Industry Committee on Feb. 14th, 2007

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Thank you, Mr. Chair.

And thank you, Ms. Yale.

I come from northern Ontario, which is not a very densely populated area and is somewhat rural, and I have some serious concerns. I don't want you to comment on one of Mr. Hunter's statements, but he mentioned something about their wanting to lower prices to compete in certain geographic areas.

When I hear “certain geographic areas” or “compete on a geographic basis”, what I hear is that you want to compete in the GTA, in Toronto, in Montreal, and really there's not much left for northern Ontario or rural areas. I see telephone service as an essential service basically. It's there, it's important, especially in isolated homes where your nearest neighbour might be three to four miles away if you're lucky; if not, maybe ten to twenty miles away.

What's to stop telecom corporations from abandoning acceptable levels of service? I mention that specifically because we can say yes, we're going to have service, but if there's no one there to provide an acceptable amount of service, I start having concerns.

I'll tie it to something else as well, and I know you're very strong on the wireless area. Out of the five companies that were given licences, there are basically three left. And they're there, they're competing, but over the last, let's say, five years—and I'll use Telus as an example, and I don't want to be disrespectful or anything—the coverage in northern Ontario has been less than stellar as far as wireless service goes.

I see this coming up—and maybe I'm paranoid but I speak a little from past experience—and what I see happening is large centres getting exceptional prices, exceptional service, and rural areas in northern Ontario being abandoned. Maybe you can comment on that.

[Janet Yale]

As I said earlier, we have an obligation to serve everywhere. So every time there's a new house built, we have an obligation to provide a line to that house as part of our regulatory obligations. As I said, it's an interesting obligation, given that in the Lower Mainland of British Columbia 10% of those homes don't actually take service, even though we have a line into them.

So everywhere there's a home we have an obligation to provide service to that home, and to date the CRTC has regulated every element of that service, not just the price but the quality. We have quality of service measures that apply to the provision of our service on a retail basis in terms of installation, repair times, time to answer phones at our call centres, and so on. Every aspect of our service is regulated, so you don't cut quality, because that aspect of our service is regulated today and there are penalties that apply for failure to meet those quality of service obligations.

So I don't believe that in the absence of competition there is any threat at all to customers, because they are completely protected under the regulatory umbrella today. I don't think customers in rural and remote regions are at any risk of abandonment or deterioration of service. Having said that, where competition is more intense, we want to be able not just to watch customers walk out the door because we can't respond to competitive entry, but to be able to offer innovative packages to them.

Does that mean we're going to limit the benefits of competition to those customers and not try to bring those innovative services and products to customers in all parts of our territory? I think competition will bring benefits to all customers and not just those who happen to live in the regions where the competitor has entered.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

I guess what you're saying is that the spearheading will happen in densely populated areas, and eventually the rural areas will get it as it comes through.

I'll ask a quick question based on your answer. You mentioned something about how people in the rural U.S. are getting service and it's working out well. What is the comparative cost for someone living in downtown New York to someone in very rural Arizona? Or maybe in a similar state, let's take Las Vegas to Arizona. Is there a large difference? I mention this because in your opening comments you did mention the rural U.S. Can you give a relative outline? If not, I understand.

[Janet Yale]

I don't have that at my fingertips. I can tell you that generally speaking, the OECD reported that local telephone prices in Canada are among the lowest of all OECD countries. So there's no question that Canadians do very well on a comparative basis. I don't have the urban–rural pricing in the U.S. at my fingertips, but I can provide it to you.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

That's what I was concerned about, the urban–rural differential.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Rota.

We'll go to Monsieur Arthur.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Chair.

There are rules, regulations, and CRTCs, but we should not forget the experience of Air Canada. Once it got out from the skirts of big mother government, it had to fail miserably before it was able to compete in its own world. Yet it was a flag-carrying airline.

There's also corporate culture. How do you get a corporation that has been privileged by regulations over the years to be able to compete in a dynamic matter—for instance, Telus?

Good afternoon, Mrs. Yale.

[Janet Yale]

Good afternoon.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

My riding in the western part of Portneuf is Telus-connected. If we had a referendum in Portneuf, you would be thrown out instantly for the poor quality of your service, the arrogance of your people, the incompetence of your technicians, and for the rates that you have gotten approved by the CRTC. My own riding office cannot connect to the parliamentary system because of the poor quality of your lines. Yet it is in a fairly big little centre that's called Donnacona.

How do you think Telus will acquire a corporate culture that will enable it to give Canadians service that competes with the cable and other people who will be at your throat when the government stops protecting you?

[Janet Yale]

I'm not personally aware of the difficulties in your riding with respect to our quality of service. Obviously our operations in the Telus Quebec territory face different challenges from those in other parts of our operating territory, where there is denser population.

We do take quality of service very seriously. We actually believe that quality of service is not something that should be dictated by the CRTC, but by our customers. Also we think about the CRTC requirements as sort of a minimum, not a maximum, level when it comes to quality. We do take pride in our ability to serve our customers well. If there are particular issues, I'd be happy to follow up with you.

What I can tell you is that if we don't keep our customers happy, then they will leave when competition comes. It is one of the best incentives to make sure we address any quality of service issues that we have. So we recognize that in increasingly competitive markets, it's customers and their ability to leave us that makes sure we keep them happy.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Are you looking forward to the right of those people to leave you? Because in my riding, they will.

[Janet Yale]

We don't want them to leave us. We recognize that we have to keep them happy or they will leave us. It's not that we want them to leave. We want them to stay. We want to satisfy them and delight them with the full suite of services and products that we offer.

All I'm saying is that if we don't do so, they have the ability to leave in a competitive market, and they will do so if we don't keep them happy.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Do I still have time?

[The Chair, Conservative, James Rajotte]

You have one minute left.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Is the corporate culture of Telus able to adapt to real competition when quality of service becomes the next best thing after price? Do you have the corporate culture to face the competition? Do you show it beforehand, or are you hoping you can have it grow under you because now is the time to have it?

[Janet Yale]

We believe we are an adaptable organization that does take quality of service very seriously at both the retail and wholesale levels, because of course our competitors do depend on us for infrastructure, and the current test of deregulation requires us to actually meet certain levels of quality of service to our competitors before we can actually be deregulated.

So we take quality of service very seriously. We are investing heavily in quality of service at both the retail and wholesale levels. We see the imminent arrival of deregulation in large parts of British Columbia and Alberta once this order in council is passed. We believe that the best way to keep our customers happy is to delight them.

[The Chair, Conservative, James Rajotte]

Thank you.

I have Monsieur Crête and Monsieur Vincent.

Go ahead, Monsieur Crête.

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

Ms. Yale, what percentage of your clients would be affected by deregulation as a result of the minister's directive?

[Janet Yale]

I can tell you that Calgary, Edmonton, and the Lower Mainland represent about two-thirds of our customers. Those are three of the ten communities that the minister identified as a priority. If you recall, the order in council talked about the top ten communities across Canada for deregulation. Our priority will be to focus on those three communities for deregulation.

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

But overall, what percentage of your clients would be affected by deregulation?

[Janet Yale]

It changes every time Shaw enters a new market. I would say that by the end of 2007 Shaw will be serving between 70% and 80% of our customers. I can verify that for you, but it's their decision to enter that determines where we can be deregulated.

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

If I understand correctly, 20% of your clients would not be affected by deregulation?

[Janet Yale]

That is correct, between 20% and 30%.

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

Consequently, even if these people are not affected by deregulation, do you not think that there would be significant pressure on the CRTC, or any other body with the responsibility of making the decision, so that ultimately, the deregulated market would have such an influence that those who are still regulated would ultimately be caught up in the trend?

[Janet Yale]

I completely disagree with that. I think it is all the more reason for the CRTC to continue to regulate where there isn't competition. Where there is no cable company, there will not be competition for some time to come. In the absence of competition, the regulator is there to stay, and we have always accepted that that should be the case.