Transport Committee on April 20th, 2021

[The Chair, Liberal, Vance Badawey]

I would like to call this meeting to order.

Welcome, each and every one of you, to meeting number 26 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

As you all know, today's meeting is once again taking place in a hybrid format pursuant to the House order of January 25. The proceedings will be made available via the House of Commons website. Just so that you are all aware, the webcast will always show the person speaking rather than the entire committee.

To ensure an orderly meeting, I would like to outline a few points to follow. Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of either the floor, English or French.

For members participating in person, proceed as you usually would when the whole committee is meeting in person in one of the committee rooms on the Hill. Keep in mind the directives from the Board of Internal Economy regarding masking and health protocols.

Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. For those in the room, your microphone will be controlled as normal by the proceedings and verification officer.

I remind everyone that all comments by members and witnesses should be addressed through the chair. When you are not speaking, your mike should be on mute.

With regard to a speaking list, the committee clerk and I will do the best we can, as we always do, to maintain the order of speaking for all members, whether they are participating virtually or in person.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on October 29, 2020, the committee will now continue its study of targeted infrastructure investments

I would like to welcome our witnesses and introduce the witnesses to all of you. First off, we have from Quebecor Media Inc., Pierre Karl Péladeau, president and chief executive officer. From Vidéotron, we have Jean-François Pruneau, president and chief executive officer. I understand they will be making a presentation together.

From Southwestern Integrated Fibre Technology, we have Mr. Barry Field, executive director, and, finally, from Telesat, we have Stephen Hampton, manager, government affairs and public policy, as well as Michele Beck, vice-president of sales, North America.

To all of you, welcome. I will start the presentations, of five minutes each, with Mr. Péladeau and Mr. Pruneau.

Gentlemen, you have the floor for five minutes.

[Pierre Karl Péladeau, President and Chief Executive Officer, Quebecor Media Inc.]

Thank you, Mr. Chairman.

Mr. Chair, ladies and gentlemen members of the committee, good evening. My name is Pierre Karl Péladeau, and I am President and Chief Executive Officer of Quebecor Media. I am joined by my colleague Jean-François Pruneau, President and Chief Executive Officer of Vidéotron.

For more than 55 years, Vidéotron has been demonstrating its unwavering commitment to infrastructure development across Quebec and in eastern Ontario. Driven by homegrown talent, our company plays a leadership role in the country's economic ecosystem. Our company's footprint on the economic development of Quebec and its regions is undeniable, and we obviously intend to continue moving in that direction.

The billions of dollars invested in our telecommunications network and in new technologies speak for themselves. In addition to advancing change in the country's telecommunications sector, we have been able to establish a network that is recognized internationally for its reliability and robustness. The past few months we have gone through together are a testament to the calibre of our infrastructure.

We are here today to reiterate our willingness to participate in the country's economic recovery. Although difficult months lie ahead, they also provide an unprecedented opportunity to which Quebecor and Vidéotron are ready to contribute. Over the past few years, we have stepped up countless times to present solutions to better serve our fellow Canadians experiencing connectivity issues or suffering from a lack of competition in their area. We need only think of the investments made by Vidéotron to serve the people of Abitibi, who had been suffering for dozens of years from a highly profitable monopoly held by Bell and its regional affiliates.

By late 2022, Vidéotron will connect, in collaboration with both levels of government, more than 37,000 Quebec households that don't currently have high-speed Internet. This commitment is the largest among all telecommunications companies in Quebec. The evidence is clear and we have shown that we want to and can compete with large national players, and we fully intend to continue moving in that direction.

Quebeckers pay less than those in the rest of the country for their telecommunications services and have access to the best client experience because of Vidéotron, which will have forced the hand of the three national giants that would otherwise continue to provide fewer services at a higher cost, as they do elsewhere in Canada.

To achieve those results, Vidéotron has invested, since 2008, over $1.5 billion in the building and evolution of its network, as well as more than $1.2 billion to acquire mobile frequencies. That money has gone directly into the public purse. We want to continue our investments, so that more Canadians could have access to advanced technologies at a fair price.

However, Vidéotron will only be able to fully play its role if regulatory organizations and political decisions-makers are ensuring that the large national players cannot profit from their dominant position to threaten facilities-based competition. The Canadian Radio-television and Telecommunications Commission, the CRTC, issued two decisions favourable to this last week: one decision focused on mobile virtual network operators, or MVNOs, and the other one focused on access to Bell's support structures, the famous poles.

Last Friday's decision on access to Bells' poles is clear: Bell has broken a number of rules and has knowingly violated the Telecommunications Act when we look at its anti-competition practices to block access to its support structures and thereby undermine Vidéotron's efforts to provide an additional choice to benefit Canadian consumers.

That decision was issued following steps undertaken by Vidéotron. It was reaffirmed by many stakeholders, including municipalities and other telecommunications service providers, who have been speaking out against those unfair tactics for months.

The CRTC's decision is clear and concludes unambiguously that the preferential treatment Bell has given itself and the disadvantage it has imposed on Vidéotron are undue and unreasonable. That decision comes with monetary penalties of up to $10 million. The impact of Bell's anti-competitive behaviour is especially serious. If Bell's opposition is not permanently eliminated, our ambitious collective project to finally connect all Canadians will remain unfeasible, and the digital divide separating our fellow Canadians in rural regions from those in urban areas will persist.

Of course, to respond to collective pressure, Bell recently boasted of having improved its operational processes. That's very well, but one thing is certain: it is crucial for governments to maintain this pressure on Bell concerning access to its support structures. They should even consider the possibility of stiff penalties should Bell refuse to comply with the legislation, as is too often the case.

Bell's dominance is not the only threat to facilities-based competition, as the recently proposed transaction by Rogers to acquire Shaw is another such threat. In fact, approving such a transaction will inevitably send us back to the drawing board and eliminate the fourth player essential to maintaining true competition in Canada's wireless market.

That would also go against the recent CRTC decision on MVNOs, where the commission writes the following:

The Commission's determinations in this decision will foster continued innovation and investment in, and affordable access to, high-quality telecommunications facilities in all regions of Canada, including rural and remote areas; promote sustainable competition that provides benefits such as affordable prices and innovative services to Canadians; and reduce barriers to entry into the market.

That is actually why we urge that the main transaction, that of consolidating wireline networks, be subject to the disposal of Freedom Mobile's assets by including the conditions necessary to the effective operation of a wireless network, including spectrum holding, roaming agreements, tower sharing and a fair agreement for the use of wireline transport, which we refer to as backhaul in our jargon.

In closing, Canada's economic prosperity and the well-being of all Canadians largely depend on builders of telecommunications networks like Vidéotron deploying their networks and providing unimpeded services in a very competitive but fair market. As a result, it is crucial for regulatory organizations and political decision-makers to ensure that large national players cannot take advantage of their dominant position to threaten facilities-based competition. This way, all Canadians could benefit from a competitive environment, numerous choices and lower prices for telecommunications services.

Thank you for your attention.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Péladeau.

Well done.

We're now going to move to a representative from Southwestern Integrated Fibre Technology, Mr. Barry Field, executive director.

Mr. Field, you have five minutes.

[Barry Field, Executive Director, Southwestern Integrated Fibre Technology]

Thank you.

Mr. Chair, and honourable committee members, my name is Barry Field. I’m the executive director of Southwestern Integrated Fibre Technology, commonly referred to as SWIFT. SWIFT is a non-profit regional broadband program. Our mandate is to eliminate the digital divide within southwestern Ontario.

Thank you for this opportunity to participate in your important deliberations. SWIFT has recently completed the procurement phase of our first program called SWIFT 1.0. The program is funded equally by the governments of Canada and Ontario, each contributing $64 million. SWIFT is grateful for these contributions and works diligently to ensure that these public funds are spent in the most effective, efficient and equitable way possible.

The primary goal of the SWIFT program is to provide broadband services to 50,000 underserved premises within the SWIFT catchment area, on or before June 2023. Secondary goals include ensuring 3,100 kilometres of new fibre construction and $65.5 million of private sector investment in the form of contributions from the Internet service providers, or ISPs.

Upon the conclusion of the procurement phase of our program, SWIFT has exceeded all of these targets, and is currently working with the ISPs to implement these important projects. The SWIFT 1.0 program has exceeded the premises target by 27%, the fibre construction target by 37% and the private sector investment target by 98%.

It’s important to note that the digital divide in Canada exists for one simple reason—there's a general market failure in this space. The high cost of implementing fast, reliable broadband infrastructure in rural areas with low population density is not offset by the requisite revenues that would make the investment profitable. Simply put, the ISPs have no profit motive to invest in these areas. There is a patchwork of non-profit co-operatives that do an incredible job of addressing rural broadband service gaps, but they are generally small and localized operations, not in a position to address such issues on a national scale. This is where the government must step in.

Subsidy programs targeted to reduce the cost of implementing and, in some cases, maintaining broadband infrastructure are necessary. The federal, provincial and municipal levels of government across the country get this.

Prior to the COVID-19 pandemic, I spent a lot of time talking to policymakers about why broadband is important. Since the pandemic, this conversation has shifted away from why it is needed to how much it’s going to cost and what's the most efficient and effective means of solving it.

Recently, the Province of Ontario announced an additional $2.8 billion worth of broadband funding. This brings their total current broadband commitment to $3.8 billion. Yesterday, in the federal budget, we learned that the federal government has committed an additional $1 billion to the universal broadband fund. This is above and beyond the $1.75 billion already committed in the UBF, and is in addition to other federal programs.

Municipal governments across the county have also answered the call with their own local commitments. Here in southwestern Ontario, the member municipalities of SWIFT have contributed $24 million to date and are committed to future funding currently under consideration. Again, all levels of government understand the need and the financial commitment required to resolve this issue, but what's missing is a co-ordinated approach, at the local level, to address this problem.

I recently argued in front of the industry committee that one size does not fit all when it comes to broadband programs. What I meant by that was that there are regional differences in requirements, current state, and implementation realities that all come into play with respect to broadband. Effective programs need to take into account local requirements and differences.

Also, the current patchwork of broadband programs, all trying to solve a small piece of the problem, is not the most effective or efficient means to address the digital divide. Within southwestern Ontario today, there are no less than five active government programs, all trying to solve the same problem in the same geography.

[The Chair, Liberal, Vance Badawey]

You have one minute left, Barry.

[Barry Field]

If we were to go back to the drawing board with the goal of designing a national broadband program, the result would not look like this. It's far more effective and efficient to consolidate funds into a single program, to address the entire problem as a whole, rather than to have four or five disparate programs running in parallel.

I urge all three levels of government to co-ordinate their efforts and to consolidate programs with the goal of ensuring that every Canadian, regardless of geography, has access to fast, reliable and affordable Internet.

I thank you once again for the opportunity to speak here today and am happy to answer any questions that you may have.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Field. Well done.

We're now going to move to representatives from Telesat. We have Mr. Stephen Hampton, manager of government affairs and public policy; and Michele Beck, vice-president of sales, North America.

Folks, you have the floor for five minutes.

[Michele Beck, Vice-President of Sales, North America, Telesat]

Mr. Chair, good evening and thank you for inviting Telesat to appear today.

My name is Michele Beck. I am the vice-president of North American sales at Telesat, and I am here with my colleague, Stephen Hampton, manager of government affairs.

I want to thank the committee for undertaking this important study on infrastructure investments, especially in telecommunications.

When it comes to broadband connectivity, we all depend on a daily basis on Internet networks, mobile networks, LTE and 5G technology, even more so since the beginning of the pandemic we are going through. The pandemic has exposed inequalities in Internet access in Canada, where rural, remote and indigenous populations are the most affected. This gap persists, and we must take immediate measures to bridge the digital divide by choosing quick deployment solutions and technologies, as well as by fostering affordable and high–quality connectivity as quickly as possible.

Telecommunications networks are necessary infrastructure for economic growth and social inclusion. Governments from around the world have understood this and made considerable investments in their connectivity infrastructure in order to benefit from the economic performance it generates every year.

We thank the committee for including telecommunications in this study.

Telesat is one of the largest and most innovative global satellite operators and a proud Canadian company with over 50 years of experience flying and operating satellites from our headquarters here in Ottawa. Today, we transmit hundreds of high-definition television channels to millions of Canadians; provide broadband and other lifeline services to rural, remote and indigenous communities; and deliver mission-critical services to Canada's security and public safety community. We offer these same types of services all around the world.

In February we officially announced the most ambitious and innovative project of our long history, a $6.5-billion state-of-the-art low-earth orbit, or LEO, satellite constellation known as Telesat Lightspeed.

Lightspeed will deliver significant economic and social benefits to Canada, including affordable high-speed broadband and LTE and 5G services throughout the entire country. Lightspeed will also deliver billions of dollars in economic growth and support thousands of high-quality, high-paying jobs, largely in STEM, in the Canadian aerospace sector. This comes at a time when economic investment and job creation have never been more important.

Telesat Lightspeed is a perfect example of a targeted, strategic infrastructure investment that will transform the economic and social landscape and ensure affordable, fibre-like broadband connectivity everywhere in Canada.

We would like to commend governments across Canada for investing heavily in broadband infrastructure, notably the Government of Canada for its partnership with Telesat to bridge the digital divide through Lightspeed, as well as the Government of Quebec for its recently announced investment into the Lightspeed project.

Telesat takes a holistic, community-focused approach to affordably connect Canadians by partnering with local ISPs, mobile operators, municipalities and indigenous communities. Lightspeed will provide affordable, high-capacity backbone connectivity to a community, and the local partner will provide the last-mile connectivity to households, schools, hospitals, small businesses, as well as LTE and 5G.

The new space economy is one of the fastest-growing industries in the world, with the global space industry estimated to nearly triple to over a trillion U.S. dollars a year over the next two decades. Next-generation satellite connectivity like Telesat Lightspeed is responsible for the majority of this growth and will seamlessly integrate with terrestrial broadband networks to provide affordable, ubiquitous high-speed coverage globally.

The new space economy will not only unlock true universal connectivity but also deliver billions of dollars in economic benefits, innovation, IP generation and job creation for Canada. Given the substantial economic and social benefits, governments all around the world are betting big on this industry and are meaningfully investing in domestic space and broadband capabilities.

Telesat Lightspeed is the largest space program ever conceived in Canada and is exactly the infrastructure investment Canada needs to bridge the digital divide and lead the world in the future of connectivity and the new space economy.

Thank you very much.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

I think you're on mute, Mr. Chair

[The Chair, Liberal, Vance Badawey]

You got me, Andrew. That's the first time in a long time.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

It happens to all of us.

[The Chair, Liberal, Vance Badawey]

Yes, it does.

We have our first round of questions, beginning with Mr. Scheer from the Conservatives for six minutes, followed by Mr. Iacono for six minutes, then Mr. Barsalou-Duval, and then, for the NDP, Mr. Bachrach.

Mr. Scheer, you have the floor for six minutes.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Thank you very much, Mr. Chair.

Again, thank you very much to all of the witnesses for some very in-depth presentations. I thought I might start off by asking SWIFT a question.

Could you speak a bit more about how you're structured? How do you bring your different players together? Based on your testimony, I understand that you're not a for-profit company. You're a program that's set up to catalyze these types of investments. Can you help me understand exactly how your organization is modelled?

[The Chair, Liberal, Vance Badawey]

Go ahead, Mr. Field.

[Barry Field]

Thank you, Mr. Chair.

SWIFT is a non-profit organization that was developed by the Western Ontario Wardens Caucus, the WOWC. The WOWC is an organization comprising 15 municipalities here in southwestern Ontario. In addition to the WOWC, we've been joined by five other non-participating municipalities. We really are a creation of the municipalities. We're a municipal organization. We are a separate company underneath that organization.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Okay. Great.

One of the things we're looking at in these various studies is how best the government can unlock some of the private sector investments in this and act as a catalyst. One of the things I'm very concerned about is what we've seen with the Canada Infrastructure Bank, which seems to gave become a corporate welfare model. We saw an announcement last week in which they gave hundreds of millions of dollars to a profitable energy company.

How can we look at the telecommunications and broadband space and make sure that while we're trying to ensure that companies can make profits by providing a service, we don't end up picking winners and losers and getting into that space where we're subsidizing profitable companies?

[Barry Field]

One of the things SWIFT does is that we actually run an independent business case analysis on any application we receive for funding. It's a very complicated process, but I'll make it quick here.

Effectively, what we do is that we look at the payback period of the investment, and if we find that the investment without SWIFT subsidy would have a payback period of less than seven years, we don't touch it. Anything over seven years we will subsidize, but if it's under seven years, we figure that somebody is going to do that project on their own, so we will not subsidize it.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Fair enough.

Monsieur Péladeau, you referenced a recent CRTC decision regarding Bell and issues around telephones. Can you tell the committee how long it took the CRTC to come to a decision on that ruling?

[Pierre Karl Péladeau]

Thank you very much, Mr. Scheer.

We've been going on for many months about the issues that we're facing in the telecommunications world. Certainly, as you know, there's a lot of influence in place in Ottawa with regard to how the former monopoly used to do business. We've been trying to convince.... In fact, we've been able to provide facts. The fact is that when competition is available to Canadians, they have a chance to benefit from lower prices and some innovation. Maybe you would like to have my answer on whether or not the process is fast enough, but I guess we will certainly always appreciate that it could go faster.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

That is what I was getting at. I was honestly curious about that one particular issue. I have heard from many companies involved in the telecommunication industry. They say that sometimes the CRTC takes so long to make rulings on whether or not one of the big established telecoms has to provide access, or on the wholesale pricing mechanisms of large telecoms, that this often screens out some smaller companies.

You talked about competition, which I think is incredibly important. Competition drives innovation. It drives better service for customers, and it's something that the government should foster without kind of tipping the fingers on the scales. That's a roundabout way of my saying that, yes, that's exactly what I was getting at. In your view, would you say that in the CRTC itself, the process itself can act as a hindrance to competition? Is that something policy-makers should be looking at? How can we ensure that the CRTC makes some of these decisions within a guaranteed, or much shorter, timeline?

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Scheer.

Mr. Péladeau, may I request that you bring your boom mike up just a tad to your moustache? The sound from your mike is popping a bit for the interpreters.

That's perfect. Thank you, Mr. Péladeau. Go ahead.

[Pierre Karl Péladeau]

To answer that specifically, Mr. Scheer, it took a year for the decision. I guess you are right to mention that, fortunately, we certainly have some financial wherewithal that smaller companies probably don't have.

I would say there is always room to improve our capacity to make decisions, and sometimes they can pick what would be the important thing. I remember I was called very quickly in front of the CRTC because we had an argument regarding the agreement for the distribution of a sports channel that also provided competition to the equivalent of TSN, called TVA Sports here.

I guess these are things that could happen, but again there is always room to improve.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Péladeau.

Thank you, Mr. Scheer.

We're now going to move to the Liberals with Mr. Iacono. Before I give Mr. Iacono the floor, I want to welcome Angelo back to the committee. He was on the committee last term and then off for a few years.

Angelo, welcome back. It's great to have you on board. You have the floor for six minutes.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you very much, Mr. Chair. I am very happy to be back.

I want to begin by reminding the committee that our government is compensating for years of underinvestment in broadband infrastructure, since the previous Conservative government decided not to prioritize that sector.

Since 2015, our government has implemented programs that will enable 1.4 million Canadian households to have a high–speed Internet connection. That is four times more than the number of households the previous Conservative government managed to connect through its flagship program.

My first question is for Mr. Péladeau.

How crucial do you think investments in broadband technology are for Canada's economic recovery and prosperity?

[Pierre Karl Péladeau]

Thank you, Mr. Iacono.

Your question is very relevant. You are right to bring this up. As I said in my presentation, having a telecommunications network has become necessary to ensuring the productivity of a country's industry.

Let's take Germany for example, which has actually said a number of times that it had to take initiatives in that respect and reinvest in its telecommunications networks, especially in terms of Internet access. Historically, we have seen how much Germans can focus on their industry and their productivity.

That illustrates how necessary it is for governments to understand this and to ensure that we maintain a dominant position internationally, for the benefit of the entire country and, more specifically, of industry players and stakeholders.

That said, once again, we have inherited a landscape that has been a monopoly for a long time. So you, as political decision–makers, must ensure to implement the necessary tools to broaden competition as much as possible, for Canadians' benefit, as competition is what enables innovation.

Unfortunately, old monopolies are all too often dedicated to remaining in a monopoly. That is why it is your responsibility to break up monopolies and implement the measures needed for competition to exist and prosper, once again, for the benefit of Canadians.