Industry Committee on Feb. 10th, 2011

[Teresa Griffin-Muir]

I think that's been the struggle for the commission all along, recognizing that although there is a mandate to allow market forces, that mandate was really directed at the retail market, and unless there's reasonable wholesale access and a framework that's technologically neutral--so as technology evolves, wholesale access continues to evolve with it--there will not be adequate competition. It's a mindset and a struggle that has been faced internationally, trying to figure out how to achieve that.

Rather than just close the door, which I think is what this decision does, you have to try to figure out a way that will provide fair access from the vantage point of all parties wanting to compete, not just from the vantage point of the incumbent.

[The Chair, Conservative, David Sweet]

Thank you very much, Madam Griffin-Muir.

Madam Coady, for five minutes.

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

Thank you very much.

Thank you for taking the time to be with us today, and thank you, Mr. Anderson, for joining us via the Internet.

I have a broad-ranged.... We're talking about policy directives and.... I'd like to come back out to a vision here, for a moment.

I'm concerned. I'm hearing all about what's happening today, but what are the consequences if Canada does not have a very strong and viable broadband, does not have the capability and aptitude that we need to have in order to progress? I'm a business person; I think I've said this at this committee before. I own a company in biotechnology. We trade in data all over the world. We have to have access to the Internet. What are the consequences to our country if we don't do something better than what we're doing?

Ms. Song talked about the wholesale pricing principle as being a tactic we could employ. Mr. Anderson, you perhaps might want to lead on this one. I note that Britain has a strategy, a superfast broadband future that wants to be the best broadband in Europe by 2015. I think we could talk about the 2006 policy directive and all those things, but are we going to be where we need to be in order to be competitive and successful and have the jobs of the future that we need?

Mr. Anderson, I'll turn to you first, and then Ms. Song.

[Steve Anderson]

I think it is very important for those very reasons. And certainly not just the U.K., but Australia and the U.S all have broadband plans, and we don't have one of those. I think that's a key item. We just need some sort of plan to expand broadband. I think some of that is a structural problem. We do need to separate out wholesale and retail, and I think that will actually bring down prices.

In terms of how important it is, I think it's hugely important. I'm part of a community here in Vancouver of media and business innovators, and certainly they're going to feel this more than anyone else. The next person who creates something in their garage, like Google or something, won't be able to afford these usage fees and you just won't hear about the next Google, or in Canada, NowPublic or HootSuite. So it has huge implications on entrepreneurship and innovation.

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

Thank you.

Ms. Song, you talked about going back to a wholesale pricing principle. I'd like you to come out and talk about how important it is to be at the leading edge here for our country. We heard that we need driven leadership in this area. Would you care to comment on this, please?

[Monica Song]

I think all the honourable members and everyone else in this room knows that. Successive Canadian governments of all stripes have consistently put on the top of their agenda bringing Canada to the forefront of the digital economy worldwide. But the reality is that since 1994, we've actually gone backwards according to metrics of price, speed, and affordability. I think one of the reasons for that is the lack of competition. Lack of competition is bad for consumers. Lack of competition is bad for innovation, because there aren't adequate incentives. CAIP's call for a return to wholesale pricing principles is designed to ensure that we have, as much as possible, a competitive marketplace.

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

Thank you very much.

I want to ask you a final question, Madam Griffin-Muir, and perhaps you can roll two thoughts into this. First of all, you said that Bell recovers all its costs plus markups, and that that is pure gravy. I'm wondering if you'd expand on that.

The second point would be that there's no evidence of congestion. I'm wondering if you could wrap around that this whole issue of how the Government of Canada and the people of Canada can move forward in broadband and what the strategy for that would be.

[Teresa Griffin-Muir]

Actually I believe my colleague here said the rest is all gravy. I'm not disputing that. What I think is that certainly with more usage and as usage grows.... And by and large every network provider wants usage to grow, but they want to be able to be compensated for the usage. So the policy will recognize that there is some cost to investment and that those accessing the network, both wholesale and retail, have to pay that cost, but not over and above that cost to a particular provider simply to allow that one provider to offer the service they want or to stifle competition.

So I think as Ms. Song was saying, incenting competition has to be the cornerstone, and finding a way to have a wholesale market that allows competition to flourish in broadband is the best way to get innovation in this country.

[The Chair, Conservative, David Sweet]

Thank you very much, Madam Griffin-Muir.

We now go to Mr. Van Kesteren for five minutes.

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

Thank you, Chair.

Thank you, witnesses, for appearing before us.

Our illustrious chair pointed out just how difficult this is for the general public, and there's no question about it. I think most of us thought we understood, but as we delve into this further, it becomes complicated.

I tried to simplify it at the last meeting. I compared the pipe, and I suggested that what you were doing was buying a segment of that pipe and what you want to do there is really your business. Bell was basically saying they wanted to change that framework. They want everyone to do what they're doing. So that's one simple illustration, and I hope that sticks with people. But I'm going to do something else at this point. I'm going to give you an opportunity, because the next panel is going to be Bell. We're going to have Bell in front of us.

I'm going to start with you, Mr. Sandiford. If at this time you had the opportunity, realizing that most people aren't operating on this plane, what questions would you want us to ask Bell? While you're thinking about that--

[Bill Sandiford]

How many hours do we have?

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

You don't have a lot of time. You have time just to make your point, so make it.

[Bill Sandiford]

I think it's quite simple. We've felt all along that we were quite adequately compensating Bell for the services they're providing today. We want to know why they think we're not doing so. Hundreds of millions of dollars are spent every year by the competitive ISPs on services, either from Bell or from the other incumbents across the country, which we require to conduct our business.

We constantly hear them talking about how it's their network and we're parasites on their network. I don't know how many of you would call somebody who gives you hundreds of millions of dollars a parasite. I'm unclear as to why they think of us the way they do. I'm unclear as to how they think they're not compensated adequately for the services we get from them.

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

Mr. Tacit.

[Christian Tacit]

I would ask them two questions.

One, how is it fair that their IPTV traffic that traverses the same network, the same core network, can be exempt from UBB when it's providing a huge load? We all know how intense a video is. Anybody who's ever streamed or downloaded knows that. How is it fair to do that and yet impose it on everybody else if they want to do something similar?

The other thing I would ask, which is an even more basic question, is how is it that they're doing this when nobody else in the world is doing it?

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

Ms. Griffin-Muir or Monsieur Hémond.... Maybe we will go first with Madame.

[Teresa Griffin-Muir]

Actually, I'd just ask them whether they'd feel as comfortable introducing retail usage-based pricing if they were not able to impose it on their wholesale customers.

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

Monsieur.

[Anthony Hémond]

So we need to ask the question and they need to demonstrate that their network is congested. This would be one of the first things that have to be shown because we still do not have any evidence. It is no longer the time to ask questions, it is time to act. When we note that the practices of a business are anticompetitive, we need to take the requisite steps to open the market up to competition. This is essential if we want to once again become leaders in this sector.

[The Chair, Conservative, David Sweet]

Did you want to hear from Mr. Anderson?

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

Certainly.

[Steve Anderson]

I would ask them if, instead of our having to worry about their different incentives from the different markets, it would be better for the public to split up their different businesses so that they're separate entities.

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

That's great. I want to thank you.

I want to also point out that it's this government's chief concern to introduce competition. I think that anybody who knew our past industry minister, who understands the free market better than any, would certainly know that every one of his directions was inclined to do that. It's working out very well.

As we can see, our Prime Minister and our industry minister acted very quickly and showed that they were—

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

These guys wouldn't be here without deregulation.

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

Yes. They were showing that we were very concerned about this and we wanted to do something.

So I thank you for that opportunity and I thank you for coming.

Mr. Chair, those are all the questions I have.