Industry Committee on Feb. 19th, 2007

[Maxime Bernier, Conservative, Beauce, QC]

The test we have applied is one that the CRTC has already used in a previous decision, namely Decision No. 9937434. The CRTC applied a competitive infrastructure test in making its decision in that particular case. That test is also used in other states in North America: Arkansas, Kansas, Missouri, Texas and Utah. Those American states all applied this kind of test to the telecommunications industry before deciding on deregulation. Even Hong Kong applies that kind of test.

Why did we use a competitive infrastructure test rather than one based on market share? Well, because it is a non-arbitrary, simple test that allows deregulation to occur as quickly as possible and also ensures that consumers will benefit from the best prices as quickly as possible. It is a test that has the advantage of being easily applicable here in Canada. As a result, we can see that if we apply the test to the larger urban centres in Canada, most of them will be deregulated and there will be competition. It is contrary to the 25 per cent market share test that the CRTC said it was in the process of reviewing last fall, because it had realized that there was competition. So, there is no longer any need to review the test, because we have suggested that the CRTC apply a different test; also, it is a test that is somewhat more arbitrary and longer to administer, when we believe that consumers should receive the benefits of deregulation as quickly as possible.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Carrie.

We'll go now to Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

Minister, I want to thank you for being here today.

I represent people from the Far North. They live in very isolated rural areas. As a result, telecommunications issues are very important for the new economy in the North.

I want to begin by speaking to the issue of broadband penetration, because our ability to compete in isolated regions is very much tied to cellphone and broadband coverage. I'm looking to the experience of the U.S., where they did rapid deregulation and they have some of the poorest rural broadband penetration in the OECD right now. I'm wondering what steps you will take to make sure our regions across the northern parts of Canada will be able to maintain strong broadband, because it has come through CRTC directives, and whether or not you will ensure that section 7 of the Telecommunications Act will remain strong so that we can guarantee the safeguards for Canadians to have access to these services.

[Maxime Bernier, Conservative, Beauce, QC]

Thanks for the question.

I believe telecommunications services in remote areas are extremely important in Canada. That is why, as you know, new, very advanced applications are able to provide what the Internet provides: tele-health, tele-learning, delivery of government services, and e-business. All those services require access to broadband. The rural areas need to be well served.

So, it is important to improve Internet access for First Nations and rural communities in Canada. The idea is not to deploy broadband service in remote communities. The idea is to provide health and educational services and enhance economic opportunities because, as you know, broadband service makes all of that possible in these communities.

At the present time, our government has taken a number of initiatives to allow rural areas to benefit from broadband service. As you know, we have implemented a broadband service pilot project. The focus was rural development. This began a few years ago with the aim of helping communities that don't have access to broadband service and allowing the private sector to play a complementary role.

Although this is a pilot project that was only developed recently, the government has also set up additional programs. Government organizations launched the National Satellite Initiative so that satellite use in communities in the Mid- and Far North, as well as remote areas of Canada, would be affordable for broadband service providers.

Among the other initiatives we have taken, I would just like to mention the Canada Strategic Infrastructure Fund and the Municipal Rural Infrastructure Fund. Those funds provide funding to eligible broadband service project developers.

We want rural communities to have the benefit of quality broadband services and access to the Internet at an affordable price. That's why we are reviewing all possible options in order to ensure that the Government of Canada can continue to play its role, as part of the effort to bring these services to Canadian communities that currently do not have access to broadband services.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

I'd like to ask you a bit about your position on net neutrality because it's getting a lot of media attention right now. There's speculation that the government is looking to maybe change how net neutrality is looked at. I'm concerned about it because we talk about consumer protection, but are there moves afoot? Do you see a role for government allowing cable providers to set up what they would consider a two-tier Internet, or are we going to maintain very clear rules on net neutrality?

[Maxime Bernier, Conservative, Beauce, QC]

Thank you very much. Internet neutrality is an important question and an issue for both Internet users and all Canadians.

A free market has served the Internet well, which is not regulated, as you know. Through the free play of market forces, innovation has allowed Canadians to take advantage of the Internet. At the present time, we want to ensure that consumers have access to the Internet and the market is competitive. We are currently reviewing possible regulation of the Internet infrastructure. If memory serves me, that is one of the recommendations made by the expert panel with respect to network neutrality. I am quite familiar with the concerns expressed by both industry players and Canadians with respect to that decision.

What will the government's position be on network neutrality? It would be premature to tell you what recommendation I will be making on that. The Internet is evolving very rapidly. There is a need to be cautious before introducing regulations. As is the case for other aspects of the Internet, I do not want to adversely affect innovation but would like to continue to look closely at this and, if there is a need, take action at the appropriate time.

[The Chair, Conservative, James Rajotte]

This is the last question.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Over the last year you've certainly established a reputation of someone willing to, some might say, run roughshod over the CRTC. You've overridden the voice-over-Internet protocol, you sent a directive to the CRTC on how you see they should be interpreting decisions, and you've introduced a bill replacing the CRTC's proactive power to determine if the large phone companies are anti-competitive. There have been consumers who have raised concerns about this. I'd like to get a sense of how you see your role with the CRTC.

Is the CRTC, with its quasi-judicial process, something that is at arm's length, or is it under you as the minister?

[Maxime Bernier, Conservative, Beauce, QC]

I can assure you that for us the role of the CRTC is important in the telecom sector. They still have a role. They're still doing social regulation in the telecom sector, and also economic regulation.

As I said, deregulation will occur only in places where the test of three is met, only when you have a competitive infrastructure, but for the remote and rural regions, it will be business as usual. The economic regulations will be there, and the CRTC will be there.

I think what we're doing as a new government is using the power we have under section 8 of the Telecommunications Act to issue a policy directive to the CRTC. We use section 8, and it's in line with the Telecommunications Act and with our mandate as a government.

Also, varying a decision from the CRTC is a power we have under the act. Section 12 gives the government the power to vary or send back a decision to the CRTC. What we did in the last couple of months was just using the power we have. It's different; we're not a regulator. We're setting policy direction for the CRTC. They are the experts. They are the regulator that will apply the three tests, and they're going to be there to regulate when necessary.

I believe the CRTC still has a role in the telecommunications industry, and it's an important role.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. McTeague.

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

Chair, thank you.

Minister, I want to come back to the earlier questions that I didn't get an answer to. In the meantime, you've raised a number of very interesting points, particularly with respect to wireless win-back, Bill C-41, and airlines.

Minister, when you last appeared before this committee on June 6, 2006, you stated categorically to my question that you didn't see any need to change the Competition Act. I'm glad to see you now see that, although I suggest the reason you're doing it has a lot to do with piggybacking on the issue of creating separate laws for the airline industry. As you know, competition law is the law of general application and general rule. I'm sure there are a number of competition lawyers and consumers out there who would probably want to argue that, as they did with me over the years.

Minister, you've talked a bit about the issue of win-backs, and I understand win-backs to work only on the following circumstances: if you leave the service, you will then get rewarded. So I hardly see how it's possible for you to connect wide consumer benefits with only a few people, who decide to leave, being paid handsome amounts to come back.

There's the experience in the United States, Minister, which I raised with you in December after you made your policy announcement just before the House rose. I talked about the experience of decline in competition in the United States. In fact, not only were they concerned about the decline, but to the same mantra that wireless and VoIP would be effective substitutes, we know that those technologies are a long way off. In fact, if they are precluded under your plan, they may never be realized.

So let me ask you this, Minister. An area that my colleague Mr. Carrie talked about in Durham region with Oshawa was with respect to what consumers are concerned about. They're very concerned about wireless. I want to know where you are with respect to this review, especially given that you have now three players. I note that under your criteria for having competition there has to be one of the wireless players who is not affiliated with the others. It's going to be pretty hard to deal with only three companies, which usually constitute either a telephone or a cable company. But this, Minister, probably has a lot to do with the fact that you didn't go through all the recommendations and follow the expert panel review.

Where are you with wireless? And when are you going to respond to a true need of consumers, as opposed to one that you seem to be inventing here now?

[The Chair, Conservative, James Rajotte]

Okay, Minister, there's a lot there for you, as usual.

[Maxime Bernier, Conservative, Beauce, QC]

Thank you for asking that question about Bill C-41. It gives me an opportunity to say that this is an important bill that will allow us to ensure that these industries can be part of the free play of market forces in areas or centres which have been deregulated, while still complying with the Competition Act. By giving the Competition Tribunal the authority to impose monetary penalties, the government is promoting voluntary compliance with the Competition Act and, at the same time, protecting the consumer from anti-competitive behaviour that could be harmful. It is important to see Bill C-41 in its full context. The telecommunications market is evolving very rapidly, and there is a need for modern, flexible and effective regulations that allow consumers to benefit…

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

I must interrupt you right there, Minister. Sorry.

[The Chair, Conservative, James Rajotte]

Mr. McTeague, you've asked him a number of questions.

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

Chair, I can ask all the questions I want in six minutes, sir, or five minutes.

[The Chair, Conservative, James Rajotte]

It's true, but you have to allow the minister time to answer.

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

Sir, on the subject of Bill C-41--

[The Chair, Conservative, James Rajotte]

Mr. McTeague, I'm going to allow the minister to answer your questions.

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

He is answering. And there's a question that comes with that.

Minister, you know full well that with respect to Bill C-41, as you've proposed it--and we've heard why you've wanted to introduce this bill--there's great concern that the damage is after the fact. So if someone is put out of business as a result, it'll take several months before somebody actually gets some kind of resolution. By that point, the business is gone, it's history, it's toast. And it'll take several months before someone is able to actually get back into business, if indeed they can at all.

This is a recipe for disaster, Minister. How do you explain that?

[Maxime Bernier, Conservative, Beauce, QC]

You asked that same question of Sheridan Scott when she appeared before you, and I can only rely on what she said. She gave you an appropriate answer to that question. She stated that when the Competition Bureau focusses its efforts on a specific market, it can act very quickly, and I believe she cited the example of the airline industry, where the Competition Bureau was able to obtain injunctions very quickly in order to put a stop to anti-competitive behaviour. When a case is brought before the Competition Tribunal, it has the necessary resources to do its work, and it does so expeditiously.

I am only an elected representative; I am not responsible for the Competition Bureau. However, when the Commissioner of Competition tells us that her organization acts very quickly, citing the example of the airline industry, and that it has the resources it needs to carry out its work, I can only express satisfaction.

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

Mr. Chair, I'm sorry—

[The Chair, Conservative, James Rajotte]

No, no.

Minister, are you finished?

[Maxime Bernier, Conservative, Beauce, QC]

Yes.

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

Are you going to play interference, Mr. Rajotte?