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Decentralized Democracy

House Hansard - 133

44th Parl. 1st Sess.
November 23, 2022 02:00PM
Context: House Hansard - 133 - Nov/23/22
Ms. Nathalie Sinclair-Desgagné (Terrebonne, BQ)
I have a great audience tonight, Madam Speaker. I hope I will be able to concentrate. Stephen Hawking once said, “We are all now connected by the Internet, like neurons in a giant brain.” In this giant brain, good Internet is equivalent to a high IQ. It lets us go further in life. The issues in the Internet service market involve both the providers themselves and the legal framework in which they operate, and can be summed up in two points that are intrinsically linked. The first is the inadequate service quality and download speeds, and the second is the exorbitant rates that Quebeckers and Canadians pay for their telecommunications services. This bill seeks, among other things, to give consumers the ability to make an informed decision when choosing an Internet service provider. In other words, Internet providers will no longer have the right to advertise the highest theoretical speed possible, but will have to indicate the average speed, especially during peak periods. That is a good start. We should note right from the outset that the proposed measures apply only to fixed broadband service and not mobile phones, even though everyone knows that cell phone rates in Canada are much higher than elsewhere in the world, but let us move on. This bill will contribute to improving the situation, but other actions will have to be taken. As I will explain, there needs to be a discussion on competition and the market power of the telecommunications giants. I would like to begin with the importance of having access to high-quality Internet. This service is beyond essential. The quality and affordability of Internet services are closely linked to the economic performance of Quebec and Canada. Let me share a quick story. In my former life as a consultant, I had a contract in the Republic of Palau. It is a small island paradise in the middle of the Pacific, and I was able to help its finance department improve their environmental, social and accounting standards so they could receive money from foreign funds. The Island of Palau does not really have Internet. My stay went very well with a bit of an Internet connection, and therefore less work, potentially, but ultimately, we can see that Palau's economic development has suffered a great deal due to this. I experienced that. The trend has been moving towards digitizing the economy for several years now, and the pandemic only accelerated this. The massive shift to telework and people's ability to work remotely should encourage the development of the regions of Quebec and Canada. Unfortunately, the Liberal government is struggling to keep up with technological developments and the digitization of the economy. Its outdated policies mean that Canada often lags behind on telecommunications affordability. We cannot talk about economic development without considering the quality of Internet access. It is as important to economic development as the power grid was in Quebec in the 1960s. The Quebec government is working hard to improve Internet access, particularly in remote areas. High-speed Internet access for all eligible households in Quebec is a priority for the Quebec government. Furthermore, it has invested huge amounts of money in this area. To date, the Quebec government has budgeted $1.3 billion to get households connected faster to high-speed Internet. In comparison, the Government of Canada has invested $1 billion this year, bringing its total investment to $2.75 billion. In Quebec, the amount is about $150 per person. In Canada, it is half that, or only about $75 per person. Now let us look at what is happening internationally. Every year, The Economist compiles data on Internet services in about 100 countries. Although Canada scores well for quality of infrastructure and literacy, which is Canadians' understanding of and ability to use Internet services, its rank is rapidly declining because of its competition and affordability scores. If the government really wants to bring telecommunications costs down and improve service quality, it has to use the Competition Act. Canada has a frustrating tendency to tolerate and sometimes even encourage monopolistic practices. In many of the country's markets, including telecommunications, a handful of companies dominate the entire market. The upshot is that providers have a lot more leeway when it comes to deciding how much to charge. Time for a quick economics refresher. In an ideal market, the price of a service is equivalent to the marginal cost, that is, the cost that the supplier pays to provide the service. It is quite easy to demonstrate, and this has been studied by economists, that in Quebec and in Canada, we pay a price that is much higher than the marginal cost. There are people who agree. For example, Bell, Rogers, Shaw and Telus collectively account for 71.7% of Internet service revenues. That is what we call an oligopoly, a market dominated by a small number of suppliers. For cellphone services, it is even worse. Three companies, Bell, Rogers and Telus, hold nearly 91% of the market. As a general rule, increasing the number of companies in a market does two things that benefit consumers and are ultimately good for the economy. Healthy competition in a market tends to lower the prices paid by consumers. In addition, companies often improve the quality of their services to attract and retain customers. While this rule is not absolute, it applies particularly well to telecommunications markets. Let us look again at what is done in other countries. Telecommunications prices are much lower in Europe, where there are a large number of telecommunications service providers. In The Economist's list, France, Spain, the Netherlands and Sweden all rank higher than Canada on the Internet affordability index. This summer, the Liberal government passed a competition reform that does not do enough to result in real change. The Liberal government's competition policies are outdated and not very well suited to the reality of the digital economy in Quebec and Canada. In practical terms, some sections of the Competition Act, which dates back to the 1980s, are obsolete and due for a serious update. It is not just the Bloc Québécois that is saying that. The competition commissioner is, too. In fact, in January, he published a list of recommendations to modernize the Competition Act. One of them involves removing the provision on the efficiency gains argument, which allows one company to merge with another on the pretext that it will be more efficient. Let us acknowledge right off the bat that this provision is an anomaly. It does not exist in the rest of the world. It exists in Canada and it is putting many consumers at a real disadvantage, so it should be removed from the act. This very argument could be made in the transaction between Shaw and Rogers, which is currently before the court. Let us recall that two out of the four companies that make up the oligopoly on Internet telecommunications want to merge their services. When this provision is invoked, the Competition Bureau cannot block the transaction, even if it is anti-competitive. In a market that is already perceived to be run by an oligopoly, this transaction should not go through. Speaking before the Competition Tribunal quite recently, an economist from Dalhousie University, Mr. Osberg, said that low-income Canadians who are already dealing with inflationary pressures would be the most affected if the cost of telecommunications increases in the wake of the merger. The last thing we need right now is to further reduce competition and guarantee that prices increase even more. The other thing the commissioner recommended as an important change to the Competition Act is related to the fact that the Competition Bureau does not have the final say on a transaction. A minister, an elected official, someone who is anything but neutral, can make a decision that goes against the bureau's recommendation. That is what happens. In the case of the Shaw-Rogers merger, the Minister of Industry intervened to defend the transaction. Yes, he is defending the deal, suggesting that part of Shaw be acquired by one of the other four providers instead. Guess what the bureau's response was. It said no, that is not a good enough solution. Unfortunately, it is not up to the bureau to make that decision. The minister will have the final say. In closing, the Bloc Québécois is in favour of Bill C-288, because it will allow consumers to make more informed choices about Internet packages. Consumers need to be able to see the actual download speeds they will be getting, rather than the theoretical highest speed. Since speeds are lower at peak hours, it is important that consumers get accurate information about the service they will receive at those times. In short, the bill is a step in the right direction, but it clearly does not go far enough. As my leader likes to say, the Bloc Québécois is never against apple pie. However, I know that apple pie alone does not make a nutritious dinner. We need more. I hope that I demonstrated, in a short amount of time, the importance of in-depth reform of the Competition Bureau, real reform that will stop the telecommunications giants' lobbyists from abusing their position of power and ensure that consumers, honest citizens, are finally protected.
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