Industry Committee on Feb. 21st, 2007

[Jim Deane]

Those are in their licensed areas. What we're talking about is Persona's licensed areas, Access Communications' licensed areas, or Bluewater's licensed areas. I don't think existing cable operators are going to go in and over-wire those systems.

[The Chair, Conservative, James Rajotte]

The second thing is a very large question, so I won't put it. I think, though, that one of the issues raised is the relationship at the wholesale-retail level. It's almost beyond the current study we're doing here.

Mr. Cohen, you might want to comment on this, because I know you raised it.

If there's something further that each of you wants to present, it's a very complicated area and a big area.

Mr. Cohen, maybe you could comment.

[Mel Cohen]

I can be very brief.

The problem is around what deregulation means. As we read what's coming out of the minister's office, deregulation means the elimination of wholesale tariffs to competitors. That's why I'm ripping up my flyer. I can't offer high-speed Internet service as a reseller if I don't have wholesale tariffs.

The larger question is whether we want duopolies or whether we want additional competitors in the marketplace that are based on resale, not just facilities.

[Dean MacDonald]

I'd like to know as well—

[The Chair, Conservative, James Rajotte]

I'm being told I'm out of time, but go ahead.

[Dean MacDonald]

—how many letters you have received from consumers who are pissed off that Rogers or Cogeco or Vidéotron have entered the phone market. I'd say zero. They're all really happy. And this new order is supposed to be consumer-friendly? I don't hear any complaints. It's great to have the cable guys providing an alternative.

So make it happen in rural Canada.

[The Chair, Conservative, James Rajotte]

My very last brief question is to you, Mr. Maduri, on the decision with respect to the concern you have that was not specifically related to this study. Was that a CRTC decision or not?

[John Maduri]

It was.

[The Chair, Conservative, James Rajotte]

It was a CRTC decision, just to clarify that.

[John Maduri]

It was an ironic decision: help foster competition in urban Canada...the deferral account, the $620 million. Oops, now we have to figure out what to do with that; let's put it into rural Canada.

It's the same kind of distortion that these folks have spoken to, and I think these other players, like us, will be impacted by that amount.

[The Chair, Conservative, James Rajotte]

So you're asking the government or the committee to act contrary to, or to do something to reverse, the CRTC decision.

[John Maduri]

Absolutely. We and others at this table have submitted to the CRTC our business plans and where we're operating today, for sharing with the telephone companies, so that we can ensure that the markets we're in or plan to be in are going to be protected from subsidized competition. That's a pretty important element to us.

[The Chair, Conservative, James Rajotte]

Thank you.

I wish this could go on. It has been very interesting.

I thank you all for your time here today.

We will take a brief two- or three-minute suspension, and then we'll ask our next witnesses to come forward to the table.

[The Chair, Conservative, James Rajotte]

Could I ask you to find your seats, please? We have votes at 5:45.

We have our next witnesses here for a thirty-minute session. This is the second part of our panel, which is composed of consumer groups.

We have one consumer group with us here today. From the Union des consommateurs, we have Marie-Ève Rancourt, telecommunications, broadcasting, and privacy policy and regulations analyst.

Bienvenue, Ms. Rancourt. We have half an hour, so we request a five-minute opening statement. Then we'll go directly to the questions from members.

You may begin any time.

[Marie-Ève Rancourt, Analyst, Telecommunications, Broadcasting and Privacy Policy and Regulations, Union des consommateurs]

Good afternoon, Mr. Chairman, members of the committee.

I'm very pleased to appear before this committee to talk to you about our position on deregulating the telecommunications sector.

The Union des consommateurs, the consumers' union, is a community organization that brings together family cooperative associations, the Association of Consumers Advocating Quality Construction, as well as individual members. Our mission is to defend the interests and rights of consumers. It is in this capacity that we appear before you today.

We are here to comment on the recent actions taken by Minister Maxime Bernier in the telecommunications sector, following the most recent order. By order in council, Minister Bernier, through the stroke of a pen, wrote off the most recent CRTC order. The CRTC order provided a deregulation framework. It should be specified that the CRTC is a quasi-judicial, independent and impartial organization. The minister justified his position as being based on the 127 recommendations of a study group. The numerous recommendations were explicit, interrelated, and as a whole provided balance. Minister Bernier founded his decision on this report.

Yet, upon closer examination of the proposed framework, it can be noted that rather than applying all 127 recommendations, the minister has elected to apply only a few. This approach destabilizes the balance provided in the report and robs it of its very essence.

The consequences of cherry picking these recommendations are serious, particularly with respect to pre-deregulation testing. It may even mean that deregulation may occur while a single company holds a dominant position, and without considering the number of shares held by this company. Even if it held 95% of the market share, nothing guarantees that a regulatory framework would govern the company's operations. Abuse of a dominant position would therefore become very dangerous. This abuse of position is highly difficult to prove, as mentioned by the OECD in one of its reports, and as was stated by this committee in the year 2000 when it studied the Competition Act.

In addition, Minister Bernier would give the Competition Tribunal the power to hear possible cases of abuse of dominant positions, which goes against the recommendations made by the study group. To our minds, this is also a problem. It is our view that the framework proposed by Minister Bernier does not foster competition nor does it protect the rights and interests of consumers. In fact, no consumer recommendations made during the CRTC hearings following Public Notice 2006-14 have been retained. In fact, it is included in the minister's order in council.

I therefore invite you to reread the first recommendation by the study group. This recommendation deals with policy and regulation goals. This recommendation also talks about amending the Telecommunications Act. You are fully aware that amending the act cannot be done by an order in council, but must be done through the legislative process. By cherry picking recommendations, the minister has decided to bypass the legislative approach and to use his power to issue an order, a power that group has recommended be abolished. His objective is to change the CRTC orders, and to interfere in the role and decisions of this organization.

We believe that through this order, the minister has chosen to impose his decisions to accelerate deregulation, rather than act through legislative means, which would be a public, transparent, and most likely longer process. This is what the minister is afraid of.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Rancourt.

We'll start with Mr. McTeague, for six minutes.

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

Thank you, Mr. Chairman.

I would just like to make sure of one thing, Ms. Rancourt: I am not the one who wrote your presentation, am I?

[Marie-Ève Rancourt]

No.

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

These are certainly concerns that we have raised on a number of occasions. There is another point that I would like to deal with. A few days ago, Bell Canada and the minister said that consumers agreed with them.

Did Mr. Bernier or Bell Canada consult you before taking a position?

[Marie-Ève Rancourt]

Obviously, they did not consult us. Moreover, I really do not see how Mr. Bernier or Bell can claim that the framework they are proposing will help consumers. We are being told that rates may drop, but the fact is that right now, even though Bell is regulated, it can provide its fixed line telephone services at much less than the current rates. But it is not doing that. Not only is it not offering the lower rates, but it is asking the CRTC to approve rate increases. I find it hard to understand, in a deregulated environment, how Bell or the other former monopolies could offer much better rates to consumers.

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

Suppose that we are not able to convince the minister to change his position. In that case, perhaps we could start by adopting the 127 recommendations through an order in council rather than through legislation.

If competition decreases, do you think that prices will increase for consumers in the regions and cities?

[Marie-Ève Rancourt]

I would expect the increases to affect the regions in particular. Several regions will be deregulated, and the cross-subsidization issue may well crop up. There may be some very short-term price decreases to deal with competition, but in the medium and long terms, some of the competitors will likely disappear. Prices will go up, and in the deregulated regions, prices will be very high in order to compete in regions where there are a number of competitors, which will be primarily urban centres.

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

I have just come back from the Toronto region. This morning, the gasoline price went up to 99¢ a litre because of a problem experienced by the oil companies. A few years ago, we were told that consumers would benefit. Steps were taken to amend the Competition Act. Bill C-41 sets out financial penalties rather than damages for victims of anti-competitive practices.

How do you see the future of small- and medium-sized businesses that have to deal with possible anti-competitive practices? Will the $15 million that the government receives go to help small businesses that are affected by such practices?

[Marie-Ève Rancourt]

No, that is one of the main problems. Neither small businesses nor consumers will be compensated. Ironically, when the minister announced the new policy, Bell and Telus were the first to applaud the granting of this power to the Competition Tribunal. It is rather surprising to see the companies that could be subject to the fine applauding this measure.

It should be noted that the panel did not recommend that the Competition Tribunal be made responsible for dealing with competition issues. The panel recommended the creation of a joint tribunal composed of members of the CRTC and the Competition Bureau, since the bureau had no particular knowledge of the telecommunications sector, which is extremely complex.

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

I cannot predict the future, but if Bill C-41 were introduced in the House of Commons, would it be preferable for the money not to go to the government but rather to the parties that are affected by the anti-competitive practices? Would you agree with me if I proposed an amendment to this bill that would give the parties that had suffered damages access to a portion of the $15 million, so that they could remain in the market? Would the Union des consommateurs be able to help us in this regard?