Industry Committee on Dec. 8th, 2020

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

Mr. Kaplan, I want to follow up Mr. Sloan's question. I'll put it to you in a little different way.

How do you drive your calculation for what the wholesale price should be? What drivers do you use?

[Andy Kaplan-Myrth]

Are you asking what the wholesale rate ought to be, or what our retail pricing—

[Majid Jowhari, Liberal, Richmond Hill, ON]

Yes, I'm asking about the wholesale rate.

My understanding is that the CRTC is setting out the wholesale rate or recommending it, and you didn't feel comfortable talking about what the drivers are, but you said that you have your own calculation. Therefore, what do you use as key drivers to calculate your wholesale rate?

[Andy Kaplan-Myrth]

There are a couple different things going on here. Just to be clear, the wholesale rate set at the CRTC is the price at which companies such as TekSavvy buy incumbent services. That's a rate that incumbents propose and the CRTC approves, often after some adjustments. There's a long-established process to figure out what those wholesale rates ought to be. It's called ”phase II costing”. It goes back to the seventies for other telecom services. It is strong, and we think it should stay in place, although—

[Majid Jowhari, Liberal, Richmond Hill, ON]

I'm going to run out of time very quickly. Do you think it should be updated?

[Andy Kaplan-Myrth]

I think there are some updates that could be made to make it more effective, which TekSavvy has argued for in an ongoing proceeding.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

[The Chair, Liberal, Sherry Romanado]

We now start our third round, with the first round of questions going to MP Cumming. You have the floor for five minutes.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, Madam Chair.

Thank you for your work, Madam Chair, in trying to get the ministers here as soon as possible, and accepting that we'll see them in the new year.

I do want to take a brief moment before I talk to the witnesses to put forward a motion on the table. It states:

That in relation to the study on the domestic manufacturing capacity for a COVID-19 vaccine, the COVID19 Vaccine Task Force members be invited to appear for one and a half hours, separately from other witnesses, at their earliest opportunity in January.

If there's no agreement on this point, you can consider this as a verbal notice of motion so we can consider it at the next meeting.

With that, I'll carry on to the witnesses.

I'd like to start with Mr. Brown. Congratulations on the work that you've done for the Pikangikum First Nation. It's really remarkable because this really isn't your core area of work, providing wireless and broadband installations.

I do want to come back to a point that you made, your struggle with dealing with the major companies in trying to get something going for that group. Can you elaborate a bit on what the barriers were? What is it that you saw that it could have been different and would potentially have gotten service into those communities more quickly, rather than coming up with the alternative with satellite—albeit it looks like it might be a very reasonable solution?

[David Brown]

Yes, sir. Thank you.

Well, I began down this path in September 2019, a year ago, so 14 or so months ago. The usual or traditional means of reaching out, engaging with basically the community, tasked me with doing whatever I could to change their situation. I would consider it to be desperate: The playing field was not level, is not level, for these communities, and they were in lockdown and isolation.

When I started down this path, it was prior to COVID, and COVID only accelerated that.

After eight months of engaging with the local telecommunications company, they came back to me and offered me 10% of the one gigabit that was in the cable plan. At that point, having done this a number of times, my frustration, my inability to go back to the community and feel like I had done my part to solve this issue, had reached new heights.

My feedback typically over the years has been met with indifference. We've often been told there's no money in servicing these communities. I think it was Albert Einstein who said that “No problem can be solved from the same level of consciousness that created it.” To me, I have no sympathy for telecommunications companies in Canada based on what I've faced and had to deal with, and what I see these communities fighting for. They have had the opportunity to be competitive. They have had a head start on everyone else. They have had funding and support from taxpayers, provincial governments, federal governments, and have failed to deliver solutions and alternatives to indigenous communities.

They're not asking for 4K Netflix; they're asking for the ability to hold court proceedings in a community. Pikangikum hasn't had a court in nine months because of the lockdown. We did a proof of concept the same day we went into that community, and we did a three-way video conference with the Kenora courthouse, the Pikangikum bail bed program, and a representative from the indigenous justice group in Toronto. The person with the poorest connection was the individual in Toronto.

We basically got tired of banging our heads against the wall to solve a problem, approaching it in the same way that it's always been approached, using terrestrial telecommunication companies to do it with. We went to SpaceX and it was like a barn-raising. I was working with friends and colleagues, and they took this project on with as much passion and desire as I had, as much need as the community had. That's not what it's like to work with telecommunications companies. I've taken years off my life, and I'm only 26 years old—

[Some hon. members]

Oh, oh!

[David Brown]

—so I can't do this every time for every community. But I did want to do it once, one time, to show every indigenous community what was possible, and that there is another way to do business and another option out there. It is no longer business by default and it is not a monopoly. You can look at other options and other avenues.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you for your efforts.

[David Brown]

Thank you, sir.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

We'll now go to MP Lambropoulos.

You have the floor for five minutes.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you, Madam Chair.

I'd like to thank all of our witnesses for being with us today to answer our questions.

One of the things that stood out to me in testimony—it's something that is pretty obvious on its own, but when it was mentioned, it stuck out even more—is the fact that many Canadians who miss meals often do it because they're paying for their phone bills. Obviously, that's not fair.

I feel that, during COVID-19, the gap between people, the inequality gap, has become even bigger because many people need a good connection in order to participate in our economy. If we look even at the education system, many Canadians are going to eventually be turning to online education in the coming months because we don't know exactly where we're headed. That's a very big concern to me.

We often say that all Canadians have access to education. If we turn and make it more online, then that won't be the case anymore, and not everyone will have equal access to getting past the barriers that currently exist for them.

Given that context, many of you gave us some examples of how our government can get involved in making sure that Internet connection is more affordable and that cellphone bills are more affordable. Minister Bains has committed to getting cellphone bills decreased by 25% in the next few years.

Do you have any suggestions that are not already being looked at that could lower the cost for lower-income Canadians? I also heard someone say that many Canadians wouldn't mind having an extra 50¢ added to their bills in order to help make up for those who can't. Are there any suggestions that haven't been mentioned yet that our government can implement to help make it more affordable?

That question is for anyone who wants to answer it.

[John Lawford]

With regard to the subsidies that we're discussing, those have all been suggested but not implemented.

There have been government programs trying to get $10 Internet to Canadians of modest means; this would be voluntary from the companies. That is a good idea, but the difficulty is that it's voluntary, so some companies are not participating. It's limited only to Canadians who have children and who are receiving the Canada child benefit.

If this Internet plan that Minister Bains has been running, the connecting families initiative, could be widened to include all low-income people whether they have children or not, and if it could be made not optional for the telecommunications companies, that would help an awful lot. I don't think that was specifically mentioned, but that's an easy one to do, I think, although I'm sure the companies would have something to say about that. It would take some money, but it would be a great improvement to that program.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you very much.

If anyone else wants to chime in, let me know, but I'll move to my next question.

Mr. Kaplan-Myrth, you've unmuted yourself. Would you like to add something?

[Andy Kaplan-Myrth]

Yes, I would just add that there are a number of piecemeal initiatives to lower prices, which are good for the outcomes that they have. I'm thinking about the minister's commitment to lower mobile prices by 25%, and the connecting families initiative is another good example. These are ends that could also be achieved through robust, stable competition. That is the goal of that.

The goal of lowering mobile prices is a good example. You're asking the same companies that have inflated prices on the one hand to voluntarily lower prices. Of course, they may do that. They are doing it in different ways, and they may reach those goals, but that's not the kind of systemic change that's going to sustain that pricing. That can only come from competition.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

I would agree with you.

[Robert Ghiz]

May I just briefly add something?

I actually agree with Mr. Kaplan-Myrth there that competition—and, I would argue, facilities-based competition....

If you look over the last five years with declining prices, a lot of that can be attributed to the regional players coming in. It's been federal government policy now for the last 15 to 20 years—and all governments have supported it—that they've been trying to grow four players in each region. Because of that, we are starting to see prices come down.

Have they come down as much as everyone would like? Probably not. There is still more room to go, but I believe that facilities-based competition is the way to go.

[The Chair, Liberal, Sherry Romanado]

Thank you.

Mr. Lemire, it is over to you. You have two and a half minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

My question is for Mr. Israel.

You said that the funding was too compartmentalized, that it does not help connect Canadians and that the funding needs to be brought together under a single national program.

Can you talk about the benefits of a single funding envelope?

[Tamir Israel]

A single directed program could be much more efficient in identifying where to direct funds, rather than relying on funding applications across the number of funding envelopes.

To give an example of something the current government has done with a directed funding initiative that's extremely helpful, the government has committed to connecting Iqaluit, which is in Nunavut, to a transatlantic cable that will give that city direct fibre access. That's a very targeted investment that the government identified for an area where the money could go to connect the city in a direct way that will improve connectivity issues in a remote area, and then they opened up an RFP for who wants to carry out that project that's been identified as a priority.

In contrast, the way it works now is that there are multiple, as you are aware, funding programs that different subscribers apply to with various projects, and based on the projects that are proposed and the existing priorities, the best ones are selected. But there's no overall mission or plan to identify where are the key areas with the most urgent gaps to fill. So it's very much left to what proposals come up.

Also, there's the issue of identifying different efficiencies around the use of spectrum. For example, perhaps a more efficient way to maximize the utility of spectrums is to force spectrum holders who are not building in rural areas to make that spectrum available to other municipalities or local indigenous groups to build their own infrastructure over that spectrum to address local needs while that spectrum is sitting unused on a cost-recovery basis.

Those types of solutions could emerge if a more strategic and holistic approach were taken to addressing where the actual challenges are, as opposed to just the current divergent approach that's being used.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.