Industry Committee on Feb. 26th, 2024

[Scott Hutton]

We can't intervene at this point in time on those particular practices.

What we want them to do is inform you so that you can make informed choices with respect to cellular prices. We are actively working on implementing the MVNO regime so there is more competition. Practices that may seem uneasy for consumers are eliminated through competition.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you.

Ms. Pratt, at the beginning of the conversation, in your opening testimony you referred to the impact of British Columbians losing Shaw. You outlined that the Shaw-Rogers merger, which you opposed, was not going to be good for British Columbians. I happen to represent a riding in British Columbia where Shaw has a major market presence.

What impact do you believe the Rogers-Shaw merger had on consumers in areas where Shaw had a major market presence?

[Jeanne Pratt]

We thought it was going to have a detrimental impact on the prices that consumers pay in British Columbia. That was part of our case.

There were a range of price effects that we put forward for the offerings from Shaw, and in particular Shaw Mobile. What we saw happen in the market was that Shaw Mobile launched and brought in something we were particularly concerned about, because earlier they were bringing prices down, offering bundles and gaining market share—

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you for that.

I just want to clarify. My understanding is that because of the Rogers-Shaw merger, prices actually went up in areas where Shaw had a major market concentration.

[Jeanne Pratt]

I wish I could be more helpful. I don't have a definitive answer to that, because we based our case on the data that was before us pre-merger and during the period of investigation. I do not have an update as to what the price effects have significantly been in any particular market in British Columbia, I'm afraid.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

However, can I conclude from your remarks that the option for a lower-priced plan offered through Shaw was lost to consumers in British Columbia as a result of the merger?

[Jeanne Pratt]

What I can say is that we have no information to say that Rogers is continuing to offer those same promotions that were available under Shaw.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Ms. Pratt, you're a very good lawyer.

Okay. Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Vis.

Mr. Van Bynen, go ahead.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

Internet access has been an issue for my community for a number of years. I was the mayor of Newmarket for 12 years. The business community's concern was that there wasn't the subscriber density that would justify Rogers or Bell upgrading their infrastructure, so effectively they were splitting the copper. As a result of that, our municipality established an ISP, and the regional municipality established a broadband backbone infrastructure, which increased the competition.

We look at roads, water and waste water as being utilities. When are we going to start to consider that broadband actually is a utility? As well, to what extent has the CRTC provided funding to municipalities so that they can fund municipal service corporations, effectively taking the profit motive out, and consider those as utilities?

I'll address that first to the CRTC, and I'd like to get the Competition Bureau's perspective as well.

[Scott Hutton]

We have our broadband fund that we've been working with for a number of years. We're currently looking again at the policy to make sure that it's easy to apply, that we respond faster, and that we look at the remaining areas where access still needs to be completed to achieve the objective of 100%.

With respect to municipalities actually participating, I can maybe ask Mr. Baggley to help with the criteria on that front.

[Ian Baggley]

The existing criteria are that municipalities can be applicants, but they have to be partnered, as part of a consortium, with an organization that can act as a telecommunications service provider so that we can in turn regulate the service that they're going to put in place.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

How much of the funding that you've collected so far has actually gone to municipalities?

[Ian Baggley]

I'd have to get back to you on that, but certainly regional governments have been recipients of our fund. I could get back to you with exactly how many specific municipalities there have been.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

I'd be interested in knowing how the CRTC ensures that the funding is distributed and is complementary to existing government initiatives so that we avoid duplication. I'd be interested in receiving that data.

[Ian Baggley]

That's been a very big part of our fund to date. Part of the reason we have to be so careful in the funding that we've awarded to date is that we have to ensure that we're not overstepping and overlapping, so we work closely with both ISED and our territorial and provincial counterparts. We have done so to date and will continue to do so to make sure that we're dispensing funds in an efficient manner.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Ms. Pratt, would that be considered a disrupter? Would that create an increase in competition?

[Jeanne Pratt]

I'll defer to Ms. Sonley with regard to whether we've had any public positions on this.

Looking at merger transactions or at the conduct of existing competitors is our bread and butter, so the facts on the ground in a particular area that are relevant to the review of any merger transaction are taken as they come. If investments are being made, for example, they may inform our view of where the market is headed in examining the impact of a particular merger transaction.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

If you created that utility, it would be simply the last mile that everybody could rent at the same price. Would that increase the competitive environment?

An example is telMAX, I believe, which is taking the last mile off of the fibre optic backbone so that any other competitor could ride that fibre optic backbone at the same price as others. Does that not create a more competitive environment?

[Laura Sonley]

It could. I think in general we tend to favour market forces wherever possible, given the difficulties of price regulation. It can be really challenging to keep up, especially in markets like this, with changing prices. In general, we do tend to favour market forces. If that option was found not to be viable, then that would be something we would consider.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

My concern would be that as we press the major infrastructure holders to reduce their pricing towards third party providers, the return on equity wouldn't be there, and there would be some pressure not to keep the infrastructure up to date and effective.

What kinds of measures should we consider to avoid something like that happening?

[Scott Hutton]

That is in fact the subject of the hearing we held that terminated last Friday, at which our colleagues from the Competition Bureau appeared in front of us. We have to ensure that we create a regime in which service is reliable, questions of outages are minimized, service is affordable and we are not the most expensive country in the world, all the while being able to build out and invest in those markets. The model we have chosen is the one in which we're trying to trust competition and we're introducing competition and we're having those competitors use the networks that are in place.

Any new investment by any player in facilities is welcomed and would be beneficial to competition.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, MP Van Bynen. I'm afraid I have to cut you off because we're running out of time.

Mr. Garon, the floor is yours for two minutes.

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

Thank you very much.

I would like to set the stage for the next meeting, when we will be hearing from telecommunications companies.

We have a system where companies own their towers and their infrastructure. The capital costs and fixed costs associated with installing towers and infrastructure are significant. Afterwards, however, it seems that the variable costs of using them are very low. Those are conditions that lead to what are called natural monopolies.

In those circumstances, roaming rates become central, so they are very important. The major players are telling us that, if those rates were lowered, it would be terrible for them and they would stop investing. That would be devastating for the Canadian cellular market.

So I am putting this question to the Competition Bureau and I expect a short answer. Do you think there is still room to significantly reduce roaming rates, while maintaining the incentive to invest in Canada?

[Laura Sonley]

In our 2019 study that was referenced earlier, we did find that roaming rates greatly exceeded, at that time, the retail rates in the market. We suggested there be a check and balance to look at what the retail prices are after you've completed a cost study, just as a common-sense check on whether the cost study reflects market realities.

If you look now, you see that the price per gigabyte has declined, so I think we would encourage that still in 2024.