Industry Committee on Dec. 8th, 2020

[The Chair, Liberal, Sherry Romanado]

Our next round of questions goes to MP Masse.

You have the floor for two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

This is probably about my hundredth meeting on this subject matter, an effect of having been on the committee for so long. I've got to be honest: We have so many advantages even with our problems, and I hear the call for consumers to pay more to help others, but again, we're raking in billions of dollars from the spectrum auction and then we're throwing a whole bunch of different programs out there so that, again, it's almost like a dog's breakfast—I've used that term before—where we're trying to figure out how to plug all these things together.

So, quite frankly, I don't really have a question at this point, Madam Chair. I'll turn my time over. I like the idea of a czar at this particular point in time to help coordinate these things. It could be done not only for the build-out from the spectrum, but also for the hard stuff that then needs to be done on the ground, and the consumer aspect, etc., so that we can re-coordinate and pivot ourselves, especially because of the frustration with this and also the benefit because all of this is publicly regulated. We actually have some benefits. We have some great incumbents, and we have some great new entrants in the market, but it's got to be done in a fairer way.

I'll leave it at that, Madam Chair. I want to thank the guests, though, because it has been very worthwhile today.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, MP Masse.

Our next round of questions goes to MP Sloan.

You have the floor for five minutes.

[Derek Sloan, Conservative, Hastings—Lennox and Addington, ON]

Thank you, Madam Chair.

I just have a couple of questions for Mr. Ghiz.

I understand, from your comments, that the Internet is not part of your portfolio. I just want to see if you had any comments on some of the earlier discussion on the inflation of wholesale rates and potentially even some of these large carriers undercutting their own arguments on what wholesale rates should be.

If you don't want to answer, that's fine, but I think you're the only witness here representing some of these larger carriers. So if you wanted to talk about that, I'd be glad to hear it.

[Robert Ghiz]

Yes. Thank you very much for the question and for giving me the opportunity.

I'll relate it to my files. That is, I think you can see a direct correlation between mandated MVNOs and the TPIA decision. It's really about prices that come in, that get regulated and that can be below market value. If someone has to sell for below market value, it will take away their incentive to go and invest. If they can't recoup that money, what's the point in doing it? Second of all, to go back to the MVNO argument on the wireless side, if you can be an MVNO and you can piggyback off of other networks, then that's even less of an incentive to go out and invest.

I've gone through some of the facts already. If you look at our coverage, I realize there's still more to do, but relatively speaking it's quite good. If you look at the quality of our networks, we have the fastest download speeds in the world. This all comes because of competition. I truly believe if you want to have quality networks and see more build-outs happen so that more Canadians are connected, allowing facilities-based competition is the best way to go.

[Derek Sloan, Conservative, Hastings—Lennox and Addington, ON]

I have another question. You noted that in terms of the cost of cellphone service and the cost per gigabyte of data, the costs have been going down, but we're still lagging behind other countries. Costs around the world have been going down. How can we fix this?

You were talking about the need for an incentive to invest and so forth, but is it really practical to expect multiple different networks in every area of this country? I mean, we're a big country. I just don't know if that's practical in every single area of the country.

[Robert Ghiz]

That's a great question. I think when it comes to prices coming down, we've really just seen it over the last probably five to eight years where the new entrants, our regional players, have had the opportunity to start to make a difference. If you look at the percent of new customers they're picking up quarterly, it's way above where their baseline is. We're seeing that competition come in and help to drive down prices.

I'd like to point out that when I have meetings with my counterparts, whether in the U.S. or Australia, I ask them what the big issues are that they're dealing with, for example, when they go before a parliamentary committee or legislative committee. They say the problem they have to deal with is around pricing and coverage—the same thing we have here. We always think the grass is greener on the other side. Quite frankly, it's not. We are doing well in Canada. We can do better and there is more to do.

[Derek Sloan, Conservative, Hastings—Lennox and Addington, ON]

Thank you for that.

Madam Chair, I would like to share the rest of my time with MP Cumming, please.

[The Chair, Liberal, Sherry Romanado]

Go ahead, MP Cumming.

[James Cumming, Conservative, Edmonton Centre, AB]

Great. Thank you, Madam Chair.

Mr. Lawford, in your testimony you talked about a broadband czar. One thing I've noticed is that we have a very diverse group of programs. You alluded to that. We have four or five different funds and different programs.

I understand the idea of a czar, but if this were all under one department, under one entity, with one minister accountable for a result, would you not think that would be a more efficient way? There would be one application process for us to be able to get the goal that I think all of us around the table want, which is to get better Internet service into these communities at a cost-effective rate.

[John Lawford]

Yes, I take your point about trying to change the structure. Trying to build the train while you're on the track, if you will, which is where we are, is difficult. Where do you locate that? It could be the ISED minister who has an extra coordination function.

I believe this committee could recommend a legislative change to the Telecommunications Act to make a legal basis for setting up a plan to get somebody in place to coordinate all of this. At the moment, the power is too diffuse. I hate to say it, but you end up with a diffuse, frankly, Canadian kind of solution, where everybody is pulling and pushing all the time. It's not very efficient. We need to get going on that.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Lawford.

Our next round of questions will go to MP Ehsassi.

You have the floor for five minutes.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you very much, Madam Chair.

Mr. Kaplan-Myrth, thank you for your testimony. You spoke at length about how the incumbents have been acting in an uncompetitive fashion. I'm wondering if you could expand on that for the benefit of all the members of the committee so that we have a better sense of the landscape. As well, what would be some of your suggestions to ensure that competition is a big part of this?

[Andy Kaplan-Myrth]

I've expanded on some of it. I'll go over some of that again. Let me know if there's any aspect of it that's especially unclear.

For our Competition Bureau complaint, the issue specifically is that Bell and Rogers have for years inflated wholesale rates before the CRTC, keeping competitors' costs high and ensuring that competitors' retail pricing also has to be high.

At the same time, especially over the past few years, they've introduced these flanker brands, which are specifically targeted at competing with competitors. They are really Bell and Rogers brands. Virgin and Fido are what I'm talking about. They act like they're competitors. People in the market even perceive them as being alternatives to the big providers. They are explicitly designed to compete with wholesalers. They undercut us on our pricing.

As for the way they do that, they really know what all of our costs are, right? We're buying services from Bell and Rogers at wholesale rates, some of them regulated and some of them unregulated. They know exactly what our costs are, and they undercut us right at that point. If the CRTC's final rates from August 2019 were implemented, that would do away with that strategy. We would then have the space to move to where we could price lower, and we think that all retail pricing would then come down. Effectively, we would be disciplining their pricing, whereas right now they're disciplining our pricing.

[Ali Ehsassi, Liberal, Willowdale, ON]

Having listened to your testimony, I think you would say that the manner in which they approach this is intentional, just to slow the process down and to make it anti-competitive.?

[Andy Kaplan-Myrth]

The way to look at it is that it is to their benefit to delay, because as long as they delay, they maintain the status quo, so I do think that's part of the strategy. Their flanker brands undercutting us is explicitly part of their strategy. They say so in financial statements. They like to see negative wholesale, right? They like to see their wholesale business decline because they see that as gains for their retail side. The strategy for Bell to launch Virgin was specifically to attack competitors. That seems quite clear.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you for that.

If we could turn to you, please, Mr. Brown, you also spoke about this very same dynamic. You were explaining to us that as you're trying to assist indigenous communities, specifically in Ontario, Manitoba and Quebec, you've come up against this very same dynamic. Would you care to elaborate on that and perhaps explain to us why you find that it's so time-consuming for you to provide services to the various communities you've been working with?

[David Brown]

Yes, sir. Thank you for the question.

There's no money in it for these telecommunications companies. That's their approach. Despite being funded in many, many cases by taxpayers to provide infrastructure, they simply don't have the desire to do so. It's about maximizing profits, not maximizing service delivery and coverage.

In a conversation yesterday with a member from a telecommunications company where I was once again trying to level the playing field, the feedback was that there's Vancouver, there's Toronto and there are a couple of speed bumps in Calgary in between, and the rest really doesn't much matter.

That approach is exactly why we are here and why these communities are where they are. It took a different approach to solve this problem and satellite-based solutions are that.

Thank you, sir.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

That ends our third round and our time for today.

I would like to thank the witnesses again for being here and the IT team and interpreters for your impeccable work, as always.

Just to let the committee know, on Thursday we are scheduled to review the draft report of the Investment Canada Act. If you haven't had a chance to read it, please make sure that you do.

If there are any changes to that schedule, we will definitely be in touch through the clerk.

I will confirm again that Bell will be with us on Tuesday, January 26.

Once again, thank you very much, and I call this meeting adjourned.