability to do a national launch.

The impact I would want to underline on that is also the impact on employment. While you have that delay, which is a period over which time provinces continue to pay for unnecessary doctor visits, the other thing that it does is....

Ours is a global industry. When a product is being considered for switch to be made into a consumer health product, that company basically has an internal competition for who will get the mandate to manufacture and export it across the globe. You're not going to be at the table in that competition if you're not even bringing the product to market in a timely way.

What we see is that our share of the manufacturing in that growth area is very much adversely affected. There are jobs that can be found this way.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Caron.

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

Thank you very much, Mr. Chair.

I am going to continue in the wake of Ms. O'Connell's remarks and speak to the representative of the Canadian Wireless Telecommunications Association.

You probably knew I was going to speak to you since we have met regularly in the past.

While service is slow and not necessarily appropriate in Ms. O'Connell's riding, there is no high-speed Internet service in my riding, apart from satellite service, which is not very reliable. In the Témiscouata RCM, eight out of 19 communities still do not have cellular coverage.

People tell me everyone used to have access to landlines. In the most remote areas, people shared a single line, but everyone had a landline. I have to respond to them by saying the situation was that way because Bell had a monopoly and that was one of the obligations associated with that monopoly. On the other hand, service was obviously more expensive for everyone in the country, but at least everyone was served.

The monopoly was subsequently abolished and the market opened up. The market was initially opened for land lines and long-distance service and then for cellular and other technologies. However, while prices have dropped as new players have come into the market, some people now have near third-world telecommunications because they live in regions where the population is not dense enough to guarantee adequate revenue for companies that might offer service there. Yes, we have a free market, and, yes, companies such as Telus, Bell, Videotron, and Rogers could serve Témiscouata's communities, but they do not.

I see this in your presentation. I am not angry with you, but I am frustrated by the situation, which has repeatedly occurred over the past five years.

How can all communities be served? I want to know how we can ensure that the eight communities in Témiscouata that do not have cellular access can one day get it. If the free market, which I consider a carrot, does not work for these people, I think it is time to bring on the stick. We will have to find a way to require companies to offer a service that is absolutely necessary today, in the 21^st century.

I made a 45-minute presentation at the CRTC hearings last spring. You may not be in favour of the solution I proposed, which was that all the major telecommunications companies should establish an independent consortium to which they would contribute financing and unused spectrum. That consortium would be allowed to decide to invest in rural communities that are underserved, poorly served or not served.

Now that I have said all that, I would like to hear your views on rural coverage by the major telecommunications companies and even by the small companies that are members of your association.

[Kurt Eby]

Certainly. Some of the things we've suggested, such as the accelerated capital cost allowance, are going to cover more areas. I've been clear. It's not going to solve the issue and—

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

I just would like to have a guarantee that this will not be used to continue, I will say, over-serving by going to the urban centres where the money is. That's my fear.

[Kurt Eby]

Right, I understand that, for sure. It would be for all investment, though, and it would definitely go to urban and rural areas. I think I've been clear in the past that there will be a bit more necessary. The CRTC was clear. I don't want to prejudge what they're going to say in that ruling, but they spoke about possible government involvement with funding. The government's already funding fixed broadband, and so whether it would move into wireless...as I said, there's about $1 billion in every budget coming just from payments for the right to use spectrum. We think there's some money there.

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

That in fact is my message to the government.

Funding has constantly been allocated to broadband Internet since the 1990s, but there has never been a significant federal government program to provide cellular coverage.

The message I am sending is that this is not your decision, but it will be the government's. An economic update is coming and there will be a budget in 2017. I think the message has to be sent, and I hope I have the support of the main players in the field.

[The Chair, Liberal, Wayne Easter]

Okay. We will go to Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair. Welcome presenters.

I wanted to start off with the Co-operative Housing Federation. In your recommendation number two, on leveraging private investment for the renovation and modernization of housing co-ops, could you provide some more colour to that? I was interested in that recommendation, please.

[Timothy Ross]

To put this into a little more detail, we are looking for a supportive regulatory environment that enables housing co-operatives to leverage their asset. There have been some particular barriers to that in the form of the long-term operating agreements that many housing co-operatives have with the Canada Mortgage and Housing Corporation. The operating agreements are often quite administratively burdensome, and they pose a barrier to refinancing the asset. Many housing co-ops have their first mortgage with CMHC. Through the amortization of that mortgage, and as part of the operation agreement with CMHC, there are restrictions on how they can leverage their asset.

Recent policy changes have allowed some housing co-operatives to prepay their first CMHC mortgage, and take it off the government's books, but then also negotiate a reasonable interest penalty. Until recently, the interest penalties were astronomically high, and it didn't make sense for housing co-operatives to refinance. The additional costs of not being able to refinance and get out of that first long-term high-interest mortgage with CMHC would mean that co-ops could not access the capital they need to keep their asset in a good state of repair. Critical repairs and modernizations are further deferred, which is endangering the useful life of the asset.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Chair, are we going to have enough time for one more round from our side for questions?

I'd like to split my time with Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair. I'm sorry, I don't think that we mean to pick on you, Kurt, but my questions are for you, as well.

I was just complaining about my wireless bill to my wireless provider today, so I started doing my own research, because people complain on a general basis that we pay some of the highest rates. I don't think I use my phone more than the average Canadian. Maybe I do, but then I started to look at statistics.

For fixed broadband Internet prices, we are the third most expensive. For fixed broadband Internet prices over a certain speed, we're the fourth most expensive. For fixed broadband prices at 100 megabits per second, we're the second most expensive. Then we go on to wireless. With mobile wireless prices, for 150 incoming and outgoing minutes, we are the most expensive country in the world. For 1,200 incoming and outgoing minutes, we are the second most expensive country in the world. We could keep going, but what I'm trying to get at is that we're very expensive when it comes to wireless and wireless providers.

I used to be a co-op student at Bell, and I am a Rogers customer, so I'm even keel across the board. They always go against opening up the market, right? What do you think the impact for consumers would be if we let a Verizon into the market in Canada?

[Kurt Eby]

I think there was a study by the Competition Bureau that was filed with the CRTC a couple of years ago, where they said that if there was a fourth fully funded national provider, retail rates would go down by 2%. That's from the Competition Bureau. That was their study. That's what I can tell you.

[Raj Grewal, Liberal, Brampton East, ON]

Practically speaking, as a former Bay Street lawyer and a financial analyst for Fortune 500, that doesn't seem legitimate.

You're a smart guy. If we were to open up the country's wireless content, do you think the competition would spew only a 2% decrease in wireless bills?

[Kurt Eby]

That is from the Competition Bureau.

[Raj Grewal, Liberal, Brampton East, ON]

You represent the industry. Forget the Competition Bureau. What do you think?

[Kurt Eby]

What do I think? No. First of all, it is open.

[Raj Grewal, Liberal, Brampton East, ON]

It's open.

[Kurt Eby]

Verizon could come in and buy Eastlink, Vidéotron, SaskTel, and MTS all at once and grow as big as it wants under the current rules, so it is open.

I think they were heavily courted by a previous government to come, and they looked at the opportunity to invest and make a return here. It's a very capital-intensive business. Most of these companies made no money for the first seven, eight, or nine years they were in business.

Looking at that and deciding what to bill—

[Raj Grewal, Liberal, Brampton East, ON]

But then they make a lot of money—

[Kurt Eby]

Right.

[Raj Grewal, Liberal, Brampton East, ON]

—an extreme amount of money. It's the best business to be in, in my humble opinion.

[Kurt Eby]

Sure. If we are going to talk about Verizon specifically, I would point to the fact that—

[The Chair, Liberal, Wayne Easter]

Raj, I bet they can afford some corporate lawyers.

[Raj Grewal, Liberal, Brampton East, ON]

I'm sure they can. I'm not a corporate lawyer anymore.