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Evidence of meeting #42 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 competition.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jean Brazeau  Vice-President, Telecommunications, Shaw Communications Inc.
Yves Mayrand  Vice-President, Corporate Affairs, COGECO Inc.
Kenneth Engelhart  Vice-President, Regulatory, Rogers Communications Inc.
Luc Lavoie  Executive Vice-President , Corporate Affairs, Quebecor Inc., Vidéotron Ltée
Ted Chislett  President and Chief Operating Officer, Primus Telecommunications Canada Inc.
Chris Peirce  Chief Regulatory Officer, MTS Allstream Inc.
Joe Parent  Vice-President, Marketing and Business Development, Vonage Canada Corp.

5 p.m.

Vice-President, Marketing and Business Development, Vonage Canada Corp.

Joe Parent

The objectives of the policy as stated we are definitely in favour of.

5 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

Mr. Chislett.

5 p.m.

President and Chief Operating Officer, Primus Telecommunications Canada Inc.

Ted Chislett

I certainly would say that the policy direction as it has now been amended we strongly support. We had a number of concerns about it originally. As Chris mentioned, through a lot of the work of this panel looking at that, I think we were successful getting it changed to something that we find is very supportive today.

5 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

The next part of my question, and this was another shocker that we received too, is that this whole process--and we're talking about the process itself--was illegal. Mr. Peirce, you were wondering about the legality of the proposed variance. Of course, we're talking about “proposed” at this point too. I want to quote you something that Mr. French, who is the vice-chairman of the CRTC, said when he was here. When asked about the legality of that, his response was that the Telecommunications Act has been written in a general way to leave room for interpretation. He also said that the government-proposed decision is in conformity with the status and the Constitution.

Sir, do you disagree with the vice-chairman of the CRTC, who said this was legal?

5 p.m.

Chief Regulatory Officer, MTS Allstream Inc.

Chris Peirce

I was here on Monday and I think, frankly, there was some confusion over when people were talking about the policy direction as opposed to when they were talking about the proposed order of forbearance. When I heard the questions of legality, I heard him speaking about the policy direction and whether or not it was legal. I certainly wouldn't expect the vice-chair, as you said, to opine on the legality of a proposed order of forbearance. That's not what I heard him doing.

Certainly, from our perspective, we would be a party affected by this order. I would expect Bell Canada to seek forbearance in the business market in the city of Toronto if this order went ahead as drafted. If it did, we would certainly question how that would pertain to granting forbearance to the business market in a place like Toronto, Ottawa, or anywhere else where we were in business, as to whether or not this order is ultra vires of the existing Telecommunications Act and doesn't require a statutory amendment to grant forbearance without any consideration of the market power of the party applying to the actual presence of competition.

5 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

Does anyone else want to make a comment on that?

5 p.m.

President and Chief Operating Officer, Primus Telecommunications Canada Inc.

Ted Chislett

Just the one I mentioned earlier. I believe there certainly is the power to forebear from falling tariffs and having an ex ante regime and moving to a ex post regime. I believe that's allowed, but you have to have that monitoring position in place.

The concern I have, as mentioned earlier, was in the absence of that monitoring that is the big obligation. The obligation of the commission is to make sure things are happening according to the Telecom Act, and that's the big opening, the big hole I see.

5:05 p.m.

Vice-President, Marketing and Business Development, Vonage Canada Corp.

Joe Parent

The concern I have is the same as was espoused earlier, which is that the policy direction is one thing, but we feel that the way it's worded and would roll out would result in a market structure that would make it very difficult, if not impossible, for us to carry on business the way we do today.

5:05 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

I have a little bit of difficulty with that winback proposal and some of your objections to that.

I was in business, and you usually put your best foot forward. Now, won't that just result in better service, and won't that result in better prices for consumers? Can't you compete? I understand that you're up against a giant, but you also have some advantages that they don't have.

5:05 p.m.

Conservative

The Chair Conservative James Rajotte

Go ahead, Mr. Parent.

5:05 p.m.

Vice-President, Marketing and Business Development, Vonage Canada Corp.

Joe Parent

Certainly we can and do compete on a regular and daily basis. The issue, I guess, boils down to the fact that I don't have 125 years of monopoly power behind me, and I don't have a 125-year relationship with this customer base, nor do I have millions of customers I can draw upon.

From our point of view, in order to have sustainable competition, which is one of the policy objectives, competitors need an opportunity to establish themselves in the market. And just as we're getting to a beachhead, if our customers are getting attacked or poached, or whatever word you want to use, before we have an opportunity to establish a relationship with them--a relationship that, in former situations, could last 90 days before their old beau came back and started offering incentives to them--it becomes much more difficult for us to create a viable business. In fact, if you look at the situation, where it costs us hundreds of dollars to achieve a customer, if more and more of those customers can be taken away without any kind of return before we've even had a chance to break even, it becomes very difficult to run a business.

5:05 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

Thank you, Mr. Van Kesteren.

I'll go to Mr. Comartin.

February 7th, 2007 / 5:05 p.m.

NDP

Joe Comartin NDP Windsor—Tecumseh, ON

Thank you, Mr. Chair.

Thank you, gentlemen, for being here.

Mr. Chislett, I have just a quick question. In your brief, and again in your verbal presentation, you indicated that your company is aware of breaches of the regulations and the criteria. When that comes to your attention, what do you do? Do you report? And what happens?

5:05 p.m.

President and Chief Operating Officer, Primus Telecommunications Canada Inc.

Ted Chislett

We are currently working with the staff of the CRTC to try to resolve the issues. The staff is aware of the instances we have in place, and they're going through the process.

5:05 p.m.

NDP

Joe Comartin NDP Windsor—Tecumseh, ON

What would you expect, or what would you hope, to be the outcome?

5:05 p.m.

President and Chief Operating Officer, Primus Telecommunications Canada Inc.

Ted Chislett

Ideally, I would hope they'd be told that they can't offer it, that it's against the rules, and they would cease and desist.

5:05 p.m.

NDP

Joe Comartin NDP Windsor—Tecumseh, ON

How fast does CRTC respond?

5:05 p.m.

President and Chief Operating Officer, Primus Telecommunications Canada Inc.

Ted Chislett

This has been going on for maybe a couple of months, so it's reasonably quick, and I expect we'll have something resolved within the next month--it is my hope--or at least the staff will put a lot of pressure on the offending parties. So I think it's a matter of months and not a matter of years. Certainly the CRTC has a reasonable process to expedite and move through these things.

We're working informally right now in the hope that this can work, but if not, there is a formal process we can go through as well.

5:05 p.m.

NDP

Joe Comartin NDP Windsor—Tecumseh, ON

Okay.

This is to Mr. Peirce and Mr. Parent, following Mr. Van Kesteren's line on the legality of what's happened here. Without completely breaching your plan, are you looking forward to having to challenge this in court?

5:05 p.m.

Chief Regulatory Officer, MTS Allstream Inc.

5:05 p.m.

NDP

Joe Comartin NDP Windsor—Tecumseh, ON

There were some semantics there. Let me try that again. As a lawyer, though, I'd like to think you might be willing to pay all those big legal fees.

5:05 p.m.

Chief Regulatory Officer, MTS Allstream Inc.

Chris Peirce

Well, my lawyers may feel that way too.

5:05 p.m.

NDP

Joe Comartin NDP Windsor—Tecumseh, ON

Although you're not looking forward to it, are you expecting that it's what you're going to have to do, or are you planning for that? And I'm asking that in light of the suggestion we have had of a six-month delay.

5:05 p.m.

Chief Regulatory Officer, MTS Allstream Inc.

Chris Peirce

What we would really hope is that the test for forbearance, the framework--however it's amended--will provide certainty.

Remember, in Manitoba we will be seeking forbearance in the city of Winnipeg, because that's where Shaw is present. Nationally we want to make sure that forbearance is not granted in markets until competition is present.

The problem we have is that this test of mere presence, of counting providers, really has nothing to do with the presence or not of competitive market forces. And if we want competitive market forces, we should follow the specific recommendation of the telecom policy review panel report, which was to review, and if there is market power, don't forbear the retail pricing of the incumbents; if there is no more market power present, then forbear.

So we would prefer to see the order revised. If six months of hearings would help us do that, then certainly we'd be in favour of that.

5:10 p.m.

NDP

Joe Comartin NDP Windsor—Tecumseh, ON

Let me pursue it to this extent. If six months is not granted, would you be moving for an injunction as part of any litigation you would initiate?