Industry Committee on Feb. 26th, 2024

[The Chair, Liberal, Joël Lightbound]

I call this meeting to order.

Good morning, everyone. Welcome to meeting number 112 of the House of Commons Standing Committee on Industry and Technology.

Today’s meeting is taking place in a hybrid format, pursuant to the Standing Orders.

Pursuant to the motion adopted by the committee on Tuesday, September 26, 2023, as well as the motion adopted on Monday, February 5, 2024, the committee is resuming consideration of its study on accessibility and affordability of wireless and broadband services in Canada.

I'd like to welcome all of today's witnesses. From the Canadian Radio-television and Telecommunications Commission, we have Scott Hutton, chief of Consumer, Research and Communications; Ian Baggley, director general, Strategic Planning, Broadband and Networks Fund; and Anthony McIntyre, general counsel and deputy executive director, Legal Services.

From the Competition Bureau of Canada, we welcome Jeanne Pratt, senior deputy commissioner, Mergers and Monopolistic Practices Branch; Laura Sonley, associate deputy commissioner, Mergers Directorate; and Anthony Durocher, deputy commissioner, Competition Promotion Branch.

I thank you all for being with us, in person, in Ottawa.

Without further ado, we'll turn the floor over to the CRTC for five minutes.

[Brian Masse, NDP, Windsor West, ON]

I have a point of order, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Mr. Masse, you have a point of order.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I'll be brief.

I want to acknowledge that at the upcoming meeting on Wednesday, the witnesses coming forth are not consistent with the motion that was passed calling for the CEOs of BCE Inc., Rogers Communications Inc. and Telus Communications Inc.

We had Mr. Péladeau here, who followed the proper procedure and rules for the motion that was passed.

This committee has a decision to make, in my opinion, very soon. I will have a draft motion to subpoena those CEOs ready, and I look forward to using the end of my time at this meeting or during committee business for that, because this is information that's been brought to us, and it's inconsistent with what was passed here in the industry committee.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Masse.

You are correct. I understand that I might keep some time for you towards the end of our meeting with witnesses today, and we can discuss how we go about getting the witnesses whom this committee has asked for.

Thank you, Mr. Masse, for bringing it up. I'll recognize you whenever you want towards the end of the meeting.

Remember that we have an hour and a half before we suspend, and we're going into committee business.

I yield the floor to the CRTC.

[Scott Hutton, Chief of Consumer, Research and Communications, Canadian Radio-television and Telecommunications Commission]

Thank you for inviting us to appear before your committee today.

Before I begin my remarks, I'd like to acknowledge that we are gathered on the traditional unceded territory of the Algonquin Anishinabe people.

I am joined today by my colleagues Ian Baggley, director general, Telecommunications, and Anthony McIntyre, general counsel.

As you know, the CRTC is an independent quasi-judicial tribunal that operates at arm's length from government. We hold public hearings on telecommunications and broadcasting matters and we make decisions based on the public record.

In the telecommunications industry, our work focuses mainly on Internet and cellphone services. We promote choice and affordability for Canadians; encourage investment in reliable, high-quality networks; and improve access to telecommunications services in indigenous, rural and remote communities.

These goals were brought into greater focus in February 2023, when the government directed the CRTC to renew our approach to telecommunications policy. It asked us to, among other things, act quickly to provide clarity to the market and consider how our decisions would promote competition, affordability, consumer interests and innovation.

A good example of how we have renewed our approach is in cellphone competition. In May of last year, the CRTC established rules that allow regional competitors to compete across Canada as mobile virtual network operators using the networks of large cellphone companies. With this access, regional companies can expand their reach and offer Canadians more choice.

Our work appears to be having a positive impact on the rates Canadians pay. The Consumer Price Index shows that cellphone service prices in Canada have declined overall 16% in the last year. Clearly, we need to continue our work, and we will be closely monitoring cellphone service prices to ensure that the recent price increase announced in January does not become a trend.

At the same time, we are also working to enhance choice and affordability in Internet services. In March we launched a proceeding on the Internet services market to increase competition, create more choice and lower prices.

We knew we had to act quickly. Our data show that competitors to the largest Internet service providers had been losing subscribers over the past two years. That's why, last November, we released an initial decision to provide competitors with a workable way to sell Internet services using the fibre-to-the-home networks of the large telecom companies. We took this initial step in Ontario and Quebec, where competition has declined most significantly.

This work continued earlier this month, when we held a public hearing on the issue. We continue to build our public record by hearing from service providers, competitors, consumer groups, individuals and government agencies. Ultimately, we need to find a solution that allows consumers to benefit from greater choice while producing robust investment in networks.

As we work to improve the affordability and quality of telecommunications services in Canada, we are also working to ensure that everyone across our country has access to these services.

Our goal is to help connect all Canadians. The CRTC plays a small role as part of a larger government effort to bring affordable and high-quality telecommunications services to all Canadians. To support this effort, the CRTC helps fund projects in rural, remote and indigenous communities through its Broadband Fund.

In our most recent call, we received more than 100 applications seeking $1.9 billion dollars in funding. We are moving quickly to make decisions on these projects, while at the same time making our application process faster and easier. We are also looking at creating a new funding stream specifically for indigenous communities.

As you can see, we have been busy, and we don't expect to slow down any time soon. We remain committed to promoting competition as a means of providing all Canadians with access to reliable, high-quality Internet and cellphone services at affordable prices. We know that Canadians are not satisfied with the prices they pay and that more needs to be done.

Thank you for the opportunity to appear today. We look forward to your questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

I will now yield the floor to the Competition Bureau.

[Jeanne Pratt, Senior Deputy Commissioner, Mergers and Monopolistic Practices Branch, Competition Bureau Canada]

Good morning, Mr. Chair and members of the committee.

My name is Jeanne Pratt. I am the senior deputy commissioner of the mergers and monopolistic practices branch at the Competition Bureau. Joining me today are my colleagues Anthony Durocher, who is the deputy commissioner of the competition promotion branch, and Laura Sonley, who is the associate deputy commissioner in our mergers directorate.

The Competition Bureau is an independent law enforcement agency that protects and promotes competition for the benefit of Canadian consumers and businesses. We do this because competition drives lower prices and innovation while fuelling economic growth. We administer and enforce the Competition Act by investigating and taking action to address anticompetitive business practices that harm consumers, competition and our economy.

The Competition Act’s merger provisions are the first line of defence against harms to competition. They are a preventative tool that guard against harmful concentration of market power.

Competition in the telecom sector has been and continues to be a priority for the bureau. It's the backbone of commerce in the digital age and a critical service for businesses and consumers alike. This committee is well aware that the bureau filed an application to the Competition Tribunal seeking to block the proposed merger between Rogers and Shaw. While we were unsuccessful in our attempt, we stand by our decision to bring the case and our reasons for it. We are continuing to monitor the markets since the transaction closed.

The bureau will continue to prioritize our work in this sector through both our enforcement and our advocacy roles. Just two weeks ago, Ms. Sonley participated with other bureau personnel in the ongoing CRTC hearings on the review of the wholesale high-speed access service framework.

Recent amendments to the Competition Act, notably those made in 2022 and more recently through the Affordable Housing and Groceries Act, have given the bureau more tools to protect and promote competition in Canada. The committee will also be aware that Bill C-59, which is currently before the House and is being prestudied in the Senate, contains several other amendments that, if passed, will further strengthen the Competition Act.

We are committed to using the new tools wherever necessary to protect competition. We also look forward to updating our guidance to Canadians and Canadian businesses on how the bureau will enforce these amendments.

The Bureau strongly believes that competition can play a greater role in the concentrated telecom sector, with Canadian consumers, businesses, and the overall economy reaping the benefits. More competition unlocks innovation and productivity, and helps us to maintain a high standard of living.

We share the committee’s interest in enhancing competition and working to ensure that high quality telecommunications services are reliable and affordable for all Canadians.

Before fielding your questions, I would note that the law requires the bureau to conduct its investigations in private and to keep confidential the information we have. This obligation may prevent us from discussing certain facets of our investigation.

I would like to thank the committee for the opportunity to appear today. We look forward to your questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

To start the discussion, I'll turn it over to MP Williams.

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

Thank you, Mr. Chair. Thank you to our witnesses for being here today.

This is probably one of the most important studies that this committee is undertaking right now. Canadians pay the highest cellphone bills on the whole planet—not just in North America and not just in part of the world, but in the whole world. Only South Africa seems to have some of the higher fees.

The reason is that we have basically a de facto network duopoly in Canada. We have only two independent mobile networks in Canada with a national footprint. We have Rogers, which does cost-sharing or sharing with Vidéotron, and then we have Bell and Telus, which operate on each side. We only have two in this whole country, so it's easy to see what's happened over the years: With fewer players and fewer sellers and many buyers, the prices have gone up.

I'll talk about some of the recent data we have. We've talked about some from Stats Canada, but this is some 2023 data from Rewheel. Canadians are paying a minimum monthly price for 4G and 5G smart phone plans that have at least 100 gigabytes, a thousand minutes and 10 megabytes per second, which is peak speed, at $90 per plan. Those in the United States are paying $44, and Australians are paying less than $30. This is what happens when this major oligopoly controls the country.

The Prime Minister said he was going to reduce cellphone fees by 25%. This was in 2019. Based on these numbers, that didn't happen.

The industry minister said that a fourth national player would be able to reduce these fees across Canada. That was supposed to be Freedom and Vidéotron. Right now we're seeing, with prices going up $9 a month, that this is not happening.

At the CRTC, you've been given directives. I want to talk specifically about the directives you've been given from the government. I want to go specifically this morning to MVNOs. How many MVNOs do we have operating in Canada at this moment?

[Scott Hutton]

I believe they're working toward having three potential MVNOs operating, at this point in time.

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

Are you aware of how many MVNOs are in the U.S. and how many are in Australia?

[Scott Hutton]

I do not have that data.

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

The number is 139 in the U.S. and 66 in Australia.

A lot of Canadians aren't aware of the flanker brands that are actually part of the big three. Bell owns Bell MTS, Lucky Mobile and Virgin Plus. Rogers owns Fido, Chatr and Cityfone. Telus owns Koodo and Public Mobile. Customers are thinking they have choice, but these are actually operated by the big brands.

Your answer was that we have only three MVNOs. You said you've been given direction by the minister to create more MVNOs in Canada, but what are the stipulations right now if you want to open an MVNO? Do you have to have network? Do you have to have a certain number of years to build it up? What are the stipulations in owning an MVNO in Canada right now?

[Scott Hutton]

The model we have implemented to impose the MVNO regime is one based on trusting the regional players across the nation. These are various players who have access to spectrum and who are building out networks to essentially better serve Canadians and provide them with more competition and better prices.

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

Does that follow the same model that we might see in Australia or the U.S.?

[Scott Hutton]

The U.S. model, I believe, is not a mandated model. It's a model that has developed as a result of effective competition in that market.

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

I think it's the same in Australia.

Essentially, if someone wants to start an MVNO in Canada, the barrier to entry is billions of dollars—not millions—to build out a network, and then build out that network to offer services. That's the only way you can become an MVNO. Is that correct?

[Scott Hutton]

We have trusted and we have mandated an MVNO regime to the major incumbent players you mentioned. With recommendations and full public hearings, we looked at the model and ensured that this gave the best ability for us to build out and maintain not just good prices but also innovation and more choice through more competition on that front.

Those players are entering the market, have entered the market, and have already had an impact on pricing. I know you've highlighted certain pricing indications, but our numbers with respect to mobile service say that over the last year there has been an actual decrease by 16% of the overall rates on the packages. In fact, prices have been decreasing since 2017 in that measure.

Canadians do not feel like they are getting better prices because they are consuming more and more faster services and significantly more data consumption services at the same time so—

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

I'm going to get you right there. That's what Canadians are consuming.

Does the CRTC have updated numbers for how much data Canadians are consuming per month at this point?

[Scott Hutton]

I wouldn't have it here, but we can provide it to the committee.

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

Can you submit that?

The data from your last submission shows that in 2014, in one quarter, Canadians would consume 39 million gigabytes. In quarter three of 2022, that went up to 554 million gigabytes. Canadians were consuming over 10 times the data that they were in 2015, which is only in eight years.

When we're looking at prices, we can go into how Canadians are looking at that, but the reality is that companies now are selling more data. They're gouging Canadians on data and they're making more money on that data.

Would that be correct?

[Scott Hutton]

Actually, when you look at the numbers and the level of data consumed, you see that Canadians are looking for faster speeds, because speed is certainly an implication as we are consuming more data, more video and more high-bandwidth services. However, when you look at the rate for what is consumed on an average basis, the actual rate has been decreasing tremendously on that front.

Canadians are consuming far more. As we are here today, we continue to work on expanding the MVNO regime to make sure that we're able to serve Canadians and that there is more competition and even more price impact, whether it's on data consumption services or mobile subscription packages.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Williams.

Ms. Lapointe, you have the floor.

[Viviane LaPointe, Liberal, Sudbury, ON]

My question is for the CRTC members.

It's my understanding that earlier this month the CRTC held public hearings to address the fact that increasing wireless competition has not been effective.

Why have current measures been unsuccessful in increasing competition, in your opinion?