Industry Committee on April 7th, 2021

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you.

My last question is for you, Mr. Boswell. You've confirmed all my suspicions. I knew that if you appeared it would be difficult for us to get a lot of information out of you, given your interest in remaining neutral.

Could you perhaps talk about what you were mentioning at the end? You talked about negotiations, after you've done your analysis, and the possibility of divestitures. Can you elaborate on the divestiture process and give us all a better sense of what that will entail?

[Matthew Boswell]

In 15 seconds, given the chair's yellow card, I can say that essentially in all merger reviews, if we come to a conclusion that there is a substantial lessening or prevention of competition, we engage with the parties to see if we can negotiate an acceptable settlement to address the competition concerns to protect Canadians.

[Ali Ehsassi, Liberal, Willowdale, ON]

What would be the one case in which you ordered the highest number of divestitures?

[Matthew Boswell]

Oh boy—there's the red card. I don't know offhand.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Saved by the red card.

With that, we have a little bit of time remaining, so I'm going to give one slot to each of the parties so they can ask some final questions.

Mr. Généreux, you have the floor for five minutes.

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

Thank you, Madam Chair.

Mr. Scott, do we agree that, in general, the more competition there is, the more varied the offerings, and more importantly, the lower the prices?

[Ian Scott]

Yes, that is generally the case.

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

You forced companies like Telus, Videotron and Bell to provide wholesale services at 83% off to resellers, which Mr. Péladeau amiably referred to as parasites, so that they could enter markets where the big players were not present.

Has this resulted in lower prices in some segments?

Maybe Ms. Wright or the other witnesses could answer that question as well.

[Ian Scott]

I'm sorry.

As I said before, once we start talking about specific situations, that is an issue. The issue of MVNOs and resale in the wireless segment is one of the core issues in the proceeding that's before us.

I will take a moment to acknowledge the Competition Bureau's extensive work in providing a major submission and analysis in that work, but as I said, the decision is forthcoming, and it wouldn't be appropriate for me to comment on such a significant element, such a central element.

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

Ms. Wright, do you have anything to add or are you in the same situation as Mr. Scott?

[Leila Wright]

What I can add is essentially what we have put forward in our submission. One of the largest findings in our submission is that when you have a market with a strong regional competitor present, you will find that there are price drops in the range of 35% to 40%. The remedy we suggested to the CRTC was a remedy that was intended to make that price competition happen in more markets across Canada so that more Canadians can benefit from that type of competition and that type of price lowering.

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

So why is it so difficult for secondary players to enter the market? I gather that many want to do so, and it would be beneficial to Canadian consumers. Why isn't this allowed more?

I'm asking Ms. Wright the question, unless Mr. Durocher or other witnesses want to comment.

[Leila Wright]

I'm happy to answer that question.

Our analysis in the wireless sector for the submission that we made to the CRTC was really focused on how you get more regional players into more markets across Canada. What we found is that facilities-based competition is the best type of competition. This means that we put forward a remedy that focused on creating an MVNO framework that would allow for facilities-based competition, which is the most sustainable type of competition in the long term in Canada and will result in lower prices for Canadians.

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

Ms. Wright, I don't know whether you've reviewed the evidence that we heard at our previous meetings. However, the evidence makes it clear that a number of people don't feel the same way as you do, particularly the major players.

Are you aware of this?

[Leila Wright]

Yes, we are aware of that.

Essentially, MVNOs are competitors who have to rely on their competitors for a necessary input into their business. They're relying on their competitors to access spectrum.

If we can create a way for there to be independent competitors in the marketplace so that they're not relying on anyone else in the marketplace—they're able to control their prices and they're able to control their network quality entirely—then we can potentially see the same type of price decrease that we saw in our analysis, which was up to 35% or 40% if you can get a strong regional player into the market.

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

In that case, Madam Chair, I think that I'll propose a new study or a review of how this entire market operates to ensure more competition in Canada.

Thank you, everyone.

[The Chair, Liberal, Sherry Romanado]

Thank you.

Our next round of questions goes to MP Badawey.

You have five minutes.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I do want to get back to the two previous speakers, but I think it has to be prefaced by a question. I'm going to give this question to someone I haven't heard much from today. I'm going to give it to the Department of Industry.

The government has enacted pro-competition policies by setting aside spectrum for smaller regional carriers, but there's a fear that if Rogers were to acquire Shaw, they would then get that set-aside spectrum at a cheaper rate than had they been on spectrum themselves, of course. Could you please explain further spectrum transfers, the work involved and the types that would be allowed, denied or forced to sell?

[Éric Dagenais]

Yes. Thank you. It's not a simple question, but I'll try to provide a simple answer, Madam Chair.

Essentially, what the minister would look at in the context of a merger would be spectrum that is being transferred from one party to the other and spectrum concentration in the different licence areas. We would be looking at areas licence by licence to look at the availability of spectrum to other parties.

In the specific case of Shaw and Rogers, while I've said I won't comment on the transaction, some of this is on the public record. If we look at our previous 600-megahertz auction, which took place in early 2019, we had some set-aside spectrum. Shaw bid on it and won some licences. The minister issued those licences with conditions attached.

Those conditions included a prohibition on the transfer of those set-aside licences to incumbents for a period of five years. That's one way in which.... When we have set-aside or competitive measures to encourage competition in the wireless market, it's one of the measures that we typically put in place to ensure that the kind of scenario you describe doesn't take place, or at least doesn't take place in the immediate years that follow, and that it's not an opportunity for arbitrage.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Dagenais.

I'll go back to Mr. Généreux's comments to Ms. Wright with respect to getting into areas that sometimes might not be as advantageous for the bigger players and therefore allowing all players to have an equitable stage, I guess, to stand on.

Ms. Wright, you mentioned the fact of having the ability to get into areas. Although, as Mr. Généreux said, the big players don't like it with respect to the market share, in the direction you spoke about, do you find it advantageous for rural communities to actually have these capacities offered to them where they aren't now and, as well, at affordable pricing?

[Leila Wright]

Thank you for the question.

Madam Chair, our analysis was really about trying to get competition out to every community in Canada. We found that if you can get strong regional players into every community in Canada, Canadians can benefit from the competition that we're seeing in particular areas of Canada.

When it comes to rural and remote areas of Canada, oftentimes it's difficult to build a network when you don't have a customer base. Our proposed remedy to the CRTC focused on allowing regional players to access spectrum from incumbents for a period of time while they are building out their network. That would allow them to develop a customer base while at the same time building out a network, and then transitioning to their own network so that they would be an independent competitor in that marketplace.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Ms. Wright.

Again, I guess to the same comments or questions that I had for Mr. Boswell earlier, do you find that the current act allows you and others who are on this panel the ability to actually bring forward these recommendations in a manner in which they will be done or they will be not done or there will be the possibility that there might be a challenge? Do you find that those opportunities are present now or that there should be some adjustments made to the act in the future?

[Leila Wright]

I can speak specifically to the proceeding in front of the CRTC. What was extremely helpful for us in making the recommendations that we made to the CRTC was the ability for us to get data from market participants so we could do our analyses and base our recommendations on those analyses.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Ms. Wright.

We see the red card. I feel like I'm in a soccer game. I'm getting tossed out of the game now.

Thank you, Madam Chair.

Thank you, Ms. Wright, and thank you to all the participants.