Evidence of meeting #56 for Industry, Science and Technology in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bell.
A recording is available from Parliament.
3:50 p.m.
Conservative
The Chair Conservative David Sweet
Thank you very much.
Now we're going to our media link, with Steve Anderson from OpenMedia.
Mr. Anderson, five minutes, please, for your opening remarks.
3:50 p.m.
Steve Anderson Founder and National Coordinator, OpenMedia.ca
Thanks for having me. I'm surprised that I've been beamed in for this; it's probably going to cost you in overage fees. But thanks for having me, nonetheless.
I'm here as an Internet user, and one of half a million Canadians who have signed the “stop the meter” petition. I want to start with something a little different—a personal story.
Several years ago I was living at home with my parents, and I really wanted to get involved in media-making and being a video producer. I took it upon myself, because I felt passionate about the issue, to try to learn how to produce videos. With Windows Movie Maker, a free program, and by picking up content on the Web, editing, and teaching myself the process, I produced a video that eventually went on YouTube and was viewed by 500,000 people. I subsequently got a job in the video production market, and I ended up winning a couple of awards. Later, I was able to develop my own non-profit organization.
I tell that story because if we had usage fees in place—what we're talking about, what the big telecom companies want to impose on independent ISPs—there's no way I would have been able to do that. There's no way I would have been able to innovate in that way, and there's no way I would have been able to do that from the ground up. Canadians across the country have stories like that. That's the kind of innovation that is under threat right now.
As far as I'm concerned, these new fees are basically a tax on innovation.
I'd also like to give a bit of context to the public outcry that led to this process. It's not just that there are new fees. It's not just the ridiculous idea of forcing their competitors to adopt these new fees. It's also that Canadians face some of the highest prices in the cellphone market. They pay some of the highest prices for Internet access. We're not keeping up with other industrialized countries. We're becoming a digital laggard. We face bad customer service, because that's what comes with a monopolistic industry.
I think it was just yesterday that Bell had to reveal that their metering service doesn't really work. That's a case in point, that the company would impose that billing structure without even knowing if their service worked properly. They might even be overbilling people.
It's within that context that people are really upset. They have decided to draw a line in the sand with this issue. I think that should tell everyone on this committee, and our representatives, that we need structural change in the market.
As another example of the structural problem we have, if you look at the reactions of Bell in particular to this public outcry, and other big telecom companies, they attack their own customers. In what other industry do you see that? Public relations 101 is that when you have a big problem with your customers, you admit fault.
That's not what they did. In fact they were elitist and condescending and disrespectful. That's not something you can do unless you dominate a market and you have captured the regulator. If you ask people why they're so upset and engaged, it's that context.
We're also talking about musicians, grandmothers wanting to share photos, gamers, and people connecting with their family over Skype. The reasons they're so concerned are as diverse as the country of Canada.
Beyond that, in a world that can seem precarious, both economically and ecologically, the Internet represents opportunity, free expression, and hope. Open communications hold a possibility that our own ingenuity and creativity could lead us to a better world. It allows self-determination—the best idea to win. It is this opportunity that I think people want to protect, and it's this that is under threat.
In terms of specifics of what needs to happen here, what I think and what I'm hearing from Canadians is structural change. We need to give full autonomy to independent ISPs in their billing. They should be empowered to have more control over their services through open-access policies.
UBB is really a symptom of a larger problem of market concentration, and that's really what Canadians are angry about. I didn't mean to talk about vertical integration. I hear people on the Internet saying that Internet congestion is really Netflix prevention. The reason they're saying that is that Bell and the other big telecom companies have their own TV offerings, and when they add new fees to the Internet, it pushes people back under their TV services and pushes them away from competitors online. The fact is, there shouldn't be that kind of dominance in two industries.
3:55 p.m.
Conservative
The Chair Conservative David Sweet
Mr. Anderson, I'm sorry, your time is well up. I gave you some leeway, as I did with the other witnesses. We'll have to go to questions now, and I hope you'll be able to squeeze your other points in on questions from members.
We have two panels today and lots to do.
Mr. Rota.
February 10th, 2011 / 3:55 p.m.
Liberal
Anthony Rota Liberal Nipissing—Timiskaming, ON
Thank you.
Thank you all for being here today.
People sometimes ask about competing, buying bandwidth off of a major player and then competing against that player. It seems to be a little counter-intuitive at times, and people look at it and wonder why this is allowed to happen.
The reason is, when you have a duopoly, a monopoly, or even an oligopoly where you have major players controlling a market, the only way to get competition is to have competition created. This helps consumers. I believe that's what we're hearing from many of our ISP producers.
So, really, it is a benefit to producers to have that competition. I think that's probably one of the most important things that we have to bring forward. Without the competition, you have a duopoly and basically there's no competition. That's not healthy for the market.
The 2006 policy directive seems to be squeezing small operators out of business. I understand that Bell requested a discount of 25%. You requested 50%. The CRTC ended up giving you 15%, and that was after giving Bell further concessions. The process was driven by the policy directive. The idea was that with less regulation the market would decide the most efficient outcome. Without competitors having fair access through the market, it doesn't have the chance to choose anyone but the major player. I guess that's where we are today.
I understand a Conservative minister gave that policy directive, which neglected the needs of small operators such as yourselves. Were the series of decisions that have been made and given by the CRTC detrimental, or were they beneficial? How did that lead to the situation we're in right now?
Mr. Tacit.
4 p.m.
Christian Tacit Barrister and Solicitor, Counsel, Canadian Network Operators Consortium Inc.
Thank you.
I'd like to address this, because there's a lot of discussion about the policy direction and its influence. If you read the document, it's pretty neutral in its language, and it's really up to the CRTC to put flesh on the bones.
On the question of access, according to the wording, if the rules relate to access to networks, they're supposed to enable competition from new technologies and not to artificially favour either incumbents or competitors. In our opening remarks, we pointed to the two main problems leading down this path. Those pre-dated the policy direction by six to seven years.
So the problem is that the commission has been looking at wholesale regulation, at least insofar as broadband is concerned, through the wrong lens. That's really where we're at. I'm not going to repeat why, because we've said that in our remarks, but that's really the issue.
4 p.m.
Liberal
Anthony Rota Liberal Nipissing—Timiskaming, ON
Should the lens be through technology, or it should be through...?
4 p.m.
Barrister and Solicitor, Counsel, Canadian Network Operators Consortium Inc.
The lens should be through looking at broadband access as a platform and not as analogous to the incumbent's own retail Internet service. The second point is that but for the fact that we have to buy this last-mile piece from the incumbents, we would be putting the other pieces together ourselves—buying, leasing, having networks. We need to be treated as co-competitors and not conceptually as resellers.
If the mindset on those two points were not there, we would never have had these decisions in the first place.
4 p.m.
Liberal
Anthony Rota Liberal Nipissing—Timiskaming, ON
So you're almost separating them into two separate businesses: someone who operates the backbone, and someone who retails. Would you have the two separated completely?
4 p.m.
Barrister and Solicitor, Counsel, Canadian Network Operators Consortium Inc.
Whether we get there, if there's no other remedy some time in the future, is another question. I think we can start with less-severe measures right now. But the commission needs to do a u-turn, as far as we're concerned, to make this competitive marketplace work and give full effect to the intent of the policy direction.
4 p.m.
Liberal
Anthony Rota Liberal Nipissing—Timiskaming, ON
One of the questions that comes up often and I keep reading about is the aggregate UBB. That would let you carry on with business as it is right now. So to clarify what the aggregate UBB is, you would buy a portion of that pipe and apportion it out yourself, as opposed to bringing it down to a micro-level.
I understand that the argument coming from the providers is that usage keeps increasing--some are saying it's by 40%, 50%, or 100% per year. How does the aggregate UBB solution get you beyond that?
4 p.m.
President, Canadian Network Operators Consortium Inc.
The solution is actually very simple. Today we buy pipes to the incumbents over which this aggregate UBB is delivered, or all of our aggregated traffic is delivered. We're fully compensating them for all of the traffic we're getting today via that.
How does it scale as traffic continues to grow? We buy another pipe, a bigger pipe, or an additional pipe, and they're fully compensated for the uses we push down that pipe.
4 p.m.
Liberal
4 p.m.
Conservative
The Chair Conservative David Sweet
Sorry, Mr. Rota, you're way over.
Thank you, Mr. Sandiford.
Now from the Bloc Québécois we have Monsieur Cardin.
4 p.m.
Bloc
Serge Cardin Bloc Sherbrooke, QC
Thank you, Mr. Chair.
My first question is for the representative from the Union des consommateurs. We have limited time and I have several questions I wish to ask.
In my opinion, the Bernier decision is behind this mess that we see today. It is behind several of the CRTC's anticompetitive decisions, including broadcast decision CRTC 2008-117, which deals with the reclassification of bandwidth access services, and recent decisions on usage-based billing.
In your opinion, did the CRTC misinterpret the order in council when it made this decision?
4 p.m.
Lawyer, Analyst, policy and regulations in telecommunications, broadcasting, information highway and privacy, Union des consommateurs
We can conclude that the CRTC misinterpreted the 2006 directive. Indeed, in order to achieve competition at a lower cost, certain aspects should have been regulated and we should have had effective regulations, something that the CRTC did not do when it took the deregulation approach. The basic premise was that there was a great deal of competition, which was not necessarily the case. So there has been an interpretation problem with this directive.
4 p.m.
Bloc
Serge Cardin Bloc Sherbrooke, QC
Further to the CRTC decision on Internet speed equity, namely speed matching, did the CRTC in fact implement the Bernier decision in favour of consumers and competition?
4 p.m.
Lawyer, Analyst, policy and regulations in telecommunications, broadcasting, information highway and privacy, Union des consommateurs
Once again, we have to wonder about the way that this decision was implemented to get this result. Indeed, speed matching did appear to make sense when the 2006 directive was implemented, whereby competitors were to have access to the same speed as incumbents. In this instance, we had a tangible, easy and obvious application of the directive to state that competitors must benefit from the same things. So sometimes the CRTC's interpretation of the decision is confusing and misleading, but at other times, it is applied properly. So we are somewhere between the two.
4:05 p.m.
Bloc
Serge Cardin Bloc Sherbrooke, QC
When the CRTC issued its broadcast decision CRTC 2008-117, the government asked it to review its decision in an order in council dated December 10, 2009. In this order in council, Minister Clement ordered the CRTC to verify, among other things, and I quote:[...] whether the impact of these wholesale requirements unduly impairs the ability of incumbent telephone companies to offer new converged services [...]
If I understand correctly, when the CRTC interprets the Bernier decision in favour of incumbents, which is anticompetitive, the government says nothing, but as soon as it is interpreted in favour of small providers and competition, the government asks the commission explicitly to overturn its decision in favour of Bell. Do you understand?
4:05 p.m.
Lawyer, Analyst, policy and regulations in telecommunications, broadcasting, information highway and privacy, Union des consommateurs
It does give this impression. Indeed, the speed matching order only considered the investment of incumbent companies, so that they would continue investing, whereas in the usage-based billing decision, it was just the opposite. So there appears to be an about-face that is done every time these decisions are made.
4:05 p.m.
Bloc
Serge Cardin Bloc Sherbrooke, QC
Do you feel that the spirit of the requests made by the government in order 2009-2007 is respected in the CRTC decision on usage-based billing?
4:05 p.m.
Lawyer, Analyst, policy and regulations in telecommunications, broadcasting, information highway and privacy, Union des consommateurs
No.
We challenged the implementation of this directive and the issues that were interpreted by the CRTC. We informed the commission at that time that, as far as usage-based billing was concerned, in our opinion, the CRTC did not properly interpret the directive.
4:05 p.m.
Bloc
Serge Cardin Bloc Sherbrooke, QC
In your opinion, if we want to have better telecommunications services at better prices for consumers, would it be preferable to regulate the sector more or would it be preferable to follow the Conservatives' strategy to deregulate?
4:05 p.m.
Lawyer, Analyst, policy and regulations in telecommunications, broadcasting, information highway and privacy, Union des consommateurs
Deregulation only works in a highly competitive market.
In order to have a competitive market when there is no competition, we have to establish the conditions required to have this competition. So we out of necessity have to regulate in order to enable competition to occur and we have to be able to regulate at the right places. That does not mean regulating the entire sector.
Nevertheless, it would appear that, in the case of certain decisions—particularly the choices made by the CRTC in regulation 2008-2017 regarding the definition of essential service—poor choices were made which do not allow for the participation of competitors and good competition in this sector.
So if we want to establish good conditions and become—or become again—leaders in this sector, that would require targeted regulation in the right places.
4:05 p.m.
Bloc
Serge Cardin Bloc Sherbrooke, QC
There appear to be some inconsistencies between these two aspects. On the one hand, we need to protect investments, and on the other hand, we must encourage competition. What do you think about this inconsistency regarding the decisions or orders that have been made?