Industry Committee on July 25th, 2022

[Ron McKenzie]

What we have tried to do is.... In our disclosure in response to the questions from the CRTC, we have been totally transparent in explaining...because what's so important from this is not just to Rogers, as the design of a common IP core is the consistent architecture used by operators all around the world. We all use the same equipment. One of the learnings from this is to share that information with other operators around the world, including our competitors, who we've already been in discussions with.

This was an unprecedented event of the way that two elements of equipment interacted together, which was not known. In that instance, we do not want this incident to ever happen again, with any other operator anywhere in the world.

[Michael Kram, Conservative, Regina—Wascana, SK]

All right.

We had the minister at the committee right before you arrived. He spoke about the CRTC doing an investigation as to what went wrong with this particular outage. Can you speak about the role that the CRTC can play in preventing future instances like this from happening again?

[Tony Staffieri]

We have co-operated, and we will continue to, with all levels of government and provide complete transparency on this incident. As you can appreciate, networks today are extremely complex. We will do everything that's available to us in terms of investment in resources and working with leading firms around the world to make sure we put in the resiliency and the redundancy we need to make sure this does not happen again.

We've talked about our plans, which I'll describe very generally and my colleague will go through the details on. There are really four main points. The first is physically separating our wireless and wireline networks so that if one were to go down in the future, we could switch over to the alternate. The second is what we describe as partitioning our network. If an incident happens in one specific location, we contain that problem to that specific location. The third is the changes we'll make to our processes and procedures in reviewing and implementing code, including the testing of it.

Finally, we are working on the memorandum of understanding with Minister Champagne's office that will allow us to more effectively work with our competitors so that in the event of an emergency and an outage, we can transfer over calls but most importantly ensure that every single 911 call transfers over to an alternate network.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

We now go to Mr. Erskine‑Smith for six minutes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

I want to start with something you said, Mr. Staffieri, on just how critical the services you provide are—as you said, reaching families, businesses accepting payments, and obviously 911 calls, which you referenced a number of times. Government services in some cases were not fully available. I would point to IRCC as an example.

Would you agree that the services you provide are an essential service in this regard?

[Tony Staffieri]

We fully appreciate the reliance that Canadians have on our network and the networks of our industry. We take that responsibility seriously. That's why we have focused very much on not just this outage but how we fix this going forward. I've articulated the steps we're going to take to ensure that we prevent this from happening again.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

I appreciate that. We all want to make sure it doesn't happen again. But I think when you take a step back and reflect on what's happened here, there was a great frustration and anger, and rightly so, for millions of Canadians. I think there are two critical lessons learned, lessons that we can relearn in some ways. One is the nature of the service that you provide. That's what I want to just drive at first and see if there's a proper acknowledgement.

Different private companies deliver different services, but you are unique insofar as you're a private company that is providing an important public essential service. Do you think that's right?

[Tony Staffieri]

We do provide connectivity to millions of customers. To the extent that some of our enterprise and business customers have customers that rely on them, then we have a role to play in that. So in many respects—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Okay. I think that's as close to a “yes” as I'm likely to get. I'll take that.

We heard Minister Champagne refer to the incident and compare it to an airline incident. Airlines, as you know, like your industry, are oligopolies. They're tightly regulated and they are essential for Canadians. In that setting, as my colleague Brian Masse referenced earlier, if something like this were to happen, it wouldn't be that the company would say, of its own volition, that it's going to provide two days' or five days' or seven days' compensation. There would be obligations for a certain compensation.

Do you think there ought to be a regulatory framework and legal framework, and that it shouldn't be up to you to decide what to compensate Canadians, but up to the law?

[Tony Staffieri]

As I said, we take our role extremely seriously. First and foremost, as I spoke to, for our customers, including businesses large and small, the number one priority is this: How do they get assurance that this will not happen again? That's our focus, first and foremost. Second is the compensation—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

But surely that would be in clear and ready focus if there were obvious consequences to not taking these steps, right? I want to get to the lack of consequences, in some ways. I appreciate that you've identified compensation. I appreciate that you've articulated a way forward to ensure that it doesn't happen again. But you also acknowledged, in your answer to the CRTC, which I'll read, and I think you reiterated today, “We failed in our commitment to be Canada's most reliable network.”

Okay. Let's say I'm a frustrated consumer. We have a lack of competition in this country. So where do I go?

[Tony Staffieri]

What we've done, as I said, is made it clear what our commitment is to fix this moving forward, for us as a company and to improve as an industry.

In terms of compensation, our outage lasted a little less than a day. We had some customers where it extended for a few of the following days, so we made the decision to make it simple for customers and extended the credit to a full five days. We're going to proactively process those on customers' bills so, as I said, we make it easy for the customer. That equates to approximately just over 15% of a customer's bill.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Well, let me return to this question of competition. At this committee, we continue to come back to this question. It's always been around price, and this frustration when we look to how much Canadians pay in comparison to other countries. It's a great source of consternation for me and other members of this committee, I think across all parties.

The other lesson we've learned from this outage is that the lack of competition not only means that Canadians are suffering as it relates to price but also that the resilience of the network is challenged.

When we get to this idea of opening up networks from competitors to your customers, in the context of the outage, you told the CRTC that “no competitor's network would have been able to handle the extra and sudden volume of wireless users (over 10.2M) and the related voice/data traffic surge.”

Isn't the concentration of customers in one particular company, not only for the sector, but let's say your company in particular, a challenge to resilience in and of itself?

[Tony Staffieri]

There are two parts to your question, sir.

I'll start with the first, being what I would describe as the “technical solution” and the ability to ensure and work as an industry to ensure that there's reliability and redundancy for Canadians.

The first part of your question relates to the competitiveness of the industry. We work every day in a very competitive environment. We work hard to bring the best value for money for our customers and for Canadians. It's in our interest to do so. They have alternative, and they have choice—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Wait, wait; do you think Canadians have alternatives and choice in this marketplace?

[Tony Staffieri]

Very much so.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

You're saying that with a straight face.

Okay. I'm running out of time, so here's another one that you can maybe answer with a straight face. Do you think this is the end of the Rogers-Shaw deal?

[Tony Staffieri]

The coming together with Shaw is about creating scale in an industry where scale is important. It allows us to do two important things. One is to make investments that neither one of us could do on our own, investing in more Internet in rural and indigenous communities, but also investing in resiliency and redundancy of networks more than either one of us could do alone. With the—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Or perhaps it's to further concentrate industry, whose very concentration is undermining resiliency and affordability for Canadians.

I'm out of time, but I appreciate your being here today.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Erskine‑Smith.

It is now over to Mr. Lemire for six minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Thank you for being here today, gentlemen.

I find your attitude refreshing. You've come before the committee in all humility and without complacency.

You said that you were accountable and that Rogers had failed. That's a good place to start rebuilding trust in the short, medium and long term.

I have a whole lot of questions about the state of Rogers' governance right now. Basically, it all comes down to one man, you, Mr. Staffieri.

We know that almost every member of Rogers' board was fired last year.

We also know that your company experienced a major outage some 15 months ago. Back then, we didn't sense the same level of accountability we are seeing from you today.

We know that you fired your chief technology officer, Mr. Fernandes. I gather he was held responsible for the outage.

You control nearly half of the country's telecommunications infrastructure, so tell us how we are now supposed to trust you to lead the way forward in the short, medium and long term?

[Tony Staffieri]

Thank you for your question, sir. You touched on a few things.

Since becoming the CEO of this company early this year, my focus has been on a number of things, but importantly the network. Network resiliency is very important. The amount of investment we have made in the network is significantly more than we have made in prior years, and we'll continue to do more. The outage has shown us that it's critical to make those investments.

We want to make changes quickly. There are things we know we need to do, and we learned from the outage, so we acted very quickly. I have full confidence that our new chief technology officer, Ron McKenzie, will execute on those changes. Ron is an engineer by background and has over 30 years of telecom experience at a very senior level. Most recently, he was president of our business operations, where he led the design and implementation of complex technical solutions for our customers. I have full confidence that he and his team will execute on the changes that we need to make to achieve what we need to do in terms of network performance.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

In your response to the Competition Bureau on the Shaw transaction, you talk about significant efficiencies that would outweigh any detriment to consumers as a result of the transaction, mainly by significantly reducing redundant infrastructure. That's in paragraph 40.

Do you think this month's events prove that we can trust you to oversee these types of telecommunications services, especially considering how much you will have to spend as a result of the Rogers–Shaw merger?

[Tony Staffieri]

As I've mentioned, the coming together with Shaw is about giving a scale and making the necessary investments. As part of our proposed merger with them, we will be selling Freedom Mobile and we have an agreement with Quebecor to purchase those assets. We believe that will create a very important and stronger fourth competitor for the wireless industry in the Canadian marketplace. That acquisition will allow them to serve over 87% of the Canadian population in at least four provinces. We think that's significant.

In terms of redundancy and reliability, which is the topic today, coming together with Shaw will give us the ability to provide an alternate network. Our intent is to keep the Shaw cable network as independent, and we will have our wireline cable network become part of that and be completely separate from our wireless network. In terms of our plan, the Shaw transaction will allow us to execute on the ability to separate them in half the time than it otherwise would take.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

You said your company's sole objective was to close the Rogers–Shaw deal. If that does happen, the focus will be on managing a balance sheet with a significant amount of debt and integrating the new asset.

The acquisition would cost $26 billion.

How will you be able to spend hundreds of millions more to revamp the network and make it more robust in order to prevent outages like this one?