Industry Committee on Jan. 25th, 2023

[Éric Dagenais]

Not using spectrum is something we've tackled. The two most recent auctions and the upcoming one this year have the most stringent deployment conditions we've ever set. People who have recently bought spectrum and people who will be buying spectrum are doing so to deploy it, because if it's not deployed, it will be taken away.

[Brian Masse, NDP, Windsor West, ON]

So it's just taken away. Are they actually fined or penalized, or do they have to lose some of their economic resource from that? If you don't use spectrum, that affects not only the competition but also our Canadian economy and other businesses that need access to high-speed Internet and good service.

What penalties happen there? My understanding is that ISED can extend the period of time for not using the spectrum on its own without returning to Parliament. Is that correct?

[Éric Dagenais]

As a regulator, we work with the regulated industry to bring them into compliance. That's the number one approach. You want the regulated industry to come into compliance and that's what you start with. You start with that before taking it away. We have taken it away, but we like to work with regulated industries.

[Brian Masse, NDP, Windsor West, ON]

But there are no penalties.

[Éric Dagenais]

There could be penalties. If you've paid billions of dollars for spectrum and it's taken away from you, I would argue that's a bit of a penalty.

[Brian Masse, NDP, Windsor West, ON]

How much money has the government kept from the spectrum? Do you refund the money back to the auction?

[Éric Dagenais]

We have not taken away spectrum that has been auctioned off recently. People are still within the milestones. When you auction spectrum, you have deployment conditions. The deployment conditions are pretty strict, but they're after the five-, 10- and 20-year milestones. Currently we are not aware of any recent spectrum auctions where the holder of the spectrum is not meeting its deployment conditions.

[Brian Masse, NDP, Windsor West, ON]

There have been numerous cases of spectrum not being used to its fullest potential. There's no doubt about that. How much money has the government fined those people who have won spectrum and those companies that have won spectrum? How much money was kept from that spectrum that has not been used? We know the spectrum has not been used.

[Éric Dagenais]

The question is not whether it's being used to its fullest potential. It's whether or not the deployment conditions are being met. What I'm saying is the deployment conditions—

[Brian Masse, NDP, Windsor West, ON]

When those have not been met, how much has the government fined?

[Éric Dagenais]

I'm saying they are being met.

[Brian Masse, NDP, Windsor West, ON]

Sir, are you saying that all spectrum conditions we have right now are being met to their fullest capacity?

[Éric Dagenais]

For the recent auctions we looked at—the 600 megahertz auction and the 3,500 megahertz auction—the deployment conditions on the people who bought the spectrum are currently being met.

[Brian Masse, NDP, Windsor West, ON]

What about for the previous ones?

[Éric Dagenais]

For previous spectrum holders, we have taken spectrum away. We have taken licences away.

[Brian Masse, NDP, Windsor West, ON]

When you take them away, how much do you actually fine those organizations and those companies? Those are public assets, so if you actually—

[Éric Dagenais]

I understand. I would have to get back to you about fines, but we have taken spectrum away.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Masse. That is all the time you have.

Mr. Dagenais, feel free to share the information with the committee through the clerk.

I'll now give the floor to the Conservatives.

Mr. Williams, you have five minutes.

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

Thank you very much, Mr. Chair.

Competition helps Canadians by allowing them to have choice, lower prices and better service. There's an alarming precedent being set, I feel, in the divestiture of Freedom Mobile in that Rogers, which is the number one market share owner of telecommunications in all of Canada, was allowed to freely vet and choose its number four competitor, which was Videotron, without the approval of the Competition Bureau.

Ms. Pratt and Mr. Durocher, you've mentioned the merger remedies that are in place to approve that. I'm going to talk about paragraph 57, which says:

In addition to approving the remedy package, the Bureau must approve the buyer of the divested asset(s), so as to ensure that such asset(s) will be operated by a vigorous competitor, and that the divestiture itself will not result in a substantial lessening or prevention of competition....

Did this occur?

[Jeanne Pratt]

Normally we conduct our investigation, and that informs the scope of the anti-competitive effects we need to address. In this particular case, we went through our exhaustive investigation. We identified the magnitude and scope of those anti-competitive effects, and we communicated them to the parties for the purposes of facilitating a settlement. We tell them what the problem is and how big the problem is with respect to a resolution, and they bring us a solution for an evaluation.

The way we evaluate that solution is in accordance with the remedies bulletin that you referenced. When we're doing that, we're asking what the assets are, what the package is that the new buyer will have to compete with and whether it is adequate to allow them to compete on a footing similar to that of the business being sold. In this particular case, that is where we had concerns with the remedy package.

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

Based on the language in this document, the bureau must approve the buyer of divested assets. Did you approve the buyer?

[Jeanne Pratt]

We did not. We did not approve the remedy package, which would include the buyer.

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

Do you feel that the tribunal properly addressed the concern you had?

[Jeanne Pratt]

Well, I think our position on this is clear: It ought to have been evaluated as a remedy under our framework.

The concerns we had with the remedy proposed included that there weren't sufficient assets being divested with the Freedom business to allow them to compete on a similar footing to what Shaw was competing on. They didn't have the assets and that was key.

There was another concern about the contractual arrangements that were undertaken with Rogers. We generally want to see that a new competitor is going to have the assets and is going to be independent from a competitor with respect to all fundamentals of supply.

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

To that point, you have not approved this. Has there been another merger of this size in Canada that has ignored the remedy process or has ignored your approval?