Industry Committee on April 6th, 2021

[Matt Stein]

Yes. I'll make a quick comment and then [Technical difficulty—Editor].

First, it's important to understand that Shaw, with Freedom.... Before it was Freedom, it was Wind, and Wind itself I referred to earlier as the instigator. It was an instigator of competition; it wasn't a vertically integrated, well-monied company that had many other assets and many other types of business in the same region. It was an instigator; it was scrappy; it was trying to find ways to compete in a tough market. It's that behaviour that Canadians need.

What they've had in the time under Shaw has been a very weakened version of that, and you can see many examples of how Shaw, over the time it has owned Wind, has adapted and modified it. It's become far more like the big incumbents we're referring to here. That's important to understand, first of all.

I'm going to turn it over to Geoff to elaborate further.

[Geoff White]

I feel like we need a CrossFit clock here, so I can watch the time count down.

Mr. Lemire, the fourth player model is clearly broken. We need a full, open, wholesale access model. The CRTC currently has the tools for it.

Mr. Jowhari, you asked where we should look for this. You look to section 7 of the Telecommunications Act, which says the telecommunications policy of Canada is to respond to the social and economic needs of users. You look at section 27 of the Telecommunications Act, which says that the rates charged by Canadian carriers should be just and reasonable. You look at the CRTC's recent consultation on mobile virtual network operators, and you [Technical difficulty—Editor] send a strong political message to the CRTC to do something about this problem.

Yes, the efficiencies defence is going to be a problem and this merger may go forward from a Competition Bureau perspective, but the CRTC regulates this industry and has clear policy directions. It just needs the government to stand behind it when it makes a decision.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Masse for two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

Thanks, Mr. White, for finishing that intervention. It was good to get an idea of the specifics.

Ms. Shaban, Rogers made a play for Cogeco earlier this year. We went out strongly against it, or I did anyway, because I was concerned about the precedent it could set. It was a hostile takeover, and it fell apart.

Then the spectrum auction coming up right now was delayed by six months. This clearly has a significant impact on the spectrum auction; it'll have an impact on the number of customers for the auction; it will impact how and whether there are set-asides in policy for it.

Should the spectrum auction now be held off? Do you have an opinion on that? I'm looking for some direction about that. Should it be extended, or...? If Shaw doesn't bid, then we say no, and then later on they're out of the market for this auction, and that's not a good sign.

[Robin Shaban]

Yes, that's an intriguing question. I don't have an informed view on that.

[Brian Masse, NDP, Windsor West, ON]

Okay. Does anybody else—Mr. White or Mr. Stein or Jean-Philippe—want in on that? You're going to be affected by that. I don't know if you want to comment or not, but the floor is yours if you do.

[Geoff White]

The problems of high prices, lack of competition and even how to better serve Mayor Wood's constituents are really solved by service-based competition. It's the reason we have competition. We had it for long distance; we had it for home phone. We had, for a period of years, a workable model on home Internet. We pay the incumbents to use their facilities; we pay them a markup as well. If you apply this on the wireless side of things too, there'll be a win for Canadians—

[Brian Masse, NDP, Windsor West, ON]

So do we hold off on the spectrum auction or not? That's what I was looking for. I have only 30 seconds.

Sorry, Mr. White.

[Geoff White]

I will say it: Yes. Yes, hold [Technical difficulty—Editor]

[Brian Masse, NDP, Windsor West, ON]

Thanks.

I know that I only had seconds, Madam Chair. I'll send it back to you.

Thank you to the witnesses.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Dreeshen for five minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thanks again.

I wanted to make one comment. It was mentioned earlier that rural communities would be happy just to get good 3G. I agree that's important, but for the agricultural industry, 5G is important to them. Hopefully, this won't be forgotten as we look to the future.

Municipalities have a great many things they have to deal with, certainly, such as laying fibre and putting up towers. All of these things are issues as they go through everyone's communities.

Mayor Wood, has there been any backlash when these projects have been proposed and go through the approval process?

[Jim Wood]

Through the chair, thank you for the question.

Actually, we've seen the exact opposite. Our community has been very welcoming and understands that we have something really good coming. We're still in our initial stages, of course, but I can talk about some partnerships. We've partnered with some of our small towns as well and what's happened through that is that they've now in fact been able to see the level of service. In our small towns, we're talking about a gigabyte.

We're in fact trying to have high service, not just service, because our standard of service for some of these communities is so small that it does not meet rural needs. One good example, for instance, is that the local medical clinic in one of our towns now has the ability to efficiently upload X-rays. Just the ability to have good health services within our communities is so important. These partnerships are extremely important, and we can't do these alone.

I want to come back to a lot of the comments I've heard today. I'm going to deviate just a bit. I've been all around the world, and I've taken a phone with me wherever I go. I've been to some third world countries and I've see the costs there, and I just can't believe it. You throw a few dollars down and you get a month of service, including data. We come home and there's no competition whatsoever. There's no incentive to have competition in rural Canada if we don't have that backbone infrastructure here.

I hear people talk about the Competition Bureau and so forth, but what we need to do is get the backbone of all that infrastructure in place and allow all the companies [Technical difficulty—Editor audible] that infrastructure. You know what? I'm not worried about where that company is from, whether it's from Canada, the United States or anywhere in the world. We want to be competitive in rural Canada, and as rural Canadians we need to have that level. I don't believe that we even have good 3G right now, let alone.... I have so many dropped calls that I can't believe it.

In rural Canada, we're so far away from what we're hearing about 5G.... I appreciate the question on 5G, but we need to start something here. Our goal at Red Deer County is to get a gigabyte for fibre, to get at least 200 megabytes to our rural people and to in fact have something that's not going to stall out. Currently, people are paying for services that they're not getting, and those services are so slow that the Internet actually stalls out. They've put so many people on that one bandwidth that as people come on it slows down and finally stops.

I think we need to see the change, and that change will never happen without legislation. I know that I'm deviating from the purpose of your meeting today, but if that legislation comes into play, there in fact will be absolutely no need for Rogers or Shaw to merge. They would be able to use that open network that's available, and everyone is going to thrive.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you very much.

Mr. Stein, your organization [Technical difficulty—Editor] telecom sector and in response to the larger telecom companies' extensive lobbying of the government to call into question the CRTC's ruling on wholesale access rates. You suggested that we should adopt a system of retail-minus rate setting, whereby the interim rates are automatically set at the incumbents' own retail price minus a set percentage. Can you explain what that suggestion is about and who it would help?

[Matt Stein]

Sure. The answer at the back is easy. It will help Canadians.

Let me explain. Retail-minus has been used in a number of places by the CRTC before. Our recommendation was that the CRTC use it to set interim rates. Remember that when the CRTC sets a rate, they have to do a long study and they have to figure everything out, but in the meantime, they know they're going there, so they set a rate in the meantime and, as said, in the words of the chair of the CRTC the last time this committee met on that topic, eventually everybody is made whole and we just need an interim rate in the meantime.

By setting it at retail-minus, by setting the retail-minus at 50% or 30% or something, it's very easy to set that rate and make it a rate that competitors can use to offer competitive services, unlike today, where not enough attention is spent on that rate. Instead, sometimes the interim rate is even more expensive than retail. For example, companies like the members of CNOC obviously cannot go ahead and create a competitive service and pay more for the service than a customer would in their own retail environment.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you very much.

[The Chair, Liberal, Sherry Romanado]

Thank you.

We'll go to MP Lambropoulos for five minutes.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you, Madam Chair.

I'd like to thank all of our witnesses for being with us today.

I apologize in advance if my computer shuts off. I don't think it will, but it's been warning me several times to restart. We'll see what happens.

I'm hearing everybody say that we need more competition. I understand, and I fully agree. I think the prices definitely need to drop. I represent a very socio-economically diverse population. Very many people in my riding would definitely benefit from better prices, even though we live in Quebec. So I agree with you 100%. It's just that currently, not all communities in Canada are connected. We don't have [Technical difficulty—Editor] needed in order to connect everyone just yet. Part of this merger is a promise to connect rural and indigenous communities, as many of you I'm sure have heard. This is something that we don't hear very often, because it's not worthwhile for big companies to necessarily go into these communities and have them connected.

I'd like to know from you about the ways in which we can incentivize these big companies to build in these areas, especially if we're going to open the door to competition and allow everybody to use this infrastructure, as some of you have suggested. What are the ways in which we could incentivize and make sure these companies see a reason or a need to actually go into these communities? The goal is really to have everybody connected as soon as we can.

[Geoff White]

If I may, I'll go first.

It's a very important issue, obviously. It's something our members support. Let me just say that competitors are not just competing on price. There are non-price factors that they compete on as well. Some of our members, for example, respond to the language needs of different community groups in Canada.

The one thing this government and this committee shouldn't do is recommend that a monopoly is somehow needed to solve this problem, because it hasn't worked. The monopoly isn't working. We're talking about these very large companies that were found by the CRTC to have engaged in misleading and aggressive sales practices with their customers in urban areas. There has to be a certain amount of scrutiny on the motives these companies face. With the right regulatory measures, which is wholesale open access, there will be a business case. You will be able to let the smaller competitors ride on those networks.

On these questions about rural investment, these companies that are taking the Canada emergency wage subsidy and paying dividends at the same time, yet earning abnormal rates of return, it's the business model you have to be skeptical of and how they're aligning their priorities. It hasn't been serving the rural and remote areas. It's the smaller competitors that our association represents. Using a model that is tried, tested and true from the CRTC, that we suggest will work....

If I may, when the CRTC appears before you, I would ask them when they will be making their decision on mobile virtual network operators. That is really what's holding us back right now. They won't give us an answer. It's very unusual for a regulator to take such a long amount of time for an issue that everyone understands to be so important. We have zero indication in this industry of when this will happen.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you.

Ms. Shaban, you seem eager to respond. If you'd like to add something, go for it.

[Robin Shaban]

My quick comment is that perhaps the solution is not a market-based one. Perhaps the solution is having communities themselves build infrastructure, just like Red Deer County. I also understand that the City of Toronto is implementing its own initiative to build a Wi-Fi network. Perhaps we shouldn't be relying on the big telcos to build this infrastructure. Maybe there's just no way for it to be profitable to them or to hold them to account to actually follow through on their commitment.

[Prof. Dwayne Winseck]

I'd like to add a couple of points.

I think Robin is dead right. The experience of Mayor Wood there is spot on. The interesting thing is that Mayor Wood's experience is replicated across the country. It has been for over a century.

I think there are a couple of really important things right now. One, the CRTC has just concluded its rural broadband barriers initiative. The story is all laid out there, the evidence is all laid out there, and there's a problem. One of the problems there is the lack of regulatory fortitude. As I like to say, the regulator needs to steel its spine.

The second thing is that we have to stop juxtaposing MVNOs versus the fourth maverick player. As soon as T-Mobile in the United States was told that it couldn't [Technical difficulty—Editor] by AT&T, one thing it did was to open up its wholesale access infrastructure to MVNOs. MVNOs in the United States took off. So we need both. It's not either-or.

I will stop there.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you very much.

[The Chair, Liberal, Sherry Romanado]

Seeing that we have a few minutes left, we'll do another round of slots for each of the parties. We'll start with MP Dreeshen.

You have the floor for five minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you.

I think I'd like to go back to Mr. Stein to allow him to flesh out, a little bit more, the wholesale access rates.

Also, you suggested that we should consider splitting the large incumbents into two parts: retail and wholesale. You suggested, if these things don't happen, competition is going to suffer permanent damage. I wonder if you could expand on what you feel those proposals would be like and how this would address the merger that [Technical difficulty—Editor].