Evidence of meeting #53 for Industry, Science and Technology in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rogers.
A video is available from Parliament.
2:45 p.m.
Liberal
2:45 p.m.
NDP
Brian Masse NDP Windsor West, ON
Thank you, Mr. Chair.
Mr. Iacobucci, I'll continue with you.
If, right now, Videotron was to do what you're saying and be more assertive with the rollout, as has been promised, it would be counter to its previous business model. This is going back to 2013, when it sat on a spectrum auction, and the successful bidding it got in British Columbia, Ontario and Alberta. What makes you confident that this time it's going to perform in the market?
Secondary to that, if it doesn't, what legal means can the government use to bring it back in line?
Lastly, would there also not be the potential that it could be bought out in the market in the future?
2:45 p.m.
Professor and Toronto Stock Exchange Chair in Capital Markets, Faculty of Law, University of Toronto, As an Individual
I'll answer the last one first, because I think in some sense that's the easiest one to deal with.
If there's a proposal to acquire Videotron in the future by one of the players in the market, there will be competition questions surrounding that acquisition. Again, the competition law institutions that we have in this country are well equipped to address the question of whether a future acquisition would reduce competition substantially.
To your first question, on what makes me think that, I'm not going to purport to be an expert on Videotron's business history or the particulars of its model. I understand where your skepticism, which I think underlies your question, may well come from. At the same time, I am confident that the tribunal did a very thorough assessment of what it heard. It was a thorough weighing of the evidence. The commissioner had an opportunity to make its claims, that we should not anticipate Videotron's being as successful as Shaw might be without the acquisition going forward. I think it was fully vetted. The conclusions seemed reasonable, from where I sat.
It's also important, though, and I would acknowledge, that although it's an assessment the tribunal made with a certain degree of confidence, predicting the future is always going to be difficult. This is something that the tribunal also alluded to. When you ask what happens if it doesn't work out, well, this is actually an area in which, if this merger isn't as competitive as we might hope, there is regulatory oversight. The CRTC could make certain decisions, including withdrawing forbearance, if it wished.
2:50 p.m.
NDP
Brian Masse NDP Windsor West, ON
Thank you. I have to move on to Mr. Klass, I think, because I directly wanted to know...and the answer is that there is nothing, really, that we can do. I appreciated your intervention, but I have have limited time here.
Mr. Klass, I guess what I'm worried about is this. If Videotron was later on to be looked at as a potential takeover from somebody else, or a merger, I don't have a lot of confidence, because when you look at the history, Bell acquired MTS. Telus bought Public Mobile. Rogers bought Fido. Shaw bought Wind Mobile. Those are just a few of those things, and now we're looking at Distributel and Bell as a merger.
This looks like rearranging the chairs on the Titanic, in many respects, at the current moment. Is taking a pause, really, at the end of the day, probably the best strategy before we lose another chance to try to set things right?
2:50 p.m.
Ph.D. Candidate, Carleton University, Senior Research Associate, Canadian Media Concentration Research Project, As an Individual
The answer to that is “yes”. While the minister can currently declare that Videotron must hold on to the spectrum for 10 years, if it comes into a position where it says, well, we've decided to exit the business, or our business model has not panned out as we had planned, then they'll be in exactly the position Shaw is in today. Members of boards like the tribunal will be asking, “If we don't approve this merger, what will happen to Videotron?”
Effectively, I think, there will be no ability to stop that spectrum transfer from going forward in the future. The best way of dealing with it is to nip it in the bud today.
2:50 p.m.
NDP
Brian Masse NDP Windsor West, ON
Thank you.
This question is for both Mr. Kaplan-Myrth and Mr. Lacavera.
Where I'm from, right now we have a couple of things. First of all, I'm in Windsor, Ontario, right across from Detroit, Michigan, so we're also benefiting from many roaming charges that people have to deal with. Second to that, it's the auto industry capital of Canada. Over the years, we've seen non-tariff barriers that have stopped Canadian exportation of vehicles into, for example, South Korea. You can legally send them there without tariffs, but there are things governments do to actually block servicing of the vehicles and so forth, so it makes it difficult to be a consumer purchaser.
I'd like your comments with regard to other potential barriers out there for a new competition to come in, whether it's sharing of cellphone towers or other types of mechanisms that are currently in place. I mean, we have disruptions that can take place by the incumbents from not even doing the things that are supposed to happen right now.
I'll start with you, Mr. Andy Kaplan-Myrth, and I'll ask you to leave some time, please, for Mr. Lacavera.
Thank you.
January 25th, 2023 / 2:50 p.m.
Vice-President, Regulatory and Carrier Affairs, TekSavvy Solutions Inc.
I'll speak very briefly on this, because really I can speak only to our experience on the telecom side.
The common theme is the overarching power of dominant providers who control the market and really control all the levers for smaller businesses who are trying to compete in that space. In our space, that is primarily about wholesale rates, which I've spoken to. It is also right now around access to fibre-to-the-home networks. That's a major challenge that we face, in particular with Bell, which has largely shifted to fibre-to-the-home networks. The wholesale industry is essentially abandoned on the old legacy DSL technology, because the CRTC has not advanced its framework one iota since 2017 to allow wholesale access to fibre to the home. That's also part of our challenge, or plays into part of our challenge, to the CRTC.
There are other ways that the dominant providers control access, to poles and things like that, but those are our primary concerns.
2:50 p.m.
NDP
Brian Masse NDP Windsor West, ON
Thank you. I'll turn it over to Mr. Lacavera for the last of my time.
Thank you, Mr. Chair.
2:50 p.m.
Chairman, Globalive Inc.
We're at a really critical moment. The only thing standing between this anti-competitive merger and Canadians is the minister. The minister has all the latitude he needs to just say no to the merger. As I said earlier, there's nothing anti-Videotron about that. Canadians deserve a fair, open and transparent process to ensure that we have a competitive framework, to ensure we have the right owners of Freedom, to ensure that when they're asking questions about what Canadians can see looking forward in terms of a competitive market, they can have the confidence that it's there.
All that's happened so far is a secretive, closed-door deal between Rogers, Shaw and Videotron. Canadians have no idea what the outcome of that's going to be, but it's overwhelmingly clear that most people are opposed to it.
2:55 p.m.
Liberal
The Chair Liberal Joël Lightbound
Thank you, Mr. Lacavera.
We will now begin the last speaking round. The Liberal Party and Conservative Party will have four minutes each, while the Bloc Québécois and NDP will have two minutes each.
We will start with Mr. Vis.
2:55 p.m.
Conservative
Brad Vis Conservative Mission—Matsqui—Fraser Canyon, BC
Thank you, Mr. Chair.
With my short amount of time today, I'll be addressing my questions to Globalive. I'm going to state the questions first, then hopefully you can provide some answers.
We've heard a lot today about the ability or the potential of Videotron to be a real fourth carrier in our Canadian oligopoly. What I haven't heard from Globalive today is why you sold Freedom Mobile in the first place, and what would make you a better fourth competitor than Videotron, specifically because we've heard that Videotron would be tied to Rogers, but you would subsequently be tied to the Telus network. What's the difference there?
You spoke a lot about your communication with Rogers, yet in the briefing you provided, likely to all of us here in this office, you didn't really communicate to us as committee members regarding your interactions with Shaw. Although you stated that your bid was $1 billion more than the price offered by Videotron to Rogers and Shaw, your bid is, in fact, different in that it includes, if I remember correctly, the mobile services offered by Shaw that you, of course, had before.
Finally in your briefing you made very serious allegations that since the announcement of the merger, Shaw has starved the Freedom Mobile business while running promotions that essentially give away mobile services to Shaw Mobile customers, with the result that Shaw Mobile has acquired almost half a million subscribers and Freedom Mobile has correspondingly shed hundreds of thousands of customers since the merger was announced.
It's over to you, Globalive.
2:55 p.m.
Chairman, Globalive Inc.
I'll go in reverse order.
The results disclosed and the performance of Freedom, I think, are very clear. Shaw is a public company, and Freedom has gone completely sideways as Shaw has stopped competing. The metrics are clear around that. The Shaw Mobile business that's part of a bundle offering, in which the subscribers are being heavily subsidized by home Internet, cable and home phone service, are also clear, so yes, Freedom has bled a lot of its subscribers in that fashion.
In terms of our interaction with Shaw, there has been none. Shaw was in agreements with Rogers that would—we expect and, I think, know—have precluded them from ever engaging with us.
In terms of our interaction with Telus, I'm coming up on 50 years old, and I've never worked for anyone yet. I'm not about to start working for anyone, so there's no scenario in which Globalive is in bed with Telus, working for Telus. That's clearly just not what our history, which is all out there, shows. What is out there now is this idea of a sharing construct with Telus. That is incredibly important for the future of competition in Canada, because we're able to invest and share spectrum with Telus—in a shared network with shared towers and infrastructure—which will enable us to ultimately realize significant efficiencies out of that and pass cost savings through to Canadian consumers in a very reliable way.
2:55 p.m.
Conservative
Brad Vis Conservative Mission—Matsqui—Fraser Canyon, BC
I'll stop you right there. What would be the difference between Videotron and Rogers, doing that versus Globalive and Telus?
2:55 p.m.
Chairman, Globalive Inc.
Videotron and Rogers have entered wholesale agreements whereby, to Mr. Klass's points earlier, Rogers ultimately has control. It's ultimately Rogers' network. We're talking about shared ownership of a network into which we've contributed spectrum that we own and contributed to radio networks that we own on a shared basis with Telus. That's the fundamental difference. Are you riding on someone else's network at rates that may be illegal—we'll see where the CRTC goes with that—or are you investing in a shared network? That is the scenario with Telus.
Why did we sell? I said very clearly at the outset that we did not want to sell. We were dragged into a sale to Shaw. The business was doing fantastically as an independent pure play. Our business model was validated and Canadians were voting with their feet. We had almost a million subscribers. We voted against selling.
When the opportunity emerged surrounding this Rogers-Shaw announcement, we immediately reached out to Rogers and expressed our desire to re-enter. The reason Rogers didn't want to talk to us was that we're the only ones that built a successful, independent pure play and actually brought prices down for Canadians in the markets we're talking about. We have national ambitions, and we look forward to getting back at it.
3 p.m.
Conservative
Brad Vis Conservative Mission—Matsqui—Fraser Canyon, BC
Thank you.
Mr. Chair, do I have any time left?
3 p.m.
Liberal
The Chair Liberal Joël Lightbound
You don't. Thank you, Mr. Vis.
We'll now turn to Mr. Erskine-Smith for four minutes.
3 p.m.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
Thank you.
Mr. Iacobucci, you referenced the tribunal's and the court's decisions. Did those decisions comment on this wholesale agreement, this additional preference that Rogers is providing Videotron and how that might impact the competitive framework?
3 p.m.
Professor and Toronto Stock Exchange Chair in Capital Markets, Faculty of Law, University of Toronto, As an Individual
They did make reference to that, yes.
3 p.m.
Professor and Toronto Stock Exchange Chair in Capital Markets, Faculty of Law, University of Toronto, As an Individual
They didn't seem to have those concerns.
One thing they noted was that these commitments had been made and would assist in going forward. Videotron had accepted some of the minister's statements about how there would be no transfer of spectrum unless Videotron—
3 p.m.
Professor and Toronto Stock Exchange Chair in Capital Markets, Faculty of Law, University of Toronto, As an Individual
No, that also—
3 p.m.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
That's not the point. The point is that we have a primary player in an oligopoly that is providing a specific preference to a fourth player. At the same time, we're saying that this fourth player is going to be disruptive to the first player.
Don't you see an obvious challenge in that line of thinking?
3 p.m.
Professor and Toronto Stock Exchange Chair in Capital Markets, Faculty of Law, University of Toronto, As an Individual
This is where I think that if worst come to worst, you've got the CRTC as a backstop when it comes to wholesale pricing, if that's what the issues are. It backs the questions that were raised earlier.
3 p.m.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
In relation to the wireline assets.... We've been focusing all our conversation on the wireless assets. When I look, as a Canadian consumer, at excessive concentration in this sector, I see that 83% of Shaw's business and revenue is actually in the wireline space and Rogers is going to take on even.... The market concentration is going to be increased to a significant degree in the wireline space.
As a Canadian consumer who cares about competition, shouldn't I care about that?