Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 6 - Evidence, May 13, 2014
OTTAWA, Tuesday, May 13, 2014
The Standing Senate Committee on Transport and Communications met this day at 9:30 a.m. to continue its study on the subject matter of those elements contained in Divisions 15, 16 and 28 of Part 6 of Bill C-31, An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures (TOPIC: Part 6 — Division 15 — Regulatory Cooperation). The committee is also continuing its study on the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.
Senator Dennis Dawson (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I call this meeting of the Standing Senate Committee on Transport and Communications to order. Today, we are continuing our study of Bill C-31, An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures. The committee has been asked to conduct a pre-study of Divisions 15, 16 and 28.
[English]
Our witnesses for today are from the Public Interest Advocacy Centre. We have: John Lawford, Executive Director and General Counsel, and Geoff White, Legal Counsel.
I invite the witnesses to make their presentations.
John Lawford, Executive Director and General Counsel, Public Interest Advocacy Centre: Thank you, Mr. Chair. Honourable senators, my name is John Lawford, and I am the Executive Director and General Counsel of the Public Interest Advocacy Centre. Thank you for having us here today to speak about Bill C-31, in particular Division 16 of Part 6, Amendments to the Telecommunications Act.
The Public Interest Advocacy Centre, PIAC, is a charitable, non-profit and federally incorporated organization founded in 1976 that provides legal and research services on behalf of consumer interests and, in particular, vulnerable consumer interests concerning the provision of important public services.
With me is Geoff White, Counsel for PIAC. We are pleased to comment on the proposed amendments, in particular the goal to set a maximum amount that a Canadian wireless carrier can charge another carrier for roaming.
Our main message today is that it's necessary and positive to address ongoing challenges with wireless competition, in part through wholesale rate regulation, which is part of what this bill seeks to do. However, we have four specific points to make about this bill.
First, wholesale roaming rates directly affect the way that Canadians select and use their wireless devices and, therefore, affect competition.
Second, presently, high domestic retail roaming rates impair the goal of promoting wireless competition, and so we welcome efforts to address that threat.
Third, the rate formula in the bill, while a step in the right direction, temporarily passes on the same high prices that the incumbents can charge their own customers.
Fourth, the amendment is an exceptional occurrence that should not be repeated as it may undermine the authority of the CRTC.
Geoff White, Legal Counsel, Public Interest Advocacy Centre: I'll expand on the first two of those points. The first point is that wholesale roaming fees directly affect the way Canadians select and use their wireless devices and, therefore, affect retail competition.
Roaming, the ability of a customer to have voice and data connectivity when travelling outside of their service's home network, is an important element of the government's measures to promote competition in the wireless market. It's important because, if designed appropriately, mandatory roaming allows new-entrant or regional competitors the chance to offer national voice, data and texting coverage to their subscribers as a viable alternative to the big three national wireless companies.
Wholesale roaming rules can directly affect the health of the retail wireless market by helping smaller and regional carriers to compete with the larger ones. Where unreasonably high wholesale roaming rates or restrictive terms and conditions are imposed by one carrier on another, these rates are inevitably passed on to consumers as retail charges. Canadian consumers, on their end, are more reluctant to subscribe to carriers if they face significant prices for domestic roaming. Wholesale rate regulation is intended to address this problem.
Our second point is that high roaming rates have been impairing the goal of promoting wireless competition, and so we welcome measures to address that threat.
As the Commissioner of Competition has recently noted, the incumbent service providers have ``market power'' and the marketplace is ``. . . characterized by other factors that, when combined with high concentration and very high barriers to entry and expansion, create a risk of coordinated interaction in these markets.'' In other words, when it comes to roaming, the big three can use wholesale roaming rates they charge to other carriers as a tool to suppress competition, resulting in Canadians paying higher roaming rates than they should in a competitive environment.
This has been a real problem in recent years, with smaller competitors being charged unreasonable, unsustainable roaming rates that were orders of magnitude higher than rates the big three charged each other for roaming and higher rates even than the smaller competitors could get for roaming in the U.S. from major U.S. carriers.
Rightly so, therefore, the CRTC just held a public proceeding to determine whether the rates being charged for wholesale roaming are unjustly discriminatory under the Telecommunications Act. The CRTC is, in addition, in the midst of another public process to examine other broad issues affecting wireless competition, including tower sharing and network sharing agreements.
Mr. Lawford: Our third point is that the rate formula in the bill, while a step in the right direction towards greater fairness in roaming rates, will pass on higher prices that the incumbents can charge their own customers by virtue of their market power.
There are a number of ways that telecom regulators set wholesale roaming rates, so bear with us for this technical discussion. These include ``cost-plus,'' ``retail minus'' or a cap. What this bill proposes, however, is a simple application of retail rates to wholesale: Basically, the rates being charged to the incumbents' own retail customers become the wholesale rates that competitors will pay so that their customers can roam on the incumbents' networks. This is a rough and ready way to approximate what the going rate is for voice, text or data, but what it does not do and what the CRTC will be doing in an open, expert and public process is to assess whether that going rate is the right one for roaming competition under the Telecommunications Act.
The rate proposed in the bill is not based on the cost of providing the service, so whatever margin the incumbents make from their own retail customers for these services becomes part of the wholesale roaming rate. If those retail rates are high in the first place, which we believe they are because of the lack of competition and the incumbents' market power, then even after the bill passes, everyone will continue to pay high roaming rates, perhaps less than before but still likely too high until the CRTC considers it. We note here that a major investment bank as well as a technology consulting firm have made similar observations recently. We recognize, however, that given the urgency and importance of this issue as the big three retrench and the remaining competitors struggle or consider whether to enter the market nationwide, this may be an acceptable approach in the interim.
Our fourth point is that amending the Telecommunications Act before the CRTC has finished its review is not the preferable way to achieve the result being sought. We would have preferred that the government leave the CRTC to pursue its mandate of setting rates and regulating the wireless market. Given the situation described in our first point about the market situation, however, we understand the purpose of the approach. We suggest that quick, targeted amendments made in the absence of the regulator's full review of issues not become a frequent practice as it may eventually undermine the authority of the CRTC.
Thank you for your time, and we look forward to your questions.
The Chair: How do we compare, as far as roaming rates are concerned, with Europe and with the States? If you're in Europe, you have 15 countries that you are travelling through inside of a month. What are their standards?
Mr. Lawford: The European situation is different. The pan-European regulators set, at a first stage, wholesale roaming rates and they cap them. That was done about four or five years ago, and they had the cap drop over time. They had a regulatory proceeding where they did the same sort of inquiry the CRTC is doing now and came to the conclusion that the wholesale rates, there as well as here, were well above cost and maybe 10 to 100 times more than they should be. But in order to promote competition and to increase the utility of wireless service in the European community, they said we have to get the wholesale rate down in hopes that the retail rate would drop.
Europe didn't stop there. They watched the market for two or three years. They noticed retail rates were not dropping fast enough. Then the European regulator went back and regulated retail rates. We're not even proposing to do that in Canada. They had to cap the retail rates, again on a sliding scale, so now they're down to quite a low level.
Europe is a special situation. The regulator has been quite interventionist. We're looking at the first step, which is wholesale rate regulation and setting up a wholesale regime.
In the United States, we not only have higher roaming rates than U.S. carriers but fewer competitors offering nationwide roaming and text, voice or data. That's the most important comparison there, I think.
Mr. White: I will give you an example that was filed in evidence before either the CRTC or Industry Canada when they each looked at this issue in the past. One new entrant competitor gave the example of it being cheaper to call coast to coast in the United States than it is to call within a region of Canada when you're travelling down to the U.S. The real effect is that it's cheaper to make a call outside of our country than it is regionally here.
Senator Eggleton: My understanding is that this is an interim provision while the CRTC carries on with its study and whatever it subsequently recommends there, and it only relates to wholesale. Specifically, it's the wholesale rate charged by the big guys, the big three, to the smaller companies as opposed to what the big three charge to their customers. My understanding is the only people who might benefit from this are the people signed up by the small companies. Have I got that right?
Mr. Lawford: I think effectively that's what's going to happen. You're right, Senator Eggleton. It's a situation where the big three have negotiated agreements when they need to roam with each other, which don't look like any agreements they have concluded with the smaller players.
Yes, to be absolutely honest, the smaller players' customers will benefit. The smaller players will benefit, but we think that's good for competition because that will put pressure on the incumbents to lower their rates because their customers will see the roaming rates of their competitors.
Senator Eggleton: My understanding is that they're charging these small companies far in excess: five, ten times. If it brings it in line with everyone else, then I'm not sure Canadians are going to see much of a benefit out of this.
How many Canadians are signed up with the big three? What percentage?
Mr. Lawford: They have 90 per cent market share.
Senator Eggleton: Maybe only 10 per cent of the market, of the consumers, is really going see any benefit in this?
Mr. Lawford: The goal for a company, take WIND for example, would be that they would launch nationwide calling, texting and data plans, which they don't have in the market right now. The theory would be, from their point of view, I believe — and Vidéotron could do this too if they launch a network — that they would gain market share by doing that. It wouldn't be 10 per cent of the market they would have, it would start to go up to 11, 12, 15, and put pricing pressure on the incumbents.
Senator Eggleton: Still, the vast majority are with the big three.
Canadians, having heard about this amendment and the purpose behind it, think that they're all of a sudden going to see lower roaming rates on a retail basis, but there's no guarantee of that at all.
Mr. Lawford: No guarantee immediately. We think that this bill is, as we said, a step in the right direction. Some competitors can come and put some products together to put some competitive pressure on the big three and hopefully have them lower their roaming rates in order to gain customers. There does need to be more done in terms of other measures within the wireless market, for sure. This is only a small piece of it and it's mostly affecting the competitors, you're correct.
Senator Eggleton: If the small players become more competitive, you think it's going to create pressure on the big three to lower their prices to their retail customers?
Mr. Lawford: That's the theory. At what point they start to do that is always a question, but what has been holding back the competition, we believe, in Canada is that you don't have a fourth player at the national level. The big three price nationally. They run campaigns nationally, and if you want to have more relief for Canadians right across the country, not just pockets where there are four players like Quebec, Manitoba and Saskatchewan, then you want that fourth national player. What has been holding back national rollout, to be honest, is roaming rates are too high for these national all-you-can-eat talk and text plans to be rolled out by their competitors.
Senator Eggleton: The European model that you mentioned, is that a good one to follow? Should we be encouraging the CRTC to look at that possibility and perhaps go further afield than just wholesale and look at retail?
Mr. Lawford: I believe they've had good results in Europe for consumers, with prices dropping and people being able to move from country to country with no worries. I believe we would be in favour of that. CRTC likely would think about that.
What might be helpful is indication from the political end of town to the CRTC that there needs to be follow-up so they don't stop at wholesale. If there's still a problem after a couple of years, they should look at the retail market.
Senator Eggleton: Good advice; thank you.
The Chair: WIND will be appearing as a witness at the end of the month, so we'll have occasion to get their version of this.
[Translation]
Senator Verner: Mr. Lawford, I will speak to you in French. You have provided a partial answer, but you may have more to add. As you know, our government's ultimate goal is to reduce costs for consumers.
Last February, we saw the arrival of Vidéotron, the player that the government has been very much looking forward to. From what I understand, there will actually be more competition in some areas of the country. However, can the three major players really allow themselves to drop prices only in certain regions or will they be forced to do so across the country?
Mr. Lawford: For the time being, the three major players set their prices regionally and when necessary. In Quebec, Saskatchewan and Manitoba, prices are a bit lower than elsewhere, but in other parts of the country, the prices are higher. I do not have the numbers with me at this time, but I could provide them to the clerk.
For the time being, that is the way things are. Theoretically, however, the arrival of a new competitor will create some pressure and drive down prices across the country.
[English]
Senator Mercer: Gentlemen, thank you for being here. I appreciate your presentations; they were very concise.
Senator Eggleton's comment about the expectation of the public will be lower rates; I don't think any of us believe that. Even though the government has spent a lot of money on advertising that hinted at it, it's not going to get there.
I want to talk about the overall problem of predatory pricing. This is predatory pricing designed to keep the market the way it is with the big three and to keep all the other guys out. Governments have gone to great lengths, and we've had presentations before this committee to talk about the new spectrum and making sure that the big three were kept out of purchasing the spectrum to create just the atmosphere we want of more competition.
We've seen predatory pricing on roaming fees, and not just in the telecommunications industry. We've seen predatory pricing in the airline industry. Any time a regional airline seems to be putting a dent in Air Canada's control, Air Canada will cut their prices to make it impossible for a regional carrier to survive.
My question is: Should the Competition Bureau, not the CRTC, be addressing this issue for all industries, not just the telecommunications industry?
Mr. Lawford: It's interesting to conceptualize it that way, that the Competition Bureau could look at predatory pricing. Overall, I know that they are constantly reviewing their guidelines, and I believe they even have a review of the legislation on that matter out there for consultation right now, if I'm not mistaken.
The answer usually is, from the industry side — not to speak for them — that they're a regulated industry. The Competition Bureau is usually very careful about treading into those waters, although we did see — and Geoff may speak to it — as we quoted in our opening remarks, the Competition Bureau take more of an advocacy approach in front of the regulator. So they entered on this CRTC proceeding, which was considering whether the pricing you're talking about was unjustly discriminatory, which is roughly the same thing, I think, as the Competition Bureau test. The Competition Bureau did come in and said, ``Yes we believe that they have market power, that they are acting in a coordinated fashion and that that is stifling entry by other competitors.''
That's about as far as they can go, but I do believe the Competition Bureau could stand back, on an industry-by- industry basis, and do a market study. That may not be what you're asking them, perhaps, to do, but I think that's as far as they would think they're able to go at the moment.
In terms of a pan-federally regulated industries kind of approach to this, it might be an interesting market study they would be able to do across sectors. I can't speak for the Competition Bureau, but it would be interesting.
Mr. White: It was important that the Competition Bureau file their submission before the CRTC when the CRTC is looking at this because there has been a lot of debate and a lot of studies funded trying to argue in favour of letting the big three charge prices as they wish. The Competition Bureau comes in with an assessment of facts saying that, yes, CRTC, there is market power here, and it can be used to the detriment of competitors. When we say ``competitors,'' I think it's important that it's not just the smaller new entrants that emerged from the 2008 spectrum auction. It's also regional players, and there are at least four or five serving provinces, northern Ontario and the East Coast. It is important, and they do have that parallel jurisdiction.
However, to echo Mr. Lawford's point, there is this sort of regulated industry argument out there, but we say it's very good that the bureau is there on the factual matters.
Senator Mercer: You made an interesting point that we should all realize — that there are strong regional players. EastLink, in Atlantic Canada, is not a small player in our neck of the woods. Beyond that, it becomes an issue and subject to some of this stuff.
At the end of the day, in your opinion, the consumer is not going to see a difference. I'm not going to see a difference in my cellphone bill if I'm a Bell, Rogers or Telus customer. We're not going to see a difference at all, but if I was a WIND customer, would I see any difference?
Mr. Lawford: I heard that WIND is coming to your committee, and they will tell you definitively. However, I would expect that you would, yes, as a WIND customer, fairly quickly see a difference because I imagine that they would launch nationwide text, calling and data plans fairly quickly after this amendment.
The other providers might be interested. Say, for example, you were with Bell and were thinking of changing to EastLink. If this amendment came through, EastLink might think of launching a similar product to WIND, but they would have to do a bit more work because they're starting from a smaller base. They may need a lower rate, and they may wait for the CRTC to come to a lower number in their proceeding. For the WIND customers, I think you would see it right away.
The hard part is, though, that if you are with the big three now, you're right that you won't see an immediate lowering of roaming rates because they are already set at a good rate for their own customers, and they roam on each other's networks. For example, Bell and Telus share a network, and they let each other roam for free. No, you won't see it right away, but if you're a WIND customer, I think you'd see it fairly quickly.
Senator Plett: I'm going to ask a question and I'm not sure whether it's relevant. If it isn't, I guess you'll tell me that it's not relevant. It is more for my own curiosity than anything else. Also, I was absent from this committee for a couple of years, and I know the chair has been anxiously waiting for me to talk about Buffalo Point cottage country again.
The Chair: It's been missing.
Senator Plett: I do want to talk about that.
I have a cottage on the Canadian-American border in Manitoba, and depending on what side of my cottage I stand on some days, I pick up service across the line and pay $2.50 a minute. I go to the other side of my cottage and pick up the tower in Canada. Is there anything that can be done about this type of issue, or do I just simply make sure that I'm standing in the right part of my lot when I want to make a phone call?
Mr. Lawford: It's an issue that's been brought up by a number of the folks who contact us directly because they live in Windsor or along the border in many places. It's something that can be solved between the two carriers. The question would be whether the CRTC and FCC should be working on it together. I don't think enough work has been done in that area to sort that out.
One of the safety valves that we've recommend people avail themselves of now is the Commissioner for Complaints for Telecommunications Services. We have had some success with referring border customers to them when they get a large bill. I had a couple from B.C., about two months ago, who had a $1,000 bill from accessing the U.S. carrier and got most of it chopped down by the CCTS, who feels that if the carrier that you run with — the Canadian carrier — doesn't make it clear that there could be this problem, at least, if you complain to that body, you might get some money back. But that's not a solution. There needs to be a technical sorting of the traffic. It's totally technically doable. It's just a matter of getting the right people behind it, but it's an issue that we have had complaints on as well.
Senator Plett: Thank you very much. So it is doable?
Mr. Lawford: It is absolutely doable. It's one of those things that has to be a priority for both regulators. The CRTC has had some amendment to their legislation. They're more able to deal with other agencies now, and they can certainly open discussions with the FCC on this.
Senator Plett: Thank you very much.
The Chair: It says a lot about the size of his cottage.
Senator Merchant: Good morning and welcome.
I live in Saskatchewan, and there are many places in Saskatchewan where you really cannot get any reception unless there's a sharing of towers. How will this benefit smaller players getting into the process? How will that benefit Saskatchewan directly?
Mr. White: Thank you for the question.
It's important to understand that we view the purpose of this bill as being an interim measure while the CRTC looks at the proper fix for the issue of charging unjust rates for roaming.
This was a follow up to a series of policy decisions made in 2007 for what was the advanced wireless spectrum auction, the AWS auction, where Industry Canada, the radio frequency regulator, said, ``Okay, we need some measures to promote competition. We'll set aside some spectrum so that the new entrants can bid on it at affordable rates. We'll mandate roaming at commercial rates, and we'll mandate access to the towers.'' In the five-year period of learning with these new rules, the regulators realized that there were some problems, including the speed at which roaming deals and tower sharing were concluded, the rates and so on.
It has come to light. The CRTC and Industry Canada, we believe, are aware of this now, and that's why this is all happening. The measures to promote competition haven't been executed as well as they could have been, so we're faced with this situation now where the new entrants and the regional players that remain independent of the big three, having not been purchased by them, are still trying to be viable and potentially be in a position to go national.
Whether or not this particular amendment will fix that, it's too interim a measure and related to too small a point within a broader framework of measures that were designed to bring that sort of competition out to the rural and remote areas.
Senator Merchant: You represent a consumer advocacy group. What efforts were made to seek opinion from the consumer? Were there focus groups that the government carried out? How were you involved? Was there polling? I'm trying to see how your organization was involved in the conception of this.
Also, and I think you touched on this earlier, how will this be monitored? Will the government report every six months? I'm trying to see how this will work out.
Mr. Lawford: I'll take the two parts of the question; Geoff may answer the second one.
What we do at the Public Interest Advocacy Centre is legally represent other consumer groups to the extent that we can. At times we are able to do primary research, such as polling. We don't do unscientific ``give us your opinion through our website'' kind of stuff. Some of our clients, such as the Consumers' Association of Canada and Canada Without Poverty, do that sort of thing.
To be honest, in working in spectrum and wireless competition, to go right back to the early days, there was no money in this for us. When you have to work in front of Industry Canada, you're not going to go to the CRTC, as we do get cost awards there. There is no money for this, so we were limited in what we could do until recent years.
We've restructured so that we are more involved now. Some of this work has pushed the CRTC, as you've seen, now into the political sphere. We do not have a lot of direct input into this. We're working from secondary input from, as I said, our clients.
The government, I don't believe, did a whole lot of polling. This was not a hot issue until three years ago. That probably should be added to the mix, but the CRTC has started to open its processes to the public much more than before. We're finding that the public record of most proceedings, including these roaming proceedings, gets public comment out. We're able to use that public comment to get some gauge of what the average consumer thinks about this.
It's a difficult area to work in, from our point of view. More could be done to help us and others by the regulator, Industry Canada and others to get some real facts and figures in front of us. It's always a struggle for us to do that.
Concerning the second part of your question about how we can check up on tower sharing and roaming, there have been recent changes to the tower-sharing rules. One was that the CRTC now, when there is a dispute, is the arbiter of the dispute rather than Industry Canada. This was a process that got bogged down in the past, so that should help. We can go to those processes. I think there are fines and such.
Mr. White: The CRTC and Industry Canada, in their respective roles, do quite a bit of monitoring of the industry in terms of annual reporting and filing of agreements. They also take the pulse of the market in terms of rates for certain services.
I think it's important to note that the average Canadian household spends $185 a month on their communications services. We take our services from increasingly concentrated, vertically integrated companies that have a bigger and bigger share of our wallet. The CRTC is monitoring this, and they publish an annual communications monitoring report.
Fundamentally, the score card for this is if the prices Canadians pay for the services that they rely on are comparable to other jurisdictions. Is this the best that Canadians can expect of their service providers?
Senator Merchant: I'm just afraid that consumers think they'll save a lot of money through this. This is maybe the way that this has been presented, but you are saying that right now they're not going to see many savings. It's something that other people have asked, too.
Mr. Lawford: Sure. I take your point, Senator Eggleton's and Senator Mercer's point that for the 90 per cent of people with the big three, no, you won't see an immediate change after this bill goes through, even after the CRTC process. But what you might do is you might actually consider that fourth player because they'll be able operate nationwide and maybe you will switch. That's the hope. It's a long road, but it's a glimmer at the end of the tunnel that we don't have otherwise.
The only other way to approach this is that if you don't think the wireless market is producing retail prices that are the right ones, the CRTC would have to look at rate regulation. They've said no, the wireless market is an area where they're going to trust competition. This bill, and the other measures they're trying, is still giving the competition one last kick at the can. What will happen if it doesn't work in two years, I don't know.
Senator Demers: Thank you very much for your presentation. You were very clear.
Competition is the best thing for anybody. At first, obviously, it will not be seen that way. When the fourth company comes in, if it's well programmed and people join, as you mentioned a few times, the competition will eventually favour the consumer. If you go in as a fourth party and it's new, there's also the tentativeness to switch because you've been with one for so many years.
From your studies, do you see that the competition coming in will be well structured and give an opportunity to have good, solid competition, as said by Senator Merchant and everyone else who spoke about that? Right now no one will benefit but in the future, if it is well structured, it will benefit the consumer. Do you see that in your studies?
Mr. Lawford: That's the hope, Senator Demers. It's hard to see proof, but we have some figures which have been cited in CRTC reports and elsewhere showing that some wireless prices in Canada did drop after the first auction, the AWS auction in 2007, 2008 and 2009. Prices had gone down because of the competitive pressure of these three new entrants, which are now two and might be one soon.
We can't see which way the kaleidoscope will turn. Vidéotron could go in across the country, we don't know. EastLink could branch out and maybe make an alliance with others and offer a coalition, nationwide service. It's hard to see the future. We know that the third competitor, WIND, is interested in this amendment because they want to roll out national pricing.
There is still hope that somehow this bill is setting a condition that is necessary so that they can go ahead. There are lots of other conditions they need: money, tower-sharing and spectrum. That maybe didn't work out so well the last time, but Vidéotron got a big chunk, so we don't know. However, this is a big step.
The Chair: If there are no further questions, Mr. Lawford and Mr. White, thank you for your presentation. We will continue studying this for the next few weeks. I'm certain you will be listening in on WIND's presentation.
For members, our next witness tomorrow is the Automotive Parts Manufacturers' Association. After the break, as mentioned, we will have WIND Mobile and the Mayors of Montreal and Longueuil.
The next study we will have, if you were in the Senate on Thursday, is on Bill S-4, the digital privacy bill, which means we will probably be sitting through the month of June on that bill. This will mean that most other considerations, including CBC, will be kept until autumn. The steering committee will meet at the end of this meeting.
I think Senator Plett had something he wanted to add.
Senator Plett: I would like to table a couple of documents.
I have two motions in order to table two important documents with the clerk. The first one would be that I move:
That the letter to the committee from Mr. Hubert Lacroix, President and CEO of the Canadian Broadcasting Corporation, dated April 9, 2014, be published as an appendix to today's evidence.
If there is debate on that, I have a few comments to make.
Senator Eggleton: Is that today's evidence or the evidence he gave at the time?
Senator Plett: Today's evidence.
Senator Eggleton: How does it fit with today's evidence?
Senator Plett: We'll have to ask the clerk that. I'm reading his wording here.
Senator Eggleton: What does the letter say? What's its relevance to today's evidence?
The Chair: When he left, we finished the meeting saying, ``If you have additional answers to submit to us, send them in writing to the clerk.'' He sent it, but it has not been passed on to all of you.
Senator Eggleton: I didn't understand the connection with today's evidence.
The Chair: It has nothing do with today's evidence.
Senator Eggleton: It's just the fact that it's filed today.
The Chair: I mentioned the CBC. The clerk has something to add.
Daniel Charbonneau, Clerk of the Committee: The reason it's today's evidence is because Mr. Lacroix appeared on February 26, and that evidence has been published already. To become part of the public record, it has to be done this way.
Senator Eggleton: I just didn't understand what it had to do with what we had today.
The Chair: Since we won't be going to the CBC until next September, most likely, I wanted to get it on the record.
Senator Plett: I would also like to put on the record that, as the clerk just alluded to, Mr. Lacroix appeared before this committee on February 26. It took him until April 10 to send us the letter. If everybody reads the letter, we'll see that these are simple things that he answered. These were not difficult questions.
I want to draw the committee's attention to at least three of the questions. One was a question that I asked with regard to travel policy, and he answers it in his letter.
He told us he did not know what the travel policy was for CBC, which I found strange at the time. His letter says that senior executives can fly business class outside of the Montreal-Toronto-Ottawa triangle. I thought that would be something that the senior executive should know. It's similar, obviously, to our travel policy. I think we are allowed to travel business class and staff is not. I want to make that point.
Our deputy chair, who was in the chair that evening, asked a couple of questions. One of them was how many in- house lawyers CBC has. Again, for the CEO of a company to not know how many in-house lawyers they have I found strange. His answer in the letter says that in fact they have 23 in-house lawyers at a cost of $9 million a year. That is significant, and something that I would have thought the CEO of a company should know.
The third one that I will raise today is that the deputy chair also asked what CBC/Radio-Canada's revenue was on its infrastructure and real estate. Again, that's something I would think a senior official in a company would know, especially since the figure is $46.7 million a year. Again, that is significant and I would have thought that the CEO of a company should know that.
Chair, as I said, I would like to table that document. I don't know whether we need to do anything else before I go to my next motion.
The Chair: No. If senators agree, we will distribute it to members and it will become a public document.
Senator Plett: My second motion deals with one of the documents listed in the letter from Mr. Lacroix. I move that the list of names of every employee of the Canadian Broadcasting Corporation, their position and salary classification, as of November 17, 2013, mentioned in the letter to the committee from Mr. Hubert Lacroix, President and CEO of the Canadian Broadcasting Corporation, dated April 9, 2014, be filed as an exhibit.
The Chair: Any objections?
Senator Eggleton: All the employees? How many employees are we talking about?
Senator Plett: It's here.
Senator Eggleton: You've got it?
The Chair: It's already been sent. It should become public. To do that, we have to table it.
Senator Mercer: It's interesting that it has been tabled. Those of us who have had a quick look at it would really question its accuracy. Some of this stuff looks like fiction. If you look at it and compare it with what goes on in the marketplace with other competitors and then you look at reality, I don't think we're getting the full picture. I don't think this is actually the answer to the question. I think there is a whole bunch more being paid to certain people in the CBC that may be outside of their salary, in terms of some other contractual arrangements. That is really what I think Senator Plett and Senator Housakos were looking for. I was disappointed that it wasn't in that report that came along.
I will have a look at it from a regional perspective to see what it says about the people who do the regional programming in Halifax.
The Chair: Before giving the microphone back to Senator Plett, since it is given in a non-alphabetical, non- geographical, weird form, we could ask our analysts to look at the main figures. For example, what is the salary of the president, the salary of the vice-president and things like that, and have them give us an analysis before we meet on this issue in the future.
Senator Plett: I want to concur with Senator Mercer and his comments as to how real these numbers are. When I look at them, I believe people are making bonuses that are larger than what their salaries indicate. I would certainly concur that I think the document — I guess if they tried to manipulate things enough they can come to those numbers — is very strange as well.
I support the chair's suggestion that the analysts do some work on this.
Senator Housakos: I want to put on record as well and reiterate the concerns that Senator Plett and Senator Mercer have outlined. I find it really disappointing that we had before our committee, for a considerable period of time, the CEO of CBC/Radio-Canada. In the context of all the challenges that he and his Crown corporation — our Crown corporation — are facing, that he wasn't more committed to our study and wasn't more forthcoming with some of the answers. Quite frankly, I'm very disappointed that the CEO of one of our largest corporations just doesn't have a grasp on the administration.
Senator Eggleton: Who hired that guy?
Senator Housakos: I certainly didn't.
Senator Eggleton: Is it anybody you know?
Senator Housakos: I know that the steering committee plans to recall Mr. Lacroix and the chairman of the board in the near future. We should maybe also look at what other steps we can take to get the CBC to be more forthcoming.
The Chair: We have a steering committee meeting at the end of this meeting. My deputy chair might bring that up at the steering committee to see how we can deal with it. Like I mentioned, we have to deal with legislation and priorities, so we have to finish the budget implementation bill and then Bill S-4. Only at that time can we go back to the CBC.
Any other questions or comments?
Senator Demers: As an observation, I'm starting to enjoy this committee because a lot of people here have tremendous experience.
I believe Senator Plett had all the right in the world to talk to him about his expenses. From that moment, from my observation — there are people who see mannerisms — I thought that he was totally mad at Senator Plett and then he just didn't want to cooperate with us. We weren't trying to destroy; we just wanted to know the facts.
The lawyer was beside him, if I am correct — there was someone beside him or an assistant — but they skipped every question — not ``every''; I shouldn't say that. They just did not want to cooperate. There's a price to pay for that when you're CEO and president of a major company. Senator Plett didn't insult him; he asked, ``What are the facts?'' He just didn't want to get involved with that. If you have overspent money —
The Chair: We'll have him back, so we will have occasion to follow up.
Senator Demers: Thank you very much.
Senator Mercer: Continuing with that, I think he showed a fair amount of disrespect to this committee by, first, showing up with a lack of knowledge; and second, not providing us with materials in a readable format. Yes, we can all sit here and search through this, but anybody would know you should put the list out in alphabetical order, which would make life easier for everybody. Then we could find the information that we wanted.
At the same time, while we're doing this major study — and we've all taken this very seriously — I've been pleasantly surprised that we are not on opposite sides here. It has been fairly non-partisan. Maybe it will get that way when we get to the report.
At the same time as we are doing this study, the CBC has, to my mind, jumped the gun and fired hundreds and hundreds of employees, some of them long-term employees, people who have brought honour to the CBC and to Canadian broadcasting in general. To do that at the same time as the study is going on and not to talk about a long- term plan or, at least, not share the long-term plan with either the committee or with Canadians, I go back to a fundamental problem with the organization, which is that you can't have anything that has three heads. The senior management of the CBC needs to be addressed as, perhaps, one of the major problems.
I always hate it when governments or organizations say that they will cut back, but the place they cut back is never the place that the cutbacks need to happen. Years ago, the government cut back at the Department of Fisheries and Oceans. Where did they cut back? In the regions where the fishermen are. At 200 Kent Street, they didn't cut anyone, and if those people bumped into a fisherman, it would be some guy standing on the edge of the Rideau Canal. That would be the closest place they'd come to a fisherman. It's those kinds of issues that I think we need to address.
Senator Eggleton: I am fine with tabling the information, but we are getting into a round of criticism of Mr. Lacroix without him being here. I have no particular brief from Mr. Lacroix. I don't know him, really; I met him a couple of times. All of these criticisms I do not think should be held in a public session without the man present so that he can respond to it. You are editing now on what he said or didn't say before this committee, and I am saying do it with him here.
The Chair: We will be re-inviting him, senator.
Senator Eggleton: Yes, but you are doing it right now.
Senator Demers: We won't do it.
Senator Eggleton: Stop doing it right now.
Senator Demers: We did ask him about his expenses and he didn't answer.
Senator Eggleton: He needed more details.
Senator Plett: To the comment that Senator Eggleton is making, I don't entirely disagree, but I do certainly in part disagree because when he was here, I was not shy, Senator Eggleton, with my questions of Mr. Lacroix. I will say on record here that Mr. Lacroix had somebody from his office come and visit me. I was not shy with them there.
I don't think I have said, nor do I think anybody else has said, anything that is not factual. I will be happy to have him come back. I will make the same comments with him here. But I think we have the right, sir, to voice our discontent at this committee if we have a witness that we believe has been uncooperative. Thank you.
The Chair: Coming back to your motion. We have a motion on the floor. Is it agreed that the document be tabled as an exhibit?
Hon. Senators: Agreed.
The Chair: Adopted.
Are there any other questions or comments? The meeting is adjourned and the steering committee will meet.
(The committee adjourned.)