Industry Committee on Feb. 8th, 2011

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

All going through the same pipes.

[Matt Stein]

The same pipe at the same time.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

And Bell has access or sells those services?

[Matt Stein]

Sometimes. Sometimes customers may buy them from other people. You may buy your Internet from somebody and then on top of that Internet connection you may watch TV, you may have phone calls, you may video conference--whatever you're going to do.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Tell me why Canada is at the bottom. I'm looking at these scales. Why are we at the bottom of having the average broadband prices? Is that the reason?

It would seem to me what we've tried to do as a government is to encourage more competition, and if we take away that ability that you have to charge what you want to charge to your own customer, we are creating a monopoly. Have I got this right so far?

[George Burger]

You're absolutely right about it. I think the inference that has to be drawn is that there is a severe lack of true competition in this market. And even this discussion about congestion is a little bit of a red herring because the reality is that every successful business ultimately reaches a point of congestion, and what they typically do is they expand the size of the business--

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

They make bigger--

[George Burger]

--to accommodate that demand, whether it's a restaurant, a store, a pipe, anything.

[The Chair, Conservative, David Sweet]

That'll have to be the case.

Thank you very much, Mr. Burger and Mr. Van Kesteren.

Now on to Mr. Masse for five minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair, and thank you for being here today.

One of the interesting things that we had come out of the hearings from the commissioner was really the realization--I didn't know about it before until we started doing some research--that business is basically treated one way and residential customers are treated another with the UBB.

He saw no inconsistency--even if you agreed with the policy, which I don't--with a large business getting the same treatment of that as a small business. In fact, in his testimony he identified that if you're a company, you could, in terms of the Internet traffic.... There are no caps for business, and if you want to have business, you go and make your deal with your provider depending on your usage. What that meant was that you could get a preferable rate.

Going back to the residential side, or the commercial side, you have the student who is doing streaming for their classes and they are using a lot. What do you think about that position, that consumer and residential get treated different from business? Is that not inconsistent?

[Matt Stein]

In the wholesale market today, that is true. Usage-based billing has been brought to the residential market today. It has not been brought to business. But Bell is already capping their business users as well.

So in the current proceeding that we're discussing, you can say, well, it's only affecting residential subscribers; it doesn't affect business. But in fact Bell has already started capping business users, and it's already listed that way.

[Brian Masse, NDP, Windsor West, ON]

That's interesting testimony, because the CRTC has the power and is actually saying they're preventing them from doing that. It'll be interesting to look into that.

[Matt Stein]

It's on Bell's website, and when you look at Bell's business products; they do list caps and so forth. That's there today.

[Brian Masse, NDP, Windsor West, ON]

That's interesting.

[George Burger]

At the risk of bringing in any nefarious objectives, the fact is that a great deal of the growth in bandwidth usage is going to be movies and television shows. That's where the heavy weight is going to be thrown around, not so much in businesses. The reality is that because of the cross-ownership of content assets, it's very, very important to Bell to make sure that people are driven to their content assets and not to third parties. The best way to do that is to make sure residences are taxed very significantly on the bandwidth usage they use.

[Brian Masse, NDP, Windsor West, ON]

Given that UBB has been in play here--and I'm one of those people who pay extra to have higher content and higher streaming--the model clearly isn't working. The incentive to actually build a stronger pipeline isn't there.

How is it that we end up down on the bottom here across these charts? Is it partly in response to the 2006 mandate change? Is that possible, that it had an impact?

[George Burger]

My view is that the dominant position that the incumbents have had when it comes to dealing with the CRTC has really not changed very much over the last 20 years. I think part of the bottleneck has to be with the way the CRTC is dealing with these issues as they arise.

There's been a consistent tendency to be more receptive to the points of view of the incumbents. And even when there are purported compromises in the decision of the CRTC, they're not real compromises; they're really cutting the baby in half and giving both parts to one side.

[Brian Masse, NDP, Windsor West, ON]

With regard to the review that's taking place right now, it's still going to be done under the old mandate, so I'm not hopeful much is going to change. If you look at what the CRTC put out today, it's still under the same terminology. What do you think about that? I'm concerned we're going to have some other model, or a hybrid model, if anything, come back because the mandate hasn't changed.

[Jean-François Mezei]

As an individual, I've spent many countless hours and nights and I don't know how many dozens of cans of Red Bull to stay awake to write submissions over the last year and a half. There have been five decisions already, always in the same direction, from the CRTC. We've had hope that eventually the CRTC would wake up and see the truth and reverse its decision. It never happened, to a point where I submitted a petition to the Governor in Council because I had lost hope that the CRTC would ever realize what it was doing.

Without a strong message from the government, I don't think the CRTC will change direction. It's been a year and a half, with five decisions already on this. I don't think they're going to change direction.

[Rocky Gaudrault]

For what it's worth, it's really good that Konrad and the CRTC commissioners have decided to take this on in a different light. The fact that it's gone back is helpful. You're right, it does seem to lead a little bit, but as this is the pre-phase of the hearing and they're asking for submissions on how they would structure it, one would hope the input will change how it currently is set.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Gaudrault.

Thank you, Mr. Masse.

Now we'll go on to Mr. Rota for five minutes.

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

Thank you, Mr. Chair.

Thank you for coming out.

I'd just like a little bit of clarification. I'm going to follow on Mr. Van Kesteren's questioning. For the average person looking at this, it's counter-intuitive. You're saying the ISPs are taking Bell's backbone. They're using it and they're competing against Bell. Maybe just to clarify, why would that be allowed, and what is the intent of that? That's something that is very clear.

I take it back to long distance, which eventually led to lower rates and it led to a more open market.

In your own words, can you explain to us why it's favourable to have individuals use Bell's backbone to compete against it? I'll let you finish that sentence and maybe touch upon the barriers to entry that exist on such a business.

[Matt Stein]

Over the past number of years we've invested very heavily in building our own network, as I mentioned earlier. Even with that investment we've made, of millions and millions of dollars, we're still in a position where many customers, even where we've built, are unreachable because the last mile, that connection to the home, is only reachable with proper speeds by Bell.

Therefore, if what you want is a competitive market, you need to give competitors access so they can get in, so they can compete. That does create more choice and lower prices for Canadians.

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

So it would be fair to say that if we just left it open, there really wouldn't be much of an incentive for a duopoly or a monopoly to really develop at a good speed to provide services to places like where I come from—northern Ontario—because really we don't have a dense population there. Is that fair to say?

[Matt Stein]

I think that's fair.