Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 5 - Evidence, April 30, 2014
OTTAWA, Wednesday, April 30, 2014
The Standing Senate Committee on Transport and Communications met this day at 6:45 p.m. to hear from representatives from BCE Inc. (Bell Canada) and the Privacy Commissioner of Canada regarding the practice of collecting and analyzing data from Bell Canada customers for commercial purposes including targeted advertising.
Senator Dennis Dawson (Chair) in the chair.
[English]
The Chair: Honourable senators, our witnesses for today, from Bell Canada, are Mirko Bibic, Executive Vice-President and Chief Legal and Regulatory Officer; William Abbott, Senior Counsel and Bell Privacy Ombudsman; and Philippe Gauvin, Senior Counsel.
[Translation]
Today will be the second and last meeting on the order of reference adopted by the Senate on December 9, 2013. The following motion was adopted:
That the Standing Senate Committee on Transport and Communications be authorized to hear from representatives from BCE Inc. (Bell Canada) and the Privacy Commissioner of Canada regarding the practice of collecting and analyzing data from Bell Canada customers for commercial purposes including targeted advertising; and
That the committee submit its final report to the Senate no later than June 30, 2014.
I would like to remind senators that Beauchesne's Parliamentary Rules and Forms, sixth edition, citation 831 states: "A committee can only consider those matters which have been committed to it by the House. . .". Furthermore, "A committee is bound by, and is not at liberty to depart from, the Order of Reference. . .".
[English]
I acknowledge that following yesterday's testimony from the Privacy Commissioner about government access to customer information collected by telecommunications providers, senators may have several questions on this matter. However, the order that the committee received from the Senate relates specifically to Bell Canada's collection of data from its clients for the purpose of commercial purposes such as targeted advertising. The motion does not deal with government access. That is a separate issue and beyond the scope of this short study.
I ask senators to stay within the boundaries of this study with their questions and comments.
That being said, if senators feel strongly that this issue should be examined by this committee, they are free and encouraged to either speak directly to the members of the Subcommittee on Agenda and Procedure about receiving a new order from the Senate or to move a motion in the chamber seeking this authority from our colleagues.
[Translation]
The Chair: I invite Mr. Bibic to give his presentation.
Mirko Bibic, Executive Vice-President and Chief Legal and Regulatory Officer, Bell Canada: Thank you, Mr. Chair. I have a presentation with me that you have before you. There is an English version, as well.
Basically, I am going to describe the relevant advertising program of Bell Mobility, our business unit that provides wireless services and products. Obviously I am going to avoid discussing details and aspects of the investigation currently being conducted by the Privacy Commissioner.
I am on page 1 of the presentation. First, know that our program respects all requirements relating to privacy protection, and does not rely on sensitive personal information. All the information used is aggregated, as I will explain to you in a moment.
Our program does not disclose individual or sensitive information to third parties. It is fully transparent and empowers customers. It is easy to opt out so that users are in control of the situation. Those are the basic principles that you discussed yesterday morning with the commissioner.
Let us move on to page 2.
[English]
What does our program do? Let's start first with this basic fact. We have likely all surfed the Internet, many of us on iPads, iPhones and BlackBerrys, and most sites we visit have ads. Websites sell ads to monetize their sites and their platforms.
Take this hypothetical example on this page where the individual that we depict on the left-hand side is visiting a news site and on the top banner you see a lululemon ad. Let us assume for the sake of this presentation that the individual has no interest and the ad has no relevance to him when he accesses this new site using, in this particular case, it looks like a Samsung Galaxy phone. If he has to see an ad, and he will, then why not a relevant ad, one that would be more useful to him and to the advertiser?
This is where our program comes in. It provides a way for advertisers to deliver more relevant ads to Bell Mobility subscribers based on their high-level aggregated Internet usage patterns when they use their iPhones, iPads, BlackBerrys and Samsungs. We do all this in a way that respects privacy laws and policies.
If you turn the page, you will now see the same user who is using his iPhone or Galaxy to surf the net. He has visited autoTRADER.ca. We would infer from that that he might have an interest in automobiles. When he is done there and he next goes on to this new site, what you would see in the top banner instead of a yoga pants ad is a car ad. This user doesn't see any more ads than before; he just sees a potentially more relevant ad.
That brings me to page 4. How does all this get done? I have some party and company names on this page, but I want to stress that this is an illustrative example. It's hypothetical and these are not actual companies involved in our program.
On the far left you have a potential advertiser, a car manufacturer who wants to advertise on this particular news portal, canoe.ca. That site would be accessed by potentially a Bell Mobility subscriber using Bell Mobility services. You have the chain of distribution there at the top.
How does this work? We have the user on the far right. He has his mobile phone. He types in www.canoe.ca. We facilitate his ability to access that site. What happens next?
First — and this is done electronically — the website determines whether or not our user on the right has opted out of our relevant ads program. If the user has opted out, the subscriber will just see a random ad. When I say "random," I mean the ad of any particular advertiser to whom this website has sold space. It could be a car ad, a yoga pants ad, or any home and garden ad, anything.
But if the subscriber has not opted out of the program, then the question becomes — and this is all done electronically — is this subscriber, the fellow on the right-hand side, within the car manufacturer's target profile? If he is, then the subscriber will see a relevant ad; in other words, that car that had we depict on page 3. If the subscriber is not in the relevant target market because nothing from his usage pattern indicates he is interested in automobiles, then the subscriber will see a random ad.
There is never contact at all between advertiser and the subscriber. Neither the advertiser nor the website — in other words, the two companies on the left — neither the car manufacturer nor the news portal, ever receive any customer information from Bell Mobility to make this happen.
Turn now to page 5. As I mentioned, all this works on an advertiser developing a target market profile and then at Bell Mobility we identify if a particular Bell Mobility user fits into that target market profile based on aggregated online usage patterns. This is what the websites and the advertisers see.
On page 5, we have shown you a screen shot from a portal we give websites access to. In the case of my hypothetical example, if Ford wants to market or develop ads to males ages 26 and up who live in urban cities, they would go on this portal. You can see the green boxes that we have highlighted for you. They would click on "Age Range" of the target market and then they click on the age ranges. The gender is male. We want them to be interested in automobiles, of course, because this is Ford in my hypothetical. You then click on the cities that you are interested in as part of your target market. That is what happens and that is all the advertisers and the websites get. That is all they do; they tell us who their target profile is. Then we deliver relevant ads to Bell Mobility users who have not opted out of the program and who fit this profile.
I would like to reiterate, as I did on page 4, we do not disclose any user's personal information or Internet usage patterns. That never leaves Bell and the systems are highly secured.
I am now on page 6, which I will skip because it gets into more technical detail on how this works and I have covered a lot of this. I am happy to answer questions, if you like.
I will now move to page 7. As I have mentioned a couple of times now, we do this based on highly aggregated Internet usage patterns of our Bell Mobility subscribers. Let me go back to my car example.
On pages 2 and 3, we had the hypothetical Bell Mobility subscriber who visited autoTRADER.ca; the day before he may have visited the Toyota website. We infer from that that this person may be interested in cars and we therefore categorize his usage interest as automotive. You will see on this page that we have categories that we class usage patterns into; it could be sports. We don't go down to the level of detail, for example, if the fellow was on the Toyota website and clicked on the Toyota Camry and looked at a red Camry and the pricing. We do not use that disaggregated information to then allow Toyota to deliver a red Toyota Camry car ad to that user. We keep it at the high level, at automotive. Ford may be delivering an ad to a user that potentially is interested in Toyota. We don't get down to that level of detail.
We also — and this is very important — do not categorize any usage patterns when they relate to political affiliation, adult content, health, sexual orientation, personal financial transactions and, an important topic discussed yesterday, content aimed at children.
If I take my example further, you have Phil on my left. Let us assume that he has opted out of our program because he is not comfortable with this. When he goes on that canoe website that I had at the front, he would likely not see a Ford ad. Instead, he'd see a random ad. Bill, on the other hand, has not opted out and he has visited autoTRADER.ca. He is actually in the market for a car. He will see that Ford ad. It is relevant to Bill, even though he may not be interested in that particular car per se.
The reason I stress this again is that neither Phil nor Bill have seen more ads, but for Bill the ad is more relevant and he may become aware, through that ad, of a promotional discount which would be of benefit to him. There is, of course, value to the car manufacturer, the advertiser, because now there is an enhanced ability to more effectively reach a target market. For Bell Mobility, we improve our ability to monetize our network platform and to start competing with the likes of Google and Facebook who have global scale and billions of users throughout the world and also deliver targeted advertising.
This strikes the balance in our view, honourable senators, between privacy, business need and innovation, which was the balance mentioned yesterday by the Privacy Commissioner.
That brings me to page 8, privacy policies. This page summarizes the Privacy Commissioner's guidelines regarding Online Behavioural Advertising Guidelines. There are two clear and evident pillars. One is that companies like Bell who engage in this need to provide clear and understandable notification to their customers and easy to use opt-outs. As we heard yesterday from the Privacy Commissioner, opt-out is acceptable if the information used is non-sensitive, there is notification and transparency so that the consumer remains empowered and in control. Opt-out, as I have mentioned, also allows us to compete with those large global players who are, as well, appropriately using opt-out for similar programs.
In the pages that remain I provide the actual notifications we gave to our customers to satisfy you that we did take the commissioner's pillars to heart and acted on them.
On page 9, we provided clear and concise notice of our program and the availability of an opt-out well before we launched the program. We did this to 5 million customers, through multiple means, notices on their bills, text messages and emails.
If you go to page 10, you will see the example of an actual email that was sent to our subscribers. If you go to page 11, you will see an example on the right-hand side of the top of the bill message. This would be an example of the bill message we included on customer bills, and on the bottom right you see an example of the text messages sent to our prepaid phone customers. Five million customers in all were notified and over 8.2 million messages were sent out.
On page 12, you will see that on the home page of bell.ca, where customers go, a notice and a link at the bottom row on the page. If you click on that link where it says "Learn more," it brings you to a Frequently Asked Questions page.
If you go to page 13, you will see an example of the landing page for the Frequently Asked Questions. This is for customers who are interested and want more information. If you want more information yet, there is a third level of information provided on page 14, and it goes on. We have had to cut it for the presentation.
Page 15 is very important. It shows an actual screen shot of the opt-out page presented to our customer if they are not interested in this. At the bottom, you see a big blue button called "Save." Right above that button are two simple choices: relevant targeted ads, and if you want them, you click there. If you want to opt-out, you click where we have clicked on the example and press "Save." At the top of the page, you put in your mobile phone number so we can associate your choice to your phone. That is the opt-out.
That brings me to the last page and our conclusion. We are by no means the first to launch initiatives designed to deliver more relevant ads. Formidable global competitors are doing it right now the world over, including in Canada. They have billions of users and, unlike us, even rely on sensitive information. We have been as transparent and more transparent, in some cases, than some of our competitors. This last slide here is designed to show that.
We are looking to compete and improve the customer experience while providing a clear and easy way to opt out for those of our customers who are not interested. We have struck that balance between privacy concerns and business needs all in keeping with privacy requirements.
Thank you, Mr. Chair and honourable senators. I would be delighted to take questions.
Senator Housakos: Welcome, Mr. Bibic, to our committee and thank you for agreeing to testify here in front of us tonight.
Would you be kind enough to explain to the committee the practice of data mining, how it works and how it has changed over the last 10 years?
Mr. Bibic: Thank you for that question.
As technology has evolved, and it has evolved tremendously, new networks, whether or not they are next generation wireless networks or next generation fibre optic Internet networks, computing, have allowed customers and Canadians to use and access the Internet in ways never before imagined, as we all know. With the tremendous growth in computing power, we have an ability to mine data in so many ways in order to make businesses more efficient, to make the chain of distribution and manufacturing more efficient and to, frankly, deliver any number of goods, services or advertising to customers in far more relevant ways.
This is how you see the growth in companies like Google, who were nowhere on the map 10 years ago, or Facebook even less than that. Those businesses are built on — and I'm no technologist — essentially sophisticated algorithms. It is all based on data mining and the ability to provide a very rich advertising experience for advertisers. You can see the market capitalization of companies like Google and Facebook. Facebook is making a rather aggressive move into mobile advertising from what it was before.
In Canada, we pride ourselves on having world leading networks, which we do have, and the foundation of a digital economy is having world leading networks. To use that as a launching pad to be able to do what these global companies are doing, our domestic companies in Canada have to engage in data mining as well so they can become more efficient and deliver more services and products that consumers want. This is just the tip of the iceberg of what we are maybe able to do and trying to do right now.
Senator Housakos: You fundamentally answered my next question to my satisfaction in your presentation, but I want to get more elaboration from you because the essence of why we are here is the concern on the part of many Canadians about having their data information protected and not circulated left, right and centre in an inefficient and insecure fashion. No one can argue there are net benefits to consumers by having relevant advertising programs. I think we are living in a society where it is all a question of speed, and everything has to be timely in our schedules, more than ever before. The economies and the societies that are the quickest and the fastest usually end up being the most efficient and ahead of the game.
I found it interesting in your presentation that you pointed out that there is no distribution of personal information from Bell to third parties, and from what I understand from the program, even second parties; correct? You used the example of a customer of yours who has a website, and you have their client who is being provided with relevant information. From what I understand, for that particular website, your client will pay you for the service of providing a list of advertisers that want a particular ad. Does that make sense? Is my understanding accurate?
Mr. Bibic: If you turn to page 4, you're correct. Essentially, Bell Mobility has two customers. One is the subscriber who pays us on a monthly basis in order to have mobile service on whatever mobile phone they have. For the purposes of the relevant ad program, the customer is the website. The website's customer is the advertiser. In this hypothetical case, it is the car manufacturer on the far left. So neither that website nor the advertiser gets access to any customer information from Bell at all — nothing. They just see what is on page 5.
Senator Housakos: So the website, I guess, would get from you just a number of hits, a number of people they would be reaching out to.
Mr. Bibic: Correct.
When our customer, the website in question on page 5 — canoe.ca in my hypothetical — wants to deliver targeted ad functionality to its advertiser, that car manufacturer, the website would go on this portal on page 5 and fill in the target market profile for its advertiser. We would actually deliver the ads when a user fits a profile, and all that the website and the car manufacturers see is this: Here is your target market profile — male, 25 years old or older; living in urban cities in Canada. Based on the usage patterns of our subscribers, there are 500,000 subscribers in our base of many millions who fit that profile. They would know going in that we may be able to deliver this ad to 500,000 people. Then, at the end of a month, we would reconcile and we would say the universe was 500,000, and the number of people who actually went on the site and saw your ad — I'm making it up, of course — is 100,000. And then the website and the advertiser would have their own arrangement for paying for the ad.
That's all you get: raw statistics on how many people saw the ad, how many people might potentially see the ad, but no information about any subscriber's name, address, usage patterns, phone they had. None of that is ever shared. In fact, I could count on one hand the number of people within Bell who have access to this, and it is not the marketing department. It is the technology folks who run and operate that network.
Senator Housakos: That is my question. How safe is the system; what internal safeguards do you have? What would be the percentage or the risk of this information inadvertently getting into the hands of the second party or even the third party? Is it 100 per cent foolproof? Technologically, I'm not well versed in it, and I assume most of my colleagues here don't understand the intricacies.
Mr. Bibic: I'm not equipped to get into the details of all the particular security parameters around this program or any other network elements. It would be of both a commercially sensitive and confidential nature.
However, to be helpful, I can say we at Bell certainly pride ourselves on the security of our networks. In order to reassure you honourable senators, I would say that much of corporate Canada uses Bell networks in order to operate. Think of the banks using Bell networks in order to operate their own internal banking systems and think of how sensitive that is and how secure that needs to be.
Government networks also run on Bell, as well as on our competitors' services — not just Bell — and we're all highly secure. We pride ourselves on the level of security. We would have put that same discipline and rigour — and we do — around securing this particular program and the networks associated with them.
Senator Housakos: How many complaints have you received? The program, if I'm not mistaken, was announced six months ago and has begun with Bell.
William Abbott, Senior Counsel and Bell Privacy Ombudsman, Bell Canada: It went into effect in November, and we started providing notifications in August 2013. I think it was August 16. I could give you the exact number if you wish.
Senator Housakos: In your notification of giving people the option to opt out, how many clients were reached? Are we talking about 4 million or 5 million?
Mr. Bibic: Bell Mobility has consumer users and business users. This program applies now to approximately 5 million consumer users, and we sent notifications to the base of 5 million, in some cases multiple times.
Senator Housakos: What percentage has opted out?
Mr. Bibic: Going back to the initial line of questioning, the consumer's interest is paramount and we certainly agree with that fully. The consumers' interest is paramount in terms of our desire, first, to deliver to them products and services they want. Their interests and desires are paramount to us as well in terms of making sure we're fully transparent, they're fully comfortable with us and they know what's going on.
Having notified the base, we have had — I would have to come back to you with an exact number, which I don't have, but the number of people who have opted out is in the tens of thousands, but below 100,000. The percentage would be around 2 per cent; I may be wrong by a couple of basis points there, but I could come back.
That tells me two things. It tells me that there is a sizeable number of customers who weren't comfortable and wanted to opt out. It showed that notification worked. We notified them, they educated themselves, they were uncomfortable and they opted out because we provide that choice. That's really positive.
What's also really positive is that while many people did opt out in absolute numbers, in percentage terms a small number did, which means that the vast majority of people are comfortable. That's good for us because we are able to provide an efficient and effective vehicle for targeted advertising to those who may wish to use the platform.
Senator Housakos: In terms of economic benefit, both to Bell and the Canadian marketplace at large — and also can you comment and let us know what you see as being the net benefit to consumers?
Mr. Bibic: This is just the beginning. In terms of an absolute economic benefit in dollar terms for Bell Mobility, the program has just started. Right now, it's small. The Privacy Commissioner gave some pretty compelling testimony on this yesterday in terms of a similar question with regard to Google's revenues and how much more they generate from targeted advertising than from regular advertising. You get a sense of the power there to generate revenues. You generate revenues because it's working; it's working because advertisers are appreciating it, and advertisers are appreciating it because customers are responding to it. There's a lot of potential here.
In Canada, we need to be able to harness technology like this in order to take it to the next level. There's this, but there are everyday things that we may not think about. In the early days of even the Apple iTunes store: "If you like this song or this band, other people who like this song also seem to like these songs." So there's a recommendation engine. On Netflix: "People who watch this movie also liked these movies. You may want to watch one of these."
We're used to that; we see that all the time, and we think, "This is convenient. This is a better mousetrap than ever before." Those recommendation engines these vast, global companies are using are based on data mining.
The Chair: If you get the more precise numbers on the opting out and you can send them to the clerk, he will share them.
Mr. Bibic: Yes, Mr. Chair. I'll also verify the commercial sensitivity of that and get back to you.
Senator Mercer: Before I get into my question, I must say that I'm disappointed we're not allowed to get into questioning about the data that telecommunication companies have been sharing with government agencies, as talked about by the Privacy Commissioner yesterday. It's an important issue; 1.2 million pieces of information have gone from telecommunication companies to agencies, some known and some unknown. I think Canadians deserve to know.
Leading into my first question: I am a client of Bell's and I have high-speed Internet in my home in Nova Scotia. I'm an old-fashioned guy in that I have a landline in Nova Scotia, as well as Bell ExpressVu, because I live in a rural community. I don't have access to cable television, and I have a Bell Mobility telephone.
I'm concerned about the data you have and that you might or might not share. But I want to talk about your entire market. You talked about 5 million people on page 16; you said 5 million in Canada. I want to know whether that includes the subsidiaries of Bell, like The Source, Bell Electronics, Bell ExpressVu, a partnership with KMTS, NorthernTel Limited Partnership, Télébec Limited Partnership, northern Westell and you have a relationship but not an ownership — I believe you share some facilities with people like Virgin Mobile, Solar Mobile and PC Mobile.
Are those included in the 5 million?
Mr. Bibic: I'm happy to answer that question, Mr. Chair. I thank the honourable senator for his loyal patronage.
Senator Mercer: So far.
Mr. Bibic: I hope after my testimony the honourable senator will remain a loyal customer.
The program relates right now to Bell Mobility and Virgin Mobile subscribers. That's because the program delivers relevant ads to those who are using their mobile phones. To draw a distinction, if you are a Bell Internet subscriber — a fibre Internet subscriber in the traditional sense, with wires coming into your house and you're sitting at a desk with a computer there and you're surfing the Internet — we're not delivering relevant ads at this stage to those users. It's the Bell Mobility users. As I mentioned, right now we apply this program to our consumer users, so it's 5 million.
We have notified customers that we would look to expand the program to other Bell lines of business, which would be, as I said, the traditional Bell Internet service that comes into your house, maybe your TV service, et cetera. Therefore, the base would expand in that case. We have notified customers of that. But at the moment, the program applies to Bell Mobility and Virgin Mobile.
Senator Mercer: On page 4, you talked about the opt-out option. Then I referred to page 15, where you actually show the form for opting out.
I like to think I'm a reasonably intelligent individual, but when you get down to the actual selection part and get past the mumbo-jumbo of the top part, where you click on "Relevant targeted ads" or "Unfiltered random ads (opt out)," if I were to click on that, "opting out" would mean to me that I'm not going to get any ads. But "Unfiltered random ads" means that I am still going to get some ads but not as many as I would if I didn't opt out; is that correct?
Mr. Bibic: To answer the question, it's probably best to go to page 4 again.
Senator Mercer: That's where I started.
Mr. Bibic: It's important to highlight that.
Bell Mobility provides a network that allows a Canadian with a mobile phone, when they're subscribed to Bell, to access the Internet. We don't control the websites you visit. So if you visit CBS.com, that's not our website. CBS is delivering ads that have nothing to do with Bell. If you visit CBC.ca, that's not our website. We don't control what ads, if any, are put on CBC.ca. CBC.ca does that. We just provide a means for Bill to visit CBC.ca to read his news on a Bell mobile phone.
None of this is about Bell deciding whether or not a website has ads, or how many ads. What we are able to provide is a functionality that, for some users and some advertisers, we can provide that link where the advertiser can deliver an ad to a user who may be interested in their product. We are the middleman. We don't control the ad.
At the end of all this, to answer the honourable senator's question, if the customer on page 15 clicks on "opt out," we just won't make them part of the program. But when Bill visits CBC.ca, he will see an ad.
Senator Mercer: I understand that. As a matter of fact, I visit CBC.ca every morning. If I click on "Unfiltered random ads," I get no ads from your program, other than if I visited another website, which I understand.
Mr. Bibic: Again, let's go to pages 2 and 3. There's a website here. It's a news website. In both cases, there's an ad in the top banner. One is a yoga pants ad; one is a car ad. We don't own the website. We're not the advertiser. We just allow Bill here to go to this new site. When he goes on the new site, he will see an ad. If Bill has clicked on "opt out," he will see an ad, and maybe the yoga pants ad has nothing to do with him. It may be an ad about a grocery store and Bill's spouse may do all the shopping, et cetera.
Senator Mercer: But he will see an ad?
Mr. Bibic: He will see an ad.
Senator Mercer: So the opt-out is just opting out of being targeted and using your personal history profile to target your ads?
Mr. Bibic: Correct.
Senator Mercer: So opting out is not really opting out; it means you will take the random ads. We then have to assume that the random ad is not a targeted ad, even if it happens to be a pop-up. In the case you've used, it is a car ad.
Mr. Bibic: To answer the honourable senator's question, every once in a while I'm on a website and something does pop up that is of interest to me. In most cases, it's not. But if our Bell Mobility customer clicks on "opt out," we will not aggregate their online usage patterns in order to provide this targeted ad functionality to advertisers; we will not.
Senator Mercer: I'm confused about one thing you said about our friend who was interested in cars and had been on a Ford site; and maybe he was on a Toyota site the day before, and on the Toyota site he clicked on a Toyota Camry and he clicked on a red Toyota Camry. You said that the program wouldn't direct him to a red Toyota Camry ad. It would seem to me: What's the purpose of the program if it wasn't to direct him to the red Toyota Camry, if that's what your data has said he's interested in?
Mr. Bibic: This is the way we've designed the program: Pillar number one, notify the customer of what we're doing; pillar number two, give them an easy-to-use opt-out mechanism.
As the Privacy Commissioner mentioned yesterday, opt-out is an acceptable way of doing things, and many players do it. The premise is that it's okay if you use non-sensitive information. If we aggregate the information and keep it at a high level — in other words, my colleague Bill is interested in cars — and then allow car manufacturers, whoever they may be, to deliver a targeted ad to Bill, they may get lucky. He may be interested in Ford; he may not be. That's aggregated information. It's non-sensitive, and therefore we can use an opt-out mechanism.
If we wanted to go to more sensitive information — in other words, highly disaggregated information — or, to change the example entirely, geolocation, which is very sensitive — and I'll get into that in a second — then we would instead provide the user the opportunity to opt in to the program rather than opting out. You heard the Privacy Commissioner talk a bit about that yesterday.
An example of delivering a targeted advertisement using geolocation would be the following — again, completely hypothetically, and Bell does not do this. I will leave my house around 8 a.m. every morning and get in my car. I go to the same coffee shop. Let's say it's Tim Hortons. Bell Mobility knows that I'm driving on this street, that street and the other street. As I pass Tim Hortons, all of a sudden I get a text message with a coupon from Starbucks that says, "Come to Starbucks and get a dollar off." That targeted ad would be delivered to me on the basis of my geolocation. That's very sensitive. This is, through network usage, knowing exactly where you are.
Because that crosses the line from non-sensitive into sensitive, you can still deliver a targeted ad — and some of our competitors do this — but you have to get the express opt-in permission of the customer.
To go back to the honourable senator's question, Mr. Chair, it comes down to, in our judgment, if we went down to the level of detail of Toyota, Toyota Camry, red, 2014, and took all that disaggregated, sensitive information and then allowed Toyota to deliver a Toyota Camry ad, we could still do that, but we would design the program differently.
[Translation]
Senator Verner: Gentlemen, thank you for being here this evening. Your thorough and interesting presentation answered some of my questions. I also have a few others.
The most recent version of the privacy policy on your company's website is from February 2012. Is that correct?
Mr. Abbott: That is correct.
Senator Verner: It is February 2012. My question follows on the publication of a directive by the Office of the Privacy Commissioner of Canada published in June 2012 and entitled Policy Position on Online Behavioural Advertising after the office determined that de-identified or anonymous data that could be collected, used and provided would be considered personal information under the act.
It is very technical. Since the statement was made in June 2012 and your policy is from February 2012, have you updated your policy to ensure that the new directives from the Office of the Privacy Commissioner are included, or were they at least made consistent?
Mr. Bibic: Our policy is a general basic one that we provide to the customers, the subscribers. It was and remains consistent with the requirements of the commissioner, but in developing the program in August 2013, which we launched in November 2013, we carefully considered the commissioner's requirements, as set out on page 8 of the presentation. Moreover, we made sure to respect the principles set out by the commissioner to ensure compliance with the requirements of the Act.
Senator Verner: Did you have any discussions with the commissioner's office when you drafted this advertising initiative?
Mr. Bibic: We were not in direct communication regarding the development and launch of the program, even though our department — Bill in particular — is often in communication with the commissioner's office about policy frameworks. We have mainly been in contact since the program was launched because the program is currently being investigated, given that several subscribers have complained, which is perfectly fine. We are responding to questions and concerns from consumers. That is what needs to be done and, as the commissioner's office indicated yesterday, it should have its report by the end of the year.
Senator Verner: We know just how quickly technologies are developed. How can you make sure that the de-identified data that you transmit is not being coupled? It is probably easier to do this in Canada, but if the data leaves the country, how could you protect yourself from having the data used differently than intended under the program you designed?
Mr. Bibic: Every day, our security department secures our networks. They do only that, and we have several networks. Breaches happen from time to time, but in our case, there has been nothing major. When there is a breach, it is important to ensure that it is repaired immediately and, again, the commissioner's office has established requirements to that effect. If there is a breach, we must notify the affected customers, notify the commissioner, submit a report and release it. And we do that.
Mr. Gauvin: I would like to stress the fact that no information is disclosed to third parties. For there to be a correlation between the information obtained under the program and the information that the advertiser could use, the third party would have to have the information, but the third party does not have the information.
[English]
Senator Plett: I listened when Senator Mercer asked his questions with regard to opting in and opting out. I apologize because I am possibly the least literate person in the room when it comes to the Internet, computers, and so forth, so maybe I am not catching on. However, I want to continue with that.
I apologize that I was a bit late coming in here. Maybe if I had been on time, I would have understood exactly what you were doing here on page 7, "Non-sensitive Categories of Interests." Then you have six of them X'ed out. What is the meaning of that? Why are they X'ed out? Would they not be part of your normal program?
Mr. Bibic: If will you allow me go over page 7 again for the honourable senator, as I mentioned in my presentation, a key pillar of what we do is we only deliver ads based on these types of highly aggregated usage categories. I had a hypothetical example of a Bell Mobility subscriber who had gone on autoTRADER.ca to look for a car. Hypothetically, perhaps the day before he had been on the Toyota website. Because we know that he was on autoTRADER.ca, and we know he went on the Toyota website, we can infer — potentially improperly — that that individual is interested in cars. We classify this individual as being interested in automobiles so that if a car manufacturer wants to deliver a targeted ad to this individual, we can deliver that functionality. That's the concept.
On page 7, we show some of the categories that we assign people to so that advertisers can build profiles. What we do not collect and use and allow advertisers to build target profiles around is political affiliation, adult content, health information, et cetera — those things that are crossed out — including, very importantly, content aimed at children.
Senator Plett: Just to be clear, if I were not to opt out, I would never get any of that type of information popping up on my screen, is that what you are saying?
Mr. Bibic: Correct. We would not allow, for example, a toy manufacturer to come to us — when a Bell Mobility subscriber visits ctv.ca, we would not allow a toy manufacturer to pop up on that site a toy ad based on the fact that a Bell Mobility subscriber tends to visit cartoon sites.
Imagine if Bill's young child were on an iPad and all day long was searching the Web for cartoon sites. All of a sudden, the next time Bill's child goes on any site, for example the sports site tsn.ca, because let us assume that his child is a Canadiens fan, and, all of a sudden, a toy ad pops up because we know Bill's child is always on cartoon sites, we do not allow any of that to happen.
Senator Plett: That speaks to one of the concerns that I have with regard to opting in and opting out. I asked the Privacy Commissioner yesterday about opting in as opposed to opting out. I guess that alleviates some of my concern.
If we go back over to page 15, further to Senator Mercer's question, you have the relevant targeted ads, the opt-out option and then "Save" and "Cancel." What if I don't respond to this? This is something that you are sending me and I can now opt out. What if I don't do anything? What happens if I don't do anything?
Mr. Bibic: Then the Bell Mobility subscriber in that case is in the program.
Senator Plett: If I don't specifically opt out, I am in.
Mr. Bibic: That is correct. Under opt-out programs like that, as the Privacy Commissioner mentioned yesterday, it becomes essential — and it is essential in all cases — to be transparent and to notify customers. We have done it multiple times and in multiple ways.
Senator Plett: You will get us the information on how many people opted out, but I am sure that many people ignore some of the stuff that comes in. So they are automatically in the program.
Would it not be just as easy, instead of having that opt-out icon, to have an opt-in icon so that now I am intentionally asking you to send that to me as opposed to the other way around?
Mr. Bibic: That is a good question. For the honourable senator, I go back to the Privacy Commissioner's testimony from yesterday where she highlighted the balance that takes place between, on the one hand, respect for privacy, which is very important, and, on the other hand, business needs and innovation.
The pillars are if the information that we are going to use are very sensitive, like geolocation — going back to my exchange with senator — then opt in is the requirement under the law. If the information is aggregated and non-sensitive, then opt out is acceptable. That is, again, because of that balance between privacy and business needs and innovation.
With our program with opt out, senator, we are respecting privacy while leveraging our networks in an efficient and effective way. We are trying to compete with the companies, in terms of targeted advertising that you see on page 16, who, in all cases but one, when they do similar things, also have an opt-out mechanism.
One of the key principles for a company like Bell is to make sure that everyone respects the law — that goes without saying — and that there is symmetrical and equal application of the law. These companies that have opt out for similar programs are doing it, in our view, in an entirely appropriate way and we want to do it the same way because we are competing with them. One company, in particular, does not even give you the ability to opt out, let alone opt in.
Senator Plett: So I don't do anything and now I am in the program. Three months from now, I decide I am getting too much of this stuff popping out and I am tired of it. What are my options for opting-out down the road? You are probably not going to send me that same thing again and give me another option, are you?
Mr. Abbott: To use the opt-out process, the opt-out has to be persistent, effective and always available at any time.
I want to get the first premise of what you are saying; namely, that you are getting too much stuff — I think you are saying too much advertising. The reality is that whether you are in the program or not, you will get the same amount of advertising. You will not get empty black squares on the Internet. If it is not an ad that is targeted to be more relevant to you, then you will get the lululemon ad or something else. It will always be there. I thought that was the premise.
Senator Plett: I appreciate that.
Mr. Abbott: If you are saying that you did not want to receive relevant ads, that you had justifiable concerns —
Senator Plett: I bought my Ford and I don't need it anymore.
Mr. Abbott: Fair enough. That opt-out is always there. You can go to the Bell.ca page, and it is above the fold on our home page. Right below the main banner is what you saw: "relevant ads." You click there and get information about relevant ads. You click again, you're at the opt-out page. You put in your cell phone number and you make your simple choice.
There are two fairly simple paragraphs there trying to balance providing concise, understandable information without being too general, and then there is a very clear choice that you can make there. And you can do that at any time, whether now or three or six months from now. It is there whenever you want.
Mr. Bibic: I would add that many customers understandably use this functionality, but we have what is called a self-serve portal for clients called MyBell. You go on there and log in, and you have all your services, accounts and how much you are paying. Right on the MyBell portal there is an ability to opt out. You can set your marketing preferences for in, out — any line of business. It is right there.
Senator Demers: This may be a different question, but it all seems to boil down to the same thing. When we talk about privacy, our technology today has gotten to the point where — we will stay in Canada but let us go to North America — you seem to have no privacy. We saw Snowden and we have young kids who are 16, 17, 18 and get on their computer and they get to the point where they can hack, if that is the right word for me to use here, is being done. What level are you at to really protect Canadians from that possibility? The competition is enormous, as you know. You are in competition with so many powerhouses today. Where are you situated — I am sure you work at it on a daily basis — to protect the lives of a lot of Canadians?
We circulate a lot with people and some have discovered their life was not totally protected, and it came out not necessarily the same as Bell, but other companies, too. Where do you stand? It has become so powerful and strong, where do you stand on that to really protect the lives of Canadians?
Mr. Bibic: That is an excellent question, honourable senator. There is a multi-faceted answer.
It starts first with providers — carriers — working on their own and in conjunction with regulatory agencies and governments to do several things. One is education; education is key. We educate our customers, working in concert with governments, provincial and federal, in education. We support organizations like MediaSmarts, a not-for-profit organization whose mission is to educate young people on the dangers and perils when they use that great thing called the Internet. Education is a key part of it, and we are all for education.
There is also securing our networks. I am sure it is the same with all the major carriers but certainly with Bell, there is a big, dedicated team that works around the clock to make sure there are no denial-of-service attacks or hacking. We implement countermeasures constantly in that constant battle with hacking. Of course, government and law enforcement agencies do that as well.
Those are the two aspects.
The third aspect is to have a robust, well-considered, principled privacy law in the country, both federally and provincially. Then governments work with providers, and we have public policy discourse like this. It is designed to have laws — and we should have laws — that do what the Privacy Commissioner talked about: respecting privacy, because it is primordial, and understanding that the digital economy is crucial to any modern economy, especially one like ours. We want to balance those things. In the law, we want to implement appropriate principles that allow companies to do what they need to do to move forward and allow our economy to grow while respecting privacy at all times.
Those are the three things: security, education, and robust, well-principled laws.
Senator Demers: That is a great answer.
Senator MacDonald: Sorry I was a little late this evening, but I was at another committee. Thank you for your patience.
You mentioned those three principles, but there is a fourth one I think we should talk about: profit. This relevant advertising program is not a public service; it is about making money. There is no question about that. You are a private corporation, so you should want to make money. You are using the data collected from all of your subscribers to make money. Why not give some of that money back to your subscribers for the information they provide you with in order to make that money?
As an example, in an American trial in Austin, Texas, AT&T offered potential customers a faster fibre Internet network at a lower cost of $79 a month instead of $99 if a customer allowed AT&T to use Web browsing information to provide tailored ads to the customer. As far as I know, none of this is being considered in the Canadian context. Do you think it should or should not be considered? Would Bell consider returning something back to their customers?
In terms of privacy, it is like putting the toothpaste back in the tube. I think privacy is a hard thing to chase down, but people understand money, too.
Mr. Bibic: To answer the honourable senator's question, there are multiple ways of delivering value to a customer. I suspect in that AT&T's case, the program might be using sensitive information in a way that opt-in might have been required. So you want to encourage people to opt in and, in a particular local market, it was an inducement in some form of a discount for customers to opt in to get a bigger mass of customers. I think it was directed to one market and probably done on a test basis. I am not sure; that is my hunch from the example you raised.
In other cases, yes we seek to monetize our networks because we literally invest billions every year in our network. BCE's capital budget on a yearly basis is over $3.5 billion, and that goes into networks and building fibre-optic Internet. Take Quebec City, for example. Quebec City is the most wired city in terms of fibre optics directly to the home in North America because Bell went in and built fibre into 259,000 homes in Quebec City. It is all wired up.
When you make investments like that, you take a big risk. It is a profit-generating enterprise since we seek to make money, but we can only continue to do that if we continue to generate a return on those investments.
In this case, the value is that a community like Quebec City went from having fast cable Internet to now having fast cable Internet and super-fast telco Internet and is one of the most digitally savvy industries in North America.
This is a way of delivering value to customers, as well.
Senator MacDonald: That is great if you live in Quebec City, but I don't live in Quebec City.
Senator Verner: I do.
The Chair: So does the chair, and I am controlling the mic.
Senator MacDonald: We've all seen the numbers for the big three in Canada, the billions of dollars they're making annually. I think your investment is pretty secure in getting a return.
Is the solution, in order to protect the consumer, that the only way you can do this is for people to opt in if you pay for them to opt in?
Mr. Bibic: Again, it comes down to that balance that I mentioned before. I return to my Quebec City example. That was the first city that we built fibre-to-home networks to. Of course, we are expanding that. Gatineau is now on the list, and we've built fibre-to-the-node and fibre-to-the-home networks in Montreal and Toronto. Ottawa we launched in September, with our Fibe Internet service.
I use that as an example, but the point is that $3.5 billion goes into expanding that network. On the wireless side, which is really what the program is about, it is about delivering a world-leading network.
If you take our mobile service, in the fourth quarter of 2013 — so I'm talking about October, November, December — price reductions numbered in the dozens as we went through the end of the year, as the wireless companies — in particular, the large three that you were mentioning were competing with each other, to the point where our wireless pricing in Canada — and this is germane to your AT&T example — is lower than in the United States. That is a phenomenal accomplishment, if you think of a market with 300 million people and one with 30 or 33 million people. It costs the same amount of money, essentially, to build a wireless network in Canada in terms of building a concrete pad, putting up a tower, attaching the electronics, building the fibre networks, except that when we do it for the same price as when AT&T does it, they get a target market, an addressable market that is 10 times bigger than ours. Yet, despite the same cost structure, we have lower pricing.
That is another way. The point is that there is a lot that goes into the value. It is pricing; it is having world-leading networks; it's having accessibility. We have 98 per cent of the Canadian population — rural areas included, obviously — with access to world-leading networks.
Senator MacDonald: This is a complicated topic. Lower pricing doesn't necessarily mean a lower bill at the end of the month. We know that, as Canadians see it. It is very expensive in this country. We go all over the world. I see cell bills in Europe and America, and our cell bills are very expensive in Canada. The average person is paying a lot of money for cell usage in this country; there is no doubt about that.
Senator Housakos: I would like to ask our guests tonight if they can comment on the following: Clearly, Canadian companies are regulated by the Privacy Act. We have PIPEDA and we have the Privacy Commissioner. But are Canadian consumers at risk from American companies like Google and Amazon with regard to their privacy issues and privacy data? What kind of dangers do Canadian consumers face from American companies and foreign companies that are somewhat more difficult for Canadian governments to regulate?
Mr. Bibic: Clearly, a multitude of international companies provide services to Canadians over the top. When I say "over the top," using digital means like the Internet. We have some listed here on page 16. The companies on page 16, of course, are large, reputable companies that, by and large, make themselves comply with Canadian law. They have been investigated as well. In some cases, they have had to adjust things, and they have.
There are other sites that are fly-by-night sites, and Canadians are at risk. They are at risk because these sites are fly-by-night, to start with. The Privacy Commissioner mentioned one example yesterday. It is unenforceable because they are beyond the bounds of the jurisdiction of the Privacy Commissioner and they are not about to make themselves within the bounds. So there is a risk there.
There was an exchange yesterday with the Privacy Commissioner where the suggestion was made that maybe there is a difference between an entity like Facebook and an entity like Bell, because consumers buy Bell services; and for Canadians, having access to mobile service is a necessity, whereas Facebook is a social media site and you can choose to be a member of the site or not. The same goes with Bell Canada.
However, in the case of Bell Canada, if a customer wants to subscribe to our services — and we dearly hope that they do — once they are a customer of ours, we then give them a choice. You can be part of the program or you can't. We want you as a cellphone user and we also want you as part of the program. But if you don't want to be part of the program, it doesn't mean that we kick you off as a Bell Mobility user; whereas with Facebook, you are either in or you are out.
I wouldn't call this a luxury either. If you take a company like Google, it is a search engine. Google has the vast majority of the market share for search engines. If you think about being on the Internet, it is essentially not useable unless you have a search engine to filter everything that's there and direct you to where you want to go. Imagine if Google said, "You either let us use your information or you cannot use our search engine at all." That would be even more of a necessity than subscribing to Bell Mobility service. So I didn't quite understand that answer.
But to get to the core point, or the beginning of the question: Yes, we are at risk. Reputable companies, whether in Canada or externally, will comply with the law, and fly-by-nights won't.
Senator Housakos: My last question goes back to the crux of what this is all about. The Privacy Commissioner alluded to it yesterday. What we'd like to do is help contribute to this debate to try to find that balance between making sure that Canadian telecom companies are not suffocated and they have the opportunity to develop this marketing resource. I'm certain there are tons of Canadians who want the opportunity to have a relevant advertising program at their fingertips and in front of their eyeballs, because we cannot change the fact that people like to buy and sell things. Yet, it is also imperative, and many Canadians are concerned that they have safeguards in place to ensure that our basic privacy issues are protected.
I would like to have your opinion with regard to the Privacy Act and with regard to PIPEDA. Is this legislation in place right now? We're also in the process right now of tabling Bill S-4, which will upgrade PIPEDA and the Privacy Act.
Are these sufficient pieces of information to ensure that individual privacy is protected and, at the same time, Canadian corporations are able to develop this advertising tool, both for the benefit of Canadian companies and for the benefit of consumers? If it is not sufficient, what other suggestions do you have, to this committee and to government, about putting forward legislation that will give that balance in the marketplace?
Mr. Bibic: We think that, at its core, the Privacy Act as it is today is a robust piece of legislation that strikes the appropriate balance. It does not mean that any law can't be fine-tuned as you learn more and as time evolves. As the honourable senator alluded to, there is Bill S-4 right now, and we heard the Privacy Commissioner's support for Bill S-4.
Again, for us, it is that balance between privacy and business needs and innovation. We heard the Privacy Commissioner support Bill S-4 in the sense that, to her, it seemed to strengthen to her satisfaction the privacy element of that. We understand that.
For us, we certainly don't think that Bill S-4 impedes innovation. I think it would continue, even if passed, to have the law strike the appropriate balances.
Senator Greene: I would like to return to the line of questioning begun by Senator MacDonald. It was very interesting, actually.
Right now, we receive advertising that is tailored for us unless we opt out; am I right?
Mr. Bibic: Right now, the program provides for that functionality, but it is just in its infancy.
Senator Greene: Sure. What is wrong with the principle of paying for that information that you use, that we have given you, to enable you to make extra money? There is nothing wrong with that. What is wrong with the principle of requiring you to do that?
Mr. Bibic: To the previous line of questioning on this, there are different ways of delivering value. One is payment from person A to person B. Another way of extracting value is delivering better service, and we feel we do that.
If many people opted out, that would be a signal to us that we would have to shut down the service or else it would be useless, or deliver value and functionality in a different way. Again, it's that balance. People are being notified. They're aware of it. Some are opting out when they're uncomfortable and some are quite comfortable.
Senator Greene: I think a lot of people don't understand that they can opt out. I honestly didn't until just today. I think that is going to be new to a lot of people. I think most people who receive your ads are in, whether they know it or not. Most of them didn't even know it.
I don't mind receiving ads tailored to me, I think, but in return for that, if they're tailored for me on the basis of my information, why shouldn't I receive a bonus of some kind over those people who decided not to sell you their personal information?
Mr. Bibic: Again, the core principles are notification, in the sense of education; opt out; and when the information is non-sensitive. If the information is very sensitive and targeted in that sense and people weren't opting in, we might need an inducement. Every company will have to judge for themselves what they need to do.
Senator Greene: Maybe there should be two levels of the use of information. One would be the basic one, the one you're using now, but if somebody wanted ads that were even more targeted, maybe they could give you more information, and you could deliver better ads.
Mr. Bibic: I agree that if we were using information that was more particular, more sensitive and more real-time than what is being used as part of the program and required users to opt in but very few people opted in, then what's the value to an advertiser of a program if 100,000 subscribers opt in out of a base of 5 million? Zero. In that case we would have to think of an inducement. An inducement might be a rebate on a bill or a free phone. I don't know what it might be. It would be for each company to judge how to encourage customers to come in.
With the existing program, which is highly aggregated, non-sensitive information, we're on the side of the principles where you notify and you provide an opt-out option.
The Chair: The committee will have to address the issue of the report next week. We are talking about Bill C-31, the budget implementation bill, on Tuesday. On Wednesday, we will have officials from CRTC and Industry Canada, on Bill C-31.
Senator Mercer: Before we go, I wanted to go back to your opening statement prior to the start of this meeting. I hope that the steering committee will examine the possibility of us having an opportunity to have a study of the sharing of data that we've heard about in the last couple of days.
About 1.2 million requests have been made to telecommunications companies; that's what we're told in the media today. I think it is incumbent upon us to examine that to find out who is sharing the data and what kind of data is being shared. I'm not questioning the legality of it; I just think it's important that Canadians feel comfortable and understand that company X, whether it be Bell, TELUS, EastLink, whoever the company is, we need to know. I think Canadians would feel more comfortable knowing what data is being shared, how often, and who is requesting that data.
Senator Housakos: To answer the question, Senator Mercer, we had a discussion with the chair prior to the meeting tonight and we came to the conclusion that it is highly appropriate to ask the questions you put on the table, but we thought it would be better to do it under the right auspices. We have a question of reference here from the chamber that was very specific, and we thought it would be only fair to our guests tonight that we focused in on that.
Senator Mercer: I don't want to presume what the steering committee will recommend, but I hope that the steering committee will do this as quickly as possible.
Senator Housakos: You should bring it to the chamber as a whole.
The Chair: When we report, if there is a need to continue the study, we can do it from the steering committee. As you know, this is a proposal from a member of the committee to study this issue, so I am quite open to the fact that we might be doing it. When we get to report stage on this issue, we can debate it at that time.
(The committee adjourned.)