Industry Committee on Feb. 14th, 2024

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

If I'm not mistaken, you share towers with Rogers in Quebec, for example, don't you? Do you do that elsewhere in Canada as well?

For the services you offer and your new products, I imagine you have collaboration agreements with other partners. You're not going to put new towers in the west and the rest of Canada, of course.

Are these agreements favourable to you?

[Pierre Karl Péladeau]

We have no agreements with other Canadian operators outside Quebec.

It's true that we had an agreement with Rogers. We even had a joint project, called Teamnet, where the network was used by both companies. We could install our radios on the same tower. Unfortunately, the presidency that preceded the current one decided to unilaterally terminate this agreement.

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

So this agreement was operative in Quebec, but as I understand it, that's no longer the case.

[Pierre Karl Péladeau]

That's right. There aren't any left in Quebec either.

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

Do you still have unused spectrum licences? You said earlier that from the moment you bought them, you had seven years to implement the services. Do you have any spectrum licences acquired in the last auctions that remain unused right now and will allow you to go to Manitoba or Saskatchewan, for example, or elsewhere?

[Pierre Karl Péladeau]

We bought spectrum in Alberta, British Columbia and Ontario in the spectrum licence auction for the 3,500-megahertz band. We will begin to deploy 5G for this spectrum.

There were subsequent auctions, which were called the 3,800-megahertz band spectrum licence auctions. They're still relatively recent. We haven't even paid the full cost yet; we've paid 20%. The auction took place in November and lasted about a month. The licences acquired in these auctions will also be the subject of a service rollout in the years to come.

Spectrum is an asset, an important public good that is inescapable for telecommunications operators. Technology is deployed gradually. We can't install everything at once. This spectrum will be used for speed and throughput. I'm not an engineer, but as far as I know, some of the low-frequency spectra, such as 600 megahertz, will be used for throughput, while the high-frequency ones will be used for speed. A combination of the two enables us to transport huge amounts of digital data, that is to say gigabytes. In fact, this is increasingly the main use we make of our wireless devices. Their use for voice is declining. What's on the rise is digital data, whether for Netflix, texting, e-mail or downloads. That's the big deal.

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

Mr. Lescadres, are you in a position to tell us...

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Généreux. I'm sorry to interrupt, but we have a slightly tighter schedule today. So I have to be less liberal than usual when it comes to time management.

Ms. Lapointe, the floor is yours.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair. I will be sharing my time with my colleague, Mr. Sorbara.

Welcome, Mr. Péladeau.

My question touches somewhat on the points raised by Mr. Masse. With regard to Quebecor's purchase of Freedom Mobile, you stated the following in August 2022: “[...] we are determined to continue building on Freedom's assets”. You went on to say: “Our strong track record combined with Freedom's solid Canadian footprint will allow us to offer consumers in British Columbia, Alberta and Ontario more choice, value and affordability through discounted multiservice bundles and innovative products.”

In fact, in April 2023, Rogers CEO Tony Staffieri promised that prices would come down for customers, but Rogers recently announced price increases.

Can you tell the members of this committee what Quebecor has done to reduce prices since that statement in August 2022?

[Pierre Karl Péladeau]

Honourable Ms. Lapointe, it will be our pleasure to do so.

My colleague Mr. Lescadres has already talked a bit about proposals and offers that have been made to Canadians. As I mentioned, every day, hundreds of new customers are added, systematically. Just look at what we call the number transfer ratio in our industry, that is the number of customers who subscribe to services versus those who unsubscribe. I think that says a lot. As an operator, we're always losing customers, but the important thing is to gain more than we lose. It's pretty simple, isn't it? It's called a ratio. Today, we have the highest ratio we've ever seen, meaning that, every day, we're still gaining more customers than we're losing. That says it all. It means that Canadians love Freedom Mobile's deals, and are abandoning their previous plans to become Freedom Mobile customers. Why is this the case? It's because we offer 5G packages across the country at much lower rates than those offered by our competitors.

The market is extremely competitive, despite everything. There are what are called the major brands, such as Telus, Bell and Rogers. Videotron can also be considered a main brand. Then there are the defensive brands, including Koodo and Fido. The Fizz brand is another, but it's a little different, since it's entirely digital. In other words, there's no call centre at Fizz. If you want a subscription with Fizz, you take your computer, go to the website and build your offer, specifying how many gigabytes you want, whether you want voicemail, whether you want data roaming, and so on. Over time, the price will change. You pay, then we'll send you your SIM card, which will give you access to the services you've ordered.

Features like these ensure that we meet the needs and desires of Canadian citizens. The results are there: our ratio is permanently positive.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Péladeau.

It's over to you, Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you very much, Ms. Lapointe.

Good evening, Mr. Péladeau. Welcome to the committee.

The August 2022 press release on the completion of the acquisition of Freedom Mobile reads, “Quebecor has shown that it is the best player to create real competition and disrupt the market.”

Mr. Péladeau, I like competition and I like innovation.

I was a private sector person before entering politics, on both Bay Street and Wall Street, and I like capitalism. I want more competition. I want more wealth creation. I want lower prices and innovation.

How are you doing so far, from the acquisition date to today?

[Pierre Karl Péladeau]

I would say we're doing pretty well and we are quite satisfied. We will release our fourth quarter numbers next week. Again, I think we'll be able to show what we were able to deliver.

I completely agree with you—and I mentioned it earlier—that innovation is certainly something of great importance. We know that, in a globalization world, we compete against other countries. We want to make sure that we will be successful at this game. This is why innovation is one of the most important factors. By introducing innovation in our own companies, we're participating in this capacity to innovate and are able to be a winner in this game.

We innovate with Fizz, which I just mentioned to you. We were the first Canadian telecom company to introduce a fully digital company. We were the first wireless company to introduce nationwide.

We look forward. Obviously, I'm not going to give you all the details, because we don't want to wake up the competition—it will wake up after the introduction of our offers—but we are far from being short of new solutions.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I imagine that if I looked at your financials—the ARPU or average revenue per user, your net new subscribers and where you operate—I would see extreme growth.

I have a final question, and I'll be very quick.

As Canadian consumers of a wireless product, many of us travel abroad, and we see a similar experience when we go to Europe. You can buy a SIM card and load a bunch of gigabytes of data on your phone. It's very cheap and very easy.

If you had to explain to one of your customers the differences between their experience here in Canada and in other jurisdictions, what would you say to them about their experience?

[The Chair, Liberal, Joël Lightbound]

Give a brief response, please, Mr. Péladeau.

[Pierre Karl Péladeau]

Well, come and see us and look at our offers, and you'll be able to understand very quickly that our proposals are better. We're now, I would say, in a better position to compete and compare with prices elsewhere, mainly in Europe and the United States.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Garon, you have the floor.

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

Thank you very much, Mr. Chair.

I'll make this quick, because, by his own admission, our chair is a little less liberal than usual. In fact, I think that's a very good thing and a great quality.

[Voices]

Ha, ha!

[The Chair, Liberal, Joël Lightbound]

That only applies to speaking time, Mr. Garon.

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

Ah, I see. It's always important to make these things clear.

I'd like us to talk about roaming charges. The committee will be hearing from representatives of companies that are your competitors, such as Rogers and Bell. Obviously, we'll be asking them questions about roaming agreements and disputes. It seems to me that roaming charges are a central element in the cost of packages. These representatives will probably tell us that things are expensive, towers are expensive, construction is expensive, that the territory is big and that it's all just awful.

I'd like to know what the real cost of roaming services is for businesses. I know there are fixed costs, and variable costs are very low. Maybe there's a congestion cost. Why is it so expensive, really?

[Pierre Karl Péladeau]

This is a big debate. We try to establish rates and costs. To do this, there are several formulas and several scenarios.

You're right, sir, these people always say the same thing. It's all talk. They tell us that the country is big and that they need more towers. Everyone knows that. But we're not the only big country in America or on the planet. When we do comparisons, we see beyond any doubt that our prices are much higher.

It's a cash cow for these companies.

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

You said roaming charges were six times more expensive here than in Europe. If we had the same prices as in Europe, would it still be profitable for these companies? Have you done any calculations?

[Pierre Karl Péladeau]

It would certainly be profitable.

It's like when these operators say they're going to stop investing. We're so used to this kind of talk, it's always the same thing. Do you think for a moment that they're going to stop investing? There isn't a company that's going to stop investing, because if they did, they'd have their market taken away by the competition.

This is all the more problematic for Bell and its yesteryear technology. Bell was the last telecom operator to invest in fibre. All the other North American operators, such as AT&T, Verizon, and even Telus, had invested in fibre long before. Bell was late to the party. What prompted it? As an operator, Bell was losing significant market share. It no longer had a choice.

Today, if you stop investing in fibre, you'll lose customers, pure and simple.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Masse, you have the floor.