THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Tuesday, May 28, 2024
The Standing Senate Committee on Transport and Communications met with videoconference this day at 9:01 a.m. [ET] to study the subject matter of those elements contained in Divisions 27 and 37 of Part 4 of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024.
Senator Leo Housakos (Chair) in the chair.
[English]
The Chair: Good morning, honourable senators. I am Leo Housakos, a senator from Quebec and chair of this committee. I would like my colleagues to briefly introduce themselves.
Senator Simons: Hello. I am Senator Paula Simons from Alberta, and I come from Treaty 6 territory.
Senator Cuzner: Rodger Cuzner, a senator from Nova Scotia.
Senator Clement: Good morning. Bernadette Clement, Ontario.
Senator Quinn: Jim Quinn, New Brunswick.
[Translation]
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
[English]
The Chair: Thank you, colleagues.
Today, as part of our study of the subject matter of Bill C-69, the Budget Implementation Act, we are studying amendments to the Telecommunications Act contained in Division 37 of Part 4 of the bill.
To that end, we are joined by Mr. Matt Hatfield, Executive Director of OpenMedia; John Lawford, Executive Director and General Counsel, and Myka Kollmann, Articling Student, from the Public Interest Advocacy Centre. Welcome and thank you for joining us this morning.
We will begin with opening remarks, five minutes each from Mr. Hatfield and then Mr. Lawford and Ms. Kollmann, before proceeding to question and answer.
Matt Hatfield, Executive Director, OpenMedia: Good morning. I’m Matt Hatfield, executive director of OpenMedia, a grassroots community of over 280,000 people in Canada that work together for an accessible internet.
Today I’m grateful to be joining you from the unceded territory of the Sto:lo, Tsleil-Waututh Squamish and Musqueam Nations.
Watching this committee last week, I was thrilled to hear you asking questions every Canadian has: Why does Canada struggle with such high telecom prices? Does this proposal help? Why isn’t the CRTC fixing the problem?
So, yes, it should be as easy as possible to switch carriers, and the proposed changes may help. They may even have a very modest pro-competition impact. But we’re still moving chairs around on the deck of a steeply tilted system — a system tilted against consumers and towards Rogers, Telus and Bell. It being easier to switch doesn’t help if you have no one to switch to, and providers will continue finding ways to squeeze, trick and subtly mislead their customers, despite these changes. Some people I talked to even worried that by clarifying the rules, some abusive practices that weasel around them will be seen as more legitimate. What it comes down to is that there is simply not a binding set of rules that we can put on providers that fully protect their customers from abuses of monopoly power. The only solution to market power is disrupting the oligopoly; nothing less will do.
Why does Canada’s telecom market consistently fail consumers? We believe it’s because our chief watchdog, the CRTC, is deeply committed to a competition model that can never succeed.
ISED staff told you last week that Canada’s telecom system is heavily monopolized and that that’s a natural product of how expensive telecom infrastructure is. Because of the huge advantages granted by existing infrastructure — infrastructure partially paid for by our governments, in many cases — ISED fairly pointed out that we can’t realistically expect foreign competitors or new Canadian companies to enter our market and build infrastructure at the volume needed to compete. But that very unlikely scenario, having new companies come in and build infrastructure to compete, has been the CRTC’s core strategy for more than a decade. When they’ve grudgingly enabled competition by purchasing access to infrastructure, it’s only with a long list of restrictions aimed at forcing startup companies to start building their own infrastructure, often within a few years.
It’s never worked — not for the small ISPs that briefly flourished in Canada but were denied high-speed internet access for so long that most of them stopped existing, and not even for Shaw, which was supposed to be our fourth infrastructure-based national competitor. Shaw’s story ended when they sold out to Rogers, and they did so telling investors very directly that they could not possibly scale up enough to succeed. The government forced Rogers to sell Freedom Mobile to Videotron, apparently hoping that what Shaw couldn’t do, Videotron will. I hope Videotron succeeds. They have some advantages that Shaw didn’t, but some significant disadvantages too, and there’s no reason to be confident that five or ten years from now, a big‑three telecom provider will not try to buy Videotron, just as Rogers bought Shaw. This kind of competition is limited and always at risk.
There are two effective long-term remedies for treating customers fairly in a naturally monopolistic system. You can recognize that competition needs permanent help to exist and force all large infrastructure owners to resell access at fair rates so there are always enough companies in the market. That’s how wired internet was supposed to work, but that system has nearly collapsed because the CRTC paid little attention to making sure it was workable for the small companies until it was too late. That’s how an MVNO, or Mobile Virtual Network Operator, system for mobile services would work too. MVNOs plainly accomplish that goal in many other countries, but in Canada, the CRTC refuses to try them.
The second solution is making telecommunications a national government service that charges fair rates. That’s a much larger government investment and not currently a popular one, but either of these strategies could, in principle, make Canadian telecom prices globally competitive.
What can’t work is asking small startups to somehow succeed against the natural monopoly structure of telecommunications. Even Bell and Telus don’t want to build duplicative networks. They share much of their mobile infrastructure across Canada. Demanding that small Canadian businesses build infrastructure that Bell and Telus don’t think profitable to do is asking them to make squeezing blood from a stone their core business model. Somehow that’s the strategy the CRTC has fixated on, and that needs to change.
Several of you asked last week why these small changes are wedged into the budget instead of being part of the CRTC’s everyday work. You’re right to wonder. I can only guess that the government believes the CRTC is missing on parts of its core mission and is forcing through some small improvement for Canadians as better than nothing at all. But it fundamentally isn’t enough.
Last week, Senator Cardozo said your committee has the opportunity on these issues to look carefully at the big picture and evaluate what’s going wrong. I strongly encourage you to do so. Without changing the underlying power imbalance between telecom companies and Canadians, quarter measures such as we’re discussing today can only mildly improve an intolerable status quo.
Thank you, and I look forward to your questions.
The Chair: Thank you, Mr. Hatfield. I turn the floor over to Ms. Kollmann and Mr. Lawford to share their five minutes.
John Lawford, Executive Director and General Counsel, Public Interest Advocacy Centre: Thank you, chair.
The Public Interest Advocacy Centre is a national, non-profit organization and registered charity that provides legal and research services on behalf of consumer interests, in particular, vulnerable consumer interests, concerning the provision of important public services. We have been active in the field of telecommunications since the 1980s.
Our message today is simple: We largely support Bill C-69, Part 4, Division 37. It will improve telecommunications markets for Canadians and allow them some much-needed control.
Myka Kollmann, Articling Student, Public Interest Advocacy Centre: The 2023 Policy Direction directs the CRTC to take measures to ensure that consumers can promptly, affordably and easily cancel, downgrade, transfer or otherwise change their services. Having a self-serve mechanism and notice of contract expiry is a legislative implementation of the policy direction and can help assist consumers in knowing when their plan is ending and what the available options are for them.
The first three sections of the proposed telecommunications amendments in Bill C-69 closely mirror those recently brought into force in the U.K. In the U.K., companies must issue an end‑of-contract notification to customers between 10 and 40 days before their minimum contract period comes to an end. They must also send notifications annually to customers who are not in a contract, reminding them that they are free to leave or change their plan. Both notifications must include information that will help customers understand whether they can save money by changing providers or signing up for a new deal. The U.K. regulator, Ofcom, found that within two years of their new rules, overpayment among mobile customers had dropped by £100 million after operators committed to cut prices when initial contracts end.
In its recent 2023-24 mid-year report, the Commission for Complaints for Telecom-Television Services, or CCTS, Canada’s Communications ombudsman, noted that 42.9% of complaints they received were related to contract cancellations and extensions. The proposed amendments in Bill C-69 could help address many of these complaints. Increasing access and awareness of service options through a self-serve mechanism and contract expiry notification likely will increase consumer agency and incentivize good faith market conduct by providers.
Mr. Lawford: The final sections in this bill, which are proposed sections 27.04 and 27.05, are an effort to prohibit certain fees for modifying or cancelling a service.
We caution that 27.04 not only stops activation and modification charges but also seeks to give CRTC the right to deny charges for service modification or cancellation if the “main purpose” is to “discourage” consumers from switching or downgrading service. If this section is intended to deny companies the ability to charge a bring-it-back fee for cellphones, then this section should target the fee more directly.
What is most remarkable of all, however, with these changes is that they have to be introduced in legislation, given policy direction 2023 and the CRTC’s mandate to protect consumers. The reason is simple: To date, the CRTC has promised much for consumers but done very little. This bill is a very strong indicator to the CRTC to do its job. We heartily agree. While it may appear to be confusing, unnecessary or redundant, this bill is worth passing to get the CRTC to act.
PIAC thanks the committee for this opportunity to speak with you, and we look forward to your questions. Thank you.
The Chair: Thank you.
Senator Simons: Welcome back, Mr. Hatfield and Mr. Lawford. It’s nice to have you back with us. Ms. Kollmann, as you’re an articling student, this is probably your first appearance at a Senate committee, but I suspect it will not be your last. Mr. Hatfield, if you’re in Musqueam territory, that means it is 6 a.m. where you are, so special thanks for being with us.
Let us turn to the question here. Why do we need to do this through budget legislation? I’m curious, Mr. Lawford and Ms. Kollmann. Can you tell us if, when Ofcom did this in the United Kingdom, it required legislation, or were they able to do it through their existing regulatory power?
Mr. Lawford: My understanding is it was a proceeding that led to this. I don’t believe it was legislatively poked in the back, but I have to say I’m not 100% certain, senator.
Senator Simons: Okay.
I’ll ask all three of you, from your perspective, if there is any reason you can think of procedurally that the CRTC could not enact these measures through their existing regulatory powers. Mr. Hatfield, I’ll start with you.
Mr. Hatfield: My understanding, and what I told senators last week is, yes, they could. At this point, from a consumer perspective, we’ll take it any way you can do it. This is a small improvement that is worth doing. I know you are speaking to the CRTC later. It seems, year after year, they will tell everyone, yes, we’re working on things, and yes, we have procedures in place, and there are all these proceedings, but nothing gets drastically better for Canadian consumers. If this is a way of finally getting some kind of improvement, we’ll take it, even if it’s not really ideally how these things should go.
Mr. Lawford: I would just add to what Matt has said by saying, absolutely, they have the jurisdiction to do this. In fact, there have been many three-year plans at the CRTC saying they’re going to look into combining the consumer codes — the wireless code, the internet code, the TV service provider code, and one on deposits and disconnections, which is largely for home phone — and that always gets pushed, always in the plans but never happens. Absolutely, that would be where you would do this exact type of work. They have all the tools they need right now.
Senator Simons: I appreciate, Mr. Hatfield, that you are taking the 50,000-foot view of things. Obviously, we can’t fix those matters with this little bit of the budget.
Can I get us to look at the mid-level, which is, why is the CRTC failing to do its regulatory duty, and are there concerns? I mean, it’s fine for us to be supportive of this because we think it’s a good idea, but I do not love the precedent of a government telling an independent regulator what to do by something tucked into a budget omnibus bill where it can’t be questioned. It raises the potential that a future government one day may tell an arm’s‑length regulator in a budget bill what it’s supposed to do, and it’s something of which I am not a fan. Can I get you to speak to what is the problem and why is the regulator not exercising its power to protect consumers?
Mr. Lawford: I’ll start, and then Matt probably has thoughts on this.
In our view, the government has been very clear already. It is discouraging to see them have to do it this way, because the policy direction 2023 has an explicit section asking for this type of relief to be undertaken by the CRTC.
All I can say is that the CRTC has slowed down their work so considerably in the last four or five years, everyone — the industry, consumer advocates — is at their wits’ end, to be honest, at the output of the CRTC. We have no idea why. It is not related to COVID. In any case, whatever is going on — I know they’re being given new tasks, and perhaps that’s distracting — the government has been clear with the policy direction. We’re just waiting. We have no understanding of why they’re jammed up, but they are.
Senator Simons: It’s not like the people working on Bill C-11 are those who are working on cellphones.
Mr. Lawford: That’s not exactly my understanding. My understanding is that many telecom people have been seconded to work on the broadcasting bill. Even so, I would expect the CRTC’s management to ask for additional resources, which I understand they have been given, in part. In any case, the slowdown started before Bill C-11 came along. We tracked it back to 2017-18.
Senator Simons: Mr. Hatfield, I don’t know if you have a response to that.
Mr. Hatfield: John covered it well. You can have a charitable view and a less charitable view. Charitably, the CRTC has been asked to do more and more things — weighty, enormous areas of responsibility that it’s been asked to take on that would slow things down. Less charitably, I don’t always have the sense that consumer welfare is a very high priority there.
Senator Simons: Thank you.
[Translation]
Senator Miville-Dechêne: I will continue with the same line of questioning. I share the concerns of my colleague Senator Simons. Apparently, the CRTC has been given additional resources to deal with bills C-11 and C-18, both. You mentioned a charitable view, but there are more people and less action. How do you explain that?
[English]
Mr. Hatfield: I can’t explain it. I wonder if someone needs to do an inquiry into how things are functioning there. It just doesn’t seem like it’s functioning in an adequate manner.
[Translation]
Mr. Lawford: We have no explanation. The former chair had a slightly more relaxed approach than previous chairs. That continued with Ms. Eatrides. In addition, there is no direct oversight, either by Parliament or by the ministers in charge. Other means of oversight are needed to find out what they are doing and whether they are on schedule.
Senator Miville-Dechêne: Basically, it’s necessary to find a form of oversight that doesn’t impinge on their independence, which can be a little complicated. Could the big players be pressuring the CRTC to push consumer protection issues to the bottom of the list? I am obviously not privy to private conversations, but could there be pressure on the CRTC not to act on this?
Mr. Lawford: I have two quick answers.
First, that is the case with telecommunications. The large corporations are angry about decisions on internet wholesale, which greatly concern them.
In terms of broadcasting, I think the CRTC panicked when the new Broadcasting Act was passed. It did too much work before the act was passed.
Senator Miville-Dechêne: Mr. Hatfield, do you have an answer to my question?
[English]
Mr. Hatfield: I have to repeat what John was saying. It does seem as though there is confusion, and I do think you’re right that some level of pressure from the companies is a factor here, but it doesn’t seem like any decision can be reached quickly, even straightforward decisions that you wouldn’t think would require a lot of time to reach.
Senator Miville-Dechêne: Maybe I could ask a more factual question, which could be easier for you. If the CRTC did act on consumer protection, what are the punishments at their disposal to have the companies obey the regulation? In this case, it wouldn’t be a law. Do they have enough tools? You said they could do it, but do they have enough tools to enforce it?
Mr. Hatfield: I think I’ll defer to you on this one, John.
Mr. Lawford: I believe the CRTC has quite a few tools now on all of their jurisdiction, particularly the general administrative monetary penalty section that was added recently to the Telecommunications Act and fines of up to $10 million. It has been used sparingly. It could be threatened more often. I find that usually the CRTC tries to give companies a couple of chances first and use other methods, which is appropriate for a scale of enforcement, but certainly they haven’t threatened, for consumer issues, any amps.
Senator Miville-Dechêne: Do you have anything to add, Mr. Hatfield?
Mr. Hatfield: No. I think there are just examples, like fibre internet, that have gone on and on and on, and it ought to be a straightforward decision. It’s a situation of giving small providers in Canada access to the internet that people mostly actually use these days. Recently, the CRTC has made some expedited decisions, because most of these companies that they were trying to help have gone out of business while they were waiting for CRTC decisions. Now, if you were going to stick in, “But we’re still waiting for the final decision and it should not be a complex calculation,” they should just say, “We’re going to provide the baseline of your business,” period, and even those straightforward decisions can happen rapidly. Their ability to navigate genuinely complex issues seems to be a threat.
Senator Miville-Dechêne: Thank you.
Senator Quinn: Thank you, witnesses, for being here.
My question is a reflection on the last year or so. I’m a transportation guy, and I’ve learnt more about communications in the last year than I probably will ever learn in the next 20 years. One of the common themes is the CRTC, and I’ve heard good things about the CRTC but also a lot of concerning things about the CRTC. This morning, it’s the concerning things. I’m hearing that they have the tools to do things that we’re now putting in a BIA. They haven’t done them. They have the tools to do it. Who holds them to account? Who holds the CRTC to account?
Mr. Lawford: I think that the CRTC should be held more to account. At the moment, it’s quite minimal, in part because of the independence that Senator Miville-Dechêne was talking about. As political actors, you can’t interfere with their quasi‑judicial decisions, but they could report to Parliament through the committees or through their ministers and then to Parliament as to meeting goals. Some form of accountability has to be there. I think in the past it was trust.
Look, the CRTC has been given massive powers to regulate the entire communications industry, and, to be honest, until 10 or 15 years ago, they were on it. Since then, things have slipped. Things have changed in this town, and they don’t realize they’re at the centre of, as you’re saying, an industry that seems to be more and more the central industry in Canada. It’s gathering more and more importance in Canadians’ lives. It’s almost as though they don’t realize it.
Reporting through you, this committee, through the industry committee, through the heritage committee, just to check up on them, would be fantastic. I think even that amount of poking would get their mind straight.
Senator Quinn: Perhaps one of the recommendations from this work that you would like us to put into our report would be to have a defined accountability framework that would regularly report through to Parliament.
Mr. Lawford: Yes.
Senator Quinn: Okay.
What we’re doing here in the BIA will enact legislation, but that still will require the CRTC to develop the methodologies through which it’s going to do its things. I’ve also heard this morning that, in the last four or five years, the CRTC has slowed down their work. It could be because of the major initiatives that happened last spring and earlier this year, Bill C-11 and Bill C-18. I heard you say that they seconded folks from areas. What assurance do we have that having this in the BIA will cause them do anything more expeditiously or more seriously?
Mr. Lawford: I’ll just answer quickly, and let Matt go afterwards.
There is a big risk of this proceeding that is going to be required by the bill. First of all, it comes into force when the government says it comes into force, but presuming it goes into force quickly, the hearings tend to take six months to be scheduled, last for a year to 18 months sometimes, and then the decision comes six months later. We’re looking at two years here, and then companies may well ask for an implementation period of up to a year during which they change their systems to allow these changes to be put in their billing systems. My concern is that this is a three-year plan.
Senator Quinn: My final question, or maybe an observation, is that based on the last year and this morning, it appears that the CRTC does some things well, but it appears that there are a number of areas, not just in this, where people are concerned about their undertaking their responsibilities. Is that a fair statement? Do you think there are other areas where the CRTC is lagging in doing its job?
Mr. Lawford: I’ll give a quick list, and then Matt, I’m sure, has some.
First of all, not doing the codes. Second, with the outages proceeding with Rogers last year on the East Coast, there was supposed to be a follow-up of two more hearings on that — not done. E911 is a disaster in this country, and the proceeding there has been going on for six or seven years, and nothing has come out of that. There is also a problem with not going further in the sales practices inquiry, which is related to this, and this is an implementation of that outcome there. We also have a more selfish one, which is that the cost regime that lets us show up and argue at CRTC needs revision. Our rates haven’t been raised since 2012, and that’s been promised for this fall. Those are just things that are consumer-oriented.
Senator Quinn: Thank you.
Mr. Hatfield: It sometimes feels as though the CRTC is good at everything except fulfilling their objectives. Of course, they will give you a multi-year presentation on how they’re going to get anywhere that they’re going to go, but even on something like Bill C-11, we’re seeing that it will be years before any of this is ever in effect, perhaps 2026.
To John’s point, we’ve gone from a world in which broadcasting and telecom were a small part of Canadian life to where it’s defining the principal spaces for Canadian life and only becoming larger each year. There simply have to be more deadlines and expectations about when the CRTC delivers results on many of these files.
Senator Cuzner: If Senator Quinn states that he knows little about the communications sector, I’ll offer that I’ll probably know less, but I respect the depth of understanding for the sector with the panellists and with the senators around us here.
You had mentioned, Mr. Hatfield, about the businesses that went by the wayside or folded because of the inability of the CRTC to render decisions. Could you give me a size and scope? What businesses were they? Did they fold specifically because of the CRTC tie-up, or were there changes in technology? We know how quickly technologies evolve and change. Could you elaborate on that to give me a sense as to what we may have lost during that time?
Mr. Hatfield: Yes. I’ll try to be brief.
The CRTC was supporting a wholesale regime for wired internet. What that meant was that it recognized there was a problem where wired internet was centralized. It was allowing, at fair rates, many companies in Canada to buy access to physical infrastructure and sell it to others. What happened was they were only allowing that purchasing on old networks. Those networks steadily dated themselves, so fewer and fewer consumers had any interest in buying that kind of service. Seven or eight years ago, they said, well, in principle we support it being possible for these companies to buy access to fibre internet, which is what most of us now use for internet. Then eight years went by. If you think about the speed you were getting for internet service eight years ago, it’s probably very different from what you are getting today. The business model disappeared. There was no urgency to act. Many of those companies were forced out of the market, unfortunately. We’re now starting not quite from zero but very far back on what they previously achieved.
Mr. Lawford: I will name those companies for fun: Distributel, Storm Internet, oxio, EBOX and VMedia. There were a couple others we were talking about but we have forgotten. They were all acquired by incumbents. Telus bought a couple. Bell bought Distributel and EBOX. VMedia was bought by Quebecor.
Senator Cuzner: Thank you.
The Chair: It’s becoming evidently clear that Canadians are being completely fleeced when it comes to telecom prices in this country. We have had the Trudeau government, in successive elections, promising in their platform to create the preconditions to have a more competitive market and bring prices down. That clearly hasn’t happened. We have allowed, obviously deliberately through a federal government that’s been negligent and the CRTC that’s been negligent, the creation of an incredible oligopoly of players in the marketplace. I heard Mr. Hatfield say earlier that new entrants, when they get into the marketplace, can’t afford to compete because the infrastructure isn’t there. The infrastructure — along with the CRTC and the federal government — is designed to allow this oligopoly to flourish and grow, at our expense and at the expense of Canadians.
I have a simple question for our panellists today: What can we concretely do as legislators to break this oligopoly of individuals and corporations that are taking advantage of taxpayers and customers in this country?
Mr. Lawford: To be extremely bold, you can take steps such as structural separation, which means you take a company like Bell Canada and say that the backbone has to be run as a not-for-profit — well, for-profit but selling to all retailers equally, including Bell’s own retail division.
You can nationalize them. I don’t think we are going there in this country. It would be great fun.
You can also do price regulations. Senator Housakos, you could direct the CRTC — despite their decisions to deregulate under section 34 of the Telecommunications Act — to either remove the forbearance section, section 34, or ask them to reconsider their forbearance for certain markets, especially retail wireless and home internet, which are the pain spots you are talking about.
Those are three ideas.
The Chair: Mr. Hatfield?
Mr. Hatfield: Yes. OpenMedia does believe in the power of innovation and competition, and that is why the solution we advise most often is really MVNO service. It’s getting many different companies competing on the same physical infrastructure. They can innovate on service, price and the types of packages they offer to consumers, none of which we get from the big three.
John is right that structural separation would be another way of achieving the same objective of ensuring that, even though we are going to keep having a relatively monopolistic system for infrastructure owners, we need far more competition on the side of what consumers experience.
The Chair: Can this be achieved through legislation alone, or does this also require legislation with the political will to get it done?
Mr. Lawford: All legislation requires political will, certainly. It requires a rather coordinated thing on three aspects: the Telecommunications Act; the Competition Bureau and the government, “the government” being ISED, the telecommunications section of that part of the government. They have to work together. One of those three legs of the stool is always failing. Every time we get close to having some progress, one of the sections gives up. The telecom companies are quite aware they need all three to be working against them, and they have played that very well, in my view.
Mr. Hatfield: To build on that, if you look at the policy direction from government, you can see some real frustration with the CRTC. There are many mentions of the need to move faster. I don’t know that we have seen greater speed since that policy direction came out. The CRTC may feel they are being fast; I think most Canadians feel they are not. That’s why both John and I are circling around someone needing to take a good, hard look at how the CRTC is functioning because it doesn’t seem to be functioning very effectively to its purpose.
The Chair: My last question: Is the CRTC fixable, or do we need to find some other body or format in order to deal with regulations in the telecom industry?
Mr. Lawford: I think it is fixable. It does require oversight beyond what is there now and then a road map to get them where they are going. There are good people there. They have been working hard. They have been given, I believe, a lot of different reporting and new duties. There is some confusion reigning over there. It would be something that would take some years, because it took years to get them where they are.
Mr. Hatfield: The question should be examined. The CRTC seems to have been set up as the minister of the internet, or the governing body of the internet. That’s a much different responsibility than they had 10 or 15 years ago. It is involving them in fundamental questions of freedom of expression that I think they are very ill-equipped to handle. Perhaps the CRTC can be adapted to function, but at the very least it needs a good, hard look and some study.
The Chair: Thank you.
Senator Simons: We have been doing the big-picture things. I want to come back to something Mr. Lawford said to ask a more granular question. You mentioned, when you were talking about proposed section 27.04, that you think it could target certain fees more directly. I’m wondering if you could expand on that.
Mr. Lawford: The huge problem we have right now — customers are complaining about it in great numbers to the CCTS, which is the ombudsman — is the bring-it-back phone plan. You basically have a two-year contract, which is required by the wireless code — it can’t be longer — but the phone financing goes three or four years, or it’s with the one bank owned by a telecom in this country. It is extended on the theory that you have a cheaper monthly payment for your phone, so more people can afford a better phone, but hen you get to the end of your term, you have a balloon payment of $600 if you want to change providers because you have been paying on a lower scale. We always presumed that you had to amortize the cost of the phone on the two-year wireless code requirement. The CRTC, despite two decisions that said that is what you have to do, has let this practice mushroom. It is endemic in the industry. Now people are complaining they have balloon payments at the end and they don’t know why.
My concern is that this particular provision isn’t clear enough. It is not clear enough. We’re going to get into that hearing and the companies are going to say the main purpose of that is to get our financing back. The main purpose is not to discourage people from leaving, when it is, but we’ll probably lose that one. I call it cellphone sharecropping, because you never have the money to get out, never.
Senator Simons: Mr. Hatfield, do you have anything to add to that?
Mr. Hatfield: I cut this out from my introductory remarks, but senators may be interested to know that Rogers complaints from customers went up about 45% in the last year since their buyout of Shaw. We can do a bit of cleanup, hopefully with these provisions, to limit some of the practices that people are frustrated about, but the bigger they are, the more they feel they have the ability to get away with this kind of stuff.
Senator Simons: Unfortunately, we didn’t have you in to speak to us when we talked about Bill C-288, which was a small bill that required people to say how fast their broadband was, not how fast their broadband could be on the most perfect day. That bill is done and dusted, but is there anything you would like to add to our understanding of that while we have you here?
Mr. Lawford: It is another time where the government, through a private member, had to poke the CRTC into doing something that we told them about for years, namely, that broadband speed advertising was deceptive. I’ll just say that.
Mr. Hatfield: I’ll point out that the regulator in the U.S. did this on their own. They didn’t need a private member’s bill. They have been developing a broadband nutrition label to this purpose.
Senator Simons: Thank you both very much.
Senator Quinn: This is a really interesting discussion this morning. I am a great believer in the budget cycle in the federal government. I also believe that the federal government on the elected side, the government itself, has the right to establish budgets. It has become increasingly concerning about what ends up in a budget implementation bill. At what point do we say enough is enough?
Following a bit on the line of the chair’s questioning, should we be saying that, no, this is not going to be in the budget implementation bill and the government needs to do a holistic piece of legislation that brings forward the issues through legislation that you have talked about? It’s not just what is in this bill. It is these broader issues that are being ignored as well. The CRTC clearly is not doing its job in some key areas. Why wouldn’t we send a message back to the elected people, saying, “No, you need to take this out and concentrate on fixing this broader issue”? This is like a Band-Aid, it sounds to me, and it seems to me that if we don’t take a position, that it will continue to be a Band-Aid approach for the next year or so. What would your reaction be to that?
Mr. Lawford: My initial reaction would be yes, it is a Band‑Aid. It is actually more of a kick in the pants, but that’s useful right now because these things have been put to the bottom of the pile.
You are correct that the larger issue is, is the Telecommunications Act up to a modern standard? The answer is no. There was the Broadcasting and Telecommunications Legislative Review report from a few years ago. Not a lot of the telecom suggestions have been taken up — some, not very many. I also believe there are a number of things that that report missed in terms of obligation to serve to customers. Perhaps reconsidering the question that the chair asked about, should we regulate it in a different manner structurally, I would like to have a discussion about that. Your bigger question is, should the Telecom Act be reformed? The answer is yes.
Mr. Hatfield: Yes, I agree. It is a judgment call on your part on whether it is strategically the right move to send it back to send a message. I’m reluctant as a consumer advocate to say, “Let’s give up on this small thing that would be helpful.” We get so little, so I would like to get some small wins. That said, the need for a larger look is very warranted.
Senator Quinn: Thank you.
[Translation]
Senator Miville-Dechêne: I would like Mr. Lawford to clarify something. You mentioned a bank owned by a major telecom provider or one in which it owns shares. Which bank is it?
Mr. Lawford: It’s Rogers Bank, which is chartered.
Senator Miville-Dechêne: I would also like to know about the macroeconomic aspect.
[English]
You talked about price regulations and about separating this oligopoly. Are there other countries that have taken this route? Did it have an impact on the rates and the service?
Mr. Lawford: The best example I can give quickly is the United Kingdom, which took British Telecom, BT, and took the backbone of that and structurally separated it and called it Openreach for the internet. It eventually became another name, Everything Everywhere, for the wireless part. That was a huge change to the British market because they were having trouble dislodging the one big incumbent rather than having two or three like we have. It did wonders for the retail market. The U.K. has a very competitive wireless market. It has a decent internet market despite the fact that they have a lot less cable TV there, so they have one less option for distribution. That’s my best example.
Senator Miville-Dechêne: However, the U.K. is a much smaller territory than we are. Can the comparison be done?
Mr. Lawford: I think yes. I always go back to, yes, it is a big country and a lot of distance so the cabling costs are more, but the population in Canadian cities is actually far denser than in the United States. We have more large cities in Canada, and in the United States they have lots of little ones. It depends on the metric that you are using, but I take your point.
The Chair: Thank you to our guests and our panellists for sharing their views with us this morning. It was very helpful.
For our second panel this morning, we welcome officials from the Canadian Radio-television and Telecommunications Commission. We have with us Mr. Scott Hutton, Chief, Consumer, Research and Communications; and Mr. Nanao Kachi, Director, Social and Consumer Policy. Welcome to both of you and thank you for joining us. We will have five minutes for opening remarks from Mr. Hutton, and then over to my colleagues for questions and answers.
Scott Hutton, Chief, Consumer, Research and Communications, Canadian Radio-television and Telecommunications Commission: Good morning, and thank you for inviting us to appear before your committee. Before I begin my remarks, I would like to thank the Algonquin Anishinaabeg people for having me here as a guest on their unceded, unsurrendered territory. I would also like to thank them for being stewards of the land and waters in this area since time immemorial. I am joined today by my colleague, Nanao Kachi, director of Social and Consumer Policy. It’s great to see all of you again.
[Translation]
As you know, the CRTC is an independent administrative tribunal that regulates the Canadian communications sector in the public interest. We hold public hearings on telecommunications and broadcasting matters, and make decisions based on the public record of those hearings.
During our recent appearance before your committee, we explained that our work in the telecommunications industry focuses mainly on internet and cellphone services. We promote choice and affordability for Canadians, encourage investment in reliable and high-quality networks, and work to improve access to telecommunications services in Indigenous, rural and remote communities.
[English]
These goals were brought into greater focus in February 2023 when the government issued a policy direction to the CRTC to renew its approach to telecommunications. It directed us, among other things, to act quickly to provide clarity to the market and to consider how our decisions would promote competition, affordability, consumer interests, innovation and investment.
We take consumer interests very seriously at the CRTC. Canadians deserve clear and concise information when choosing telecommunications service plans, and we have taken action to make sure they have it. We also know that when Canadians have more choices and are empowered to make them, that naturally increases competition and, in turn, affordability.
Let me share with you the actions we have taken to make it easier for consumers to switch cellphone and internet providers. As we mentioned in our last appearance, we created the Wireless Code in 2013 and the Internet Code in 2019. Both ensure that consumers receive a copy of their contract from their provider explaining the services included and any potential charges in clear terms. These should also be made available in accessible formats, free of charge, for persons with disabilities. Providers cannot lock in customers for more than 24 months and must send a notification before the end of the contract. They must also clearly indicate in their contracts that customers can switch plans or providers without penalty.
[Translation]
Under the Wireless Code, devices provided must be unlocked at the customer’s request at no charge. This makes it easier to switch since the same cellphone will work on any new provider’s network. We have also taken action to safeguard against any charges incurred when a cellphone is lost or stolen.
In addition, service providers can’t charge a customer for service while their device is being repaired.
Furthermore, when Canadians choose to switch to a different provider, we have put in place rules so that their new provider can transfer all of their existing services — including phone numbers — from their last provider. Canadians don’t have to notify, or talk to, their old provider if they do not want to.
[English]
We would also like to point out that these codes are not static. We continue to explore ways that we can improve the codes to protect consumers from unreasonable charges and improve their ability to choose plans that best fit their needs. The measures we mentioned regarding unlocking cellphones were part of a substantial update to the Wireless Code in 2017.
The actions we take are based on what Canadians tell us they need through our public consultations. We also listen to Canadians through public opinion research so we can better understand the issues that matter to them. For example, we know from research conducted last year that many Canadians find the current marketing practices of telecommunications companies confusing and containing unclear information, that perceived cost remains an obstacle to switching plans and that some providers still have accessibility problems on their websites, just to name a few. The CRTC has also put in place a secret shopper program to understand the shoppers’ experience when they deal with providers and work on compliance.
[Translation]
We are constantly looking at how we can help improve the consumer experience and provide Canadians with more information and choice. Any further action that the CRTC takes will build on the foundation of protections that I have outlined today and with the interests of Canadians top of mind.
We are working to ensure that Canadians can benefit from lower prices and more choice, while promoting investment in telecommunications networks. We look forward to continuing this important work.
Thank you again for the opportunity to appear before you today, and we look forward to your questions.
The Chair: Thank you, Mr. Hutton.
[English]
Senator Simons: Mr. Hutton, welcome back.
I was quite intrigued by the fact that your testimony in no way related to the bill that we are discussing today. Let us talk about the legislation that is actually before us. Can you tell me if there is anything in this legislation that the federal government has put before us that you could not already have done within the scope of your existing regulatory powers?
Mr. Hutton: In the opening remarks, we highlighted three of the elements of the codes that we have in place right now that reflect exactly the elements being proposed in this bill. I’m sorry if that was confusing.
Senator Simons: No, I understood what you said. Perhaps you did not understand my question. The government clearly feels this legislation is necessary. Do you require this legislation to do the thing that the government is directing you to do? And if not, why haven’t you already done it?
Mr. Hutton: We have already done and addressed all of these matters in our codes for a number of years. As the representatives from the Department of Innovation, Science and Economic Development indicated last week, we already have the powers to be able to address these matters within the Telecommunications Act as it now stands, and we have. I’ll explain, if you want, the slight adjustments that this bill is bringing out.
Senator Simons: That would be helpful, because this is what we’re here to discuss — the text of this legislation.
Mr. Hutton: As we indicated in our opening remarks, we have already addressed the notice requirements. Ninety days prior to a contract being terminated, the providers must provide notice to customers, including all potential charges, of which there are none because, to address the prohibition matter, they cannot charge penalties or fees to leave or switch from existing providers. Those are already elements of the code. Offers are made in the market on that front. If we are talking about an offer that is generally suitable to the customer, here the text of the law is maybe not as clear as the budget text was, but there is the concept of the best possible offer, which is slightly different, as it is an offer suitable to the customer. We can certainly look at that minor adjustment going forward. A prohibition on fees is already provided for —
Senator Simons: You certainly will look at it if it’s in the legislation.
Mr. Hutton: We’re already working towards trying to be ready, when this legislation receives Royal Assent, to move ahead and evaluate that adjustment, but those markets and matters are already addressed in our codes as they are now.
Senator Simons: Do you feel that this legislation is superfluous?
Mr. Hutton: As I indicated last week, it gives us additional policy cover — or a couple of weeks ago when you asked me that same question with respect to the previous bill.
I would venture to say we’re takers of legislation. We will not second-guess Parliament on that front as to what should be put ahead. It does provide policy cover, as I indicated earlier, and clear direction as to the elements that should be considered and addressed going forward. It’s hard for me to say that this is superfluous. All I can say is we have these authorities right now, and we do address all these three matters in our codes as they now stand.
Senator Simons: The question then is, are the codes being enforced? In the previous testimony, for example, we heard about the issue of balloon payments. It may not technically be billed as a penalty but, when they’re exiting the system, they suddenly face a significant payment to leave, which they did not anticipate. It’s fine to say they’re in the code, but is the code being enforced?
Mr. Hutton: The codes are enforced in collaboration with the CCTS, which is the ombudsman for the telecommunications industry, which is formed of both representatives and a board from consumer groups, from industry and other independent parties. They are the people who enforce the codes, and they have been addressing those issues through the codes as it now stands. That is our enforcement mechanism, and when telecommunications providers do not respect the code, then there is an intervention. Rebates are offered, and changes are made to the contracts going forward.
Senator Simons: Will this legislation, once it is enacted, make it easier to enforce these rules?
Mr. Hutton: As I indicated, policy cover and precision will likely be able to help. On the other side, it does reduce flexibility going forward. Here we’re addressing the issues that are in front of us now.
Do these provisions also stand going forward? That’s what we’ll have to see, because what we have been constantly doing over the years is updating our codes, evaluating our policies and looking at things outside of the codes such as introducing more competition and being specific in introducing forms of mobile competition that did not exist before that seem to be quite successful on the rating front. This legislation will help Canadians, I suspect, to switch providers, because that’s a big focus of what we’re looking at right now. There are better prices in the market right now, but Canadians are not benefiting from them right now.
All of these measures — the ones we were here on a couple of weeks ago, as I explained, better information for Canadians so that they can take that chance, switch and change their provider and feel free to do it, take benefit from those better prices — all of these elements which relate to switching will help in that arena.
Senator Simons: I have more questions but I will go on second round, please.
[Translation]
Senator Miville-Dechêne: I will ask you to be a little more concrete. Based on what the bill says, I’d like to know whether you took action in this area. The first change in the bill states the following:
A telecommunications service provider must make available to its subscribers a self-service mechanism that … allows them … to cancel the contract or modify the telecommunications service plan ….
Did you implement such a policy? It seems relatively simple. If you didn’t, then why not? In its latest direction, the government asked you to work more quickly to protect consumers. What have you done on that specifically? Why have you done nothing? At least, I imagine that’s the case, since the bill includes a provision concerning that.
Mr. Hutton: We do handle that issue, actually. That provision deals with the ease of transferring a service, whether home phone, internet or wireless, to a new provider.
Senator Miville-Dechêne: That wasn’t my question. It was about self-service.
Mr. Hutton: Basically, the way we handle this issue is through the codes that have been in place for a number of years. People can contact a new provider, which will cancel your service with your old provider and transfer the phone number, in the case of telephone service, to the new platform and the new service. You don’t have to do anything. That is the way it’s been done for a few years. We have focused on making it easier. People can contact the new provider. I admit that there’s something new here. If you would like to change or cancel your existing wireless service and you contact your existing provider, that’s when something like this could help you. If you want to switch, you would simply contact your new provider. If you want to cancel —
Senator Miville-Dechêne: Why haven’t you applied this particular self-service policy so that customers can contact the telecom giants? That’s my question. It’s pretty straightforward. In previous years, why haven’t you seen fit to apply it? We are told that you have all the necessary powers to do so.
Mr. Hutton: Until now, as I said last week and as I’ve reiterated here, we do public opinion research to determine what is important to consumers. That hasn’t yet emerged from our research. We ask questions to gather information. It’s like the measure you adopted in the Senate: The idea is to provide more specific information to make switching easier and ensure that there is new pricing in the market. What is the point of switching providers if the price doesn’t change? That’s the other item that was very important to consumers, along with information. Another is the fact that certain communities are at a greater technological disadvantage, whether newcomers, Canadians living with disabilities or older Canadians. We’re making progress in that area to try to make their lives easier.
Senator Miville-Dechêne: I have a second specific question. We’re discussing the part of the budget and the act that concerns you, not the entire thing. The third change to the act says the following:
A telecommunications service provider must not charge a fee to a subscriber that is related to the activation or modification of a telecommunications service plan, or any other fee whose main purpose is, in the opinion of the Commission, to discourage subscribers from modifying their service plan or cancelling their contract for telecommunications services.
In relation to former Bill C-11, we were basically told that the way the internet giants operated was to sell a phone over three years. After two years, when the plan ends, the poor customers who were somewhat in the dark are charged $600. That is what’s called a hidden cost. Why have you let that practice continue?
Mr. Hutton: Through the codes, we put in place a practice to ensure that contracts do not last more than 24 months to make it easier to —
Senator Miville-Dechêne: You keep talking about codes, but that’s not what I’m getting at. I’m asking you why you haven’t done anything to —
Mr. Hutton: I’m bringing up the codes because they contain all of these elements, and that is our way of putting them in place.
Senator Miville-Dechêne: Where in the code does it say that the telecom giants can be fined for charging customers $600 to cancel their service with the company? What part of the code allows that?
Mr. Hutton: Basically, the Commission for Complaints for Telecom-Television Services — the office of the communications ombud I mentioned earlier — is much better informed than we are given the arrangements in place since it was created. It also adheres to the government’s policy direction. The CCTS can ensure that there are not only refunds, but also lump sums that are added to customer refunds when the code is breached.
Senator Miville-Dechêne: Is there a breach in this case?
Mr. Hutton: I’ll ask Mr. Kachi how things developed on that front. I know he works a lot with the CCTS. Can he help me on that?
[English]
Nanao Kachi, Director, Social and Consumer Policy, Canadian Radio-television and Telecommunications Commission: On this particular front, we have had conversations with the CCTS staff to talk about this issue. Whether they have found a breach, I cannot say. It doesn’t come off the top of my head that they were able to find a breach because of the way these plans are designed.
The CRTC regulates the service plans, and then if there is a phone associated with it, we regulate that element as well.
Senator Miville-Dechêne: Are you able at the CRTC to ask for changes?
Mr. Kachi: Yes.
Senator Miville-Dechêne: Why didn’t you ask for changes on this particular obstacle?
Mr. Kachi: We’ve had conversations. We started with device financing when it was first introduced in 2021, and the commission put out a decision.
Senator Miville-Dechêne: I’m asking you about the telephone, the price of the telephone.
Mr. Kachi: I’m just saying we’ve sort of set that into place. Then the commission required the CCTS to administer that part of the device financing regulatory framework. When it comes to phones, if the phone is not associated with a service plan, the commission has less authority over the price of that device. So we still need clarity in contracts, and the customers are told up front what the consequence is, but the landscape in which we have the ability to influence different types of contracts is really related to the fact that there is a service plan in place.
Senator Miville-Dechêne: So with this particular law, will you have more power to stop this practice that looks very much like a trap, the practice of asking to pay $600 for the phone when you leave the company?
Mr. Kachi: The way this is set up right now, it’s my understanding that we could take a look at the way the legislation is set out. It is, as I said, something we’re having conversations with the CCTS about to determine how they’re interpreting the Wireless Code and device financing decision that came out.
Senator Miville-Dechêne: So you haven’t figured that out yet.
Mr. Kachi: We haven’t figured that out yet. It’s still under discussion.
Mr. Hutton: One of the provisions that we have is being able to unlock that phone and take that phone to go somewhere else, and that is possible under any scenario.
Senator Miville-Dechêne: Are you doing it now?
Mr. Hutton: Yes. Right now, every new phone is unlocked so you can move away.
Senator Miville-Dechêne: The phones that have not been paid already, the phone on which you owe money if you want to change.
Mr. Hutton: It is a purchase that is made separate from the plan. It’s essential for the plan, but it’s a purchase that’s made separate from the plan so you do have to —
Senator Miville-Dechêne: It’s pretty evident what they’re trying to do. A three-year plan, a two-year plan, it seems to me that it’s — anyway. I’ll stop there.
Senator Quinn: Thank you, Mr. Kachi and Mr. Hutton, for being here again.
I’m just going to continue down the line of questions that my colleagues have asked. From the previous panel, we heard that you have the tools now to do the things that this legislation talks about, and you’ve agreed with that. You have your framework.
Mr. Hutton: Yes.
Senator Quinn: If you have the framework, other than it giving additional policy cover, which I’m not buying into because you have the tools — you’ve said you have the tools — why aren’t you doing what you’re supposed to do? A precursor to your answer is that we’ve also heard with other legislation that’s come in this past year, heavy pieces of legislation, that there is a movement of staff to pay attention there. I’m an old legislator, if you will, from the government, and we’ve brought in legislation in different departments where we didn’t have the resources to enforce the regulations. Is that the situation you’re in now? You simply don’t have the resources to do the job that you have the tools or the framework for?
Mr. Hutton: I’ll indicate that we have addressed each of these elements — just to the first part of your question, and then I’ll get to the resources, if you don’t mind. We have addressed each of these elements in various ways through the various years as we’ve already indicated on that front. So it would give us policy direction. It allows us to be more precise on that front, but it’s for you parliamentarians. We are takers of legislation, so if you decide that that legislation is necessary to go forward, yes.
On the resource front, the commission certainly has a lot of work on its plate right now. The Department of Industry has provided us with a new telecom policy direction, which we received financing to implement over the last couple of years. We’re in the process of doing that. It put a heavy component on ensuring that prices continue to develop in the market, introducing more competition. We are heavily involved and working on that front with our MVNO regime, which mandates that competitors can use the networks of the established players to be able to compete all across the country, create that fourth national player — fourth, fifth, sixth potentially — but we have a number of players on that front, and market prices have dropped significantly. Canadians aren’t fully benefiting because they’re not switching yet, for a variety of reasons, and that’s what we need to get to, and that’s how this piece of legislation, just like the ones we chatted about a couple of weeks ago, would help. It’s with respect to the switching on that front. We have received the resources there, so we’re working on that.
We’re also working on providing better prices for home internet. We have an open proceeding and we’re working rather quickly to be able to implement a new regime where smaller competitors can use the home internet lines of the main incumbents to be able to compete and provide better prices.
We have been working diligently behind the scenes on a whole bunch of other fronts. We are getting out of the gate with proceedings with respect to information, with respect to outages, with respect to a whole bunch of other issues we have on our plate going forward, not the least is implementing the Accessible Canada Act. We have a lot of things on our plate. We have resources to do it on the telecom side. They don’t get transferred over to the broadcasting side, if that’s what people —
Senator Quinn: I’m going to jump into the next question, if I may. I’ve heard you say you’re policy takers. Of course you are.
Mr. Hutton: Legislation takers. We make regulatory policy.
Senator Quinn: You’re legislative takers, as are other areas of the government, but yet you’ve said that you have the tools. That’s telling me that this is giving you more focus, if you will, to do something that you’re able to do now. You’ve said you have the tools to do it now.
I come back to earlier questions. We’re dealing with the budget and the budget implementation act. This has nothing to do with the budget at all. You’ve confirmed for me, and previous witnesses have confirmed for me, that this is superfluous in terms of having it in a budget implementation bill. The government has decided that’s where it’s going to go. You’ve heard previous questions. The Senate is supposed to be the place of sober second thought. Is this the place for us, in your opinion, to send a message back: let people do their jobs, hold them to account, ensure they do their jobs with the tools they’ve been given and take this out of the budget implementation act because you don’t need it? Would you agree with that?
Mr. Hutton: As an independent quasi-judicial tribunal that is independent of government, it’s putting me in a difficult spot to comment on proposed legislation. I can only guide you in saying that we have the authority. We have addressed many of these elements. It does bring more precision, and we will be acting upon that front.
Senator Quinn: Yes, it does put you in a difficult position, and I’m sorry I’ve done that, but then I’ll ask a yes-or-no question. If this was removed from the BIA, can you then confirm again that you still would have the tools to do what this legislation would ask to be done?
Mr. Hutton: Yes.
Senator Quinn: Thank you.
The Chair: Gentlemen, can you explain to us why, under the CRTC’s watch, we have allowed or you have allowed and encouraged, in my view, large telecom corporations in this country to become such a powerful oligopoly to the point where Canadians are paying among the highest cellphone bills and connectivity bills compared to other nations around the world? Since the CRTC has all the tools at your disposal to regulate and not allow for collusion and lack of competition and make sure that the system is efficient and effective, why have you failed and why has this happened under your watch?
Mr. Hutton: I confirm that our country does pay some of the highest rates in the world, as you indicate, Mr. Chair. We’re also among the highest levels of investment across the world. We’re at the forefront of technology deployment and coverage, although a lot of work needs to be done. There are a lot of different things we need to balance as a regulator going forward. But with respect to prices, it has been a clear focus of the commission over the last couple of years. We’ve clearly heard from Canadians that they want and we also agree they deserve better prices. We certainly have been working on that front to deliver those better prices.
As some of the answers to Senator Quinn indicated earlier, certainly a lot of our significant focus has been put on wireless because we are outliers on that front. With the MVNO regime that we introduced a couple of years ago and that we’re continuing to implement through multiple decisions every few months to be able to ensure that competitors are active in the market and are able to deploy service all across the country and effectively compete with better prices all across the country, it is having an effect over the last year or even two.
You have seen significant price drops. We still need to do our work and we still need to push on that front, but we are no longer the most expensive. When everything else has been getting more expensive, the prices for telecom services have been dropping, in part for what we do, in part government policy with respect to the spectrum and in part with respect to introducing a fourth player or fifth player out there. It is having its effect on the market at this point in time, but Canadians don’t feel it because they haven’t been able to switch or they have barriers to switching, which is where we view ourselves as being in line with the objectives of this piece of legislation to be able to address those factors. Prices in the U.S. have increased over this period where we have dropped, so we are doing better than that immediate neighbour, but we still have work to do with respect to other G7 countries, as you fully know.
The Chair: Mr. Hutton, prices have dropped marginally, and we have tonnes of room to drop. The problem is very simple. Canadians are being gouged. The giants — we all know who they are — are getting richer and richer. Just look at their stocks and their stock prices and their bonuses that go out every year to their executives. We have smaller entrants that try to get into the marketplace that are constantly being bought out or pushed out because they don’t have the capacity to compete. That is the reality.
The question again is very simple: Why has the CRTC, in over a decade of dealing with this problem, not moved the yardsticks? Could it be that the CRTC is not equipped and is not the right organization to make sure that Canadians have a fair marketplace and a free enterprise economy where competition is encouraged and where the consumer comes first? I know it’s a painful question, but it’s truthful based on the facts before us. There is nothing wrong if, at the end of the day, the CRTC isn’t the body to get the results on this particular issue.
Mr. Hutton: I venture to say that the CRTC is the right body on this front. I will have to beg to disagree on some elements of our market. We started three years ago with respect to intervening significantly to achieve better prices in the market on the mobile cellphone market, and we have seen a 50% drop in prices. We need to continue our work on that front, but while every other service provider in North America has been increasing prices, prices have been dropping here.
With respect to home internet services, that’s the market where the small players have been departing, being sold out, so on and so forth as you mentioned, and certainly that started to occur in the last 24 months. We have taken action, supported by policy direction from government, and relaunched a look at that regime there. We initially got out of the gate by reducing initial wholesale rates so that those players can start being more effective competitors, being able to innovate and being able to compete on price immediately. We’ve also highlighted and made the preliminary decision that they should also gain access to new, fibre-based services, which was not the case in the previous regime before on that front. We are about to issue decisions on that front to finalize necessary rate reductions and a new regime on that front which will, hopefully, in our view, be able to deliver even better prices on home internet services.
As for the companies and their stock prices and pay packages, that’s for them to decide on.
The Chair: Another question, deviating a little bit from the legislation before us but nonetheless relevant: The government seems to have a lot more faith in the CRTC than I or many stakeholders do, as we saw with Bill C-11 and Bill C-18. The Trudeau government essentially decided to make the CRTC the internet police. Also with Bill C-11 and Bill C-18, they have put on the shoulders of the CRTC the responsibilities to review Canadian content, which is an ongoing discussion in the arts and culture industry in this country. The government was under the impression that the CRTC would be able to manage all of these elements and also pick winners and losers in the media, a very complex issue the CRTC is dealing with because of Bill C-11 and Bill C-18. Now we find out, instead of getting to the bottom of these issues in a few months, as the government thought you would, you have suspended hearings, and there seems to be a little bit of uncertainty in terms of when the CRTC will get to the bottom of some of these questions.
Mr. Hutton: I can deal with some of those elements.
The CRTC is not the internet police, nor will it ever be. That’s not what Bill C-11 or Bill C-18, the Online News Act or the amendments to the Broadcasting Act, bring about. That’s not what we’ve done for decades in the broadcasting field. We’re not about to start doing that in this case here.
Yes, we’ve been trusted with implementing those two key pieces of legislation. With respect to Bill C-18, the policy is set by government. It is something different than our interventions in television and broadcasting where we are solely an implementer of the negotiation regime. This is a narrow provision that we are handling and is far from picking winners and losers on that front. That will not be our role in that environment, nor is it under Bill C-11.
We have, for decades, put in place successful regimes to create Canadian content, to create news and to be able to tell Canadian stories to Canada and the world. Those are certainly under threat. That’s why the government has put in place modifications to bring in the new online streamers to contribute towards our regimes going forward.
With respect to speed, I venture to say that as soon as that bill received Royal Assent, within a couple of weeks, we were out there with multiple proceedings on track to set foundational elements of that decision. We’ve already issued four significant decisions in that domain and on that front, not only started but concluded. We also had a significant hearing with respect to determining initial contributions towards the industry, getting dollars to flow going forward. That’s what most players are concerned with.
While we’re doing this, some people are saying we’re going too slow and some say we’re going too fast. We’re going at a hurried pace because it’s important to make sure our cultural industry, our broadcasters, our stories and our news are being told. In the next number of weeks, we will be issuing a major decision with respect to initial contributions coming forward.
I venture to say that there likely is some confusion out there because we put in place a road map to hopefully be able to guide the industry as to what is coming next. We are redoing a generation’s worth of work of successful regulatory framework in about two years. It is quite a tall order, which we are striving to achieve within our mandate and our capabilities.
Senator Simons: I want to come back to the actual text of the legislation that is before us as an example of what we’re talking about here. Proposed section 27.01 (1) is a legal requirement that service providers must have a self-service mechanism. Now, this seems to me to be a peculiar thing to put in a budget, but you’ve talked about how you have a code and the code is enforceable with the complaint to an ombudsperson. Do you have anything in your code that requires providers to have a self-service window on their website?
Mr. Hutton: In the market, there are a number of self-service windows out there, primarily with the new players.
Senator Simons: That’s not the question.
Mr. Hutton: I’ve explained this before. How we’ve addressed the switching is by requiring the old provider to deal with the new provider. You contact your new provider, and it’s even better with self-serve. You don’t even have to talk to them on that front. But we do not have a mandated self-serve approach. We will certainly be looking at how that can be achieved pursuant to this piece of legislation going forward and even investigating it otherwise.
Senator Simons: I bring up this example not because I’m so obsessed with the nature of having a self-serve window on a website but because it seems to me that in drafting this legislation, the government is sending a very clear message to the CRTC that they are unhappy with the pace at which you are moving to protect consumers and that they are unhappy with the way this is being enforced. With all due respect to Senator Quinn, we are not going to amend the budget. It’s a confidence motion. This is not something over which we bring down a government because we think that this is superfluous legislation. The very fact that the government feels it is necessary to put this kind of micromanagement into a budget document speaks to me to a breakdown in confidence and communication between the government and the independent regulator. I don’t understand why, having received this policy directive in February of 2023, things like this have not already happened.
Mr. Hutton: The policy direction mentioned a number of different elements.
On the case of confidence or not, you would have to speak with the government or the minister’s staff. I assume you posed that question to them last week.
Senator Simons: I did, yes.
Mr. Hutton: You did. I assume you got an answer on that front.
They are, in part, like us, looking at switching as being a key element in the market right now, because prices seem to be moving in the right direction. A lot of focus in that policy direction was put on prices and on those regimes. That was the main component of that policy direction out there. We put an enormous amount of work on that front.
The policy direction also spoke about a number of elements, such as measuring, making sure Canadians are getting what they pay for, so we have been putting in place measures on that front. It also makes mention of continuing to deploy broadband. We have been working on that front. We have been not only approving significant investments across the country for broadband but we have also launched a review of that to make it even more precise and be able to address the remaining areas — certainly rural, northern, Indigenous communities. There is a long list of things that we are working on as a result of that policy proceeding.
Now, what we are finding with our research over the last year — I guess the government is doing the same — is that switching is an issue. We have sought to address it through providing better information, because these elements are primarily covered by our codes already and our methods in place at this point in time. I will note a self-serve mechanism is something new, quite intriguing, not heard of as a suggestion prior to this bill coming into place. We will be looking at that, but it was not something that consumers raised with us in our research. We are addressing the elements such as better information, the need for better prices, the need to clearly understand what the packages are that are being offered to them, because the confusion that is out there is impeding people from switching too. That’s what we have been concentrating on.
Senator Simons: I want to come back to this. You’re saying you’ll look at that. If the government writes legislation that is passed by the House of Commons and the Senate and receives Royal Assent, your diction seems to suggest that the CRTC will take that under advisement and will consider it. I have to presume that if it is government legislation requiring you to do a thing, you actually have to do the thing, do you not?
Mr. Hutton: I will simply answer yes to that question. My diction is there are a lot of matters for us to interpret in here and actually provided by the act. I am also a staff member, and I cannot speak on behalf — I will be making those recommendations. The people who sit on the commission have to make those judgments. I am never able to speak as categorically as you would hope, and hopefully, you can understand that, but yes.
Senator Simons: Thank you very much.
[Translation]
Senator Miville-Dechêne: I will continue in the same vein as the chair of the committee about Bill C-11. I personally find that Bill C-11 contains important elements for preserving francophone culture in particular, but also other minority cultures in Canada. I became very concerned when I read that you were a year behind in implementing Bill C-11. Did I misread that? Please tell us.
Here’s what I would like to know: When can we expect to have regulations on what you call content discoverability on music platforms? In Quebec at the moment, the situation is not getting any better. My concern, which I expressed several times, is that francophone music and culture are central to preserving the French language. Given that, I don’t understand the delays at the CRTC. You hired people specifically for Bill C-11, and we’re told that you can’t stay on schedule. We talked about much tighter deadlines when the bill was passed.
Mr. Hutton: We are hard at work and not behind schedule. We have completed a number of processes and made a number of decisions. We are very close to completing another process for ensuring the start of contributions for production specifically. There will also be funds allocated to potentially promote discoverability in the audio and audiovisual market.
We have another very important project, the key to what is mostly in place to evaluate the new definition of Canadian content.
The government asked us, as an administrative tribunal, to conduct extensive consultations, and that’s where we are. That’s what we’re doing. We have completed the first stage of consultation, and we will schedule hearings to conclude that part of our work.
Senator Miville-Dechêne: I understand what you’re saying. I’ll stop you there, because I have a question. The May 14, 2024 edition of The Globe and Mail featured this headline: “CRTC delays implementing online streaming act until the end of 2025.” Is that not true?
Mr. Hutton: Our work plan, which involves redoing a generation’s worth of work, will be completed over a fairly short period, all told.
Senator Miville-Dechêne: That’s not what I’m asking you. Have you extended the deadline?
Mr. Hutton: We are continuing our work, but the deadline we’re using is the one in the policy direction that was provided to the commission, which clarified certain priorities to implement within a given period.
All of these priorities will be completed shortly, along with other key areas. We are hard at work on our hearings and consultations. We can’t just snap our fingers and it’s done. Many people say that we are going too fast, but we’re continuing our efforts and working hard to deliver what has been asked of us by a very specific time.
Senator Miville-Dechêne: More specifically, when will discoverability happen? This year, in 2024? In 2025? I’d like to have an idea.
Mr. Hutton: There will be elements of discoverability in 2024 and 2025.
Senator Miville-Dechêne: That will be implemented?
Mr. Hutton: Yes.
Senator Miville-Dechêne: I have no more questions.
[English]
The Chair: I want to go back, Mr. Hutton, to a response you gave to me in regard to Bill C-11 earlier. You mentioned that one of its objectives was to protect Canadian content, which is under threat. If you look at the stats and the facts, Canadian content has been busier, never had more injection of money and never had more success in terms of reach/growth over the last decade. It is unprecedented, and in large part it is unprecedented because of great investments from streamers like Netflix and others, who, in terms of dollars, have actually been surpassing the investment in Canadian content as defined by the Canadian government and the CRTC by an enormous amount of money. Isn’t the main objective of Bill C-11 to determine how we can get more money out of the streamers to put into the Canadian content structure that has been in place since the 1970s and 1980s, which is struggling because Canadians are just choosing not to watch that content?
Mr. Hutton: I will go back to what started a lot of this debate, which was a report on that front that was produced about six years ago by the commission called Harnessing Change. I think the anniversary is in a couple of days’ time. Certainly, the conclusion of the commission at that time was that streamers in the market were having an impact on those old players, as you say, out there and reducing their ability and that of the existing system to be able to deliver on the objectives of the Broadcasting Act. The conclusion was that those players should be asked to contribute in a fair, flexible and equitable manner to the environment — not only those players but all players in the market who are able to benefit from being in Canada.
Are we here to save a business model? No. However, we are here for journalism and we are here for news. We are here for talking about Canadian stories, bringing our sense to the world, having critical analysis and supporting democracy through debates and ideas on that front. That’s what the CRTC is about. It is not about being able to support one player or another on that front.
You speak of — certainly, you know very well the jargon and term — the industrial production. We have a great regime in this country that is outside of the Canadian content regime that has served, over the years, through various tax incentives and through having high-quality technicians, great writers and great actors here in Canada, to attract a lot of Hollywood and streamers to our country to be able to produce content here. The debate, as you well know, is about the profits or the IP. That story is certainly not considered Canadian content under the current regime. One of the things we’re looking at is evaluating whether those contributions should be recognized to a certain extent or how some of them should be shared with Canadian producers so that we can build that production industry in this country and be able to have people invest in music and programming, build companies and tell those Canadian stories. It is about asking these players to contribute toward the Canadian content regime and not to save anybody in particular.
The Chair: On that point, I really hope the CRTC will once and for all tackle what our government didn’t have the courage to tackle, which is that definition of Canadian content. The truth of the matter remains that you can have a Canadian story written by a Canadian author and have a movie produced by a Canadian producer using Canadian actors on Canadian soil, and we don’t consider that Canadian content. I find that out of this world. It’s just because the investment dollars into this Canadian story and all these Canadian players come from overseas. I think it’s something we should consider fully Canadian and fully encourage. The fact that the investor wants to invest in that Canadian content should be something we applaud and not punish.
I always use the argument that Mario Lemieux is no less Canadian just because he plays hockey in the United States where the investors that allowed him to play professional hockey were using U.S. dollars. At the end of the day, as we see today, Mario Lemieux made enough money playing hockey in the United States, and now he owns part of the Pittsburgh Penguins. For me, that’s a Canadian story and Canadian content, and it has to be reflected in this modern world.
That’s more of a statement. I will leave it to the CRTC to get to the bottom of that. That’s not a question.
Senator Cardozo: My apologies for not being here earlier and missing some of this.
I just want to take this a bit further. On the matter of Canadian content that the chair talked about, the way I see it — maybe it is a matter of changing the terminology — it’s an industrial policy. When you talk about the different aspects of what’s Canadian, if Bryan Adams records a song in the U.S. written by a non‑Canadian writer with a non-Canadian band in a non‑Canadian studio, he is not helping the Canadian industry a whole lot. I think what we are really talking about is made-in-Canada content as opposed to Canadian content. But that’s a good one for another day.
In terms of the points that the chair raised, what is your sense of how things are going with Netflix moving on board in terms of making contributions? Do you see a point down the road where we won’t need Canadian content regulations because enough will be happening in terms of the development of Canadian content?
Mr. Hutton: I would venture to say that that may be an aspirational goal, but we are far from it, if I can put it that way. The rationale for the regime we have in place — which is to promote discoverability and Canadian production, ensure that we can have news and information, ensure that we have journalism and debates and make sure we have some stories to tell about Canada — was certainly very much introduced because we were right next to the United States, and a lot of information and programming were flowing, as you well know, into our country. Quite frankly, we weren’t able to compete with that on an open market. The cost of quality stories, the writing and the imagery, is tremendous. They were being developed for the American market and the 350 or so million people there.
Essentially, we have moved to a world where a piece of high-end programming is no longer being developed solely for the American market. It is being developed for the world market — the English-speaking market or the Western market. We are talking billions of people. There are a lot of advantages to being able to tell the Canadian story in that environment, because maybe if we do have that great Canadian story, then a billion people hear about it. That’s one thing we want to be able to capture through this regime, and that’s a little bit of what the chair was alluding to in his statement on that front.
That doesn’t deliver Canadian news or Canadian journalism. Therefore, we certainly need to ensure that side of the regime is able to produce information and news on whatever platform — I don’t think we want to specify any particular one — and be flexible in our approach to be able to make sure that Canadian stories, news and information are being told out there. As the world and economics have changed, it has gotten more difficult, in my view, to be able to tell those stories going forward.
Senator Cardozo: In terms of news and current affairs, I note that CTV recently laid off a large number of journalists, and there have been some layoffs at CBC, although I hear now there may not be that many. What are we doing in terms of Canadian news and current affairs on CBC, Radio-Canada and the private sector?
Mr. Hutton: The CRTC looks at the ensemble. We don’t specifically look to get involved in supporting one player over another. We look at various approaches. However, over the last number of years, it was on our radar that news was certainly under threat, so we put a number of elements in place in our framework, which included conditions of licence to deliver on local news and even specific information related to local markets. We were being quite precise. We introduced Canadian programming expenditures, spending requirements, on news for a number of different players in place so that when times get more difficult, as they continue to, a minimum is being provided on that front.
We have put in place other regimes which allow the integrated nature of some of the corporations to transfer some of their funds that would have supported other ventures toward their local news operations. Bell Canada and Rogers are folks who can transfer millions of dollars to continue to support the local news environment or even their national news environment.
For independent players, we have also had a regime put in place, and we’re continuing to work on that regime. We may see some decisions coming up quite soon in that respect to be able to support them through the Independent Local News Fund, which actually provides dollars to support those who are not affiliated with bigger players to produce local news. News is not a profit‑making environment; it is supported by the rest of the operation. That’s why we have always been quite mindful with existing players, as we are now. We now have to look at shifting that to the new realities that we have in front of us going forward.
Senator Cardozo: Over the last 10 years, has the amount of news programming gone down in the private and the public broadcasters? CTV has laid off a number of people in smaller towns, and CBC has done some of that, too.
Mr. Hutton: I don’t have the number of hours in front of me. The regime that we put in place was to ensure that we set a floor of the number of hours that reflected what was being offered in the market at that time. That was a couple of years back. That is what we measure, and that’s what we can hold the broadcasters to account on, as you know, with the conditions of licences that they have in front of us. We certainly monitor that, and we will be addressing that once more at renewal going forward. We do not regulate the number of employees or the number of reporters. Our tools are for what is on-air and what they invest in news, and they continue to invest in news in a manner that reflects the conditions of the licence.
The Chair: Thank you to our guests for being with us here today and answering our questions — sometimes pointed questions, but thank you nonetheless.
Mr. Hutton: And my pointed answers, being respectful to all of us.
The Chair: It’s very much appreciated that you faced the music on behalf of the CRTC. Thank you.
(The committee adjourned.)