My apologies in advance. I was told that I had seven minutes, so I will go as quickly as I can.
I'm Matt Stein, president and chair of the Competitive Network Operators of Canada, or CNOC, the industry association for the competitive side of the telecommunications industry. It's the side of the industry that brings Internet to the homes of over 5 million Canadians.
CNOC's mission is to increase the level of competitive choice, add value and boost innovation in the delivery of communication services to Canadians. Additionally, I am the CEO of Distributel, one of the largest independent ISPs in the country, although my comments today are for CNOC.
Also appearing with me is Geoff White, director of legal and regulatory affairs for CNOC.
The Internet is an essential service. That's never been more evident. At the same time, large Canadian telecom companies have never been more powerful or less accountable. When it comes to pricing, it's no secret: Canadians pay some of the highest prices in the world. Perhaps then it should really be no surprise that Canada is also home to three of the most profitable telecom companies in the world.
Are Canadians getting what they need in terms of speed, packages, pricing, services, customer service and otherwise? The simple answer is no. The CNOC member companies, which are investors and job creators, use the mandated wholesale access to large carrier networks to compete with the big former monopolies on price, quality and customer service. We do this by paying rates set by the CRTC and which the CRTC determines based on the underlying costs, plus a fair and reasonable markup, which ensures that big carriers continue to earn a profit even when it is our members that load customers on to the network rather than their own retail operations. Our customers love us and more Canadians would, if they could turn to us, because of the way that we do business.
Smaller competitors have been a key part of the Canadian telecommunications landscape since the government started allowing competition against the former provincial monopolies. The current government and previous ones, as well as the CRTC, have recognized that without smaller competitors, the large carriers would have too much market power, resulting in higher prices, lower innovation and poor customer service. In fact, the current government, in its 2019 policy direction as well as during the last campaign, committed to make competition a key pillar of its commitment to affordability and innovation in Canadian telecom, helping the middle class move forward.
While the CRTC has, over the years, put in place several measures to facilitate competition, the incumbent carriers have put so much pressure on the system through lawyering and lobbying that today competition hangs on by a thread. Whenever the CRTC delivers a decision they don't like, the incumbents protest and wait for the last minute to appeal—not because of doing what's right, but to create a delay, because a delay is a win. Every day of a delay is another day of acting without being kept in check by competition.
I want to briefly outline a very timely example of that was discussed at this very committee earlier in the week.
As you're aware, the CRTC's decision of August 2019 set final rates for high-speed services. When they did so, it said that the rates that we, the independents, had been paying the incumbents for years were, in many instances, 73% too high. It corrected the rates accordingly. It also ordered the incumbents to repay years of the overcharging—just as the CRTC warned them they would do in 2016—to the tune of $325 million. To underscore that, it was $325 million that the big phone and cable companies had overcharged small and medium businesses across the country for years.
As a result, competitors took swift action and lowered prices, raised speeds and improved their packages. Not surprisingly, the incumbents took that to the Federal Court of Appeal, as was just discussed earlier today. Why not? The risk of delay is nil to them. Today, small competitors are still paying the old, inflated rates and cannot access the millions of dollars of refunds that they're entitled to.
If the CRTC's final rates—or corrected rates—were in place, overcharges would have been repaid. I guarantee that competitive service providers would already be hard at work innovating, lowering prices and investing in affordable access for Canadians.
We were confident that the CRTC was going to stand by that decision, but something the Governor in Council did in August really concerns us. Although it didn't send the decision back, it did take the unprecedented step of adding some strange language to the preamble, which seemed to question whether an investment balance had been struck despite the fact that the CRTC's process, by definition, takes that in account not only by considering investment, but also by requiring a fair and reasonable return. Because of that, we're now very concerned that the government might be backing away from its commitment to Canadians. The actions of the CRTC are not enough if the government does not stand behind its work with the support it needs.
Finally, the best investment that could be made in Canadian telecom affordability right now does not originate from government coffers. It originates from a reaffirmation from the current government of the role competitive service providers play in delivering on the goals of competition, affordability and innovation, and letting the CRTC do its work. Canadians deserve better.
I'm happy to answer any questions you may have. Thank you. I apologize for going over time.