Industry Committee on Jan. 26th, 2021

[The Chair, Liberal, Sherry Romanado]

Good morning, everyone. I now call this meeting to order.

Welcome to meeting number 12 of the House of Commons Standing Committee on Industry, Science and Technology.

I want to acknowledge the presence of our colleague Mr. Généreux and welcome him to the committee.

Today's meeting is taking place in a hybrid format pursuant to the House order of January 25, 2021. The proceedings will be made available via the House of Commons website. The webcast will always show the person speaking rather than the entirety of the committee.

To ensure an orderly meeting, I'd like to outline a few rules to follow. Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of “floor”, “English” or “French”.

Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. We do not have any MPs in the room, so we won't need the proceedings and verification officer to turn it on and off. All comments by members and witnesses should be addressed through the chair. When you are not speaking, your mike should be on mute.

With regard to a speaking list, the committee clerk and I will do our best to maintain the order of speaking for all members, whether they are participating virtually or in person.

Pursuant to Standing Order 108(2) the committee is meeting today to resume its study on the accessibility and affordability of telecommunications services in Canada. We have two panels today. In our first panel are witnesses from BCE Inc.: Robert Malcolmson, executive vice-president, chief legal and regulatory officer and Jonathan Daniels, vice-president, regulatory law.

In our second panel we will have Raymond Noyes from ACORN Canada. From SSi Canada, we have Mr. Jeff Philipp, founder and chief executive officer and Dean Proctor, chief development officer.

Each witness will present for up to seven minutes followed by our rounds of questions.

I will now turn the floor over to BCE.

[Robert Malcolmson, Executive Vice-President, Chief Legal and Regulatory Officer, BCE Inc.]

Thank you.

Madam Chair and honourable committee members, my name is Robert Malcolmson. I'm the chief legal and regulatory officer at BCE and Bell. With me today is Jonathan Daniels, BCE's vice-president of regulatory law.

I would first like to point out that Bell Let's Talk Day, the world's foremost event when it comes to raising awareness and driving action on mental health, is taking place two days from now, on January 28, and we enthusiastically invite everyone to join the conversation.

Turning to the matter at hand, our goal at Bell is to advance how Canadians connect with each other and the world. To help achieve this objective, we invest approximately $4 billion in networks and services every year. We also work with governments at every level, and communities of all sizes, to ensure as many Canadians as possible have access to high-quality connections.

For almost a year now, the COVID-19 pandemic has put the capacity, and capabilities of Canada's communications infrastructure to the test. At Bell, we're very proud that our networks and services have met this unprecedented challenge.

Importantly, at the outset of the pandemic, Bell adopted a wide range of measures to maintain the health and safety of our customers, and to help Canadians manage through the crisis. Consumers, businesses, governments, educators, students, health care workers, first responders and mental health providers have all relied on Bell for the communication services and equipment they need, and we've delivered.

Despite the many COVID-19 challenges facing our own business, including declining revenues, tens of thousands of employees working remotely, and significant changes to our retail and local news operations, we made the strategic decision early on to accelerate our new network builds, especially in rural areas.

We did this because, now more than at any other point in Bell's 140-year history, it's more important than ever before that as many Canadians as possible have access to reliable connectivity to better navigate life and work.

As CRTC data for 2019 shows, while about 92% of rural households in Canada were able to access the commission's previously targeted download speed of five megabits per second, and almost 78% could access download speeds of 25 megabits per second, the gap widens as broadband objectives and needs continue to evolve.

To help close this digital divide, at the outset of the pandemic, we ramped up deployments of our wireless home Internet service to reach 137,000 additional rural households by the end of April. We also pushed forward an important upgrade to the service, doubling download and upload speeds to 50 and 10 megabits per second, respectively, by late 2020. We continued to accelerate rollouts in the second half of the year to reach an additional 80,000 rural households, including the start of deployments to rural areas in Atlantic Canada in the fall.

Today, our wireless home Internet is available to approximately 480,000 rural households. We expect the service will ultimately reach one million homes and businesses in Ontario, Quebec, Atlantic Canada and Manitoba.

To be clear, Bell increased and accelerated deployments of wireless home Internet without any direct government funding. However, we are also ready, willing and able to work with governments, and indeed we are, and local communities where there is simply no business case to expand and improve broadband connectivity without some level of government support.

Today we are participating in a range of funding programs, including provincial programs in Quebec and Nova Scotia and the first phase of the CRTC broadband fund, the latter leading to significant additional investment in Canada's north.

We are also submitting applications to the improving connectivity in Ontario program, the second phase of the CRTC broadband fund and, of course, the federal government's universal broadband fund.

Finally, we have taken actions to improve access by regional service providers to our existing support structures, especially in the province of Quebec. These programs and initiatives combine available private and public sector resources to ensure Canadians in remote and underserved areas of the country can access better broadband.

However, there are also practical actions that we think government and regulators could take to address Canada's rural broadband needs faster and more effectively. These include the following. One, without delaying pending projects, consider combining federal government broadband funds currently available from three sources—the UBF, the CRTC broadband fund and potentially the Canada Infrastructure Bank—into one superfund that could support large-scale rural broadband projects. Two, direct additional sources of funding, such as proceeds from auctions of public spectrum, towards rural broadband projects. Three, incentivize public-private partnerships through existing entities like the Infrastructure Bank. Finally, and importantly, adopt balanced regulatory policies that prioritize investment in networks by companies that are prepared to risk private capital to build connectivity.

For our part, Bell continues to fully fund deployments of world-class networks and services, and we believe it's in the public interest that government and regulatory policies support these ongoing investments.

Our next-generation, all-fibre connections are now available to 5.6 million customer locations, and as I mentioned, our innovative wireless home Internet service is also meeting the broadband needs of growing numbers of Canadians in rural and suburban fringe areas where the costs to deploy fibre to the home are exceedingly high.

We are also moving Canada forward with investments in 5G wireless technology. Having launched our initial 5G service in urban centres in 2020, Bell is poised to offer 5G far more broadly in 2021. Importantly, the availability of spectrum as well as ongoing policy and regulatory support for facilities-based competition will be major factors that determine how far we are able to go with 5G.

To conclude, in 2020, we saw with remarkable clarity the benefits of supporting facilities-based competition. Canada's network infrastructure, bolstered by billions of dollars of private investment over many years, has delivered despite unprecedented demand.

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you.

We'll now begin the first round of questions.

Mr. Généreux, you have the floor for six minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you for your warm welcome, Madam Chair. I'm very pleased to be sitting on the committee starting today.

Mr. Malcolmson, you just said in your presentation that you had access to three federal funds, one from the CRTC and two from the government.

I gather that you think that there should be only one fund, because it would be simpler. Is that what you're saying?

[Robert Malcolmson]

One of the observations we have is all levels of government and regulators are quite admirably putting together broadband funds. The issue is, I think, if we were starting over again and designing the perfect mousetrap, we would consider putting all those funding mechanisms into one centrally administered fund. We think that would hopefully create some efficiencies in the allocation and rollout of broadband funding.

Right now it's a bit of a patchwork quilt of funding, and we understand why, because there are different constituencies and interests that need to be served by various levels of government.

But in a perfect world we would say—we have called it a superfund in our remarks today—that one fund centrally administered and efficiently delivered, the last point being the most important, could expedite the rollout of broadband at a time when Canadians clearly need it.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Okay. Thank you.

Do you have any specific requests for the upcoming spectrum auctions that would help provide better service to rural areas?

Montmagny—L’Islet—Kamouraska—Rivière-du-Loup has 58 different municipalities. Telus operates in at least half of them, and Bell operates in the other half. In my constituency, I can see that Telus is much better structured than Bell when it comes to delivering services, particularly in the more remote towns and municipalities, which currently receive much less service.

In terms of what the government is proposing for spectrum, could anything be changed to improve service and to ensure that these smaller municipalities are also well served?

[Robert Malcolmson]

As I said in our opening remarks, at the outset of the pandemic, despite the various challenges facing our own business, we did make the strategic and concerted decision to accelerate the rollout of our investment in rural and small communities with our wireless home Internet product. As I mentioned, we rolled it out initially to 137,000 households early on in the pandemic and added an additional 80,000 households.

In terms of spectrum, your question is a good one because we use the wireless home Internet technology in smaller rural areas because fibre is simply too expensive to build out. There's no business case for it, and often it's interrupted by geography and climate challenges, so wireless home Internet is the answer to connect last mile rural communities.

The issue with wireless home Internet is it relies on wireless spectrum, and until more spectrum is released in upcoming spectrum auctions, the cellular towers that you see in areas like yours that feed homes and communities are often congested and constrained due to a lack of spectrum as traffic increases.

We're very anxious to participate in the upcoming 3,500 megahertz auction. We believe that, assuming people get their fair share of spectrum in that auction, we will be able to improve and extend that service.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I want to ask you about the measures announced by the government. The government announced $1.7 billion last year, even before the latest budget. The money was actually announced earlier, but the announcement was repeated this year. The government said that the rural areas would be the main recipients of the money. However, I don't think that this is the case. In any event, at this point, it doesn't seem that the government has really put in place the right tools to properly serve rural areas.

What are your thoughts on this matter?

[Robert Malcolmson]

I think the government's efforts to fund rural broadband, and I'm speaking in particular of ISED's universal broadband fund and to a lesser extent the CRTC's broadband fund, are certainly major steps in the right direction.

It's a bit of an intractable problem in connectivity because the cost of extending it to every corner of our country is never-ending and exponentially increasing as traffic demand and demand for higher speeds, lower latency, etc., are made by consumers.

It's a difficult issue to solve. It requires exponential amounts of both private and public sector investment. I think the trick here is, as I said in my remarks, to figure out ways to expedite access to funding, to figure out ways to incentivize the private sector to continue to invest private sector capital and to ensure that our regulatory policies are such that they don't undermine investment.

From where we sit, there are a number of regulatory policies that, in fact, undermine investment and impede our ability to roll out to rural areas.

[The Chair, Liberal, Sherry Romanado]

Thank you.

Our next speaker is MP Jaczek.

You have the floor for six minutes.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you, Madam Chair and thank you, Mr. Malcolmson, for your testimony, which has dwelt very heavily on the accessibility side of things. As you know, this committee is studying not only accessibility but affordability.

Do you think there is an affordability problem for Canadians in the current situation?

[Robert Malcolmson]

Certainly there is an affordability problem for low-income families. This is a problem that will exist across the board with all sorts of consumer products.

We have participated and continue to participate in a program known as the connecting families program, whereby we offer $10 home Internet to qualifying low-income families. We're proud to say that this program is rolled out to, I think, 52,000 Canadian families. Of that group, Bell Canada is the largest provider to this subset.

Moving on from low-income families to the general population, we've heard lots over the past few years about wireless affordability, so I will start there. Then I would ask Jonathan to talk a little about wire line or home Internet affordability, if time permits.

On wireless, I think we made extremely great progress. If you look at the CRTC's data from 2016 to 2019, for example, which is the most recent data available, the average price for a five-gigabit wireless plan has decreased by 37%.

Another recent study by PwC in 2019 found that wireless services were more affordable in Canada than in peer countries such as Australia and the U.S.

StatsCan recently published a wireless price index showing that wireless cellular pricing has declined by 19% versus the overall price index for all consumer items, which had increased by about 3%. I think, then, we're making great progress. We offer low-cost wireless plans.

I'll give you one example. We launched a prepaid wireless service known as Lucky Mobile, which offers a $15 wireless service. Our flanker brand, Virgin Internet, offers one gig for $28. We're making, then, very good progress.

We're also making progress on ISED's 25% price reduction, which was mandated across the two-, four- and six-gigabit plans and we work closely with ISED to be active participants in that. We're about halfway to the goal of a 25% price reduction.

Finally, I would just comment that unlimited plans, which are the function of the vigorous competition in our Canadian wireless industry, have really transformed the market. Gone are the days when consumers were getting extremely expensive overage charges on their wireless bills. Now, if you are a heavy user, you can get an unlimited plan, which we offer in the range of $65. There have been competitive offers that have been much lower than that.

To answer your question, then, I think that on the wireless side progress is being made and will continue to be made, given the competitive intensity in the marketplace.

If you want to hear about wire line or home Internet, I can ask my colleague Jonathan to give you a brief comment. I'm in your hands, Madam Chair.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you. Perhaps we could have you elaborate a little bit more on how you are going to reach the 25% reduction in prices that our government has initiated. You've alluded to the fact that you're making progress. Could you perhaps elaborate on your plan for the next two years?

[Robert Malcolmson]

As I said, in the last report published by ISED we're about halfway there.

The interesting thing about that program is the plans that are subject to the targeted price reduction. We're seeing that consumers want more and more data, so some of those plans are becoming less popular with customers.

The other thing that's happening is that you are seeing higher data usage plans' prices coming down. That's not by virtue of any form of government intervention; it's simply by virtue of the operation of the competitive marketplace among facilities-based providers.

I think that to get to where the government would like to go and to ensure that Canadians have access to very competitively priced wireless services, we need to continue the path that the government embarked upon in, I think, 2008, with the introduction of facilities-based wireless competitors—the likes of Shaw, Vidéotron and Eastlink—that are having a real impact on the competitive dynamic in the market and are driving prices downward.

I'll stop there.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Did Bell take advantage of our government's wage subsidy program? If it did, what type of subsidy did Bell receive?

[Robert Malcolmson]

Yes. We did take advantage of the wage subsidy program. We used it for its intended purpose, which was obviously to keep employees working and to avoid layoffs in the midst of the pandemic.

I am happy to elaborate on that further, but I'm getting a stop sign from the chair.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Mr. Lemire, you have the floor for six minutes.

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

Thank you, Madam Chair. I want to thank you and the clerk for your efforts. I wish you a happy new year.

This meeting is very important to me. I want to acknowledge the presence of the Bell representatives, including Mr. Malcolmson.

Thank you for being here, Mr. Malcolmson. Congratulations on the Bell Let's Talk initiative. This year in particular, the mental health issue is fundamental.

According to several service providers, for 30% of requests, Bell takes on average over two years to provide access to its infrastructure. Why do you take so long?

[Robert Malcolmson]

I don't know that I agree that it takes two years to get access to our infrastructure. I will say, particularly in the province of Quebec, of the requests for pole access we get, 70% come from Quebec.

Just to give you some context, last year we had requests for access to 100,000 poles in the province of Quebec. Many of those poles are owned or used jointly between Bell, Hydro-Québec and Telus. It's a difficult issue to confront to ensure you respect safety standards—because the poles carry electricity—and ensure that the integrity of the poles is maintained when people seek access. We have heard the complaints about pole access and we've proactively dealt with it.

If you permit me, I'll take you through it.

We established what came to be known as a coordination table with the Government of Quebec, Hydro-Québec, Bell and Telus. In response to the complaints about the speed of pole access, we implemented a number of changes. We permitted third parties to do what's called “make-ready” work on the poles.

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

How many users can access one pole?

[Robert Malcolmson]

It depends on the capacity of the pole. It's not one-size-fits-all. You have to fit in the equipment between the electrification of the pole and the—

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

How much do you charge for the pole rental and permit application?

[Robert Malcolmson]

The CRTC sets a tariffed rate for pole access.

My colleague, Jonathan, will correct me if I'm wrong, but I believe the current tariffed rate is in the range of $12.48 for access to a pole.

[Jonathan Daniels, Vice-President, Regulatory Law, BCE Inc.]

That's for a full year, not a month.

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

Some service providers say that they pay $20 per pole and $1,000 per permit. At Hydro-Québec, the rate is about $17 per pole and about $140 per permit. Why is there a discrepancy between your poles and Hydro-Québec's poles? Could the figures be released to the public to help carry out projects?

Do you agree that it's difficult to assess the project parameters when fair and reasonable prices are hard to come by?