Evidence of meeting #20 for Industry, Science and Technology in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was trademark.
A recording is available from Parliament.
Senior Director, Industry Framework Policy, Department of Industry
Thanks for that question.
In terms of what I mentioned before, subsection 27(3) of the Telecommunications Act would give the commission the power to determine in any case, as a question of fact, whether a Canadian carrier has complied with the section.
I'm not sure if that answers your question.
NDP
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
Yes.
Once the CRTC determines that a company has broken the rules, penalties can be imposed, but has the CRTC ever imposed those penalties?
Director General, Telecommunications Policy Branch, Department of Industry
The CRTC currently has its normal enforcement measures, but in addition, the government is introducing administrative monetary penalties. As I mentioned previously, this was announced by our minister in December and it also was announced in the budget. There will be further action in terms of the introduction of administrative monetary penalties.
NDP
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
The CRTC will impose penalties in the future, but right now nothing is being done.
Director General, Telecommunications Policy Branch, Department of Industry
The CRTC has its normal enforcement procedures, and this will strengthen what the CRTC has.
NDP
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
I understand.
Earlier, you said that approximately 60% of rural areas have coverage. However, there are at least 10 municipalities in my riding, Beauharnois—Salaberry, where young people, workers or doctors in hospitals, for example, don't have access to high-speed Internet. As soon as the wind starts to blow or it starts to rain, Internet access gets cuts off. There is no network. The government has yet to pass regulations to ensure that companies offer this service in rural areas.
Do the proposed changes include regulations that would improve the network and help lower service prices for people in rural areas?
Director General, Telecommunications Policy Branch, Department of Industry
Thank you for that question.
In terms of service availability for rural areas, I think you would be looking at both wireless, as we've mentioned, and also broadband availability. A program has been announced in the budget, and the government will be going ahead with investments for rural broadband. In terms of the timing of that, it has already been announced in the budget; it has been confirmed. It is a total of quite a considerable sum of money, over $300 million. That would bring service of up to five megabits to Canadians throughout Canada. The details will be introduced shortly.
NDP
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
The budget figures that you just shared don't include much for next year. The funding will be available after 2017.
What measures could be taken, in the short- and medium-term, to make it easier for small companies to enter the market? Despite the bidding on the 700 megahertz spectrum, there aren't many wireless companies in Canada. It didn't really make it easier for small companies to enter the market. That's the case for rural areas as well.
How does the government think the proposed changes will improve the situation for communities?
Conservative
The Chair Conservative David Sweet
Sorry, we have to leave that question; we're way over time. Hopefully you can squeeze an answer maybe in some other round where it's germane.
We'll move on to Mr. Braid for five minutes.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
Thank you to Ms. Miller and Mr. Johnstone for being here today and for helping with our understanding of the elements of the budget implementation act that apply to the telecommunications industry generally, and our efforts to cap roaming rates specifically.
Mr. Johnstone, you've explained that these measures would cap wholesale rates that one company charges another, and that the cap essentially would mean that a company cannot charge another company a higher roaming rate than what it charges its own customers.
Who do you anticipate will benefit from these measures?
Senior Director, Industry Framework Policy, Department of Industry
In terms of the benefits, I would go back to the statement that the roaming rates that Canada's largest wireless companies are charging other domestic providers could be more than 10 times what they charge their own customers for those specific services.
Those companies and their customers are affected by that, given that either the carrier needs to absorb this cost and try to be more competitive or pass those costs on to their customers.
A number of new wireless entrants have entered the market since 2008, when the government first set aside spectrum for new entrants to enter the market. Those are companies, for example, that would benefit from this reduction in wholesale roaming rates.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
Do you have any idea what the incremental roaming rates being charged in Canada currently represent in dollar terms? Is there a dollar figure?
Senior Director, Industry Framework Policy, Department of Industry
There is no public dollar figure on the volumes between companies. These are obviously company-specific and company confidential volumes and prices, so there's no specific figure that I could quote.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
Is it not a desired outcome that at the end of the day consumers would benefit from this because there will no longer be a requirement for the company to pass those higher roaming charges along?
Senior Director, Industry Framework Policy, Department of Industry
Exactly. Overall, the intent of this measure is to improve competition, and obviously wireless prices and services in Canada for consumers are a function of competition.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
To pick up on that point, you have also mentioned that these high roaming rates—one of the reasons we're taking this initiative—are a barrier preventing new entrants from entering the marketplace. Take that a step further: how are they a barrier currently?
Senior Director, Industry Framework Policy, Department of Industry
They are, given that the prices being charged can be 10 or more times higher for those roaming services. When the customers of these companies roam outside of the company's network, their company is charged those high rates, which are higher than the retail rates, as we discussed earlier. A client of the roaming provider would pay rates that are less by that factor.
Again, the carrier then needs to—
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
I want to ask one final question, and I think it's a simple one. As a government, why do we want to remove barriers to new entrants in the marketplace?
Senior Director, Industry Framework Policy, Department of Industry
As the Competition Bureau stated, this is an industry that faces high barriers to entry. Obviously, industries that have high barriers to entry are more susceptible to lower levels of competition. Lower barriers to entry allow people to enter the market and provide services to consumers.
Conservative
The Chair Conservative David Sweet
Thank you very much, Mr. Johnstone and Mr. Braid.
We'll move on to Mr. Côté.
You have five minutes.
NDP
Raymond Côté NDP Beauport—Limoilou, QC
Thank you very much, Mr. Chair.
It's unfortunate that our committee is having to defend the government's interests today instead of the interests of Canadians. However, time is running out for this government, which continues to impose its will on the House and various committees. Despite that, we will still examine the relevant clauses in this massive omnibus bill.
I'm not really familiar with wireless service delivery, but I'm interested in one particular aspect. There's a lot of talk about cost, about contracts with incredible fees. If a small company wants to access one of the big national provider's wireless networks to then provide wireless services to its own customers, how easy is it to get access to those services? Can the big three refuse to allow a small company to use their networks for that purpose?
Senior Director, Industry Framework Policy, Department of Industry
No, that is not possible. There are provisions within Industry Canada's spectrum policies.
Under the current roaming policies, under spectrum conditions of licence, it's a requirement that the carriers provide roaming to other carriers. They cannot be refused.
That was put in place in 2008. In 2013 the government extended those provisions indefinitely. In 2008 they were set for a period of time; in 2013 they were extended indefinitely.
So, no. It is a requirement under those conditions of licence.
NDP
Raymond Côté NDP Beauport—Limoilou, QC
Okay. Thank you.
When the Commissioner of Competition appeared before the CRTC, he quoted from the Church and Wilkins report. He said:
11.The analysis contained in the C-W Report has two significant limitations that should be noted. First, the profitability analysis that forms the centerpiece of the report (1) examines only one service provider, (2) does not actually measure that service provider’s cost of capital, and (3) when properly interpreted, does not support the conclusions contained in the report.
The major providers are now required to offer service. I remember a couple of decades ago when Canada's long-distance market opened up, we were told that there would be huge savings. However, that was only true for frequent long-distance users.
As for the daily services that are provided to all users, meaning customers from both large and small companies, has it been determined what kind of effect that requirement—to charge roaming fees that are no higher than regular rates—will have?
Senior Director, Industry Framework Policy, Department of Industry
The clause does cap the amount that a company can charge another company for wireless roaming services, so that—
NDP
Raymond Côté NDP Beauport—Limoilou, QC
I wasn't talking about roaming contracts, but service costs in general and the effect it could have. Given the limitations that the major providers are facing—and I am in no way defending them, quite the opposite—there could be a downside, some unintended consequences. Small companies might find a way to enter the market and use the networks. The major companies could then react to that by charging their customers more, even just a few dollars a month, for their services. There was already a $5 increase for smart phone services.