Evidence of meeting #26 for Industry, Science and Technology in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was prices.
A video is available from Parliament.
President and Chief Executive Officer, Rogers Communications Inc.
Yes, it is profitable—6% last year and 8% in the last many years.
Liberal
Ali Ehsassi Liberal Willowdale, ON
So, you would agree with me that the reason this acquisition is happening is not because you're really hurting, because you're desperate and because you need to do these things to come up with savings. Is that correct?
President and Chief Executive Officer, Rogers Communications Inc.
This acquisition is about looking to the future, not the present.
Liberal
Ali Ehsassi Liberal Willowdale, ON
Okay, it's looking to the future.
Looking to the future, would you agree that, as a general rule, Canadians are very much concerned?
President and Chief Executive Officer, Rogers Communications Inc.
I think Canadians want the ability to get services that are affordable. They want to see prices continue to come down. They want their telecom service providers to be able to invest in that future and deliver what's next.
Liberal
Ali Ehsassi Liberal Willowdale, ON
You keep referring to a study among OECD countries that indicates that in terms of affordability, we're in the middle of the pack insofar as the over 30 OECD countries are concerned. Is that correct?
President and Chief Executive Officer, Rogers Communications Inc.
That's correct—and the Wall report and the CRTC monitoring report.
Liberal
Ali Ehsassi Liberal Willowdale, ON
Is that something we should be proud of? Are we supposed to say that's just amazing, or do you think consumers have every right to be concerned?
President and Chief Executive Officer, Rogers Communications Inc.
I think we're all committed to finding ways of delivering more value and more affordability. I think our Connected for Success program is a great example of something that's very important to us. It does exactly—
Liberal
Ali Ehsassi Liberal Willowdale, ON
But connecting to rural areas.... To refresh my memory, I remember in the past you've said that you can't see a business case for that program. Is that correct?
President and Chief Executive Officer, Rogers Communications Inc.
It requires a longer return on that business case. Right now, the capital—
Liberal
Ali Ehsassi Liberal Willowdale, ON
But you said there was no real business case. In the past you have said that—that in terms of rural connectivity the government is pushing way too hard and there's no real business case. Do you recall having made that statement?
President and Chief Executive Officer, Rogers Communications Inc.
There's a business case with government collaboration, as there has been with the universal broadband fund, the EORN initiative, the SWIFT initiative, the CRTC funding. These are real programs that are making a big difference—
Liberal
Ali Ehsassi Liberal Willowdale, ON
But you don't recall ever having said in the past that there was no real business case to be made about the government's concern about rural connectivity. You have no recollection of that.
President and Chief Executive Officer, Rogers Communications Inc.
It's very challenging, on your own, to build a business case for connectivity that requires a 50- or 100-year payback. It's very challenging. Now, together with government, with new technologies that exist—because 5G creates a new way of covering rural Canada that didn't exist in the past—that business case just got better because of 5G and what's around the corner.
Liberal
The Chair Liberal Sherry Romanado
Thank you very much.
I have a gentle reminder to not talk over each other so the interpreters can do their work.
We'll now start our third round of questions. The first round goes to MP Baldinelli.
You have five minutes.
Conservative
Tony Baldinelli Conservative Niagara Falls, ON
Thank you, Madam Chair.
Thank you to the witnesses for being with us today.
I want to build on some of the questioning that took place earlier from some of my colleagues. It essentially revolves around the idea of “Why now?”
Mr. Natale, you talk about the notion of scale and scope and $26 billion being required to afford that move to 5G. We've heard about the wholesale access rates and the spectrum decisions that are upcoming, so why is this merger required now?
President and Chief Executive Officer, Rogers Communications Inc.
The timing of “Why now?” is linked to the Shaw organization and Brad and when they decided to make the decision. What I would say to “Why now?” is that it's because we're at an inflection point. Every generation or so this industry re-ups—every generation or so this industry makes a massive investment in the future.
Then you work your way over the next decade or so to climb out of that investment, and you hope to make the right return. You count on a regulatory framework and consistency around that framework so you can make some money coming out the other end.
We're at the doorstep of that next inflection point.
I would encourage Mr. Shaw and Mr. McAleese to add to that, because I don't want to take away from their time or their narrative.
Executive Chair and Chief Executive Officer, Shaw Communications Inc.
Thanks, Joe.
I'll have Paul start, and then I can add a little at the end.
President, Shaw Communications Inc.
Thank you, Brad.
I'll echo Joe's comments. We are faced with an opportunity going forward in 5G that we are challenged by in terms of the depth of spectrum assets we have and the ability to reach rural and remote communities. It's desperately needed, as some of you have commented before. This is a unique moment in time for us, and in combination with when Brad and the family looked to trade in the asset, essentially, for equity in Rogers, this felt like the right time.
Conservative
Tony Baldinelli Conservative Niagara Falls, ON
Thank you.
Mr. Natale, we're talking about use of words like the importance of scale and strong players and $26 billion required for this investment in 5G, and you're still talking about the need for robust competition. At the same time, when you're talking about strong players and scope and scale, could you not see further consolidation happening in our sector, as opposed to increased competition?
President and Chief Executive Officer, Rogers Communications Inc.
It's hard to speculate on what might happen to the future of the industry over time. This is a question that has been debated in the telecom industry for a very long time. It has been debated around the notion of foreign ownership. Do we just open up the border and let U.S. come in and buy out Canadian telecommunications providers? These are broader questions that have a lot to do with [Technical difficulty—Editor]. What is it with respect to sovereignty and security in a nation? How many players are enough, etc.?
At the heart of it, in any country in the world where you have a number of strong players with the ability to invest and they can go toe to toe, that's the greatest source of competition: strong players that can go toe to toe. [Technical difficulty—Editor] Shaw and Rogers will be far stronger, far more capable and can go much further toe to toe, whether it's building out or going right up against the competition. I believe that in my heart.
I look at competitive intensity with my team every Monday and Tuesday for the [Technical difficulty—Editor] in a sort of “what happened this weekend?” discussion. I will tell you that every weekend it's a big fight for the next customer, and the strength of the company matters in terms of that fight.
Conservative
Tony Baldinelli Conservative Niagara Falls, ON
Thank you.
Also, quickly, in terms of the announcement and the impressive investment decisions—$6.5 million into western Canada and $2.5 million of that into 5G specifically—are those investment decisions contingent on Shaw retaining its 5G carve-out and its ability to take part in the upcoming spectrum auction?