Industry Committee on May 12th, 2014

[John Lawford]

I don't think anyone's talking about, with this measure or any other of the policies of the government, expropriating legitimate investments that the companies have made. I believe Bell Canada wanted out of regulation and to become its own private outfit sometime in the seventies and eighties anyway.

The point is this. There's a point where, if wireless rates are too high, you're then retarding the general growth of the Canadian economy. That would be our concern. We're looking at things like OECD reports and other reports that have shown that prices in Canada are high in comparison with the rest of the world, and therefore are probably a drag on the Canadian economy in general.

We're talking about just introducing a measure of competition—this bill is one way to try to get competition working a little faster—and just trying to introduce enough competition to make the prices come down to a level that stimulates the economy and is fair to consumers. If it goes below that, then we believe the CRTC wouldn't let it bottom out at a point where there's confiscation of sunk costs by the incumbents.

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

How much time do I have left, Chair?

[The Chair, Conservative, David Sweet]

A minute....

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

Thank you.

Perhaps you could expand on the importance of that, because if I think about growth industry and we talk about jobs, the world of telecommunications and wireless will probably have the greatest growth. Why is that important—the changes that we've made—for growth and expansion and the jobs in the industry that would follow?

[John Lawford]

I don't have the figures before me, but I think the OECD and others have done studies showing that the GDP does advance more quickly in countries that have more competitive wireless and Internet markets. I think the government's focusing on wireless as part of its overall communications strategy is very smart, because they're seeing that kind of research. But I'm afraid I don't have it in front of me.

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

Okay. Good.

Thank you.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Van Kesteren and Mr. Lawford.

We'll now go to Mr. Angus for four and a half minutes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

It's great that you gentlemen are here.

I think I'd like to put the regional lens on this, because in order for Canada to stay competitive, our regions have to be competitive. Competitive means fibre, it means high speed, and it means competitive phone rates. Looking at all of the numbers we have to deal with in terms of tower-sharing and pole access, the idea in the nineties was that we'd deregulate the market and everything would look out for itself, but it just doesn't seem to be the case. You have to have a player—the referee—who's going to insist that the big guys let in the small players in the regions, because there's no economic case ever for putting in your own infrastructure or having to pay outrageous access fees.

What role do you see the CRTC playing in 2014 in order to assure that in regions we're actually able to bring in some competition?

[John Lawford]

Part of the trouble with the regional coverage is that there's often only one carrier out there with towers, and it's often on a less modern network, let's say, so you're running on not even GSM. Sometimes you just get voice in these areas, yet that's where we need it the most.

Now, I would be concerned, as you're saying, that the CRTC process, as we've read it, really gives a lot of concern to that. It may be that we'll need to have other measures and they're not in this bill. They're not in the CRTC process per se. But I follow your issue, because other programs are probably needed to get the networks up to speed to then allow the roaming or sharing, especially in those regions.

I don't know if my colleague wants to add to that.

[Geoffrey White]

The CRTC has an important role to play here, and it's on their three-year plan to revisit that basic service objective. This is what allows Canadians in rural, remote, and hard-to-reach places to have the ability to access plain old telephone service and dial-up Internet. But as we all know, dial-up Internet these days isn't really going to cut it anymore, so the CRTC will be looking at that.

That's the kind of role we see the CRTC playing here in figuring out the balance between, admittedly, the need, perhaps, or the ability of only one service provider to get the job done, but also what the standard should be so that all Canadians—who, by the way, are spending on average of $185 a month on their communication service—can afford to actually get the level of service that they need to participate.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I find it interesting, because it's great to talk about outside players coming into Canada—and we're always waiting for the great white saviour of telecommunications that's never shown up—but I'm also looking at the small regional players that want to get into the game and the difficulty they're facing in actually moving into a bigger market.

In my region, Ontera did a lot of infrastructure that there was no business case for, and now the provincial Liberals have sold it off in a fire sale to Bell. I'm talking to smaller players that are very interested in expanding and competing and are saying, “Well, if Ma Bell is now holding all the infrastructure, what possibility is there for us to even try to get competitive and offer an alternative?” There we had a provincially run operation that was servicing regions. If it's all just sold off to the big Bell infrastructure without some regulator in there to say they are going to make sure that these smaller players actually get to the game, we're worse off than we were.

You're saying that you're waiting on the CRTC overview, and they do an excellent job, but do you think they need more power so they can actually.... I mean, there's no business case for Bell to welcome in small competition.

[Steve Anderson]

I think it goes back to my earlier point with regard to opening the networks. We've talked to local businesses in communities in several areas across the country. They say that if they had access to that network, they would build the next part and would make sure that our communities could have affordable, fast service. But the problem is that the telecom companies are not providing that access in some cases, while in other cases they're providing it at a very inflated rate, because they don't actually want the competition. They're at the last mile.

That's why, at the end of the day, we need to get to open networks. If the CRTC doesn't get there soon, I think the government is going to need to take action on this.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Anderson and Mr. Angus.

Now we'll go on to Madam Gallant for four and a half minutes.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman, and through you to our witnesses.

It was mentioned that the full profit from this spectrum auction should be put towards infrastructure. In the past when we've rolled out infrastructure for broadband high-speed Internet, the different territories have been designated and then contracts put to tender for the various areas. Often, we have just one company that will put in an offer to do it. Is there some other model that you would recommend in terms of rolling out the bids for the contracting on the infrastructure?

[Steve Anderson]

I like the option that Nordicity has put forward, which is reverse auctions, having a totally open process and letting the bidders put their proposals forward in a more open way without limitations. I think that's one option. Also, I think giving more outreach...because when I talk to first nation communities or rural municipalities, they say they really want money to invest in this infrastructure. There's some sort of disconnect, so I think the terms may need to be looked at more closely, along with some consultation with those communities.

[John Lawford]

I believe that in the fall, the CRTC will be looking at a mechanism in this essential services proceeding that Geoff mentioned. The way the CRTC tends to look at this, as they did with high-cost telephone service, is to set up a contribution fund to which you can then apply, and it can be nationwide. We would likely support something like that. So, yes, in certain regions you might only have one provider that wanted to take up that money, but as long as it's designed so it's open to all—and we can get into the nuts and bolts of that—we think that might be a better way to approach your question.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Okay.

It's interesting that you mentioned a contribution fund because what we do have is the deferral fund. Our experience has been, and I have this in my area, where we still have pockets of the geography that do not have the infrastructure for high speed because they're in that shaded area controlled by the company who has access to the deferral account. So they're still holding out. We're matching funds on top of what's already been set aside for them. Would you offer a solution to how we get past this impasse?

[John Lawford]

The deferral accounts is a nasty episode in CRTC history. I would hope that the CRTC would design it so that kind of gaming could not take place. It's often a “use it or lose it” kind of rule so that if someone does not get something ruled out in the area they promised, it goes back to tender, if you will. That's one mechanism.

Just keeping on top of them with targets, which I think the CRTC is starting to do now but maybe left for a couple of years, for the deferral accounts is another method. I can probably think of more if I had a little more time, but that's my best answer.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you.

[Steve Anderson]

I think the monetary penalties could play a role there as well, penalizing those companies when they don't do bill dates on time or in the right area because that type of thing is happening all over the place.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you.

One other aspect on the roaming fees and your organizations being consumer advocates is that the complaints I receive from consumers are that they can't justify and there's no way for them to validate what the roaming charges or data charges that they receive on their bill actually are. They see the numbers, but there's no way for them to verify that they are correct. Have your organizations encountered this and if so, what have they learned in terms of the verification of these numbers?

[The Chair, Conservative, David Sweet]

Go ahead very briefly, please.

[John Lawford]

Very briefly, there has been some work done by CRTC in measuring broadband, you know, receipt of packets, which I think will help in the upcoming future. To some extent, consumers also can go to the consumer complaints ombudsman now for telecommunications and say that they don't understand this, it wasn’t explained, and therefore they don't think they owe it. Some folks have done that.

But you're right. It's difficult because the consumer, unless they're using a measuring tool on their device, can't really tell if the charges are accurate, but there, we're in the hands of the companies at that point, unless the CRTC sets a rule.

[The Chair, Conservative, David Sweet]

Thank you very much, John.

On behalf of the committee, we really appreciate your testimony. I know we only had a limited amount of time today, but I think we had the right questions and right answers.

Colleagues, we're going to suspend for three minutes, and we'll ask the next panel to come in quickly so that we can start with them.

[The Chair, Conservative, David Sweet]

Okay, colleagues, we're back in session now.

We have two groups before us as witnesses: the Canadian Bar Association, Janet Fuhrer, second vice-president; and the Intellectual Property Institute of Canada, Mark Eisen, treasurer and past-president, as well as Michel Gérin, executive director.

We'll first go with the Intellectual Property Institute because I understand we're having some copies made now of some remarks from the Canadian Bar Association.

Please go ahead and try to keep your comments to five minutes.