Industry Committee on March 18th, 2024

[The Chair, Liberal, Joël Lightbound]

Good morning, everyone. I declare the meeting open.

Welcome to meeting number 114 of the House of Commons Standing Committee on Industry and Technology.

Today's meeting is in 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 today resumes its study on the accessibility and affordability of wireless and broadband services in Canada.

I'd like to welcome the witnesses who are joining us today and thank them for being with us. We welcome Mirko Bibic, president and chief executive officer of BCE Inc. We also welcome Tony Staffieri, president and chief executive officer of Rogers Communications Inc., who is accompanied by Phil Hartling, president of the Wireless Division. Finally, we welcome Darren Entwistle, president and chief executive officer of TELUS Communications.

Without further ado, I'll turn the floor over to Mr. Bibic for five minutes.

[Mirko Bibic, President and Chief Executive Officer, BCE Inc.]

Thank you, Mr. Chair.

I also thank the members of the committee.

I would like to begin by recognizing that I am joining you from unceded indigenous lands. The Kanien’kehá:ka Nation is recognized as the steward of the lands and waters from which I’m speaking to you today.

At Bell, our purpose is to advance how Canadians connect with each other and the world. To fulfil our purpose, we offer our customers access to the best networks at attractive prices, prices that are now significantly lower than in the United States.

At the end of this year, since 2020, Bell will have invested $23 billion—that's right, $23 billion—to expand our pure fibre Internet and 5G networks. While many other companies scaled back their investments during COVID-19, we built more.

Earlier this month, Bell was the only business in Canada recognized by OpenSignal as a global leader in network speed experience. For the third year in a row, Global Wireless Solutions ranked Bell 5G Canada’s fastest 5G network. And Bell’s pure fibre Internet offers the world’s best Internet technology and is recognized as the fastest Internet and Wi-Fi in the country.

We have invested in building these networks to serve our customers not just in Montreal, Toronto, Quebec City and Halifax, but also in places like Churchill, Happy Valley-Goose Bay, Lac-Beauport, Trois-Pistoles and Welland.

Meanwhile, we remain relentlessly focused on improving the customer experience. According to the Commission for Complaints for Telecom-television Services, Bell outperformed all our competitors, with a 6% reduction in the overall share of complaints. This is the eighth consecutive year that our share has decreased.

We continue to improve our service and provide customers with greater flexibility through digital tools. Our award-winning MyBell app makes it easier for our customers to manage their services online. Our virtual repair tool fixes common issues from within the MyBell app.

What's more, our investments in fibre from Manitoba to Newfoundland have brought more competition to cable companies that have dominated the Internet market for far too long. In Quebec, for example, we have deployed fibre to 2.7 million locations—bringing reliable fibre connectivity to customers who previously had little or no competitive choice.

With this increased competition comes lower prices for Canadians. StatsCan's own data shows that Canadians pay much lower prices for wireless Internet today than they did just a short time ago.

From 2019 to January 2024, wireless service prices declined over 47%, while Internet prices dropped by almost 8%. In contrast, since 2019, Canadians have paid up to 18.5% more for all items, including gas, energy and shelter.

As prices have fallen, Bell has significantly increased how much data customers receive each month. For an average Canadian using between five and seven gigabytes of wireless data per month, prices have fallen nearly 30%—that's $13 per month—on our Virgin Plus brand since 2020. Instead of just five gigabytes of data back then, that user is now getting 10 times more: 50 gigabytes.

In the last five years, wireless prices have gone down in Canada, have stayed more or less flat in the U.S. and have gone up 24% in the U.K. Today, Canadians pay less for wireless than in the U.S. Virgin's $34 for 50-gigabytes plan is $7 less than a 10-gigabyte plan on AT&T's Cricket brand. That's $7 less, but five times more data.

On the Internet side, Virgin Plus offers 300-megabytes-per-second residential Internet for $55. That same plan would cost $74 in the U.S.

Prices in Canada are falling, despite government-imposed spectrum prices that rank among the highest in the world. Most recently, Canadian providers paid the federal government $8.9 billion for their 3.5 GHz band spectrum licences, while in Australia, providers paid one tenth that amount.

If government-imposed spectrum prices in Canada followed the global average, every Canadian's wireless bills would be $5 per month lower. World-leading networks, a focus on customer experience and globally competitive prices. That is how we are delivering for Canadians.

You hear the term “shrinkflation” a lot these days. Increasingly, Canadians are paying more but feel like they're getting less. With Bell, as the data shows, Canadians are paying less and getting more.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

I now give the floor to Mr. Staffieri, from Rogers.

[Tony Staffieri, President and Chief Executive Officer, Rogers Communications Inc.]

Thank you, Mr. Chair.

Good morning, committee members. My name is Tony Staffieri. I'm the president and CEO of Rogers. Thank you for the invitation today.

With me is Phil Hartling, president of [Technical difficulty—Editor]

[The Chair, Liberal, Joël Lightbound]

We've lost the video signal for Mr. Staffieri.

While we try to figure that out, we'll move to our next witness.

Mr. Entwistle from Telus, the floor is yours for five minutes.

[Darren Entwistle, President and Chief Executive Officer, Telus Communications Inc.]

Good morning, Mr. Chair and honourable members.

Good morning, everyone.

Today I will illustrate that wireless prices have decreased significantly as our telecom industry delivers more value for Canadians, and we do so despite the escalating cost factors of production that our industry is experiencing. Additionally, I will emphasize the critical role our industry plays in Canada's economy and societies.

First, according to StatsCan, the price of wireless services decreased 50.4% between 2018 and 2023. During that same period, average data consumption increased by 200%, according to the CRTC. Notably, during the 2023 holiday season, prices were 97% lower than in 2020. Moreover, when compared to the G7 countries and Australia, Canada offers the best wireless value proposition, with prices that are almost 5% lower than the average price that foreign carriers would charge for the same service.

Second, as wireless prices decrease, the prices for other goods in Canada are increasing. Between 2018 and 2023 the cost of rent, transportation, energy, housing and food increased between 22% and 27%. In that same period, our Canadian government confirmed that prices for wireless services declined faster than in any other category of consumer goods and services.

Third, as wireless prices decrease, the costs of building and operating wireless networks are rising markedly. The cost of telecom equipment, paid for mostly in U.S. dollars, has risen over 24% from 2020 to 2023, and price increases from suppliers are accelerating. Canadian labour costs have increased 17%. Utilities and electricity have grown from 15% whilst fuel prices have skyrocketed 54%. Furthermore, Canadian carriers are already paying the highest spectrum costs across the OECD. Over the last 10 years carriers have paid $29 billion for spectrum licences. Indeed, Canada's auction of 3500 megahertz spectrum alone, so critical for 5G networks, extracted a record $9 billion from telecom operators. In contrast, in Japan and South Korea, they gave away the spectrum so that operators could concentrate their spend on deployment. In 2021 alone these spectrum fees accounted for $100 on the annual wireless phone bill of every Canadian.

Fourth, despite these cost factors in Canada being 103% higher than in the G7 and Australia, we continue to invest in and operate the best-quality networks in the world. Telus has invested $259 billion in network infrastructure and operations over the past 24 years. This has contributed to Canada's wireless networks consistently ranking among the best globally—the best for speed, quality, user experience and coverage, according to the OECD. The telecom sector has also rapidly advanced 5G coverage, reaching 90% of our population and continuing to grow.

Next, Telus provides low-income Canadians with highly subsidized access to vital high-speed connectivity. Through Telus's “connecting for good” program, we offer extremely low-cost Internet and wireless services to 1.1 million Canadian families and seniors who are underserved.

Indeed, our industry should be a source of national pride, given that it is powering Canada's digital economies and our digital societies. From 2009 to 2019, broadband connectivity enabled almost 20% of Canada's labour productivity growth. According to StatsCan and PricewaterhouseCoopers, our industry generated almost $77 billion in direct GDP for Canada in 2022 alone. Moreover, our industry supports 724,000 jobs, with wages 42% higher than in other service industries.

At Telus, our charitable and social support for Canadians is truly unmatched.

Since 2000, we have contributed $1.7 billion in philanthropy to our communities and citizens in need. This includes volunteering 2.2 million days of service, which is more than any other company in the world.

Through Telus Health and Telus Agriculture, we are leveraging broadband technologies to answer society’s most pressing challenges in health care transformation and food security.

Importantly, we're also supporting the prosperity and livelihoods of millions of Canadians who own Telus shares. This includes seniors who rely on our dividends for their incomes that support their lives. Of course, it includes our Telus team members, who collectively represent our fourth largest shareholder overall.

Clearly, the telecom industry is delivering enhanced value and lower prices for Canadians, and it is playing a vital role in strengthening our nation’s economy.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Staffieri, you now have the floor for five minutes.

[Tony Staffieri]

Thank you, Mr. Chair, and good morning, committee members. Thank you for the invitation today.

With me is Phil Hartling, president of our wireless division.

I've been following the work of this committee, and I am pleased to provide facts and correct some inaccurate assumptions.

Affordability is an issue in Canada, one that is real and felt by many Canadians. Other industries are using Canada's inflation trend to offer Canadians the same or less at higher prices. Rogers is doing the exact opposite. We're lowering our prices, and offering Canadians more. Companies in other sectors simply can't say the same.

I believe our discussion today needs to be based on facts, and here are some of them.

Our wireless network reaches 99% of the population, but only covers 12% of our land mass. We're investing in satellite-to-mobile technology to connect every corner of our country. Our Internet footprint reaches 60% of households today. We're investing to reach every household.

In the last decade alone, Rogers has invested over $40 billion in our networks. To put this into context, that's more than the federal government's $39 billion in announced funding commitments for Canada's national housing strategy. Last year, that included investing over $1 billion just to manage the huge increase in wireless data usage.

Every year we reinvest 90% of our profits back into Canada. That's investment in Canadian infrastructure, Canadian jobs and the Canadian economy. We're making these record investments while inflation drives up our cost of raw materials and labour.

On top of that, the federal government imposes more costs on wireless carriers than many other countries. We paid seven times as much as U.S. carriers for 3500 megahertz spectrum. For low-band, five-gigabyte spectrum, we paid over 50% more. Annual spectrum fees in Canada are some of the highest in the world. They're up 15% in three years. Despite all of this, we are lowering prices for Canadians.

The federal government's own data from Statistics Canada shows wireless prices are down nearly 50% over the last five years. In the last year alone, they're down 16%.

Rogers has been the leader in driving this trend. We've cut the cost of data on our most popular five-gigabyte plan by over 70%. We led the industry and dropped our five-gigabyte entry price by over 40% to $50. We introduced the national “connected for success” wireless program with a free five-gigabyte smartphone, and a $25 five-gigabyte plan for over 2.5 million eligible low-income Canadians. We're offering 50 gigabytes for $34 on our Fido brand, all in the last year since coming together with Shaw.

Customers are getting more for less, both in absolute terms, and on a per gig basis.

There are few industries today where you see record investments and consumers receiving more, often at a lower cost. This is the outcome of rigorous competition. Last year, there were about 3,000 price plans in the market, and 4.9 million Canadians switched providers.

What does this mean? It means there's more choice.

The same can't be said about the U.K. or the U.S. The wireless consumer price index in the U.K. is up 24% over the past five years. In the U.S., it's up 1.5%. Wireless prices are higher in the U.S. than Canada.

I'm looking forward to our discussion today, but I want to make sure that we're grounded in the facts.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

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

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

Thank you, Mr. Chair.

We're here because Canadians are telling us different stats from some of the ones we're hearing today. They're telling us that they're still paying some of the highest cellphone prices in the world. After eight years under this Liberal government, we've had the cost of almost everything go up, which has been mentioned already by our witnesses. When we looked at grocery prices, we looked at the Toronto Daily Bread Food Bank, and there are 300,000 people visiting that food bank. Cellphones are not a luxury anymore. Cellphones are essential.

When we look at some of the facts, we see that cars are being stolen, and that's up 300% in Toronto alone. People use cellphones now to put Apple AirTags in their cars to track where their cars are going. They have doorbell cams because they're looking to prevent home invasions. People are using cellphones to find coupons to go to the grocery store.

Cellphones aren't a luxury. They're essential, and what happens when Canadians use more and more cellphones? They're using more data. When we look at the facts, by 2026 Canadians are going to need an average of about 50 gigabytes a month just to use the essentials on their cellphones, and we're not even talking about social media and other uses.

We look at other countries, and we compare prices with other countries. We have found that there's more competition in the U.S. There's more competition in Australia. What happens is that prices have gone down. We heard from Mr. Staffieri and Mr. Hartling that the prices at Rogers were lower than those in the U.S. and Australia.

Do you stand by that statement at this point?

[Tony Staffieri]

It's important that we are clear on the facts, and the facts are twofold. One, prices are coming down in Canada by the government's own measure, according to Stats Canada. As I said in my opening comments, they are down 16% in the last—

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

I'm sorry. I have limited time here. I asked you a direct question. Are prices in Canada lower than in the U.S. and Australia, as Mr. Hartling stated the other day? Yes or no?

[Tony Staffieri]

When you look at our price plans here in Canada, they are lower. Undeniably, that's what the facts say, relative to the U.S. I encourage you to look at information that Rogers submitted to this committee after—

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

Mr. Staffieri, thank you so much.

I'm going to compare some prices from Fido. Fido is owned by Rogers. It's your lowest-priced plan. We looked at Canadians struggling to survive. They're looking for the lowest price for the most data. We looked at Fido, which is about $34 a month. We compared that to the Americans. They have Mint Mobile and the Australians have a great one called Moose. They're both lower than that price, but more importantly, I think, Canadians need to know that they both offer a 5G plan.

When we talk about Canada, I know Rogers, Telus and Bell all talk about the fact that we have 5G almost everywhere across Canada. We're one of the most built-up networks, but Fido is only offered on 4G.

When we look at comparisons, I think, if we had competition in Canada such as Mint Mobile in the U.S., we would have lower prices on 5G networks. Australia has several MVNOs on 5G networks at lower prices. With Fido in mind, do we have enough competition? If we had competition, would Fido offer 5G?

[Tony Staffieri]

This country has very robust and healthy competition. Consumers have choice. If you were to look at last year alone, 4.9 million Canadians switched their provider. If you were to look at Rogers, 20% of our customers switched plans. There is choice for Canadians and there's very robust competition in the marketplace.

As you looked at our prices relative to those in the U.S., you used the example of Fido at $34. We have other plans on our Chatr brand that are as low as $19. When you look at our price points relative to having the best networks in the world, the value for money certainly ranks at or near the top and is definitely higher than in the U.S.

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

Mr. Staffieri, I've just listed some competitors in the U.S. and Australia that offer those price points at 5G; you're offering that on 4G. When we look at comparators across the U.S. and Australia, 3G is outdated. It's being taken off the networks in the U.S. because there's more competition.

To go back to why we're here, you said you were going to increase your prices by $9.

I'd like to go now to the witnesses from Bell and Telus. Are you going to follow suit and increase your prices by up to $9 for cellphone plans?

[Mirko Bibic]

Our focus is on lowering prices for Canadians and delivering the very best services to as many Canadians as possible. I followed pretty closely your exchange with Mr. Staffieri. Just to compare prices, Virgin is a Bell brand, and we offer Virgin Plus on 5G and our prices are undeniably lower than in the U.S.

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

Thank you, sir. I appreciate that.

I asked you a direct question, though. Are you going to be following Rogers and increasing those prices by up to $9, yes or no?

[Mirko Bibic]

Our focus is on lowering prices. That's why our 50-gigabyte plan—which is the one you referred to in your exchange with Mr. Staffieri—is available for $34 on the Virgin Plus brand, which is on the 5G network. That's lower than in the U.S., U.K., Australia and France.

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

Thank you. That did not answer my question.

Mr. Entwistle, could you answer that question with a yes or no? Are you going to increase prices by up to $9 a month?

[Darren Entwistle]

We've done over 400 price changes over the last 12 months. Ninety per cent of those price changes were price decreases. Only 10% were price increases.

I'm not going to talk about price setting in a forum with my two competitors sitting right here.

To answer your question directly, I'm highly confident that the average price per gigabit is going to decline for the benefit of Canadians.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Sorbara, the floor is yours.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Chair.

Welcome, gentlemen, to this panel and to our committee.

The first thing I want to say is to each of the CEOs.

Many of the comments we've heard here within the room on the competitive dynamics within the Canadian wireless or telecommunications market have been met with some skepticism and maybe a few chuckles. I do want to get that on the record.

We can debate about the competitive dynamics and how they've evolved in the Canadian wireless market over the last 20 or 30 years. I was a research analyst for many years. I covered many of your companies. I understand the dynamics well.

My first question will be for Rogers. It's on the announcement of the price hike, whether it's $7, $9, $10 or whichever number you want to have. In an affordability crisis that many Canadians are feeling, would you admit that the timing was not great? If I could use the term “tone deaf”, to customers and the Canadian populace, it was probably not the right thing to announce at this time.

This is for Mr. Staffieri.

[Tony Staffieri]

Thank you.

We made price plan amendments in January of this year. Those changes were to a small percentage of our customer base. The average was $5. For most of those customers it was $4 or less. I should reiterate that it was a small percentage of our total base.

The other item to note that's of importance is that these are customers who are on legacy plans that were out of contract. It was important to us to make sure that these customers had choice. The customers could go online—with two clicks they could get onto a plan that was in market and gave them the best value for money for their circumstance—or they could call in and we could work with those customers. That was really the important part for us.

Having said that, it's against the backdrop of price plans that are in market that continue to come down month over month and year over year. I mentioned earlier that, on average, 3,000 price plans and promotions were in market last year. That's more than 250 per month.

We see quite a number—over 20% in fact—of our customer base continually looking at trying to get the best value for money. Our competitive environment drives us to put plans and offers out there that are going to earn the business of Canadians.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Staffieri for those comments.

I'm going over to Mr. Bibic at Bell.

I could have done this for each of the entities. I just chose Bell this morning. I pulled up your 20-F and your annual information form. I was looking at some of the numbers on the mobile division. You enjoy a 40% EBITDA margin. All of you folks enjoy a healthy margin on your EBITDA with regard to your wireless businesses.

Yes, there's been some churn on Bell specifically. I haven't looked at Rogers and Telus this morning. I'm assuming it's the same direction.

Your average revenue per user, ARPU, measurements are continuing to increase. I'm assuming that's about the data plans that people are using. They're moving up the value chains, which is a little more expensive.

If you folks are so adamant that prices have come down, why is there so much skepticism in the marketplace that they have not? Is it that you're not communicating properly? Is it that the statistical facts aren't correct? Why is there so much healthy skepticism out there?

I'll start with the president of BCE and then go over to Mr. Entwistle of Telus, please.