Industry Committee on Jan. 25th, 2023

[Pierre Karl Péladeau]

First of all, I would say that after buying spectrum in 2008, we've been investing a significant amount of money to build the network that we've built in Quebec and in servicing what we have today, which is roughly 23% of the market. That's significant against a very competitive market.

We have three companies and eight brands. We're looking to do the same. We're going to pay $2.9 billion to acquire Freedom.

As you probably also know, in the last auction we invested roughly $450 million, which was paid to the Government of Canada. Therefore, we really have skin in the game here. It's significant in terms of the money we've been investing.

We have a responsibility to our shareholders. We will continue to make sure that at the end of the day they will be able to benefit from the growth we've been able to provide for them. We'll also be able to service the customers we are now providing service for in the regions that we will now cover with the acquisition of Freedom.

[Brian Masse, NDP, Windsor West, ON]

Your loyalty, of course, is to.... I don't blame the companies for doing what you have done. It's a system that's regulated by us at the end of the day, in terms of Parliament, because the spectrum is a public asset.

I still have concerns about not recognizing.... The cost has been talked about a lot here in this situation, but the products and the services you have that didn't get rolled out hurt people economically or limited their capability to participate in society.

I'd ask all of the companies here to respond to what they feel their obligation is, in the future and in the past, in actually not acting on spectrum.

Perhaps you could all respond by telling us how much spectrum you didn't actually activate and that you left out there on the market with less competition.

If we could go across the board, I'd appreciate it, please.

[Tony Staffieri]

I'd be happy to start, MP Masse.

At Rogers we have always invested in spectrum. Over the last eight years alone, we invested over $8.5 billion in spectrum. We've invested more in spectrum than any other Canadian wireless player has over the years.

We quickly deploy that. Most recently we acquired 5G spectrum, and you saw us roll that out in 5G and 5G+ across the nation, as quickly as technology and permitting would allow us. It's in our interest to deploy that spectrum aggressively.

[Brian Masse, NDP, Windsor West, ON]

Who wants to go next? I'm looking for what spectrum you didn't deploy.

[Paul McAleese]

Mr. Masse, Shaw has met the licence conditions for all spectrum that it has ever acquired.

[Brian Masse, NDP, Windsor West, ON]

You met the licence conditions, but did you actually not deploy spectrum?

[Paul McAleese]

Well, licence conditions are exactly what they imply. We have met all the conditions.

[Brian Masse, NDP, Windsor West, ON]

Right, but that doesn't mean you have deployed and used all your spectrum. That's what I'm—

[Paul McAleese]

Appreciate, Mr. Masse, that some of the spectrum is still well within its licensing period in terms of the need to deploy. We have a period of time in which we're allowed to deploy it under the conditions of that, and we have met all of those obligations.

[Brian Masse, NDP, Windsor West, ON]

I'll turn it over soon, but this is a good example of the frustrations Canadians feel, because I have asked specifically about whether you have actually used all your spectrum, but what you're saying is you're meeting the obligations. We all understand that, because we know that the government actually doesn't really push this very hard and we haven't seen much action in the past.

I was wondering whether or not the Shaw spectrum, or some of it, might be languishing somewhere and not competing. That's a legitimate thing because it's a public asset.

Mr. Péladeau, what percentages are you sitting on with spectrum? If you're not, if you've deployed it all, I'd appreciate knowing that.

Thank you.

[Pierre Karl Péladeau]

We haven't deployed all the spectrum we bought for the province of Quebec. We've been there. The last one was the 3,500 megahertz, which will be the key driver for 5G, and all companies in Canada are deploying it. Some are deploying it more quickly than others are. We're certainly also in the same game.

The spectrum we have not deployed was deployed after the sale by Rogers and by Shaw. They acquired the spectrum we bought but didn't use because of improper conditions in terms of commercial.... As I said, now the conditions are all together. The MVNO policy by the CRTC was established in 2021. The TPIA policies are also available to make sure that conditions are met and to provide success for new operators.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Péladeau and Mr. Masse.

Mr. Généreux, you have the floor for five minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chair.

Thank you to all the witnesses.

Mr. Péladeau, I hope you have a sense of humour, in spite of the serious purpose of this committee. As a Quebecker, I am very happy and proud to see you and your company invest in another country. I think you know what I mean.

I have a number of questions, so I would like you to answer quickly. You are already a Rogers partner in Quebec and will become even more closely affiliated in western Canada. You have filed an $850‑million lawsuit against Rogers, which is currently before the courts.

I am also a businessman. Can you tell me how you can sue your partner and then enter into new agreements with it to develop other markets?

If you are suing Rogers, I guess it is because it has not met your expectations or needs in the past. Are you not somewhat apprehensive about the conditions under which the transaction with Rogers was made for the expansion of mobile services in the west, given the relationship you have had in Quebec?

I believe the lawsuit pertains to the business dealings you had with Rogers in Quebec.

How do you see this? It seems rather contradictory.

[Pierre Karl Péladeau]

As I said, in 2006, we became operators using the Rogers network until we were able to purchase part of the spectrum and then build our own network, with Rogers, as part of a project we called Teamnet. If we worked with Rogers, it was also to offset “Bellus”, that is, Bell and Telus, since they have common networks and share the spectrum licenses that were purchased for each company.

There was actually a misunderstanding between us, and we have settled it. I am pleased to announce that we have reached an agreement in this regard. Our dealings have been extremely useful and beneficial for each party, including past presidents such as Guy Laurence and Nadir Mohamed, and Mr. Staffieri now, and we are on a solid footing again. We believe we can further strengthen this association, which has existed for 15 years now.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Okay.

Earlier, my colleague Mr. Perkins asked Mr. Staffieri if there have been job cuts, and he said yes, in some sectors.

At Quebecor, do you expect to create jobs, either in Quebec or elsewhere in Canada, as a result of this agreement?

[Pierre Karl Péladeau]

Yes, indeed. I mentioned that.

Actually, I did not just mention it, it is required of us as a mobile virtual network operator, or MVNO. We are required to build a network if we use the facilities of the current network owners, and we have a deadline to meet.

As Mr. Staffieri said, we spend billions of dollars to build a network, which third-part Internet access services do not do. We have made those investments, and so has Shaw. That is why the CRTC, no doubt on the government's advice, has decided to henceforth require those with the privilege of being mobile virtual network operators to build a network in order to contribute directly to economic activity in Canada.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

It's been said many times that Videotron's prices are lower than Freedom's. One condition the minister required was that prices would get lower over time. I have before me two printouts from the Videotron and Freedom websites. Freedom's 20 GB package costs $50, whereas Videotron's is $65. These are the regular prices, not specials. The prices are already lower.

Based on the agreement reached and the obligations that come with it, and if the minister authorizes it, you will need to make sure that you offer lower prices than what is being offered now. However, right now, Videotron's prices are higher than Freedom's.

[Pierre Karl Péladeau]

I will ask my colleague Jean‑François Lescadres to comment on what you have just said.

[Jean-François Lescadres, Vice-President, Finance, Vidéotron ltée]

In this area, it's very important to understand what we're comparing here. Nothing demonstrates that better than the way competitors react.

As Mr. Péladeau showed earlier, competitors react by offering much lower prices in Quebec than elsewhere in Canada. In addition, Freedom's plans right now are not identical to those of its competitors. Freedom doesn't offer 5G, which we've committed to offering very quickly once the transaction closes.

Next, Freedom limits what we call national roaming. If you speak to a salesperson who offers plans from multiple providers, they're going to ask you if you plan to stay in town or go out of town. If you stay in town, they'll tell you that they can offer you a Freedom plan at a certain price, but if you travel from, say, Calgary to Edmonton or Toronto to Kitchener, your data will be extremely limited.

For example, right now, if you buy a 20 GB plan from Freedom, you only get 1 GB of data outside your territory. This is a competitive disadvantage for Freedom that we certainly intend to address, because we don't have those restrictions in Quebec. Videotron and Fizz plans include roaming across Canada.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

All right.

[Pierre Karl Péladeau]

I feel it's important that I repeat what I said earlier: roaming charges make up a significant portion of a customer's bill, and that's even more true today because people use data. No one talks on the phone anymore, or very little. People use their phone to go get data.

When you're not on your network, you're roaming. However, rates in Canada haven't changed in eight years and they're among the highest in the world. They go from $8 to $12, while in all European countries roaming costs $2. That's five times more expensive.

It's important that the CRTC—

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Péladeau, for the record, could you tell us how roaming fees are established? Are they set by the government or by industry?

[Pierre Karl Péladeau]

They are set by the government, by the CRTC, which determined that roaming would be available at such and such a rate.

As I just said, it's been eight years since the rates have changed, and they are now five times higher than in Europe.

[The Chair, Liberal, Joël Lightbound]

Unfortunately, Mr. Généreux, we've gone three minutes and 15 seconds over your allotted time.

I now turn the floor over to Mr. Erskine‑Smith for five short minutes.

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

My question is for Rogers, and Mr. Staffieri. On the testimony we've heard today, Rogers received a better financial offer than the deal it ultimately arrived at with Videotron. Now, I want the best deal for competition in a sector that sorely needs competition, so walk us through it. Why would Rogers accept less money in this deal, unless it also meant less competition?