Industry Committee on Feb. 28th, 2024

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

Sir, I would dispute your claim. If you would like to submit those facts, as you think Americans are paying more than Canadians, please submit them. We do not have that data.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Williams. That's all the time we have.

I'll just let Mr. Hartling finish his train of thought.

[Phil Hartling]

Mr. Chair, we would be happy to provide additional information with respect to price comparisons between our prices and prices in the United States. We'll follow up with the clerk.

[The Chair, Liberal, Joël Lightbound]

Thank you.

MP Turnbull, the floor is yours.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you.

Welcome to the witnesses. Thank you for being here today.

Mr. French, I'll start with you. I would note that you're from the greatest town in all of Canada, my hometown of Whitby. It's great to have you here.

You mentioned that the volume of switching suppliers was up about 40%. Can you just clarify that I got that number right?

[Doug French]

You did.

[Ryan Turnbull, Liberal, Whitby, ON]

Is that a result of the federal government's work to essentially create a $50 fee for breaking contracts? Has that helped lead to more switching, in your opinion?

[Doug French]

In my opinion, what we've seen is that because of the cost of handsets, there is a significant number of customers not signing contracts anymore. More and more customers are signing up for “bring your own device”. I would say that a lot of the switching is happening due to customers keeping their handsets longer. This is the primary reason we have seen for the switching movement.

[Ryan Turnbull, Liberal, Whitby, ON]

Okay. Great.

Similar to Mr. Williams' line of questioning, but certainly taking a different tone, I have a question for both Bell and Rogers.

I want to ask you, Mr. Hartling and Mr. Malcolmson, about the article that spurred this particular study. It was about an increase in prices, to my understanding, for customers at Rogers who were off contract. Can you explain what percentage of your customer base that would be?

I'll start with Mr. Hartling.

[Phil Hartling]

Sure. Thank you for the question.

It depends on the brand. For example, with Rogers, a little under half of our customers are no longer under contract. With Fido, it's more like 75% of customers are not under contract. With Chatr, no customers are on contracts. It has become the dominant percentage, really, of the customer base that doesn't have a contract.

[Ryan Turnbull, Liberal, Whitby, ON]

Mr. Hartling, I note that you said, “Rogers shares in the commitment to affordability”. What I want to know is why, at a time when Canadians are really struggling, you would be increasing prices at all for people who are off contract. Is there a rationale for it that you can provide to the committee?

[Phil Hartling]

We often make plan adjustments. For example, last May we lowered the price for 5G entry plans from $85 to $55. That's now $50 for 75 gigs a month. We introduced low-cost options for students, teenagers and senior citizens. We introduced a connected for success program that provides a $25 5G plan, plus a free smart phone, for low-income Canadians. We have plans starting at $15.

The general trend in the industry is that prices are falling. That's what Statistics Canada reports when it says that our prices are down 50% over five years and 16% in the last year. That's the general trend. At the same time, we're investing record amounts in our network—as I said, $4 billion—with a record amount of that going to building networks across Canada.

No other industry that I can think of is lowering prices at the rate the wireless industry is. At the same time, consumption of the product is growing quickly and our costs continue to grow. Our cost of borrowing, our cost of labour, our cost of equipment and our cost of spectrum are all up, but at the same time, as StatsCan shows us, prices are coming down.

[Ryan Turnbull, Liberal, Whitby, ON]

I agree. I've been an advocate of the StatsCan numbers, just to bring us down to reality and to be fact-based and evidenced-based in our discussions and debates on this topic, which I feel is very important. Thank you for highlighting that.

I still don't understand how that provides a rationale for increasing prices for a significant number of your customers who are off contract. If I was a business person, I think it would incentivize people to enter a new contract. Wouldn't you say that's the main objective, to raise prices on individuals who are off contract so they will renegotiate a contract to stay with Rogers? Isn't that a rationale?

I understand that your costs are going up in other places, but you're also a highly profitable company. We don't have much empathy for the fact that your cost increases are significant when you're profiting so handsomely. How does this provide a strong rationale for those off-contract increases?

Maybe just give a quick answer, because I can see the chair giving me the evil eye.

[Phil Hartling]

I guess what I'm trying to say is that we're often making plan adjustments. Occasionally, prices go up; more often, they go down.

When a customer receives notification of a price increase, it's very easy for them to reach out to us online, through our retail store or in the call centre to see if there's a better option for them. Perhaps one option they may choose is to go into a contract and get a new smart phone. Another option they may choose is BYOD, or bring your own device, which is a plan that's available in the market. We make it easy for customers to make those changes.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, MP Turnbull.

Colleagues, a vote has been called in the House. As you can see, the bells are ringing. I have one suggestion, given that we have already started our first round of questions. It's that we finish this first round of questions so that Mr. Garon and Mr. Davies have their turns. Then we would adjourn the meeting.

Do I have unanimous consent for that? No.

Do you want to adjourn right now, Mr. Perkins?

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

I understand that even with the planned votes and the votes happening in addition to those votes, we have two hours' worth of resources available. I would say that we continue the meeting and suspend, as we normally do while we're sitting here, to do the votes when necessary, and then go back to questioning and testimony.

[The Chair, Liberal, Joël Lightbound]

I'll just proceed the regular way.

Do I have unanimous consent to continue the meeting until five minutes before the vote?

[Some hon. members]

Agreed.

[The Chair, Liberal, Joël Lightbound]

We'll go on and then we'll suspend.

Mr. Garon.

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

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

Gentlemen, the fact is that we are in an extremely concentrated market. Three telecom giants—Bell, Rogers and Telus—own just about every brand. I realize there are many different versions of these brands, but they're really all the same candy in different wrappers.

New players, such as Videotron, are trying to enter the market, but their roaming rate agreements are being challenged. In fact, arbitration of such agreements, which would bring in new players, is going to be appealed.

Smaller companies want to set up shop, but they tell us that it's absolutely impossible to get into the market. As a matter of fact, it's so hard that companies like Cogeco are starting to look at the American market because ours is impenetrable. Cogeco, a Quebec company, is looking at providing cell services in the United States. That's the current state of the Canadian cell market.

Our market is so uncompetitive that CEOs think it's okay to ignore invitations to testify to Parliament. That's the kind of market we're in. Corporations are telling us that it's not true prices are higher in Canada. Apparently that's a myth.

Yes, we're seeing lower prices, technological innovations and efficiency gains around the world. Prices have come down. Most of your companies are shouting it from the rooftops, but the Competition Bureau and the Canadian Radio-television and Telecommunications Commission, the CRTC, told us, right here in this room, that the prices Canadians pay are not as low as they should be and that prices have dropped less here than in the rest of the world. That's the Canadian reality.

I'll start with a short question, and I'll ask for a short answer, please, Mr. Hartling.

When it comes to pricing and lower prices, don't you want to be in the same league as the best in the world?

[Phil Hartling]

I absolutely believe that we are among the best telecommunications networks in the world and Canada.

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

I'm talking about bringing prices down.

Prices have dropped much less in the Canadian market than in other industrialized countries. Your companies keep telling us that prices have dropped, but we haven't seen the same price cuts in Quebec and Canada as in other countries.

Your companies' messaging is that high prices in Canada are a myth, yet prices should have dropped more than they did.

I will ask you again. When it comes to lowering prices, don't you want to be in the same league as the best?

[Phil Hartling]

I think you have to put the question in context. It costs a lot of money to build networks in Canada. It's a big country. We pay the highest spectrum prices in the world for the spectrum we use to operate in. We have a high concentration of cellular towers just because of the size of the geography and the very small population.

When you're looking—

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

I'm going to interrupt the witness, Mr. Chair.

I don't want to come across as rude, but you're repeating what you said in your opening remarks.

We know that roaming rates are extremely high in Canada. We know that the market structure here means the heavyweights own the infrastructure, which means that roaming rates are the key to bringing prices down. We know the big players are not keen to lower their rates. You don't seem to want to talk about that for some reason.

I'm going to ask you another question, Mr. Hartling. Is there anything the price of spectrum in Canada isn't responsible for?

[Phil Hartling]

I'm sorry. Could you repeat the question? I don't understand it.