Industry Committee on Feb. 26th, 2024

[Brian Masse, NDP, Windsor West, ON]

Well, it's still $9 million out of your budget. I'm sorry, but it's hard to believe that it wouldn't have any effect. Rogers didn't have to use it on Shohei Ohtani, because that didn't work out either; but there's no doubt in my mind that it also sends a chilling factor.

Quite frankly, has there been discussion in the Competition Bureau about what to do if this situation arises again?

[Jeanne Pratt]

What I can say is we are very welcoming of the proposed amendments in Bill C‑59, which would immunize the commissioner from cost awards when we are bringing a case in the public interest. I think that goes a long way to addressing any potential chilling impact that the cost awards could have on our bringing cases before the tribunal.

[Brian Masse, NDP, Windsor West, ON]

Thank you. I appreciate that. It's very important for public confidence to be maintained, and our competition legislation has handcuffed the Competition Bureau in several ways, in my opinion.

You've seen that what's taken place is exactly what you predicted with regard to prices going up from Rogers, so one thing I do want to know is if there has been consideration within the Competition Bureau to look at market structure and establishing some type of study or investigation of other countries. Have you looked at whether separating the wholesale facilities from the retail sales and service market might be beneficial for Canada with regard to the telecommunications industries?

[Jeanne Pratt]

What I can say is that we don't have any ongoing investigations. Because this is a sector that is incredibly concentrated and is a focus of our work across the provisions of the act, we are proactively monitoring what's going on. What I can tell you is that what we are starting to see from publicly available sources, or at least have continued to see, are some concerns post closing. In particular, Rogers has now discontinued Shaw Mobile.

As I mentioned, we found Shaw Mobile to be a particularly growing and disruptive competitive force in British Columbia and Alberta, and they offered very aggressive pricing for bundled wireless plans. So far, we haven't seen any information that would suggest that Rogers is offering pricing comparable to Shaw Mobile post transaction. That is a concern.

Vidéotron also indicated during the tribunal proceeding that it would begin offering bundled services at low prices after acquiring Freedom Mobile. To date, we're not aware of any bundled offering being offered by Vidéotron and Freedom.

Additionally, the planned expansion of Freedom's wireless network appears to have been affected by its acquisition by Vidéotron. We had concerns that Vidéotron would be less likely to invest in Freedom's network, given its smaller base of subscribers and lack of wireline assets. To date, it appears, again, that Vidéotron has not expanded its network infrastructure as previously planned.

Pricing post transaction is a much more complex issue, and I would defer to my colleague Laura Sonley to explain some of the factors that go into monitoring that from publicly available sources.

[Laura Sonley]

One thing we would caution against is looking at a single metric when considering prices. There's been a lot of discussion of CPI. Generally when we look at pricing, we try to have as many metrics as possible, and if you do see a discrepancy between two metrics, we question why that's the case. Currently we are seeing a difference between the trend in CPI versus average revenue per user, so that's just one consideration.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Mr. Chair, do I have any more time?

[The Chair, Liberal, Joël Lightbound]

You do.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

I'll move to the CRTC.

Has there been any consideration from the CRTC of re-establishing mandatory capital expenditures as part of the issuance of spectrum licences?

In the past, there has been that process, and what we've seen with some of the spectrum licences has also been a musical-chair approach in terms of trading them back and forth or not even being used at times.

Has there been any consideration of going through a process like that?

[Scott Hutton]

With respect to spectrum licensing, the spectrum regulator is, in fact, ISED and the minister of industry. We are not involved in the issuance of spectrum licensing or able to impose conditions with respect to those licences going forward.

We have been working through different means to ensure that we have greater competition, such as looking at attachments to poles and towers to facilitate network deployment. We have also, as mentioned earlier, implemented the MVNO regime here in Canada, and we've have been quite active in ensuring that the players that are involved are able to reach deals and are able to operate in this field to offer more competition choice and reliable services to Canadians.

[Brian Masse, NDP, Windsor West, ON]

I appreciate that answer.

I want to follow up if the CRTC could offer an opinion or a voice on this. It seems that later on you have to deal with a structural problem that ISED has not put in place.

Has there been consideration of the CRTC's becoming more involved in looking at spectrum licensing conditions and processes?

[Scott Hutton]

The CRTC certainly has a number of wide powers at its disposal that are granted to it pursuant to the Telecommunications Act. Spectrum is not one of them.

As I mentioned in my opening remarks, we currently have a significant number of issues on our plate, and there's priority on the items that are certainly and squarely within our purview. Also, as an independent quasi-judicial tribunal, it's not our place to be suggesting policy to policy-makers on that front.

[Brian Masse, NDP, Windsor West, ON]

I can appreciate that answer.

The issue, though, is that we have the minister setting the rules, conditions and terms, and then the CRTC later on trying to deal with them, and they are disconnected entirely, but that also creates structural problems for what's taking place.

I have one last question for the CRTC.

Do you have enough resources with regard to the changing role of the CRTC? Has there been any thought about additional resources that might be required to speed up CRTC decisions? That's one thing that we often get as a complaint that the industry brings back, and I think it's fair.

Has there been any thought about that situation and almost presenting a cost for quicker practices from the CRTC if we did want to accomplish that goal?

[Scott Hutton]

In actual fact, in my remarks I mentioned the introduction of the telecom policy direction. In that same context, the CRTC has also secured additional resources to help in its telecom operations. It has been operating much more quickly. We have come out of the gate rather quickly with a number of public notices to intervene in this market. We have resolved issues with respect to arbitration and accessing the MVNO networks rather quickly. We have already made a couple of decisions with respect to implementing our regime to provide expanded access to competitors to the ILEC networks.

I mentioned the fibre deployment on that front. We concluded a hearing earlier this month on that approach, and we're continuing to work tirelessly in that domain.

[Brian Masse, NDP, Windsor West, ON]

Okay. I guess that's—

[The Chair, Liberal, Joël Lightbound]

No, Mr. Masse. I should have specified how much more time you had. We're way over.

I'll turn it over now to Mr. Perkins.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

Thank you, Mr. Masse.

Ms. Pratt, perhaps I could start with you.

For all of those who are watching, who didn't follow as closely as most of us in the room did about the Shaw-Rogers-Freedom-Vidéotron drama and the reduced competition that resulted, you advised the government early on in that process about the Competition Bureau's views on the competitive nature of that proposed transaction. Is that correct?

[Jeanne Pratt]

We're an independent law enforcement agency. We're like the competition cops. We investigate a merger. We are completely independent in that function.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Right—and what did you say?

[Jeanne Pratt]

We were definitely concerned, and that's why we challenged the transaction before the Competition Tribunal. That's the way our model works: We investigate, and when we see a problem, the commissioner brings an application before the tribunal. Then we have to live with that decision.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Mr. Péladeau was here recently, as you may have seen, and he was quite effusive about himself and what he may do for competition, following up on the positioning that the government had at the time.

Four weeks after the transaction closed, after he appeared before this committee in January 2023, he increased prices of Freedom by $7 on the BYOD—bring your own device—package at Freedom while the ink was just barely drying on the acquisition, even though the condition of that acquisition was reduced prices. Of course, the condition of everything, as we know, was that Rogers and everyone committed that they would reduce prices. Of course, Rogers has increased prices again. We'll find out what the others plan to do when they come before us here.

Is that reduced competition that you warned about the reason these prices are going up?

[Jeanne Pratt]

I don't think we can say whether that is why prices are going up and what the magnitude is. As Ms. Sonley said, it is a very complex question that requires a lot of data to see because of the variety of factors and what actual consumers are paying. That is a very difficult question to answer definitively at this point.

What I can say is that we were definitely concerned about the acquisition and the replacement of Shaw Mobile, which had been a vigorous and effective competitor and which appeared to be driving prices and bundled products down in western Canada. Frankly, the evidence showed that Rogers was the biggest loser in that fight.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I get that, but the only price announcements I've seen are the ones that have shown it going up. You mentioned some disturbing things that the Competition Bureau is watching with regard to the fact that Freedom doesn't seem to be rolling out their network. Our concerns, of course, were that the history of Quebecor and Vidéotron was that they were actually arbitraging spectrum by buying it from the government and then selling it at considerable profit. Our skepticism is still there about whether or not there will actually be a fourth or third national carrier.

I'm wondering if you could explain a little more. One of the things that you raised a concern about in that merger was that Rogers-Shaw in B.C. in particular had over 40% market share, and yet the tribunal said that this was no big deal. I think any time any large oligopoly has 40% or more market share, it's a big deal. Now you're saying they're not even offering the price that was there, that was part of the bundling. Has that resulted in people, particularly in British Columbia, seeing their pricing going up?

[Jeanne Pratt]

I can't say definitively where prices are, because it is a complex question. What I can say is that we are concerned about the trajectory.

We didn't have a problem with Vidéotron as a buyer of Freedom. Vidéotron has demonstrated that it can be a vigorous and effective competitor in the province of Quebec, but the distinguishing feature there is that they own their wireline infrastructure. They are able to offer a bundled product, which I believe their CEO mentioned as a strength there. They cannot do that in Alberta and British Columbia because they don't have the wireline assets to do that. They committed to doing that, using various behavioural agreements with Rogers, and we just haven't seen that come to the market.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Mr. Hutton, I could ask you this. You mentioned that there are three MVNOs that are in the application process. Are any of those three not owned by the big guys?

[Scott Hutton]

Essentially, of the three, as far as I am aware, certainly Quebecor is the most active on that front. They've made deals with both Rogers and Bell on that front.