Industry Committee on Feb. 28th, 2024

[The Chair, Liberal, Joël Lightbound]

Good afternoon, everyone.

I call this meeting to order.

Welcome to meeting number 113 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. In addition, pursuant to the motion adopted by the committee on Tuesday, September 26, 2023, and the motion adopted on Monday, February 5, 2024, the committee is resuming its study on the accessibility and affordability of wireless and broadband services in Canada.

I would like to take this opportunity to welcome the witnesses joining us by videoconference today.

From BCE Inc., we have Robert Malcolmson, executive vice-president and chief legal and regulatory officer, and Mark Graham, vice-president of legal and regulatory affairs.

From Rogers Communications Inc., we have Phil Hartling, president of wireless; and from Telus Communications Inc., we have Doug French, executive vice-president and chief financial officer.

Also, before anything else, I wish to apologize to our witnesses for the delay. There was a vote in the House, which explains why we're starting a little later than planned.

Before turning to the opening statements, I recognize MP Davies for a point of order.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you very much, Mr. Chair.

I appreciate that we have witnesses here and, with all due respect to them, they are not the ones this committee requested to appear.

Therefore, to avoid any further confusion or concerns, and in the interests of Canadians, I will move the following motion, which has been given due notice. It says:

That, in relation to the study on Accessibility and Affordability of Wireless and Broadband Services in Canada, the committee invite and, if this invitation is not accepted, summons, pursuant to Standing Order 108(1), the following to appear before the committee to answer questions and explain measures that are being taken: Tony Staffieri, President and CEO of Rogers Communications Inc.; Mirko Bibic, President and CEO of BCE Inc.; and Darren Entwistle, President and CEO of Telus Communications Inc.

I think the motion speaks for itself, but I believe that these witnesses have already been requested to appear by the committee—my understanding is on two separate occasions—and have not. I think it's appropriate to issue a summons for them to appear to answer questions on these extremely important matters of national interest to all Canadians from coast to coast to coast.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Davies.

All members have heard the terms of the motion before the committee. Are there any comments? I see none.

Do I need to put it to a vote, or is there a consensus around the table and online?

(Motion agreed to)

Thank you, Mr. Davies.

I just want to warn our witnesses that there might be another vote, so we might be interrupted again in the course of this proceeding, and the meeting might be adjourned a little earlier than expected.

Mr. Vis, I see your hand is up.

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

Just to clarify, Mr. Chair, there will be another vote.

[The Chair, Liberal, Joël Lightbound]

Yes, we'll wait for the bells.

Thank you, Mr. Vis.

Mr. Malcolmson, the floor is yours for five minutes.

[Robert Malcolmson, Executive Vice-President and Chief Legal and Regulatory Officer, BCE Inc.]

Good afternoon. Thank you, Chair and members of the committee.

I would like to begin by recognizing that I am joining you from the traditional territories of many first nations and indigenous peoples.

At Bell, our goal is to advance how Canadians connect with each other and the world. We set this goal in recognition of the critical role that Bell's leading-edge wireless and fibre optic infrastructure plays in the lives of Canadians and the future of the Canadian economy.

Canada's facilities-based competition framework is delivering access and affordability for Canadians at a time when prices for other essential goods and services continue to rise. While Canadians are paying more at the grocery store, in rent and in interest on everything from mortgages to small business loans, wireless and Internet prices are consistently declining.

Between January 2020 and January 2024, wireless service prices have declined over 41%. During the same period, inflation for all consumer items increased by over 15%.

Consumers today have a wide range of affordable choices. Let me highlight a few examples.

Through Lucky Mobile, we offer wireless plans starting at $15 a month.

At Virgin Plus, we have a 30-gigabyte plan for $39 a month. Five years ago, a comparable plan with less data cost $180 a month. That means a customer could reduce their monthly bill by $141 while using 50% more data.

In 2019, Bell's Black Friday special offered 10 gigs of wireless data for $75, a price of $7.50 per gig.

Today, you can get 100 gigs of wireless data for $60 when you bundle Bell wireless and Internet services, a price of 60¢ per gig. On a stand-alone wireless plan, you can get 75 gigs of data for $65, or 87¢ per gig.

Meanwhile, payments to government for spectrum in Canada are among the highest in the world. Most recently, Canadian telcos paid the federal government $8.9 billion for 3.5 gigahertz of spectrum. In Australia, telcos paid one-tenth that amount for comparable spectrum. Simply fixing the spectrum licensing process to mirror that of our international peers could reduce cellphone bills in Canada by five dollars a month for every subscriber.

Consumers are also benefiting from lower prices for Internet services. The average retail price of a 600 megabits per second Internet package is down from $71 four years ago to $54 today. This reflects a 25% reduction in the monthly Internet bill of a Canadian household over the past four years.

We are proud of our progress in expanding our networks while lowering prices for our customers. At its core, Bell is an infrastructure builder. Since 2020, we have invested over $19 billion to expand our networks.

That is the value proposition we offer to our customers and to the ordinary Canadians and their pension funds, which trust us to be the stewards of their hard-earned money through the purchase of our stock. However, building a new network is a risky, capital-intensive proposition. The payback period is long and uncertain. The business case for those investments cannot absorb negative regulatory decisions without consequence.

As a direct result of the CRTC's November 2023 decision on wholesale Internet access, which allows third parties to resell our newly built fibre network at below-cost rates, we reduced capital expenditures by over $1.1 billion. That means five million homes and businesses in Bell's footprint that are still without fibre will continue to be without fibre for the foreseeable future. If the regulator does not allow a reasonable return on investment, Bell cannot justify investing billions of dollars in brand new infrastructure just to subsidize its competitors.

Earlier this month, the Minister of Finance made a plea to Canadian companies to support the country's productivity through investment. Bell stands ready to answer that call. We want to invest. We share the minister's view of the importance of business investment and the need for Parliament's and the regulator's support.

Let's work together to build on the success of Canada's long-standing policy of facilities-based competition, rather than piling on additional costs and barriers to investment through heavy-handed regulation.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

I'll now turn to Rogers and Mr. Hartling.

[Phil Hartling, President, Wireless, Rogers Communications Inc.]

Thank you, Mr. Chair.

Good afternoon, committee members. My name is Phil Hartling and I'm the president of Rogers Wireless. I've previously led the residential business and our service expansion program. I appreciate the opportunity to speak with you about the telecommunications industry and the work that Rogers is doing to connect more Canadians, drive innovation and deliver more value for consumers.

Rogers is a proud Canadian company. For more than 60 years, we've created tens of thousands of jobs and served millions of customers to bring Canadians the best products and services they can rely on. In the last decade alone, we've invested over $40 billion in our networks.

We've built Canada's largest and best 5G network. Our coast-to-coast Internet network now passes 9.8 million homes, since we came together with Shaw last year. Our investments drive a capital-intensive business. Our planned capital expenditure in 2024 of $4 billion reflects record levels of investment in our networks.

This investment in our networks is not just to support the rapid growth in data consumption, which is growing rapidly. In wireless, for example, data consumption has gone up over 400% in the last five years. Broadband usage on our wireline networks is up over 200%. Last year alone, we invested $1 billion in our wireless network just to keep up with the amount of consumption increase in 2023.

Beyond keeping up with consumption, we are investing in industry-leading innovations like satellite-to-mobile technology, which will bring coverage to every corner of our country—even the most rural and remote parts. It's about harnessing leading global technology to help first responders with early wildfire detection using AI cameras and satellite-powered sensors. It's about bringing cellular service that never existed before along the Highway of Tears in British Columbia, or through eastern Ontario to improve public safety.

We're making these record investments while delivering more value to Canadians in a very competitive market. In fact, since our merger with Shaw and Quebecor's acquisition of Freedom Mobile, the industry has never been more competitive.

Inflation has driven up the price of most goods, including groceries and energy, but it's a very different picture for wireless and broadband services. From the federal government's own data, wireless prices have gone down 50% in the last five years. Since last year, prices are down 16% and wireless prices are now lower than those in the United States.

Think back to 2020, when a 10-gigabyte plan cost $75 a month. Today, you can purchase 30 gigabytes of data for $39 a month. In other words, the cost of wireless is down, both in absolute terms and in price per gigabyte.

As a company, we know there's more to do. In the last year, we've expanded our connected for success program—our low-cost, high-speed home Internet program for low-income Canadians—to include the western provinces. We've also introduced a connected for success wireless program that offers a $25-dollar 5G plan with a no-cost 5G smart phone. For Canadians, we've cut the cost of our most popular 5G plan by 70%. We dropped prices for the entry price of 5G last year by over 40%, from $85 to $55, and it's now $50 a month. The market followed.

Those are real, substantive reductions for consumers. In any given week, companies are offering special promos and deals as we compete vigorously for market share. Last year alone, there were more than 3,000 price plans in the market that Canadians could avail themselves of, and 4.9 million Canadians switched providers in 2023.

Rogers has also introduced a 48-month device financing option at 0% interest with no mobile contract when it's bundled with a Rogers credit card. This cuts the monthly device payments in half. With the average iPhone these days costing $1,200 to $1,500, that kind of reduction makes a material impact on the cost to consumers.

I'll conclude by saying that Rogers shares the commitment of affordability and ensuring that Canadians have the very best in connectivity, regardless of where they live and no matter their budget or needs.

I look forward to your questions.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Hartling.

I'll now give the floor to Mr. French, from Telus.

[Doug French, Executive Vice-President and Chief Financial Officer, Telus Communications Inc.]

Thank you, Mr. Chair and honourable members.

My name is Doug French. I am the executive vice-president and chief financial officer of Telus. Leading a team of over 1,400 professionals, I oversee the financial operations of Telus. I'm a resident of Whitby, Ontario.

This past November and December, we saw the most aggressive price competition between the four national mobile operators in recent memory. It has continued into 2024.

Looking at Telus, we had some incredible deals during this period, including rate plans of $29 for 30 gigabytes on Public Mobile and 50 gigs for $34 on Koodo, which were up to 97% lower than 2020 at the start of the government's 25% reduction mandate for price per gigabyte. Some of the prices we saw during these holiday periods were so aggressive that they were actually not profitable during the contract period.

Customers are taking advantage of these highly competitive environments, which are enabled by a wide range of choice among all our carriers and the ease with which they can switch providers while keeping their own phone numbers. During the last quarter of 2023, the volume with which customers were switching providers was up 40% year over year.

Like cellphone prices, Internet prices are rapidly declining. Statistics Canada data from January show that consumers paid over 4% less for high-speed Internet services on average from one year earlier. Telecom prices continue to go down even as prices for all other essential services are on the rise.

According to Statistics Canada, between 2021 and 2023, average housing costs went up by more than $1,800 a year, groceries by more than $1,600 a year and electricity costs by more than $150 a year. By comparison, Canadians are paying, on average, $275 less for cellphones and at least $75 less for Internet.

Even as Canadians are paying less for their telecom services, they're getting more. Every year we're offering faster, diverse, more expansive and more reliable services, as well as larger data buckets for the same or lower pricing.

Given high rates of inflation, we're seeing significantly rising costs associated with running, building and protecting our infrastructure, including the impacts of the changes we're seeing in the Canadian climate; the high price of devices, equipment and spectrum; and increasing labour costs. The cost of building networks in Canada is 103% higher than in any other G7 country, based on its unique geography, topography and population dispersion, and including the items I talked about above.

Against this backdrop, Canada still has some of the best networks in the world. According to the OECD, we're second only to South Korea for wireless services and in the top 10 for home Internet.

Our world-leading networks are supported by world-leading investment, creating massive benefits for all Canadians. The industry directly and indirectly provides jobs for over 724,000 Canadians when you look at our investments as they're being talked about today. Connectivity infrastructure accounted for almost 20% of Canada's labour productivity between 2009 and 2019. The telecom industry generated over $76 billion in GDP in 2022, making up over 3% of the national economy.

At the heart of Telus is our social purpose. We are leveraging our technology and compassion to drive social change and enable remarkable human outcomes. We are bridging digital divides by bringing our networks to rural, remote and indigenous communities. We make connectivity accessible to everyone, no matter their social or economic circumstances, through our Connecting for Good programs, which offer heavily discounted home Internet and mobility services for low-income families, seniors, youth transitioning from foster care and new refugees coming to Canada. Not many industries in Canada, or industries anywhere, offer these kinds of discounts under that framework.

Our social purpose drives all the areas of our business, from how we invest to how we innovate to how we put customers first. We're ready to compete to do what's right for Canadians and generate the best outcomes for our customers, our team members, all of our communities across Canada and shareholders.

We know there is more to be done and I look forward to continuing to work together.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. French.

I'll give Mr. Williams the floor to start things off.

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

We are here today because Canadians are paying the highest cellphone bills on the entire planet. We had a government that in 2020 said they were going to reduce cellphone bills by 25%. We had a Prime Minister in the House of Commons who said he did exactly that and that prices went down 25%.

Mr. Hartling, are your prices down 25%, yes or no?

[Phil Hartling]

Prices are falling in Canada, as Statistics Canada reports. The industry sets the pace—

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

Mr. Hartling, I only have so much time. Are your prices down 25%?

[Phil Hartling]

Prices are down 50% over the last five years, and 16% in the last 12 months.

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

You're saying that your prices are down 25%. We've had a lot of statistics bandied around this committee and to the Canadian public.

We're going to look at one statistic today, and that's monthly average revenue per account, ARPU. In layman's terms for those listening at home, that means the average revenue taken in and how many accounts that each of these companies has. Basically, that is the best statistic we have for Canadians to show exactly how much revenue is coming in and how much that revenue is paying per customer. In other words, this is exactly what is coming in for Canadians and how much they're paying these public companies.

When it comes to looking at 2022 versus 2023, Rogers had an average revenue per account of $57.89 in 2022, and in 2023 it was $57.86, a decrease of only three cents. With Bell, in 2022 it was $58.92, and in 2023 it was $59.08. In 2022, Telus was at $58.10, and in 2023 it was $58.78.

There are a couple of observations from this. One is that all three of these companies seem to be very similar, within two or three dollars of each other. Two, the average revenue per customer has not gone down, except for Rogers, by three cents.

Mr. Hartling, how do you account for these numbers on average revenue per user with the statement you just made that you've dropped cellphone bills by more than that?

[Phil Hartling]

Let me begin by making an observation.

When you use the term average revenue per user, or RPU, it is not the same as the monthly service fee that the customer pays. To clarify, let's look at what's in RPU.

The way RPU is calculated is that it's all wireless revenues over all wireless subscribers. One portion of what's included in wireless revenues is the monthly service fee. For example, if you're paying $50 a month, that's part of RPU. On top of that, we include in RPU things like device protection insurance. Suppose that you decide your cellphone is expensive and you're afraid that you're going to lose it or drop and break it. You can buy an insurance policy, and that's included—

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

Mr. Hartling, I'm sorry to interrupt, because I know you're adding this in.

Are these charges you're adding being paid for by the consumer, like insurance and anything else? Are these being paid by Canadians, yes or no?

[Phil Hartling]

Some are being paid by consumers and some are being paid by businesses.

If you'll let me finish, I could give you a few more examples of RPUs being paid by businesses. For example, Tesla pays us to access their network—

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

Mr. Hartling, I'm sorry to interrupt you.

By “customer”, you're trying to tell me that a business is not a customer. A business is a customer. I take it that what you're trying to say is that these are add-ons and not what the Prime Minister meant when he said that he was going to decrease cellphone costs. That's what we're trying to understand here.

Cellphone bills are what consumers pay, and whether it's an add-on or another charge like the $60 activation fees, these are revenues coming in. When consumers pay bills, a lot of Canadians are confused about what they're paying month to month. I will also note that this does not include tax, which is added to these bills.

These customers are paying these bills. No matter how you break it up per individual, is that how this stat is broken up, yes or no?

[Phil Hartling]

As I said, it's the total amount of revenue.

When we look at the trend of pricing in Canada, we're looking at the monthly service fee. Those are the things the customer pays. The customer may choose to add on additional services, but that's a customer choice. We're not talking about additional services and customer choice; we're talking about the average monthly service fee. That's what Statistics Canada—

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

Thank you, sir.

Customers do have choice, but they are also sometimes locked into plans for two years. We can say that Canadian are just paying bills, and at the end of the day, we're looking at bills for Canadians.

Does that ARPU include all revenue from Fido, Chatr and Cityfone?

[Phil Hartling]

Yes, it does.

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

Just to be clear for consumers, these are sub-brands of Rogers. A lot of people who have Fido, Chatr or Cityfone may not know that.

Sir, we're here because you made an announcement to raise fees up to nine dollars for some accounts. When we're talking about the increase of fees, Canadians are already paying the highest in the world. When we look at ARPU, Canadians are still paying almost twice what Australians are paying in a country that has a similar geography and fewer people.

Do you think we have enough competition in Canada, yes or no?

[Phil Hartling]

Let's start by talking about your claim that Canadians are paying the highest prices in the world. We know that there are facts on the table that show that Canadian prices are lower than U.S. prices and lower than Australian prices. It's not true that Canadians pay the highest prices in the world.