Industry Committee on Feb. 14th, 2024

[Pierre Karl Péladeau, President and Chief Executive Officer, Quebecor Media Inc.]

Thank you, Mr. Chair.

Thank you for the invitation. My colleagues and I are pleased to have the opportunity to discuss the price of wireless services, a key issue for Canadians.

A little over a year ago, I stood before this committee to show you that Quebecor was ready to repeat in Canada the success achieved by its Videotron subsidiary in the wireless sector in Quebec. We've been involved in this business since 2006.

We knew that Canadians would be the first to reap the benefits of the increased competition resulting from Videotron's acquisition of Freedom Mobile. The solid expansion plan implemented since then has paid off.

Freedom Mobile has become a driving force for positive change in the Canadian wireless market. In just a few months, we began rolling out our 5G technology and made significant network enhancements to improve the customer experience. We also introduced offers never before seen in the country. These offers include the first Canada—United States 5G mobile plans priced under $35, and Roam Beyond, an affordable and high‑capacity mobile plan that lets you roam at no extra charge in over 70 international destinations.

Inflation is undermining the ability of Canadians to pay. However, these new and ultra‑competitive offers have driven prices down throughout the Canadian wireless market. The Freedom effect means that Statistics Canada's consumer price index for wireless services has dropped by 26.8% over the past year, compared with a 3.4% increase for all products and services over the same period.

These lower prices translate into more money for Canadian families. The yearly savings can easily amount to one thousand dollars: money that can go to buying groceries or helping to pay the mortgage.

Moreover, unlike some of our competitors, Quebecor’s three telecom brands—Freedom, Fizz and Videotron—have wireless price freeze policies. Customers can keep the same monthly rate for as long as they keep their mobile plan.

The commitment of various governments to establish healthy and sustainable competition has contributed to this progress. However, work remains to be done. For example, roaming charges are still at least six times higher in Canada than in Europe. These charges must be lowered so that prices keep falling as mobile data use soars.

The constant opposition of national incumbents to any initiative designed to promote competition remains an issue. Here are some examples regarding the establishment of rates for mobile virtual network operators, or MVNOs. These rates will give Videotron the chance to offer wireless services outside its network footprint. Rogers is challenging in court the outcome of the arbitration process that it requested. Bell refuses to accept the start date for the marketing of our MVNO activities, even though our companies clearly agreed on this date beforehand. Telus's intransigence and delaying tactics are forcing us into another lengthy arbitration process to set rates for access to its network.

These examples of obstruction are also seen in other areas, such as Internet access. On top of appealing a CRTC decision concerning access to its fibre optic network, Bell recently asked the government to overturn this decision. The decision stemmed from the government's instructions to the CRTC to adopt new rules encouraging competition, improved service and affordability.

These are a few examples of the headwinds facing new players like Quebecor as we seek to provide Canadians with better telecommunication services at better prices. The incumbents will do anything to protect their monopoly for as long as possible, in defiance of government policy.

All measures must be implemented to serve the public interest and make telecommunications services more affordable. As Freedom Mobile fulfills its commitment to lower wireless prices, national incumbents must now follow the rules of the game imposed on them to achieve these goals.

Thank you for your attention.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Péladeau.

To launch the discussion, I'll give the floor to Mr. Williams for six minutes.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Mr. Chair.

Thank you very much to you, Mr. Péladeau, and to the rest of the witnesses for being here today.

You come here as a very famous man, not just from your reputation, but also from the minister, who talked about you being the “fourth player”, who was going to solve all our problems in wireless here in Canada, which was great. Of course, I'm already hearing that some of the problems you're facing are what Canadians have faced all along, not just across your industry but in all of the oligopolies we have across Canada.

You have 2.3 million customers right now and about 6% of market share. However, if you're really going to be a fourth carrier in Canada, you need, based on a lot of research we've done, to get to at least 10%. That means massively growing up. We know what conditions the minister put on the Rogers-Shaw sale. Part of it was that you were going to be developing 5G. How many years is it going to take to develop 5G for Freedom across all of Canada?

[Pierre Karl Péladeau]

Just to make sure we have the same numbers, you mentioned 2.3 million customers. We have 3.8 million when you combine Videotron and Freedom, and we're growing every day.

We look forward to continuing to make sure that we'll be able to serve Canadians as best as possible with, again, the best prices. I guess that seeing those numbers shows that, at the end of the day, money talks, and when we're able to offer better prices, Canadians will get new services. This has been our experience since taking over Freedom.

We mentioned 5G. It's certainly something of importance. We're growing our network. We're considering that we will continue to grow. In the meantime, what we need to have...and this is something where, again, the incumbents are always delaying. These are the strategies that we have been facing for so many years. Instead of having access to MVNO with the price we need to get and then to build after the policy, this is what the CRTC said: “You'll buy spectrum.” As you'll probably remember, the price is very expensive.

If you are a telecom operator, you have the right to buy spectrum. Once you buy the spectrum, you have the obligation to build, and the time frame to do this is seven years, so we're in this window. We think we should start with MVNO. This is what the thinking of the CRTC was, because you cannot build your network in two days or a weekend. You need to build day after day, week after week and month after month. In fact, it's like we did in Quebec, because when we started, we had nothing. We started building our network, and today we have full-fledged 5G across the province.

We look forward, again, to continuing the same strategy we've been able to have in Quebec, and we started with MVNO, with those operators—

[Ryan Williams, Conservative, Bay of Quinte, ON]

I'm sorry. I don't want to interrupt you. I only have so much time here.

You're saying it takes about seven years to develop that network across Canada, which is going to be a significant amount of time.

We're here today because Rogers is going to increase its prices. It's something that happens when you talk about the monopolistic and oligipolistic practices of these companies. They will raise prices. Rogers is not playing ball with you when it comes to the MVNOs and sharing networks, and they're also going to be raising prices for Canadians.

To ensure we have that competition, we need to have you in as many places in Canada as possible, developing 5G to be a viable fourth player. Do you think you can be a viable competitor? Do you think you have enough time to compete against a big company like Rogers, and others like Bell and Telus, or is it just going to take too long?

[Pierre Karl Péladeau]

We do. However, as I mentioned, we need some help. There's no doubt there is desire and will. We should tell Parliament, and not only the government, to make sure that Canada is not going to be the country in which citizens pay the highest prices in the world. This is not acceptable. To make sure we'll be able to get this result, we need to have proper regulations in order to enhance competition.

We think—and this is what we're experiencing now, other than seeing the incumbents delaying our strategy to move forward—what we're seeing right now is the right thing. The CRTC is certainly pro-competition. We think it will continue to be such. As you know, there's an audience tomorrow.

On wireless, we believe the policies in front of Canadians are good. The problem is with the delays by the incumbents. Tomorrow we'll be in front of the CRTC regarding conditions for the Internet, the wired-line Internet on fibre. As a cable operator, we've been offering cable for 20 years. We are obliged to offer our network to competitors, what we call TPIA, at a decent price. We have been doing it. Again, we see Bell and Telus refusing to do it.

The wireless policy is good, and we look forward to moving in this direction and seeing the industry minister being favourable to that competition and that policy.

[Ryan Williams, Conservative, Bay of Quinte, ON]

As a small player coming into where we have big fish, you see what happens. Would you be okay with more competitors besides you coming into the Canadian market, more competitors fighting against the big three?

[Pierre Karl Péladeau]

We are totally for competition. From our standpoint, competition is good. Competition brings innovation. Competition brings the capacity to serve your customers better. Without competition, the economy does badly. This is not the kind of culture we have in our company. We've always been in a competitive environment and we look forward to changing this.

In fact, for us as a media company originally in the newspaper business and the printing business and the pulp and paper business, this is what we were facing. There was not only local competition; we were also competing internationally. Pulp and paper was really international. When we arrived in the telecom business, we found monopoly everywhere. Do you know what? We like it, because we want to change things. I think we've been able to do that for a while.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Mr. Péladeau. You're speaking our language.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Gaheer, the floor is yours.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you, Chair.

Thank you to the witnesses, especially Mr. Péladeau, for appearing before the committee.

We know that telecom prices tend to be lower in parts of the country where there are other service providers outside of the big three, especially in Quebec.

I'll give you an anecdote. Recently, I was looking to switch my plan. I was doing it in Ottawa on my cellphone. I thought it was such a great plan. It was offered by one of the big three. I went to the checkout and once I entered my postal code, it actually corrected me and said that plan was offered only in Quebec, and I would instead have to switch to the Ontario one. As soon as I shifted it to Ontario, the price jumped up considerably. I was very disappointed.

If the big three are truly invested in providing all Canadians with competitive prices, why does it take a regional fourth player to drive those prices down?

[Pierre Karl Péladeau]

You know, I'm not the Competition Bureau. If I were, I would open an inquiry. Would I be successful? That is another question.

This is the kind of environment we've been seeing for so long. With the competition brought in by the fourth operator that we have in Quebec, historically prices in Quebec have been the lowest in Canada. When the Minister of Industry and the Competition Tribunal and other people involved in the Shaw-Rogers transaction considered that it would be a good thing for Canada to spin off the Freedom Mobile asset, obviously we were there at the beginning to raise our hand.

Do you know what? We were not invited to the party at the beginning. Why was that? I guess it was because the experience of seeing competition was not something that Rogers appreciated. For whatever reason, at the end of the day, in the public interest of Canadians, we were finally able to buy Freedom, to operate it and to introduce a very competitive environment, a real one.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

On that, why did the deal impact the prices that you offer? Can you share any stats on that?

[Jean-François Lescadres, Vice-President, Finance, Vidéotron ltée]

I can answer that, absolutely.

Basically—

[Pierre Karl Péladeau]

Jean-François is our numbers guy. He knows everything.

[Jean-François Lescadres]

That's my job.

Basically, when we took over the Freedom side, there were two things. First of all, there was the current price that Freedom was putting in front. I'll give you an example. We were selling about 50 gigabytes for $65 on a non-5G network with non-nationwide coverage. A few weeks after we took over, we implemented 5G nationwide everywhere, and we increased the competitive package by a large margin.

Now, if you compare it to the promise that we made, basically, to the department when we took over the transaction.... I'll give you an example. We swore that we would never sell a package of 25 gigabytes for over $68. Today we sell that same package with twice the data—so 50 gigabytes instead of 25 gigabytes—for $34. That's half the price that we promised in our commitment. We also offer roaming in the U.S. in that same price.

This is what Canadians have access to right now. They can get much lower prices than, honestly, have ever happened in Canada before.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

We do know that the numbers have come down for telecom prices. StatsCan gives us that data. I have numbers here. For example, for one of the big three, 10 gigabytes in 2017 was $145. Today it's about $39 per month, so we know the numbers have come down.

However, Canadians still remain very concerned about the prices that telecoms offer and the competition in the industry. How would you address the concerns that Canadians have?

[Pierre Karl Péladeau]

We already addressed this, and I talked about it in my speech.

The roaming factor is of importance. The CRTC is already aware of all this. It opened an inquiry to figure out what the roaming aspect is.

In the European Union, as you know, because of the many countries and because a lot of operators are present there, they were having 60 or 70 roaming prices. The European Commission decided to legislate on this. Today, you have a set schedule of prices, and this is public so that you have something to compare. Now the CRTC will go there and it will be easier to compare the prices of roaming in Canada, which we said are six times more expensive. If you were to reduce this, obviously, the reduction would be a very important factor for seeing the prices go even lower.

This is of importance, and we look forward to the CRTC going in this direction.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Gaheer.

Mr. Garon, the floor is yours.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

I want to thank the witnesses for being here today.

Mr. Péladeau, I want to talk more about roaming. We live in a sparsely populated country with large geographical areas. The fixed costs for installing towers, for example, are substantial. This naturally creates monopoly situations. This situation may be even more of an issue than the situation in other countries.

For example, Europe is densely populated. Towers can be profitable when installed next to each other, so...

[Pierre Karl Péladeau]

There are radios on top of each other, on the same tower.

[Jean-Denis Garon, Bloc, Mirabel, QC]

You see, that's why we're asking you questions. You know these things better than we do.

You can probably see what I'm getting at. You spoke about roaming charges, which are six times higher in Canada than in Europe. What are roaming charges like in the United States?

You also spoke about your conflicts with certain competitors over roaming contracts. Should we be even less tolerant of this interference than other countries, given its significance in Canada?

[Pierre Karl Péladeau]

To answer your question, I'll quickly summarize the history of the introduction of competition in wireless.

At the time, the late Jim Prentice was Minister of Industry when there was an auction process in which we participated. He ensured that spectrum licences were reserved so that competition could be introduced. There were also other conditions, including infrastructure sharing. Indeed, why would we build three towers next to each other—one for Bell, one for Telus and one for Rogers—plus another for a new player entering the industry, when we'd be able to set up shop on the same tower?

In the United States, this is actually a business model. Towers are no longer owned by operators, but by tower companies, known as “towercos”. It is noteworthy that on these towers, there are radios from all the companies.

Here in Canada, we decided to do things differently. We were forced, for the most part, to build towers or install radios on buildings. It is certainly not ideal.

Then came mandatory roaming. In effect, when you left one territory, you had to be able to access another territory. We negotiated this with Rogers. Freedom Mobile, on the other hand, didn't have that privilege, if I can put it that way. Every time you changed territories, you lost your connection and had to call back. It was an extremely bad customer experience.

However, all that has evolved. Conditions have contributed to this. I think the CRTC understood the challenges. Sometimes you have to get into the details, and there's a lot at stake. As the saying goes, the devil is in the details. Things evolve as this explanation unfolds. Now, the CRTC and the Department of Industry are well aware of these challenges and are committed to their resolution.

On the other hand, we always face the same problems: relentless delays, legal challenges, regulatory challenges. We're forced to take legal action. For example, Quebecor had to sue Bell.

[Jean-Denis Garon, Bloc, Mirabel, QC]

I have a question for you, just out of curiosity.

You referred to an appeal concerning the result of an arbitration process with Rogers. By definition, is arbitration not a process that cannot be appealed?

[Pierre Karl Péladeau]

I cannot disagree with that. The point of arbitration is precisely to avoid having to turn to the courts.

I'm going to ask Ms. Tabet to answer you, Mr. Garon. This is her daily bread. Mr. Lescadres deals with numbers; Ms. Tabet deals with regulation.