Industry Committee on March 18th, 2024

[Tony Staffieri]

Throughout the process, we were required to sell Freedom Mobile. We went through an open, and, quite frankly, transparent process in looking for a buyer that would be approved by the government. We went through that process. We agreed to a number of conditions with the government, as well as with Quebecor Videotron, and we continue to abide by those conditions. There is nothing that Rogers has done, or intends to do, that would prevent Quebecor from investing in networks and competing in an open market.

[The Chair, Liberal, Joël Lightbound]

Thank you.

Mr. Van Bynen, the floor is yours.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

What I find most frustrating, when we talk to these different telecom companies, is that everyone is developing their own networks. It's similar to say, “Ford, GM or Tesla building only roads for Ford, GM or Tesla.” The infrastructure seems to be a big part of the discussion. When the CRTC announced that large telecommunications service providers would have to provide competitors with access to their fibre-to-home networks, Bell announced that it would reduce its planned network investment by a billion dollars. I understand, and I've heard the argument that there needs to be a return on equity.

Are we getting to the stage now where fibre optics, or telecom networks, need to be considered as utilities, and need to become return-on-investment utilities that are regulated?

I'd like to hear from each one of you.

[Mirko Bibic]

I'll go first.

Back to the analogy which prefaced the question, the more apt analogy for the CRTC decision would be seeing one of those auto manufacturers that was mentioned build a plant costing billions of dollars, and the regulator saying you have to give access to that plant to a competing auto manufacturer, so it can build its own automobiles using your technology and your facility.

This is exactly what has happened with the CRTC. In fact, in telecom, the reason Canada has been so successful in being able to provide more accessibility.... There is now wide coverage across the vast land of high quality, world-leading networks at lower prices, because each of the players who are here today, including others who have appeared, had to build their own networks. A fundamental basis of competition in Canada is the competition of networks, the services we can offer over those networks and the innovation that comes with those networks. We then lower prices as a result.

That's what we should be supporting in Canada. It's fundamentally important.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Let me give you an example. When I was the mayor of the town of Newmarket, I was the founding chair of YorkNet. YorkNet put a fibre optic backbone to all—or is in the process of doing that—homes in the York region. As a result of that, organizations like Vianet and telMAX have come in with very competitive pricing of products.

How can you say that we shouldn't be looking at the telecom system as a utility?

[Mirko Bibic]

You may take it one step further. You don't have to take it very many steps further and have a rule that says if you treat it as a utility and everyone can ride on the same network, or use the same network to compete, you lose all the benefits of resiliency and redundancy, which are so important in this day and age. Imagine having only one network connecting a community and that network goes down, or that network is attacked. You want redundancy, you want the competing networks. That's what makes speed, that's what improves speed, that's what lowers prices, that's what connects more and more communities across the country. It's so important.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

But you can build redundancy into different networks. I've heard an awful lot around how we were criticized for the cost of spectrum prices. In a research document, Dr. Gregory Taylor, an associate professor at the University of Calgary, put Telus's assertion in perspective, pointing out that the government only sets the initial bid for licensing auction.

I will start again with Telus. What approach does Telus suggest for ensuring that the final prices of the spectrum of licences are lower in Canada?

[Darren Entwistle]

I would argue that the auction framework in Canada was flawed, and as a result of that flawed auction framework it extracted significant economic rent in terms of spectrum prices paid. That's been to the detriment of the industry in totality. I would argue that if we followed the auction process that the FCC has implemented in the U.S., or even within Europe, that would have generated better outcomes for both operators and Canadians with lower prices paid on the spectrum front.

The impact of increased net costs on spectrum I think is inconsistent with an affordability agenda. When you couple that with the fact that the demographics and topography of Canada are particularly challenging, and we have the highest cost factors of production—and I gave you the stat that the costs here are 103% greater than the G7 plus Australia—I think we have to take a keen eye in terms of what's taking place on the spectrum cost front.

I can also answer the fibre question if you want as well.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Yes, go ahead please.

[Darren Entwistle]

To the extent to which a market is competitive and customers are being well-served in terms of affordability and also quality and innovation, clearly there's not the need for an intervention or regulatory activity, and the posture should be more benign. If the market is deemed to be insufficiently competitive, then I think there's the opportunity for the government to step in. But if the government does step in and put an obligation on an incumbent player that's not yet delivered a return on the original fibre investment, and that fibre investment has been significant with the risks inherent in that, the wholesale prices that should be set should be fair so that the individual, the company building that broadband infrastructure, can exact a fair return at the retail level and at the wholesale level.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Van Bynen, you're out of time.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Mr. Garon, you now have the floor for two and a half minutes.

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

Thank you, Mr. Chair.

Mr. Entwistle, a number of employees in your company are concerned about the rate of job cuts in Canada coupled with the increase in jobs outsourced abroad. Your latest report to shareholders shows that your company lost 6,821 unionized jobs from 2014 to 2023. However, the total number of jobs at your company increased by several hundred percent over the same period.

Why do you prefer to hire employees in foreign countries rather than in Canada and Quebec to serve our constituents? Isn't your business practice somewhat tantamount to sacrificing jobs in areas that need them for their economic vitality?

[Darren Entwistle]

Firstly, in terms of the evaluation, sadly it hasn't increased by hundreds and hundreds of percentage points, but this is a serious, sad and emotional subject in terms of the impact upon our employees. As a result of the macroeconomic environment and regulatory changes, including increases in competition, and what we're experiencing at the price level with successive decreases, with price commoditization and margin compression, and the significantly escalating costs within our supply chain we have indeed, as you rightly point out, made difficult decisions in terms of reducing our staff levels. It's impacted—

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

Mr. Entwistle, I gather that the regulatory framework and increased competition prompted your decision to lay off unionized workers in parts of Quebec and outsource abroad.

[Darren Entwistle]

To be extremely precise in the response, yes, the regulatory environment increased competition. As I said earlier, the decreasing prices and the macroeconomic environment that has seen significant cost escalation within our supply chain, which we've talked to at length, and the impact of that, have forced us to reduce staffing levels. This has been exacerbated by the digitization of our economy, which has put further pressure on jobs.

What I would highlight to you, sir, is that we have not undertaken any layoffs. Zero. These departures have been, for our unionized employees, entirely voluntary departure plans. They've been extremely generous at a financial level to support the transition of employees to a new role or they have been very generous early retirement plans.

When I say that they're voluntary departure plans, I mean exactly that. If the employees do not want to go and take the package, they can keep their job. It was entirely an elective undertaking.

Nevertheless, it was extremely difficult just the same. I think it's a reflection of the pressures that our businesses are being buffeted by.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Garon.

Mr. Masse, the floor is yours.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I want to return and hear from Telus and Bell—Mr. Bibic and Mr. Entwistle.

With regard to U.S. roaming charges, are you at $12 per day and $25 per month, as well? What is your pricing for turning on your phone in the United States?

Do you have something that also stops it? If you actually try to turn your phone on and put it in airplane mode, you get charged anyway. Rogers does this and takes the money.

Is that your policy, too?

[Darren Entwistle]

Our prices range between $5 and $10. We have the online capability to set the package in place to allow customers to make adjustments on the fly or to determine the best rate prior to their departure.

Our service on the roaming front also includes health care extensibility for when people are travelling within that value proposition.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Mr. Bibic.

[Mirko Bibic]

We always seek to be competitive in the marketplace, so our pricing would be in the same general zone as Mr. Entwistle indicated.

This is one area where I think the industry had needed to get much better in terms of communicating with customers. More customers are getting accustomed to the options they have. They can subscribe to packages that reduce their costs before they travel. Of course, they have options locally. Many customers are taking advantage of local SIM cards and therefore reducing their cost.

[Brian Masse, NDP, Windsor West, ON]

What is your cost per—

[Mirko Bibic]

The important point here is customers, like in every other area—

[Brian Masse, NDP, Windsor West, ON]

The important point is what I'm asking specifically.

What is your cost for this? If I turn on a Bell device, how much do you charge in the United States?