Industry Committee on March 13th, 2008

[Jim Prentice, Conservative, Calgary Centre-North, AB]

You have received that letter. It is a provision regarding the confidentiality of this subject. I am the person in charge and I am going to make this decision under the Act.

[Robert Vincent, Bloc, Shefford, QC]

Fine, I will move on to a second question.

[The Chair, Conservative, James Rajotte]

This will be your last question, and it will have to be brief.

[Robert Vincent, Bloc, Shefford, QC]

How much time do I have left?

[The Chair, Conservative, James Rajotte]

You have less than a minute.

[Robert Vincent, Bloc, Shefford, QC]

Fine.

The federal government has injected $45 million into the development of the satellite, $155 million into other MDA projects and $30 million into national security. After all that, are we going to sell the RADARSAT-2 satellite? After the satellite is sold, do you believe there will be more than mere monitoring of the territory? Is this a back door to joining the United States' anti-missile defence program, the anti-missile shield?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

This is a proposed agreement between MDA and ATK, it is not an agreement with the government of Canada. My responsibility, under the Investment Canada Act, is to consider and deal with that question.

[The Chair, Conservative, James Rajotte]

Merci, Monsieur Vincent.

I'll go to Mr. Stanton, please.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

I'll just ask a short question and I'll share my time, if I can, with Monsieur Arthur.

Mr. Minister, one of the announcements you made last fall concerned the advanced wireless spectrum auction. This was an announcement that presumably impacts on telecommunications companies, but also on consumers. Could you give us a snapshot of how those benefits are going to roll out for each of those stakeholders?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

I'll be pleased to do that.

Before I do, I might point out for the benefit of Mr. Brison that in response to his question earlier about Mr. Phil Murphy and whether there had been any meetings or discussions between me or any of Mr. Boothe, Mr. Legault, or Mr. Dicerni with Mr. Murphy—and I said no, absolutely not, and that is the case—I have asked my staff in the meantime to confirm whether there had been any other discussions.

I would advise you that one of the staff in my office, Leanne McIntyre, had a meeting with Mr. Phil Murphy on October 4, 2007. This, of course, is some time ago, and I'm advised that it was part of a general introductory briefing.

I just wanted to be fair in responding to your question. That's the best information I have of the only meeting that transpired.

Going back, if I may, Mr. Chair, to AWS, on November 28, 2007, we released the policy framework for an auction for advanced wireless services. Of course, we've been looking for greater competition and innovation in the industry. As I said at that time, and still feel quite strongly today, the objective is lower prices, better service, and more choice for consumers and businesses.

I should say parenthetically that we started from the premise that radio spectrum is a finite resource, a defined resource that is valuable and is used by all Canadians. It is in a sense a public good that is owned by Canadians. The decisions with respect to the deployment of it need to be made in the best interests of all Canadians.

We made those decisions when we announced the framework for the spectrum auction in November. In the time since then, we have been proceeding with the consultative process that is required. We've received over 60 written submissions and have also considered the advice of the telecommunications policy review panel.

So we are moving forward and will be dealing with the actual auction on the timeline that was previously indicated. We are very much looking forward to achieving those objectives of lower prices, more choice, and better service for Canadians.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

The time for Mr. Arthur is two minutes.

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

Minister, regarding the new wireless spectrum auction, you have the choice of reserving frequencies for new entrants, as you have been asked to do, or making all these new frequencies available to everyone in the auction. At a certain point, you had two options: generate higher revenue for the government of Canada by not reserving frequencies or allow new entrants to have access to this technology.

Could you explain to us what reasoning you used to reach your decision? How do you justify it, in your own mind?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

Certainly. I am going to ask you to be patient and answer in English, given that this is a very technical subject.

The important decision of how to allocate AWS spectrum was made by me, with the advice of the department, following an extensive process of deliberation and consultation.

I received legal advice shortly after I became the minister that it would be prudent to consult extensively with the players in the industry. Further to that advice, I met with the individual CEOs of six or seven, as I recall, different players in the telecommunications industry. I afforded each of them an equal amount of time to explain their perspective. I was a new minister and I wanted to make sure I understood where they were coming from. I also read everything I could about the industry, and I spent an enormous amount of time with the department getting further details.

I came to the conclusion, not at any single point in time but gradually, that we needed to ensure through the AWS auction that Canadians received the benefit of their AWS spectrum, because it is a public good that is owned by the citizens of Canada, and that what was in their interest was lower prices, more choice, and better service. I strongly formed the view that the way to achieve that was with a set-aside that is reasonably modest in terms of the overall amount of spectrum that is publicly deployed on a commercial basis but that nonetheless would achieve the objective of more competition and thereby lower prices, more choice, and better service.

I note that virtually all the auctions, whether you speak of Canada or our industrial competitors, the United States, England, and so on, have had some mechanism to achieve new entry. A set-aside is one such mechanism. It's not the only mechanism. There are other public policy steps that different governments have taken. I won't bore you with the details, but they have all been targeted to achieve the same thing, which is new entry.

I would say in closing that the very first auctions in Canada were actually targeted to do exactly that, and in fact all the incumbents in the telecommunications industry in Canada currently hold spectrum that they acquired by way of set-aside.

[The Chair, Conservative, James Rajotte]

Minister, I'm sorry I have to cut you off, but we are over time.

We'll go now to Ms. Nash, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you. Mr. Minister.

I'm told that a Mr. Montenegrino from Lang Michener, who has represented the Prime Minister and several senior Conservatives, including cabinet ministers, is a lobbyist for ATK in this deal. Can you confirm that?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

To respond to your question, I know the individual of whom you speak. He is a lawyer. I don't know if he is registered as a lobbyist; I haven't determined that. I don't know who his clients are necessarily. I don't know if he represents MDA or ATK. You'd have to ask him that.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Have you met with him? Have you had a discussion with him about ATK, or has any member of your staff had a discussion with him?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

I saw him at the shuttle launch several days ago. There was a reception several hours before the launch, where I gave a brief speech. I was there along with Steve MacLean and Julie Payette, two of our astronauts. There were about 50 or 70 people in the room, who were Canadians and who were associated with the shuttle launch. He was there. I spoke to him very briefly and only socially. He introduced me to the individual who, as I recall, is the president of MDA, but I spoke only socially and only very briefly--not about any substance whatsoever.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Has he met with your staff about the sale of MDA to ATK?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

He certainly has not met with Mr. Dicerni, Mr. Boothe, or Mr. Legault, to my knowledge, no. I'll certainly verify that.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

You spoke earlier expressing some excitement about the future of Canada's space industry. So, again, I'd like to ask this question. If you think highly of Canada's space industry, why has your government refused Europe's request to help build the Mars Rover?

And why has Canada not funded the RADARSAT Constellation? Are you concerned about the brain drain of all the incredible expertise Canada has, which we will lose if we fail to fund these projects?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

We have been a leader in space. It is an area where we have punched above our weight, to use an expression.

[Peggy Nash, NDP, Parkdale—High Park, ON]

I think that's true of the past. My question is for the future. We're looking at a lack of funding for projects that are on the books, which are crucial to Canada's involvement in the future of the space industry. This government has not stepped up. I'm wondering how you can explain that.

[Jim Prentice, Conservative, Calgary Centre-North, AB]

I understand the question. I don't agree with the premise that the government has not stepped up.