Industry Committee on Feb. 5th, 2007

[Sheridan Scott]

In our opinion, we should proceed as quickly as possible. This is why we proposed a test based on the elements of competition, namely the costs for the company, the rivalry on the market, as these are also reasonable factors for determining the level of competition in a market.

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

It is already finished. Thank you.

[The Chair, Conservative, James Rajotte]

Merci, Monsieur Crête.

There are a couple of minutes left. I am actually going to take the next Conservative spot, as that's the chair's prerogative.

First of all, I think the main issue, if you try to get away from some of the jargon, is that you're almost looking at two approaches here. You're looking at an approach that says you have to rely on percentage of market power, for instance, which is the approach the CRTC takes with respect to forbearance for local telephony, which obviously impacts VOIP. Or you take an approach, which to me the minister is trying to do, that looks at whether there are actually competitive services available.

It seems to me from your answers and your presentation that you adopt the latter approach—at least in philosophy. Whether you would specifically advocate for that or not, I'm not saying.

So you've got the 25% market power on one side, and then on the other side you've got competition between three facilities, two wireline and one wireless.

If you look at the figures given by Mr. French, he talked about 11%, I believe, for COGECO, Vidéotron, Shaw, and Rogers; and then he talked about the 25% needed for the forbearance issue. If I just look at the city of Edmonton, a mid- to large-size city, you've got Telus providing local service, telephony, Internet, including ADSL; you've got Shaw for television, local telephony, and Internet through cable. You've got VOIP with Vonage. Vonage exists in Devon, a community of 7,000 outside the city of Edmonton, and in Leduc, a community of 17,000, You've got wireless, Telus, Bell, and Rogers. And yet I would suspect that Telus's share of the market is greater than 75% local telephony.

So if you take the first approach, you would actually not deregulate the market, and yet as a consumer in the city of Edmonton it would just seem to me common sense that in that situation—albeit perhaps not in a rural area—you would just say yes, that as a consumer I can switch to ADSL with Telus, or to Shaw and get my Internet that way, or I can switch back and forth on wireless if I don't like the Telus service or don't like the Bell service.

So it seems to me, and I just want to clarify this, that you favour the second approach, looking with common sense at the situation existing on the ground and saying yes, there are companies there that can provide services, rather than relying on a 25% market power figure, which to me seems increasingly unrealistic in the world we're dealing with in telecommunications.

[Sheridan Scott]

We came up the middle on that, in a sense. I think I've said several times that the market share tests are useful, but they don't determine the matter in all cases. We don't like market share; we wouldn't agree with the 25% test. What we're looking at instead is whether there is another equally efficient competitor that could provide service.

Again, it's a shortened version of our normal analysis. The test is present right now in the regulation the minister is proposing. We would have looked at a couple of things, such as the cost structure, the presence of rivals and what not. Because we're looking at the presence of two competing infrastructures in our test, we are closer to simply having independent infrastructures that can provide a competitive alternative. Had we been doing this analysis when we first started talking about forbearance two years ago, we might have looked at some of these elements.

Something we would also observe now is exactly the series of figures you're citing--the percentage presence in the marketplace. There are 1.1 million consumers who are now served by cable systems, and there are another 300,000 served by Call-Net. We would see those figures as evidence that parts of our test likely satisfied the rivalry and those sorts of elements.

I think you will find we're partway in, but we're certainly not on the market-share side of the analysis. We are clearly proposing a test that relies on the importance of those competing infrastructures.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Scott.

I just want to wrap up by saying I appreciated your reference to yourself as a terrier. I think that was a very good example.

As the chair, I think I certainly speak for members regarding your direct responses, your forthrightness, and your knowledge of your files, which were very impressive.

We appreciated your appearance here today--both of you. Thank you.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Chair, I wonder if it might be helpful for the committee to have the two pieces of information and to have them properly explained. One is from the previous witnesses with respect to Bell's percentage of increase. It seems there were several questions by members that didn't get adequate explanations. There's some confusion.

Finally, if I could also, Chair, ask a question, from the previous CRTC decision there was a question of suggesting how much market share a telephone company would have to exercise in order to appropriately deregulate them. I think this is an intervention that was made by the bureau. I'm wondering if the bureau could provide us with that information.

[The Chair, Conservative, James Rajotte]

Can we formally do that through the clerk?

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Yes, I'm asking the clerk to look this up, Mr. Chair.

Thank you.

[The Chair, Conservative, James Rajotte]

We can certainly write to the commissioner and seek to obtain that information.

Thank you, Ms. Scott, and thank you, Mr. Taylor.

We are going to go in camera. I promise members it will be a very brief session. I just want to highlight what we're doing tomorrow with the release of the manufacturing report.

We will have only members and their staff in the committee room.

[Proceedings continue in camera]