Industry Committee on March 20th, 2023

[The Chair, Liberal, Joël Lightbound]

Good afternoon, everyone. I'm happy to see you again.

I call this meeting to order.

Welcome to meeting number 62 of the House of Commons Standing Committee on Industry and Technology.

Pursuant to the order of reference of Wednesday, November 30, 2022, we are studying Bill C‑288, An Act to amend the Telecommunications Act (transparent and accurate broadband services information).

Today’s meeting is taking place in a hybrid format, pursuant to the House order of Thursday, June 23, 2022.

We have with us today, by video conference, Reza Rajabiun, who will testify as an individual in his capacity as an expert on competition policy and telecommunications strategies.

From the Commission for Complaints for Telecom-Television Services, we have Howard Maker, commissioner and chief executive officer, and Josée Thibault, assistant commissioner for Operations and Business Services.

Finally, from OpenMedia, we have Erin Knight, senior campaigner, also joining us by video conference.

I thank all the witnesses for being with us today.

Without further ado, I would like to give the floor to Reza Rajabiun for five minutes.

[Dr. Reza Rajabiun, Competition Policy and Telecom Strategy Expert, As an Individual]

Thank you and good afternoon.

My name is Reza Rajabiun. I'm a researcher and consultant in the area of competition and telecom policy. My research explores how the design of telecommunication policies and the strategic behaviour of network providers shape the evolution of Internet connectivity that people experience within Canada and internationally.

In my consulting practice, I have served organizations such as the Ontario Ministry of Infrastructure and the CRTC as a subject matter expert on broadband policy issues. I have also represented rural municipalities and consumer advocacy groups before the CRTC and have assisted communities across Canada to identify private broadband service gaps and devise strategies for improvement. I appear before you in my personal capacity as an individual. My views do not reflect those of any organizations with which I have been affiliated.

I will briefly provide some background on the underlying economic problem that motivates this deal, what I see as its weaknesses and offer some suggestions for potential amendments.

First, the basic problem that the bill is trying to address is a common one. The market convention has been to specify broadband speeds in terms of a maximum theoretical “up to x megabits per second” and to use “best effort” retail contracts. However, actual Internet speeds and reliability vary widely, and this variation negatively affects the user experience and access to vital services and applications.

Telecom regulatory authorities in other advanced economies have developed policies that aim to address the same problem as this bill does. In addition to examples from Australia, the U.K. and the U.S. discussed previously by the bill's sponsor, I note that the transparency and retail contract regulations regarding both minimum and normal or typical Internet speeds are key elements of the European Union's “Open Internet” regulations adopted back in 2015.

This bill does not go as far as the European Union regulatory framework in terms of strengthening quality commitments in standard form retail contracts. Nevertheless, what the bill proposes to do is broadly consistent with trends in other jurisdictions trying to address the same fundamental quality signalling problems in broadband service markets.

Second, in terms of regulatory history, it's relevant to note that concerns about gaps between advertised and actual speeds that certain providers deliver have come before the CRTC for at least a decade, in my recollection. The CRTC, however, has been reluctant to take on the issue. Notably, in the development of the CRTC's 2019 Internet Code, the CRTC explicitly excluded advertised speeds and service quality issues from the scope of discussions in the proceeding. The CRTC did not provide reasons for doing so.

As such, the bill will help mitigate what can be viewed as an error in developing the Internet Code a few years back. More broadly, unanimous support in the House for this bill has the potential to enhance the incentives of the CRTC to prioritize competition and consumer interests in its future policies.

Third, I would like to note that in practice, gaps between service speeds providers advertise and those they deliver depend, among other factors, on how much particular providers invest in network capacity as demand grows over time. In relatively high-income urban centres of Canada, private sector incentives to increase capacity and deliver higher speeds tend to be relatively strong. In these areas, some providers may in fact be delivering the speeds they promise, as suggested by CRTC's broadband test data.

However, where network investment incentives are relatively weak, on the edges of wireline cable and fibre networks outside of urban centres, the problem tends to be more pervasive and undermines the business case for rural fibre deployments, as expected take-up rates are reduced. In this context, the bill has the potential to promote incentives for service providers to invest in reliable high-speed broadband technologies and to make sure providers keep up with growing demand and enhance digital equity.

In summary, if implemented in an effective manner by the CRTC, the bill has the potential to achieve its stated objectives of better informing consumers and promoting competition. However, the bill does not go far enough in terms of enforcement, contractual accountability of suppliers and remedies for consumers who end up not receiving what they are paying for.

I would advise the committee to recommend additional language that makes suppliers more accountable for the quality and reliability of services they deliver to their customers, potentially via reforms to the Internet Code.

Thank you for the opportunity to appear. I look forward to answering questions the committee may have.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Rajabiun.

I now give the floor to Ms. Thibault or Mr. Maker from the Commission for Complaints for Telecom-Television Services.

[Howard Maker, Commissioner and Chief Executive Officer, Commission for Complaints for Telecom-Television Services]

Thank you, Mr. Chair.

I'm Howard Maker, commissioner and CEO of CCTS, the Commission for Complaints for Telecom-Television Services, and with me today is my colleague Josée Thibault, our assistant commissioner of operations and business services.

CCTS is Canada's national organization providing free service to consumers to help them resolve complaints about retail Internet, wireless TV and local phone services under a structure and mandate approved by the CRTC, thus ensuring that our governance and operations are independent of the industry.

In simpler terms, we're the industry ombudsman and we have dealt with over 150,000 complaints since inception. We deal with complaints about billing, service quality, adherence to contracts and credit management. We're here to ensure that service providers meet their contractual obligations to their consumer and small business customers. We have an enviable track record in assisting Canadian customers, facilitating the resolution of nearly 90% of all complaints, often within 30 days. Indeed, we have the authority to require our 400-plus participating service providers to fix customer problems and to compensate customers when appropriate. Our decisions are binding on those providers.

We also report on what drives consumer complaints, regularly publishing aggregated data about the issues we see to ensure that consumers, the industry and the regulator are fully informed about the issues that cause complaints and to drive positive change in the industry.

In addition, we administer the CRTC's four consumer codes of conduct, which we use as benchmarks for service provider conduct when we are investigating complaints.

[Josée Thibault, Assistant Commissioner, Operations and Business Services, Commission for Complaints for Telecom-Television Services]

Internet is the second most complained about service, and complaints about insufficient Internet speeds fall within our mandate. We track these speed complaints under a category we call “quality of service”, which is a basket of issues that includes complaints about slow Internet speeds as well as other service issues, such as service outages.

Quality of service is the problem most most frequently raised by Internet customers, accounting for about 17% of all Internet problems raised last year. In a recent audit, we found that complaints specifically about Internet speed accounted for about 25% of all of the quality-of-service concerns raised by Internet customers. In these complaints, customers told us they weren't getting the speeds they thought they had contracted for or that they didn't understand that the speeds displayed in their plans were the maximum speeds that might be made available to them.

In most of these complaints, we also found that the provider actually offered a lower-tiered plan that might have better suited the customer, considering the actual speeds available to them.

CCTS's mandate is to determine whether the service provider met its contractual obligations to the customer. When investigating a complaint, we review the provider's obligations to the customer, which are contained in their terms of service; their policies; the customer's contract and the CRTC codes of conduct.

We note that the CRTC codes do not contain any obligations with respect to speeds or performance and that currently there's no requirement for service providers to include any speed metrics in customer contracts. When investigating a complaint, we also consider what disclosure was made to the customer about speed guarantees and performance expectations when they subscribed to the service. If we find a discrepancy between expected and actual speeds, we look at whether the customer is on the best plan for their needs.

For example, if a customer is on a 100 megabits per second plan but is only getting 25 megabits per second, we'll examine the service provider's tier of plans and propose a more appropriate plan in light of the actual speeds the customer is receiving and require the provider to reimburse the customer for the difference between the two plans.

[Howard Maker]

With regard to Bill C-288, we've said publicly and regularly that being fully informed is really the best protection that a consumer can have.

CCTS is not a policy-making or a regulatory body, nor do we advocate for either industry or consumer interests, but given the number of Internet service quality complaints that we see, it seems reasonable to conclude that making service metrics available to customers when they subscribe to an Internet service would be a step forward in ensuring that they understand what they're getting and in achieving our objective of full disclosure. In our work, we regularly see complaints that arise when customers think they're buying something but wind up getting something different. Disclosure of service metrics might very well help to avoid this situation.

For these reasons, you can appreciate why Bill C-288 is of interest to us.

We thank you for the opportunity to appear before you to discuss it. Of course, we're happy to answer any questions you may have about our work.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

I'll now turn to Madame Knight for five minutes.

[Erin Knight, Senior Campaigner, OpenMedia]

Thank you.

Good afternoon. My name is Erin Knight. Today I'm calling in from New York City, which is the traditional homeland of the Lenape.

Thank you for the chance to speak today on behalf of the OpenMedia community, comprising nearly 300,000 people in Canada. OpenMedia is a non-partisan grassroots organization that works to keep the Internet open, affordable and surveillance-free.

It's my sincerest pleasure to be here today in full support of Bill C-288. OpenMedia was very pleased to see all the parties come together to advance this bill to the committee stage, because—let's be clear—Bill C-288 is not a controversial piece of legislation. We can all agree that it serves to empower everyday people, support their right to high-quality connectivity and protect them from shady business practices by big telecom. Improvements to the status quo will benefit every person in this room and people in Canada writ large.

With that said, I'm happy to share some of the specific reasons that parliamentarians on all sides should be eager to pass this bill.

I will begin by sharing an important statistic: According to a September 2022 survey for Globalive, people in Canada view our telecom sector more negatively than any other industry. It's no wonder. If you talk to the average Canadian, they'll tell you that big telecom is very good at squeezing customers on not only pricing but also the value received for services purchased.

I'm referring, of course, to advertised Internet download speeds versus the actual speeds customers receive on average. Over the years, members of the OpenMedia community have raised concerning discrepancies between the two. In general, the problem goes something like this: ISPs might advertise a certain speed for a particular plan. A customer subscribes to that plan, believing that is the speed they are paying for, only to discover their connection is far slower than that speed during the times they actually need to use it. This is because the service agreement says their plan only goes “up to” the advertised speed, but there are no promises. This information is not plainly shared with customers, but instead hidden in the fine print.

To illustrate this, I will take a moment to share the experience, in their own words, of Angela, a low-income member of the OpenMedia community: “Two and a half years ago, I signed up for Internet 600 with Shaw.... I have never once received the actual Internet speed I was paying for. It has always been artificially capped at around 300 Mbps or sometimes even 200 Mbps.... Trying to upgrade to the newer, faster option...would carry a bigger price tag with no guarantee or even any reason to believe they would actually deliver on the improved service. The prices are always going up and the service is unreliable and falsely advertised. These problems have existed across the board with all the big Internet companies.”

Bill C-288 tackles this issue clearly and concisely. When you sign up for an Internet plan, you deserve to know what you're paying for before you pay. This legislation will make it so. At the end of the day, it's about truth and transparency. If an Internet provider is advertising certain speeds, consumers have the right to know, before they buy, whether those speeds accurately reflect average performance.

There's a fundamental reason that we need this to come in legislative form, rather than relying totally on the regulator. I want to make clear the difference between the new CRTC policy direction and Bill C-288, and how the direction needs to work in tandem with legislation like this if we hope to see any of the protections we're discussing today implemented.

The policy direction tells the CRTC how to interpret cases in front of them in a way that promotes competition, affordability and consumer interest. It's a framework that will only apply to future CRTC regulatory decisions moving forward. The direction can only help the commission interpret what is in front of them. There is no CRTC proceeding explicitly taking place right now that is related to broadband speed advertising, so there is nothing on the topic for the commission to apply the policy direction to. Without the application component, we will not see this issue move forward at the CRTC.

Bill C-288 is that legislative application. The bill directly mandates the CRTC to hold public hearings on this issue. That means the bill would immediately put the broadband speed advertising item in front of the commission, giving the CRTC the opportunity to apply the policy direction framework.

In closing, I'd like to remind us all where Bill C-288 sits in the wider scope of the transformative changes we need to urgently make in telecom in Canada. If I can be frank, this is the lowest-hanging fruit. If we can't do this simple, uncontroversial, pro-consumer move that other countries have already done, I'll be deeply concerned about our ability as a country to make the changes we so desperately need.

Thanks, and I look forward to your questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much for your testimonies.

We will now open the discussion. Mr. Williams, you have six minutes.

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

Thank you very much, Mr. Chair.

Thank you to our witnesses for joining online today. This is a very important discussion.

Ms. Knight, thank you for being here. We share your values. An open, affordable and surveillance-free Internet is very important. I know you summarized some of the direction to the CRTC. This seems to be one of the major points of dissension among the groups.

We talked about this bill three weeks ago. Some members suggested that Minister Champagne's February 13 announcement on policy to the CRTC made this bill unnecessary.

I know you have already touched on this, but do you agree with that sentiment?

[Erin Knight]

I'm happy to reiterate that the new CRTC policy direction on its own will not address the broadband-speed advertising issue at hand that we're discussing. As a regulatory framework, the policy direction doesn't go far enough without a corresponding legislative application, which this bill, in particular, will provide. That's why Bill C-288, in my opinion, is complementary to the policy direction and not contradictory to it, and that's all the more reason why Bill C-288 is not controversial.

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

Thank you.

Just to also reiterate, is Minister Champagne's policy directive binding on the CRTC? Without this bill, does the CRTC have to act on his recommendations?

[Erin Knight]

The CRTC has to use the policy direction as a framework when it makes its decisions on cases that are in front of it. That's why I mentioned in my testimony that putting those cases in front of the CRTC is going to be really key to making sure there is actually an enforceability element to the policy direction as is.

That was one of the major concerns OpenMedia had with the policy direction. How is this going to be implemented, and how is this actually going to affect Canadians day to day? This legislative application is a really good example of how we apply that enforceability mechanism.

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

Great.

Just to reiterate, does it make it more important that we pass this bill to make the CRTC direction binding?

[Erin Knight]

Absolutely.

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

Thank you.

As remote working and schooling looks to remain a permanent piece of society—and we certainly saw that during COVID-19—do rural Internet speeds that are less than advertised and often inadequate for online video streaming deny rural Canadians equality or opportunity?

[Erin Knight]

I'm sorry. Was that a question for me?

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

Yes. I'm sorry. All of these are for Ms. Knight, yes.

[Erin Knight]

No problem.

Yes, rural and remote households are absolutely affected the most—or anyone who relies on low-cost Internet services, particularly rural and remote households.

For most of us, high-speed Internet underperformance is going to be irritating and will still be a huge problem, but when lower-speed Internet of the kind you would get in a rural community underperforms, it's effectively denying people an essential service. It's a difference between getting an average speed of 75 megabits per second on a plan that's advertised as 100 versus, if you're in a rural community, getting 2 megabits per second on a plan advertised as 15. The latter is something that actually stops you from using the Internet effectively in 2023.

I really need to stress that ensuring transparent and accurate broadband services is non-negotiable in closing the digital divide in rural and remote Canada.

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

I want to touch upon that. That segues into competition. In the last year or so, we've seen bigger telecommunication companies buying up smaller providers. One of the only independent wholesalers left is TekSavvy. We've had them at this committee before.

What does a reduction in competition mean for rural and remote Internet customers?

[Erin Knight]

For anyone in Canada, the reduction of competition is a huge problem, and we are seeing right now an extinction event for independent Internet service providers. That really goes back to the dysfunction happening right now in the wholesale access system, as you've mentioned.

Wholesale high-speed access rates are clearly inflated, and the wholesale fibre-to-the-home access system has not been functionally implemented to date. That dysfunction is causing the mass extinction of independent Internet providers, and that in itself is preventing meaningful reduction in retail Internet pricing for all Canadians, including rural and remote customers. That also has implications for network build-out as well.

OpenMedia is really pleased to see that the CRTC is looking at reviewing the wholesale market, but it does remain to be seen what the CRTC does with that. We hope it will choose to side with Canadians and not side with big telecom yet again.

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

With regard to the recent announcement of a policy decision or a plan to reduce the wholesale rates by 10%, is that enough to help the few remaining smaller local ISPs compete?

[Erin Knight]

I can't speak to whether that number itself is enough. We have heard from independent ISPs that immediate relief was really critical, so we are happy that immediate relief did come. I will wait to see what the CRTC does with its review.

OpenMedia will, no doubt, bring forward the opinions of our close to 300,000 community members and those of Canadians who have a stake in this issue.

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

In terms of helping new ISPs get off the ground, do you have any recommendations on how we can help a larger number of smaller companies compete?

[Erin Knight]

First, we know that ISED is looking at reforming the Competition Act. There are a number of things they could do to lessen the force that monopoly powers play in our economy, and reducing the clout of monopoly powers in Canada is certainly going to improve things for smaller companies.

Then, in itself, the wholesale access review, as I mentioned, is a critical part of paving the way for smaller companies to enter the Canadian market and also thrive in the Canadian market. Right now, those conditions are causing those companies to be unsustainable.