Evidence of meeting #45 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.
Liberal
Maurizio Bevilacqua Liberal Vaughan, ON
Thank you very much, Mr. Chair.
Minister, first of all, I'd like to express to you my sincerest gratitude for your presentation today. You occupy a very important role as it relates to the Canadian economy.
As far as I'm concerned, the number one challenge this economy faces is the productivity gap between us and the United States and other countries. That has, of course, an impact on our standard of living. I was happy to note in your presentation that competitiveness, as well as productivity, is in fact part and parcel of your beliefs as they relate to the Canadian economy as we try to compete in the world market.
I want to take a broader approach and get a sense from you, as the minister, what we can in fact expect from you. You obviously are a believer in deregulation. This is the philosophy that you seem to be promoting. How far are you going to go with that? Does it go beyond the telecom issue?
As well, I would like for you to address the issue of foreign ownership, which has not been mentioned. I refer to the OECD study that essentially urges Canada to change its rules. If I may quote from a couple of individuals, one was Don Drummond, the chief economist of the Toronto-Dominion Bank, who said, “It reduces competition, and so it keeps prices up artificially high.” The C.D. Howe Institute stated, “Without change, capital-starved Canadian companies will fail to commercialize much of the nation’s R&D investment.” So how big of an issue is this for you, and will you be acting on this particular issue in the near future?
Conservative
Maxime Bernier Conservative Beauce, QC
Thank you.
As you know, on March 22, the Telecommunications Policy Review Panel submitted a report containing more than 120 recommendations, as well as a number of interesting suggestions. One of those was to adopt a progressive method of liberalizing foreign investment restrictions. It also suggested, as you know, that Cabinet be given the power to override the restrictions during phase I, if it believes the foreign investment is in the public interest. It also recommended broader liberalization that would ensure fair treatment for all telecommunications undertakings, including distribution and broadcasting undertakings. This second phase would be implemented following a review of broadcasting policy.
Those are the recommendations made by the expert panel, and we are currently reviewing all of their recommendations, including that specific one.
As you already stated, the OECD also recently expressed the view that there should be further deregulation in the Canadian telecommunications industry.
There is also our Advantage Canada plan, presented by the Minister of Finance, which is intended to increase foreign investment in Canada. In that regard, we are being asked to review foreign investment policy, and particularly the Investment Canada Act. Through the Advantage Canada plan, the new government will try to maximize foreign investment spinoffs for Canadians, while maintaining our ability to protect the national interest or national security.
As you know, we are determined to lift restrictions on foreign property as much as possible under the General Agreement on Trade in Services between the provinces. That is an important agreement, and we want to be sure we limit restrictions between jurisdictions even here in Canada.
Finally, the World Trade Organization has to adopt policies that are consistent with Canadian policies and its own.
Having said that, the telecommunication sector is important for industry. We want to ensure that it has the necessary resources to be competitive internationally.
We are currently reviewing foreign investment. You asked me whether I am prepared to take action with respect to foreign investment. I note that, under the previous government, your Committee tabled a unanimous report, I believe—my memory fails me—in which you said that there should be liberalization of foreign investment in the telecommunications sector.
As Minister of Industry, I am responsible for the Telecommunications Act, but not the Broadcasting Act. So, I am analyzing the recommendations of the Policy Review Panel, as well as the report of the Standing Committee on Industry, which recommended that we liberalize foreign investment. I will report on that analysis to my Cabinet colleagues at the appropriate time, with a view to determining future action.
Conservative
The Chair Conservative James Rajotte
We're over time, Mr. Bevilacqua. I'm sorry about that. We're at five and a half minutes, so we're over time.
We'll go to Mr. Carrie for five minutes.
Conservative
Colin Carrie Conservative Oshawa, ON
Thank you again, Mr. Chair.
I'd like to talk about the wireless market for a couple of moments. Some players have said that in order for Canada to have a competitive wireless market, the federal government should put Spectrum aside for a fourth wireless player. I was wondering what your position is on this and how you would you like to explain your recent announcement about the Spectrum auction.
Conservative
Maxime Bernier Conservative Beauce, QC
Thank you very much.
Industry Canada is currently responsible for spectrum management. As you know, in their report, the experts recommended that responsibility for spectrum management in Canada be transferred to another organization.
I am currently reviewing this whole issue from a broader perspective, as I am all the other recommendations. My Department issued a press release last Friday informing Canadians and industry participants that we would like to proceed with a spectrum auction. Various band frequencies are currently available, and we want them to be available to players here in Canada.
As you just said, we asked a specific question as part of the consultation, which was the first phase of a lengthy process. We will be consulting industry stakeholders with respect to the criteria for the auction. Following that, we will carefully consider their input. Finally, in early 2008, we will proceed with a call for bids on available spectrum.
The question is whether part of the spectrum should be reserved for new players. The debate is on. I have no preconceived notions as far as that goes. I await the recommendations and suggestions of people in the industry and various players with respect to whether or not the government should reserve part of the spectrum for new entrants.
There are also all the other technical details related to the auction. We are asking people in the industry to forward their comments and suggestions to us. This is a consultation process that will last 30 to 60 days. At the end of that process, in early 2007, we will call for tenders in order to make certain spectrum bands available on the market.
Conservative
Colin Carrie Conservative Oshawa, ON
Thank you very much, Mr. Minister.
Overall, we've heard from the committee that some committee members feel you've been moving too fast and some committee members have felt you're moving too slowly. I'm looking at how this whole process is moving forward. As you were saying, it's the first step in moving this thing forward.
You appear to be following the expert panel's recommendations quite closely. And we heard today that maybe you should take all the recommendations and move forward at once. But if we did go for legislative change in that regard, did you get any input from the department about, if we went that route, how much longer it would take to get things moving forward than following the route you've already taken?
Conservative
Maxime Bernier Conservative Beauce, QC
I just want to be sure that I understand your question very well. It's about deregulation or about Spectrum that you're speaking.
Conservative
Colin Carrie Conservative Oshawa, ON
Not Spectrum, no; it's the deregulation part of things.
I'm just curious. As I said, you seem to be following the expert panel quite closely, and I was wondering, if you went for legislative change, did you get any recommendations as to how much longer that would have taken if you went that route throughout the whole thing?
Conservative
Maxime Bernier Conservative Beauce, QC
First of all, as a committee...I received a lot of recommendations. There were 127 recommendations from the expert panel. We're studying that.
You've had some hearings and you're going to have some hearings during the next couple of weeks. I will weigh that before going out in front of Parliament with a new Telecommunications Act or something like that.
This Telecommunications Act has not been revised since 1993, and I think we must have a look at this legislation. A lot of the recommendations by the expert panel are very important for the future of this telecom industry. It's why I'm asking you, as a member of the committee, and the committee as a whole, to give me some recommendations and to do a deep study on this sector.
I will be able to take that back and analyze it. In the near future our goal is to have legislation before Parliament. But I don't know when. I don't have any priority on that right now. The priority is to be sure that I receive the recommendations from this committee, and I will analyze that, and as soon as possible we'll make a decision as to whether we are able to bring the legislation before Parliament or not.
Conservative
Liberal
Larry Bagnell Liberal Yukon, YT
Well, Minister. Thank you for being here.
I know you'd like the deregulation to reduce costs for everyone—for consumers, I'm sure--but sometimes the road to hell is paved with good intentions, and in some cases it's just not working for low-income people. I'll give you two examples.
One is when long distance was deregulated. You sort of did half the job, but not basic access rates that low-income people need. In remote areas, it's almost a matter of life and death, and certainly for economic survival or to get off social assistance. So when long distance rates went down—which you, I, or governments, and wealthy people could afford—the telcos needed to get some revenue from somewhere, so they reduced basic access rates, which were not regulated. Of course the people who could least afford it, those with low incomes, had to pay the bill.
The second example is when a telephone company owns the wires in an area. There may be a number of Internet providers, but when you say, well, we'll deregulate and then we'll get the cheapest, the problem is that the company owning the wires charges the only other providers a rate to use those wires. When that was regulated, at least they had to provide access at a reasonable rate. But deregulated, they think they can do what they want and charge exorbitant rates, which puts Internet access up.
Of course, no one in a remote area can afford to put in those cables or wires again, so it's not working.
I don't know if the minister has a solution to those two problems and how they might be made to work with regulation, because deregulation obviously didn't work.
Conservative
Maxime Bernier Conservative Beauce, QC
For your question, I want to let you know why we're doing that. I think it's important to put it in context.
Recently the OECD issued a very interesting paper, based on a study about why we want to have more market forces in the telecom sector, why we want to have more deregulation in Canada's telecom sector.
The study estimated that the growth in Canada's business sector productivity could have been much higher. It would have been 1% higher every year between 1995 and 2003. I'm saying this because—and it's not me, it's the OECD—if we didn't have the overregulation that we have in this country, we could have better productivity for our economy as a whole. If we had aligned our regulation with that of the least restrictive country in each sector, we would have had that 1% increase between 1995 and 2003. This 1% more per year makes a huge difference after a few years, and I think you're going to agree with me.
But there was another important observation in the OECD study. Excessive regulation has a worse effect in sectors that produce and use information and communications technology intensively. So telecom is an example. It's even more important to have less and better regulation in this sector.
This is why we decided to deregulate the telecom sector, so that the economy as a whole would benefit.
In the end, this will have an impact on productivity growth in this country, because as you know, excessive regulation has always been a huge cost. This cost is more important in the telecom sector, because it's so important for the country's innovation and productivity.
Answering your question concerning
Access to services provided by wholesale Internet access or telephone access resellers is very important. That is why we asked the CRTC, in the policy direction which is currently in effect, to strike the right balance between market forces and regulation in this segment of the telecommunications industry.
We also recognize that mandatory access to wholesale services is needed to promote competition, and the CRTC is currently reviewing that. The CRTC is the most appropriate agency to regulate that segment of the industry, if need be, and ensure that Internet service is accessible, particularly broadband, all across the country.
We want to ensure that deregulation does occur, and that it occurs in an orderly manner, and that service providers…
Conservative
Maxime Bernier Conservative Beauce, QC
Sorry; I will just conclude on that point: I want to ensure that wholesale service providers will still have access to the same regulation.
Liberal
Larry Bagnell Liberal Yukon, YT
Very briefly, I wonder if the department could give me a written answer to those two questions in a bit more detail. I'd appreciate you answering now, but....
Conservative
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Thank you, Mr. Chairman.
Good afternoon, Minister.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
You are more than the Minister of Industry for Canada; you are the member for Beauce.
And I am the member for Portneuf—Jacques-Cartier.
People in Quebec know about the similarities between Portneuf and Beauce. Both are ridings where small industry is extremely dynamic and is based to a large extent, in both cases, on exports, allowing both employees and investors to make a good living. Entrepreneurs in both of our ridings are fiercely independent people. A member of Parliament who served before you was an independent by the name of Gilbert Bernier. Our two ridings have this in common: they're the victims of programs put in place by the Government of Quebec that discriminate against resource regions, resulting in significant job losses. Our two ridings also have in common the fact that, for a very long time, they were ruled by Québec-Téléphone, which became Telus Québec, something that probably significantly hindered economic development in both of our regions.
Our two ridings probably also have in common their lack of access to deregulation, which is kind of a shame, based on the standards you have just put in place or are preparing to make official. When that happens and as competition becomes more and more widespread, you will need to find competent and dynamic adjudicators, so that the competition is fierce and ruthless.
In recent weeks, I have noted that Liberal members of Parliament who sit on this Committee do not have a great deal of confidence in the Competition Bureau. They have the impression that everything always takes too long when you're dealing with the Bureau. As for our Montreal colleagues representing the Bloc, they feel that if the Competition Bureau were truly effective, every oil company executive would already be in prison. So, they can't possibly have any confidence in the Competition Bureau.
Ms. Scott showed courage in coming here to deliver her message, which was to reclaim a mandate and to declare herself capable of fulfilling that mandate expeditiously if real problems emerge.
What do you intend to do to restore people's confidence in the Competition Bureau and its ability to take quick, draconian action if there are abuses?
Conservative
Maxime Bernier Conservative Beauce, QC
Thank you for your question. As regards a comparison between the ridings of Beauce and Portneuf, you are right that we represent people who are entrepreneurs, people who believe in their success and in themselves. I am very proud to represent the Beauce region, and I am certain that you are just as proud to represent your riding. People from the Beauce may not benefit from the deregulation of telephone services quite as quickly as we would have liked, but I do hope that one day, they will derive the same benefits as people living in the major urban centres across the country.
I have confidence in the Competition Bureau; I believe the Commissioner is doing a fantastic job. She told the Committee that when there are serious problems, they address them and allocate the necessary resources to carry out studies as quickly as possible and issue injunctions, when necessary.
The Competition Bureau has all the resources it needs to be in a position to take action and sanction anti-competitive behaviour or an industry player that abuses its dominant position. It has all the necessary resources to do that. But we would like to provide it with an additional tool to counter this kind of behaviour. That's why I'm asking the Committee to look at Bill C-41, a bill that is in the interests of consumers, since it will ultimately give the Competition Bureau more teeth, by enabling it to impose administrative monetary penalties of as much as $15 million and issue injunctions after conducting a comprehensive, but expeditious, study of a given situation.
The Competition Bureau has a role to play. It is an independent government organization, as you know. I believe the new power related to administrative monetary penalties that would be given to the Competition Bureau once Bill C-41 has been passed into law, is in the interests of consumers and Canadians as a whole. I am confident that the Bureau will act expeditiously if this bill is passed and if a situation arises in the market place which shows that a company is not abiding by the rules laid out in the Competition Act.
Thank you for your interest in Bill C-41 and I hope that this bill can receive appropriate consideration at second and third readings as soon as possible.
