Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 7 - Evidence, May 27, 2014
OTTAWA, Tuesday, May 27, 2014
The Standing Senate Committee on Transport and Communications met this day, at 9:30 a.m., to study 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. The committee is also continuing its consideration of a draft budget for the study on the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.
TOPIC: Part 6 — Division 16 — Telecommunications Act; Part 6 — Division 28 — New Bridge for the St. Lawrence Act.
Senator Dennis Dawson (Chair) in the chair.
[Translation]
The Chair: Today, we are continuing our study on 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.
In the first part of the meeting, we will examine division 16, which amends the Telecommunications Act to set a maximum amount that a Canadian carrier can charge to another Canadian carrier for certain roaming services — roaming fees.
[English]
Our first witness is Simon Lockie, Chief Regulatory Officer at WIND Mobile. I invite Mr. Lockie to make his presentation.
Simon Lockie, Chief Regulatory Officer, WIND Mobile: Thank you very much for the invitation to speak here today. I don't have prepared remarks, so it's probably best if I give you some sense of who I am, who WIND is and how we find ourselves here today.
My name is Simon Lockie and I am the Chief Regulatory Officer for WIND Mobile. I am also on the board of directors and one of its founders, meaning two of my colleagues and I raised the money to create WIND when we first heard about the set-aside policy six years ago. I'll provide a brief history of how we came to be.
The set-aside policy had three pillars upon which it was built, which were the foundation on which we were able to attract what is now $1.5 billion of investment into the country. The first and most obvious pillar was the set-aside of a material amount of spectrum for advanced wireless services, AWS, in an auction; and the other two were mandated tower sharing and mandated roaming.
The mechanism for roaming is important to understand. The concept was that rather than regulate the terms and rates on which it would be offered, the parties intended to go through what ultimately was clearly an artifice of negotiation. If they were not able to come to terms with the sole provider at the time, for technological reasons I can speak to, who was strongly disincented to give us anything approaching reasonable rates, then we could go to commercial arbitration.
There are several issues with that that ultimately combined to make it an unrealistic alternative for us at the time. A primary issue was that we were in an informational disadvantage to the incumbents. We didn't have hundreds of roaming agreements and we didn't know the terms of their roaming agreements. They had all sorts of resources and expert witnesses that they would call.
The negotiations were going so badly that we had no choice but to prepare for arbitration. We spent close to half a million dollars on experts and legal advisers preparing for arbitration. Ultimately, we just could not move forward. The primary reason was that we had to launch and roaming is absolutely critical to launching a wireless company. Even with spectrum, which we acquired at auction for $442 million, paid right at the outset, the possibility of a return on that primary investment had already started — the clock was ticking.
We needed to launch as soon as possible; and the incumbents needed to delay us as long as they could. So, we had no choice but to accept terms that were not some proxy for what a true commercial negotiation is where both parties want to transact but rather what level could they push us to where we had no choice but to delay our launch indefinitely — at least six months to a year. The terms of the agreement we entered into were absolutely terrible. I have to be circumspect, unfortunately, about all the information I can share because there are confidentiality restrictions. I would love to share them but I really can't. What I can do is give you some examples of the agreement that we entered into.
The most important rate in a roaming agreement is for data roaming. When one of our subscribers is on the roaming provider's network, consuming data quickly becomes by far the biggest expense. That is when you hear in the news about nightmare experiences people have when they are travelling and roaming and receive bills for several thousand dollars. We passed that rate on to our customers, as we must do, and I will speak to that in a moment. It was $1,000 per gigabyte. Compare that to the rate of $5 per gigabyte at the retail level and you get a sense of how egregious that rate was.
Another example is that we were charged for inbound text messages that our subscribers received while roaming, who don't have any ability to control when they receive a text. The industry standard for any retail offering in Canada or the world, as far as I know, is that no one charges for inbound text. We couldn't pass that charge on, so it cost us about $1 million a year to absorb those costs.
We have about 200 roaming agreements globally. Of those, we have inbound text charges on only three of them: the Cuban government, a chain of cruise ships, and our domestic roaming agreement.
The agreement was also exclusive, which was insisted upon. That meant we could not avail ourselves of any other possible roaming opportunities as they materialized.
This is probably a good time to explain that when we launched, the only party that operated a GSM network, which is a network technology — it is sort of the VHS and BETA — was Rogers. The other two, Bell and TELUS, operated a CDMA network, which was not technologically compatible with our network. We could not roam on them at the time, meaning we had one provider and one provider only in a monopoly position. That goes some way to explain why even if they were not an oligopoly, which they most assuredly are, we couldn't generate any competitive tension and or avail ourselves of potential roaming opportunities with other new entrants as their networks became developed.
One of the primary impacts of this roaming agreement for us was that it dictated our commercial proposition. WIND, in order to compete with the big guys, had a very simple proposition. We had flat rates and simple plans — very affordable and unlimited. That really was the key. When we spoke to Canadians about the kind of company and alternative they wanted, "unlimited" was at the top of every list. We offer unlimited data, unlimited talking, unlimited texts and, depending on the plan, unlimited North American calling and very attractive long distance packages around the world.
We had egregious rates on a domestic roaming agreement. Understand that when you launch, you only have so touch time to build a network and it takes a lot of time and money. Necessarily you are constrained in how much coverage you can have before you launch. Therefore, you rely heavily not so much on people travelling, for example, from Toronto to Regina, but on someone going from the Toronto core to north of Major Mackenzie Drive. That is where domestic roaming is most important. Because of how much the rates were, we had to create a home and away zone concept. If you were on our home network, then you had unlimited everything. If you were roaming domestically, then we had to pass on some of the most ridiculous rates you can imagine.
We also had to artificially constrain the accidental consumption of data in particular, even though we technologically and by the conditions of licence had the ability to get what is called 3G as opposed 2G — the "G" stands for "generation." 2G is the second generation, and 3G is what we are in right now, and LTE, which you have probably heard about or seen the ads, is 4G, the next generation. We had to make the difficult decision only to launch roaming on 2G. 2G is great for voice and text but is virtually useless for data. We had to do that because the consequences of someone accidentally or perhaps ignorantly checking out their Facebook profile or something like that could easily get to $500 to $1,000 or more, and obviously that is simply not something that we could pass on.
That was one element, the home and away concept, which we didn't want to do. You can see why it is anathema to our simplicity and to our knowing what your fees are going to be, and it greatly compromised our attractiveness in the market.
The other element that we couldn't take advantage of, and it's one of the chief benefits of in-territory roaming, which has been recognized around the world, is that when you are building out even in a city and you use a lot of rooftops, inevitably there are spots where your coverage isn't as strong or complete black spots as you build out, and it takes time to fill those in. What you'd like to do is use roaming to fill those black spots so that your customer has a relatively seamless experience and does not step behind a building and have their call drop. Because the rates were so high, we couldn't do that. If we had a home zone, it would have to be clearly delineated on a map, and our customers would have to know that they're not going to incur these terrible charges. We couldn't fill what we called the Swiss cheese with domestic roaming. That was one of the consequences.
It is safe to say that none of these consequences were unintended. They were foisted upon us very consciously by the incumbents, or at that point just one of them.
Despite all that, we have actually been very successful operationally. Despite what the incumbents try to present in the media, we have had tremendous success because I think there was such a desperate hunger for an alternative to the incumbents. We have 725,000 subscribers now. In the first quarter of this year, we had a net add of 26,000 subscribers. Bell, Rogers and TELUS, who have a vast retail network and brand presence and bundling opportunities, had a net loss of 76,000 subscribers. We're performing better than any wireless company in the country right now, and that is under the constraints that I have just articulated.
I would like to give you an example of what happens given our philosophy when we get good rates. We have been negotiating with some U.S. roaming providers. We went to the biggest and the best network with absolutely no leverage whatsoever. They don't roam on our network, and we have trivial traffic on their network. But they offered us a fair rate because they didn't have any competitive reason not do. The rate that they offered us — and again, I have to be circumspect in how I describe this — was 1,000 times less than what we were able to get from the domestic incumbent. Even with the retail rate cap that is proposed in this legislation, the rate that we were successful in getting from this U.S. carrier, to whom we mean nothing, is 3.5 times less than what these legislated caps will provide.
Once we got those rates, we could have just absorbed that margin. The rates that are charged in the market by the incumbents for U.S. roaming are very high. We were already well below them, and we could have left them there and just absorbed that extra margin, but that's not consistent with our business plan. We offered $15 all-you-can-eat unlimited data, unlimited voice, unlimited text and unlimited North American calling. You pay your $15, and you only pay it in the month that you're doing it. If you only travel in March, then you spend $15 that March, and you can watch the entire season of "Breaking Bad" or call all you want. You will never pay more than the $15 that our plan provides for. That is the kind of opportunity that we wanted to replicate when we were building our plan initially on the perhaps naive assumption that we'd be able to get to reasonable rates. We wanted that to be reflected in what we did domestically.
The government, to its credit, recognized that there was a terrible situation with roaming. It hadn't worked out the way anyone wanted it to. This is a welcome interim measure. I think it is important to understand that it is only an interim measure. The CRTC is fully seized of this matter now, and we are very optimistic, given the facts, frankly, that we are going to get a much more reasonable outcome down the road. I think that will be anywhere from five to ten times better rates on a wholesale rate that is fair and reasonable than what we pay per this legislated cap.
The legislated cap is very important because we are at an inflection point as a business. We need to secure additional financing to acquire additional spectrum to continue marketing and to continue to build, and to achieve that financing, we needed to be able to show that there was a resolution to this.
I don't want to seem ungrateful for the legislated caps, which I think are important, but it is important to understand that when you are competing with these companies and they can charge you on a wholesale level — and these are enormously profitable companies; they charge a lot at a retail level. When they can pass that on to us as a wholesale customer, again, it doesn't solve the issue; it greatly mitigates it. Before, there was an unchecked market power that was exerted as strongly as they could, and now there is a limit to it. That limit is many, many times lower than what we would have been able to secure in the former regime. More has to be done, and we are working on that. As I said, the CRTC has a couple of different proceedings.
I am sensitive to rambling on, but I wanted to set the context. I am happy to speak to any of this, including the CRTC proceedings. At this point, I would be happy to turn it over and answer any questions that you may have.
The Chair: On the CRTC proceedings, is there a timetable for that?
Mr. Lockie: That is part of the issue. Yes is the short answer, but I don't give many short answers.
One of the things that the CRTC did is they went to all the different carriers, as they can under the act, and said, "Give us all of your roaming agreements, domestic and international." Once they saw them, they saw, frankly, a preposterous situation. They said, "In our view, even though we don't regulate in wireless right now, and we made the decision well before WIND existed that the market was sufficiently competitive that we didn't have to, we also have in the act provisions that you simply can't breech. One of them says you can't confer an undue preference on yourself or anyone else, and you can't unjustly discriminate against anyone." They said, "In our view, this looks like undue preference or unjust discrimination against companies like WIND. We're going to have a proceeding to see if that's the case."
That proceeding was in the early spring and wrapped up. Typically, the CRTC takes about four months to come up with a decision. We would expect a decision on that in June, around the same time as this legislation.
If they decide that there has been unjust discrimination, which on the face of it there clearly has, but there are technical challenges with that provision, so you never know, the next question is: What do we do about it? They can just say, "Stop doing that," but they can also say, "Stop doing that, and here is the remedy we're going to impose." The CRTC has a long history of imposing costs-based rates. They would say, "What is the cost, and not just the marginal cost of having that extra subscriber on your network, but in building the network in the first place? We will charge you that, and we'll give you a reasonable markup of, say, 25 per cent." That is a possibility in June.
At the same time, they said, "We're going to launch a proceeding," which has since been launched, and WIND is participating, as you'd expect. "We're going to look at the wholesale environment for wireless across the board." That includes any inter-carrier relationship, so tower sharing, roaming, interconnection, long distance termination.
I will get back to the timing question, but long distance while roaming is an important thing to point out. One of the things we had foisted upon us was that if someone initiated an international long distance call, say they were calling China, and if that call was returned to us and we terminated it using our wholesale providers for long distance, we could do that call at a penny a minute. That is our wholesale cost. Again, I can't get into very specific numbers, but suffice it to say that what we were charged was a lot closer to $2 a minute than it was to $1 a minute. That is just another example of something that we would be looking for the CRTC to resolve, and that is something that expressly isn't solved by this legislation.
For the timing for that proceeding, it will run over the course of this year. We would expect an answer on that sometime in 2015. If we are successful, and we have every hope and expectation we will be, then there are sometimes quite drawn out cost proceedings because it is not a simple matter to pin down the right cost basis. You just say cost plus 25, but then you spend lots of time figuring out what cost is.
Senator Mercer: Mr. Lockie, we appreciate your time and the clarity of your presentation. It is great to have our prices for inbound text messaging compared with those for Cuba, cruise ships and domestic carriers. For travelling, it's interesting.
I have referred during previous testimony before this committee to what is going on as "predatory pricing." The object of the game here is to knock you out of the business, from my point of view. I supported the idea of issuing new spectrum, but when new spectrum was made available, the government said it wanted to get it into the hands of people other than the big three. Should they have said at the same time that there should be regulations to prevent predatory pricing by the big three, recognizing the fact that any new player in the business would need some sort of agreements with one, if not all three, of the major players to service their clients properly?
Mr. Lockie: That is a fair question. The Competition Act contains provisions that make predatory pricing a violation. The Competition Act, in my view, has plenty of provisions that are violated on a regular basis in this scenario. To their credit, I think they understand that. It is a very challenging thing to mount a successful process under the Competition Act. It takes a long time. Predatory pricing is one example. Predatory pricing, looked at through a different lens, is a lot like fierce competition. These are some of the challenges with the thresholds of evidence and so on in the Competition Act.
Having said that, the government clearly had a policy objective, and they acted completely in good faith to try to make it happen. To some extent, they were successful in that they attracted all of this investment. As I can tell you, I was the one in the room explaining to people how this would all work, but it simply didn't work out the way anyone intended. There was an expectation and, frankly, a legal obligation to negotiate in good faith.
The problem is that there was no effective mechanism to constrain the behaviour of the incumbents. It was a condition of licence to do it. The only recourse for the government is to say to Rogers, Bell, TELUS or whoever it might be, "You're not acting in good faith. You violated the conditions of licence, so we're taking back your spectrum licence and your 9 million users will go dark." It's a sledgehammer or a nuclear bomb that would never be deployed.
In hindsight, a more active regulation, which is what I am hopeful the CRTC will engage in shortly, would have been a much better path.
Senator Mercer: It may be a nuclear bomb, but it could have acted as deterrence. Perhaps the threat of this should happen.
You said this is a welcome interim measure, which you then linked to the CRTC discussion.
Mr. Lockie: Correct.
Senator Mercer: Should the government at some point get a little more aggressive in regulating the sector and foreseeing some of these problems? Some of these things are the unintended consequences of goodwill on behalf of the government issuing new spectrum and thinking, incorrectly, that things would go along nicely. I suppose if all of us had sat back and thought about it and looked at it from the point of view of Bell, TELUS and Rogers, we might have compared it with what is happening in the airline industry. Every time there is a new regional airline, Air Canada drops the price. They never get charged with predatory pricing, which they should as well.
Do you think that's where we should be going? Should we bring in more regulations and should those regulations be through the CRTC or through the Competition Bureau?
Mr. Lockie: Again, a good question. I am a firm believer in competition and free markets. The place it has to happen is at the retail level; but regulating at the retail level would be a nightmare and would have very negative effects on innovation and investment.
That said, bodies like the CRTC are successful in regulating at the back end, at the wholesale level, especially when telecom has enormous capital costs. For example, you don't want three different lines going to every house. You want one line, and then whoever built it gets a fair price paid by others who use it to access that house. Similarly, you don't want three cellphone towers when you can have three antennas on one tower. The government and the CRTC should not regulate at the retail level. I think there should be much more active regulation on the back end. There is plenty of precedent for that, especially on the fixed line side of the house; and it has been very successful. You have to ask: What is the difference between wireless and fixed line? Why should you not regulate the back end for one and not the other, especially when you have this model showing that it works?
For example, look at the way incumbents price in Manitoba or Saskatchewan where there are strong alternatives. They charge for exactly the same stuff that they charge for in B.C., Alberta and Ontario but for approximately half the cost. We know what competition can do, but we also know how disincented the incumbents are from price competing with guys like us. Let me give you an example of why that is.
There is something in our industry called average revenue per user, ARPU. It's a very important metric that the analysts track. The incumbents, whose pricing is virtually identical on every front, have ARPUs of around $60. For every user they have, they have $60 from wireless. Our ARPU is much less than that, approximately half. You can understand that we are long term. They can't just outwait us and have this siege mentality and constrain our business model. We will be there, much like MTS will be there in Manitoba and SaskTel will be there in Saskatchewan. We are going to be there, and they resign themselves to that reality. They have to start competing with us on prices, especially as we build out our network.
It is important to understand that every dollar of ARPU that they come down costs them billions of dollars in enterprise value, and so they are loathe to do that. They will use anything they can to maintain that. You see that all the time. They have price increases.
I don't know if anyone remembers when we had those silly system access fees, which were absolutely absurd. They are just an invented way to get a little more money. There was a significant consumer backlash against them when we came out because we said there was no such thing and were not charging for that. As a reaction to us competitively, they all dropped those fees, but interestingly, their ARPU did not go down one penny. If you're getting $1.50 or $3.50 less from your system access fee, how does your ARPU stay the same? It is because you find other ways to do it. You increase your long distance fees and your plans a bit.
They are very good at preserving ARPU. They will do whatever it takes and hold out as long as they can before they cut into those numbers.
Senator Demers: When a fourth player comes in, obviously it's great for consumers and a tremendous bargaining power for all of us. People like to shop, and it gives them an opportunity to shop elsewhere. Obviously, you have been progressing rapidly. Service becomes a priority no matter who comes in. Have you been able to forecast what service you will be able to provide at the rate you are going now, given how quickly you are progressing? Everyone will expect that special service; and everybody wants a cheaper price. That's normal. Do you have the manpower to be able to provide to the new people coming in?
Mr. Lockie: Absolutely. We've been constrained, I will say, from a capital perspective. It's difficult to raise money in an environment where there's a lack of clarity on future spectrum. I can speak to that, but it's been a primary obstacle for us. It's something that we've been working hard on, and I truly believe the government is committed to ensuring that spectrum is available. You've seen that with it blocking the TELUS-Mobilicity deal. Even last week, TELUS was persisting in its efforts to acquire that company.
Once that shakes loose and the money flows more freely, we have every expectation that we're here for the long term and we have a plan to acquire millions of subscribers. We're not capacity constrained right now. We have a core proposition that I think is what resonates with Canadians, when I talk about unlimited and simplicity.
One of the biggest challenges we had from inception, and I still think it's an issue, is people are used to seeing low numbers in the ads, but they're not used to seeing it in the bill. With us, they see it in the bill. As that word spreads, we're getting more and more momentum. We have absolutely an accelerating success. Last quarter was our best quarter ever, and it was a terrible quarter for the incumbents. We're on the right path. As I say, I'm a big believer in competition. Where this goes is at some point they're going to have to start competing with us on price, and that's good news for everyone.
Senator Eggleton: You said that more needs to be done. This legislation in front of us comes out of the budget bill and provides for temporary measures by the CRTC to authorize them to level the playing field a little bit better in terms of wholesale roaming charges while they do a study on a more long-term solution. Is this an adequate framework for getting more done?
Mr. Lockie: Yes. I would say that obviously, as the chief regulatory officer, I have people who come to me and say, "How come we haven't accomplished more?" You always want to get to the spot where you have what I would consider fair and reasonable wholesale rates. What I mean by that is where you're actually earning a return, as the roaming provider, at rates that are far lower than what the legislated cap provides for.
I think it is a suitable framework. I think it is an important interim measure. If we didn't have it, then we would have a much more difficult time in the shorter term.
Our expectation and hope is that the CRTC, who didn't need this amendment to act and was already under way, and candidly they could have done that years ago, is now fully seized of the matter, and I think the information is laid out in front of them. Believe me, I've seen it, so I know how bad it is.
Senator Eggleton: It's an adequate framework. All right.
The savings that you're going to gain from whatever decision is made by the CRTC, are you going to pass 100 per cent of that on to the consumer?
Mr. Lockie: I will say there won't be savings so much. We have no choice but to pass it on, if I'm being realistic. If you don't mind, I'll sidetrack to tell you how this works.
When I was negotiating with the U.S. carriers, I would go to my commercial counterpart and ask him, "What can you do with the rate of 15 cents per megabyte?" He would say it's clearly much better than what we have right now, but we would just absorb that margin, meaning we would not reduce our rates because we're already substantially below our competitors. Reducing them even further will not attract that many more customers, so we need to take that margin. I asked what he could do if I got down to the rate that I actually got down to. He said, "Well, that would be revolutionary because then we could get consistent with our brand proposition and have unlimited roaming." And that's exactly what we did.
As I say, we pass on data charges right now in our commercial offering at $1,000 per gigabyte. That's a very specific number. We are going to be well under 5 cents per megabyte.
Senator Eggleton: Does that mean you're taking a loss at the moment?
Mr. Lockie: We're taking a loss on some things and passing on other things. We could never absorb that money. If you don't pass it on, the other issue is you have no constraint on the consumer using it. We pass that on. When we get the lower rates, the first thing we will do is pass on those savings to them as best we can. If we get even lower, then we have an opportunity to revolutionize what we offer to Canadians.
Senator Eggleton: WIND did not take part in the spectrum auction that occurred last year or the year before.
Mr. Lockie: That's correct.
Senator Eggleton: Why not?
Mr. Lockie: There are two answers. One is that we had significant concerns about the policy as it was announced in the sense that, in our view, what was needed to make 700 megahertz spectrum a stand-alone solution for a party like us would have been to set aside the lower B and C, so it's a specific chunk of that spectrum that was very attractive and important to competition, and that didn't happen. So 75 per cent of the available spectrum was effectively set aside for the incumbents, which is frankly kind of an odd place for it to end up. When that happened and we knew there was only a tiny sliver, so 5 megahertz paired that would be available to us, it isn't a long-term, sufficient solution. That's one issue. That's on the commercial side.
The other side of it is that we were not successful in getting financing. I think we would have participated in that auction anyway if we could get the financing but, for the reasons I've articulated, we weren't able to get it. As I say, a lot of these initiatives, like the roaming, hadn't really come out yet, and so we didn't have as good a story to tell.
Senator Eggleton: One final question: This morning's Report on Business in The Globe and Mail has the new CEO of Rogers quoted as saying that a fourth major player cannot make it in Canada and that, by and large, most countries have about three major players. He doesn't think it's possible to do that. What do you say to that? Are you trying to become the fourth, or are you going to stay a small player?
Mr. Lockie: The fourth, small or large, depending on how many operators. I don't think there's any special magic to the number four. I think what you need is an active and competitive market. As an example — and I'm just giving one and not suggesting this is going to happen — if we become really successful and Bell and TELUS used that vigorous competition as an opportunity to close the deal they wanted to do a few years ago, there would be three operators and we would all be going at it tooth and nail, so that's okay.
The problem is the incumbents right now have absolutely no incentive to price compete with each other, so they don't. Where there is a fourth competitor, and I used Manitoba and Saskatchewan as an example, they have to come down and compete. The fourth is very important.
With all respect to Mr. Laurence, when you look at our operational results, we are being very successful. MTS is a fourth to the big three. SaskTel is a fourth to the big three. They're very successful. He's simply wrong, is how I would put it.
I would also look at the fact that in the States, which is probably our most direct comparable, they have four carriers. T-Mobile, who is their fourth carrier there, is enormously disruptive. Of course he doesn't want there to be a fourth. France has a very competitive market with four carriers.
Drawing any analogy, the U.S. and Canada could be looked at as somewhat similar from a regulatory perspective, but to point to countries like Germany — which has high rates so I'm not sure why he did that — as success stories, they have a much more invasive regulatory regime than we have here. Could you have three carriers? Sure, if you started regulating. As I say, I just don't think that's the right answer.
Senator Merchant: Thank you for your very clear presentation about your travails trying to establish yourselves.
How will the customer know on his bill that there is an accommodation of roaming charges? You just mentioned the system access fees. Sometimes it's very difficult to understand why there are charges on your bill, so you just pay it. You have no option but to pay it. How will a customer know that these roaming charges are not a combination? You said you were going to pass on some of these to the customer.
Mr. Lockie: It's different for everyone. One thing I will say, and it's another example of the commission taking action where formerly it hadn't, is this wireless code of conduct. WIND was actively involved in crafting and participated in the proceedings on that. It has several measures that make it much clearer than it used to be, what you're paying for. You have to summarize it very clearly and disclose it very clearly. There are caps on roaming and caps on what you can recover if someone wants to leave you. There is direction on having to unlock the phone so that you can move to another carrier. That's a step in the right direction, although perhaps not surprisingly, incumbents are fighting it with all the litigation they can and ultimately that will show real fruit.
There's also the CCTS, which resolves consumer disputes. To your point, a lot of people say to themselves, "I actually don't whether there's been a violation and it's time and effort to go through that," but that's there if they need to.
The incumbents have literally thousands of plans. For example, in the wireless code proceeding, they were making claims about some of their plans, so we had our commercial team go through it. They came back after three days saying, "We've been through these things and we actually don't understand them. It's impossible to understand." That's what they do for a living.
Our plans are dead simple. We make very clear what you get. Because it's unlimited, there are no buckets or overages and that kind of thing, with the clear exception that when you are off our network and roaming domestically or internationally, but domestically is the one we're talking about, here's what you get charged.
There are caps, thanks to the wireless code. That's something if they got to that cap, we would have to let them know and they would have to want to keep going. One of the primary benefits, or what people narratively get back to us about what they love, is they have absolutely no doubt whatsoever what they're paying for.
Senator Merchant: You speak about your code of conduct. If the customer has a complaint, would it be a good idea for the customer to go to an independent third party with his complaint instead of going to the providers? To whom does a customer go with a complaint?
Mr. Lockie: They have this recourse now, the CCTS.
Senator Merchant: What does that stand for?
Mr. Lockie: I'm trying to remember. You put me on the spot. I'm used to calling it the CCTS. It's a dispute resolution body created under CRTC's mandate and they are very independent and effective. If you have a dispute, you go to your carrier. If you can't resolve that, then you file a complaint with the CCTS. They are quick and effective. They talk to the carrier. They know the rules. They know the carrier's terms and they resolve it. They order the resolution.
They're somewhat constrained. They can't penalize; they can't give someone a fine. What they can say is "return that money." They are an effective thing. It's an informational thing.
We all have links to the CCTS on our websites. People are getting more and more aware of that recourse because it's a relatively new phenomenon. Every year, I think that will get to be more and more the case.
Senator Merchant: How do they become aware of it? Is there something on the bill?
Mr. Lockie: Yes, it will be on their bill and also on the provider's website — not by choice in some cases, but it's there.
Senator Merchant: If there are reductions, will the customer be able to see this on his bill? How quickly would he begin to get the better pricing?
Mr. Lockie: There are two answers to that. When we have the information, which we don't currently have, and the new rates, which we don't currently have, obviously we will make our offering in the market as attractive as we possibly can. They won't miss it, because we will throw at lot of marketing at it. It will be obvious when you look at our website because it will say, "Here's the plan you selected" — and it's one of five plans — "and here's what domestic roaming costs you." That number, which is right now $1,000 per gigabyte, will be substantially lower. I don't know the number yet, but it could be $30 or $40. Depending on what the CRTC does, it could be that we do away with domestic roaming charges entirely.
These are all commercial decisions, and that's not what I do. However, it's a flexibility that will be very welcome after being as hampered as we have been for as long as we have been.
Senator Merchant: How quickly would we begin to see that?
Mr. Lockie: Virtually immediately. I think we're waiting to get it, and then we will move as quickly as we can. I'm not trying to be evasive. It could be a week; it could be 30 days, but it will be very quick.
The Chair: Mr. Lockie, thank you very much for your presentation.
Before moving on to the next panel, CCTS is the Commissioner for Complaints for Telecommunications Services. I didn't find it by myself; that's why we have good analysts.
Mr. Lockie: I appreciate that.
The Chair: We are continuing our study of Bill C-31, An Act to implement certain provisions of the budget tabled in Parliament February 11. The committee has been asked to conduct a pre-study of Divisions 15, 16, and 28.
[Translation]
In the second part of this meeting, we will examine division 8, which includes the New Bridge for the St. Lawrence Act and pertains to the construction and operation of a new bridge in Montreal to replace the Champlain Bridge and the Nuns' Island Bridge.
We will now hear from the following witnesses representing the Conseil régional de l'environnement de la Montérégie: Vincent Moreau, Executive Director; Bruno Gadrat, First Vice-President, Strategic Planning and Sustainable Development; and Richard Marois, Third Vice-President, Media Relations and Coordination.
I invite the witnesses to make their presentation.
Vincent Moreau, Executive Director, Conseil régional de l'environnement de la Montérégie: Mr. Chair, honourable senators, thank you very much for this invitation and for your interest in the Conseil régional de l'environnement de la Montérégie in this file.
I am Vincent Moreau, the organization's Executive Director. I am joined by Bruno Gadrat, First Vice-President, Strategic Planning and Sustainable Development, and Richard Marois, Third Vice-President, Media Relations and Coordination.
The Conseil régional de l'environnement de la Montérégie, CRE Montérégie, is a non-profit organization, created in 1989 in order to fulfil a need for regional coordination in environmental matters. CRE Montérégie's mission is to support sustainable development and foster environmental protection in Montérégie.
We had the privilege of commenting on and improving the environmental assessment of the new bridge on the St. Lawrence through two briefs that were submitted to the professionals from Transport Canada, which now operates under the umbrella of Infrastructure Canada. We have had an opportunity to see the quality of the team in place and its willingness to listen during specific consultations.
The important points we highlighted in those briefs were based on the following six key areas: (1) produce environmental gains; (2) increase the modal share of public and active transportation; (3) improve accessibility to the river; (4) establish ongoing communication with community stakeholders; (5) guarantee the control and monitoring of objectives; (6) oversee the design and precautions during construction.
We invite you to refer to this document to learn about all of our recommendations concerning those points. We have brought a few copies with us today.
Today's meeting is an opportunity for us to comment on division 28 of Bill C-31, the New Bridge for the St. Lawrence Act.
However, we do want to let you know that we represent only a portion of the environmental stakeholders. So it is vital that the committee consult all the stakeholders affected by this issue. They should represent all civil society sectors — economic, social and environmental sectors, including different governance levels.
Here are a few elements we want to highlight in division 28 of the bill.
Concerning clauses 6 and 11, in terms of perception, we feel those provisions could raise an issue regarding legislators' credibility in terms of compliance with laws. This raises concerns about the attention to design and about whether the necessary precautions will be taken during and after the construction. Is the whole Bridges Act bad? Do those concerns apply only to this bridge? Why exclude the User Fees Act? We do not understand why those clauses need to be included in this bill. Consequently, we fear the worst in terms of project slippages and the exorbitant costs that will stem from this lack of oversight and clear guidelines. That could possibly lead to a loss of control over the monitoring of the objectives.
The project will be supported financially by local communities and physically by the environment, without any benefits for Canada. This bill should rather strengthen control and goal achievement elements. Provisions should also be implemented to help avoid any slippage caused by decisions made unilaterally and without coordination with the community for reasons of public interest and the urgency of the current bridge's condition. We think the legislation should include a mechanism for eliminating ambiguities. One way to do this is to create a budget item for coordination with local communities that could prove to be just as effective in terms of decision making.
Regarding clause 7 — which covers the terms and implementation of agreements by the Minister of Public Works and Government Services — the image it projects is that entrusting the project's health to a single individual, no matter how deserving, puts the project at very considerable risk. The bill should provide for the required support, monitoring and back-up mechanisms to ensure that the project will make environmental, social and economic gains.
Whose agent is supposed to conclude an agreement with the Minister of Public Works and Government Services? We are wondering about that.
Regarding clause 8 — which is related to clause 7 — we feel that all interests must be taken into account, so that environmental, social and economic benefits can be obtained. To that end, agreements should be signed in coordination with all stakeholders — the Quebec government, its municipalities and organizations or agents.
According to clause 9, any owner of a vehicle using the bridge must pay any toll, fee or other charge that is applicable to the vehicle under this act. As you already know, that toll fee has a very low social acceptability.
The toll is expected to change the distribution of traffic on other bridges — some of which also come under federal jurisdiction — that will be affected in terms of operation and maintenance.
People tend to forget that imposing a toll on this future bridge connecting the greater Montreal area will accentuate social, economic and environmental inequalities among the city's various metropolitan areas.
In our opinion, the government should not impose a toll on the new bridge without considering the impact on the other bridges and on the greater Montreal area. We also feel it is imperative that, if such a fee strategy is imposed, the modal share of active and public transportation be increased to balance things out.
In closing, we strongly suggest bringing together community stakeholders in order to develop a strategy to address the previously mentioned concerns.
Mr. Chair, honourable senators, thank you for listening. We are available to answer any questions.
The Chair: Thank you, Mr. Moreau.
[English]
Senator Mercer: Thank you very much, gentlemen, for your presentation.
You made reference to public transit as an alternative. The infrastructure costs of public transit are significant as well. I didn't catch an analysis of the capital cost of expansion of public transit in and around the Island of Montreal.
[Translation]
Bruno Gadrat, First Vice-President, Strategic Planning and Sustainable Development, Conseil régional de l'environnement de la Montérégie: That is a good question. We feel it is important to increase the modal share of public transit. Regardless of how that increase is funded, it is important, since it will produce definite environmental gains.
The legislation you are proposing includes a toll for funding purposes, but you do not say how public transit will be funded or what kind of a relationship will exist between that user fee and the payment to organizations in charge of public transit. That is not covered at all, and we feel that is what the bill lacks.
This is why we are saying coordination will help illustrate those elements and find the breakdown that will make it possible to strike a balance between individual transportation and public transit.
[English]
Senator Mercer: I appreciate that you have the desire and the recommendation for public transit, but at some point somebody has to figure out where the money is going to come from for the capital and operating costs, what the fees will be, what the tolls might be for the public to transit over for the bridge. Somebody still has to come up with the capital cost to get it built. This is an issue that I think all governments will have to deal with. I'm not here to defend the government's plan, by the way, but I am realistically trying to observe how we do this. Where do we find the money to do that?
[Translation]
Richard Marois, Third Vice-President, Media Relations and Coordination, Conseil régional de l'environnement de la Montérégie: I also chair the Ville-Marie ZIP Committee, which, by the way, is a federal organization.
You are asking us who will make the decision. This is exactly why we are insisting on a collaborative method. It goes without saying that it is not always easy to establish some sort of cooperation among economic, social and environmental communities. I do not think this is new to you. The two organizations I represent — the Conseil régional de l'environnement de la Montérégie and the Ville-Marie ZIP Committee — are focused on cooperation. We foster a collaborative approach because we feel that a decision made in a coordinated manner builds consensus. Although this approach is longer and sometimes difficult, the final decision is more acceptable both socially and individually.
I think one of the current problems with the bill is the fact that it separates coordination from discussion. Our main concern is to foster collaboration among all stakeholders. Of course, that includes municipal governments, as well as provincial and federal governments. We are aware of the difficulties involved, but what we are basically telling you today is that we are worried by this issue, which we believe can be remedied.
We have worked with Transport Canada representatives in this file. The briefs we prepared were the product of a collaborative and coordinated effort, and the Transport Canada representatives were very happy about that.
Such an approach makes it is easier to build consensus among Canadians.
Mr. Moreau: Regarding the provision on the toll, an impression should not be given that this is a unilateral decision made without consultations with the community. For instance, if the toll was at some point harmonized for the greater Montreal area, that should be done in collaboration with the community players and based on a strategy developed with the Government of Quebec, the Montreal Metropolitan Community and other stakeholders.
The decision cannot be in the hands of a single individual, regardless of the quality of the people involved and the work done. The perception given by division 28 should be reversed.
[English]
Senator Mercer: As someone who quite frequently crosses a bridge that has a toll on it, and Senator MacDonald and Senator Greene might as well, I don't remember any consultation that happened every time a toll is imposed or it goes up.
[Translation]
The Chair: This is a pre-study of a bill that is still before the House of Commons. I do not know whether any amendments will be put forward or not, but I wanted to clarify that, first, this is not our bill. The committee is examining this bill at the government's request. Second, this is an omnibus bill, so the previous witness was talking about telephone services, while we are now considering the construction of a new bridge.
The Standing Senate Committee on Transport and Communications has a varied analytical lens. I congratulate you, as your advocacy activities helped put this issue on the agenda, so that all governments would know that a bridge needs to be built. I understand that someone will have to pay for its construction, but tomorrow we will hear from the Longueuil and Montreal mayors on the same topic.
We appreciate your comments. We have the responsibility to appear before the Standing Senate Committee on National Finance to report on the testimony we have heard.
Mr. Marois: Pardon my insistence. We are not advocacy organizations, nor are we militants. It is important for us to point this out. I am not saying that we always agree with federal, provincial and municipal governments. I am saying that it is not always easy to coordinate efforts, but that this can be done. This is our message to you. That is why we are here today. This case has some potential for discussion, and our organization is sometimes criticized by more militant environmental groups. We are playing our role, but if I was to claim I was part of an advocacy organization, certain groups would disagree.
The Chair: I am taking due note of that, and I congratulate you for being able to get your point across much more subtly than others.
[English]
Dear friends, the steering committee has prepared a follow-up for the Western part of our study. Basically, the objective is Eastern Canada. I will let the clerk go through the whole list, but we have decisions to make concerning adoption. We have to give this to the Internal Economy Committee as soon as possible if we want to be able to budget and plan for trips when we get back at the end of the summer.
Daniel Charbonneau, Clerk of the Committee: At the request of the Subcommittee on Agenda and Procedure, I was asked to prepare a budget with four activities for your consideration: a trip to Halifax, Quebec City and Sherbrooke for public hearings and for some fact-finding; the second activity would be a trip to Toronto for public hearings; the third would be a visit to Montreal for public hearings; and then a final activity to London, United Kingdom, for a fact-finding activity. The purpose of that would be for meetings with the BBC and also with parliamentarians and the legislative sector in the U.K. The total budget for that would be $383,171.
Senator Mercer: In anticipation of what Internal Economy will say when they see this, perhaps I might make a recommendation for transportation to the hearings in Toronto and Montreal. We could reduce the costs significantly. There must be an error, by the way, in the Montreal one, $3,600. We could reduce this by going by train. It makes sense. If we travel by train, as we know, the costs are minimal.
The Chair: Is it agreed?
Senator MacDonald: There is no problem travelling by train to Toronto.
The Chair: I have no problem travelling by train to Toronto either.
Depending on the timing of the visit, one could be done, taking the example of Eastern Canada, coming into Ottawa on a Monday or Tuesday morning, and do that part from your home district to Montreal and then from Montreal to Ottawa, and the same thing for Toronto. We do not have dates yet. First, we haven't got approval. But I certainly agree that we will change this and make it a train-driven trip. The other part will be your normal travel.
Senator MacDonald: We could fly into Toronto and take the train back.
The Chair: If it is on a Monday morning and you are flying in from Halifax, we won't have you fly to Ottawa and take the train to Montreal.
Senator Plett: We could literally, then, take out travel for Toronto and Montreal.
Senator Mercer: If there's staff.
Senator Plett: I understand. Staff would still have to pay, I guess. Certainly their travel to Montreal by train, even staff, would be cheaper than travelling by air.
The Chair: Definitely. In their case, they would leave Ottawa, meet us in Montreal, meet us in Toronto, and fly back. If it is on a Wednesday, we will all leave from here, obviously. But if it is on a Tuesday morning or a Thursday afternoon, we can do it on a cycle of coming in and coming out of the capital.
Senator Mercer: Let us assume we take the train to Toronto, we end our meetings on a Thursday night or a Friday, and we fly from Toronto back to our districts. That is on our regular points.
The Chair: It's on your regular transportation.
Senator Mercer: That is another point to be made. When you appear before Internal Economy, you need to emphasize that.
The Chair: That is a very good point.
Do I have a proposal for the budget? I guess I should have started with that.
Senator Housakos proposed the budget. We have a first amendment on the travel to Toronto and Montreal. For the rest of the package, is everybody agreed?
Senator Eggleton: What is the time frame for these?
The Chair: Autumn.
Senator Eggleton: We will not do any of this in the summer?
The Chair: Summer could be before we come back in September. First we will get the approval, hypothetical for now. We hope to get that quickly. We will come back to the full committee before the adjournment in July, before July 15. That is always the "we'll adjourn in July" joke. No one is laughing.
Does everyone agree?
Senator Plett: The reason we're not laughing, chair, is because we don't trust you.
Senator Greene: Ultimately, it won't be this much anyway, because not all of us will go.
The Chair: The budget, again, is always based on the fact that we have to budget for a full committee. Obviously, we never have full committees, but we still have that responsibility towards the steering committee to do it that way.
Thank you very much.
(The committee adjourned.)