Industry Committee on March 31st, 2021

[Brian Masse, NDP, Windsor West, ON]

You still believe in that. Okay. I just think it's important to note, though, that when any one of these four is diminished and reassembled, we still have less competition.

Thanks, Madam Chair. Those are my questions.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Généreux.

You have the floor for five minutes.

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

Thank you, Madam Chair.

I would remind all my colleagues that we have three witnesses with us. We seem to have forgotten Mr. Pruneau from the very start.

So I have a question for the three witnesses.

Is it a go? If so, how or why?

Monsieur Pruneau.

[Jean-François Pruneau]

As Mr. Péladeau mentioned, I don't think anyone wants the fourth operator with facilities in the Alberta, British Columbia and Ontario market to disappear. If a change in ownership were to be transacted, I think it would have to be subject to binding conditions for the disposal of that asset, conditions respecting all elements needed to operate a wireless services business, not just the number of subscribers. Consideration would obviously have to be given to the entire spectrum portfolio, but it would also have to be determined whether any suitable and fair agreements were in effect respecting roaming, use of the wireline transport network and tower sharing. All those conditions would have to be considered.

I think that's one of the mistakes that was made in the transaction between Manitoba Telecom Services and Bell. The parties broke down the competition by directing some subscribers to Xplornet and others to Telus without necessarily subjecting those transfers to other conditions that would guarantee viable and sustainable competition.

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

Thank you.

Monsieur Thomson, what do you think? Is it a go or a no go?

[Jay Thomson]

I'm sorry, but could you repeat the question?

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

Do you think we should go ahead with it? If so, why?

[Jay Thomson]

Again, it all depends on the conditions that are attached to it. If ultimately there are rules to ensure that consumers are protected from this and it's to the benefit of consumers, then yes, I guess you should go ahead with it. But there are a lot of things that have to happen. There are a lot of rules that have to be put in place to make sure that this is indeed the case.

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

Do you share that view, Mr. Péladeau?

[Pierre Karl Péladeau]

That's correct, sir. I think Mr. Pruneau has accurately summarized our position.

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

All right.

I'd like to put my last question to you, Mr. Péladeau.

Going back to the service resellers issue, I found it unusual that you characterized them as parasites, since you candidly admitted you had initially been one yourself. I even think I've heard you say in the past that there was no need for resellers.

Today those resellers sell services equivalent to yours at lower cost because the CRTC has has granted them a basic cost reduction. How does that undermine the introduction of your technologies, particularly as regards 5G?

[Pierre Karl Péladeau]

I should tell you that that's incorrect. We have never said we were opposed to resellers. On the contrary, we think they encourage competition. So we're in fact in favour of their being in the market.

However, you have to see what the resale conditions are. As you know, a decision has been made, and the government has said it wants to review it. It has asked the CRTC to review its homework, as it were.

There has to be a balance in everything. If you pull an elastic band too hard from one end or the other, it may snap. Were the prices previously charged too high? I don't think so. You have to take many factors into consideration and perform a complex calculation in order to set prices. Never forget that, when you say third-party Internet access, or TPIA, you talking first and foremost about all Internet access, not wireless services. Wireless services are currently covered by an authority. So we'll see how things turn out.

You also have to understand that wireless assets aren't the same as in the wired services sector. The wired sector has no spectrum component.

So it's incorrect to say we're opposed to TPIA. We're in favour of it, but a fair price has to be determined based on past investment by network builders. You also have to avoid creating an environment that doesn't encourage operators to invest in maintaining the network quality we have in Canada, which is among the best. Citizens and businesses must continue to enjoy a network conducive to very high productivity. Never forget that a telecommunications network is an essential tool to a country's productivity.

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

Thank you very much, Mr. Péladeau.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our last round of questions for this panel will go to MP Erskine-Smith. You have the floor for five minutes.

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

Thanks very much.

I want to start with Mr. Péladeau. We had executives from Rogers and Shaw before this committee a couple of days ago, and they said that the deal would increase competition, not reduce competition, pointing to the intensity of competition.

What do you make of those comments?

[Pierre Karl Péladeau]

I would say that history shows that when you have four operators, you'll be able to enjoy more competition. Therefore, that will be shown in the prices and different offers available to consumers. Otherwise, fewer players means less competition.

It's true in Canada, but it's true elsewhere. There have been many debates take place in Europe regarding the need for three or four operators. Most of the competition bodies there were in agreement. Quite simply, they found that a fourth operator would bring more competition. This is how it works.

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

Just to pick up on that, you've said in answer to my colleague MP Poilievre's questions that, at a minimum, if this deal is approved, it has to come with a condition that Freedom be spun off and continue to operate as a fourth competitive entity.

Are there any other conditions that you think ought to be imposed if a deal were to be approved?

[Pierre Karl Péladeau]

My intervention is to make sure that we will get and we will provide a competitive environment for Canadians in the wireless business. We don't compete against Shaw and the cable business, the Internet access business or the wireline telephony. I think that Shaw has been able to provide a very good service. In all those services, they are competing against a very large company on the western side of the country, which is Telus, which has been providing television as well for many years.

This is how it works. It's been providing for and servicing the market adequately, given also that you have smaller cable companies and also TPIAs that are providing a competitive landscape.

It's less true on the western side of the country. You will find fewer TPIAs available than you will find in Quebec, which is probably another reason why the wire line market is very competitive. If you want to make sure that you get competition in the wireless market, a fourth operator would be the best formula and the best solution.

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

Understood.

Mr. Thomson, I'll go to you with the same question. When we look at conditions, it seems that at a minimum, if this deal were to be approved, it couldn't be that Freedom would be rolled into the big three. What other conditions, if any, would you say are absolutely necessary for a deal to be approved?

[Jay Thomson]

Our position is that four isn't even enough in terms of the number of competitors out there to make sure that there are cheaper rates and more choice across the country. We forget that, in the focus on wireless in this arrangement, there is an impact on the cable side of the business, and the Internet side, with the growth that will occur for Rogers if it takes over Shaw.

That size, as I outlined in my opening remarks, has an impact on prices for cable television services. We need to have rules that confirm the CRTC's authority in the Broadcasting Act to protect consumers. Those same kinds of rules need to apply on the Internet side to protect consumers from the Internet operator using that size to reduce choice and access to Internet services, which is a real possibility.

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

Mr. Thomson, we have heard that there are three reviews set. ISED is reviewing this. The CRTC is reviewing this. The bureau is reviewing this. The bureau, it seems to me, has the biggest role to play, yet in March they came out against the Air Canada-Transat merger and the government approved it anyway. Do you have concerns that, regardless of what the bureau says, they're not going to be listened to?

[Jay Thomson]

The bureau has a role to play. I can't get it in advance as to how people will react to what the bureau does, but we're confident that it will meet its mandate.

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

Finally, Mr. Péladeau, if Freedom is spun off, are you open to foreign ownership of the fourth carrier to ensure competition?

[Pierre Karl Péladeau]

You know, foreign carriers unfortunately prove.... We saw what took place with Wind Mobile at the beginning of the auction in 2008. This was a failure. You need to be an operator and you need to have a strong financial base to be able to succeed. I guess foreign carriers are not able to bring this at the moment.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

That wraps up our first panel for today.

Mr. Péladeau, Mr. Pruneau and Mr. Thomson, thank you for coming and testifying today.

We really appreciate hearing from you.

With that, we will suspend momentarily to allow our first panel to leave and our second panel to join.