Industry Committee on Jan. 26th, 2021

[Robert Malcolmson]

Price variance is a function of a competitive marketplace, and price variances are a function of the cost of providing service in the particular geography where you're serving customers. To the extent that you see prices differences, it's a function of the cost of delivering the service. I'm happy to provide you with retail pricing of our services in the area you're speaking about.

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

Thank you. I look forward to receiving it.

Regarding the CRTC transaction, why is it beneficial for Bell to own companies such as Télébec and Cablevision? Does it serve the public interest? Even so, when we look at the changes in infrastructure and prices, we can see that we've been heavily penalized over the past 20 years.

[Robert Malcolmson]

I think there is an advantage to facilities-based providers like Bell that are willing to invest in network connectivity and build those networks in areas that are difficult to reach or present a challenging business case. There is an advantage to those communities in having a network-building company willing to invest.

I'm being told by the chair that I need to stop.

[The Chair, Liberal, Sherry Romanado]

With respect to Mr. Lemire's request for that documentation, if you could make sure that it gets sent to the clerk, he will make sure that it is circulated amongst the members in both official languages. Thank you.

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.

Mr. Malcolmson, how much money did Bell save on the 200,000 that were cut from the delivery or rollout of services? What was the financial loss for going ahead with that business decision?

You must have done a full market analysis to determine the liability upon Bell for providing that promised 200,000 rollout that was supposed to happen from your previous announcements.

[Robert Malcolmson]

As I said, when we're going to build to an area, we conduct a business-case analysis—

[Brian Masse, NDP, Windsor West, ON]

How much was it going to cost Bell to roll out the 200,000 to rural and remote communities? There must have been a business case that told you that you had to cut that 200,000 from the CRTC decision. It was that significant.

[Robert Malcolmson]

Yes, as I said, the CRTC decision slashed the rates that we were able to charge third parties seeking access to—

[Brian Masse, NDP, Windsor West, ON]

What was that going to cost you for those 200,000 homes?

[Robert Malcolmson]

I'm trying to answer your question in a fulsome way. The CRTC slashed those third party access rates by 82%. That made the business case to build in the areas where we decided not to continue building not viable. That's why we stopped it.

[Brian Masse, NDP, Windsor West, ON]

By how much? What was the number for not viable?

You must have done a responsible business plan for this. You're telling me—for a company the size of Bell, with the resources you have—that the CRTC makes a decision that affects a planned rollout to 200,000 homes and you say it's not financially feasible for a company of your magnitude to continue that. There must be a number for why that was no longer applicable for the rollout.

[Robert Malcolmson]

If you were in business and you had to sell a product that cost you $100 to make and you had to resell it for pennies on that dollar—

[Brian Masse, NDP, Windsor West, ON]

Okay, so you don't want to share that. Either you don't want to share that, or you didn't do the model and it was a like a spoiled child or a knee-jerk reaction to something. You don't have the number to present for what you were going to save and now you're saying you're rolling out for these 200,000 people more as a favour....

What was the actual financial loss Bell would have taken on this? I think it's important.

[Robert Malcolmson]

What's important is to have a mature, non-emotional conversation about the high costs of delivering broadband connectivity to parts of our country—

[Brian Masse, NDP, Windsor West, ON]

I'm sorry it's emotional for me, because we have Canadians who were denied service who need it right now for their families, for their education and for everything else. That's all delayed because of the decision that you took and the consequences of it.

[Jonathan Daniels]

If I could just jump in here, I would point out to the honourable member that in addition to the fact that there was a requirement to cut a cheque for over $100 million—in our case, to resellers who weren't going to use that investment—that was straight out of investments we were going to make.

The other thing that you must keep in mind is that we've actually increased our rollout of wireless home Internet over this period of time while that decision is being reconsidered.

[Brian Masse, NDP, Windsor West, ON]

As you access more public money.

[The Chair, Liberal, Sherry Romanado]

Thank you.

Unfortunately, we're over time on that. I want to remind folks that it's important to let people finish their questions for the sake of translation. The translators cannot hear when there are two people talking.

We'll now go to MP Cumming. You have the floor for five minutes.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, Mr. Malcolmson, for being here and for being in the hot seat, as we would say.

If you feel some passion and emotion on this issue, it's because all the members on this committee feel very strongly about the lack of service in rural Canada. If you're getting a lot of emotion here, it's for good reason. We hear from our constituents and our constituents are very concerned about this.

I want to deal with a couple of your recommendations, specifically around the combination of funds. Has Bell received or made any kind of application as it relates to the Infrastructure Bank and its fund?

[Robert Malcolmson]

Yes, we've had extensive discussions with the Infrastructure Bank over the past couple of years, trying to come up with a financial model that would combine Infrastructure Bank funding with our private sector investments in an effort to roll out broadband to rural areas, and those discussions continue.

[James Cumming, Conservative, Edmonton Centre, AB]

There is a variety of funds here, and I think I agree with you that accountability to one person or one agency can make some sense. We've heard other witnesses suggest that.

I'd be interested in your remarks related to this: Should the government—the Infrastructure Bank, given your access and your ability to access public markets and public funding—be in the banking business as it relates to infrastructure build-out?

I get your argument about those jurisdictions that are unprofitable, but I'm not sure that I get the argument of why it would be in the banking business.

[Robert Malcolmson]

I think if there's an opportunity for the bank to provide low-cost debt financing to someone who is willing to invest in network connectivity, that's another financing mechanism that doesn't necessarily have to involve public subsidy in order to build broadband.

I think it is an option that should be looked at and that could be viable for the bank to engage in.

[James Cumming, Conservative, Edmonton Centre, AB]

I'm not sure that the public markets can get much lower in interest rates right now, so I'm not sure that that's a role for the government, but I'll take that at face value.

The other recommendation that you made was on spectrum funds' being redeployed into rural access or into programs. I'd like to ask you about the converse of that. What if the spectrum auction was more focused on outcomes that had higher utilization in rural sectors?

Rather than create a model where we're receiving the revenue we receive off spectrum and then the government deciding on how to redeploy it, why don't we hold companies that apply for spectrum accountable to deploy more of that spectrum into the rural sectors?

[Robert Malcolmson]

Today, as I think you can appreciate, the money from spectrum auctions goes into the consolidated revenue fund. Our point is simply that it doesn't seem to come back to an allocation for rural broadband, and maybe that is something worthwhile for the government to look at.

Your concept of obligating companies like ours that are willing to bid on spectrum and acquire spectrum to have access to spectrum dependent upon rural deployment obligations is also a viable idea. Despite what the honourable member Masse may think, that's an idea that certainly seems viable to us as a company that is ready, willing and able to invest in rural broadband, and we'd be happy to discuss it further.

[James Cumming, Conservative, Edmonton Centre, AB]

For the funds that you currently receive capital from, how have you found the application process and the time from when you put an application in to the time to market?

We've heard from witness over witness that the rollout is way too slow in all these programs.