Industry Committee on Oct. 19th, 2006

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Monsieur Crête for six minutes.

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

Thank you, Mr. Chair.

Mr. Hunter, your brief troubles me as much as the minister's direction. Could you explain to me why it doesn't contain the word “consumer” a single time? Is that because it's not a concern for your organization?

[Lawson Hunter]

I was on the wrong channel. I'm sorry, I didn't hear.

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

I'm going to repeat my question.

Your brief troubles me as much as the minister's direction. I read it quickly a few times and it does not contain the word “consumer”; it only refers to competition between companies. It doesn't talk about the consumer. As a member from a region, I find that very disturbing.

What do you say about that?

[Lawson Hunter]

I don't think that is correct. If you look at my statement, I said several times that it's—

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

You're talking about markets, but you're not talking about users.

[Lawson Hunter]

Look at my very last quote, the last word to Canadians themselves, the vast majority of consumers. If it doesn't, in your view, mention that enough, that's an oversight on my part, because from our point of view, the most important thing and what we think is driving the changes in this sector is from the demand side of the market, what's happening with consumers. Clearly, this policy is what's needed to actually offer consumers better prices, better service, and more innovative services. That's what the ultimate objective should be here.

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

Do you agree with me that it would be important to conduct a much broader consultation before assessing the relevance of this regulation? For example, in a region such as the one I represent, if there had not been any subsidies from Industry Canada to introduce the Internet, there wouldn't have been any service.

They called on businesses. In very concrete terms, in the Témiscouata region, they called on five companies, all of which answered that they could not provide cellular service. In the circumstances, the example I have before me, the image I see of that could quite quickly lead, not to a monopoly, but to a duopoly, where there's virtually no competition.

Wouldn't that be the danger with this direction?

[Lawson Hunter]

First of all, I don't think it's necessary to have more consultation. That was what the telecom policy review mandate was, to go out and consult with consumers and with affected parties and use their expertise to make a recommendation to the government, so that was done. It was done over the course of a year, and I think it was done very, very effectively.

On the issue of broadband access--in fact, Mr. Sabia, our CEO, on more than one occasion spoke to this--if you look at our submission to the telecom policy review report, we did significant work on the issue of broadband access. In fact, we recommended, and he recommended in his speech a year ago, that the government should set an objective of universal access for broadband services.

As you may know as well, we recently submitted a proposal to the CRTC to spend $455 million in rolling out broadband--some in your riding, I might add. Without doubt, it's true that when you get into the less densely populated parts of the country, the cost of providing broadband service gets higher, but we are very, very close in Canada. We already have 92% of households with wire-line access. We, with Rogers, have a joint venture called Inukshuk, where we'll be providing wireless and WiMAX-type access to a very large part of the country. Telesat, which today is a wholly owned subsidiary of Canada, offers a high-speed satellite Internet service, the first in the world.

I don't think we have anything to be ashamed of in this country about how far we've gone with broadband. On the other hand, I don't disagree with you that it is vitally important that we make sure Canadians have access to broadband, and we certainly feel we have gone a long way ourselves. We have more to do, I don't deny that, but we ourselves have been very clear in this whole process that this was a fundamental part of what needed to be done.

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

I'd like to know the views of the other speakers.

In your opinion, would there be better service in the regions in three or five years as a result of the implementation of the direction, for the products you're offering, since there won't be any more guardrails? What kind of safeguard would you be prepared to provide consumers to ensure they have some control other than merely their actions as consumers?

[Janet Yale]

That's a very important question. The direction will apply more in the regions where there is competition. It's important that there be protection and regulations where there aren't any.

As regards the regions where there is no competition and not yet any broadband service infrastructure, in particular, a way must be found to ensure that all Canadian consumers have access, regardless of where they are in Canada.

[The Chair, Conservative, James Rajotte]

Fini?

We'll go now to Mr. Carrie, for six minutes.

[Colin Carrie, Conservative, Oshawa, ON]

Wow, that was very fast. Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

I'm just following the directions set for me by the members.

[Some hon. members]

Oh, oh!

[Colin Carrie, Conservative, Oshawa, ON]

Well, thank you, Mr. Chair. I'll get right to it.

I just wanted to point out to the members that the policy direction mentions Canadian consumers four times. I think everybody would agree this is all about the consumers.

This is going to be my first question to the panel. Could you comment on how relying on market forces will actually help consumers?

[Janet Yale]

Maybe I can start.

I think the reality, which a number of the panellists have pointed out, is that in the current regulatory environment, we are actually held back in a number of ways from making our best offers to customers. This in turn takes the pressure off our competitors; they don't have to be as sharp in their offers because they know there are certain ways we are unable to respond. One is the three-month rule on trying to win customers back, as Mr. Meldrum pointed out. We're not allowed to approach those customers for three months after they've made their decision, so we don't have the ability to do the point and counterpoint we'd like to be able to do in a competitive market. We're limited in terms of the ways in which we can bundle our services to match the offers of our competitors, who often have a bundle including local all-year calling features, flat-rated long distance everywhere in North America, and a whole bunch of other things. We have constraints preventing us from doing that.

So from our perspective, relying on market forces is a win-win for consumers. There's no doubt about it.

[John Meldrum]

I'll argue the point by analogy. In terms of our cable television service, where we compete with Shaw and Access Communications, every day we spend time and effort working on price, promotion, and innovation. It's the only way we can succeed against Shaw and Access. To me, that's the way it should be in local telephone service as well, where folks are focusing on those things, especially on the innovation end.

[Colin Carrie, Conservative, Oshawa, ON]

Are there any other comments on that?

[Lawson Hunter]

I guess I'd just say this is such a fast-moving industry. I think we are fundamentally talking about what the proper role of government here is.

As I pointed out in my remarks, if we thought about it, many of the devices consumers use today that give them freedom, choice, and better service didn't exist before. This is moving so dramatically that the notion that a government agency could predict what the market will produce is, in my view, a thankless task—and, to be honest, a hopeless task.

We really need to rely on the market; the market will produce these benefits. If there are abuses of market power, then obviously we need a way to respond to those. But to restrain competition is the regime we have today, which just won't work for consumers in the short run, let alone the long run.

[Colin Carrie, Conservative, Oshawa, ON]

Okay. You talked about the regulatory issues, so I'd like you to expand on what you think the problems are with the present telecommunications regulatory system. How could it be improved? If you could write the rules, not only for now but also for the next ten years, what would they look like?

[Janet Yale]

In three minutes or less?

[Some hon. members]

Oh, oh!

[Colin Carrie, Conservative, Oshawa, ON]

In three minutes or less.

[Lawson Hunter]

Can I start, Janet?

This document here, by the way, is an appendix to the submission we made to the telecom policy review panel. It's 98 pages long. This is a list of all of the regulations we are subject to today; the index is over 10 pages. So we are living in an unbelievably complicated, micromanaged world.

We're moving so quickly that it's impossible for consumers to get the benefits of competition in this world, which basically has as its fundamental premise that everything is regulated until the government says it isn't.

Other jurisdictions have moved the presumption the other way, and that is one of the recommendations of the panel. They say we should change the presumption of regulation; let's not presume we need to regulate in an ex ante command and control way, but we should see if there's a problem. That's fundamentally one of the changes we think needs to happen. This is not going to happen by this direction, of course; it would require a legislative change.

But the whole scheme of the act, as the panel articulated quite well, needs to be changed. If you'd like to see an example of this, I'll leave it with you, but this is graphic illustration of the intrusive nature of the current system we have, which the panel has said is just out of step with the rest of the world.