Industry Committee on Feb. 10th, 2011

[Mirko Bibic]

That is correct.

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

Thank you.

I'll let Ms. Coady take over.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Thank you very much.

Thank you to Bell for the mental health day the other day. It was very well done.

And thank you all, gentlemen, for being here.

Mr. Bibic, in an article you published in the Financial Post in early February, you stated that “Canada has increasingly become a world leader when it comes to broadband”, both in speed and low cost. Yet time and time again we hear that's not exactly the case.

Let me tell you about TekSavvy, which was before us the other day. They showed us a chart that showed that among the 30 OECD countries, Canada ranks 25th for download speeds and 23rd for the cost of broadband.

So my question to you is which is it. Are we a leader or a laggard?

[Mirko Bibic]

That is a great question, and thank you, Ms. Coady.

If you take a look at the chart that TekSavvy presented, this is an old OECD study, and the odd thing about the old OECD study is that it indicates that Canada's fastest speed is 16 megabits per second. Well, Canada has far faster speeds than 16 megabits per second, so they have a sampling error.

I actually would like to turn it over to Shaw and they can explain to you what speeds they have in Canada, and it's far more than 16.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

I would love to have the fullness of the explanation, but that's going to have to suffice, based on time.

[Ken Stein]

The study is wrong. The information they gave you is old and it's out of date and it's wrong.

And the Department of Industry is actually working with the OECD to come to a more rational explanation of what our speeds are and what our capacity is.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Thank you for that.

[The Chair, Conservative, David Sweet]

I'll stop Madam Coady's time.

Just for clarity, because I know the calibre of testimony we need here is excellent, can you table, then, documentation about the actual standing—

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Yes, thank you. I was about to ask.

[The Chair, Conservative, David Sweet]

—that this country has vis-à-vis other G-8 and G-20 OECD countries?

[Mirko Bibic]

Mr. Chairman, I won't belabour this, but attached to my opening statement we have charts that show the rankings.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

I saw them and that's why I asked the question.

[The Chair, Conservative, David Sweet]

And here's just one last thing. I haven't seen them. Are the sources on those charts?

[Mirko Bibic]

In our case, we've footnoted every source.

[The Chair, Conservative, David Sweet]

Madam Coady, I'll start your time again now.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Thank you very much.

And I apologize. We have only such limited time. But I want to give you the opportunity. In the last group we had before us we heard that “Bell already recovers all costs plus prescribed markups”.

The other day we heard from John Lawford of PIAC, and he said that:

Bell is compensated for the traffic it carries on its network for competitive ISPs. The CRTC has set rates, based on Bell and other ISPs' costs, that fully compensate Bell.

So there is a concern here that you're fully compensated for your wholesale costs and that UBB is actually penalizing people. Could you just give us a comment on that, please?

[Mirko Bibic]

We're certainly not trying to penalize anybody. We just want to make sure there is fairness in our billing system, so that the vast majority of users don't subsidize the heavy users.

The problem with those allegations is that we fully recover our costs, and this is a tough business, and the payback periods are very long. The difficulty is that those allegations wish away the billions that need to be spent to build the networks—the engineering costs, the construction costs, the equipment costs, the employee costs. You can't just wish away those costs, and we have to recover all those sunk and fixed costs over a long period of time.

[The Chair, Conservative, David Sweet]

Thank you, Madam Coady.

Now we'll move on to Mr. Lake for five minutes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair.

We know network congestion is only an issue, of course, during peak usage periods. You said those peak usage periods are in the evenings. If this is true, of course it follows that a movie that's downloaded at 1 p.m. should have no effect on your network.

Have you considered at all a compromise where UBB is only used during peak periods? Or what other compromises have you considered?

[Ken Stein]

I can respond to that. The first thing is that that's a draconian kind of step. It would involve more investment in the system, to no real advantage to our customers. Because we don't want to meter every minute of their day and how they're using the system, our system is not designed to do that.

You know, 90% of our customers do not exceed their package bandwidth. When we talk about speeds and the OECD study, our top package, which is called Nitro, has a download speed of 100 megabytes per second. So we have packages available to our customers to ensure they don't exceed their usage allowance and to ensure they get the kind of satisfaction they want. It's the 10% of users—whether it's prime-time or non-prime-time or whatever—who account for 60% of our network traffic.

That's the problem we have to deal with, because to go into a senior resident area in Vancouver and basically say to them that we're going to have to double their rates because we're building out a new system serving the area of the University of British Columbia just doesn't make any sense to us.

So we need to get a balance in terms of what we do and how we offer packages to our customers. That's what we're trying to do in all this. If we tried to get into more sophisticated technologies to say that some people downloaded a movie between one and two o'clock in the afternoon and others downloaded at seven or eight o'clock, we'd get a lot more complaints from people saying they're not home in the afternoon to download a movie; they're home at seven at night.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

What if one of the independent service providers wants to build a model like that? What if one of the independent service providers wants to say, hey, the system's not being used to its full capacity at one o'clock in the afternoon? And if you're one of those, whatever, 10% of users who uses a lot of bandwidth, if you use it at one o'clock in the afternoon, what difference does it make? What's the cost to you?

[Ken Stein]

The cost would be traumatic.

It doesn't provide a better service to the customer.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

The cost is traumatic for a user downloading lots of information at one in the afternoon? That cost is dramatic?

[Ken Stein]

No. I'd have to know when they're doing it. I'm not in a position to know when they're downloading.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

But what if one—