Evidence of meeting #41 for Industry, Science and Technology in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was crtc.
A recording is available from Parliament.
NDP
Commissioner of Competition, Competition Bureau, Department of Industry
The budgetary process is quite a long process. And it's not for want of trying, it's just that it's a long process to get into that budget cycle.
NDP
Commissioner of Competition, Competition Bureau, Department of Industry
I know, and we appreciate your support.
NDP
Brian Masse NDP Windsor West, ON
Quickly, with regard to point four of your framework for deregulation, you say if new entrants do not have market power, they should not be regulated. Would it not be prudent to have some type of ceiling in place?
I guess my concern is where perhaps it's a rural area and there's already been a public subsidization, either through the CRTC's program, where they're just reaching out to different places, or through public policy that has been done through this department in Industry Canada.
Is it not prudent to have some type of ceiling in place to ensure that people are protected?
Commissioner of Competition, Competition Bureau, Department of Industry
Well, the new entrant in that statement would be someone who hasn't competed in telecommunications. An example of that would be Call-Net getting into the telecom business or what not. These tend to be relatively new players in the marketplace, so there doesn't seem to be a particularly compelling reason to regulate them.
When we look at market power, there are tests that we look at. Below 35% would never be an issue for us. Other than that, we would want market power to be only one of the factors that we took into consideration.
NDP
Brian Masse NDP Windsor West, ON
I just wonder about some places being charged too much because there's no ceiling.
Commissioner of Competition, Competition Bureau, Department of Industry
Are you talking about the incumbent telephone company being able to increase?
Commissioner of Competition, Competition Bureau, Department of Industry
As I understand the proposal right now, there would be a freezing of the rates right now, so the rates could not go up. As I understand it from the minister's variation of the CRTC's decision, there would actually be a ceiling imposed.
NDP
Brian Masse NDP Windsor West, ON
I have one last quick question, Mr. Chair.
With regard to the bureau itself, would it be advantageous for consumers if the bureau were actually an independent agency and not actually a department of Industry? One of the things I've often wondered about since coming here is how it's actually part of the department, whereas other models are not.
Commissioner of Competition, Competition Bureau, Department of Industry
We are independent of the government, the department, with respect to law enforcement. The crossover comes with respect to policy advice. I'm of two minds on this in the sense that we do have probably the greatest expertise with respect to competition policy. If one wanted to put it in the department, in a sense you're duplicating that. The question is whether you want to have two sources of knowledge and expertise and awareness or not.
There's no doubt that there are some advantages to being a separate operating agency that might be appealing as well, but I have to say I'm of two minds. When I think of actually approaching others to get their opinion on this, I know it would take a fair amount of energy to move in this direction. I'm not sure, given all our other challenges, that I want to be looking to institutional matters. I prefer to be looking to a number of the challenges we have in the enforcement side.
Conservative
NDP
February 5th, 2007 / 5:10 p.m.
Commissioner of Competition, Competition Bureau, Department of Industry
Over the years, I think people have looked at this.
Conservative
The Chair Conservative James Rajotte
Sorry, Mr. Masse, but your time is up. Thank you very much.
I just want to indicate to members and Ms. Scott that there have been some questions about the release of our manufacturing report tomorrow. If I could ask members to stay just five minutes past 5:30, we just have a very few items. We'll go in camera and I'll indicate...especially for those members who are speaking at the press conference tomorrow.
Sorry to intervene in this discussion on telecommunications. We'll go now to Mr. Thibault. Welcome to the committee.
Liberal
Robert Thibault Liberal West Nova, NS
Thank you, Mr. Chairman.
Thank you for being here, Ms. Scott.
I've been listening to your questions and answers, as well as those of the representative from CRTC. If you look at the question of competition as opposed to a monopoly or a regulatory system, a regulated service, it sounds good. Everybody will agree that if I get people competing with me with equal or better services for an equal or better price, then as a consumer, I will have improved access. But it's not always the case. There tends to be a lot of competition on the low-hanging fruit, in the urban areas where the markets are good and very profitable. But that does not always translate or seldom translates to rural areas. We've seen that in airline travel. While it has improved maybe for a lot of people, in a lot of areas we've lost service.
On the question of telephony and these services, I have great concerns. In rural Nova Scotia, where I live, we don't have that competition out there. We don't have broadband. We don't have cable everywhere. In some areas, we've been able to negotiate with small cable companies to get broadband, with government assistance on the infrastructure costs, but it's still not there for everybody. Voice-over is not available. The incumbents are providing the telephone service at a very expensive price. Getting the wires and the switching equipment and those things in those rural areas is a lot more expensive, per revenue, than in the urban areas.
If we let competition go unregulated, with no interference, don't we risk at one point that the reinvestment in the less profitable areas by the incumbents will be at such a point that the service is not available or of very inferior quality to that of 50% of Canadians?
Commissioner of Competition, Competition Bureau, Department of Industry
It's interesting to look at the evolution of competition in many markets. You're quite right that, generally speaking, competition begins in more concentrated urban markets and what not. Certainly one can see this in telecommunications in general. The introduction of long-distance competition, Internet, and wireless began in the more densely populated centres. But what we also observe is that it slowly moves out into the less populated areas and you have the arrival of competition.
Our view is that, generally speaking, if one were to compare regulation versus competition, one wants to rely as much as possible on market forces because they will bring competitive prices and greater choice. There's no doubt that it's not going to be a perfect solution everywhere, and if one looks at the various tests that have been proposed and been debated today, it could very well be that you will continue to have regulation in some areas. That is a possibility, and the regulator will substitute itself for market forces. But that is what the regulator does.
I spent ten years of my career at the CRTC, actually. What one is trying to do is to get as close as you possibly can to the market forces, because you're trying to provide those efficiencies and pass those on to consumers because you believe they are going to bring advantages to consumers.
So, sure, there isn't going to be a perfect solution and it's certainly not going to work overnight. But if we're going to pick a model that we want to rely on and work toward, I would just suggest to you that relying on market forces is going to be, I believe, a better model in the long run than relying on government regulation.
Liberal
Robert Thibault Liberal West Nova, NS
In your calculations and decisions, do you factor in the equality of service between rural and urban areas, and the similarity of service and similarity of cost?
We've already seen what the incumbents are suggesting: that rural areas would pay a larger monthly fee for basic service because of the increased cost. That was greatly due to the competition they were having in urban areas.
Commissioner of Competition, Competition Bureau, Department of Industry
These are very hard issues that we grapple with. There's no doubt that it is more expensive to serve people who live in rural areas. Generally speaking, we would support prices that are based on cost. There are other tools that the government can use if they want to redress some of those inequities. That being said—
Liberal
Robert Thibault Liberal West Nova, NS
But would their costs be to the individual service, or would there be the same costs for all Canadians, for similar services?
Commissioner of Competition, Competition Bureau, Department of Industry
I'm saying there are different costs to providing different services, and the price that is charged for a service should reflect the cost of providing that service.
Commissioner of Competition, Competition Bureau, Department of Industry
They might in some circumstances, depending. What's very interesting about the evolution of telecommunications, and I think quite exciting from a competition perspective, is that there are new services being developed, such as applications that are actually independent of infrastructure. They can be used in the context of a single telephone provider if they're providing high-speed access. You can use an application that you can attach and get your telephone service that way. It's an infrastructure-independent type of competition.