Industry Committee on Feb. 3rd, 2011

[The Chair, Conservative, David Sweet]

Mr. Masse, we've actually run out of time. I'm just giving Mr. von Finckenstein a little bit of time to answer your question.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

[Konrad W. von Finckenstein]

Bell's cap in Ontario is 25 gigabytes, and in Quebec it's 60. The average use is 15, so there's a big difference there. There's a huge amount of homes between those two.

[The Chair, Conservative, David Sweet]

Thank you very much.

We'll now go to the Liberal Party. This is a five-minute round.

Mr. Rota, for five minutes.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Mr. Chair, before the clock starts, if you don't mind, I'd like to make a point of order.

There have been a lot of figures brought forward. A lot of them could be very useful to us in our deliberations. I was wondering if Mr. von Finckenstein could table those figures so that we could use them. The usage rates would be the ones that we would ask for.

[Konrad W. von Finckenstein]

I will gladly do that.

I mean, the key figure is in my statement, which is right in front of you, the one about the average use by Canadians in 2009 being 15 gigabytes per month. But I will gladly give you further details on usage.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

That would be ideal.

[The Chair, Conservative, David Sweet]

Yes. If there's anything that would correlate with that as well, perhaps you could table that with the clerk. That would be great.

Go ahead, Mr. Rota.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Very good. Thank you, Mr. Chair.

Again, thank you for being here today.

Now, traditionally the role of the CRTC has been one of balancing the interests of consumers, business, and innovation, making sure that it all works well. It's not an easy role. There's a lot of respect for the CRTC.

The CRTC really relies on the direction the government sets. I understand that in 2006 the government issued a ”first of its kind” policy direction on telecommunications for the CRTC for greater reliance on market forces. The main guiding point up until that time was market share test, I understand.

Can you give us a quick synopsis of the difference between the two? Perhaps you could give us just the major differences between the two.

[Konrad W. von Finckenstein]

You're talking about something that was before my time, first of all. I wasn't at the CRTC in those days. Also, don't forget that it's a different industry. We have competition in the telecom industry. The telecom industry originally involved monopolies, and there were rate regulations, etc. There has been a transition from one to the other. It has been a very difficult transition because the industry has grown from a monopoly provided with rate regulation to an industry where there are multiple competitors. It's not an easy task, and it's gone all over the world. People have experienced trouble making that transition. Nonetheless, the transition has been incredibly beneficial. We have seen an explosion in telephone usage and innovation as a whole, the development of not only the Internet but wireless phones and now other wireless mobile apparatuses.

I don't know to what extent it would serve any purpose to go back to a time when regulation was based on a different industry, but if you want, I can ask my colleague who was at the CRTC to explain it. I wasn't there.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

One of the main points I was looking at in the market share test was the reference to geography. Geography is a very important issue to me. I come from northern Ontario. It's a vast, expansive land and is very sparsely populated. I have to chuckle when I hear some of my colleagues from larger centres talk about our right to electricity and gas. I assume they're talking about natural gas. There are large parts of my riding and large parts of northern Ontario that do not have access to natural gas. That's something that concerns me.

What I was getting at is, how would the decision arrived at today or in the last year have differed had it been the old test versus the new test? Maybe that's something Ms. Fancy could answer.

[Lynne Fancy, Acting Executive Director, Telecommunications, Canadian Radio-television and Telecommunications Commission]

The specific test you're referring to was limited to the forbearance criteria as to when we would no longer regulate the retail rates for local phone service. The commission had originally made a determination that we would no longer regulate retail rates when the market share of the competitor was at a certain level. At that point, we used the criteria that is in the Telecommunications Act in order to decide whether or not we should no longer regulate. The policy direction applies to all services and all decisions the commission makes. Today we still would determine whether or not to regulate the retail rates of something based on exactly the same test, which would be the test in the Telecommunications Act.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Very good.

On a different note, I understand that IPTV was exempt from the caps. What was the rationale behind that?

[Konrad W. von Finckenstein]

It was because IPTV really is not part of your Internet service. It is a separate service. You're not getting IPTV over the Internet. If you talk about Netflix or Google TV, yes, they come over the top. It is called over-the-top TV. With IPTV, basically there is a pipe and it is divided into various sections. There is one section that is public Internet and everything, and there is another section that provides a specific service. The cable company provides IPTV over that the same way the cable company provides a cable customer telephone service and also Internet access over the same cable.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Very good.

When you came to a decision among the commission, was there any dissension among the board members?

[Konrad W. von Finckenstein]

Which decision are we talking about now?

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

The decision on the usage-based billing.

[Konrad W. von Finckenstein]

Yes, I believe one of my--

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

What was that dissension? What were the arguments opposing that?

[Konrad W. von Finckenstein]

It's very technical language, and I'll try to simplify it. Essentially, they said that right now we insist that each customer of an ISP who goes over the limit pay the extra charge, or that the ISP charge them on a per customer basis. She said why not allow some averages there. The easiest way to explain it is to give an example.

You have three customers. The cap is 20 gigabytes, let us say. One uses 25, one uses 15, one uses five. If the cap is 20, obviously with three customers it would be 60. Add the usage of the three of them up and they don't go over 60, but the one that used 25 went over the cap and therefore should pay. In the scenario if you average it out, you would only have to pay if they went over 60.

There's another way of doing it. As I mentioned in response to a question from Mr. Van Kesteren, that's undoubtedly something that will be put to us, and we will have to think through how it works and how technically difficult or easy it is to do that. It will require probably a whole different system of measuring and accounting.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Okay.

[The Chair, Conservative, David Sweet]

Thank you very much.

Now we'll go to Monsieur Généreux pour cinq minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chair, and thank you to our witnesses.

In the regions, we have been working for a long time to ensure that these services are offered to all citizens. Regionally, provincially and federally, we want such services to be accessible to all Canadians. Let's say that I am a farmer, that I live on some concession road in Quebec and that I have had Internet, for example, for a few months, or for a year or two. Given the decision that you made last week, what is the difference between the price that I would have had to pay for this service and the one that I will now have to pay? Is there really a difference? Do you view farmers as business people?

[Konrad W. von Finckenstein]

I cannot answer because I do not know who your provider is and I do not know whether or not you have subscribed to this service as a consumer or business person. I would imagine that, if you were a farmer, you would have subscribed as a business person. So it would be up to you to decide whether or not the service should only cover your residence or your farm activities as well.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

So I should therefore not be affected by that.