Industry Committee on Feb. 10th, 2011

[The Chair, Conservative, David Sweet]

Be very brief, Monsieur Hémond.

[Anthony Hémond]

In the decision on, among other things, speed matching, the government order was aimed at protecting the investment made by companies, whereas, in the other decisions, this investment was set aside. So there is a lack of consistency in the policies.

Do we want open competition and a competitive market? Do we want to provide the conditions in order to obtain this competitive market or do we want to protect the investments that are made solely by a few players?

We need to have a competitive market and we must not simply protect these investments.

[The Chair, Conservative, David Sweet]

Thank you.

Thank you, Mr. Cardin.

We will now move on to Mr. Wallace for five minutes.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair.

I thank our guests for coming this afternoon.

True to my word, I'll give Ms. Song a few seconds to tell us about the five points.

[Monica Song]

Thank you.

The commission based its approval of wholesale UBB on this so-called equivalence of treatment principle that the commission attempted to bring between wholesale access services and retail Internet services. Other witnesses have already described to you that they are not comparable services, but I won't go back over that.

The five problems are as follows. First, the requirement that the competitors mirror the retail pricing plans of Bell or any other wholesale provider is retail price maintenance by any other name. Not only the effect, but the stated intent or purpose of wholesale UBB is to prevent competitors from reducing the price or influencing upwards the prices they are charging their customers. That's effected through the medium of Bell's control over the wholesale access service.

Our second concern is that IPTV is not irrelevant to this issue. Even though competitors and consumers have raised it time and again, the CRTC continues to stick to the myth that IPTV is somehow separate. There is no separate network for IPTV. If retail equivalence and the possibility of congestion are the justifications for requiring competitive ISPs to mirror Bell's retail pricing plans, then the fact that Bell's own bandwidth-intensive IPTV services are exempted by Bell--a vertically integrated network, distribution, and content provider--cannot be considered irrelevant.

Wholesale UBB as proposed is also not a fair and transparent Internet traffic management practice. First, it is applied to the amount of data transferred over the course of a month. Monsieur Hémond and Ms. Griffin-Muir have pointed out that metering 24 hours a day every day will do nothing to reduce congestion--if indeed congestion even exists--or peak-period traffic. Second, if the reduction in peak-period traffic were the real objective, then Bell would have applied UBB to its own IPTV services.

[Mike Wallace, Conservative, Burlington, ON]

Are you a lawyer? You are. What point are you on? Three, four? Which point are you on now?

[Monica Song]

I'm at three.

[Mike Wallace, Conservative, Burlington, ON]

Can you get to points four and five quickly?

[Monica Song]

All right. Retail equivalence—and this is an important point—is, practically speaking, unenforceable, because no one really knows what the retail pricing plans of Bell are. There's no regulation of retail pricing. There's no requirement to publish. At any given point in time, Bell may have hundreds of retail pricing plans out there. So it's fundamentally unfair, because the commission doesn't have the power to police or to monitor Bell's retail pricing.

Third, I would say that retail equivalence allows the commission to do indirectly what it said it wouldn't do, which is to regulate retail pricing. Because it's regulating the retail pricing of competitor fees.

[Mike Wallace, Conservative, Burlington, ON]

I'm going to stop you right there. I appreciate that. Somebody could ask for the other two.

Here's my fundamental question, based on the presentation we just had and the presentations we've had today. It's a big learning curve for me, I'm not denying that. I knew nothing about it before these hearings started.

I'm of the mindset that the incumbent could sell you a basket of apples, which are bits and bites or whatever you want to call them, and you sell them to whoever you want at whatever price, and they get their price, you get your price, and we'd be done with it.

It's been said today, and I don't understand.... You're saying the CRTC made an error in their judgment. I don't understand why you couldn't get your message to them. Maybe Mr. Tacit could answer that question.

[Christian Tacit]

I think it comes back to the two fundamental framework issues that we discussed. They view wholesale, high-speed access as equivalent to the retail Internet service offered by the incumbents. If you apply that equivalency, then it leads you down the UBB path, because then you're trying to make us look like them.

The other point is if you don't recognize that we are co-competitors across the board of equal standing, of equal stature, and we're perceived as a reseller, then it reinforces the first point.

You'd have to ask them, not me, but reading their whole jurisprudence over the years leads me to this conclusion.

[Mike Wallace, Conservative, Burlington, ON]

Are you going to be able to make your points in the 60 days that the CRTC has added to relook at the issue based on the—

[Christian Tacit]

We certainly hope so. We hope that this will be a turnaround in how they view the framework. I think this was the most extreme example that led to this public outcry of something that's been going down this path for many years and has harmed competition. So we hope this is the turning point.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Wallace.

Bits, bites, gas, broad and bandwidth. A lot of people across the country are probably having a challenge keeping up with that.

I'd like to remind everybody that Mr. Anderson is via video link. I know that it's easy to see the witnesses here in front of us and forget. I'm certain Mr. Anderson wouldn't want that to happen.

Mr. Masse, five minutes, please.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here today.

I think it's important to establish that there has been a series of decisions and deregulation that has allowed this current framework to emerge. It's not the fault of the people coming to the table here. It's the plan that's been laid out, and now we're reaping the results. That's really what's happened.

The first question I have, and it's to anyone who wants to answer or to all, is what I'm really concerned about is the CRTC's framework that they issued the other day. I don't think that gives the result we're looking for if they follow those types of hearings. I think we're going to have a similar decision come back or some other type of a hybrid type of a system, unless we get them to re-establish how they're going to have those hearings.

That's why I was disappointed with the minister. If we're just going to wait for the 60 days to answer the two questions in the framing that they've done, we're not going to solve the fundamental problem.

I'll turn that over to anyone who wants to talk about that.

[Christian Tacit]

First of all, when the commission issues a public notice like this—now they call them notices of consultation—they're not necessarily carved in stone. People can write in and say, “By the way, we think you need to broaden it, we think you need to clarify the language”, and so on.

This thing has only been out for a couple of days, so stayed tuned.

[The Chair, Conservative, David Sweet]

Mr. Masse, Mr. Anderson wanted to comment on that question, if you choose.

[Brian Masse, NDP, Windsor West, ON]

Yes.

[The Chair, Conservative, David Sweet]

Mr. Anderson, did you want to comment on that question?

[Steve Anderson]

Yes.

I think the CRTC needs a clearer public interest mandate, for one. For another, I think they should be having public, in-person hearings, not just some sort of online consultation. I think that longer term, as I was trying to say earlier, we need structural change, and when it comes to the CRTC that means, I think, that we need a commission that is based in the citizenry, which means that the chair and the majority of the people on the commission should be from the public interest community, not from industry. I think that's a fundamental structural problem with the CRTC that needs to be changed.

[Brian Masse, NDP, Windsor West, ON]

Mr. Sandiford, did you want to comment on that?

[Bill Sandiford]

I echo the comments of my colleague. The notice of consultation, as it came out, leaves a small window open for us to provide our feedback to the commission on how that process is going to run. We intend to let them know what we think of the notice of consultation and where we think it needs to be broadened or changed in order to make sure we get a full and just answer to the questions that are being asked to them.

[Brian Masse, NDP, Windsor West, ON]

Right now the CRTC has identified two simple questions. You can argue anything else you want under the sun, but at the same time if there's not a serious recognition by the CRTC that other issues need to be addressed, they could simply say their consultations are about A and B--or 1 and 2--in terms of those questions, and anything else they can strike out. Unless there's a real directive....

Ms. Song, do you want to comment on that?

[Monica Song]

I think you're pointing out something that's probably true. The concerns that CAIP has about this notice are that the commission does not appear to have abandoned the notion that it wants to keep wholesale looking like retail. So that same issue seems to be there. But as my colleagues have pointed out, what we can do at this point is simply point that out in written submissions to the commission, and then we may be back before you on this again.

[Brian Masse, NDP, Windsor West, ON]

I hope the commission is going to get that as a message. Hopefully there will be some political leadership that can be done to direct the commission. Otherwise, once again, they could just come back with that framework.

Really quickly, I want to follow up on wholesale and retail. Can you highlight how that also defeats competition, that philosophy?