Industry Committee on March 29th, 2021

[Joe Natale]

Mr. Baldinelli, I really can't comment on anything to do with the upcoming spectrum auction. I would say to you that those are bona fide commitments based on this transaction receiving approval, and they're things that we believe really matter to the future of Canada and of western Canada especially.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

That's great. Thank you.

Do I have any time, Madam Chair?

[The Chair, Liberal, Sherry Romanado]

You have eight seconds.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Okay. Thank you, and thank you to our witnesses.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Erskine-Smith.

You have the floor for five minutes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much, Madam Chair.

To summarize what I've heard so far, I've heard that the deal will accelerate investments to expand your networks to rural and remote areas, which you were largely, from what I understand, already planning to make. You've also said, though, that it will improve competition in the long term, and I have to admit that I find that particular submission to be a confusing one.

Mr. Shaw, in a brief submitted to this committee on January 15 of this year, Shaw stated that “regional facilities-based competitors—Shaw, Videotron, and Eastlink—are rapidly disrupting the dominance of the Big 3...and driving unprecedented levels of affordability and choice for consumers.” It went on to say, “Freedom’s entry has shifted the market dynamics, causing the Big 3 to drastically reduce overage fees and offer significantly more data for much lower prices.”

In this deal, we lose that competition and disruption, and we lose a pressure towards affordability. If we take your past statements of January of this year at face value, shouldn't we expect a negative impact on affordability of telecommunication services in this country if this deal goes through?

[Brad Shaw]

I'll start, and maybe Paul can add to it.

I think, certainly, as we look.... As an entrepreneurial family and company, you're always looking forward and you're looking to the future. I think that for all the moves and our commitments that we've made up until now, we certainly have driven competition, driven choice and driven a lot of value for Canadians, but as we look at it, we say “Wow, how do we really make sure we're prepared to make the right investments?” I think, as Joe has said, that the combination of these two companies will drive unparalleled investment as we go forward—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

I'm not speaking to investment. I'm speaking to affordability on price. If you could restrict your comments specifically to price, isn't this a net negative in driving...? We're going to lose competition that has previously driven down prices, in your own statement.

[Brad Shaw]

Well, I truly believe that.... Listen, we all like to win and, in this country, I think Shaw has proven that it's willing to do anything with innovation, customer choice and value. I think Rogers has been the same. I think the combination, with a stronger competitor in Canada, will drive value, choice, innovation and new services for both business and consumers—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

But not lower prices.

[Brad Shaw]

Well, [Technical difficulty—Editor].

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

You think a lack of a competitor will drive lower prices, despite previous statements from January of this year that say that increased competition has in fact lowered prices. Now a lack of competition will do the same thing.

[Brad Shaw]

No, I just think.... Listen, with the amount of investment and what we're focused on to provide more competition on rural and remote and for all Canadians, I think for sure, you're going to.... We want to gain market share. We want [Technical difficulty—Editor] so I think with that, you're going to continue to make sure that you do the right things to provide that choice and to provide that value.

We're not about to sit there and go, “Wow, how do we raise prices to take less market share?” How do we get that return on that 10-year cycle of capital? How do we make sure that we make the right choices as this joined company to create new opportunities for Canadians and new value and new choice—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Let's talk about return on value for consumers and for the Government of Canada, because it has been a long-standing policy, not only of Liberal governments but of Conservative governments, over the past decade to really encourage a fourth wireless carrier to ensure that we have competition and that prices are driven down.

There is a financial cost to the government in restricting the auction rules. I think you'd agree with that. The government lives with that cost in order to increase competition and benefit consumers. However, if the government subsidizes smaller regional players like Shaw at auction, only to see those same players subsequently acquired by one of the big three, isn't the government really subsidizing you, your shareholders and executives as you cash out?

[Brad Shaw]

I'll ask Chima to comment and then I'll add some comments after.

[Chima Nkemdirim]

MP Erskine-Smith, one thing I'll point out is that at Shaw we're really quite proud of what we've done on wireless since we entered the market in 2016. Since that time, with the acquisition of Wind Mobile, the spending on spectrum and the investment in the network, we've spent over $1 billion. As of today, though, Freedom is still not free cash flow-positive.

During that time, we also went from five cities to 30 communities. However, there are still primarily 30 urban centres in western Canada, so when we take a look at the need for rural connectivity and the investments required to bring in 5G, we see that it's a huge commitment and a huge undertaking.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

I do appreciate that 5G is a huge undertaking. That doesn't respond to my question, though.

I have 30 seconds left, so I will ask my last question.

The Competition Bureau has said, “Where the Big 3 face a wireless [competitor], prices are significantly lower.” It has gone on to say, “Wireless disruptors offer the most promising path forward. They drive lower prices, greater choice and increased levels of innovation in Canada”.

If the Competition Bureau says the deal can go through but that, at a minimum, you have to spin off your wireless business, is it still a deal you're going to move forward with?

[Joe Natale]

First of all, we will work very closely with the Competition Bureau to find a solution to whatever it deems is the appropriate path forward. However, I can't comment any further on what we will or will not do until we get into a room with the Competition Bureau and go through its public process, where others will have a chance to offer their views and opinions on the state of competition in Canada.

I can tell you that we're committed to competition and the intensity and affordability that it delivers. It's been that way from the beginning.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

[The Chair, Liberal, Sherry Romanado]

Mr. Lemire, you now have two and a half minutes.

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

Thank you, Madam Chair.

My question is for Mr. Shaw and it follows on that of my colleague, Mr. Erskine-Smith.

I am also wondering about the chronology of events. On January 15, barely two and a half months ago, you submitted a brief to our committee on the accessibility and affordability of telecommunications services. In that brief, you said that, “regional facilities-based competitors—Shaw, Videotron, and Eastlink—are rapidly disrupting the dominance of the Big 3 (the three major providers)—Rogers, Bell, and Telus—and driving unprecedented levels of affordability and choice for consumers.” In other words, this benefits consumers.

In light of that statement, what would be the repercussions of the proposed transaction? I would ask you to focus your answer on cellular telephones and wireless telephony because we have already had answers on cable technology.

[Brad Shaw]

I'll have Paul start and then I can add to that.

[Paul McAleese]

Thank you, Brad.

We believe that Canada needs dynamic competition, not a magic number of competitors. The test here really needs to be about how the market is performing.

As you've heard today from a number of witnesses, there has been a significant and rapid decline in the cost of cellular service across Canada. As much as I would love to take credit for that and suggest that Freedom has been solely responsible, the truth of the matter is that all carriers have had a significant role in driving new [Technical difficulty—Editor]. Telus was the first to launch $99 unlimited talk and text for a year, letting limited-use subscribers have a much more affordable way into the sector, and Rogers—led by Joe over the last number of years—was the first to successfully market [Technical difficulty—Editor]. I think 2.5 million people have enthusiastically signed on to that plan. Today they are receiving extraordinarily strong value, the peace of mind that comes with no overage fees and, I suspect, very high customer satisfaction.

It is not simply a matter of how many carriers are in the market, but in fact what they're doing in that market.

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

I'm going to have to stop you there, because I'd like to ask you a follow-up question regarding the chronology of events.

Did you decide from the outset to put all your eggs in the Rogers basket? Did you consider other factors, such as Eastlink or Videotron's presence in the wireless sector, with regard to selling your assets?