Industry Committee on May 16th, 2019

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

Money that comes from spectrum auctions goes into general revenues. General revenues would, of course, take into account broadband as well as other services and programs that the government provides. The money would go into the general revenues.

[Brian Masse, NDP, Windsor West, ON]

That also, then, includes the other 2015 auction, the 2,500 megahertz band, which is another $1 billion. There was the residential spectrum licences for the remaining 700 megahertz as well.

In total, Canadians have received from their government over $14 billion with regard to spectrum auctions in recent history, so it's hard to believe we've ended up with a revenue stream of $14 billion and some of the highest prices and some of the least coverage in rural areas. Why do you think that's the case? We've received record amounts of unaccounted-for money in terms of it being required for anything.

With the spectrum auction, for those who aren't aware, you're selling off land rights and air rights. That's like water. It's something that there is no cost to do for the Canadian government, so it's pure revenue for the government.

Why do you think there's been no allocation of these resources to rural broadband, especially given the high prices we have?

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

We've invested in rural broadband significantly since we've been elected. The money that comes from the spectrum auction goes into general revenues, which pays for a lot of different programs. Rural broadband would probably be one of them.

We're making significant investments as well as commitments to making sure that we connect this country. We've already committed to connecting over 900 communities through the connect to innovate fund. We're looking at topping up that fund, as well as the universal broadband fund that's going to be rolling out shortly. We know that the money is necessary in order to connect communities across this country. It is something we are extremely committed to doing.

When you talk about the spectrum auction specifically, there's been a carve-out spectrum for rural communities. We know it's critical for rural areas to get that connectivity. We're making sure we're going to do it.

[Brian Masse, NDP, Windsor West, ON]

Given that, right now, you have two spectrum auctions under way, are you able to commit the revenues from those spectrum auctions, which will be in the billions, to broadband services?

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

Revenues from spectrum auctions go to the general revenues that pay for a number of different government programs, one of which may be broadband. We have committed to making sure that this country is connected. We've made sure that we're putting that money in the budget.

[Brian Masse, NDP, Windsor West, ON]

I'll take that as a no.

Those are future budgets. Future revenues will come in. There are future spectrum auctions on top of that. There's an excessive amount of money being generated here. I know that you're seeking partners for the Canada Infrastructure Bank to the tune of $2 billion. At the same time, you're expecting Bell Mobility, Telus, Vidéotron, SaskTel and Rogers to spend billions of dollars on a spectrum auction.

I want to move towards consumer protection. The recent CRTC decision acknowledges that consumers in this country have been abused by predatory pricing practices and the telcos' behaviour toward customers. The decision is going to take a full year to put penalties on those companies for such behaviour.

Is that acceptable to you and the minister?

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

As we talked about earlier, the Minister of Innovation, Science and Economic Development has already given a directive to the CRTC to look at the pricing of the telcos.

[Brian Masse, NDP, Windsor West, ON]

This is about their behaviour. There was an inquiry with regard to their behaviour and predatory practices with consumers, be it marketing, soliciting of business or moving customers to different elements. There is a ruling specifically identifying that they're guilty.

The CRTC has said they will take a year to bring consequences for that. Is that acceptable to you and the minister, that it would take a year to rebate or compensate Canadian consumers for behaviour the CRTC has ruled was inappropriate?

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

I'm going to ask Lisa to comment on that, since she is the person who deals mostly with ISED. She can maybe bring a little more to that.

[Brian Masse, NDP, Windsor West, ON]

I'm really asking you. It's going to take a year. I want to know whether you find that acceptable for the CRTC, after they have issued a guilty decision. The penalty is not going to take a matter of days, weeks or months. It's going to take a year. There's been dead silence related to that. I want to know whether you find it acceptable that for abusive practices identified and acknowledged by the CRTC, the penalties and consequences will take a full year to benefit consumers.

Do you think that's appropriate for the CRTC to take that length of time?

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

Mr. Masse, as you are aware, the CRTC is an arm's-length organization of government. We have had a directive from the Minister of Innovation, Science and Economic Development to ask the CRTC to look at the practices of the telcos and how they are doing.

[Brian Masse, NDP, Windsor West, ON]

You have had a directive letter, exactly.

You can have public comment with regard to whether or not it's acceptable for them to take that long—

[The Chair, Liberal, Dan Ruimy]

Thank you.

[Brian Masse, NDP, Windsor West, ON]

—if the minister issued an actual directive to them—

[The Chair, Liberal, Dan Ruimy]

Thank you.

[Brian Masse, NDP, Windsor West, ON]

—as you have acknowledged and expressed here.

[The Chair, Liberal, Dan Ruimy]

Your time's up.

I would just remind everyone that ministers bring their deputy ministers and agents with them in order that they may help ministers answer questions. If ministers want to refer to them, that's well within their right.

We're going to move to Mr. Graham.

You have seven minutes.

[David Graham, Liberal, Laurentides—Labelle, QC]

Thank you, Ms. Jordan, for being here for this. This is a very important issue we're discussing. I know we've talked about the Internet an awful lot, but I think cellphones are really what we're trying to get to here.

I'll continue with Brian's point for a bit. How do we get small companies, such as the ones in my riding, to get involved in cellphones, when it costs them $1 billion to get into the market?

Are we going to look at moving to a post-auction world for wireless spectrum?

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

Mr. Graham, thank you so much for all of your advocacy for cellphone and Internet coverage in rural communities. I know it's something that you've been extremely dedicated to since you were first elected here.

With regard to smaller companies being able to access spectrum, there was actually a carve-out in the spectrum auction for rural and smaller communities. I think that's one of the ways we are able to help address the smaller companies that want to get into the marketplace.

It's something that we've heard about across the country, in terms of making sure that those companies have the ability to compete. We know that sometimes in rural communities, they are the people who have the vested interest in making sure that they are able to be part of the planning and the go-forward and making sure we provide good cellphone coverage and connectivity.

As we've said many times, this is not going to be a one-size-fits-all solution, but we do know that small companies have a huge role to play.

[David Graham, Liberal, Laurentides—Labelle, QC]

I appreciate that.

[Lisa Setlakwe]

I can add one thing to that. What we do hear from smaller companies when we are selling off spectrum is that we sell it in blocks that sometimes are not affordable for them. We are actually in the process of consulting on a smaller block size, so that these kinds of service providers can participate in spectrum acquisition.

[David Graham, Liberal, Laurentides—Labelle, QC]

By smaller blocks, do you mean narrower band or a narrow geographic area?

[Lisa Setlakwe]

Narrow geographic area.

[David Graham, Liberal, Laurentides—Labelle, QC]

That's helpful. We have an Internet service co-operative in my riding and it would be wonderful if they could bid on cellphones to provide it to that county, as opposed to having to do the province or the country. That's what I'd like to get to.

You mentioned in your opening comments, Minister, about the stakeholder telcos stepping up. With respect to that, it has not been my experience with the stakeholder telcos. They have been remarkably reluctant to invest in rural areas if it is not profitable.

If you as a community or an individual wanted them to install infrastructure in your area—for example, one of my communities that has no cellphone service, and I'll get back to that in a second—and went to one of the larger telco companies, they might say sure they'll install a tower for you if you pay 100% of it. There isn't even a cost-sharing option. When they start making money off that tower, because there are 1,000 residents around it, there is no revenue sharing back to the community that brought it in.

It's the same thing with Internet service. If I want to bring in a fibre optic line three kilometres down the road from where I am to the nearest connection of any sort, it would cost me about $75,000. If the 20 or so houses between us start connecting, then all the revenues go back to the original company. There's no revenue sharing once you force the private to invest.

I don't agree that stakeholders are stepping up. I think they're actually quite frustrating and slowing us down, not accelerating us.

[Bernadette Jordan, Liberal, South Shore—St. Margarets, NS]

I'd like to comment on that if I could.

As I've said, there is no one-size-fits-all solution. I would like to comment that in the fall economic statement, we allowed for the accelerated capital cost allowance, which has given the telcos the ability to invest money that they're basically saving because of that. We have actually seen a number of them stepping up and making sure that they are connecting rural communities because of that accelerated capital cost allowance.

I believe that one company has said it is going from 800,000 to 1.2 million connections because of it. Another one has already announced that it will be providing cellphone coverage on highways in British Columbia, as well as Nova Scotia, and that it has more rolling out.

So, we do see that the telcos are actually investing in rural communities because of that provision that we put in the fall economic statement. But, to your point earlier, I think the smaller companies have a large role to play as well. We see that as part of our go-forward plan for sure.