Industry Committee on Oct. 19th, 2006

[Geneviève Duchesne]

I'm looking at paragraph 1(a) of the draft direction, and, as I said earlier, we are reluctant because of certain incompatibilities that subparagraphs 1(a) and 1(a)(ii) could cause with certain other provisions of the Telecommunications Act. So there seems to be some redrafting to be done. In any case, we object to this orientation.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Can you read to the committee the text you object to?

[Geneviève Duchesne]

It's the part that concerns “the CRTC should”. The obligation that the CRTC must meet to rely on market forces is already provided for by Parliament. The Governor in Council tells us that the CRTC should: “1(a)(i) rely on market forces to the maximum extent feasible...”

However, there is subparagraph 1(b)(ii)—and I don't want that to be binding on me with respect to the scope of section 8, which makes it possible to state these provisions—which concerns the CRTC's obligation to clarify the policy objective: “1(b)(ii) economic regulation, when required, should neither deter efficient competitive entry nor promote inefficient entry.”

Those are the elements we can't live with.

We also find the part concerning symmetrical implementation of non-economic regulation, that is symmetrical and neutral implementation from the standpoint of competition, very interesting. However, as regards the part clarifying the objective, it is not an obligation for the CRTC, but it's already making it one. In certain cases, it already respects these elements which are not an obligation. But why not clarify it? The possibility of doing that through the proposed direction should be studied, but some elements of its content are already being implemented by the CRTC.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Does anyone else have a comment to make or a principal recommendation that they would like corrected?

[John MacDonald]

Specifically, as I've mentioned in my remarks concerning subparagraph 1(c)(ii), where it refers to the direction regarding mandated wholesale access, we're pretty much on board with the overall objectives of the proposed policy changes. We think regulations have to change in keeping with technology changes, the changes in global positioning of customer expectations, in such terms as that things should be predictable and should be efficient.

But this one specifically will have an impact on the industry that is quite significant and we think requires very careful thought.

[Ted Chislett]

We have three different areas we'd see....

The first is that we feel paragraph 1(a) of the suggestion should be modified along the lines of section 34 of the Telecommunications Act, which modifies it to the extent that the establishment should not “impair unduly the establishment or continuance of a competitive market”.

We also believe that paragraph 1(c) should be changed from the tone it has right now, where it talks about phasing out wholesale access, to one where it ensures that wholesale access is available for critical inputs to competitors.

And lastly, in paragraph 1(b) we would add a comment that it should not deter any competitive behaviour.

Similar suggestions are included in the handout we've given to you.

[The Chair, Conservative, James Rajotte]

Mr. Piercy.

[John Piercy]

I would add that we fully support the recommendations of the telecom policy review. I think if you're going to look at doing a policy directive to the CRTC, you have to adopt everything that was in the original suggestion. That included a recognition of significant market power. If you're not going to recognize that the telecom companies, the ILS , at 95% to 100% market share, depending on what market you're in, don't have significant market power, you're going to stifle competition right there. You're not going to see competition in a lot of the smaller rural markets that my members serve.

[The Chair, Conservative, James Rajotte]

Mr. Janigan.

[Michael Janigan]

I think the policy directive is a rather awkward instrument to try to effect change in the Telecommunications Act. It's a bit like attempting to thread a needle with boxing gloves on. The kind of thing you're looking at doing is to orient the Telecommunications Act. If you wish to do it in tandem with the results of the TPR panel, that requires legislative change and it requires dealing with it in a substantive manner. What you have here, unfortunately, is a bit of an attempt to slap the CRTC around a bit, and it's not genuinely an attempt at reform. It doesn't incorporate all of the different protections that the TPR report envisioned, including a consumer agency to deal with consumer problems. In my view, I think it's probably best if the directive is withdrawn, rethought, and submitted in an appropriate way.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go now to Mr. Arthur for six minutes.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Ms. Duchesne, I listened to your presentation, which was perhaps more a lawyer's text than a consumer's text. You explained to us that the government was not entitled to issue this kind of direction. I got the impression that, at the end, regarding the survey...

Would you repeat the last sentence of your brief, please?

[Geneviève Duchesne]

I can cite it to you from memory.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Go ahead.

[Geneviève Duchesne]

A recent Pollara poll shows that 70% of Canadians reject the idea that telephone companies should set their own rates without the CRTC's approval.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Do you believe that the purpose of that question that was put to consumers was to ask them whether they had an objection to the telephone companies lowering the cost of their services, or was it instead to ask them whether they would allow the companies to decide themselves, which suggests an increase in their rates? Don't you believe there could be a minor change in meaning in the wording?

[Geneviève Duchesne]

I can't presume to know what went on in the minds of consumers.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Could you cite the question for us?

[Geneviève Duchesne]

No, I don't have the text with me.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Canadian consumers decided to tell you that they objected to a cut in rates?

[Geneviève Duchesne]

That's not what I said.

What Canadian consumers want is to ensure that the rates charged for an essential service are fair and reasonable...

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

That wasn't the survey question.

You're telling us that more than 60% of people don't want the telephone companies to decide for themselves.

Do you believe that people knew that there might be an implicit reference to a rate cut?

[The Chair, Conservative, James Rajotte]

Monsieur Arthur, let's allow....

Ms. Duchesne, we'll let you answer the question. Let her answer the question.

[Geneviève Duchesne]

Consumers are clearly in favour of rate cuts, but it's also clear that they want to be assured that rates will be fair and reasonable.

Where it is sufficient, competition can ensure that rates are fair and reasonable. If necessary, the CRTC will stop regulating businesses, the old monopolies, from an economic standpoint.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

You're stating the argument that the consumers you represent would object to a bigger rate cut?