Industry Committee on Nov. 26th, 2020

[The Chair, Liberal, Sherry Romanado]

Good morning, everyone.

I call this meeting to order. Welcome to meeting number 7 of the House of Commons Standing Committee on Industry, Science and Technology.

Today's meeting is taking place in a hybrid format, pursuant to the House order of September 23. The proceedings will be made available via the House of Commons website. So that you are aware, the webcast will always show the person speaking, rather than the entire committee.

To ensure an orderly meeting, I would like to outline a few rules as usual.

Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of “floor” and English or French. Please select the language you will be using.

For members participating in person, proceed as you usually would when the whole committee is meeting in person in a committee room. Keep in mind the directives from the Board of Internal Economy regarding masking and health protocols.

Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. For those in the room, your microphone will be controlled, as normal, by the proceedings and verification officer.

I remind you that all comments by members and witnesses should be addressed through the chair. When you are not speaking, your mike should be on mute.

With regard to a speaking list, the committee clerk and I will do our best to maintain the order of speaking for all members, whether they are participating virtually or in person.

Pursuant to Standing Order 108(2), the committee is meeting today to resume its study on the accessibility and affordability of telecommunications services.

As is my normal practice, I will hold up a yellow card for when you have 30 seconds left in your intervention and a red card for when your time for questions has expired. Please respect the time so that all members have a chance to question the witnesses.

I would like to now welcome our witnesses. For our first panel, we have, from the CRTC, Mr. Ian Scott, chairperson and CEO; Madame Renée Doiron, director, broadband and networking engineering; and Nanao Kachi, director, social and consumer policy.

I will introduce our second panel when we get to it.

With that, each witness will present for five minutes, followed by the round of questions.

We will open the floor to the CRTC for their presentation. You have five minutes.

[Ian Scott, Chairperson and Chief Executive Officer , Canadian Radio-television and Telecommunications Commission]

I was a little intimidated by your introduction, Madam Chair. As a former soccer player, getting a yellow and a red card flashed in front of me made me very nervous.

Thank you, Madam Chair, for inviting us to appear before your committee.

As you indicated, I'm joined by two of my colleagues. Renée Doiron is the director of broadband and network engineering, and Nanao Kachi is the director of social and consumer policy at the commission.

I'd like to begin by applauding your members for your study on the accessibility and affordability of telecommunications services. We take this opportunity to reiterate the need to close the digital divide by ensuring universal access to high-speed Internet and a high-quality cellular network. All Canadians—and I repeat, all Canadians—need fast, affordable and reliable broadband Internet and mobile access to participate fully in today’s economy and society.

This is something the CRTC has been actively advancing since declaring broadband Internet a basic telecommunications service a few years ago.

The CRTC’s universal service objective calls for all Canadians to have access to fixed broadband at download speeds of at least 50 megabits per second and upload speeds of 10 megabits per second, as well as an unlimited data option. It also calls for the latest mobile wireless technology to be available to all Canadian homes and businesses and along major roads.

While meeting this standard has been a priority for some time, the profound economic and social upheaval caused by the COVID-19 pandemic has reinforced the need for broadband in communities that are underserved.

This past August, we announced the first recipients of this targeted funding. Five projects will share a total of $72 million to improve Internet access for more than 10,000 households in 51 communities in the Northwest Territories and northern Manitoba. The majority of these communities are indigenous.

These projects will serve some of the most remote areas in Canada, where the geography and climate present unique challenges to providing broadband Internet access and mobile services. The prices committed to by the recipients must be maintained for at least five years after the infrastructure is built.

I'll finish, Madam Chair.

In terms of affordability, recipients must provide services at a price that is no higher than the broadband services provided by service providers in major urban areas in the same territory.

Would you like me to stop there? If so, we are available for questions.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Scott.

Yes, you're a little over time, but I'm sure we'll be able to get some more information in the round of questions.

With that, I'm going to start with our first round of questions. MP Cumming, you have the floor for six minutes.

[James Cumming, Conservative, Edmonton Centre, AB]

Great, thank you, Madam Chair.

Thank you, witnesses, for appearing today on this very important issue.

First, I want to delve into the CRTC's decision on wholesale rates and subsequent to that, the ask by government to review those wholesale rates. Do you think you got it right in the first place?

[Ian Scott]

I cannot speak directly to matters that are currently in front of the commission. As members are aware, any commission decision can be appealed to the courts on questions of law or jurisdiction, and they can petition government in relation to policy concerns; the Telecommunications Act provides for that. We also have provisions for parties to appeal to the commission. They're called review and vary applications. That has been done. We have received such applications, and we are in the midst of reviewing and developing the full record, and will render a decision as soon as possible.

[James Cumming, Conservative, Edmonton Centre, AB]

When do you expect that decision to come forth? Would “as soon as possible” be before the end of the year?

[Ian Scott]

I don't mean to be unhelpful, but we don't predict or signal exactly when a decision would be released. The record is complete in that proceeding. Staff is completing its analysis. Then members at a commission meeting will make a collective decision. We are well aware of the significance of the file. We are working as quickly as we can.

[James Cumming, Conservative, Edmonton Centre, AB]

Is it unusual, given the amount of effort and time you put have into this area, for you to have to revisit this decision?

[Ian Scott]

This is a very fundamental decision. We receive many requests to review and vary decisions. Sometimes they are, if you will, larger and more important, more fundamental proceedings, but often it can be on more technical, narrow matters. We take all such applications and treat all of them similarly. We seek comment, develop the record and then make the best decision we can.

[James Cumming, Conservative, Edmonton Centre, AB]

I want to move on to the broadband fund. You said that $72 million has been allocated. You've closed the second round of applications.

Do you have any sense of what will be allocated through that second round as well? Are you on target to meet your goal of a $100 million?

[Ian Scott]

With the target, it's not so much the latter point; it's not a question of the $100 million being a target. That was what would be available in year one.

As to what's available, we set aside, if you will, or identify an amount that could be dedicated to satellite-dependent areas, predominately in the north. The rest of the fund is obviously for all of Canada. We've received applications, as you indicated, for all parts of Canada. We are proceeding with our assessment of that second tranche, if you will, of applications right now. We will endeavour to get some decisions out as quickly as we can. In all likelihood, some projects will move in before others.

[James Cumming, Conservative, Edmonton Centre, AB]

How is this fund different from the universal broadband fund, the Infrastructure Bank fund, the connect to innovate fund and the connecting families fund? We have a lot of funds going.

Do you have any comment on that? Is there much interaction between the various managers of all of these different funds trying to meet the goal of connecting Canadians?

[Ian Scott]

Thank you very much

[Technical difficulty--Editor] difference between the CRTC's fund and others. Unlike most government funds, which are part of the budget and are fundamentally based on taxpayers' contributions, this is a CRTC-administered fund, and the monies come from the industry, not directly from taxpayers.

The second distinguishing feature I suppose is that we are an arm's-length independent agency. We cannot and are not directed by government to make decisions. We make them at arm's-length; we're quasi-judicial and we make decisions that are in the public interest independent of government.

On the last point about co-operation or coordination, our quasi-judicial nature by definition means that there's a degree of separation, but we work closely, as much as we can, with government. I sit on a deputy ministerial level coordination committee and we share what information we can. We work closely with ISED and other departments. For example, we work with them to develop the mapping technology to track the progress, and we provide information that the department subsequently makes available on its websites of the projects under way and completed.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Unfortunately, Mr. Cumming, you are out of time.

We now turn to MP Lambropoulos.

You have the floor for six minutes.

[Ian Scott]

As I said a minute ago, on matters that are in front of us, I'm very limited in what I am able to say. As you pointed out in your question, we held a hearing earlier this year. We are doing a major and fundamental review of wireless. It does examine the state of competition and market power.

Following that we will address in an upcoming decision any remedies or solutions that are required to further ensure the affordability of wireless services.

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

Would you say that this is the best way to make rates more affordable?

[Ian Scott]

Generally speaking I would say that competition is the best way, not regulation. I think that members will probably know that cellular mobile rates have never been subject to retail rate regulation since they were introduced in the 1980s. There was always a degree of competition. Clearly we need to continue to get mobile rates down and make them more affordable, but I firmly believe that competition, a competitive market, is the best and most meaningful way to do so.

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

Thank you very much.

As you mentioned, in today's day and age, in order to fully participate in the economy we need to make sure that all Canadians have access to broadband, to wireless Internet, to good connectivity. You've also mentioned that you have five projects currently under way to ensure that an 10,000 extra households will get access to wireless Internet. That 10,000 is quite far from where we need to get, though I know that we can't fix everything in one night. I also know that the CRTC is funded by the government, but what other plans would you suggest in this situation to make sure that we get even more households connected?

[Ian Scott]

The five projects I referred to were the first projects awarded funding by the commission's broadband fund.

In response to the second call, which was for all of Canada, we have received almost 600 applications from all regions of the country. They add up to a total of $1.5 billion. We have our work cut out for us. We are working quickly to assess those projects and we'll move forward. All of those are targeted areas that do not have acceptable levels of broadband service.

The short answer is that we have many projects in front of us and we will be approving further projects in the coming months on a regular basis.

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

Thank you.

The telecommunications companies are key to succeeding in making sure that all households have access to the Internet. I believe that the infrastructure that is already there because of these companies is what allows us to offer Internet services to many places, even those that don't necessarily have it yet.

How can we encourage telecom companies to continue to build infrastructure that would allow households in rural areas to get access to the Internet if we're also increasing competitiveness? How can we balance that, in your opinion?

[Ian Scott]

It's a good question. All questions are good; that's a particularly difficult question.

That's the challenge. First, I have to say that our broadband projects are targeted at areas where it's uneconomic and where there isn't a business case. Carriers or service providers need to have financial support to reach that objective of providing an appropriate level of service. That's the purpose of our fund.

In terms of how you encourage them to build and make an economic business case, you have to close the loop. It's usually a question of financing. That's what this fund and other government funds—provincial, federal and territorial—help accomplish.

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

Thank you so much.

[Ian Scott]

Thank you, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you.

[Ian Scott]

Why is it in the hands of private providers? I suppose the starting point is because it always has been. That has been the industry structure. The role of the regulatory agency was to supervise and regulate private sector players in their provision, initially, of basic telecommunications service, and now broadband and wireless services as well.

To be sure, we have a modern and highly effective system. If you will, we are just the policemen; we are the regulator in this. It is not a focus on what is the best industry structure.