Industry Committee on March 20th, 2023

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

Thank you very much.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Erskine-Smith, the floor is yours.

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

Thanks, Joël.

I want to start with OpenMedia and Ms. Knight.

First, thanks for the advocacy. I look forward to a bigger conversation around privacy reform when it comes to our committee, which in many ways will be a more substantive conversation.

This bill is important nonetheless. It's a short bill. There's not a ton to it, other than a requirement to really formalize the direction to the CRTC right now, which is a good thing—formalizing it through legislation, I think, ultimately.

Are there are any amendments that you would like to see to the legislation as it is?

[Erin Knight]

We did hear from some other folks in talking about this bill that there are possibilities to strengthen the bill to empower consumers. We would be happy with any sort of further strengthening that would empower consumers and protect consumers from being abused by big telecom in the ways that they are and the ways that we have heard for decades.

I don't have a specific thing that I would like to see in this bill, but if something would improve the ability of consumers to achieve recourse, as I believe Reza mentioned, for issues they're having with this discrepancy in speed advertising, we absolutely would be happy to support something that empowers consumers.

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

Interesting.

I don't know, Reza, if you want to pick up from there. On my reading of the bill, it's a pretty straightforward requirement for transparency. It doesn't get into remedial measures in any way whatsoever. It would be a little bit different if we were to amend the bill with a measure like that.

Did you have anything in mind in terms of how we might go about strengthening this bill, or is it straightforward—just pass the thing and go on to the next thing?

[Dr. Reza Rajabiun]

Well, the transparency part is a good step forward, but I was trying to highlight that there is another aspect to this, and I think the CCTS can probably expand on it.

All the retail contracts say that your speeds may vary. There is no guarantee or no binding commitment from the supplier. For example, right now somebody is trying to put together a class action lawsuit in Manitoba around broadband speeds not being delivered in rural areas, but that contract element is.... I'm not sure if they are going to get certified, because the standard form contract allows the supplier to deliver whatever they want.

I was trying to point out that this is a step forward, but it's not as strong as, for example, the European Union regulations, which are trying to specify concrete performance measurements in retail contracts. If somebody goes through the—

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

I appreciate that.

Ms. Thibault or Mr. Maker, do you want to weigh in on what has just been expressed in terms strengthening, if not in this bill, a regime overall in terms of demanding not only transparency but also some accountability to consumers?

[Howard Maker]

I'll follow on Mr. Rajabiun's comment, which pretty much took the words out of my mouth.

From our perspective, we are an organization that looks at the commitment and the contractual responsibilities that service providers have to customers. I think you've done the right thing in this bill in terms of providing the authority to the CRTC to do all the detail work and to decide what metrics should be made available and so forth. I think what we would add to that is that if we come to that proceeding, which we would, we would like to see those metrics as part of the contract so that they become in some way enforceable. We could look at them and know exactly what the service provider has offered to provide and what the consumer has agreed to accept.

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

l will say that as a consumer, I have never in my life done a speed test that has ever met the stated speed, whether upload or download, that I am paying for. Has any one of you ever done the speed test and hit the speed that is listed and advertised?

[Howard Maker]

That's a bit challenging. I know I'm not here to speak personally, but you did ask a personal question. The answer is that I've done that lots of times, because I'm always curious.

I had a recent experience. I'm on a 150 mbps package. In the past I have exceeded the 150, but I was dealing with my own ISP. I had one of their reps in my office right here. When I said, “Let's go to one of these speed test sites”, we did that. It then depended on which server we connected to. One of them said I was getting 130 and another one said I was getting 80.

I don't know what an average consumer is supposed to do with that. In particular, if I have an “up to 150”, my service provider has met its commitment. They've given me up to 150, whether it's 80 or 130. That, I think, is the problem with the “up to” advertising.

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

I take the view from all of the witnesses, it sounds like—and if anyone disagrees, please be heard—that this is a bill that should be passed. It's a bill that does strengthen the transparency regime for consumers. We could strengthen the accountability mechanisms and we could look to the EU, potentially, for doing so, but as it stands, this is something that we should pass as is and get the CRTC to do its work.

Speak now or forever hold your peace.

We have one. Go ahead, Mr. Maker.

[Howard Maker]

There is an accountability mechanism now. It's the CCTS.

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

Yes.

[Howard Maker]

I thought I should point that out, because the problem is whether we have enough tools to apply the accountability. That's the question, and that's what I think this bill would help us with.

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

Thanks so much.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Lemire, go ahead.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I thank the witnesses for their contributions to this study, which seems to be important, especially in rural areas.

Mr. Rajabiun, you talked about investments in the regions, outside urban centres. I think discussing that would be beneficial, and I would like you to elaborate on it.

Is the problem that the investments to help reach the promised speeds are not being made? Would it really be impossible to achieve these types of speeds in the regions? If so, that type of package should not be made available to people in rural areas.

[Dr. Reza Rajabiun]

Plans that are offered to rural subscribers tend to have lower speeds because of the technological differences. The issue, as you noted, is the weakness of investment incentives. If somebody deploys a new network today, they may be able to deliver those 50/10 speeds to the population in a small town or something, but as demand grows over time, that capacity will start getting constrained. The difference between a small town and a more competitive urban core is that the incentive to reinvest in capacity is limited in the small town.

One of the problems you see with the rural broadband programs that were adopted around 10 to 15 years ago with the fixed wireless is that they didn't really account for that demand growth. Lots of public subsidies went out 10 to 15 years ago to develop these rural wireless networks, but there was no accounting for demand growth. Some provinces even were saying that they had solved the rural connectivity problem. Then COVID hit, and the fact that the emperor has no clothes exposed itself.

There's one problem that I've been seeing with a lot of rural broadband projects across the country, both in development and in reviewing them. One problem you see with rural fibre deployments is that it's already hard enough for a new fibre provider to justify investing. You get some subsidies from upper-tier governments, hopefully, but the problem is that when you are competing against lower-speed services that advertise higher speeds, it reduces your expected take-up rate as an investor in that project. Rural fibre deployments that are networks that can deliver their promises on the speeds they deliver are undermined.

That's what I mean by that signalling problem. It's the lemons problem. Consumers cannot really assess the quality. There is uncertainty in the quality. That undermines the incentives for the higher-quality networks and investors to come into the market, because they can't signal the quality of their new products as well as they should and get as much revenue as they need to sustain the business.

That's why I was trying to emphasize the particular importance of this bill, if implemented properly by the CRTC, for rural areas and remote communities and also for some low-income urban centres where there isn't that much incentive to invest and people are still relying on old legacy copper networks.

If you cannot justify the revenue in the business case for these processes, even if you get all the subsidies to deploy the network over time, you will not be reinvesting in the network as demand grows, so we're going to see this problem.

This is not short term. I think this bill can be a long-term solution for improving accountability and efficiency of the market.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you very much.

In fact, we very rarely see companies themselves investing in rural areas, as profitability is more difficult to achieve there. That's why governments make investments—either the federal government, through the CRTC or through budgets of the Department of Industry or, in some cases, provincial governments.

Are there sufficient demands on network builders to provide customers with quality service and equipment, update that equipment and maintain it? Is what is required of these builders sufficient to ensure quality services?

[Dr. Reza Rajabiun]

Right now you're talking about maximum speeds and advertised speeds, but another angle on all of this is a minimum service quality standard. This has been in front of the CRTC for many years. They actually adopted a minimum service quality standard in many proceedings, and also a method to measure the standard. With regard to the measurement question Mr. Maker was raising, there was a methodology that the CRTC developed, but it was never implemented in practice.

For example, all of the rural subsidy programs.... I advocated that when you give out subsidies, you should put minimum service quality standards that are legally binding into the subsidy contracts. However, as far as I know, nobody has really done that. Essentially, subsidies are going out and there's going to be monitoring built in, but nobody is going to be looking at what the quality of service is going to be in a few years. With the adoption of minimum standards in contracts, on the contractual side you would have to specify the normal or typical speed plus the minimum speed in the contract.

Different regulators have different ways of measuring it. I was just looking at what the Dutch regulator is doing on this. There are definitions: You are not getting the normal speed that you were promised if eight out of 10 tests over a week do not meet that threshold, and this can be specified. If those standards are not met, consumers can go to the CCTS or join a class action lawsuit. There are very practical ways of dealing with this, and the minimums are very important.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Exactly.

Thank you very much.

[The Chair, Liberal, Joël Lightbound]

Thank you.

We'll now turn to Mr. Masse for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair, and thank you to our witnesses here today.

It's almost like predicting the weather in terms of Internet speeds and services. It's almost like a daily or hourly excursion for people. This has also become a cottage industry for some businesses.

What we're looking at here is not necessarily whether we can make changes through this legislation at this moment; what we're looking at is accountable practices for advertising and in many respects false advertising that is sucking in consumers.

My first question is to Ms. Knight, looking for amendments that you may have or suggestions on penalties or repercussions for those who.... There will be good actors, hopefully, who will be able to be practical and predictable and will go about it in a responsible way. However, there might still be those who in the past used to write off fines and penalties as a business-related expense.

That's one of the things we were able to change here. It was a loss leader for the company. It was part of doing business. That's why I worry a bit with this legislation. We'll have some good actors come in, but then others will continue to do misleading practices, because that will just be the cost of doing business.

[Erin Knight]

Yes. When it comes to misleading practices, I think we're already seeing that today, and I really can only see it improving with this legislation. I don't see this legislation's doing anything that would make anything worse.

I think when you're talking about penalties and such, looking to the other examples in other countries, there are probably good and bad. I think other witnesses on the panel today would be able to speak to that a bit more than I can.

I have been looking at the broadband labelling that the FCC has introduced. If you're a consumer, you would be looking at that label to see things like typical download speed, typical upload speed and latency. I think having all that information available up front is really critical, as you mentioned. I don't want to get away from that at all. I want to make sure that it's clear to everyone that we are talking about making information transparent to people. That's fairly uncontroversial.

When it comes to penalties for big telecom, I don't think there presently exists a good penalty for them. I think penalties could be significantly improved in many ways. Enforceability mechanisms includes going past that cost of doing business. In what way could they actually deter companies from behaving in shady ways to the customers? I hope to see the CRTC look at this in terms of the misleading sales practices aspect, which came to them and then left, and nothing really happened about that. I hope to see more happen on that.

In particular, we have seen some folks advocating the private right of action for telecom consumers, meaning the right to do telecom class action lawsuits. That is something that could help as well.

In terms of amendments to this particular bill, I don't have any for you in this regard.

[Brian Masse, NDP, Windsor West, ON]

Fair enough.

I want to move to Mr. Maker.

One of the things I worked on before was microbeads. Banning microbeads was supported by the industry and by Environmental Defence. We got them together and we got 90% agreement on banning microbeads. There were then, at that time, a number of different players that wanted to get to better practices, but they were being undercut, again, by some bad actors in the process.

In the complaints that you get and the ones you're able to resolve, do you have a couple of bad actors? Is it universal in terms of the problems that you deal with, or is it disproportionate to a couple of organizations in particular? Give us a little snapshot of what you get there, because if we were able to get the industry on board as well—because this is to be a helpful process for everybody, at the end of the day, in consumer accountability—it would be far stronger.

That's where we ended up. We ended up with the union of the environmental people and the chemical producers and the plastics association, and we got unanimous conjecture in the House of Commons and finally a vote that was lived up to.

What are you getting, and how is it reflective of the broader industry?