Industry Committee on Nov. 26th, 2020

[Brian Masse, NDP, Windsor West, ON]

Yes, I'm talking in particular about wireless service. Again, this is more of a policy question than it is about putting blame on any particular component. It's more of a policy question. It's what we've got, at the end of the day, and I don't think what we've got right now is a good spot in terms of cost-effectiveness for Canadians.

[Ian Scott]

I'll try to answer quickly so that I don't use up your time. I think there are a couple of factors. One, comparisons are hard. I mean, there are just so many factors; we do need to look at them carefully.

You are right that we have higher prices. We also, though, have a very high standard of coverage: 98% of Canadians have access to LTE, the latest and most modern technology. That's not true in many of those countries, including our neighbours to the south. We have a problem about pricing and affordability. That is what we are focused on at the moment in our major review of wireless.

[Brian Masse, NDP, Windsor West, ON]

Fair enough.

Do you believe, though, that there has been enough...? Here is the thing: Governments have collected over $22 billion from spectrum auctions. Has that policy of collecting money and then trying to do smaller programs and services later been effective, or is CRTC of the opinion that our spectrum auction is more geared to actually covering Canadians and keeping prices lower than to actually taking in money and then hoping things work out later?

[Ian Scott]

The CRTC doesn't have a view about how the government should allocate funds in that sense.

I guess the important point in the question is that if you took $22 billion from any source and directed it to the problem, obviously it would have a big impact, but it could have come from any source.

[Brian Masse, NDP, Windsor West, ON]

Thank you for that.

Thank you, Madam Chair.

Thank you to the witnesses.

[The Chair, Liberal, Sherry Romanado]

Thank you.

Our next round of questions goes to MP Sloan.

You have the mike for five minutes.

[Derek Sloan, Conservative, Hastings—Lennox and Addington, ON]

That's great. I thought I had only two and a half, so that's perfect.

Perhaps I can summarize the August 29 decision. It may not be a perfect summary, but basically it was decided that the large carriers were overstating their costs or essentially gouging wholesale providers, and this decision corrected rates based on evidence, and ordered repayments for the past three years.

In that report you used the words “very disturbing”.

I am just wondering, in regard to a decision like that, which I think is very important in the context of providing Internet service to Canadians, why not implement those rates now, even though you're doing a review on it?

I understand that while the case was before the Federal Court of Appeal, the court suspended the implementation of these rates, but since the Federal Court of Appeal has essentially confirmed those rates, why not put them in place now, pending the outcome of this review?

[Ian Scott]

Thank you for the question. I think it's important that I just quickly recharacterize what our decision is.

We had a large process whereby we received multiple submissions about what the correct costs were. We established interim rates while we deliberated on those, and ultimately we chose costs that resulted in reductions to the proposed costs filed by the incumbent companies. The interim rates, once they're made final, go back to the first point and parties are made whole. I just characterized it slightly differently.

As to the issue of why they're not in place, as you mentioned the courts had a stay until recently. In the applications for review and vary made to us, there were also requests for a stay. We didn't address those at the time because there was a stay imposed by the court. Once the court removed its stay, we had to consider those, and based on the applications made before us, they met the test and we granted the stay until we finish our work.

[Derek Sloan, Conservative, Hastings—Lennox and Addington, ON]

Would it be true to say that the decision that was made in August, 2019, in terms of wholesale rates has never, in fact, had implementation in the real world?

Was there a time in which those rates were applied before the stays were put in place?

[Ian Scott]

The interim rates had been in place, and then the commission made rulings on final rates. Those final rates have not been put in place.

[Derek Sloan, Conservative, Hastings—Lennox and Addington, ON]

The decision in August, 2019 was an interim decision?

[Ian Scott]

No, the August, 2019 decision was on the proposed final rate.

[Derek Sloan, Conservative, Hastings—Lennox and Addington, ON]

Right, so they have not been implemented yet.

[Ian Scott]

No, because they went to the courts and obtained the stay, and then we granted a stay recently while we complete our review and vary application.

[Derek Sloan, Conservative, Hastings—Lennox and Addington, ON]

Right.

I want to ask you a further question.

You've mentioned a few times that the CRTC is a quasi-judicial, independent body. Your activities are subject to government direction through various ministers, including the Minister of Industry. In the press release by Minister Bains on August 15, he characterized the decision made in August, 2019—and I'm summarizing again—as not entirely correct in terms of the balancing act.

Would you guys at the CRTC look at that press release and view that as government direction, or is your decision-making process entirely independent of that relationship?

[Ian Scott]

Our decision-making process is always independent. The government has the power to review and vary a decision, or they could send it back for reconsideration. The order in council that was issued at that time didn't do so. It acknowledged that the matter was in front of the CRTC, and it is, and we're continuing our work.

[Derek Sloan, Conservative, Hastings—Lennox and Addington, ON]

What he released at that time essentially has no bearing on the decision-making process that you're undergoing right now.

[Ian Scott]

We rely on the record of proceedings, so we have received applications for review and vary. We have received comments or submissions from other parties. That is the basis upon which we will make our decision.

[Derek Sloan, Conservative, Hastings—Lennox and Addington, ON]

Okay. I appreciate that. Thank you.

I'm done, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, MP Sloan.

Our last round will go to MP Ehsassi.

You have the floor for five minutes.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you, Madam Chair.

Thank you, Mr. Scott. This has been very helpful.

The first question I have, Mr. Scott, is on the last little while—the last decade, at least—when we've seen many low-cost operators enter the market. After some time, they've been gobbled up by the big telcos. Would you care to comment on that phenomenon and advise us as to whether there is a solution to that?

[Ian Scott]

I'm not sure which market segment you're referring to. I guess in the largest sense it's a pretty normal process, in that businesses may launch but they may not have either the financial wherewithal or the economic stamina, if you will, to make it in the longer run.

I think, for example, of someone who's engaging simply in arbitrage. It may be that when prices come down, they no longer have a sufficient margin within which to operate, and the business becomes more difficult. We don't have responsibility for reviewing market concentration in the sense of, for example, the Competition Bureau, which looks at mergers and acquisitions. We don't review mergers and acquisitions unless they had a fundamental impact or they related to Canadian ownership.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you for that.

There's another question that I had. Insofar as connectivity is concerned, there appears to be a lot of potential in using satellites. What would you say about the use of satellites to ensure that more Canadians are connected?

[Ian Scott]

Satellites play a very large role today, perhaps unnoticed or unappreciated, I guess, and they are all what are called geostationary satellites. They do provide service. Today, they provide television, telecommunications, GPS and so on.

A lot of the discussion today is about the low-earth orbit proposals or the systems that are being built. Indeed, they hold a great deal of promise, as they are a substitute for fibre and can provide low latency and high throughput services to individuals who aren't close to the traditional points of presence of telecommunications providers.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you for that.

Late last year, the CRTC launched a survey asking Canadians about mobile wireless services. Could you share with this committee what were some of the principal findings of that survey?