Industry Committee on March 21st, 2007

[Sophie Léger]

The issue is not only price, but quality as well. On this issue, the coalition and myself largely share Ms. Gordon's opinion.

One very important point we have raised here today is network neutrality. That point is also being debated in the US. If we let infrastructure owners prioritize packets, be they those of companies that pay the most or those of their affiliated companies, those will be the ones to keep the most customers.

At the same time, we might end up with the issues Ms. Gordon mentioned. If someone is a customer of a VOIP system, say with a third party, which the incumbent has not prioritized on its network, VOIP service could be seriously degraded. In fact, that customer might lose access to all VOIP advantages. But the issue is not VOIP alone. We still do not have TV over the Internet—TVOIP. We have not seen all those services yet. Yet, we agree that the future is with IP technology.

This is why the coalition believes that the infrastructure itself is an essential service. That is the crux of this debate—the infrastructure must be properly regulated to ensure that all Canadian consumers can be guaranteed quality and access regardless of where they live.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll now go to Monsieur Crête.

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

Thank you, Mr. Chairman.

Thank you very much for your comments.

My question is in two parts. I would like quick answers from each of you.

First, what repercussions will the minister's decision have on your organization or the people you represent? If we stay on this path, where will we be in three years?

Second, should we start from scratch, take the report of the Telecommunications Policy Review Panel, and establish a comprehensive legislative framework?

I would like each of you to answer both questions, in one or two minutes, please.

[Robert Proulx]

I'll begin.

Obviously, a small company like ours or like the Internet providers Ms. Léger represents, is sensitive to what I would call targeted competition. Since our market is fairly small, there is no question that someone who really wants to eliminate us could do it. Full deregulation, with no limitations on unfair competition, would push us out of the market completely.

Our company's sales figures amount to some $10 million a year. We serve some 100 communities and generate 60 to 70 jobs in the regions. Since there are no limitations to protect us, we could easily be pushed out of the market.

One thing is important for us, and we believe that thing should be considered at all times. Regardless of whether there are regulations in place, there must be some assurance that no unfair competition takes place, and that small players are given the opportunity to participate in the market. Obviously, small companies will not have the means to fight the major companies. So we need support there.

With regard to the second question, we completely agree that we should start from scratch, to ensure that all recommendations on deregulation are implemented in an orderly fashion, so that we don't end up throwing out the baby with the bath water. We can look at the major cities, where the major players are very aggressive, but we know that some 80% of Canada's rural regions are not served by those major players.

If we are not very careful with deregulation, the situation in rural areas could well get worse. We must actively ensure that does not happen.

[Patricia MacDonald]

For us, I would see the biggest impact on the consumers I represent is that people just will no longer be able to afford a phone at the rates that I had earlier addressed in my opening comments.

For someone who is on a disability income, if they're paying $55 a month, that could be potentially 10% of their income. It simply wouldn't be affordable. It would be the choice between food and housing and a telephone, so they would rely on the remaining pay phones that are left out there, and they certainly wouldn't have any access to the Internet at all.

So I'd like to go back. I think that's the appropriate way to proceed until competition has really taken a firm grip and we actually see it. It's not likely, given what I've heard, that we are going to go back, but that doesn't mean those recommendations shouldn't be made if you have the evidence before you to show why they shouldn't be made. And I say that to protect consumers. Perhaps something should be done and some recommendation should be made.

There are the lifeline programs in the United States that might be interesting to look at. These programs protect low-income consumers, particularly. I would refer you to a report commissioned by Human Resources Development Canada in 2002. It is by Philippa Lawson, former counsel at the Public Interest Advocacy Centre. She describes these in detail. I will provide that to the clerk.

[The Chair, Conservative, James Rajotte]

We have about two minutes left, so we can have the three of you in the two minutes.

[Phyllis Gordon]

I think that for people with disabilities telecommunications is their lifeline. It is the way of communicating and connecting, whether it's through your computer or your telephone. Without connection, people will be more and more isolated and will be less and less employable.

It is the government's view that we should be assisting people with disabilities and not creating increased barriers. It's our view that without really standardized approaches to telecom in the level of accessibility, both at the network level design and the terminal equipment design such as exists in the United States, we will be really going backwards.

I want to point out that there has been an organization for 30 years in the States called the Access Board, which sets regulations. It's currently reviewing all the standards for section 508 under the rehabilitation act and section 255 under the telecommunications act in the States, both of which are very powerful instruments that lead to accessible telecommunications in that country. It really seems quite backward that we should be jumping ahead wholesale, without looking seriously at these issues. We must go back, if we can, to really examine seriously the report from the panel.

The disability community really needs time to adjust, to hear, and to participate. Quick action by the government now will really cut out the public debate. This is not in the front pages of the paper. We're a little two-person group trying to get the issue on the disability community's platform. If the government goes too quickly, it will really undo a great deal of important work and leave people in more isolated lives.

[The Chair, Conservative, James Rajotte]

We're right out of time. Perhaps I'll let Ms. Léger have a comment.

I'm sorry to do this, but perhaps I can remind the witnesses that each member is given a very short period of time.

If you do all want to speak, you will have to be very brief in your comments. Mr. Crête only has six minutes, so you have to speak for one minute each.

I will give Ms. Léger a bit of time here.

[Sophie Léger]

I will briefly answer the first question.

Three years from now, we would effectively see the disappearance of competitors who are using wholesale services today. They would stop offering service to their customers.

In response to your second question, we recommend examining the entire process. All Canadian consumers would have too much to lose if the recommendations were to be implemented on an ad hoc basis. That would be going backwards, taking risks in terms of security, and blocking innovation in the future, because the small companies and groups that we represent today are the source of this innovation.

We should perhaps stop the process and review it in its entirety.

[The Chair, Conservative, James Rajotte]

Okay.

I'm sorry, Mr. Beaudoin, but we're well over seven and a half minutes here, so we'll move on to Mr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I want to thank all the witnesses for attending this afternoon.

In my former life I was in the health care field as a chiropractor and I had the honour of treating many people with disabilities, particularly arthritis, so some of the things that you're bringing forward, Ms. Gordon, are of particular interest to me.

The CRTC decided in the deferral account decision that 5% of the deferred account funds had to be used to help people with disabilities. I was wondering whether you are satisfied with that CRTC decision. What do you think of it?

[Phyllis Gordon]

We were a party in the decision. On whether we are satisfied with it, $34 million for the disability community is more than we have ever seen. We've never had a positive order like that in Canada. It felt like a victory on a large-scale level.

The decision is in the courts now. The CRTC is looking at it again. It's going on and on. The disability community is organizing and holding meetings to figure out how best to make submissions, but overall it was not our proposal. We thought that rather than leave the money with the companies, the $34 million or more should be used to set up a true fund that would be available to the Government of Canada or some third party to administer to kick-start the industry to develop accessible and assistive devices.

In terms of time, Chairman Rajotte will jump on me if I answer your question in any more detail. I could talk for hours on the deferral account.

[Colin Carrie, Conservative, Oshawa, ON]

I am curious to know, and I think everybody here is curious to know, if you are satisfied with it overall.

[Phyllis Gordon]

I'm moderately satisfied.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much. That's great.

I want to direct my other question to Madam Léger. Some of the statements you made concern me very much. It might have been the translation, but I think you mentioned that the CRTC told you it was controlled by the ILECs. Who at the CRTC told you that?

[Sophie Léger]

They are not controlled by the ILECs. What's happening is we obviously used the road of the CRTC in some actions and discussions with the various ILECs. In some of the decisions, the CRTC staff members told us it was beyond their control. Lobbying by the ILECs and cable companies is so strong and is putting political pressure on the CRTC staff members to either delay processes or the part seven we submitted took eight to nine months to be solved without any success. That's a reason we heard from the staff members themselves, and that's why we decided two years ago to jump.

[Colin Carrie, Conservative, Oshawa, ON]

It is concerning me, because we've had people from the CRTC here and they seemed to behave very appropriately. They're very good regulators. Are you saying they're not impartial and they can be bought in some way?

[Sophie Léger]

We are saying that the answers we got and the timelines in which we got them were not reflective of the motivation or what the staff members would have done if they had been totally free in their actions.

[Colin Carrie, Conservative, Oshawa, ON]

So staff members are implying that they weren't able to be objective in this way.

[Sophie Léger]

Yes.

[Colin Carrie, Conservative, Oshawa, ON]

You also mentioned that the Competition Bureau could not give objective data to the CRTC. Is that because you disagree with the Competition Bureau? Why is the Competition Bureau not objective, in your viewpoint? Could you elaborate on that, please?

[Sophie Léger]

I'll refer you to the two paragraphs we took from the evidence submitted to the PN 2006-14 made by the Competition Bureau. It is very disturbing to us that the Competition Bureau has an opinion right now that is not in line with Industry Canada's view.

The Competition Bureau says that wholesale access services should not be kept in the future in the telecommunications industry, while Industry Canada, in Minister Bernier's last comment on February 19, came back and said it had reviewed it, and in its view wholesale should be protected and kept as it is right now.

The Competition Bureau also stated that the current facility-based competition was the only way to be very competitive and the only way there will be an incentive to build additional facilities. We obviously have members that have built infrastructure right now, and we have wholesale access.

So the Competition Bureau made some very strong assessments. You can read the two paragraphs on your own, and they show that. It's very concerning to us that the Competition Bureau already has an opinion on that.

[Colin Carrie, Conservative, Oshawa, ON]

You're saying they have to be consistent with Industry Canada in order to be impartial.

[The Chair, Conservative, James Rajotte]

This is your final question.

[Colin Carrie, Conservative, Oshawa, ON]

Is that what you're implying here?