Industry Committee on July 25th, 2022

[Ian Scott]

What they're saying is, at a minimum.... I'll give you an example.

Several times the outage in 2021 has been raised. That was on the wireless network. The reason they still offered the other services is it was only the wireless radio access network that was unavailable for a period of time. What Rogers is now saying is it would be good practice to flip the core. I don't know of another situation where the core failed in its entirety anywhere.

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

I don't want to presuppose the outcome, and you said you're still doing your investigation, but assuming you find negligence here, your tool is an administrative monetary penalty.

[Ian Scott]

The issue of a financial penalty was at question, and there we have AMPs available to us. There are many other tools. We can make various orders and require them to do a number of things. It depends on what harm you're trying to cure.

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

This is my last question, because I'm running out of time.

The FCC in June and July tabled a report around wireless resiliency, new rules and updating the rules. Were you in active conversations with the FCC? Have you been in active conversations with the FCC to take a similar approach from the CRTC's perspective?

[Ian Scott]

Our staff regularly engages. I met with the current chairperson of the FCC about six weeks ago, and we discussed a range of things, including protecting networks from cyber-attacks and overall resiliency. She did inform me of some of the measures the FCC was contemplating. Our technical staff and that of the FCC do have regular dialogue.

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

I look forward to the CRTC report on wireless resiliency.

Thanks very much, Mr. Scott.

[Ian Scott]

Thank you very much, sir.

I note, Mr. Chairman, that I must apologize for my procedural manners today. I have not been directing my responses through you, and for that I do apologize.

[The Vice-Chair, Conservative, Michael Kram]

That is certainly all right.

Thank you to the representatives from the CRTC for joining us today.

[Ian Scott]

Thank you for hearing us.

[The Vice-Chair, Conservative, Michael Kram]

The meeting will suspend while we bring in the new group of witnesses.

[The Vice-Chair, Conservative, Michael Kram]

Welcome back, everyone.

We are now joined by a new group of witnesses.

Appearing as individuals, we have Michael Geist, Canada research chair in Internet and e-commerce law, faculty of law, University of Ottawa. We have Ben Klass, Ph.D. candidate, Carleton University, senior research associate, Canadian Media Concentration Research Project; and Dwayne Winseck, professor, Carleton University, and director, Global Media & Internet Concentration Project. These three individuals are appearing online.

Joining us in person, from the Public Interest Advocacy Centre, we have John Lawford, executive director and general counsel.

First we have Michael Geist.

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

[Dr. Michael Geist, Canada Research Chair in Internet and E-Commerce Law, Faculty of Law, University of Ottawa, As an Individual]

Thank you very much, Chair.

Good afternoon. My name is Michael Geist. I'm a law professor at the University of Ottawa, where I hold the Canada research chair in Internet and e-commerce law, and I'm a member of the Centre for Law, Technology and Society. I appear in a personal capacity representing only my own views.

I have to begin by noting how discouraged I've been by what I've heard for the past three hours of hearings. We need more than tough talk and references to ministerial demands of CEOs. It's about far more than who called whom or solely about the failure of one company.

I think we have to recognize that private phone calls or beers among companies, legislators or regulators aren't the answer. It can't be about saying “I'm sorry” but then evading questions on key issues such as essential services, as if it's hard to acknowledge directly that 911 calls should be an essential service, or about a regulator who blithely dismisses the role that competition played in this event or that new regulations could play.

Today's inescapable takeaway is that much more needs to be done and it needs to come through a legislative framing. To that end, I'd like to highlight the following seven measures.

First, the investigation should extend beyond the CRTC's initial round of questions in today's hearing. Organizations such as Interac, governments and health care providers need to explain how they found themselves without redundancy plans and an appropriate backup system to address wide-scale network outages. Assuming some of these questions are outside of the CRTC's remit or it's unwilling to extend what is itself an uncertain process further, it falls to this committee to expand the study and ask those questions in a public forum.

Second, there must be greater transparency with respect to the outages. Rogers can't claim to support transparency and simultaneously request wide-scale redactions in its submissions to the CRTC. The commission should reject the request for redactions where it's in the public interest, which seems to apply here given that public safety is involved. Furthermore, there is a need for a consistently transparent approach to network outages and extended downtime. These should be filed with the regulator on a regular basis and disclosed to the public.

Third, consumer compensation requires more than a company simply saying it considered the matter and decided what it thinks is appropriate. There should be regulations that establish clear parameters for compensation, including mandated payments for downtime that are automatically applied to customers' monthly bills.

Fourth, the communications standards on outages should also not be left to the carriers alone. Outage maps, estimated times to address problems and consistent, widely accessible communications have become standard for other utilities such as hydro. The same should be true for communications services, with penalties levied for failure to meet the requisite standard.

Fifth, competition concerns with Canada's communications sector must be met with real policy reforms. While the Rogers CEO tried to claim otherwise with a straight face, few dispute the competition problems that leave Canada's broadband and wireless pricing among the most expensive in the world. The carriers, as we just heard in one exchange, have often touted the link between high prices and network quality. However, the latest outage confirms that the networks often fail to live up to the industry hype. Instead, high prices mean consumers gravitate to riskier bundled options in order to reduce monthly bills. Canada needs real competition that draws on both facilities-based and services-based competitors.

Sixth, the Rogers-Shaw merger should be regarded as dead in the water. The last thing Canadians need is an even more concentrated market. This committee has already recommended that the merger not proceed, but left an out in the event that it does. It should adopt an even stronger position in opposing the merger now.

Seventh, the next chair of the CRTC is scheduled to be appointed in the coming weeks. In the aftermath of the Rogers outage, a former CRTC chair posted about a commission investigation, saying, “I don’t think the CRTC is the body to run such an inquiry. They have become captive to the big players and the current membership are not trustworthy truth seekers.”

This cannot stand. It's essential that the chair prioritize Canada's communications infrastructure and its impact on consumers and business as the single most important policy issue faced by the CRTC. That person must be independent, with knowledge of the sector. While there's been an emphasis on cultural policy in recent months, CanCon policies don't matter if Canadians can't access the content or the network. Since communications is job one, a truly independent digital and network-focused chair of the CRTC is essential.

I look forward to your questions.

[The Vice-Chair, Conservative, Michael Kram]

Thank you, Mr. Geist.

Next we have Mr. Klass for five minutes.

[Ben Klass, Ph.D. Candidate, Carleton University, Senior Research Associate, Canadian Media Concentration Research Project, As an Individual]

Thank you, Mr. Chair and members, for inviting me to appear today.

I'm joining you from Treaty 3, the traditional land of the Anishinabe nation at the border of Manitoba and Ontario.

I should note that I'm a director of the Internet Society, Canada Chapter as well as the Public Interest Advocacy Centre. These views I express here today are mine alone and do not necessarily represent those of the organizations to which I belong.

The outage that we collectively experienced several weeks ago was incredibly disruptive and, as a result, people across the country are justifiably upset. I think the best way to proceed from an event like this is to take it as a learning opportunity and to reflect upon how to improve our situation.

Millions of people rely upon Rogers' services for their communication needs, and most of us tend to take ubiquitous connectivity for granted when it's working as it should. The majority of the time things do run smoothly, thanks to a lot of behind-the-scenes hard work and dedication from people who work at companies like Rogers. However, when these systems do break down, which is inevitable from time to time, they suddenly become visible in ways that highlight how deeply embedded communications infrastructure is in our lives.

For those of us who normally take access to telecommunications as a given, being unexpectedly disconnected provides a glimpse into what it's like for those who live with limited or otherwise inadequate access to that service in the first place. This outage reminds us not only of the need to improve the reliability of our networks, but the urgent requirement to expand the benefits of communication systems to all.

The challenges facing our communications environment are not new. Communication markets around the country are highly concentrated. We're told that this has been permitted because large, powerful companies can deliver the goods in ways that smaller businesses cannot. This is a common refrain in discussions on communication policy in our country.

Earlier this month, this story was given a reality check. The Rogers outage has revealed the significant shortcomings of a system that encourages too much control by corporate behemoths. The harms in this outage were magnified because of a system that prioritizes bigness. When we place all of our faith on a small number of corporate giants, we put too many eggs in one basket. When one company's technical glitch can cause millions across the country to be knocked off-line, we can see that bigger is not always better.

When managing large technical systems, the question is not whether there will be a failure but rather when one will occur. Efforts must be taken to prevent foreseeable errors, but we must also recognize that failures will inevitably take place and we must be prepared to mitigate their impact. We can think about solutions in terms of both immediate measures that should be taken and broader environmental changes that shape the conditions in which we're operating as well.

First, there needs to be a process in place to ensure that when people suddenly find themselves disconnected, they're informed of the situation in a timely manner and provided with the necessary information they need to arrange their affairs accordingly. When the hydro goes out, power companies provide outage maps and communicate regularly about estimated time of repair. In short, better communication during outages should be a no-brainer for a company like Rogers.

Second, decentralization is a fundamental to ensuring communication networks will function in an emergency. This means that Rogers does not bear the sole responsibility for ensuring things like 911 will always be available. The CRTC already facilitates the technical implementation of its policy through collaborative industry working groups, as we've heard, but despite this, 911 was simply not available for people on July 8. The regulator therefore bears some responsibility for this failure. Its processes must be improved, and perhaps it should be required to rethink its relatively permissive approach to regulating critical services.

We shouldn't just rely on these companies and the regulator to do better. At the root of the problem is that we're relying on a handful of companies that have become too big to fail. This is a systemic problem. However, we can approach things differently.

First, we should say no to the Rogers-Shaw merger. This committee as well as the heritage committee have already expressed grave reservations about this merger. Further expanding one company's control over the country's communications infrastructure would be a mistake.

Second, resilience can be improved by bolstering the CRTC's existing framework for competition. There are ways that this regime for competitor access to incumbent networks can be configured that improves reliability. Maximizing the independence of the competitors who rely on access to incumbent facilities using technical means is one way to make our system more robust. It's also something that the Competition Bureau has endorsed in the past.

Finally, there are other ways to structure our communication markets than what we have today. Encouraging smaller and more community-oriented networks would contribute to a system that is more resilient and responsive to users. Public companies like SaskTel and Tbaytel, and smaller outfits like National Capital FreeNet and first nations-owned K-Net in northern Ontario are examples of companies that operate today and prioritize delivering robust, accountable communication solutions to the communities they serve.

Thinking about how to carve out a different structure for our communications market should form a part of our long-term plan for solving the problems that face us today.

Thank you.

[The Vice-Chair, Conservative, Michael Kram]

Thank you, Mr. Klass.

Next we have Mr. Winseck for five minutes.

[Dr. Dwayne Winseck, Professor, Carleton University, Director, Global Media and Internet Concentration Project, As an Individual]

Thank you very much to the committee chair, members of the committee and fellow panellists for coming together on this very important meeting.

The Rogers Communications service outage underscores the risk of so many essential public services relying on a tight oligopoly of players. Communication services underpin the economy, society and people's daily lives. Typically, such things are taken for granted until they break down, as was illustrated so powerfully when the Rogers Communications outage on July 8 took place. With it, it disabled access to 911 services, financial services payment systems like Interac, and the ability of businesses, health, law enforcement and citizens to go about their daily activities.

The Rogers Communications service outage raises significant questions about how we approach communications and Internet regulation. The idea that communications services are essential public services and that people must have access to universal, affordable and secure communications is a bedrock principle of telecommunications policy in the Telecommunications Act, and it has been since communications regulation first emerged in this country in the early 1900s. Those principles must be updated and reinforced for the 21st century. The undue emphasis on market forces in the 2006 telecommunications policy directive, alongside the companies' rhetoric and regulatory hesitance within the CRTC, ISED and the Competition Bureau since, must change.

Excessive dependence on one or a small number of essential communication service providers is risky. As of 2021, the big five communications and Internet conglomerates in Canada—Bell, Rogers, Telus, Shaw and Videotron—accounted for roughly 87% of the 71 million mobile wireless and wireline connections in Canada that support mobile phone, Internet service, television distribution and POTS, plain old telephone service.

Rogers accounts for close to a quarter of all such connections, or 16.5 million connections, on its own. It is already the second-largest communications conglomerate in this country. If its proposed deal to acquire Shaw Communications, the fourth-largest such company in this country, is approved, its share would grow to a third of the market, or 23.5 million connections, in service. This is too much control over essential communication services to rest with one firm. It is risky; it is a bad idea, and I urge policy-makers to block this deal or carefully consider the alternative options I will lay out.

The scale, scope and significance of essential service providers means that they must have public obligations to match their importance as the gateways through which society's communications must pass. Some recent steps by the Competition Bureau and a few murmurs at ISED have recognized this, although the role of the CRTC under its current chair has been entirely inadequate. The appointment of a new chair must reflect such realities rather than give in to those who want to put someone in charge from the broadcast industries.

I think it's also important to move away from what we heard far too much of this morning, this mother-may-I approach where the minister speaks toughly and ISED and regulators treat the tight oligopoly of players who control Canada's communication infrastructure with kid gloves and undue deference. It is time to use the legislative measures at the minister's disposal and impose more stringent regulatory mandates on the carriers with respect to network quality, information disclosure requirements and measures to be adopted when network outages or disruptions occur. This means, for example, that instead of the minister and the CRTC jawboning and requesting that the major communication providers come up with a plan within 60 days to mitigate the impacts of future outages, they need to take a number of steps. Here are five quick ones.

First, use order in council powers under section 8 of the Telecommunications Act to order the companies to devise a plan that meets policy-makers' and the public's expectations.

Second, impose tougher conditions of licence during spectrum auctions or transfers with respect to network quality standards, information disclosure and disruption reporting.

Third, require temporary network switching in the case of network outages governed by mandatory rules that allow institutional users to fall back on secondary contracts for services or allow everyday users to temporarily switch service providers using a web-based application with a daily cap on fees for the duration of the problem.

Fourth, the proposed Rogers-Shaw deal should be a dead letter, with the risks and vulnerabilities of the recent outage adding to the already long list of why this deal is bad for Canadians.

Fifth, if we need to think of an imaginative alternative, if this deal should be approved, require that Shaw's wireless assets be spun off into a confederation of publicly, community and independently owned communications enterprises that offer mobile wireless and Internet access to underserved and unserved Canadians from coast to coast to coast. Elsewhere I've dubbed this the great Canadian communications corporation, and we may need to think about something like that for today.

Thank you very much.

[The Vice-Chair, Conservative, Michael Kram]

Thank you, Mr. Winseck.

Finally, we have Mr. Lawford for five minutes.

[John Lawford, Executive Director and General Counsel, Public Interest Advocacy Centre]

Thank you, Mr. Chair and members of the committee.

My name is John Lawford. I'm the executive director and general counsel at the Public Interest Advocacy Centre.

PIAC is a national non-profit organization and registered charity that provides legal and research services on behalf of consumers, and in particular, vulnerable consumers. PIAC has been active in the field of communications law and policy for over 40 years.

Unlike previous quality-of-service regimes for wireline telephone, now all but abandoned by the CRTC, there have never been quality-of-service requirements imposed on companies for wireless or Internet retail service. This is why the commission, from whom you have just heard, has a hard time describing just what it is doing to both inquire into Rogers' outage and ensure that it will not happen again, not only to Rogers but to any other telecommunications service provider.

I could bore you with details about regulation by competition under changes from the 1993 Telecommunications Act and talk of forbearance from regulation, but the result is the same: Canadians are at risk of going digitally dark at any time. Frankly, there are no rules for how the telco involved must communicate the outage and to whom, not what services are impacted, when service will be restored, whether customers will get a rebate, nor whether emergency connectivity can or will be restored. In short, there is nothing.

Rogers says, “Trust us,” “Sorry,” and “We will fix it,” after it has happened at least twice. We say, “We don't trust you.” The regulator should say, “Trust but verify, inform, compensate and become resilient,” but we have no faith the CRTC has said that or will ensure that.

PIAC filed a letter on the day of the Rogers outage requesting that the CRTC first, conduct a CRTC-led inquiry under section 48 of the Telecommunications Act to inquire into the Rogers outage and, second, initiate a notice of consultation involving all Internet and wireless providers to set a baseline of service resumption, notification, compensation, interconnection and emergency response.

These two formal processes would ensure that the CRTC could ensure that Rogers made necessary corrections and, more importantly, that all consumers taking service from all telecommunications service providers would be protected going forward in a similar manner.

The CRTC then announced it would ask Rogers questions and by implication, I believe, not undertake the two more thorough public and open complete investigations. This means we think the CRTC will do nothing more. It is sweeping this under the rug and yet it has a lot of power and tons of jurisdiction to do it.

We have reviewed Rogers' responses filed Friday. They are predictably redacted and effectively useless and opaque. The minister's request for a mutual assistance agreement between major telcos for emergency coverage and limited roaming is only a tiny portion of the answer.

Parliament can act when the CRTC refuses to do so. It can make changes to the Telecommunications Act. In 2014, Parliament, tired of waiting for the CRTC to issue a wireless roaming tariff to make roaming more affordable and available, amended the Telecommunications Act to add section 27.1, temporarily setting a rate until the CRTC moved itself to replace the legislated rate with a regulated one. It did so relatively quickly.

Similarly, here Parliament can legislate. It can legislate the baseline protections that PIAC and retail customers are demanding and dare the CRTC to actually replace those requirements with a holistic, regulatory regime for outages. We ask you to do it.

Those are our comments, and we welcome your questions.

Thank you.

[The Vice-Chair, Conservative, Michael Kram]

Thank you, Mr. Lawford and all of our witnesses.

Moving on to questions, first we have Ms. Gray from the Conservatives for six minutes.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

Thank you to all of the witnesses for being here today.

My first few questions are for Dr. Geist.

We heard today how the CRTC, as the regulator of telecommunications, has not taken risk assessment or oversight seriously, unlike other regulators that do. Would you agree with this, and do you think that it should be?

[Dr. Michael Geist]

Oh, absolutely, and Mr. Lawford, I think, just pointed to this as well.

It was, I thought, remarkable and exceptionally discouraging to watch the chair of the CRTC kind of give a virtual shrug when asked questions about the role that new regulations could play, about the role that penalties could play and about the role the competition could play, as if all of this is just inevitable and it's just there for the CRTC after the fact to engage in a bit of fact-finding.

If the regulator is to mean anything, surely it has to do more than just that.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Listening to the answers from the executives at the CRTC, I felt like I was questioning senior telecom executives, not the regulator. On that note, would you agree that the CRTC is not fulfilling their mandate as regulator and that the minister is not holding the CRTC accountable?

[Dr. Michael Geist]

I think you do make a compelling case on both of those fronts.

There's been an enormous amount of concern and frustration about the way the CRTC has conducted itself. There have been allegations of bias with the current CRTC chair and the industry itself, so your observation about thinking that you're listening to a telecom executive can be forgiven, given the way some people have perceived the way the CRTC has conducted itself.

It shifted from an approach that tried to put consumers and the public interest at the centre to one in which they seem to be missing altogether, so we have a real problem in that the government has been willing to do so little in terms of becoming more aggressive.

Even this recent policy direction from the minister felt like more of the same. It's one of the reasons I really emphasized that the identity of the next CRTC chair is mission critical to the future of Canada's communications infrastructure.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

We heard today from Rogers, and part of the testimony that became clear was that Rogers does not have a chief risk officer or someone in that type of role in a senior executive position overseeing risk at the company. This was quite surprising, considering the complexity and how large the organization is.

Do you have any thoughts on that or on how they might view risk assessment within their own organization based on the results that you've seen?

[Dr. Michael Geist]

Based on the hearing, I think their primary view is that the biggest risk they face is a regulatory risk. When they were asked repeated questions about essential services, they punted on the question and refused to answer it. When asked questions about the merger, they tried to avoid that question, and ultimately even just talked about how 25,000 employees work hard every day as opposed to addressing some of the core concerns that people have.

I'm sure people do work hard, but it can't be that your primary focus, it would seem at times, is whether or not legislators and the regulator are going to do their job on these issues. That was, to me, the primary take-away from many of the comments that came from the CEO today.