Industry Committee on Feb. 26th, 2024

[Scott Hutton]

To be specific, our hearings earlier this week, or that concluded the Friday before last, were on what I'd call home Internet services. That's wireline services to the home. That market certainly has stagnated, contrary to what I've indicated with respect to cellular prices, which have been significantly decreasing consistently since 2017.

Now the world has changed, in part because we're all working from home. We're consuming far more Internet services at home, with higher speeds and more data. That particular market is the one we looked at last week. What we've been seeing with that environment is that the regime put in place for competition is greatly in need of update. We've been seeing that a number of players were exiting the market. They were having more difficulty being able to serve consumers and they were losing subscribers.

There we certainly took action on that front. Not only have we conducted the proceeding and held the hearing to hear from over 300 different groups to talk about the issue there, but we took immediate action to lower the rates the competitors could use by 10%.

We also took action to mandate access to fibre services by those competitors, so they can continue to expand their services, serve Canadians and bring more competition.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you.

In 2016, the CRTC created a $750-million fund using contributions from large telecommunication service providers to support projects in areas where broadband targets had not yet been met. From August 2022, the broadband fund committed $226.5 million for improving fixed and mobile wireless broadband Internet services.

Can you offer some insights as to why the $750-million fund has not been utilized, especially where it pertains to first nation communities, where we know there is a significant digital divide?

[Scott Hutton]

You're quite right. The areas that need close attention and where the CRTC is paying close attention are indigenous communities, rural communities and northern communities. We've certainly been looking at a variety of approaches to be able to help and serve that variety of customers on that front.

The $750 million is essentially a calculation of $150 million a year over a number of different years. As we're looking at that funding, we have been committing the funds we have been collecting and redistributing them on that front.

Right now, we're on our third call process, which we made easier and faster than every one before that, and where we're also looking more particularly at creating, for example, an indigenous stream and paying close attention to northern communities. We have about 100 applicants and $1.9 billion in funding requests, so $750 million will certainly help in that domain.

Our approach is only a small portion of overall government funding. We're about 2% of the overall funding that has been made available to broadband expansion.

[Viviane LaPointe, Liberal, Sudbury, ON]

What are the barriers to expanding the broadband connectivity to remote communities? What are the most significant barriers?

[Scott Hutton]

I'll probably ask Mr. Baggley, because his field of expertise is northern and rural communities. Northern communities are particularly difficult on that side. Nunavut is only served by satellite. Northern construction periods are short. There are a whole bunch of different things. There are low population density levels and huge distances.

Mr. Baggley can probably add some precision to that.

[Ian Baggley, Director General, Strategic Planning, Broadband Fund and Networks, Telecommunications, Canadian Radio-television and Telecommunications Commission]

I think you captured that well, Mr. Hutton. The lack of access to general infrastructure, like roads, is a big barrier to building up infrastructure. For example, in December, we were successful in awarding funding to Nunavut to provide high-speed Internet for the first time to all 25 communities. They now have a Starlink satellite link. We are making progress in that regard, but certainly geography and remoteness are key factors.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Ms. Lapointe.

Mr. Garon, you have the floor.

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

Thank you, Mr. Chair.

I thank all the witnesses for being here today.

My first question will be for the representatives of the Canadian Radio-television and Telecommunications Commission.

We know that price increases were announced at the beginning of the year, which was widely reported in the press. They followed the Rogers/Shaw transaction, as you know.

When representatives of the major telecommunications companies come to see us, they point out forcefully that the fact that Canadians pay more for their cellular services than citizens of many other countries is a myth. We're often compared to the G7 countries and Australia. And yet, when we invite the CEOs of these companies to come and debunk the myth, they don't seem in a hurry to explain why Canadians don't pay so much after all. It's quite surprising. Why do you think they're not in a big hurry to come over here to meet us?

[Scott Hutton]

We're in the same boat, because we hear the same explanation when we hold our hearings. Admittedly, it's difficult to compare exactly the prices and services offered in different countries. It's hard work. We're still working on it, because Canadians are telling us they're paying too much. We have indeed heard this complaint.

When we compare the prices of our wireless services with those offered internationally, we find that we no longer have the highest prices. We're in third place. It's not great, but we're no longer number one. As for Internet services, we still have the highest prices—

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

Forgive me for interrupting, but I want to catch this ball on the fly.

Since we're so fond of comparing price levels, what are we seeing in competitor countries? Is it a uniquely Canadian phenomenon to see price drops, or is it a global one?

[Scott Hutton]

It's a global phenomenon. Indeed, prices are falling at the same time for the same product. When it comes to residential Internet services, even though prices are coming down a little, we still have the highest prices in the world.

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

So the fact that Canadians pay a lot for their services is not a myth.

[Scott Hutton]

We believe that Canadians do pay a lot, and we're trying to reduce the cost of wireless phone services and residential Internet services by trying to introduce more competition into the market. But it's not just about cost. Innovation, choice of services and investment are also important.

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

You've answered well. Maybe that explains why we'll have to discuss a subpoena later today. Thank you for the clarification.

I will now address the representatives of the Competition Bureau.

We are currently studying Bill C-56 in Parliament. The Canadian competition regime is quite special—it's not your fault, you have a mandate—in that it places a lot of emphasis on efficiency gains. Elsewhere in the world, people try to ascertain whether efficiencies affect the consumer in any way, shape or form. I'm thinking of consumer surplus, for example, but I won't go into the technical details.

If Bill C-56 had been in force, would the transaction between Rogers and Shaw have taken place in the same form, in your opinion?

[Jeanne Pratt]

I'm going to answer in English, since I have to use rather technical vocabulary.

The efficiencies exception was certainly a factor before the tribunal, but ultimately the tribunal's decision did not turn on the efficiencies exception. We are, I think, very publicly welcoming the repeal of the efficiencies exception. We do find that it tends to have the law focus on efficiencies more than on the actual competitive effects of the transaction. We're very happy we're in a new world order—

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

I'm going to ask you the same question again, because I think it's very important.

People think that the transaction between the Royal Bank of Canada and HSBC Canada could not have gone ahead had Bill C-56 been in force. Yet the government approved the transaction anyway. We know that the Minister of Industry has been very tight-lipped about this.

Subject to all reservations, if Bill C-56 had been passed and in force, do you think the transaction between Shaw and Rogers would have taken place in the same way?

[Jeanne Pratt]

It's really difficult to say what impact it would have had, because we did our entire investigation, all the litigation, under the existing framework, which included section 96.

What I can tell you, though, is that with Bill C‑56 and the end of the efficiencies exception in addition to the proposals in Bill C‑59, I do think there would have been a difference, particularly through Bill C‑59, since concentration levels will now be a factor that the tribunal can consider.

For example in the Rogers-Shaw case, we would have seen that the four largest firms would have held a market share of 95% collectively. The repeal of the provision that says the tribunal can't look at concentration as well as the addition of a factor that says that they can actually consider it, in addition to coordinated effects—a specific factor being added for that—definitely would have changed some of the analysis in the Rogers-Shaw trade talks.

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

It is, therefore, possible that the conditions imposed by the minister to authorize the transaction were not enough to ensure sufficient competition and benefit the consumer.

[Jeanne Pratt]

I cannot speak to the minister's decision. What I can speak to is how we looked at the transaction under the Competition Act.

We definitely had concerns about the transaction. That's why we challenged it before the tribunal. We did file an application. The Vidéotron divestiture was brought forward after we filed that application. We did not think that the divestiture went far enough to address what we thought the anti-competitive effects would be from that transaction. We continued mostly because we were concerned that the divestiture did not address the particularly vigorous and effective competitor we saw with Shaw Mobile, and they were able to leverage their wireline infrastructure to be able to offer bundled product. Vidéotron, with the divestiture of Freedom, does not have that infrastructure. That did concern us, and that is why we continued our fight.

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

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Masse, you have the floor.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair, and thank you for our witnesses.

My first question is to the Competition Bureau.

With the opposition to the Rogers-Shaw decision, it had a consequence, I believe, of $9 million that was recouped by Rogers. Is that correct?

[Jeanne Pratt]

That's correct.

[Brian Masse, NDP, Windsor West, ON]

This is outrageous, in my opinion, and in many respects defeats the purpose of having a competition bureau that's able to really stand up for itself and for Canadian consumers.

Aside from that, is this $9 million now a budgetary loss in the Competition Bureau's operations that has to be made up for, or will it be made up for by the government at this time? I have requested that this money be made up for by the minister.

[Jeanne Pratt]

I can tell you that it has not impacted our operations. We have been able to get coverage for that cost award such that the merger review is not being impacted.