Thank you, Mr. Chair. You all should have a copy of my comments and our submission.
Before I get to the specifics of why I felt it important to appear before you today, I want to take the opportunity to give you a thumbnail sketch of our company, for I fear we may not be as well known as some of the witnesses you've seen in the previous two panels.
Primus Canada is a national, stand-alone Canadian corporation with an all-Canadian management team. We're the largest full-service alternative service provider and one of the few remaining competitors in Canada independent of an ILEC or a cable company. Primus Canada serves about a million Canadians across all regions of the country. Primus Canada provides a full range of high-quality, innovative, and competitive services to Canadians. In our mind, we are what this government wants: competition.
Mr. Chair, Primus supports the objective of ensuring Canadians benefit from a strong, competitive environment that yields innovation, choice, and lower prices. However, Primus is concerned that as the directive is written, it may lead to the opposite: reduced competition. This is because the access networks, that last mile of cable going into Canadian homes, are a natural monopoly, like water, gas, and electricity distribution.
All competitors like Primus Canada need the access networks on which they provide competitive services to Canadians. This is a huge and insurmountable barrier to entry into the telecommunications industry for competitors like Primus. For a competitor, to duplicate the access network has an enormous cost, billions of dollars, and is entirely uneconomic, especially when a network already exists. It just doesn't make sense to duplicate.
For true competition to exist in the Canadian telecommunications industry, we need competitively neutral wholesale access regimes to these bottleneck facilities. These are the access networks that have been built through public rights-of-way over many decades under a monopoly guaranteed rate of return regime.
Otherwise, best case, there would only be two competitors left: the former monopoly telco and the former monopoly cable company, and in many cases only one monopoly access network: in remote regions, areas where the cable network is not two-way, and in most business areas where only the telephone network exists.
For Canadians to receive the benefits of competition in this important industry, we need many vibrant competitors who can innovate and compete, not a monopoly or a duopoly. We understand the cost to build these access networks in the first place and we understand we must pay to access these networks.
With wholesale access at cost plus a reasonable markup, we ensure that, first, a monopoly or duopoly will not persist; second, uneconomic entry will not occur; and third, and most importantly, a vibrant competitive regime can develop an ultimately true choice for Canadians.
With wholesale access, we support the deregulation of retail rates. We believe we will then be able to rely on market forces at the retail level because there would be true competition. But the wholesale regime cannot be left to market forces because it is not competitive.
There is also a need for special ground rules to prevent any competitive behaviour by the former monopolies. Just as it would be anti-competitive for Air Canada, knowing who has reservations on WestJet next week, to contact WestJet's customers individually and offer a special rate or incentive not available to the public at large, we'd have special rules in the telco sector where the competitors' customers can be easily identified to ensure that those with significant market power do not cross the line from competition to anti-competitive behaviour by these former monopoly players.
With a few minor changes to the directive, our concerns can be addressed. We've provided the suggested changes in the brief enclosed in the packages. We strongly believe these minor changes will ensure that viable, competitive entrants like Primus Canada will have what we need to provide competitive service to Canadians and will avoid the unintended consequence of decreasing competition in the telecommunications industry.
Thank you for inviting me today, and I look forward to your questions.