Transcript, Hearing 15 February 2024

Attendees and Location

Held at:

Conference Centre
Portage IV
140 Promenade du Portage
Gatineau, Quebec

Attendees:

• Chairperson: Vicky Eatrides
• Members: Adam Scott, Vice-Chairperson, Telecommunications
  Ellen Desmond, Commissioner, Atlantic Region and Nunavut
  Nirmala Naidoo, Commissioner, Alberta and the Northwest Territories
• Legal Counsel: Eric Bowles
  Megan Maloney
• Secretary: Sonia Gravelle
• Hearing Manager: Marianne Blais
• Manager Telecommunications: Adam Mills

Table of Contents

3114 Cogeco Connexion Inc.

3376 Quebecor Media Inc. on behalf of Videotron Ltd.

3659 Rogers Communications Canada Inc.

Undertakings

3900 Undertaking

Transcript

Gatineau, Quebec
15 February 2024
Opening of Hearing at 9:02 a.m.

Gatineau, Québec

‑‑‑ Upon commencing on Thursday, February 15, 2024 at 9:02 a.m.

3111 LA SECRÉTAIRE : Bon matin.

3112 We will begin with the presentation of Cogeco Connexion Inc.

3113 Please introduce yourself and your colleagues and you may begin your presentation. Thank you.

Presentation

3114 M. BEAUDRY : Bon matin. Bonjour, Madame la Présidente Eatrides, Monsieur le Vice‑président Scott, et mesdames les Commissaires Desmond et Naidoo.

3115 Je suis Paul Beaudry, vice‑président, Affaires réglementaires et gouvernementales, chez Cogeco.

3116 Je suis accompagné à ma droite de Philippe Jetté, président et chef de la direction de Cogeco et de Cogeco Communications, de Frédéric Perron, président de Cogeco Connexion, et de Valéry Zamuner, première vice‑présidente et cheffe des affaires corporatives et juridiques; et à ma gauche de Nathan Jarrett, directeur, Affaires réglementaires, et Leonard Eichel, directeur, Affaires réglementaires.

3117 C’est avec plaisir que nous nous présentons devant vous aujourd’hui pour aborder des questions que nous jugeons cruciales pour l’avenir de la concurrence dans les services à large bande au Canada.

3118 Nous demandons au Conseil de revenir aux principes de base en ce qui concerne le régime d’accès de gros obligatoire, en y apportant des modifications essentielles pour veiller à ce que les entreprises de télécommunications régionales, comme Cogeco, puissent continuer à être des concurrents viables dans un marché où la domination des grandes entreprises titulaires n’a jamais été aussi forte.

3119 Nous demandons au Conseil de corriger une asymétrie qui existe au sein du régime réglementaire et qui a permis aux entreprises titulaires de profiter d’un allègement réglementaire sans précédent en ce qui a trait à leurs installations de fibre, tout en leur offrant un accès illimité aux installations de leurs concurrents du câble.

3120 Nous demandons également au Conseil de faire preuve d’une grande prudence dans l’application de la méthode de calcul des coûts qu’il a choisie pour établir les tarifs de gros afin de trouver un équilibre approprié entre la stimulation de la concurrence, la promotion de l’innovation et le maintien des mesures incitatives à l’investissement dans les installations que les Canadiennes et les Canadiens méritent.

3121 Philippe.

3122 MR. JETTÉ: Cogeco wishes to make three main recommendations as part of this review, which we believe are of paramount importance to the enhancement of competition and the long‑term viability of regional facilities‑based competitors:

3123 First, the CRTC should exclude the three largest integrated service providers in the country ‑‑ namely, Bell, TELUS and Rogers and their respective affiliates ‑‑ from being able to use the mandated wholesale framework.

3124 Second, the CRTC should exclude nascent fibre‑to‑the‑premises facilities from any permanent FTTP access mandate.

3125 Third, the CRTC should reject retail rate benchmarking when it comes to setting wholesale access rates and should instead implement a mechanism to ensure that wholesale access rates increase commensurate with the speed of the product.

3126 Now, let us go in more details. Frédéric.

3127 MR. PERRON: Good morning.

3128 Cogeco has been, and remains today, a vigorous competitor in the more than 600 mostly rural communities that we serve. In most of these communities, we compete head‑to‑head with much larger incumbents, as well as with many independent resellers who use our network to serve their customers.

3129 However, in the past two years, a significant threat to the telecommunications landscape has emerged. The three largest carriers in Canada ‑‑Bell, Rogers and TELUS ‑‑ have purchased many of the independent service providers that use our network. This industry consolidation has happened so quickly that today nearly half of all wholesale end‑customers on Cogeco’s network belong to those three dominant providers.

3130 Let me say it again. Close to 50 percent of all end‑customers who use our network via the CRTC’s mandated wholesale regime belong to Bell, Rogers and TELUS.

3131 This is unprecedented and is a severe distortion of the original intent of the mandated wholesale access regime. And it represents an existential threat ‑‑ and I'm not saying that lightly ‑‑ to the long‑term viability of regional carriers like Cogeco as a going concern.

3132 We assure you this is not hyperbole, and we are taking these developments very seriously. Bell, TELUS and Rogers each have a market capitalization that is 10 to 15 times greater than Cogeco. They are dominant service providers who can bundle their wireline services with their established wireless services. They have marketing, capital and operations budgets that dwarf Cogeco’s.

3133 The Big 3 incumbents are using the wholesale access regime to consolidate their dominance of Canada’s telecommunications industry.

3134 For example, TELUS has recently leveraged its acquisition of a wholesale‑based service provider to launch home Internet on the Koodo brand, which now offers wireline‑wireless bundles in Ontario, Quebec and Manitoba. Bell, for its part, as they admitted yesterday, has announced its intention to launch a Bell‑branded Internet service using cable networks in certain Quebec markets. Ironically, both of these companies are expanding their use of the wholesale regime while, at the same time, fighting tooth and nail to prevent other carriers from doing the same on their network.

3135 These large incumbents currently have unlimited access to our wireline networks as a result of the current asymmetry in the mandated wholesale regime. There is no sunset, no restriction of any kind and no obligation for them to invest in their own infrastructure over time. By contrast, in order for Cogeco to access the wireless networks of these same providers via the Commission’s MVNO access framework, we must spend hundreds of millions of dollars on spectrum and build our entire wireless network within a short seven‑year period.

3136 Taken together, these factors lead Cogeco to conclude that if the Big 3 incumbents continue benefiting from unlimited access to our networks at regulated rates, Cogeco, as well as other regional competitors, could suffer irreparable harm. As the Big 3 gradually grow their dominant position by accessing the wholesale access regime, Cogeco could gradually be crowded out of its own network and no longer have the ability to invest in the world‑class networks we offer today. Ultimately, Canadian consumers would pay the price for this reduction in facilities‑based competition.

3137 Of course, all of this can be avoided and the solution is simple: Bell, Rogers and TELUS should no longer have access to the mandated wholesale regime, either within or outside their footprint. Period.

3138 Our recommendation is consistent with the original intent of the mandated wholesale framework, which was to allow smaller providers to access the networks of dominant carriers and become viable competitors. But the framework has now been flipped on its head, with Bell, Rogers and TELUS now using it to further consolidate their already significant market power.

3139 Cogeco notes that our proposal to exclude the Big 3 from accessing the wholesale access regime has been endorsed by a significant number of intervenors in this proceeding. They include wholesale‑based competitors and incumbent carriers. While we have disagreements with these other stakeholders on a number of issues in this proceeding, we all agree that the use of the wholesale regime by Canada’s three dominant carriers, who currently exercise significant market power, is not in the interest of Canadian consumers.

3140 Valéry.

3141 MME ZAMUNER : Bonjour.

3142 Le deuxième point dont nous aimerions discuter avec vous aujourd’hui concerne les réseaux de fibre et la nécessité de maintenir les mesures incitatives à l’investissement.

3143 Au cours des deux dernières années Cogeco a procédé à la construction de réseaux physiques dans plusieurs régions rurales et mal desservies du Québec. Nous avons relié plus de 50 000 foyers à ce réseau. Ce développement se poursuit également avec l'affectation de ressources supplémentaires dans la province de l'Ontario, où nous avons l'intention de relier 55 000 foyers additionnels à ce même réseau.

3144 Il est important de mentionner que la vaste majorité des constructions du réseau de fibre de Cogeco se font dans le cadre de projets visant des zones où l'infrastructure d'accès ne répond pas aux normes ou n'existent tout simplement pas. Comme nos projets de construction de fibre se situent généralement dans les régions rurales, où la densité de la population est faible, l'analyse de rentabilité peut s'avérer extrêmement difficile. Même lorsque nous recevons des subventions des gouvernements, la période de recouvrement de notre investissement peut s'étendre sur plus d'une décennie.

3145 De plus, ces subventions ne fournissent que le capital nécessaire à la construction initiale et ne financent pas les coûts permanents, comme l'entretien et l'exploitation, et ne tiennent pas compte des dépassements de coûts.

3146 Comparativement à Bell et TELUS, qui déploient de la fibre depuis plus de huit ans, la majorité des déploiements de fibre de Cogeco ont été réalisés au cours des dernières années, c'est pourquoi nous les qualifions d'émergents, ils sont à peine achevés et en sont aux premières étapes d'accueillir des abonnés. Contrairement aux trois grandes entreprises titulaires, aujourd'hui nous n'avons pas rentabilisé nos investissements dans la fibre.

3147 Nous proposons donc que le Conseil exempte les entreprises de télécommunications dont les réseaux d'accès de la fibre desservent moins de 350 000 foyers, ou alternativement permettent aux entreprises dont le déploiement FTTP sont émergents, d'être exemptées de la règlementation de gros pendant au moins trois ans, une fois la mise en service.

3148 Nous croyons que nos propositions sont raisonnables et trouvent le juste équilibre entre les deux objectifs du CRTC, soit la facilitation d'une concurrence durable et le maintien des mesures incitatives à l'investissement.

3149 Ni l'une, ni l'autre de nos propositions ne priverait les tiers d'accéder aux vastes réseaux FTTP des grandes entreprises titulaires et elles rendraient accessibles plus de neuf millions de foyers actuellement desservis par les installations FTTP des titulaires. Nathan?

3150 MR. JARRETT: Merci. The third issue we would like to raise with you today is how wholesale rates are to be established. We recognize that the CRTC has recently ruled that it will continue to use Phase 2 costing methodology to set wholesale rates for mandated services such as high‑speed internet.

3151 Although we would have preferred a different approach we acknowledge and understand the Commission's decision. That said, we have two recommendations to propose to the Commission as it sets out to finalize the wholesale HSA rates.

3152 First, we urge the Commission to reject the proposals made by some parties to benchmark the wholesale rates produced, using the Commission's costing methodology with retails rates available in the market.

3153 These proposals represent a shift away from cost‑based pricing and embrace a retail minus approach that was explicitly rejected by the Commission in its recent rate‑setting methodology decision.

3154 We're deeply concerned that any attempt to adjust wholesale rates after they've been set, using the Commission's costing methodology, risks moving them further from true underlying network costs.

3155 Attempting to benchmark wholesale rates with selective and arbitrary retail rates fails to recognize the diversity of retail pricing.

3156 More importantly, it fails to acknowledge that resellers have... offer a multiplicity of retail services over a single wholesale broadband connection.

3157 As such, simplistic retail benchmarking denies just and reasonable compensation to underlying carriers, like Cogeco, and further, risks the armful distortion of the retail market.

3158 Second is the issue of the wholesale rate structure, in particular, the composition of the access rates, which ultimately determine the retail rate offered by third parties to consumers.

3159 We note that by using the basic Phase 2 methodology the access rates produced for FTTP networks are flat, no matter the speed. The access rate for a 50 megabit service is priced the same as a 1 gigabit, or 1.5 gigabit service. This is completely out of step with internet pricing and the retail market, with the Commission's historic approach to wholesale rate setting and with incentives to invest where needed, to build and maintain an robust telecommunications infrastructure in Canada.

3160 Traditionally, internet service prices, both retail and wholesale, have increased with speed, as a means of encouraging underlying carriers to invest in new technologies for cutting‑edge users, while simultaneously ensure that rates are as affordable as possible for the broader subscriber base.

3161 This pricing logic has served Canadian consumers well, as it has allowed them to choose a wide variety of speeds, at different price points, that suit their budgets.

3162 We urge the commission to recognize, as part of its wholesale policy framework, that wholesale access rates that increase with speed are pro‑consumer and help to ensure that network providers, like Cogeco, can continue to invest in their networks over the longer term. Paul?

3163 MR. BEAUDRY: Before we close, I wish to briefly address the matter of retail regulation.

3164 You're asking us whether or not retail internet should be regulated. Our answer, empathically, is that they should not.

3165 First, the Commission has at its disposal a number of consumer protections in place to mitigate against abusive behaviour. Chief amongst these measures is the internet code. Coupled with a complaints process overseen by the Commission for complaints for telecom and television services, we believe that these measures adequate and strike the right balance between consumer protection and incentivising investment and innovation.

3166 Second, we believe the measures we are advocating at the wholesale level will help address issues in the marketplace prompting this question, ensuring that robust regional competitors, such as Cogeco, continue to have incentives to invest and expand their networks, it is the best way to ensure real and sustainable competition that benefits Canadian consumers.

3167 The imposition of retail regulation by the Commission would have the perverse effect of reducing the diversity of competitive offers in the market, leaving consumers with less choice, and service providers, like Cogeco, with fewer opportunities to distinguish themselves.

3168 We also note that there's broad consensus on this issues from interested parties in this proceeding.

3169 In closing, let me reiterate our key points. First, the Commission should clarify that the wholesale mandate is to the benefit of independent ISPs and regional carriers only. The Big Three carriers do not need the mandated wholesale regime to compete. Allow them to continue benefitting from it risks crippling regional competitors and leaving consumers with the appearance of options but no actual options.

3170 Second, nascent fibre‑to‑the‑premises facilities must be protected and incentives to invest in fibre must be maintained. To that end, the Commission should either exempt carriers whose fibre access networks has less than 350,000 homes, from the wholesale mandate, or alternatively, exempt nascent fibre deployments for a period of at least three years.

3171 Lastly, Phase 2 costing should be used with care. Proposal to benchmark wholesale rate with retail rates should be avoided and the access component of wholesale high‑speed access rates should increase with speed, to be consistent with carriers' long‑standing retail practices.

3172 All of the above elements are key to the success of the mandated wholesale access regime in Canada and for maintaining a healthy competitive environment.

3173 Thank you for the opportunity to participate in this proceeding. We look forward to answering your questions.

3174 LA PRÉSIDENTE : Merci beaucoup à Cogeco pour votre participation et pour être ici avec vous ce matin.

3175 Alors, je sais qu'on a hâte d'avoir une discussion. Je vais céder la parole à la Conseillère Naidoo, pour commencer avec les questions. Merci beaucoup.

3176 COMMISSIONER NAIDOO: Good morning. Thank you so much for being here, we really appreciate it.

3177 I wanted to start off with retail pricing. The lowest advertised retail internet prices in Canada are currently in Quebec, and of course Cogeco has very significant operations in both Ontario and Quebec.

3178 So, I'm wondering why you think advertised retail prices are lower in Quebec. Do you expect to see retail internet prices in Quebec decline, increase, stay about the same, over the next few years? And I'm wondering if you can explain why.

3179 MR. PERRON: Thank you for that question, Commissioner. We are glad to hear your comment about deaveraging Canadian prices, because when we talk about Canadian prices being high, it is indeed an average of Western prices going up, and Quebec and to a lesser extent Ontario, going down, so thank you for taking note of that fact.

3180 We take great pride in being aggressive competitors in those markets. We are David fighting against Goliath and we're fighting Goliath pretty hard every day. We are not giving them an inch in the street fighting that is happening out there.

3181 And that why oftentimes you will see that Cogeco's pricing strategy will be lower. Cogeco's prices will be lower, in many cases, than those of the incumbents.

3182 So, in summary, Commissioner, I would say that the presence of regional players out east, like Cogeco, like Videotron, like Eastlink, is a major driver of those prices going down in those regions, and it is a sustainable driver of prices going down, because we offer our own infrastructure, whereas resellers may be a short‑term solution, which is not always as strong of a long‑term solution.

3183 So, in sum, we're proud of having been a contributor to that situation.

3184 COMMISSIONER NAIDOO: Thank you very much for that.

3185 MR. PERRON: Thank you.

3186 COMMISSIONER NAIDOO: I just want to stay on the same topic, here.

3187 In our view, what are the unique market conditions causing internet prices to differ between Ontario and Quebec, and... especially with considerations that Bell operates in both regions?

3188 MR. PERRON: I don't know that I have the full answer, Commissioner, but I do take note that... or I do notice that there is a stronger regional infrastructure player presence in Quebec, with the presence of both Cogeco and Videotron, whereas in Ontario it's only Cogeco, really, and we're not present anywhere... everywhere ‑‑ sorry.

3189 However, in the markets where we do operate in Ontario, we have been a driver of competition and of price declines, and we're proud of that.

3190 COMMISSIONER NAIDOO: I want to give you an opportunity to give us your opinion on this. Large incumbents like Bell are offering promotional retail rates in some areas that are actually below the wholesale rates. And so I'm wondering what impact that has on competition, and are those offers difficult for you to match?

3191 MR. PERRON: We try to match them as much as we can. And as I mentioned earlier, in many cases we have to undercut them because we're smaller and we're fighting them tooth and nail.

3192 With regards to why below the wholesale rate, I don't exactly know other than to say that to my knowledge this is not something we do very much, or at least not consciously. It's the Canadian wireline market is extremely segmented, extremely regional by product, by system, by region. So it's possible sometimes that some cases like that might happen, but it's not something that we notice happening on a systematic basis.

3193 MR. BEAUDRY: And if I may just add, Commissioner, in addition to this, some of these promotions are part of larger bundles, so we also have to not lose sight of the fact that sometimes it's part of a larger pricing pattern that includes more than one service.

3194 MR. PERRON: And if I may add, I forgot to mention the fundamental importance of convergence. And the incumbents being able to bundle their wireline and wireless services, which is something we cannot do because it's so hard for us to access the wireless regulated regime. So what the incumbents may be in a position to do is actually lower their prices on the wireline business as a loss leader to then cross out wireless, which is one more argument to express how dominant they are in this market and how they may be able to crush ‑‑ as Bell noted yesterday ‑‑ as they may be able to crush the smaller players, whether they're resellers or regional players such as ourselves, by bundling wireline and wireless and selling one of the two products as a loss leader.

3195 COMMISSIONER NAIDOO: Thank you for that.

3196 MR. JETTÉ: You are asking very good questions. As you can see, it has many components in the answer. So being vertically integrated offers a lot of options to the marketplace. That's an important one. Convergence is part of that.

3197 Density, geography is also a consideration. Since the incumbent, the large incumbents often cover the bigger Canadian cities, they actually benefit from the density factor, lowering their costs from dense urban areas, and they can redistribute profits over geography or other market offers that they bring.

3198 And third, their scale. They are much bigger. They have access to financing at reduced rate compared to smaller players. They have more ‑‑ they have a greater labour force. They have more of everything, and they pay less than the smaller players. So the economics are on their favour on that one as well. And there are also other considerations.

3199 COMMISSIONER NAIDOO: Well, that was a really good segue into my next question, so thank you for that. I want to talk about geography.

3200 In your intervention, you raise concerns about an alleged emerging threat that you think is happening as we talk. You say the three largest carriers use the wholesale HSA regime as a vehicle to undermine regional facilities‑based competitors. You say Bell, TELUS, and Rogers have been actively acquiring wholesale‑based ISPs.

3201 So I'm wondering, in a context where your FTTP deployment mostly takes place in rural areas, as you had mentioned, and there are wholesale‑based competitors who tend to compete in urban or more higher densely‑populated areas, how would you say how likely do you think it is that Bell, TELUS, and Rogers would make use of a mandated HSA service to compete in your territory?

3202 MR. BEAUDRY: Well, I can say that up to now, Commissioner, they have been making use of this network. You know, we've heard some larger players threatening that if they don't get what they want on fibre, they're going to compete on cable. But the reality is, as we've just explained to you, this is a phenomenon that's already happening.

3203 With respect to our fibre deployments, as you know, in Quebec and Ontario, we must make them available, but currently it's only under the disaggregated regime. And because of the discrepancies between the aggregate regime and the disaggregated regime, there currently hasn't been a lot of take‑up for disaggregated.

3204 But should you change this in a new access regime, there is a real threat that not only would smaller independent ISPs try to access these more rural and remote fibre deployments, but the largest players would do so as well. And this would be extremely detrimental to a player like us, because it would completely change our business case when we go in these communities.

3205 We've pointed out to you that the business case is already extremely challenging with long payback periods. Needless to say, if we turn the lights on on a new deployment, and the next day, one of the big marketing machines of a Big Three player comes in asking for regulated access, potentially at rates that are under our costs, we could be decimated.

3206 And this also has implications for future investments. We've pointed out that we get government subsidies for a lot of these undertakings, but even when we factor the subsidies, it's not an easy case. Imagine there's going to be a significant shift to a greater amount of public funding, even greater than we get currently, if there's open access policies at below‑cost rates, because the payback periods, which right now are already above 10 years in many cases, will be even more protracted.

3207 So yes, we do fear this. And obviously, that's why we've proposed remedies on the fibre side that ensure that smaller players like Cogeco whose fibre deployments are largely rural and remote need certain protections to ensure that they can continue building, but also that Canadian citizens who live in these communities can get access to high‑speed next‑generation networks, which they require to be full participants in the global economy.

3208 MR. PERRON: I think, if I may add, on the broader point of your question, which I think was how likely would it be that the incumbents would take advantage of the regime to essentially crush us, it's already happening today, and it's just getting started.

3209 So a couple of examples we've shared already that already half of the third party users on our network are from the Big Three, so we're already in some situations today where we need to make investments in certain parts of our network to enable the Big Three to make profit that we are not profiting into.

3210 You've seen publicly Bell saying that they want to enter cable networks in Trois‑Rivières, Quebec, for example, which by the way is the birthplace of Cogeco. They already have a network in Trois‑Rivières, but they now want ‑‑ that's not enough for them. They want to enter the cable network to further harm us.

3211 So it's happening today every day. TELUS is doing it in some markets as well, where they take their significant brand, they take their national wireless service, they take their national home security service, and they do door‑to‑door in our markets, door‑to‑door sales, offering these products and wireline service on our own network.

3212 TELUS, I think, said they're a regional player. That's pretty fanciful, Commissioner, and pretty misleading, to be honest. TELUS is a national brand, a national wireless service, a national home security service. Which Canadian do you know doesn't know TELUS? TELUS is not a regional player.

3213 LA PRÉSIDENTE : Je m'excuse. La conseillère Naidoo... J'aurais dû commencer en disant qu'on a des questions en anglais et en français aussi. S'il vous plaît, veuillez répondre dans la langue de votre choix. Merci. Je m'excuse.

3214 COMMISSIONER NAIDOO: Yes, and I apologize. My French isn't at the level where I feel confident enough to speak it to you, so please, but I've got my earphones, so please answer in any language that you choose.

3215 Like Eastlink, you submitted that your FTTP deployment is relatively new and generally limited to very high‑cost rural areas, in contrast with the ILECs, who've been overlaying their copper with FTTP for years. As a result, you believe your network and those of smaller players should be exempted from any mandate.

3216 How would consumer choice be impacted if Cogeco's FTTP facilities were not subject to the Commission's mandate?

3217 MR. BEAUDRY: I would say that ‑‑ I don't want to repeat what I said before, but there is a challenging business case when we build these networks at the edges of our existing infrastructure. When we build these networks out, we start with zero customers. We need to build it all from scratch. And often, the alternative in these communities is to either develop a business case to build a network or for no network to emerge.

3218 So as I've said, we pride ourselves in taking part in these initiatives. We work collaboratively with the federal government, with the CRTC, with provincial governments to the extent possible bridge the digital divide which still remains in various regions of the country.

3219 But ultimately, if there's an onerous sharing regime, especially for a company like us, which cannot spread the cost of implementing and operationalizing a regime with a lot of fixed costs across a wider FTTP customer base or homes passed, it will be very challenging for us to continue doing this.

3220 So ultimately, my answer to you is it's not perfect, but again, for a lot of communities in which we go, there needs to be a rationale, a business rationale for us to deploy. And if not, these communities are simply deprived of a network. The choice is not between one, two, or three networks; it's between either you have a network or, unfortunately, the economic rationale doesn't make sense and you don't build out.

3221 MR. PERRON: Maybe looking at it also from a customer perspective, which was the sense of your question, those recent rural builds ‑‑ and I'll take Quebec as an example, because Quebec is now mostly deployed, even in rural areas ‑‑ these programs have been a massive success. And consumers are raving about it, because in the past ‑‑ I have a number of personal friends living in the Laurentians, living in the Eastern Townships by a lake. In the past, their only choice was satellite or in some cases fixed wireless access, but relatively ‑‑ they had choice, but they were relatively weaker Internet choices.

3222 When we came to town ‑‑ which we would have never been able to afford without a bit of subsidy help ‑‑ when we came to town, they were delighted. The number of the letters we got, the amount of sales demand we got was exceptional. So that was a major breakthrough for consumers. And it's therefore not surprising that today many consumers are saying that they get better Internet at their cottage than their house downtown Montreal. So we think it's been a major breakthrough.

3223 For the economic reasons that Paul mentioned, it's hard to open those new programs because they haven't paid back for us yet. You know, in some cases, we're connecting a cottage, a lone cottage on top of a mountain. We need to deploy crew, equipment to pass the wire through a forest, up a hill. Cost can be $20,000. Now, imagine if we don't even have time to connect that customer and get them as a customer, and a reseller comes in and takes that customer. These programs would never pay back in my lifetime. And that's the argument we're putting forward today.

3224 MR. BEAUDRY: And Commissioner, we enjoy piggybacking off each other's responses, but just one last thing, and Frédéric touched upon it, there are alternatives in these communities. There are satellite options, low‑Earth orbit satellite offerings. There's FWA, fixed wireless is an option. One big incumbent recently announced they were making a foray into this area. So there are alternatives. I'm not saying they're always perfect. But the idea is that in many communities, consumers still have a choice and a fallback option.

3225 MR. JETTÉ: May I add two other items to this? Because the large incumbent always had a choice to go there and build. They decided not to because it was not profitable enough for them, even across their integrated portfolio or their many lines of business. They made a choice not to go there. They are waiting for us to establish a network and wanting to ride on top of it through the mandated regime once we're there. I think there is a big question mark there.

3226 Second, the communities actually want us to bring the service to their communities. They win as a community. We establish very good and deep relationship at the community level, and we go working in partnership with the communities.

3227 And from a customer point of view, I think there's another angle. We often talk about the product. Of course, customers need speed. But they also need a good ‑‑ an excellent customer service. And that's where we differentiate as well. We have the lowest complaint rates across all the HSI service providers. It's one of our differentiators. We invest in customer service as much as we invest in our product. That's choice for consumers that they would not have with others deploying in these areas.

3228 COMMISSIONER NAIDOO: Thank you very much.

3229 Even in your opening remarks and in your written intervention, you proposed exempting small carriers whose FTTP deployments pass fewer than 350,000 homes. If the Commission did establish an exemption threshold, why would 350,000 be the correct number?

3230 MR. PERRON: Yeah, so we proposed two options. One of them is a time‑bound exclusion, the other one was a size‑bound exclusion. Ideally, we thought that the time‑bound exclusion was the most rigorous because it's really we could calculate how long we need to get a payback on those investments before opening it.

3231 That being said, we know the Commission is very focused on easy‑to‑administer solutions, and that's why we went to the size‑bound exclusion, because it's extremely easy to administer. In fact, today we already provide the CRTC on a regular basis formal reporting on how many FTTP homes we have. So to put a size‑bound exclusion would be extremely easy. We could just use that reporting, and when we cross the threshold, then the exclusion would go away.

3232 Now, to your question of why 350, I'd like to claim that there's a perfect mathematical calculation for the 350, but in all honesty, it was just less than five per cent of total FTTP homes in Canada, which we thought was small. And we thought it's probably just a couple of players that qualify for this, so it would still leave the large majority of FTTP homes in Canada even after that exclusion being part of the wholesale regime.

3233 COMMISSIONER NAIDOO: All right. And when do you expect to reach the 350,000 homes passed with FTTP?

3234 MR. PERRON: We don't know yet. Not in the foreseeable future.

3235 COMMISSIONER NAIDOO: Okay. Do you think that it's likely at all when we're looking at the 350,000 threshold that an incumbent would decide to just hover under the 350,000 mark to avoid the mandate? And would that kind of limitation discourage investment, do you think?

3236 MR. PERRON: To my knowledge ‑‑ Paul, feel free to comment ‑‑ but to my knowledge, that would be very unlikely because there's such a separation between the big players and the smaller players. And the big players are so well above that threshold already that it would be impossible or impractical for them to backtrack from that.

3237 I don't know, colleagues, if you want to add something.

3238 MR. BEAUDRY: I would just add that, in my view, actually, this threshold would incentivize smaller players who have currently smaller fibre footprints to actually build out, who are nowhere near there.

3239 The other element that I would also bring to the table is that obviously the only companies who would qualify for this exemption would be cable companies. And as the Commission pointed out in the notice of consultation, for the last eight years, we've been carrying the weight of the wholesale regime on our shoulders by carrying over 75 per cent of the traffic or the end‑users on cable networks, whereas the telcos on their next generation fibre networks have not shouldered that burden. So I think there's also an element of equity that we can link to that as well.

3240 COMMISSIONER NAIDOO: All right, I'd like to turn our minds now to a potential access holiday where mandated fibre access would be delayed for a period of time after an incumbent has built the fibre.

3241 You've proposed a three‑year exemption while other parties have actually proposed different numbers, as many as seven years, for example. Why do you think three years is the magic number?

3242 MR. BEAUDRY: We don't think three years is necessarily the magic number, and I'll be candid with you, we would appreciate a longer lead time in order to monetize our investments. We tried in arriving at that number to elaborate a framework that would give meaningful access to fibre to wholesale customers while at the same time allowing us with a bit of a head start to start getting a bit of a payback on our investment.

3243 I thought it was quite useful to hear TELUS yesterday discuss their request, because back in 2015, or rather in 2013 when they appeared before the Commission as part of the last framework review, their ask was for a seven‑year head start. And they got it. It's been more than 10 years since they appeared before the Commission asking for a seven‑year head start, and they've ‑‑ probably most of their fibre has benefitted from this holiday.

3244 So we tried to be reasonable, understanding the Commission's intentions with this notice of consultation and some of the preliminary observations that you've made, and believe that setting a certain period ‑‑ we've heard Bell say five years. We would probably prefer five years as well, but at the very least, three years would be necessary, in our view.

3245 COMMISSIONER NAIDOO: Okay. And at what point should the Commission, in your view, consider FTTP deployment to be sufficient to trigger the access holiday? Retail service available to a percentage of a community? A whole community? A single home in a community?

3246 MR. BEAUDRY: Yes, we didn't delve into the details of how this would be operationalized, and I would probably point to the fact that this is why we thought the 350,000‑home threshold was a more elegant way to proceed because we report this on an annual basis. When you exceed it, you're subject to the mandate altogether.

3247 We would probably want reasonable measures on how this head start rule would start, probably not at the home level, obviously. Probably at the community level. The way we do it at Cogeco is often, as I said, we do this as edge‑outs of our fibre network. So when you'd cover potentially a community and start offering services to a sizeable portion of that community, you could start the clock.

3248 COMMISSIONER NAIDOO: And how would an access holiday help reverse the trend of declining wholesale‑based competition?

3249 MR. BEAUDRY: As I've said, in my view, there is a reasonable position that you can have that on the one hand incentivizes continued investment while at the same time providing meaningful access to a significant amount of homes passed by FTTP. I think in our submission we pointed out that with our three‑year proposed head start rule, there'd be about nine million homes covered by FTTP that would be captured by the access mandate. So I think this is a reasonable compromise that fulfills the dual objectives of stimulating competition while at the same time ensuring that smaller regional players like Cogeco, whose fibre investments are mostly rural and remote, continue to have these intents to accomplish these crucial projects that are useful for Canada's society and democracy and economy.

3250 MR. PERRON: Yeah, and I would add that in our case, for example, it would be well below 10 per cent of our total network which would be excluded from the regime as part of that exception for just a period of time, so the majority would still very much be in place.

3251 COMMISSIONER NAIDOO: Yesterday, TELUS argued that facilities‑based providers should be prohibited from accessing an aggregated FTTP service within their own territories. TELUS seems particularly concerned that cable companies would abandon their cable networks and become wholesale‑based competitors on the FTTP networks of both Bell and TELUS.

3252 And I'm wondering under what conditions, if any, would you foresee Cogeco slowing down or ceasing to invest in its incumbent territories in favour of using another incumbent's wholesale service?

3253 MR. PERRON: Commissioner, I don't see it happening at all. We'd be happy to share numbers about our economics with you, but the margin that we would make ‑‑ we believe, first of all, being facilities‑based is our strategy. It's our essence. And the economics, the marginal economics of it on a facilities‑based endeavour remain better for us, once we've made all these investments anyway. So I really don't see it happening.

3254 MR. BEAUDRY: And if I may just add, if there were ever incentives for us to do so, it would mean that the rates have been incorrectly set. We've been arguing that rates have to be compensatory for goth HFC and fibre, and the result of an appropriate application of the methodology would actually prevent the scenario from happening, in our opinion.

3255 MR. PERRON: And one last point ‑‑ thank you, Valery.

3256 So, first of all, already, today, over 80 percent of our network offers 1‑gig speeds. 1‑gig speed, to put it in context, would let a single home stream 20 different televisions, 20 different Netflix shows at the same time.

3257 The point being, we don't need to be on these networks, our networks are already quite good, and with the evolution of cable technology, DOCSIS 4 technology ‑‑ not to bore with technical details ‑‑ but DOCSIS 4 technology will let us go all the way to 10 gig speeds. So we just don't have any to make such a shift.

3258 MR. JETTÉ: It's too easy to make it a fibre and cable comparison. The reality for cable networks is there's a lot of fibre in there. It's a combination of fibre and coax. We keep growing the fibre component every year. Our capital intensity and reinvesting in our networks is over around 18 percent per year, and that's before network expansion. When we add the fibre network expansion that we do, you will look in our publicly reported results, that were 21, 22, 23 percent in capital intensity, so we do invest regularly with fibre, in our networks.

3259 Of course, they came from the cable days, but they don't resemble at all any cable products of the 1980s, and they are well in advanced of the market demand. We have ‑‑ as Frédéric mentioned ‑‑ we offer 1‑gig in most places and we're building the capability to build it to 10‑gig.

3260 So, it's... we make it too simple, when we consider cable as a technology of the past. I know the telcos would like to hear that but unfortunately they had a technology where they had no other choice but to jump from low‑speed DSL to full‑fibre. They did not add the incremental step options to invest in their network, that we have, with cable assets.

3261 COMMISSIONER NAIDOO: You've touched on this already a little bit, but I have a specific question about it.

3262 Yesterday, of course. TELUS said that larger companies are exactly who the Commission should be prioritizing for wholesale access, because of the competition that they can bring to the market. Obviously, you have a completely different view on that, that large incumbents should be excluded from the wholesale access.

3263 Given that a number of wholesale‑based competitors have been acquired in recent years, how can be sure that consumers will have enough choice and competition if we were to prohibit those larger companies from wholesale?

3264 MR. PERRON: We think it's very important to put measures in place so that we don't relive a Groundhog Day commission, like this one, in a few years' time, where we put measures in place for new resellers to come in the market and then they got acquired again by the Big Three. We want to prevent such a scenario from happening.

3265 And therefore, that is why it is so critical that the recommendation we're putting forward about the Big Three not being allowed as TPIA be implemented, because today, the Big Three would have incentives to acquire new TPIAs that come to the market. They have deep pockets, it's an easy source of growth. There are synergies.

3266 But if we say, as per our recommendations, they cannot operate as TPIAs, they wouldn't... that would be a negative incentive for them to start acquiring them again.

3267 MR. PERRON: And if I may just add, TELUS came before you yesterday and I think some of the regulatory representatives were mentioning TELUS' not a Big Three on wireline, they're just a humble new entrant in Ontario and most parts of Quebec.

3268 While at the same time their marketing representatives said: The reason why Koodo is having such an impact is because of the national brand, our ability to offer national bundles and national services.

3269 They can't have it both ways.

3270 COMMISSIONER NAIDOO: Yesterday you heard Bell said that they get a competitive advantage when they upgrade a house to fibre.

3271 Would you agree with that, and how do you adapt when Bell does build fibre into a neighbourhood that you serve?

3272 MR. PERRON: Over the years Cogeco, being the fierce competitor that we are, we have developed techniques to fight fibre. First of all, as we explained earlier, our cable technology is already quite good and keeps getting better, and we'll keep getting better.

3273 But from a pricing and competition perspective, we are so fierce, and when we have to fight them on price, we do, and when we have to... to have even more affordable prices, we put them in, and that's how we've been able to hold our own, and that's why we're so proud to be a competitive force in the market, driving prices down in Quebec and Ontario.

3274 COMMISSIONER NAIDOO: All right, thank you very much. Those are all my questions. I know my colleagues also have questions for you, so I hand it over to them. Madam chair? Thank you.

3275 LA PRÉSIDENTE : Merci beaucoup. Alors, on va continuer avec le vice‑présidente, merci.

3276 VICE‑PRÉSIDENTE SCOTT: Merci, Madame la Présidente.

3277 Monsieur Beaudry, vous avez mentionné la dissymétrie entre les telcos et les câblos. Quel a été l'effet de cette dynamique sur vos investissements?

3278 M. BEAUDRY : Je crois que le Conseil a accepté par le passé le fait que tout régime d'accès de gros a un effet sur les investissements. On argumente depuis longtemps que les tarifs d'accès de gros doivent être compensatoires et ça n'a pas été le cas, et la réalité ‑‑ comme Frédéric vous l'a dit tantôt ‑‑ c'est que plus on a de joueurs qui viennent sur notre réseau, plus on doit investir dans la capacité. Des fois on le fait pour le bénéfice d'autres joueurs.

3279 Donc, je sais que vous parliez hier d'un scénario en vertu duquel on pourrait avoir le taux parfait, et ça fait longtemps que j'ai été un enfant, donc je ne me rappelle plus de la traduction de Goldielocks, mais en effet, il y a une scénario théorique où on pourrait avoir le taux parfait, qui fait en sorte qu'on est parfaitement indifférent de la provenance du dollar additionnel qui arrive dans le réseau.

3280 Mais la réalité, c'est que ce n'est pas le cas.

3281 Et pour nous, évidemment, il y a un impact additionnel quand tous ces joueurs‑là viennent sur notre réseau. Ça a un impact sur les investissements. Ça a un impact sur notre capacité de combler la demande.

3282 Ce qu'on voit présentement ‑‑ et ce que j'aimerais... ce sur quoi j'aimerais mettre l'accent, c'est qu'il y a une différence fondamentale entre avoir des plus petits joueurs qui viennent à la marge s'ajouter sur notre réseau... je dois vous dire, on est capable de... d'adapter nos décisions avec l'arrivée de plus de dix joueurs qui ne viendront pas avec des tas de nouveaux abonnés, dans une période particulière, mais le risque pour nous ‑‑ puis je retape sur ce clou‑là ‑‑ c'est le changement de paradigme dans lequel on vit présentement, où les trois gros joueurs pourraient commencer, grâce à leurs budgets de marketing massifs, infuser des quantités énormes de nouveaux utilisateurs sur notre réseau, et ça, ça serait problématique.

3283 MR. PERRON: Yes, and... I want to be very clear, we support this regime. We support this regime, as long as the Big Three are excluded, new projects on top of mountains are excluded until it's paid back, and as long as the prices are fair.

3284 We don't think the prices are fair today, because sometimes we do need to make investments to support others, but there is indeed a price, and I'll just piggy‑back on the comments of Lee Bragg, from Eastlink, earlier this week, with the blueberry analogy.

3285 There is a price at which we're indifferent, between wholesaling our services and retailing our services, and we're very much open to that possibility.

3286 VICE‑PRÉSIDENTE SCOTT: Merci. Un autre thème que nous avons déjà abordé, mais j'aimerais vous présenter le même scénario que j'ai posé à Bell et à TELUS hier.

3287 Si on avait un tarif de gros pour le FTTP disponible à n'importe qui, n'importe où au pays ‑‑ The Wild West Scenario ‑‑ qui ferait quoi? Comment réagiriez‑vous? Comment les autres réagiraient‑ils? Comment se déroulerait l'ensemble du scénario, étape par étape, et où il se termine?

3288 M. BEAUDRY : Je répondrais de la façon suivante. Évidemment, il y a certains... il y a certaines interrogations, quel serait ce mandat? Est‑ce qu'on retourne dans la façon de procéder avec la méthode agrégée ou désagrégée? C'est une question.

3289 Évidemment, si le Conseil décidait d'en arriver avec un mandat ouvert à tous de façon agrégée, on voit des... on voit des conséquences assez significatives pour un joueur comme Cogeco. Comme on vous l'a dit, nous, nos déploiements de fibre sont dans des régions plus éloignées, donc évidemment, si en se connectant à un point d'interconnexion tous les joueurs peuvent avoir accès à notre fibre, dans quelque communauté qui soit, ça aurait des incidences négatives sur nos incitatifs à investir plus dans l'avenir, mais également de réaliser des revenus compensatoires dans les projets déjà bâtis.

3290 Également, je vous dirais ‑‑ puis je pense que j'ai fait allusion à ça tantôt ‑‑ ça change complètement la donne pour tout projet futur d'investissement. Il faudrait qu'on se pose des questions très sérieuses et ça pourrait potentiellement même vouloir dire que dans certaines régions, finalement, on opère pour le bénéfice d'un autre joueur et on ne recouvre pas nos coûts, et on n'a pas le choix de finalement fermer boutique.

3291 Donc, il pourrait y avoir des conséquences extrêmement fâcheuses.

3292 Et comme je vous l'ai dit, étant donné que les projets dans les régions éloignées sont souvent réalisés grâce à l'aide financière du gouvernement, on peut s'attendre à ce qu'il y a ait un shift... une mouvance significative des capitaux provenant du secteur privé vers le secteur public, nécessitant des subventions encore plus sérieuses et significatives de la part des gouvernements, en raison de l'incertitude totale au niveau de la capacité de recouvrer nos capitaux, qui prendraient place dans un environnement, justement, complètement débridé, où les trois gros joueurs pourraient s'adonner à cœur joie en utilisant nos nouveaux réseaux.

3293 MR. PERRON: Oui, et plus généralement, on ne blague pas quand on dit que la présence des trois gros joueurs en TPIA, c'est une menace existentielle pour Cogeco. On est déjà pas loin d'un point où on doit fermer certains marchés à cause qu'ils ne sont plus profitables pour nous, parce qu'on finance les profits des autres.

3294 Donc, ce qu'on verrait, dans un scénario comme ça, c'est peu à peu on commencerait à fermer des marchés. Combien on en ferme? On ne le sait pas encore. Est‑ce qu'on les ferme tous? C'est une possibilité la plus extrême.

3295 Puis juste pour vous aider à visualiser ce qui se produit quand on ferme un marché.

3296 On a dû fermer certains villages en Gaspésie le mois dernier, mais pour des raisons très différentes, mais le cas est le même, où on a dû arrêter d'offrir nos services... l'infrastructure est là mais on a fermé l'infrastructure pour des raisons de profitabilité. Les citoyens sont furieux, et ils sont furieux parce que maintenant c'est juste TELUS qui est présent dans ces marchés‑là. TELUS est la seule infrastructure, TELUS est la seule option, et, surprise, surprise, les prix de TELUS sont extrêmement élevés en Gaspésie, dans un marché où le revenu est plus bas que la moyenne du Canada. On veut empêcher une boule de neige de scénarios‑là qui se produisent.

3297 M. BEAUDRY : Puis juste pour compléter, Monsieur le Vice‑président.

3298 Évidemment, l'éléphant dans la pièce quand vous parlez d'un tel scénario, ce serait quel serait le taux. Et je pense que je vais faire écho aux interventions d'autres de nos pairs durant les dernières journées, où on a mentionné que, évidemment, dans un monde idéal, le CRTC trouve le juste milieu parfait. Cependant, l'erreur est humaine, et c'est possible qu'on en arrive à des résultats qui soient trop hauts ou trop bas.

3299 Et je pense que je vais emboîter le pas aux autres fournisseurs de services fondés sur les installations qui vous ont dit : Il y a un très grand risque, surtout si vous choisissez la configuration groupée comme configuration finale dans vos décisions, que si vous décidez d'établir des tarifs qui sont trop bas, c'est là que ça l'a un impact assez dévastateur sur les investissements, qui est magnifié par le fait que, évidemment, sous le format groupé, il n'y a vraiment aucune incitation, aucune exigence d'investissement de la part des joueurs indépendants, que ce soit en transport, colocation, et caetera. Donc, le risque est particulièrement présent. C'est une combinaison de mandat à tout crin, avec des tarifs qui sont potentiellement pas pleinement compensatoires pour les investisseurs comme nous.

3300 VICE‑PRÉSIDENT SCOTT : Merci.

3301 Les enjeux économiques d'un projet FTTP sont‑ils les mêmes pour les grandes entreprises filaires de télécommunications comme Bell que pour vous? Et, selon vous, quelle est la crédibilité des menaces des grands titulaires de réduire leurs investissements?

3302 MR. PERRON: First, I'd say that some of those very remote projects are extremely expensive. I shared earlier in this discussion sometimes it can be $20,000 to connect one home.

3303 That is an issue that’s pervasive, I would imagine, for all players. However, much larger players have economies of scale that they can leverage. For example, they’ve got a much greater procurement power, they’ve got much greater leverage over suppliers of those projects. Therefore, would imagine they would have a certain advantage.

3304 You know, how much lower is it than us? I don’t know. It’s probably still relatively high, but it would be lower than us.

3305 VICE‑PRÉSIDENT SCOTT : Merci.

3306 Madame la Présidente.

3307 LA PRÉSIDENTE : Excellent. Merci beaucoup, Monsieur le Vice‑président.

3308 Alors, on va continuer avec la conseillère Desmond. Merci.

3309 COMMISSIONER DESMOND: Good morning. I just have a couple of questions. You’ve spoken about your commitment to rural and remote areas, and that you do a lot of fibre deployment in that area.

3310 I’m wondering if you could speak to your ability to break into some of the larger urban areas? Some of the smaller ‑‑ some of the ISPs have done that, they’ve served both rural and urban areas. Could you speak to how you make decisions with respect to where you roll out your fibre, and if you’ve made any progress on sort of trying to tackle the larger areas and, if you have, how that’s been successful or not?

3311 MR. PERRON: Sure. If your questions relates specifically to new fibre deployment, the only place we’ve been able to make it work so far is rural areas, because these were originally unpenetrated areas and we go the help of the government to do it.

3312 As it relates to deploying new fibre, for example, we’re not in Montréal today, we’re not in Toronto today. For us to make the decision to now deploy fibre in those large cities would be extremely difficult economically because there are already a number of players in those markets.

3313 Where we are a major competitive force is using our existing networks in places like Burlington, Kingston, Windsor, Trois‑Rivières, just gaining market share from the existing players and driving prices down, as we mentioned earlier.

3314 COMMISSIONER DESMOND: Okay, thank you. Rogers has indicated that the cost to upgrade and maintain it’s HFC network is similar to the investment to the investments that ILECs are making in their FTTP. As a larger cable carrier, could you speak to that, if you think the cost of investment is similar?

3315 MR. JETTÉ: Well, the size of Rogers matters here. So compared to us, they have significant purchasing power and supply chain. There is also the size of their existing markets, we’ve mentioned that earlier. They have many products across different segments. They have a large geography. They have fixed wireless access, they have mobile, they have other products to bundle.

3316 So your question needs to be taken into the portfolio, the whole portfolio, because that’s how they actually decide to make investment and choose different markets.

3317 Frédéric, do you want to compliment that?

3318 MR. PERRON: Yes. I’ll just simply add that we are massive investor in the Canadian economy and in our networks. It would be unfair to say that it’s only the fibre players contributing.

3319 As I mentioned earlier, there’s going to be a new wave of investment indeed to eventually bring our services to 10Gb, and that will be significant.

3320 COMMISSIONER DESMOND: Okay, thank you. In your opening remarks you spoke to the fact that 50 per cent of your wholesale subscribers are end users now of Bell, TELUS or Rogers, and much of that comes from the acquisition of independent ISPs.

3321 We know that Cogeco is a significant wholesale provider. Can you help us understand or provide a bit more information with respect to how this is transpiring, the movement of purchasing up smaller ISPs and then competing?

3322 MR. PERRON: Sure. What I would say, Commissioner, is what’s already happened, and that 50 per cent being to the big three due to those acquisitions is one thing.

3323 What we worry about even more is the current velocity of those big three players using those assets to increase their dominance over us by crowding our networks. So it’s not so much the point in time, although it is quite thought‑provoking that they’re already at 50 per cent.

3324 But it’s the plans that they’ve announced; Bell entering Trois‑Rivières, TELUS coming into Ontario, it’s that trend that very much concerns us and could, over time, become an existential threat to Cogeco.

3325 COMMISSIONER DESMOND: But can you explain or do you have any thoughts on why this has happened so quickly, so suddenly? Is there something different now happening in the marketplace that has caused this sudden interest?

3326 MR. PERRON: I can't explain their strategies on their behalf other than just wonder if the acquisition of these assets made it easier for them to then scale them. Because once they acquired EBOX or Start or Altima, they then obtained established relationships with Cogeco, a brand in some cases that they can scale. So it’s the acquisition of that asset that then gives them a platform to scale, I would imagine.

3327 COMMISSIONER DESMOND: Thank you. Thank you, Madam Chair.

3328 LA PRÉSIDENTE : Merci beaucoup.

3329 Alors, peut‑être je peux continuer avec quelques questions juste pour vous demander de réagir à des commentaires qu'on a entendus cette semaine.

3330 Alors, juste pour commencer. C'est vraiment une continuation de la discussion que vous avez eue avec la conseillère Desmond.

3331 Alors, on a entendu de certains intervenants que les récentes acquisitions étaient signe que le régime d'accès du service de gros ne fonctionnait pas. Qu'en pensez‑vous?

3332 M. PERRON : Oui. Ce que je dirais, premièrement, c'est important de clarifier que, à notre connaissance, la plupart des revendeurs qui ont été acquis étaient profitables, et dans plusieurs cas très profitables. On voit le problème à un endroit différent.

3333 Le problème qu'on voit, et je l'ai mentionné auparavant, c'est que les 3 gros ont un grand incitatif économique à acheter des plus petits. C'est normal, la consolidation se produit habituellement dans les marchés où il y a saturation. Donc, le problème ce n'est pas la viabilité des petits, c'est que les gros les achètent. Puis c'est pour ça que notre recommandation est si importante, que les gros ne devraient pas opérer en TPIA.

3334 LA PRÉSIDENTE : Alors, juste pour continuer sur ça, j'aimerais lire quelque chose qu'on a entendu de TELUS hier. Je ne vais pas le traduire, c'est en anglais. Ils ont dit :

    « Of course the wholesale mandate should be available for all carriers outside of their traditional serving territories precisely because a wholesale mandate is useless as a tool to drive competition if the strongest competitors can’t use it. »

3335 Alors, pourriez‑vous réagir à ça?

3336 MR. JETTÉ: Well, they're distorting the concept to the very end. Because by purchasing all the small ones, they’re making the mandated regime unfunctional. So eventually, if we let this go, in due time we are going back to duopolies on the big three.

3337 So Rogers on one side, Bell and TELUS, and again the convergence of mobile and broadband, wireline and wireless, is a key factor in there. So they have national brands, they have market power, they have a large portfolio, they’re purchasing smaller players, they’re purchasing customers at the same time, and they are becoming pervasive, and the only options to customers.

3338 MR. BEAUDRY: If I might also add. In 2013, when the Commission issued its Notice of Consultation that led to Decision 2015‑326, the Commission noted that it mandated the provision of wholesale services to varying degrees since the early 1990s. Recognizing that there was a size disparity between the large ILECs and the emerging competitors, the Commission determined that competitors required access to certain wholesale services, et cetera, et cetera.

3339 So the size component was always very relevant. And TELUS noted before that they’re just only a new entrant in Ontario and Quebec. But they are such, in terms of size and scale, an important player. And whether you think that there’s a national product market or not, there’s experts who’ve said that the market for wireline and wireless is increasingly becoming converged, the networks are being engineered the same way.

3340 The end point for users, the Wi‑Fi connection is either ‑‑ or, sorry, the last mile is either Wi‑Fi or cellular connectivity. And the end point where most customers get their connectivity, whether wireline or wireless, is their smartphone.

3341 So the whole idea that they’re a new entrant in a completely different market, in my view, should be rejected by the Commission. But even if you do not agree with us on this one and you agree that there’s different product markets at play, you cannot ignore the fact that a dominant carrier in a market can use that dominance in an adjacent market. We fear the situation, and we have reason to fear it for the reasons that my colleagues have explained to you.

3342 MR. PERRON: And if I may add. There’s a certain irony or contradiction in the comment from TELUS, because they’re also admitting that they’re biggest and the strongest. And it also contradicts what Bell said, where Bell said if the big three can use the regime, they’ll crush everyone else.

3343 That’s the scenario that we’re really concerned about, not only for us, clearly for us, but also for competition and Canadian consumers. Because if that scenario plays out, the Big 3 become TPIAs, they crush everyone else, they crush the TPIAs, they crush the regional players. You end up with many parts of the country with just one infrastructure, like the Gaspésie example I was mentioning earlier, and that’s clearly not good for Canadians.

3344 MR. JETTÉ: They bring the mirage of many brands in the market. But when you look at all those sub‑brands from them three major players, all these smaller brands now belong to them. So it’s actually a portfolio of brands owned by the big three.

3345 Don’t fall in the trap of the mirage of the different options to consumers based on brands, because they all roll up to the Big 3.

3346 LA PRÉSIDENTE : O.K. Merci beaucoup.

3347 Alors, peut‑être une question sur la concurrence, les consommateurs, parce que vous avez parlé du service à la clientèle et la perspective des consommateurs.

3348 Alors, Bell nous a dit hier qu'il n'y avait pas de manque de concurrence sur le marché. En même temps, des intervenants comme PIAC, OpenMedia, Manitoba Coalition nous ont dit cette semaine qu'il y avait plein de problèmes : de manque de choix, de prix élevés, de service à la clientèle, et caetera. Alors, que pensez‑vous de ces perspectives qui sont offertes des consommateurs?

3349 M. PERRON : Oui. Donc, comme on parlait auparavant, c'est important de séparer le marché canadien. On voit extrêmement de progrès au Québec et un certain progrès en Ontario, grâce à des joueurs comme Cogeco et Vidéotron. Donc, on est fiers de faire partie de la solution.

3350 Le manque de concurrence, on le voit principalement dans l'Ouest à l'heure actuelle, où vous voyez les prix montés.

3351 LA PRÉSIDENTE : Et les perspectives des consommateurs, pourriez‑vous offrir des commentaires?

3352 M. JETTÉ : Bien, deux commentaires, le premier en ligne avec mon commentaire précédent sur les marques. Quand les marques appartiennent aux mêmes maisons mères, le produit se ressemble et le service client finit par se ressembler. En fait, plus ils augmentent leur dominance dans le marché, plus les prix se ressemblent et plus les caractéristiques du produit se ressemblent.

3353 Les joueurs régionaux comme nous, en contrepartie, non seulement on investit pour bâtir une entreprise à long terme, mais on doit se différencier, et un des choix qu'on fait c'est de se différencier par le service à la clientèle en offrant un service différencié et un meilleur service qui est reflété par les plaintes documentées par le CRTC. Nous avons le plus bas taux de plaintes de la clientèle. Pourquoi? Parce qu'on y met des efforts pour se différencier des trois grands joueurs.

3354 M. PERRON : Les clients en général aiment Cogeco, aiment le fait d'avoir un choix différent. Et une autre chose qui nous différencie, pour être encore plus précis, c'est on est un des seuls joueurs ‑‑ je ne pense pas que les 3 gros l'offrent ‑‑ qui offrent leur service à la clientèle dans la province du client. Donc, si vous êtes un client québécois, vous nous appelez, le service à la clientèle est au Québec, et même chose pour l'Ontario, et on est très fiers de ça. Puis ça c'est un autre type de concurrence qu'on amène au marché, au‑delà des prix.

3355 LA PRÉSIDENTE : Alors, peut‑être pour ma dernière question, si on peut continuer avec ça et l'innovation.

3356 SaskTel nous a dit que les fournisseurs en gros n'offraient pas d'améliorations technologiques. En même temps, les intervenants comme PIAC, par exemple, ont dit que les concurrents peuvent apporter de l'innovation dans le marché.

3357 Alors, est‑ce que vous pouvez parler un peu de quels sont les types d'innovations que les fournisseurs en gros peuvent offrir, et aussi comment ces innovations profitent‑elles les consommateurs?

3358 M. PERRON : Il n'y a pas de doute que les revendeurs peuvent amener une concurrence des prix. Évidemment, comme on le sait, c'est pour ça qu'on soutient le régime plus généralement.

3359 Il y a aussi d'autres exemples où des revendeurs ont amené un certain positionnement de la marque un peu plus jeune, qui ont amené un choix de marque et de positionnement qui étaient nouveaux dans le marché. Et dans d'autres cas, il y a des revendeurs comme Auxio qui ont amené un modèle complètement numérique. Par exemple, le système de vente, le service à la clientèle est complètement numérique par Chat ou par Internet. Puis ça c'est des innovations qu'on valorise dans le marché, et, encore une fois, c'est pour ça qu'on soutient le régime.

3360 M. JETTÉ : Mais l'innovation de ce type‑là, elle existe plutôt au retail qu'au wholesale. Au wholesale, par définition, ce sont des very large pipes connecting at the lowest price possible, the different players. We compete and we bring innovation, or the service layer with innovation is at the retail level.

3361 LA PRÉSIDENTE : D'accord. Merci beaucoup. Et merci beaucoup pour la discussion. Alors, on aimerait vous donner le dernier mot. Merci.

3362 MR. JETTÉ: Thank you very much. In closing, well first we’d like to thank the Commission to have taken the time to listen to us and actually go deep on certain aspects of our proposal.

3363 The time is critical to examine the wholesale regime. We thank you for that.

3364 The market, as we’ve said, has changed dramatically and very fast over the last two years. And, as it stands today, the regime will not deliver what the Commission is looking for in terms of lowering price and bringing greater competition to the market. We are firmly convinced of that. So things need to change.

3365 First, stopping the abuse of the regime is urgent, and banning the Big 3 and their affiliates from using the mandated wholesale regime, to us, is critical. They have the means to invest on their own, and most of the time they opt not to, remember that. And they can also and always use normal commercial negotiated deals, but they prefer the less‑friction path of the mandated regime.

3366 Cogeco and other regional facilities‑based carriers are facing, we said it, existential competitive threats by incumbents who have not been shy, not at all, indicating to you that their intention is actually to use our network instead of investing.

3367 I repeat, this is an existential threat to smaller regional operators like Cogeco.

3368 We’re asking for a quick decisive decision by the Commission on this. This proposal, along with our other proposals to protect fibre deployments by smaller carriers we think strikes the right balance between the dual objective of stimulating market entry and retail competition while preserving incentive. And that’s very important, preserving incentive for regional and smaller carriers to continue investing in building better networks that we think Canadians deserve.

3369 Thank you very much.

3370 LA PRÉSIDENTE : Merci beaucoup, Cogeco.

3371 LA SECRÉTAIRE : Merci, Madame la Présidente.

3372 Nous prendrons une courte pause et serons de retour à 10 h 40. Merci.

‑‑‑ Upon recessing at 10:21 a.m.

‑‑‑ Upon resuming at 10:41 a.m.

3373 LA SECRÉTAIRE : Bonjour.

3374 Nous entendrons maintenant la présentation de Québecor Média inc., au nom de sa filiale Vidéotron ltée.

3375 Veuillez vous présenter, ainsi que vos collègues, et vous pouvez débuter votre présentation. Merci.

Presentation

3376 M. PÉLADEAU : Bonjour, Madame la Présidente. Je vais, effectivement donc, avoir l'occasion de présenter mes collègues, mais, tout d'abord, nous souhaiterions vous dire que nous sommes très heureux d'être devant vous ce matin pour une audience pour un service essentiel pour les Canadiens et les Canadiennes.

3377 Vous savez, l'accès Internet aujourd'hui, on ne peut pas s'en passer, et vraiment, nous sommes, je dirais, au carrefour de cette capacité de faire en sorte de maintenir la concurrence, de la souligner encore davantage, et de permettre aux Canadiens et aux Canadiennes d'avoir plusieurs choix et, par voie de conséquence, je dirais, de meilleurs prix.

3378 Alors, permettez‑moi donc de vous présenter mes collègues.

3379 Je suis moi‑même Pierre Karl Péladeau, président de Vidéotron.

3380 Ceux qui m'accompagnent, à ma gauche immédiatement :

3381 ‑ Jean‑François Lescadres, qui est vice‑président Finances de Vidéotron;

3382 ‑ Mohamed Drif, qui est vice‑président principal et chef de la Direction technologique de Vidéotron; et

3383 ‑ Juan Ramos, qui est vice‑président, Réseaux filaires de Vidéotron.

3384 À ma droite immédiate :

3385 ‑ Peggy Tabet, qui est la vice‑présidente, Affaires réglementaires et environnementales de Québecor Média;

3386 ‑ Patrick Désy, qui est directeur principal, Affaires réglementaires – Télécommunications de Québecor Média; et enfin,

3387 ‑ Frédéric Déry, qui est vice‑président, Ventes et Marketing résidentiel de Vidéotron.

3388 Comme vous avez pu le constater depuis le début de cette instance, Vidéotron occupe une position unique dans le marché des télécommunications au Canada. Nous croyons que notre singularité confère à nos propositions un caractère crédible, raisonnable et équilibré. En effet, nos propositions s’appuient sur une évaluation qui tient compte à la fois de notre rôle de titulaire au Québec et de celui de fournisseur de services Internet indépendant dans le reste du Canada devant recourir à des services d’accès haute vitesse de gros.

3389 Au Québec, Vidéotron ‑‑ avec sa marque dérivée Fizz ‑‑ est le plus important fournisseur d’accès Internet de détail et l’un des joueurs les plus importants dans le marché des accès haute vitesse de gros.

3390 Depuis 2022, Vidéotron est propriétaire de VMédia, un fournisseur de service Internet indépendant œuvrant partout au Canada. Vidéotron a également fait l’acquisition en mars 2023 de Freedom Mobile, une entreprise de services sans fil. L’acquisition de Freedom s’inscrit dans une démarche qui permettra de hausser la concurrence et de briser enfin le monopole ou le marché d’oligopole du « Big 3 », de Bell, Rogers et TELUS.

3391 Notre présence se fait d’ailleurs déjà bien sentir. Alors que l’indice des prix à la consommation a augmenté de 3,4 pour cent de décembre 2022 à décembre 2023, l’indice des prix des services sans fil a, quant à lui, baissé de 27 pour cent sur la même période. Ajoutons que de janvier à septembre 2023, le revenu moyen par abonné sans fil chez Québecor a baissé de 3,37 pour cent, alors qu’il a augmenté chez les « Big 3 », affichant une hausse de 3,66 pour cent chez Bell, de 2,74 pour cent chez Rogers et de 1 pour cent chez TELUS.

3392 Mais ce n’est qu’un début. Pour continuer à nous imposer au niveau national, nous avons besoin de pouvoir offrir des bouquets de services pour répondre adéquatement aux demandes des consommateurs. D'ailleurs, le Bureau de la concurrence l'avait souligné durant le processus de cession de Shaw, Freedom, Rogers et Vidéotron, processus quand même qui a été un peu compliqué et particulièrement long. Ces derniers cherchent souvent à rassembler leurs services de télécommunication et de télédistribution chez un même fournisseur afin de bénéficier de meilleurs prix.

3393 Depuis toujours, le Conseil a souhaité procurer aux Canadiens et aux Canadiennes un environnement concurrentiel. Les réseaux étant peu nombreux et coûteux, comme en témoigne l’entente de réseau partagé de Bell, le Conseil a instauré le cadre réglementaire des services d’accès haute vitesse de gros. Or, les installations filaires de Vidéotron étant très limitées en dehors du Québec, nous comptons sur ce cadre réglementaire pour permettre à Vidéotron et ses filiales d’offrir des services Internet filaires hors Québec.

3394 Après avoir fait l’objet de plusieurs représentations, le Conseil a finalement mis fin à l’asymétrie réglementaire injustifiable entre les services à large bande de gros fournis sur un réseau de fibre jusqu’aux locaux des abonnés FTTP et les services hybrides fibre‑coaxial (HFC). Nous accueillons favorablement la décision publiée par le Conseil en novembre dernier qui oblige enfin Bell et TELUS à donner accès à toutes les vitesses offertes sur leur réseau FTTP en mode groupé. Bien qu’elle ne s’applique pour le moment qu’au Québec et en Ontario, cette nouvelle obligation vient mettre un terme à la dissymétrie réglementaire entre les Telcos et les Câblos, ces derniers étant les seuls qui devaient offrir en revente en mode groupé leurs vitesses les plus rapides.

3395 Ce premier pas dans la bonne direction doit néanmoins être accompagné de plusieurs autres mesures afin d’assurer l’équilibre du régime d’accès haute vitesse de gros et la pérennité d’une saine concurrence dans le marché Internet de détail au Canada.

3396 Les procédures entreprises par Bell devant la Cour d’appel fédérale et au Cabinet fédéral afin de faire annuler la décision de novembre dernier sont encore une fois la preuve patente et je dirais systémique de l’obstruction habituelle de Bell. Cette déplorable initiative, aucunement surprenante toutefois, va complètement à l’encontre des Instructions du gouvernement. Bell cherche par tous les moyens à protéger son quasi‑monopole sur les services FTTP et à torpiller les efforts du Conseil. C'est quand même ‑‑ excusez‑moi l'expression ‑‑ assez fort de café, mais avec les « Big 3 », rien ne résiste à leur volonté de maintenir leur oligopole.

3397 Les démarches incessantes de Bell exaspèrent les Canadiens et les Canadiennes, et ses menaces de cesser ses investissements dans ses réseaux ne sont qu’une stratégie, je dirais, digne du bonhomme sept heures, alors que tous savent qu’à défaut de remplacer son réseau désuet en fil de cuivre par la fibre optique, ses revenus auraient fondu comme neige au soleil.

3398 Le long congé réglementaire protégeant l’accès au FTTP en mode groupé a justement permis à Bell et TELUS de construire un immense réseau FTTP partout au Canada. Selon nos informations, le réseau de fibre des deux anciens monopoles ‑‑ dont la capitalisation boursière combinée pèse pour plus de 80 milliards de dollars ‑‑ permet d’atteindre plus de 60 pour cent des adresses ou des locaux desservis par ces compagnies de téléphone titulaires. Et ce réseau n’a jamais été partagé en mode groupé.

3399 Le président de Bell, Mirko Bibic, déclarait le 29 novembre 2023, il y a à peine trois mois, dans le quotidien La Presse, et je le cite :

    « On a maintenant 1 million d’abonnés sur la fibre optique [au Québec]. Nos ventes pour notre service Fibe sont quand même impressionnantes; 70 % de nos ventes se font à des vitesses au‑delà de 1 gigabit. Pensez‑y : 70% des consommateurs ».

3400 Après avoir bénéficié d’un congé réglementaire aussi exceptionnel, nous croyons qu’il est plus que temps pour Bell et TELUS de jouer partout au Canada selon les mêmes règles que les câblodistributeurs. Contrairement aux nombreuses menaces de Bell et TELUS, nous n’avons jamais cessé d’investir massivement dans nos réseaux, malgré l'obligation de revendre en mode groupé nos vitesses les plus rapides depuis plus de 10 ans.

3401 La clé du succès pour permettre aux titulaires de continuer à investir, tout en partageant leurs réseaux, est de mettre en place des tarifs justes et raisonnables, suivant la méthode Phase II. Le Conseil doit cependant mettre en place deux outils supplémentaires afin de s'assurer que ces tarifs demeurent effectivement justes et raisonnables.

3402 Alors, le premier outil consiste en l'imposition d'un tarif national uniforme qui obligerait tous les titulaires à offrir leur service d'accès haute vitesse de gros FTTP et HFC selon les tranches de vitesse et des tarifs uniformes partout au Canada. Les tarifs approuvés pour chaque tranche de vitesse seraient basés sur le tarif le plus bas déposé par les titulaires, suivant la méthode Phase II.

3403 Nous entendons déjà ceux et celles qui soutiennent que notre proposition est incompatible avec le principe voulant que chaque titulaire puisse recouvrir ses propres coûts. Cependant, le congé réglementaire de Bell et TELUS leur a clairement permis de recouvrir leurs coûts durant des années, assez pour permettre à Bell d'offrir aujourd'hui des forfaits de détail à un prix représentant le tiers du tarif de gros. Je répète : un prix représentant le tiers du tarif de gros.

3404 Par ailleurs, les coûts pour délivrer un mégaoctet de données sont très similaires d'un fournisseur à l'autre, qu'il s'agisse de FTTP ou de HFC. Le consommateur est indifférent au choix technologique, stratégique ou financier d'un fournisseur. Ce qu'il cherche, d'abord et avant tout, c'est une connexion Internet de qualité lui offrant les débits dont il a besoin à un prix qui lui convient.

3405 L'imposition d'un tarif national uniforme facilitera aussi le plan d'affaires des concurrents, qui pourront passer d'un réseau à l'autre, qu'il soit FTTP ou HFC, sans devoir réviser le prix de leur accès. Une telle situation permettra de garantir une stabilité et une cohérence dans les offres, le tout au bénéfice du consommateur.

3406 Puisqu'il n'y aura pas de différence tarifaire entre les différents titulaires, ces derniers n'auront d'autre choix que de se distinguer par d'autres moyens, notamment, et c'est très important, la qualité du service ‑‑ un aspect sur lequel Vidéotron s'est toujours démarqué depuis l'introduction du cadre AITP.

3407 Le deuxième outil maintenant est l’imposition d’un filet de sécurité et d’un test de raisonnabilité. Ceci permettra d'éviter les abus et l’instauration de prix d’éviction comme le fait Bell depuis les dernières années, ce qui a justement mené à la disparition de nombreux fournisseurs indépendants au Canada et a permis à Bell de se construire un nouveau monopole dans la FTTP. Un tel outil obligerait un titulaire qui décide de proposer sur son territoire un accès Internet à un prix de détail plus bas que le tarif de gros réglementé d’offrir cet accès Internet en mode grossiste au même prix que le prix de détail moins 15 pour cent pour l'ensemble de son territoire, et ce, jusqu’à la révision desdits tarifs par le Conseil.

3408 Rappelons que depuis plus d’un an, les innombrables offres commerciales de Bell dans le marché de détail Internet sont la preuve que les tarifs de gros FTTP sont tout sauf justes et raisonnables.

3409 Comme nous pouvons le constater, Bell offre 1,5 gigabit par seconde (Gbps) à 50$/mois à Toronto et jusqu’à 40$/mois à Montréal si le client est abonné à ses services sans fil, des prix pouvant aller jusqu’au tiers des tarifs de gros afin de protéger son monopole dans la FTTP le plus longtemps possible.

3410 On voit bien que les prix de détail de Bell pour cette vitesse sont nettement plus bas que :

3411 (1) les tarifs FTTP groupés déposés au printemps dernier, qui sont de 108,24$/mois, en sus des frais de capacité, appelé CBB);

3412 (2) les tarifs FTTP groupés approuvés provisoirement dans la décision de novembre, soit 68,94$ pour les vitesses de moins de 1,5 Gbps et 78,03$ pour les vitesses jusqu’à 8 Gbps, en sus, encore une fois, du CBB); et

3413 (3) les tarifs FTTP dégroupés de Bell dont toutes les vitesses sont offertes à un prix unique de 121,79$, une fois de plus, en sus du CBB.

3414 Autrement dit, les tarifs FTTP réglementés de Bell, qu’ils soient groupés ou non, sont excessivement élevés.

3415 De la même manière, les offres Internet de Bell sont la preuve irréfutable qu’elle utilise des pratiques d’exclusion, dont le seul but est de forcer ses concurrents à compresser leurs marges de profit, et qui, de plus, sont prohibées en vertu des articles 78 et 79 de la Loi sur la Concurrence au Canada.

3416 C’est pour ces raisons que nos outils, c'est‑à‑dire un tarif national uniforme et un test de raisonnabilité, vont permettre de prévenir les distorsions de prix dans le marché Internet de détail. Sans ces outils, le régime d’accès haute vitesse de gros ne pourra jamais porter les fruits de la concurrence escomptés par le Conseil.

3417 Ici, nous parlons en toute connaissance de cause puisque nous avons testé la bête, et ce, deux fois plutôt qu’une.

3418 La première expérience, en Abitibi‑Témiscamingue sur le réseau HFC de Cablevision du Nord de Québec, une filiale de Bell qui se partageait, avant notre arrivée, le monopole des services Internet de détail de cette vaste région avec Télébec, une autre filiale de Bell. Rappelons que cette dernière avait non seulement tenté de retirer le service AITP de Cablevision, ce que le Conseil avait refusé, elle avait également pris tous les moyens possibles pour bloquer l’arrivée et le déploiement commercial de Vidéotron en Abitibi‑Témiscamingue. Au total, nous avons dû déposer quatre demandes en vertu de la Partie 1 à l’intérieur de 16 mois afin que le Conseil nous donne raison et force Cablevision et Bell à respecter leurs obligations réglementaires en matière de service AITP.

3419 Aujourd’hui, après avoir acquis une masse critique de clients et avoir aussi et surtout satisfait les besoins de la population en Abitibi‑Témiscamingue, Vidéotron est en mesure de déployer son propre réseau afin de délaisser les services AITP de Cablevision. Notre expérience en Abitibi‑Témiscamingue, bien que compliquée par les actions posées par Bell, est la preuve qu’il est possible de se servir du régime AITP pour bâtir ses propres installations réseau lorsque les bonnes conditions sont réunies.

3420 Notre seconde expérience, au Central d’Adélaïde de Bell, au cœur de Toronto, ne s’est pas soldée de la même façon. Le cas d'Adélaïde est la preuve ultime que le Conseil doit apporter des changements majeurs au régime des services accès haute vitesse de gros s’il souhaite instaurer une véritable concurrence dans le marché Internet de détail.

3421 Face aux offres commerciales agressives de Bell des derniers mois, notre filiale VMédia a demandé l’accès à leurs services FTTP en mode dégroupé. Pour rappel, le tarif unique approuvé provisoirement pour Bell en 2017 est de 121,79 dollars par mois pour toutes les vitesses, en plus du frais de capacité et des frais liés au modem et à l’installation.

3422 Comme vous pouvez le voir, pour concurrencer Bell où elle offre un service de 1,5 Gbps à 50 dollars par mois, VMédia a offert le même accès à 45 dollars par mois. Lorsqu’on applique ce revenu mensuel de 45 dollars par mois dans le modèle actuel, on se retrouve avec une perte mensuelle de 92 dollars par client. Sur une base annuelle, la perte s’élève à plus de 1 100 dollars par client.

3423 En posant l’hypothèse d’un objectif d’aller chercher aussi peu que 10 pour cent du monopole de Bell, nous subirions des pertes annuelles de plus de 115 millions de dollars. On le voit bien, c’est un plan d’affaires tout simplement intenable, et ce, même pour une entreprise de la stature de Vidéotron.

3424 Et c’est sans compter la qualité de service désastreuse offerte par Bell. Il nous aura fallu plusieurs mises en demeure et une correspondance avec le Conseil pour obtenir un minimum de réactivité de la part de Bell. Nous vous invitons d’ailleurs à consulter nos interventions pour connaître la longue liste d’irritants à cet égard.

3425 Bref, il ne suffit pas d’avoir des tarifs justes et raisonnables, il faut également que le Conseil s’assure d’avoir un régime de qualité de service qui ait du mordant en imposant des pénalités à ceux qui ne le respectent pas.

3426 Le Conseil est à la croisée des chemins s’il souhaite atteindre les objectifs qu’il s’est fixés dans cette instance et respecter les Instructions de 2023, non seulement dans le marché Internet de détail, mais aussi dans le marché sans fil de détail, les deux allant souvent de pair. Nous encourageons donc le Conseil à continuer sur le bon chemin :

3427 i)en soumettant Bell et TELUS aux mêmes obligations réglementaires que les câblodistributeurs et en les obligeant à donner accès en mode groupé à toutes les vitesses offertes sur leurs réseaux FTTP partout au Canada;

3428 ii)en approuvant et en maintenant des tarifs justes et raisonnables; et, enfin,

3429 iii)en imposant un véritable régime de qualité.

3430 Ce sont évidemment tous les Canadiens et les Canadiennes qui en profiteront.

3431 Merci de votre attention. Nous sommes maintenant prêts à répondre à vos questions.

3432 LA PRÉSIDENTE : Merci beaucoup de votre participation dans notre instance et notre audience. On pense que c’est vraiment important aussi. Alors, merci. Et on sait que c’est votre deuxième comparution en 24 heures. Alors, merci beaucoup d’être ici.

3433 Alors, peut‑être juste avant de commencer, je sais que vous le savez, mais juste pour le souligner, on va demander des questions en anglais et en français. Alors, s’il vous plaît, répondez dans la langue officielle de votre choix.

3434 Alors, on va commencer avec le vice‑président de télécommunications. Merci.

3435 VICE‑PRÉSIDENT SCOTT : Merci, Madame la Présidente. Bienvenue à vous, Monsieur Péladeau, et à toute votre équipe.

3436 Je commencerai mes questions par les marchés du Québec parce qu’il y a des câblodistributeurs forts dans d’autres provinces, mais c’est au Québec que les prix d’Internet sont plus bas. Pourquoi est‑ce que les prix sont plus bas au Québec par rapport au reste du Canada?

3437 M. PÉLADEAU : Merci beaucoup, Monsieur le Conseiller. C’est une très bonne question. Et c’est une question qu’il nous fait plaisir de répondre. Et c’est également aussi un environnement que je crois que nous avons hérité, puisque Québecor a fait l’acquisition de Vidéotron en 2000, que nous avons hérité également aussi donc de la famille Chagnon, d’André Chagnon, un grand bâtisseur de la câblodistribution au Canada. Un homme qui n’a jamais eu peur donc d’investir dans sa qualité de produit. Un visionnaire également aussi qui a amené des produits qui étaient avant‑gardistes et qui, bien avant que la câblodistribution numérique, offrait donc des services de qualité.

3438 À cet égard, dans un environnement concurrentiel et dans la volonté de faire en sorte d’avoir la pénétration la plus élevée, d’avoir la capacité de générer le plus important montant de revenus, un prix compétitif, un prix qui, si on le compare avec les autres prix canadiens, vous avez raison, Monsieur le Conseiller, était plus bas, bien, a permis justement à Vidéotron, donc, de s’imposer auprès de sa clientèle en investissement également, comme j’ai eu l’occasion de le mentionner, dans son service à la clientèle.

3439 Je pense que Québecor a repris le relais, a gardé cette philosophie, a investi encore davantage au niveau de son service à la clientèle. Et, aujourd’hui, si notre position nous permet donc de continuer à offrir des services de qualité... Et nous avons offert l’accès Internet à partir donc de 2000 sur notre réseau HFC. Ensuite, nous avons offert la téléphonie filaire. Et, là aussi, nous avons proposé de meilleurs prix que le titulaire. Et, enfin, donc, dès 2006, le service sans fil MVNO que nous avons négocié à l’époque avec Rogers. Tout ça dans une perspective, donc, d’assemblage.

3440 Et c’est là où je reviens sur les propos que je tenais, donc, dans mon intervention, l’importance de l’assemblage. Nous avions donc la capacité d’avoir ce réseau au Québec. Nous avons eu la capacité de le construire également là où nous étions absents. J’ai utilisé l’exemple de l’Abitibi‑Témiscamingue. Et nous souhaiterions poursuivre cette perspective dans le reste du Canada, mais nous ne pouvons pas le faire sans avoir accès à un réseau dans un premier temps en FFTP ou en HFC.

3441 C’est la raison pour laquelle nous insistons sur le fait que l’assemblage permettra encore une fois aux Canadiens et aux Canadiennes de pouvoir bénéficier de nouveaux choix et par voie de conséquence, comme nous avons eu l’occasion de l’illustrer et de le faire vivre aux Québécois, de meilleurs prix et une meilleure qualité de service.

3442 VICE‑PRÉSIDENT SCOTT : Merci. Dans quelle mesure les fournisseurs indépendants de services en gros ont joué un rôle dans la réduction des prix? Ou est‑ce que c’est uniquement la philosophie de Vidéotron et la concurrence avec Bell qui pousse les prix plus bas?

3443 M. PÉLADEAU : Mon opinion, Monsieur le Conseiller, c’est que, effectivement, donc, nous avons eu au Québec une proportion de fournisseurs, donc, AITP ou TPIA plus importante au Québec qu’ailleurs au Canada. Lorsque nous regardions un peu ce que pouvaient offrir les grands opérateurs TPIA, on voyait une concentration beaucoup plus importante au Québec qu’en Ontario et que dans l’Ouest canadien.

3444 À quoi attribuer ces éléments‑là? Honnêtement, je pourrais difficilement vous le dire. Je pense que, du côté de Vmédia, notre expérience a été de faire en sorte que l’accès pour les opérateurs TPIA auprès des fournisseurs était beaucoup plus difficile, était ponctué, donc, de démarches, de blocages.

3445 Alors que, chez Vidéotron, premièrement, nous respectons la réglementation. Et deuxièmement, nous considérions que d’avoir des clients en TPIA, ce n’est pas une mauvaise chose, bien au contraire. C’est une source de revenus additionnels. Et je pense que c’est important également aussi de respecter le choix des Québécois et des Québécoises de faire en sorte de choisir l’opérateur qu’il souhaite.

3446 Et nous devons dire également que les TPIA ont été un facteur d’innovation. Je pense particulièrement à Oxio. Oxio a mis donc une plate‑forme disponible sur le marché québécois très intéressant. Et je pense également aussi à VMÉdia. Et c’était la raison pour laquelle nous avons souhaité faire l’acquisition. C’est qu’il y a une plate‑forme de télévision qui est innovante et qui fait en sorte que nous puissions offrir un service de télévision à l’extérieur du cadre réglementaire, une télévision numérique, une télévision par accès Internet. Et en l’occurrence, ça s’appelle River TV, qui est à se développer encore davantage pour offrir un bouquet de services plus importants.

3447 Alors, c’est dans le choix du respect des clients et dans la volonté également de faire en sorte de nous imprégner d’innovation que nous avons investi dans le cadre TPIA et que je pense également aussi qui pourrait s’imposer ailleurs. Si les titulaires qui ont acheté un grand nombre d’opérateurs TPIA, pensons à Distributel, pensons à EBOX, qui n’offrent pas ces services‑là, vous savez qu’est‑ce qui va se produire? Ils vont perdre leurs clients et ils vont poursuivre leur déclin.

3448 VICE‑PRÉSIDENT SCOTT : Merci. Vous dites que les prix au détail de Bell pour les services FTTP sont tellement bas qu’il s’agit en fait de stratégies prédatrices. Vidéotron détient pourtant une part importante du marché Internet au Québec, évidemment. Comment est‑ce que vous restez compétitif, vu ces offres à perte de Bell? Est‑ce que vos prix de détail aussi doivent être en dessous de vos coûts pour rester en concurrence?

3449 M. PÉLADEAU : Je vais demander à Jean‑François Lescadres, donc, de vous donner plus de détails sur votre question, également aussi à Peggy d’ajouter le cas échéant. Jean‑François?

3450 M. LESCADRES : Merci. Monsieur le Vice‑Président, donc, écoutez, il y a plusieurs éléments à cette réponse. La première que je vous amènerais, c’est vraiment que tout n’est pas une question de prix. Tout est une question aussi de qualité de service qu’on amène lors de l’expérience. Vidéotron a prouvé encore et encore au fil du temps une expérience client sans faille qui a été reconnue par divers prix, dont je ne vous ferai pas la nomenclature ce matin, qui a permis de nous acquérir une réputation qui fait que les gens savent lorsqu’ils viennent chez Vidéotron qu’ils auront une expérience vraiment extrêmement supérieure à ce qu’ils pourraient retrouver chez la compétition.

3451 Donc, clairement, on se retrouve dans un contexte où est‑ce qu’on mise beaucoup là‑dessus pour se retrouver. Et c’est quelque chose qu’il faut avoir en tête absolument pour nous dans le cadre AITP, dans le cadre FTTP qu’on va amener. Il y a, oui, certainement, une notion de prix, mais il y a assurément une notion de qualité de service qui doit être fourni pour nous permettre d’offrir ce même niveau de service là à des clients qui passeraient alors dans un cadre de revente.

3452 Pierre Karl y a fait référence un peu précédemment, mais lorsqu’on a eu beaucoup de discussions avec Vmédia, un des points qui a ressorti, c’est à quel point que nous offrions au revendeur une expérience largement supérieure à celle des autres compagnies qui mettaient beaucoup, beaucoup de bâtons dans les roues des revendeurs. Ce qui s’est confirmé et qui explique potentiellement pourquoi on a autant de clients aujourd’hui en revente sur notre réseau.

3453 L’autre point, pour revenir à votre question plus précisément par rapport au prix de vente que l’on opère, nos prix de vente sont compétitifs, nos prix de vente témoignent de nos coûts. Lorsqu’on regarde aujourd’hui la structure de coûts de nos prix de vente, elle est très alignée, en réalité, et très compétitive, mais elle est aussi en lien avec les prix de revente. Ce n’est pas pour rien qu’on a aujourd’hui 200 000 clients en revente sur notre réseau. C’est parce qu’on a un contexte au Québec qui est beaucoup plus favorable, auquel nous répondons. Nous répondons à cette concurrence‑là le plus favorablement possible.

3454 MME TABET : Peut‑être que je vais élaborer sur le prix d’exclusion que vous avez parlé, Monsieur le Vice‑Président. Donc, effectivement, on vous a fait la démonstration, Adélaïde à Toronto, comment le prix de Bell était très bas et comment on a tenté de concurrencer, mais qu’il n’y en avait pas de plan d’affaires viable. À notre avis, un prix d’éviction, c’est justement ce que la Loi sur la concurrence prohibe. Et c’est tout agissement destiné à avoir un effet négatif sur une entreprise visant l’exclusion, l’éviction ou la mise au pas d’un concurrent, à nuire à la concurrence, notamment à la compression des marges. Donc, c’est ce qu’on vous a prouvé et c’est ce qui est prohibé justement dans les articles d’abus de position dominante.

3455 VICE‑PRÉSIDENT SCOTT : Merci. Estimez‑vous votre activité Internet en dehors du territoire comme une activité de croissance primaire ou est‑ce qu’elle vise plutôt à augmenter et soutenir votre offre de services sans fil? Ou pour le dire autrement, accepteriez‑vous une perte sur le service d’Internet pour réaliser un profit d’autres services dans votre bouquet?

3456 M. PÉLADEAU : C’est une très bonne question, Monsieur le Vice‑Président. Désolé... Je dirais que, dans la perspective où on continue à vouloir offrir... Et nous avons eu l’occasion d’en discuter longuement. Madame la Présidente y a fait référence hier au Comité, donc, INDU, à la Chambre des communes, au Parlement, pardon. Nous voulons et continuons à faire en sorte que notre activité sans fil se développe au Canada. Encore aujourd’hui, notre ratio, lorsqu’on perd un client ou on en gagne un, est extrêmement favorable. C’est‑à‑dire que, lorsqu’on perd un client, on en gagne deux. Et si on est en mesure de pouvoir, t’sais, continuer cette performance, c’est parce que la qualité du service est excellente, le produit, nous continuons à y investir en élargissant, excusez‑moi l’expression, le footprint de notre réseau et notre volonté également aussi d’aller en assemblage.

3457 Nous constatons en général que, lorsque nous offrons un service Internet, d’accès Internet, nous sommes en mesure dans cet assemblage‑là de faire en sorte de continuer à réduire les prix et de maintenir une marge bénéficiaire. Est‑ce qu’elle est comprimée? Certainement. Mais est‑ce qu’elle nous convient puis elle constitue pour nous un facteur de croissance? Indéniablement. Et c’est la raison pour laquelle, aussi, si on revient à votre première question, nous avons bien réussi au Québec parce que, à partir de la construction de notre réseau, nous avons été en mesure d’augmenter nos revenus dans la mesure où les produits que nous offrions étaient plus nombreux que le seul historiquement qu’un câblodistributeur a offert, c’est‑à‑dire la fameuse câblodistribution qui, vous savez, aujourd’hui, est en déclin et qui doit justement faire l’objet d’une compensation à partir d’autres services afin de maintenir au Canada une qualité de services à la hauteur d’un pays industrialisé comme le nôtre.

3458 M. LESCADRES : Si vous me permettez, Monsieur le Vice‑Président, à cet effet‑là également, la réalité, c’est que cette marge‑là doit être minime, mais elle doit exister. Le meilleur exemple qu’on peut vous donner, c’est l’exemple de l’Abitibi. S’il avait fallu en Abitibi, comme vous le savez probablement, Câblevision était câblée, donc, donnait accès au câble du régime AITP. Et donc, on a été en mesure de lancer nos services sur ce cadre. Et on a été en mesure par la suite de procéder aujourd’hui à la construction d’un réseau concurrent et assurer une concurrence et des prix incroyablement plus bas à la région de l’Abitibi, qui a répondu incroyablement favorablement à ceci.

3459 Si par malheur, on aurait dû se confronter à un régime qui aurait été sur le FTTP, il aurait été impossible de procéder de cette façon‑là évidemment avec les prix dont on a parlé précédemment, là, jusqu’à 121 dollars pour un branchement. Ce qui nous aurait rendu la vie complètement impossible.

3460 Or, lorsqu’on regarde ça aujourd’hui, c’est quand même ironique, quand on parle aussi comment peuvent vivre les revendeurs, de voir que des compagnies qui ont été achetées par notamment Bell vendent aujourd’hui à des prix de 50 dollars, 45 dollars alors que, certainement, tout revendeur qui voudrait faire ça, vivrait une catastrophe financière.

3461 VICE‑PRÉSIDENTE SCOTT : Le bureau de la concurrence suggère que les différentes régions du pays devraient être analysées séparément et éventuellement soumises à un traitement réglementaire différent. Que pensez‑vous d’un cadre de vente en gros axé sur les régions et traitant celles‑ci différemment?

3462 M. PÉLADEAU : Monsieur le Vice‑Président, je vais demander à mon collègue, donc, Mohamed, donc, de répondre à ça. Puis, en un mot, un mégaoctet est un mégaoctet. Mais Mohamed est en mesure de pouvoir donner davantage de détails.

3463 M. DRIF : Monsieur le Vice‑Président, Pierre Karl a tout dit. Donc, oui, pour nous, l’approche régionale ou pas régionale, les majors, les trois gros fournisseurs ont un footprint et une masse critique tellement importante que la variation entre les régions n’a pas lieu d’être. Et transporter un mégabyte ou transporter un mégabyte d’une région à une autre est équivalent vu que la masse est dans les centres urbains les plus denses.

3464 M. PÉLADEAU : Et si vous permettez également aussi, Monsieur le Vice‑Président, parce qu’on connaît aussi, donc, la perspective, et nous avons eu l’occasion d’entendre certains de nos concurrents, on se doit quand même de constater, là, que parmi les opérateurs de télécom en Amérique du Nord, qu’on regarde ce que fait Verizon, ce qu’on a fait... AT & T a fait et que nous regardions qu’est‑ce que Telus a fait... Telus a été parmi la première entreprise de télécom à investir dans la fibre. Bell y est arrivé plus tardivement. En fait, c’est la plus tardive des entreprises importantes en Amérique du Nord.

3465 Alors, pourquoi il n’y aurait pas de prix? Parce que, un, d’une part, on souhaite ne pas imposer le régime FTTP dans l’Ouest canadien. Et, si c’était le cas, d’avoir des prix différenciés, et je présume qu’ils vont souhaiter avoir un prix de gros plus élevé que celui dans l’Est du Canada. La logique est un peu difficile à soutenir.

3466 M. LESCADRES : Si je peux compléter aussi, regardez... si on peut regarder, c’est un peu plus dur en filaire parce que, avant l’acquisition de Rogers par Shaw, il n’y avait pas beaucoup de joueurs qui faisaient l’Est et l’Ouest, à part une petite partie de Telus en quelque sorte au Québec. Lorsqu’on regarde en mobilité, lorsqu’on regarde aujourd’hui les prix qui se vendent sur le marché, on regarde les prix de Telus, qu’ils vendent en Ontario ou qu’ils vendent dans l’Ouest, ils vendent exactement au même coût. Il n’y a pas de différence notoire dans qu’est‑ce qui est amené au marché.

3467 Donc, c’est certainement pour nous une réalité parce que, évidemment, tout ce qu’on rentre dans les coûts, on peut évidemment amener beaucoup de points au niveau des chiffres, des hypothèses, mais lorsqu’on regarde ce qui ressort aujourd’hui dans le marché de détail, ça fait à nos yeux aucun doute.

3468 VICE‑PRÉSIDENTE SCOTT : Merci. J’aimerais discuter un peu du risque des réductions d’investissement par des entreprises titulaires en réponse à l’intervention réglementaire. Bell a clairement indiqué que ces réductions constituaient un phénomène réel et significatif. Vous avez été tout aussi clair sur le fait que ces menaces n’étaient pas fondées. Alors, comment trouver la formule magique qui montre l’impact réel de la vente en gros sur les investissements en fibre?

3469 M. PÉLADEAU : Bien, tout d’abord, je tiens à réitérer, Monsieur le Vice‑Président, donc, la politique des 20 dernières années et même davantage de Vidéotron, ce n’est pas l’émergence des TPIA qui nous a empêchés, donc, de continuer à investir à l’intérieur de notre réseau, bien au contraire, même qu’ils en ont bénéficié. Alors, on entend évidemment poursuivre cette politique.

3470 Deuxièmement, n’oubliez pas, là, vous savez, l’ancienne technologie de Bell, le DSL, là, plus vous vous éloignez de la centrale, là, plus votre débit puis votre vitesse se détériore. Ça, c’est sans compte le fameux deling‑ling‑ling, vous vous souvenez de ça. Alors, pensez‑vous véritablement qu’on peut offrir un service de qualité avec cette technologie? Ce n’est pas pour rien que, lorsque l’accès Internet a commencé à croître de façon significative, on parle donc des années 2001, 2002, 2003, Vidéotron ramassait la grande majorité de la clientèle. Et c’était plus de 150 000 clients par année, là, qui s’abonnaient à notre service. Alors, nous avons continué à faire en sorte d’investir.

3471 Maintenant, si... et je réitère que Bell n’avait pas fait ce qui était nécessaire, bien, ils auraient purement et simplement manqué le bateau de l’accès Internet, dont nous savons aujourd’hui que c’est une compensation extrêmement importante, donc, des services de câblodistribution. Et c’est sans compter... Parce que la fibre aujourd’hui leur permet de pouvoir également aussi distribuer du signal vidéo. Et, trimestre après trimestre, on est en mesure de le constater, la technologie de distribution de signal vidéo par satellite est en déclin partout, pas uniquement au Canada, également aussi aux États‑Unis. Alors, s’ils avaient voulu offrir et continuer à offrir ces services, ils n’avaient pas le choix que d’investir dans une technologie qui leur permettait de procurer des services de cette nature.

3472 Maintenant, nous ne sommes pas les gestionnaires de Bell. Alors, si nous l’étions, peut‑être que nous serions plus efficaces. Mais, ça, c’est une autre histoire. En attendant, c’est sûr qu’ils vont avoir des arguments et il n’y a rien de nouveau là‑dedans. Ces arguments, nous les tenons d’il y a une décennie. Alors, c’est du bricolage que d’arriver avec des coûts qui sont ceux qui existent selon telle méthode ou selon telle autre méthode.

3473 Nous croyons que la meilleure méthode, c’est celle : qu’est‑ce que vous offrez aux clients? Quel est le prix que vous offrez aux Québécois ou aux Québécoises, aux Canadiens et Canadiennes? Si vous offrez 45 dollars, pourquoi ce service ne serait pas disponible à d’autres opérateurs alors que vous l’offrez immédiatement aux clients consommateurs? Je pense que, comme on dit en bon français, the proof of the pudding is the eating. It’s right there.

3474 MME TABET : Monsieur le Vice‑Président, j’ajouterais aussi que Bell a eu 10 ans de congé réglementaire au niveau de la FTTH. Donc, encore une fois, ils ont pleinement eu la chance de recouvrer leurs investissements alors que, nous, on a toujours donné accès à notre réseau. La formule magique dont vous parlez, c’est justement pour ça qu’on a présenté le tarif national. Donc, c’est ça notre formule magique. Et le test de raisonnabilité, maintenant, je donnais peut‑être la parole à Frédéric, qui a aussi des exemples concrets pour Bell.

3475 M. DÉRY : Exact. Donc, Monsieur le Vice‑Président, peut‑être à la réaction des titulaires de dire : « On va désinvestir massivement s’il y a des meilleures conditions tarifaires d’accès au FTTP », prenons l’exemple au Québec. On vous a fait état de l’exemple de l’Abitibi, où on a loué le réseau de Câblevision appartenant à Bell, où on s’est bâti une masse critique. Et ça nous a permis de construire. On a maintenant une belle présence là‑bas. Ça n’a pas empêché Bell de commencer son déploiement et de construire et de préparer le réseau FTTP de Bell à cet endroit‑là.

3476 Si je prends un exemple de Telus aussi, donc, au Québec comme partout ailleurs, il y a eu des programmes de subvention pour amener la fibre optique puis les accès haute vitesse en région. Il y a des régions où nous avons eu accès à des subventions pour amener les accès haute vitesse. Et peu de temps après, Telus a choisi de bâtir dans ces régions‑là. Je pense notamment à la région des Basques et à Saint‑Mathieu‑de‑Rioux. Donc, également, quand on parle, là, de densité de population, ce ne sont pas les régions les plus denses au Québec. Et malgré tout, Telus a fait le choix de construire.

3477 Donc, nos conclusions, c’est davantage le risque de menace grandissante de compétition qui amène les titulaires à continuer à investir dans leur réseau. Donc, pour nous, ce n’est qu’un épouvantail.

3478 M. PÉLADEAU : Monsieur le Vice‑Président, il y a Juan Ramos, notre collègue qui aimerait aussi ajouter quelque chose puisqu’il vit de façon quotidienne, lui, qu’est‑ce qui se passe en Abitibi. C’est lui qui est responsable de la construction de notre réseau. Alors, je pense qu’il a des éléments qui sont intéressants.

3479 M. RAMOS : Oui, juste pour compléter la réponse. C’est ironique parce que, du moment où on avait déjà commencé à construire notre réseau en fibre optique dans cette région, on a reçu même une demande de Cablôvision pour avoir accès à un mode revente sur ce réseau. Donc, ça prouve que le modèle que nous avons adopté de commencer à revendre, construire une fois qu’on a une masse critique puis donner accès à des revendeurs fonctionne très bien.

3480 VICE‑PRÉSIDENTE SCOTT : Oui, j'ai pris note de votre déclaration, monsieur Péladeau, que vous n’avez jamais cessé d’investir massivement dans vos réseaux, malgré les obligations de revendre des vitesses plus rapides. Est‑ce que cela sera toujours le cas, même si Vidéotron est soumise aux règles réglementaires qui s’appliquent à un réseau de fibre optique en pleine expansion?

3481 M. PÉLADEAU : Honnêtement, Monsieur le Vice‑Président, il n’y a pas de raison de cesser d’investir. C’est une obligation industrielle que de le faire. J’ai eu le privilège de diriger beaucoup d’entreprises dans ma vie professionnelle, des entreprises dont le qualificatif ou dont l’attribut est celui de... on appelle ça capital intensive. D’ailleurs, donc, les télécoms sont certainement à cet égard, donc, une des plus grandes illustrations.

3482 Lorsque vous êtes dans une activités capital intensive, si vous n’investissez pas, vos concurrents vont prendre votre place. Vous devez toujours être en mesure d’offrir à vos clients aux marchés que vous desservez la meilleure productivité, le meilleur produit et la meilleure capacité de maintenir une marge bénéficiaire. Et cette capacité‑là ne passe ailleurs et autrement que par l’investissement et l’amélioration de vos activités.

3483 VICE‑PRÉSIDENTE SCOTT : Merci. Certaines parties, comme le Centre pour la défense de l’Internet public, ont indiqué que la construction excessive des réseaux câblés et FTTP en double n’est probablement pas efficace d’un point de vue économique. Mais vous êtes un peu différent des autres acteurs qui cherchent à obtenir un accès en gros. Compte tenu de vos projets d’expansion de sans‑fil, dans quelles circonstances est‑il rentable pour vous de construire des réseaux filaires, d’accès ou de transport en dehors du Québec?

3484 M. PÉLADEAU : Bien, je prendrais... Vous savez, ce n’est pas parce que c’est l’Abitibi‑Témiscaminque et c’est situé au Québec qu’on va avoir une logique équivalente ou différente ailleurs. Lorsque vous investissez... puis je pense que Jean‑François également aussi, donc, l’a bien démontré, lorsque vous démarrez une activité, puis c’est un petit peu comme le sans‑fil également, je pense que et le ministère de l’Industrie et le CRTC ont fait en sorte, bon, de poser les conditions gagnantes, mais en même temps aussi de faire en sorte qu’on évite la spéculation, on évite, je dirais, l’utilisation abusive des biens publics.

3485 Donc, ce qui fait en sorte que, si vous êtes titulaires de specs, vous avez une obligation de construire. Je dirais, à propos, donc, de l’accès filaire ou l’accès Internet filaire, c’est un peu la même chose. Au lieu de MVNO, ça va être un régime TPIA, qui va faire en sorte de vous permettre donc d’exploiter un marché et par la suite de faire en sorte de construire pour réduire vos coûts d’exploitation.

3486 Alors, c’est ce que nous souhaitons et c’est ce que nous tentons, donc, de dire et de convaincre que ça prend un régime équilibré, un régime qui ne soit pas à l’avantage unique des telco, mais également aussi un régime qui ne soit pas nécessairement non plus à l’avantage unique des fournisseurs d’accès Internet ou des TPIA ou des... Quelque chose d’équilibré, qui fait en sorte justement que nous allons continuer d’avoir l’intérêt et l’incitatif de construire. Parce que, en construisant également aussi, en général, on améliore la qualité du produit. Et c’est ce qui est important pour les clients. Et c’est ce qui est important également aussi, je dirais, pour une collectivité, puisqu’on l’a déjà dit à plusieurs reprises, l’accès Internet, les télécommunications sont des facteurs extrêmement importants à l’intérieur de la productivité d’un pays. Pas uniquement donc des consommateurs parce que c’est vrai également aussi pour les entreprises.

3487 Et, à cet égard, je dirais que les entreprises de télécoms sont au cœur de cette possibilité et de cette volonté de faire en sorte de maintenir le Canada dans un environnement concurrentiel mondial.

3488 VICE‑PRÉSIDENTE SCOTT : Merci. Plusieurs parties ont indiqué que des limites devraient être imposées sur les termes de qui devrait avoir le droit d’utiliser des services d’accès de gros. Vous avez suggéré que seuls les fournisseurs régionaux devraient être autorisés à accéder à ces services. Qu’est‑ce qu’un fournisseur régional pour vous? Comment est‑ce qu’on devrait définir ce concept?

3489 M. PÉLADEAU : Jean‑François.

3490 M. LESCADRES : Merci. Bien, premièrement, écoutez, avant de rentrer dans ce détail‑là, c’est sûr que, ce qui est très important pour nous, c’est que le cadre permette le développement. O.K.? Puis dans cet aspect‑là qu’on a amené cet élément de réponse là. Élément aussi qui n’est pas, comme on dit dans l’expression anglaise, self‑serving. Donc, on présente quelque chose qui doit être équitable pour tous dans le marché.

3491 Aujourd’hui, nous, quand on entend des réponses en réalité de protectionnisme, de... vraiment, de voir en réalité comment (indiscernable) strictement à leur clientèle, je vous avouerais que ça nous surprend un peu, surtout quand on regarde aujourd’hui, juste pour votre information, actuellement, il y a 30 fois plus de clients de Telus sur le réseau de Vidéotron que de clients de la famille Vidéotron sur le réseau de Telus. Pour Bell, si on exclut Câblevision, c’est 10 fois plus.

3492 Donc, on voit aujourd’hui que dans ce... dans le cadre déjà du régime HFC, c’est un cadre qui est beaucoup plus utilisé ironiquement suite aux nombreuses acquisitions qui ont été faites par les joueurs par les grands titulaires que par nous‑mêmes.

3493 C’est dans ce contexte‑là, avec toutes ces techniques‑là qu’on voit les titulaires amener qu’on pense qu’il est essentiel si on veut améliorer la compétition au Canada de nous donner cet accès‑là pour nous permettre d’entrer et de continuer à vraiment faire profiter les Canadiens des meilleurs prix.

3494 Si vous me permettez un ricochet sur votre question précédente. Vous avez demandé: « Est‑ce que si un régime... potentiellement, il y a une baisse de prix, est‑ce qu’il y aurait encore des investissements? » Je vais reprendre vos propres paroles en début qui disaient que, au Québec, les tarifs sont beaucoup moins chers que dans le reste du Canada. Et je peux vous assurer puis je pense qu’on a la preuve aujourd’hui avec nos parts de marché qu’on n’a jamais arrêté avec ce contexte‑là de prix moins élevés à investir pour donner la meilleure expérience possible à nos clients.

3495 MME TABET : En ce qui concerne les limites imposées à l’accès, nous, on n’a pas de limite. Comme Jean‑François dit, ce n’est pas self‑serving. C’est : tout le monde a accès à n’importe quelle technologie partout.

3496 VICE‑PRÉSIDENTE SCOTT : O.K. Dans ce cas, j’aimerais vous présenter le même scénario que celui que j’ai présenté à d’autres intervenants. Et c’est vraiment ça. Si on avait un tarif de groupe où le FTTP est disponible partout à tout le monde sans restriction, qui ferait quoi, comment réagiriez‑vous, comment se déroulerait l’ensemble du scénario étape par étape et où il se termine?

3497 M. PÉLADEAU : C’est toujours un peu difficile donc de faire de la prospective, Monsieur le Vice‑Président. Mais, en même temps, aussi, vous savez, ce n’est pas extrêmement sorcier. C’est ce qui nous a permis donc de développer nos activités. Ce que nous voyons, c’est la capacité d’offrir un service en TPIA si les tarifs sont en mesure de pouvoir procurer, donc, une raisonnabilité. Est‑ce que l’investissement doit nécessairement être toujours... devoir s’accompagner de perte d’exploitation? C’est peut‑être difficile à dire. Mais, chose certaine, lorsque vous exploitez un réseau et que vous utilisez le réseau d’une autre entreprise, il ne faut pas vous attendre à faire des marges de 40 pour cent. Et on ne s’attend pas à faire ça. Mais si on devait faire ça, à ce moment‑là, effectivement, ça risque de constituer un frein à l'investissement et, d'une certaine façon, peut‑être aussi un abus de l'utilisation des réseaux d'autrui, ce qui nous porte à penser que si on souhaite continuer à investir en construisant des réseaux de plus grande qualité, une marge qui peut évoluer entre 10 et 20 pour cent va faire en sorte de continuer à être intéressante pour pouvoir faire en sorte de construire.

3498 Le Canada et les opérateurs canadiens pour la grande majorité d'entre eux, sauf peut‑être pour les dernières décennies, s'est construit sur le principe du facilities‑based. Donc, les entreprises étaient propriétaires de leur réseau. Est‑ce que ça peut évoluer? Certes. Mais lorsque les Canadiens avaient besoin d'un réseau, bon, le Conseil puis les autorités législatives ou gouvernementales ont considéré que des monopoles devaient être octroyées pour faire en sorte que ces réseaux‑là puissent se construire. Mais cette époque est révolue, elle est derrière nous, et justement, on se doit d'être davantage moderne et faire en sorte de stimuler la concurrence.

3499 C'est la raison pour laquelle les propositions que nous faisons, pour reprendre un petit peu donc ce que j'ai dit en ouverture de mon intervention, nous pensons avoir la crédibilité nécessaire pour bien informer ou pour bien orienter le Conseil puisque nous vivons de façon permanente ces deux situations : un comme opérateur titulaire, et l'autre comme un opérateur third party. Alors, c'est ce qui nous donne cet équilibre, une fois de plus, auquel je faisais référence un peu plus tôt.

3500 VICE‑PRÉSIDENT SCOTT : Madame la Présidente, je m’arrêterai ici pour laisser mes collègues poser des questions aussi.

3501 LA PRÉSIDENTE : D’accord. Merci beaucoup.

3502 Alors, on va continuer avec la conseillère Naidoo. Merci.

3503 COMMISSIONER NAIDOO: Hello. I am going to ask my questions in English. I apologize.

3504 MR. PÉLADEAU: No problem.

3505 COMMISSIONER NAIDOO: Forgive me. My French just isn’t strong enough, but please feel free to answer in French. I have got my earphones here and we have wonderful translators.

3506 You mentioned interest in expanding your presence in Western Canada through VMedia and Freedom. I’ve got a few questions about that. I just wanted to start with which provinces you think you may be looking to target.

3507 MR. PÉLADEAU: Well, it’s actually, you know, where we are operating. So, we are operating right now in B.C. We operate in Alberta. Basically, you know, the footprint where Freedom Mobile, and before, Wind Mobile were operating. What we look forward is to increase the footprint of our own network to be able on the wireless side, not going on another ‑‑ in fact, it’s the same logic than the one I was referring to in terms of TPIA. Because when we are getting out of our network we’re paying roaming, and with the price of roaming in Canada provided by the incumbents, you’re going to go bankrupt very quickly. In fact, I understand that the Commission is interested to find out what are the roaming issues, and I guess we’ll keep that for another audience, but it is of importance.

3508 So, you know, what we are looking for is to grow, to increase our footprint, and also to bring an additional service. So, each time that we have this capacity, then therefore we will also have the capacity to offer a bundle. I referred to it ‑‑ you know, I was talking with the Vice President earlier ‑‑ that will be able, for us and for Canadians, to have more choices, and therefore better prices.

3509 This is what we experiment elsewhere and, in fact, you know, I would say that the same logic will provide the same consequences. And we look forward to do this. We look forward to have an MVNO, you know, pricing that is affordable, that is comparable with the other roaming prices that we experiment, either in the U.S. or elsewhere, in Europe. This is public. There is nothing, you know, here as a secret, and we look forward obviously also to have the FTTP pricing as affordable and balanced with the one that we expect to have on the MVNO basis.

3510 Okay, and I forgot and I think it is of importance also. During the last auction of the 3500 ‑‑ both 3500 and 3800, we participated and we bought spectrum for the Province of Manitoba. And just recently we launched a new brand, which is one brand that we used for the last five years now, called Fizz. Fizz is a completely digital brand offering internet access and we just launched a beta access, well, last week, and we look forward to be able to provide this as an internet provider which addresses a certain basket of clientele, more what we call the digital‑savvy people. Usually they are our youngest people. Older people require, you know, sometimes more help, sometimes access to a call centre. This is completely digital. You use your computer and you order whatever you want. And, you know, we were referring to the fact that innovation is of importance. I guess, once again, you know, we’re showing to Canadians that we are bringing innovation, and Fizz is a pretty good example of that.

3511 COMMISSIONER NAIDOO: What advantages do Freedom and VMedia give you that you didn’t have a year ago? And, I mean, aside from brand recognition, obviously, are there technology or infrastructure synergies that you can leverage that may help with your expansion plans?

3512 MR. PÉLADEAU: What is of importance, I would say also, is that, you know, previous to the acquisition of Freedom Mobile and ‑‑ again, you know, what I said earlier, you know, before that, there was Win ‑‑ the importance of investment in terms of building a network was more important in Ontario than they were in Alberta and British Columbia. But that, you know, doesn’t mean that we’re not in a position to invest and build our network. In fact, you know, we’re there, and we look forward, you know, to continue to grow our business there, and we look forward to grow our network. This is what we’re working on a daily basis with Juan, and Mohamed, you know, recently we were in Vancouver, you know, we need to have data centre also and infrastructure that will provide us, you know, the capacity to grow our business. And obviously, the name of the game for us is to make sure that, you know, we’ll succeed there.

3513 And as of today, you know, we’re pretty happy and we’re succeeding, you know, more than ever. We look forward to continue to do this, and we believe that we will be able, you know, to grow even faster if we were to be able to also bundle services, and this is, you know, one of the additional reasons we are in front of you today, you know, to try to convince that, you know, this is the best thing to do to provide Canadians better choices and better prices.

3514 COMMISSIONER NAIDOO: Well, that was a really good segue to my next question. Obviously, you’ve indicated that you plan to bundle your wireline and wireless services outside of Quebec. How would that happen? Would it be through a Vidéotron package? A VMedia package? A Freedom bundle?

3515 MR. PÉLADEAU: Well, that’s a good question but, you know, it’s like our conference call, our quarterly conference call, you know ‑‑ sometimes we are more quiet, you know, because we just don’t want to show, you know, what will be our marketing strategies. I guess that, you know, our competitors listen to us. So, we’ll take care of that. But, you know, what you mentioned ‑‑ it’s certainly, you know, one of the choices that you mentioned.

‑‑‑ Laughter

3516 COMMISSIONER NAIDOO: So a multiple choice question. Okay. Thank you for that. That was a good answer.

3517 In your view, why do you think Vidéotron would be more successful in the West than the existing, established ISPs, and what in your view explains the lower levels of wholesale‑based competition in the West?

3518 MR. PÉLADEAU: Well, you know, maybe we manage our company differently. We ‑‑ you know, if we were to compare to Bell, you know, we certainly do not have the pressure, you know, to pay an over 7 percent dividend. Yes, we believe that, you know, shareholders need to be rewarded, but like anything else, you know, it’s a question of balance. Investment is the name of the game in our business. I refer to the fact that we are a capital‑intensive industry, and again, if you want to cover ‑‑ to be able, you know, to continue your growth, you need to make sure that, you know, our customers will be able to be served the best as possible.

3519 You know, other ‑‑ you know, what will be GNA, will be other things ‑‑ it’s a matter of, you know, I would say managing better your business and, I guess that certainly ‑‑ well, maybe not certainly; it’s for others to judge, but, you know, what we’ve been doing for the last two decades is to provide, you know, good return on investment and decent services, you know, to our customers, and we look forward to continue the same direction.

3520 COMMISSIONER NAIDOO: Thank you. You suggested that a mandated aggregated FTTP service will allow you to enter markets across Canada and that your competitive presence should drive down wireline prices. You also presented evidence that Bell’s retail pricing, in your view, has been consistently below its proposed wholesale tariffs, and I believe you called those rates ‘below cost’, ‘predatory’. Do you believe that your observed pricing is good for consumers, even though it may provide challenges for competitors?

3521 MR. PÉLADEAU: J.‑F. will answer that.

3522 MR. LESCADRES: I just want to be sure that I would understand the last part of your question. Can you just repeat the last sentence, please?

3523 COMMISSIONER NAIDOO: Yes. Do you believe that your observed pricing is good for consumers, even though it may provide challenges for competitors?

3524 MR. LESCADRES: Okay. I appreciate the question. So, basically, we ‑‑ I think we talked about it before ‑‑ we’ve never been shy about bringing great prices to our customers. That’s the combo. It’s great ‑‑ it’s not a big ‑‑ a big secret, is because it’s a great price with great services. And we’re totally fine with that, but it’s got to be fair. Right now, I don’t know how it’s even possible for the TekSavvys, the CIK Telecoms, the Bravos, to operate and such an environment that it’s not even possible when you compare pricing at 122 dollars, or even the new rate. The new rates are an important step, as we discussed, but even at 68 bucks plus CBB, I mean, let’s not forget the CBB part, which is quite important, which represents all the data that is used basically on that network. How is it possible for these companies to ‑‑ to basically be able to be competitive when basically they have to pay 68 bucks plus that CBB while in the market? You see, like, 45 bucks with Distributel, as I said earlier; 50 bucks with EBOX. So, clearly, that's a challenge.

3525 For us, it's also a challenge. Of course, when our own cost base on assets bring prices very close over the price that we're bringing to the market, but... it's a challenge but it's a really different situation. We're extremely close. If you compare, basically, the market rates, two of the prices that we provide in the latest studies, it's extremely close, one to the other, so it's not a big margin, like we're seeing now with Bell.

3526 COMMISSIONER NAIDOO: And do you see yourself being able to compete on price where you leverage an aggregated wholesale service?

3527 MR. LESCADRES: Well, we're already doing that, okay? We think that it should be that way, we're totally fine with that.

3528 And we also think it's really important that ‑‑ and that's why we proposed that ‑‑ that we get a reasonability test, to make sure basically that we're not going on a long process and going through that basically all and over, all over it and over again. I think that's big risk that we're facing, that we're... that you complement some rates, basically, whatever they be.

3529 And then, there is predatory pricing that puts us and that puts the industry in a tough binding, and I think that's what we are trying to avoid with the suggestion that we brought.

3530 Clearly, as Pierre Karl said, 15 percent is not much. It's tough but let's not forget that you have to consider all your sales costs to be able to reach that, but at least it provides some previsibility also, to anyone that wants to invest in this industry.

3531 COMMISSIONER NAIDOO: Thank you very much. Those are my questions. Back to you, Madam Chair.

3532 LA PRÉSIDENTE: Ok, merci beaucoup. On va continuer avec la Conseillère Desmond. Merci.

3533 COMMISSIONER DESMOND: Bonjour. Je vais demander mes questions en anglais aussi, mais si vous voulez répondre en français, ça marche bien. Merci.

3534 Je vais commencer avec mes questions.

3535 Okay. I wanted to ask about your project in Abitibi. You mentioned that you're doing work there, as an example of your expansion into new areas, where you expect high penetration.

3536 But our understanding is that that project has been funded in large part by the Government of Quebec and the Government of Canada.

3537 Can you confirm what technology you're actually using in this region, and can you clarify for us, are these new infrastructures to serve both Cablevision territory, and maybe what the rationale is for this decision.

3538 MR. PÉLADEAU: JF is paying for all of this so I guess that he will be in a good position to answer.

‑‑‑ Laughter

3539 MR. PÉLADEAU: I can absolutely start ‑‑ and my colleague, Mohamed, if he wants to go a bit deeper in the technology aspect of your question.

3540 So, really... it's really important that we understand that what we're doing right now in Abitibi is not part of any subsidy we're getting, okay? So, basically, it's an overlay that we're... that we're building, basically, on the Cablevision network, and per definition it would never be eligible to get the subsidies that were given, basically, to increase the access of internet, because these people already have access to internet, so clearly, it wasn't possible for us to even try to get subsidies to these customers.

3541 There is, however, other areas in Abitibi that some of them were part of the Quebec program, but they weren't a sector that we were providing any kind of TPIA services, so they were really like underserved communities, some rural communities, but that's really a different project than the one that is really building on the Cablevision cities, our new network, which is a knowledge that consists of fibre ‑‑ I don't know if you want to elaborate?

3542 M. DRIF : Moi, je vais continuer en français. Comme Jean‑François l'a expliqué, c'est deux gros projets qui sont complètement différents. Il y a l'overlay, le remplacement de nos infrastructures sur un réseau de Cablevision qui est en‑dehors du programme de subvention du gouvernement, et les régions rurales qui sont des régions qui ont été subventionnées par le gouvernement.

3543 Donc, on parle vraiment de l'infrastructure au‑dessus du réseau de Cablevision, qui a été utilisé comme modèle TPIA pour alimenter nos clients.

3544 Pour la technologie qui a été utilisée, c'est celle de Cablevision, lorsqu'on a commencé en modèle TPIA avec le réseau de Cablevision en mode HFC, donc ça, c'était comment on a débuté.

3545 Par‑dessus ça, nous avons construit un réseau FTTP, donc avec une technologie PON, qui va substituer graduellement des clients qui sont sur le réseau de Cablevision vers ce réseau FTTP.

3546 Pour les régions éloignées, les régions qui ont été subventionnées par le gouvernement, nous avons aussi construit un réseau en mode FTTP.

3547 LA PRÉSIDENTE: OK, merci.

3548 I have a question with respect to your mandated FTTP service, and you've suggested that if a mandated service is put in place that will enable you to enter markets across Canada, and that you'll have a competitive presence in other locations, which, ideally, would help drive down prices and be to the benefit of consumers.

3549 You've also presented evidence that Bell's retail pricing has been consistently below what the wholesale price is, and you've characterized that as predatory.

3550 And I think maybe Commissioner Naidoo asked a similar question, but I just wanted to clarify and maybe ask you if you could expand a little bit more on that. How will this benefit customers in the long run? Like, if this continues, this situation continues, where there's such competition, do we really see a benefit in the short‑term, long‑term, how will customers actually achieve the best results, if we were to have a mandated system?

3551 MR. PÉLADEAU: Well, you know, it's a matter of do you think that competition is bringing benefits the country and to Canadians? And at the end of the day... you know, we believe so. We believe that, you know, this situation has been proven in the past... you know...

3552 In Quebec... you know, you mentioned that earlier, prices were lower, but we were able also to bring the prices of wireless lower, despite the fact that... you know, we were not competing only against Bell, we were competing against two other operators, with flanker brands on top of that. And Videotron came in and brought another offer, other proposal that benefit to Quebecers.

3553 We were able... you know, to bring and to bundle different services and at the end of the day, I guess that... you know, we should consider this as an interesting factor. So much that... you know, even the CRTC and the industry and the Competition Bureau, Stats Can... you know, find out that... you know, the prices were lower, despite a competitive environment.

3554 So, if, in wireless, you have more competition... you know, again, the facts have been proven, should we do the same, in terms of wireline? In terms of internet access? Usually... well, it's a matter of fact that right now... maybe it's not going to be the same forever, because, you know, we will be able to enjoy new technologies... and I think of fixed wireless in the future, but right now, what we have is one wireline competitor.

3555 So, competition is lower and therefore if... you know, we were to move forward in other provinces, I think again, you know, we will be able to increase choices and reduce prices. We have all the economical and financial incentives to do so... you know, we paid a significant amount of money... you know, to buy Freedom Mobile, it's about 3 billion dollars, so then, therefore, you know, we would like to have the best return on investment as possible, other than to be able to achieve... you know, this objective than having more customers, and grow our revenues at the end of the day.

3556 So, we look forward to follow... I would say a quite simple philosophy by improving our market position, and doing so by providing better proposals to our customers.

3557 MS. TABET: I would like to add on the predatory prices. This is exactly why we are putting in front of the Commission the national tariff, that's exactly why, and the reasonability test. This would prevent predatory prices. It would discipline the market, and this is the answer to predatory prices put in place by Bell.

3558 And Fred has a very good example. There's no rationale for a customer in Ontario to pay double the price than a customer in Quebec, and it's exactly... it's actually an example of good predatory prices that we are facing in Quebec.

3559 M. DÉRY : Je vais poursuivre en français. Effectivement, Peggy, c'est comme si de ne pas... de garder un statu quo, mettre en place deux classes de Canadiens, donc un au Québec puis les autres, et je vais vous donner l'exemple actuel d'une promotion où Bell offre de l'internet sur son réseau FTTP dans lequel il jumelle de la télé IP ‑‑ donc, qui passe aussi sur son internet ‑‑ à 89 dollars au Québec, alors que ce même package‑là, de duo de services filaires, qui fonctionnent sur le broadband de Bell, en Ontario, ça va être 145 dollars, donc un écart de 56 dollars par mois.

3560 Et à votre question, en complément, le predatory pricing, est‑ce que le consommateur aime ces prix‑là? Ils aiment des prix abordables, mais il faut attention au titulaire. Alors ici, c'est un point de vigilance où les pratiques historiques des titulaires, c'est de peut‑être appâter les clients avec des prix attractifs mais par la suite les hausser significativement.

3561 Donc, si statut quoi persiste on rebâtit un monopole actuellement vers les accès Internet FTTP, ce n'est que ça qu'ils veulent, et par la suite pouvoir réenclencher des hausses de prix.

3562 MR. PÉLADEAU: And I would add, Commissioner, in our experience I had the privilege... you know, to run and... you know, to be the CEO of this company for many years now... I would say even many decades... well... well... it is what it is, so... we're not getting younger. (laughter)

3563 And predatory pricing, you know, we've been seeing this always. I remember, Charles Dalfen was the President of the CRTC at that time, and the CEO of Bell was Jean Monty, so it's 20 years ago, and you know what they did? You know... they were looking... you know, with predatory pricing... you know, to kill the cable business. They were offering satellite. You're going to go buy at a RadioShack... you know, a box, and you were not forced to buy a subscription. That was creating a mess in the industry.

3564 And at the end of the day... and obviously, you know, the CRTC was considering this issue as very important, and we had audiences... you know, we had... you know, time to discuss that.

3565 But at the end of the day, also, we sued Bell and they were forced to pay us 104 million dollars.

3566 So, it means... you know, they're ready to do anything... you know, to create damages and what we're seeing as predatory pricing is nothing new for us, but somewhere I think that it needs... that needs to stop.

3567 COMMISSIONER DESMOND: OK, merci.

3568 Je voudrais demander une question sur quelque chose que Rogers a dit.

3569 Rogers has suggested that Videotron used to be in favour of disaggregated HSA, but that is no longer the case, because of the interest now in getting outside of Quebec at the lowest possible cost... and I'm sure you've had an opportunity to read that.

3570 So, I just wanted to give you the opportunity to respond to that comment.

3571 MS. TABET: Can you please repeat? I'm not sure I understood. So, Rogers said that Videotron was in favour of disaggregated?

3572 COMMISSIONER DESMOND: So, as I understand Rogers' submission ‑‑ and I don't want to misquote Rogers ‑‑ but I understand their submission to be that they view your position as being one that used to be in favour of disaggregated HSA, but that's no longer the case, because now you have an interest in moving outside of Quebec.

3573 So, what I took Rogers' submission to mean ‑‑ and we'll have an opportunity to hear from them later today...

3574 MS. TABET: Yeah.

3575 COMMISSIONER DESMOND: ... but I took then to mean that you used to have a position that you favoured the disaggregated model and now, because new opportunities have presented themselves, you've kind of changed your view on that...

3576 MS. TABET: Yeah.

3577 COMMISSIONER DESMOND: ... and are more now moving towards aggregated, so it's...

3578 MS. TABET: Understood, understood.

3579 COMMISSIONER DESMOND: All right.

3580 MS. TABET: So, what I have to say about that is even the Commission itself said that the disaggregated did not work and we are of the same opinion. It's very hard for us to access a disaggregated model with these high prices that are regulated at the moment.

3581 And maybe... I don't know if Mohamed would like to... to expand on the aggregated model, why it would be better than the disaggregated...

3582 MR. DRIF: Yeah... well, it's difficult to understand, the statement of Rogers, because we are always asked to reduce the number of connection points at the last submission that we have done... for example, for Quebec, it was one of the cable companies that asked for less points of connection, so...

3583 We explained that multiplying the points of connection wasn't efficient and will cause investments that are not... let's say, useful, and just complicate the infrastructure.

3584 And the difference between the aggregated regime and the disaggregated regime, we think that the transport parts that are not included in the disaggregated regime was the incentive for the companies that... TPIA companies to invest in transport.

3585 So, the problem that we are living is the prices are... there is no difference right now, and the different between the prices are in the inverse direction. So, when the aggregated tariff is less than the tariff, that will include... we don't include the transport, it's not logical.

3586 So, this is our position and we will always... we are not against the disaggregated or aggregated, we are in favour for both regimes but with the difference between the tariffs must... inciter... must push the TPIAs to invest in transport.

3587 So, what we are doing, for example, in... like, Abitibi or other types of projects.

3588 COMMISSIONER DESMOND: Okay, thank you. And I apologize that there are some overlap with these questions and what has been asked. I just want to make sure that we fully understand the record, and we're trying to clarify, so... thank you for your patience.

3589 In your reply comments you did discuss how Bell and TELUS have no options but to invest in FTTP, so that they can compete with cable companies, and this natural competition between both the ILECs and cable companies is going to force the cable companies to introduce newer technology.

3590 So, is there a business case to overbuild your HFC infrastructure with FTTP in our territory? In the Videotron territory? Or in areas maybe where VMedia owns infrastructure?

3591 M. DRIF : Je vais continuer en français, si vous me permettez.

3592 Le réseau HFC est une technologie évolutive, donc une... un des points forts de cette technologie par rapport à un réseau traditionnel DSL que Bell ou TELUS exploitaient dans les anciennes compagnies de téléphone.

3593 Cette capacité d'investir graduellement un réseau HFC... comme le nom le dit, c'est un réseau qui est composé de fibre et de coax, et non pas juste the coax.

3594 Et, par exemple, pour Vidéotron, nous avons toujours investi dans l'évolution de ces réseaux HFC à différentes étapes, qui permettait de suivre le besoin de nos clients et le besoin en vitesse et en capacité.

3595 Et cette capacité évolutive, c'est ça qui a fait notre force durant les 10, 15 dernières années, et c'est pour cela qu'on est leader sur le marché pour la disponibilité du service internet.

3596 Cependant, certains secteurs, certains territoires ont besoin d'un investissement plus rapide, à cause de la densité de population, à cause de l'évolution, à cause de nouvelles constructions, où Vidéotron investit, au lieu dans un réseau HFC qui évolue met directement dans le réseau PON, qui est plus péren sur une longueur... une durée de vie plus longue, de 10 à 15 ans.

3597 Dans certains régions nos investissements en réseau FTTP et... qui représentent un équivalent de 5 à 10 pour cent du réseau. Le reste, c'est des évolutions du réseau existant vers une technologie DOCSIS, qui évolue dans la future génération, DOCSIS 4.0, qui va nous amener jusqu'à des vitesses de 10 gig, qui va facilement compétitionner avec la fibre à la maison.

3598 COMMISSIONER DESMOND: Okay. I just need a minute to make sure I'm not... maybe some of these questions have been asked, so if I can just have your patience for a moment.

3599 I know we've talked about this this morning quite a bit but just to make sure I understand.

3600 How does the Commission balance the objective of affordability and competition with making investments? You know, it's a very fine balance to have to achieve, and, you know, we're trying to hear your submissions, the submissions of the public intervener, the PIAC, OpenMedia, interested parties who take a different view. So, we're trying to achieve that balance, and really, we look to you for a solution, in terms of how to achieve that balance.

3601 So, if can provide any more insight into that?

3602 MR. LESCADRES: Sure, with pleasure.

3603 Basically, the way I can see it is that I think we provide a great example of it's totally... that it's totally possible to be a successful company that keeps investing year after year, with low internet prices... okay? I think we proved that, and I think... like, when we come back to the original... the original comments of Vice‑Chair Scott, basically, the prices are lower in Quebec, and that doesn't stop in any way the investment. That doesn't... that doesn't stop... that didn't stop us from investing, and that didn't stop Bell, basically, from investing in Quebec, in lower‑options environment.

3604 So, I think that... to repeat an expression that... the proof is in the pudding, well, I think we saw that in the past, and I think that's going to continue in front of us, and I'm totally confident that this... basically, the receive that we saw in Quebec is going to be applied to the rest of Canada, to the benefit of all Canadians.

3605 THE CHAIRPERSON: OK, merci. Thank you.

3606 Merci beaucoup, et je sais qu'on a beaucoup de questions, mais c'est vraiment un sujet très important, comme vous le savez, alors je m'excuse.

3607 Alors, peut‑être on peut commencer avec juste une précision. Pourriez‑vous juste clarifier pour nous votre position, quant à la question de permettre aux trois grands titulaires... alors, Bell Canada, Rogers et TELUS... de prendre avantage des services achevées de gros tarifs qui seraient offerts par les autres entreprises titulaires?

3608 MME TABET : Mais, en fait, comme on a... comme... de toute façon Bell a déjà accès à nos infrastructures. On ne demande pas de limites... ils sont déjà là, donc ça serait contre‑productif de leur demander de sortir, premièrement, et nous, on ne veut pas avoir de limites ailleurs.

3609 Donc, c'est vraiment aucunes limitations... et cohérent, oui, avec notre position.

3610 Donc, c'est... ce que Cogeco propose... bien, on a dit que ça avait ses mérites, mais ce n'est pas la position qu'on prend, nous, c'est accès partout, pour tout le monde.

3611 THE CHAIRPERSON: D'accord, merci beaucoup. Ça, c'est clair.

3612 Alors, on parle de Cogeco. Ce matin on a entendu de Cogeco que n'importe quelle forme de comparaison des tarifs de détail devrait être considérée hors de l'établissement des tarifs de gros, mais vous avez soutenu le contraire.

3613 Alors, comment vous êtes différents?

3614 M. PÉLADEAU : Écoutez, à la... notre position n'est pas diamétralement opposée. Nous comprenons la nécessité pour un fournisseur de... d'utiliser la méthode sur les coûts, telle qu'elle était établie.

3615 Cela étant dit, ce qu’on amène de différent et basé sur le passé, c’est de s’assurer d’avoir un mécanisme de surveillance, en réalité, qui tient compte de la raisonnabilité et donc de s’assurer qu’on ne se retrouve pas dans une situation où est‑ce qu’on doit tout recommencer ce processus, qui est un processus qui est extrêmement long, un processus qui demande énormément d’énergie de tous pour y arriver. Et donc, d’avoir, donc, un test de raisonnabilité pour être certain que, si on donne accès aux joueurs qui rentrent dans cette industrie‑là, donner accès à la possibilité d’avoir des plans d’affaires qui tiennent la route et donc qui permettent d’offrir les prix qu’on veut offrir, qui permettent de... vraiment, de baisser la facture des Canadiens. C’est vraiment dans cette distinction‑là, pour éviter de se retrouver dans quelque chose qui n’est pas pérenne, quelque chose qui certainement peut paraître intéressant le jour 1, mais qui a des répercussions importantes aussi à long terme. Et quelque chose en lien avec notre proposition aussi qui bénéficie aux Canadiens d’un océan à l’autre. Ça, je pense que ça va être très, très important aussi dans notre position qu’on vous amène ce matin.

3616 LA PRÉSIDENTE : D'accord. Merci beaucoup. Juste à propos de la qualité de service, alors, vous avez parlé ce matin de la qualité de service désastreuse offerte par Bell. Est‑ce que vous pouvez parler de l’impact de cette mauvaise qualité de service?

3617 M. PÉLADEAU : Je vais demander à Juan, qui vit cette, encore, expérience quotidienne, de bien vouloir vous donner la réponse à votre question.

3618 M. RAMOS : Dans le contexte où on est les clients revendeurs pour un titulaire, donc, je pense que, l’impact principal, c’est le temps. C’est des tactiques dilatoires qu’on voit, qu’on a vues et qu’on a mentionnées dans le cas de Câblevision ou bien dans le cas de Toronto, dans les centrales téléphoniques d’Adelaïde. C’est des tactiques dilatoires. C’est de la documentation confuse. C’est de l’accompagnement non existant. C’est des informations non disponibles. Des informations aussi simples que les codes postaux des zones de desserte ne nous sont pas fournis pour pouvoir établir avec nos collègues de marketing, par exemple, des plans de commercialisation.

3619 Ça fait aussi l’objet d’installations erronées, des techniciens mal formés ou des équipements différents aux équipements qu’on s’attendait à voir installés chez un client. Donc, tout ça amène un délai pour que, nous, on puisse commencer à générer un revenu après même avoir déjà connecté les deux réseaux pour pouvoir faire la revente de service.

3620 MME TABET : J’ajouterais aussi que, pendant tout ce temps‑là, pendant tout le temps que Bell prend pour nous servir, bien, c’est eux qui font l’acquisition de clients pour nous couper l’herbe sous le pied. Donc, ça aussi, c’est l’impact que ça engendre.

3621 M. DÉRY : Et aussi, je peux ajouter, à Câblevision, on l’a bien vu, quand on est arrivés pour entrer sur le marché, Bell s’est empressée de mettre des bâtons dans nos roues de manière à ne pas pouvoir prendre des commandes. Ce qui leur a permis de déployer des tactiques commerciales et justement d’aller chercher notre clientèle tout de suite, sachant qu’on arrivait sur le marché. Donc, ils se servent de ça justement pour nous bloquer le plus longtemps possible pour pouvoir justement arriver avec des prix qui sont plus bas et donc saper nos intentions de justement offrir des services différents à bas prix et des meilleurs choix à la clientèle.

3622 M. PÉLADEAU : Et je me permets d’ajouter également, aussi, Madame la Présidente, again, t’sais, it’s nothing new here, alors, on a constaté que, chez VMédia, on l’a mentionné un petit peu plus tôt, c’était le même environnement dans lequel ils se sont retrouvés avec les incumbents. Vous savez, donc, les TPIA n’ont pas la surface financière que celle sur laquelle repose Vidéotron ou même Cogeco, quand même des exploitants, donc, depuis de nombreuses années. Et n’ayant pas les ressources financières, elles n’ont pas la capacité non plus d’aller devant les tribunaux devant... d’entretenir un département d’affaires réglementaires qui doit exister pour justement gérer cette relation‑là avec le régulateur et/ou éventuellement les tribunaux. C’est la raison pour laquelle également aussi on constate que, tristement, ils disparaissent les uns après les autres. C’est comme si, donc, les titulaires souhaitaient que les TPIA meurent à petit feu en utilisant ces stratégies dilatoires.

3623 Certainement, t’sais, qu’on souhaiterait, nous, ne pas être en mesure de souffrir cet environnement, mais on a la capacité de le faire. T’sais, on a les moyens financiers accordingly. T’sais, donc, on... et on va continuer à le faire comme on l’a fait... Tout à l’heure, je faisais référence, donc, à la poursuite devant les tribunaux. Il y a 20 ans maintenant. Mais depuis ces 20 dernières années, on subit le même environnement dans lequel systémique nous avons été habitués à vivre.

3624 M. DÉRY : Et juste pour terminer sur la qualité de service, parce que c’est quand même un élément très important qui va au‑delà d’un tarif juste et raisonnable qu’on demande, la qualité de service dont on parle, elle nous impacte. Et Pierre Karl faisait mention tout à l’heure du fait que, justement, on respecte la réglementation. On peut vous dire, vous pouvez le demander aux revendeurs, aux clients TPIA, demandez‑leur la qualité de service qu’ils reçoivent chez Vidéotron, vous allez voir des réponses qui vont vous surprendre. On a mis sur pied... on a des gens qui sont attentionnés, qui accompagnent les clients TPIA chez nous.

3625 On leur offre par exemple... on parlait tout à l’heure des adresses qui sont desservies, par exemple, sur notre réseau, à la demande, nous, on fournit les codes postaux à ces gens‑là par tête de ligne, donc, par région. Les clients TPIA sont en mesure de savoir, par exemple, quels clients ils vont être en mesure de desservir. Ce qui n’est pas possible, par exemple, avec Bell. Donc, il y a véritablement cet élément‑là de qualité de service, que vous avez justement aussi étudié. D’ailleurs, vous avez mis en place un régime de qualité de service sur les installations, sur les réparations. Ce modèle‑là est en place actuellement. On est en... il faut remplir des formulaires pour vous montrer, par exemple, le taux de satisfaction des réparations et des installations. Mais il n’y a pas encore de mordant qui est accroché à ça. Et je pense que le CRTC devrait se tourner et regarder ça sérieusement dans le cadre de cette instance‑là.

3626 M. PÉLADEAU : Et je ne peux pas m’empêcher également aussi donc de vous dire merci, de me rafraîchir la mémoire à cet égard‑là. Donc, devant le comité hier, donc, de la Chambre des communes, INDU, donc, le député néodémocrate Brian Masse a bien insisté sur ce que le ministre Champagne a imposé dans la transaction Rogers‑Shaw‑Québecor‑Freedom de dire que, si vous ne rencontrez pas vos obligations, bien, vous aurez des pénalités et des sanctions pécuniaires. Et il a insisté à plusieurs reprises à cet égard. Et je pense que c’était tout à fait justifié.

3627 LA PRÉSIDENTE : D’accord, merci. Et alors, juste pour encore préciser, vous avez donné un exemple de VMédia et les problèmes, les difficultés à accéder aux installations par FFTP au moyen des services (indiscernable) groupés de Bell dans la région du Grand‑Toronto. Alors, est‑ce que, ça, c’est toujours le cas?

3628 M. RAMOS : Bien, on a réussi à établir et à lancer notre service. Mais, au niveau des installations, on a toujours des problèmes, effectivement.

3629 LA PRÉSIDENTE : D'accord, merci. On a parlé beaucoup et vous avez parlé beaucoup de la concurrence et les effets de la concurrence. Alors, les prix plus bas, les choix pour le consommateur. Hier, Bell nous a dit qu’il n’y avait pas de marque de concurrence sur le marché et ils ont dit en anglais, moi, j’ai écrit : « The market has never been more competitive. » Alors, en même temps, des intervenants comme PIAC (ph), OpenMedia, Manitoba Coalition et des autres nous ont dit cette semaine qu’il y avait plein de problèmes, du manque de choix, de prix élevés, de service à la clientèle. Alors, que pensez‑vous de cette perspective sur la concurrence?

3630 M. DÉRY : Je peux le prendre, Madame la Présidente. On est d’avis qu’il manque de compétition. Si vous regardez la dynamique par province, il y a toujours deux joueurs dominants. Et je prendre le fait Québec. Oui, on est dans une belle posture par toutes les qualités de notre plan historique, mais c’est l’endroit où est‑ce qu’il y a quand même le plus de revendeurs, presque 20 pour cent. Si vous regardez dans les autres provinces, ce n’est pas du tout, du tout la même dynamique. Il y a également certains fournisseurs qui vous ont proposé d’exclure leur territoire. Et c’est dans ces territoires‑là, je fais référence à Telus BC, Alberta où la part de marché Internet de Telus est parmi les plus élevée au Canada. Il me ferait plaisir de vous partager en engagement les parts de marché des joueurs par province. Alors, d’exclure... Quand on disait, nous autres, c’est le marché ouvert, c’est définitivement vers cette avenue qu’on pense que les Canadiens vont payer le juste prix d’un océan à l’autre pour leurs services Internet.

3631 MME TABET : Je pourrais peut‑être partager justement quelques exemples de parts de marché. Donc, Alberta, BC, Telus et Shaw et maintenant Rogers ont 80 pour cent des parts de marché. Et deux les principaux joueurs en Ontario, Bell et Rogers ont 67 pour cent des parts de marché. Donc, c’est la réponse à votre question.

3632 M. DÉRY : Puis pour terminer, un point de vigilance parce que ça nous a fait sourire un peu, certains disent avec fierté contribuer à faire baisser le prix entre autres de l’Internet au pays de l’ordre de 20 pour cent, on a même entendu certains chiffres. Donc, tout... il faut se rappeler le point de départ. Donc, si une province a malheureusement des prix moyens de 100 dollars par mois pour un accès moyen puis que, tout d’un coup, ça devient 80 dollars, le point de vigilance, c’est que c’est peut‑être un beau pourcentage, 20 pour cent, mais ce n’est pas ça. C’est peut‑être 50 dollars qui est le bon prix. Donc, je vous invite aussi... ça, c’est un indice des prix payés moyens par province, qui est un indicateur important, je pense, dans la stratégie pour la suite.

3633 LA PRÉSIDENTE : Merci beaucoup. Alors, une question sur l’innovation. On sait que, l’innovation, c’est important. On a entendu cette semaine de Saskatel que les fournisseurs en gros n’offraient pas d’amélioration technologique. On a entendu des autres intervenants, c’est comme, en anglais, it’s like selling water, Internet service... selling Internet service is like selling water. Can’t really innovate.

3634 En même temps, les intervenants comme PIAC ont dit que les concurrents peuvent apporter de l’innovation dans le marché. Vous avez parlé de l’innovation. Quels sont les types d’innovation que les fournisseurs en gros peuvent offrir et comment ces innovations profitent‑elles aux consommateurs?

3635 M. PÉLADEAU : Concernant donc l’innovation, donc, de la part des opérateurs TPIA, il faut distinguer, quand même également aussi. Et puis on n’a pas nécessairement toujours, nous aussi, été tendres à l’égard donc des opérateurs TPIA pour une raison assez simple. C’est qu’il n’y avait pas nécessairement justement de ce facteur d’innovation. Mais cette affirmation‑là n’est pas vraie en toutes circonstances. Et j’ai eu l’occasion de vous le mentionner, pour VMédia, pour Oxio. Ce sont... et je pense qu’on doit reconnaître que ce sont des entreprises qui ont ajouté en valeur dans le système et dans le réseau de télécom au Canada. Alors, c’est la raison pour laquelle, je pense, qu’on doit reconnaître à César ce qui appartient à César et à cet égard‑là.

3636 Maintenant, est‑ce que toutes les compagnies seront logées à cette enseigne? Je ne crois pas. Certaines utilisaient, donc, de façon peut‑être abusive le réseau des titulaires. C’est la raison pour laquelle je pense que et le ministère de l’Industrie et certainement également aussi le CRTC, aujourd’hui ou dans l’avenir, en tout cas, en ce qui concerne le ministère de l’Industrie, on a eu l’occasion également aussi de le mentionner, il y a une obligation de construire. T’sais, vous utilisez donc le réseau de quelqu’un d’autre. Vous avez à la fin de la journée l’obligation de construire si vous êtes également aussi détenteur de droits en vertu du spectre. C’est comme ça que ça se passe dans le sans‑fil. C’est probablement et possiblement également aussi pour vous une piste que vous pourriez explorer dans la mesure où on ne souhaite pas non plus purement et simplement offrir sans qu’il y ait de la valeur ajoutée à l’intérieur du système de télécommunication au Canada. Peut‑être que ce sont des facteurs d’innovation qui doivent être retenus. Peut‑être que c’est d’autres facteurs. Je pense que c’est à la Commission de bien les identifier et certainement pour nous, ce sera donc un plaisir d’orienter cette discussion‑là.

3637 LA PRÉSIDENTE : Merci beaucoup. Alors, j’ai deux autres questions. Alors, une question à propos des acquisitions. Alors, on a entendu de certains intervenants que les récentes acquisitions étaient un signe que le régime d’accès de service de gros ne fonctionnait pas. Qu’en pensez‑vous?

3638 M. PÉLADEAU : Ça, c’est peut‑être synonyme et l’illustration donc de la politique que nous avons vue avec Bell. Il ne faut pas avoir peur donc de le signifier. Donc, c’est eux qui sont arrivés avec leurs gros sabots et qui ont acquis, donc, des entreprises importantes. Quelle est la logique derrière tout ça? Honnêtement, des fois, en tout cas, en ce qui nous concerne, nous avons de la difficulté à comprendre. On regarde leurs états financiers de façon trimestrielle et on n’arrive pas à remettre les blocs au bon endroit dans le puzzle.

3639 Quelle est leur stratégie? C’est difficile, encore une fois, à apprécier. Mais, ce que nous visons essentiellement, puisque la grande majorité de ces TPIA qui utilisaient le service HFC de Vidéotron, bien, on constate que les clients migrent ou leurs clients migrent sur leurs réseaux. Alors, c’est comme s’ils achetaient des clients à des prix très élevés pour pouvoir peut‑être satisfaire le marché financier en leur disant : « Bien, on a crû de 5 000, de 10 000, de 15 000 nouveaux clients par trimestre. »

3640 Et d’une certaine façon, c’est certainement également aussi le cas. Parce que c’est quand même... et on est tous d’avis que le marché de l’accès Internet est un marché devenu mature au Canada. Il y a peut‑être encore un petit peu de croissance, particulièrement, éventuellement, en fonction du secteur de l’immigration. Mais il y a cette concurrence‑là avec le sans‑fil. On peut considérer que le marché de l’accès Internet est mature et que c’est une business, excusez‑moi l’expression, de turn. C’est celui qui va être en mesure de faire la différence auprès des clients, que ce soit en tarif, que ce soit en qualité de service, que ce soit avec les produits également aussi qui peuvent être offerts. On pense notamment, puis il y a beaucoup d’évolution qui sont en train de se produire aux États‑Unis. Est‑ce que du contenu particulièrement sur le sans‑fil peut être identifié et commercialisé? Donc, tous ces éléments‑là...

3641 Et heureusement également aussi, d’une certaine façon, ça participe à l’évolution du marché. Puis je pense que c’est une très bonne chose.

3642 M. LESCADRES : Si je peux ajouter aussi...

3643 M. PÉLADEAU : Jean‑François est très bon là‑dedans, lui. Il regarde les états financiers. Il se couche là‑dessus le soir puis il se réveille le matin.

‑‑‑ Laughter

3644 M. LESCADRES : Si je peux ajouter, vraiment, à ce niveau‑là, je pense qu’on peut regarder les acquisitions justement qui ont été faites par les titulaires, notamment Bell, un peu Telus, de ces joueurs‑là, et le prix qui a été payé pour acquérir ces compagnies‑là. Lorsqu’on amène ce prix‑là par abonné, ça témoigne de la valeur incroyable qui est accordée à ces abonnés‑là. Je ne peux pas présumer, évidemment, de leurs intentions. On voit un phénomène de migration, comme Pierre Karl le voit, jumelé aussi à un effet un peu de confusion avec le consommateur qui n’est certainement pas non plus tout au fait comme nous le sommes des marques qui sont sous quel chapeau. On a parlé ce matin, on a parlé... Cogeco en parlait, la multiplication des marques. On voit la valeur qui est donnée clairement par les titulaires, un peu à aller chercher cet élément‑là, de changer le marché, d’enlever de la compétition dans le marché, de se l’accaparer. Et ça témoigne aussi des marges que l’Internet rapporte de leur vue pour être en mesure de faire de telles acquisitions.

3645 LA PRÉSIDENTE : D’accord. Merci beaucoup. Alors, dernière question pour moi. Pourquoi est‑ce que notre décision dans cette instance est urgente?

3646 M. PÉLADEAU : Bien, je vais me permettre, Madame la Présidente, donc, de saluer votre courage et votre audace. Je pense que, là aussi, t’sais, comme entreprise de télécommunication, nous avons l’expérience de travailler avec la Commission. Et puis nous ne sommes probablement pas les seuls, donc, à réfléchir puis à émettre des commentaires. Vous savez, donc, ça bouge beaucoup dans les télécoms. C’est un métier qui évolue rapidement. Et c’est vrai également aussi pour la radiodiffusion.

3647 Il y a 10 ans, qui aurait pensé que Netflix vaudrait, je ne sais pas, moi, 42 milliards? Que Apple se lancerait comme fournisseur de téléphone éventuellement donc comme un fournisseur de contenu? Et ça va continuer à évoluer de façon significative. Vous avez vu la semaine dernière trois entreprises de contenu fusionner pour offrir un nouveau service de streaming de sport, donc, Discovery, ESPN et puis Fox.

3648 Alors, ça requiert, je dirais, une rapidité au niveau des décisions et puis on a constaté tristement, peut‑être que dans le passé, les décisions étaient longues à être reprises, ce qui faisait en sorte, je pense, t’sais, de créer peut‑être un préjudice aux opérateurs. Alors, on ne peut faire autrement que saluer votre démarche parce que, depuis que vous assumez le leadership de la Commission, bien, les décisions sont prises. Elles sont prises... que ce soit une bonne ou une mauvaise décision, peu importe. Donc, celui qui la subit... Mais l’important, c’est de la prendre. Et, à cet égard‑là, on ne peut faire que saluer, donc, le courage dont vous faites preuve.

3649 Alors, pour cette audience, je pense que Peggy l’a bien mentionné, c’est que ce congé, t’sais, réglementaire de la part du FTTP, c’est 10 ans où le HFC propose son réseau. Et c’est 10 ans où le réseau du FTTP n’est pas disponible à aucune autre organisation. Il y a un déséquilibre. Il y a certainement une inéquité également aussi dans le système qui doit faire l’objet d’une correction, d’autant que, comme vous le savez aussi également, puis je pense qu’on en a... nous le vivons, on a tenté de vous le démontrer, c’est que de vouloir avoir accès au réseau des titulaires, ce n’est pas une mince tâche. C’est extrêmement compliqué. Si on fait face à des procédés dilatoires, encore une fois, qu’on a toujours vécu, bien, à la fin de la journée, je ne pense pas que ce soit au bénéfice donc des Canadiens, des Canadiennes...

3650 Probablement que c’est au bénéfice des actionnaires de Bell ou de BCE, mais je ne crois pas que nous sommes au service des actionnaires de BCE. Nous souhaitons être au service des Canadiens et des Canadiennes pour offrir des services de qualité en matière, donc, de télécom les plus élevés possible à des tarifs les plus bas possible.

3651 LA PRÉSIDENTE : Merci beaucoup. Alors, je vous cède la parole pour le mot final. Merci.

3652 M. PÉLADEAU : Bien, écoutez, Madame la Présidente, encore une fois, j’ai tenté de le mentionner au départ, puis je viens d’y répondre d’une certaine façon, donc, c’est la nécessité, donc, de pouvoir faire en sorte puis on peut dire que toutes les auditions, toutes les audiences du CRTC sont importantes, mais certaines d’entre elles sont probablement plus importantes que d’autres parce que ça requiert, donc, je dirais, des changements pour pouvoir faire bénéficier aux Canadiens, là, ce dont nous avons parlé.

3653 Alors, je pense que pas mal tout a été dit. Ça nous a fait extrêmement plaisir, je pense, de répondre à vos questions. Vous avez posé les bonnes questions. J’ose espérer qu’on vous a donné les bonnes réponses. Si vous souhaitez éventuellement donc d’autres commentaires, vous le savez, nous sommes toujours à votre disposition. Nous apprécions également aussi tout le soutien du personnel de la Commission. Elle est là pour faire en sorte justement qu’on puisse poursuivre les objectifs qui sont de la Commission. En même temps... ou du Conseil plutôt. En même temps, bon, on sait qu’on va continuer à devoir nous opposer aux titulaires, que ce soit devant vous, devant le personnel ou devant les tribunaux. Il faudrait que ça cesse, je pense. Voilà, Madame la Présidente. Merci beaucoup de votre écoute et de votre attention.

3654 LA PRÉSIDENTE : Merci beaucoup à vous.

3655 THE SECRETARY : Merci. Merci. Nous prendrons maintenant la pause du dîner et serons de retour à 13 h 40. Merci.

‑‑‑ Upon recessing at 12:35 p.m.

‑‑‑ Upon resuming at 1:40 p.m.

3656 THE SECRETARY: Welcome back, everyone. We will now hear the presentation of Rogers Communications Canada Inc. For the participant, appearing remotely, can you please confirm that you can hear us correctly?

3657 MR. FEASEY: I can, thanks

3658 THE SECRETARY: Perfect, and we can, as well. Please introduce yourself and your colleagues, and you may begin your presentation. Thank you.

Presentation

3659 MR. SHAIKH: Good afternoon, Chairperson Eatrides, Vice Chair Scott, Commissioners Desmond and Naidoo, and Commission staff.

3660 My name is Dean Shaikh. I am the Senior Vice President, Regulatory Affairs, at Rogers Communications. I am joined today by, to my right, Ron McKenzie, Chief Technology and Information Officer, Kendall Milne‑Bancroft, Senior Vice President Sales and Marketing, Residential Division, and Renee Duplantis, Principal, The Brattle Group. And to my left, Howard Slawner, Vice President, Regulatory Telecom, and Christine Pop, Vice President, Wholesale Solutions. In the back row we have Barry Choi, Director of Regulatory Economics, and Megan MacDonald, Director, Competition Counsel. Joining us virtually is Richard Feasey, our UK‑based consultant and an expert on European regulation.

3661 Thank you for this opportunity to provide Rogers’ views on the future of Canadian broadband and our commitment to our customers. Rogers is poised to make massive investments in the next generation of advanced network technologies. The wholesale framework that the Commission establishes will have direct implications for these investments as well as the achievement of Canada’s telecom policy objectives.

3662 It is critical that the framework promote both competition and investment. The long‑standing objectives of high‑quality, affordable services for all Canadians delivered by advanced and resilient networks fundamentally rely upon continued investment in competing networks. These investments, in turn, rely on a stable and proportionate regime that treats parties equitably and rates that fairly compensate for the massive costs and risks involved with building networks.

3663 Ron?

3664 MR. McKENZIE: Thank you.

3665 Despite Canada’s extensive geography, low population density, and challenging terrain and climate, Canada has amongst the world’s most advanced and robust telecommunications networks. These networks performed remarkably during the COVID‑19 pandemic, absorbing unprecedented spikes in demand, and they continue to meet Canada’s ever‑evolving needs for connectivity.

3666 A lot has changed since the days the connection to the home enabled a mere telephone call or email. Canadians now rely on their broadband connections to support many aspects of daily life and power their connected homes. Thanks to technological advancements, the value of that connection to the home, in terms of what it can do for Canadian consumers and Canadian businesses, has increased exponentially. For example, the number of connected devices per Canadian household is projected to grow to 21 by the end of this year, and that’s up from 15 in 2020. That’s a 40 percent increase in connected devices in just four years. The average monthly usage, which just nine years ago was 58 gigabytes per customer, is now an astonishing 482 gigabytes per customer, an eightfold increase.

3667 And as you know, supporting these evolving demands is neither inexpensive nor easy. Operating and maintaining high‑quality networks requires constant and consistent expenditures in the hundreds of millions of dollars annually. On top of that are the massive generational investments required to “future proof” these networks so that we can continue to deliver high‑quality, innovative services that underpin the digital economy of tomorrow and allow Canada to keep pace with our global peers. In fact, over the last 10 years, Rogers, together with Shaw, has invested over 20 billion dollars in our wireline infrastructure.

3668 Rogers is currently at the cusp of another generational investment in our DOCSIS hybrid‑fibre coax network, DOCSIS 4.0. It represents a revolutionary change in the cable network architecture, necessitating the replacement of almost every network element and requiring billions of dollars in incremental investment. DOCSIS 4.0 hybrid‑fibre coax technology will deliver 10 gigabit speeds and allow cable operators to go head‑to‑head with our competitors, who utilize fibre for last mile to the premises. It fuels facilities‑based competition for years to come. And as previous generations of DOCSIS technology, DOCSIS 4.0 will continue to evolve to deliver even higher speeds over time.

3669 The decisions that you make in this proceeding will impact both the scale and the pace of these capital investments, and it could jeopardize the business case for the most challenging investments, including those in rural parts of the country. Impeding our ability to invest will also distort and potentially even weaken the cable‑telco facilities‑based competition and all the benefits that flow from that.

3670 If these investments were not large and risky, our wholesale competitors would be making them, rather than relying on our infrastructure. At a minimum, these competitors must be required to compensate us fairly for access to our networks with rates that allow for cost recovery and sharing of the enormous risks that we are taking.

3671 The Commission should also follow the lead of European regulators and focus on ensuring network builders have efficient and truly non‑discriminatory access to passive infrastructure, like ducts and poles, to accelerate builds and deliver services. Doing this will stimulate investment, network expansion, and facilities‑based competition.

3672 Kendall?

3673 MS. MILNE‑BANCROFT: As the leader of our residential retail sales team, I see first‑hand the impact the network investments made by Ron and his team have had on the retail market. Over the years, these network investments have allowed Rogers to stay ahead of the curve, anticipating and meeting those ever‑changing consumer demands with affordable, reliable, innovative services that deliver significant value to our customers.

3674 Our network‑based competitors have done the same, and today we fight tooth and nail with them to attract and keep every customer. This rivalry has led to lower prices and more choice for consumers, and it is making my job more challenging every day. The data from the Commission and Statistics Canada reflects what my consumer intelligence team tells me every week: that in spite of soaring inflation, broadband prices are falling. The CPI index for internet services fell 10 points from December 2021 to December 2023, while the CPI for all products increased by 14 points. CRTC data shows that from 2013 to 2022, average end‑user revenue per megabit has fallen dramatically, from $3.28 in 2013 to just $0.23 in 2022. I can attest personally that the broadband market has never been more competitive.

3675 In this environment, it is clear the competition is more than sufficient to protect the consumer interest and there is no basis for new retail regulation. This perspective also informs our position that a wholesale high‑speed access mandate is unjustified and should be phased out.

3676 Finally, Rogers competes by offering Canadians access to the most advanced networks in the world. Consumer research shows that reliability is the most important internet attribute for customers. There is no question that the best way to ensure network reliability and resiliency, and create sustainable competition and choice for consumers, is through network investment and facilities‑based competition. Our recent acquisition of Shaw is clear evidence of Rogers’ commitment to these imperatives.

3677 MR. SHAIKH: The primary driver of affordability, reliability, innovation, and service availability in Canada’s broadband market is, and for decades has been, cable‑telco competition. In recent years, new providers and technologies, like low‑earth orbit satellite and fixed wireless internet, have begun to exert competitive pressure on Canada’s broadband markets, but it is the fierce competition between wireline networks that continues to ensure the policy objectives are advanced and consumers are well‑served with a choice of affordable, reliable, and innovative services.

3678 In this context, the Commission should be focusing on how to strengthen this network‑based competition by, for example, promoting network deployment through measures that support fair and efficient access to passive infrastructure, as Ron has mentioned. By contrast, wholesale mandates that are overbroad or that favour one type of network technology or competitor over others undermine the primary source of competition in the market.

3679 Canada’s retail broadband markets are competitive, and the record of this proceeding does not demonstrate otherwise. There is no market failure justifying the extraordinary level of intervention contemplated in this proceeding.

3680 Aggregated wholesale high‑speed access does not satisfy the Essential Facilities Test, which has long been a cornerstone of the Commission’s wholesale regime. Aggregated access also forecloses efficient investment in competitive transport facilities. We believe there is still a path to a feasible disaggregated solution if the Commission is prepared to work at it and expect more from our wholesale‑based competitors.

3681 If the Commission instead decides to reverse course and entrench an aggregated solution, we have developed some parameters for an equitable regime that can be implemented with relative ease.

3682 First, if you mandate wholesale access to the fibre‑to‑the‑premises networks, cable carriers should not be burdened with the costs of maintaining and operating access to both DOCSIS and fibre‑to‑the‑prem infrastructure. Access to only one next‑generation network per provider should be mandated. Cable carriers should not be required to implement the wholesale service on their nascent FTTP networks.

3683 To mandate otherwise would violate the Policy Direction’s requirement for equitable treatment of wholesale carriers. It would also be neither efficient nor proportionate, given the limited reach of cable FTTP networks, and it would slow the implementation process.

3684 Second, if an aggregated configuration is mandated, the disaggregated configuration must be phased out. Duplicative mandated access configurations are costly and inefficient and would constitute over‑regulation. In our interventions, we proposed a workable solution for increased disaggregation in the aggregated model that will maintain some incentives for wholesale‑based competitors to invest without the cost and complexity of maintaining multiple access services.

3685 Finally, if the Commission imposes any wholesale customer exclusions, they must not distort competition and undermine investment. Therefore, exclusions should apply in an equitable manner among facilities‑based carriers and should apply to both FTTP and HFC. We are especially opposed to the self‑serving proposal put forward by TELUS.

3686 Howard?

3687 MR. SLAWNER: The parameters Dean has described will yield a wholesale high‑speed access regime, if one is necessary, that is equitable and proportionate. However, for it to work, wholesale rates must be appropriate.

3688 Below‑cost wholesale rates subsidize wholesale‑based competitors and are not just and reasonable. They also undermine investment and long run competition, in turn harming affordability and the quality and reliability of Canada’s broadband infrastructure. Rates must be set to recover carrier‑specific Phase II costs, a reasonable return, and a sharing of investment risk. Any deviation, even for a short period of time, will destabilize and have a longstanding negative impact on Canada’s broadband infrastructure investment. The analysis conducted by the Brattle Group in this proceeding clearly demonstrates this impact. With the competitive landscape shifting, it is more important than ever that appropriate investment incentives are preserved.

3689 The starting point for getting the rates right is the Phase II cost studies developed by Rogers and other carriers following the Commission’s established processes. Rogers’ cost studies are extensive and robust. They comply with Phase II costing principles and substantiate the cost‑based rates we have proposed. If the Commission requires any clarification or further information, it should issue RFIs and build the evidentiary record for its decision. The Commission should not depart from its recently affirmed Phase II costing approach in favour of new proposals surfacing in this proceeding, including retail‑minus. As mentioned earlier, Rogers and other incumbent carriers require stability and regulatory certainty to make long‑term investment decisions.

3690 MR. SHAIKH: Rogers appreciates this opportunity to provide our views on the future of the wholesale highspeed access framework.

3691 If the Commission mandates an aggregated service in this proceeding, it should be in accordance with the guidelines we have proposed. These parameters will yield a regime that is equitable and relatively simple to implement, and, if rates are calibrated properly, one that is consistent with the objectives of the Act and the Policy Direction.

3692 Excessive wholesale mandates will undermine investment. Less investment will in turn undermine dynamic competition, innovation, and network resiliency. These outcomes matter to Canadians and the Canadian economy. The best way to ensure affordable, high‑quality services for Canadian consumers and businesses ‑‑ and sustain the digital infrastructure that Canada needs to remain competitive with its global peers ‑‑ is through minimally intrusive regulation and compensatory rates.

3693 Thank you. We look forward to answering your questions.

3694 THE CHAIRPERSON: Thank you very much for your submissions, Rogers. Thank you for participating in the proceeding and for being here with us today.

3695 We’re really looking forward to the discussion. We have a lot of questions, and so what I would propose is we will start with Commissioner Desmond, see how that goes in terms of timing, and I would propose that we take a break at some point, but we’ll just play it by ear.

3696 Commissioner Desmond, over to you.

3697 COMMISSIONER DESMOND: Okay. Thank you. Good afternoon.

3698 In your opening statement ‑‑ I’m looking at page 5 of your document ‑‑ and you just stated:

    “Canada’s retail broadband markets are competitive, and the record on the proceeding does not demonstrate otherwise. There is no market failure.”

3699 So, I just want to have a conversation about that. We heard earlier this week from the Competition Bureau, and the Competition Bureau thinks that perhaps we need to look at this issue from a regional perspective ‑‑ that we’re seeing regional differences.

3700 So, I would be interested in hearing your views on how the market has evolved, from a regional perspective ‑‑ what’s happening out West, why do we see less and fewer competitive offerings in the West, and how you’re seeing the market evolve?

3701 MR. SHAIKH: Thank you. I think I’ll start. So, we don’t agree with certain of those observations made not just by the Bureau but also by TELUS, I think, that described different competitive circumstances out West versus out East. There is intense competition, primarily facilities‑based competition, across Canada in every market we serve. We think markets are defined as local or regional, but in every local, regional market there is very intense competition. So, there is no local market that justifies a distinct approach.

3702 If I can speak directly to the question of whether or not we have competitive markets, I think each of us probably has some views on that, so I would like to start from the regulatory perspective, supported by some analysis that Renee at Brattle has done, and I think more importantly, you should hear from the business people about what they experience across Canada in every single market that reflects the intense competition we encounter.

3703 So, we have said that the record of this proceeding I think is clear now that there is intense competition. It’s primarily facilities‑based competition. In the majority of markets across Canada, Rogers competes directly with an ILEC competitor. There are also several wholesale‑based competitors in those markets, and as we alluded to earlier, we’re now facing the prospect of entry from LEO and fixed wireless.

3704 We have seen ‑‑ and I think the evidence has made it clear ‑‑ that across Canada prices are actually declining. I certainly share the view that Bell expressed the other day, and some of the statistics it shared, that in the course of just one year broadband prices declined by 6 percent, over the course of three years, almost 8 percent, and over the course of five years, almost 10 percent. So, the broadband market is competitive, especially when you compare that pricing to other markets, where we’ve seen inflation.

3705 And I think another critical component of the conversation is some of the non‑price dimensions of competition, which revolve around innovation, investment, new technologies ‑‑ all produced by a competitive market ‑‑ that’s revealed in the data on price‑per‑gigabyte, and I would ask Renee maybe to explain a bit more.

3706 MS. DUPLANTIS: Sure. Thanks, Dean.

3707 In terms of competition metrics, we can look to the CRTC’s communications market reports data, and we have figures in our report. Specifically, I would point you to Figures 14 and 15 on pages 32 to 34 of our original report that show that across Canada over the 2017 to 2021 time period, coverage and performance or speed increased, while when we look at the quality‑adjusted prices in this industry, they have been declining.

3708 We measured quality‑adjusted prices in two ways: first, by looking at average revenue per unit of capacity, measured in dollars per gigabit; and then the second measure is average revenue per unit of speed, measured as dollars per megabit per second. Specifically, we found that the price per gigabit has dropped by more than half, from 35 cents per gigabit to 15 cents, and after adjusting for speed, the price per megabit per second decreased by 70 percent, from 88 cents to 26 cents per megabit per second.

3709 So, the increasing coverage and performance, in combination with the decreasing quality‑adjusted prices, are all indicators of intense competition in the market.

3710 MS. MILNE‑BANCROFT: And then you asked us about sort of the regional approach and what we see. So, I think some of our other colleagues had spoken earlier about how hyper‑intense it is, market‑by‑market, and that’s absolutely what we see as well. And so, what we ‑‑ how we look at that is that that means there’s great consumer pricing that’s happening in different markets. It ebbs and flows for sure during different promotional periods, times of year, network investments, technology upgrades, but we find we’re able to, you know, market‑by‑market assess how to be competitive and serve consumers, looking at all the different attributes that they ‑‑ they care about.

3711 COMMISSIONER DESMOND: Okay, thank you. I'm wondering, though, why we're seeing prices differ so much, then, between different provinces. So we've heard over the course of this week that the pricing in Quebec is, you know, markedly less than in other provinces, and in regions where there are fewer competitors, we're seeing higher pricing. And you know, doesn't that call for some type of intervention if we're seeing that difference?

3712 MS. MILNE‑BANCROFT: So from our perspective, we are not seeing that same difference when we look at what customers actually come in on from a rate perspective. We see slightly different market dynamics for sure in western Canada and eastern Canada based on the competitive environment. But when we actually look at what consumers are buying from us and the speeds and the tiers, we're not seeing the dramatic differences that were highlighted today.

3713 And then Dean?

3714 MR. SHAIKH: Yeah, and then sort of the regulatory answer to that question is, you know, at various points in time you might see differences in each market, in each market again the prices are the product of intense competition.

3715 I would strongly caution you against what is suggested to be very intrusive regulation if you thought immediately in response to a certain period of time in one market you were going to introduce market‑specific onerous regulation. I think that would be a mistake.

3716 COMMISSIONER DESMOND: Okay, thank you.

3717 I'd like to ask you now about the merger with Shaw and Rogers. And now that that's completed and you're in a position to really sort of roll out your services across Canada, how has that impacted your business strategy, and are your strategies different maybe in the west than they would be perhaps in Ontario or in the Atlantic provinces?

3718 MR. SHAIKH: Well, I'll start with the transaction. I think one thing we might agree with ‑‑ Telus said, one of the very few things we said is that there's intense competition out west, and we see increasing competition. Again, that's not to say that there's not still intense competition out east, which there is. But it certainly confirms the case we made that the transaction was pro‑competitive, and as a result of that transaction, competition is increasing and becoming more intense to the benefit of Canadian consumers across Canada.

3719 Do you want to add anything?

3720 MS. MILNE‑BANCROFT: Yeah. And from a western Canada perspective in particular, as it relates to the Shaw merger, we actively are looking at different ways of pricing and packaging for those customers now that we can offer them more services. So we do use a bundled approach that we didn't have available to us before. And that's a way for us to offer customers more services for certain households that that's a great option for them. And so that's been one of the benefits. And we have seen some of the pricing come down as we're able to offer more services and packaging for consumers.

3721 COMMISSIONER DESMOND: And I'm sure we'll have a conversation about bundling, but aside from being able to bundle your services, were you able to capture any other efficiencies that would benefit the consumer in terms of pricing or as a result of the merger?

3722 MS. MILNE‑BANCROFT: I think from our perspective in the business, the single biggest thing we could offer the consumer is more choice and more options in the pricing and packaging and speeds that are available. And then the synergies that we're also able to get with Ron's team from a network investment perspective and our ability to reach communities faster with the scale that we have, we're certainly looking to take advantage of that to serve more Canadian homes as well.

3723 MR. McKENZIE: Yeah, I think from a technology perspective, one of the biggest opportunities we have is to serve all Canadians. And that's through network expansion, through investment and infrastructure, and leveraging the same ‑‑ instead of two separate operations, looking at how we bring all those pieces together.

3724 And once again, and I'll talk more about this, is this investment is generational in terms of lifting the modernization to DOCSIS 4.0. That enables us to deliver fibre performance and speeds to every community, every house that's connected. And so that's the difference versus what house got connected, what house didn't get connected during a construction phase. And so the real power of this is being able to deliver and serve all Canadians.

3725 The second part I would say is we've been able to build an enormous amount of expansion to serve communities that were underserved. That's a big part of our commitment, and a big part of our commitment to the west. And so I can speak first‑hand in communities that we've been building on and communities where we've turned up coverage where, for example, there was never coverage. Some on the island in areas from Sooke to Shirley to Port Renfrew. Sadly, the Highway of Tears, dead for years, no operator. No operator. Built coverage in that area on Highway 16. It took 77 helicopter runs of concrete to pour the foundation for two towers to create service in that community. That's investment. That's building on infrastructure that we can deliver. And that's why facilities‑based investment in this country is so critical to be able to deliver the types of services all across to serve all Canadians. And so as a technologist, that's near and dear, to be able to serve.

3726 COMMISSIONER DESMOND: Okay, thank you, and thank you for sharing that example.

3727 I don't want to misstate your position, but as I understand it, you're suggesting that the mandated wholesale service should be phased out and in part because the wholesale‑based competitors are increasingly owned by large incumbents that are operating out of territory who, as you suggest, are large and well financed and can negotiate access arrangements.

3728 So you've made reference to being able to negotiate. So can you speak to when you would be willing to negotiate wholesale access on your network?

3729 MR. SHAIKH: Yeah, I'll start. I just want to make clear there's a number of reasons why we suggest that the wholesale mandate should be phased out. I'm not sure it's exactly the way you characterize it. I think there's a number of reasons including, quite honestly, the disproportionate burden that it has imposed on cable, which was one of the points that the Bureau made and has become a theme of this proceeding that we absolutely do agree with.

3730 I think going forward, Canadians are best served by facilities‑based competition and you can consider appropriately phasing out the framework. If you did phase out the framework, as I think your question is leading to, there still would be the opportunity for the negotiation of off‑tariff agreements. And I think off‑tariff agreements could exist in a regime where wholesale access was not mandated. It could still benefit consumers, and it could still serve competition.

3731 COMMISSIONER DESMOND: Okay, and thank you for that clarification. I didn't want to misrepresent your comments. And certainly, I understand that that's one of the factors that potentially would be why we would want to consider phasing out the opportunity to potentially negotiate arrangements.

3732 So could you speak to your experience vis‑à‑vis negotiations? How would that work in your mind? Who would you be willing to negotiate with? And have you attempted to negotiate access to other incumbents' networks? And what was the outcome of that?

3733 MR. SHAIKH: I'm going to ask Christine to jump in on the negotiations with wholesalers, yeah.

3734 MS. POP: Sure. Thanks, Dean.

3735 So I think broadly, first of all, there's a history of regulated services becoming forborne over the last 20 to 25 years. And as operators, we have found our way to transition from tariffed arrangements to commercially negotiated ones. So I would expect that through a transition like that, we would undergo the same process: negotiate commercial arrangements that often, you know, benefit both parties where we can find middle ground. And we would continue to do that with TPIA as an example.

3736 COMMISSIONER DESMOND: Okay, thank you.

3737 We heard earlier this week from Telus, and I'm sure you had the opportunity to hear their submissions as well, they did speak to the fact that, in their view, it was more expensive to undertake construction out west than it is maybe on the east coast. So I'd be interested in hearing your experience. Is that a similar observation? What are the cost drivers per region? And does it matter?

3738 MR. SHAIKH: Building is expensive across Canada. Just like competition exists intensely throughout Canada, building is expensive throughout Canada. But I'll ask Ron to talk about specific regional differences.

3739 MR. McKENZIE: Yeah, and once again, when you're building, the way to think about this is the majority of the cost of the build is the construction. It's labour. And so almost 80 per cent of the build cost is construction. So the key is sourcing the labour, having the capabilities to do that.

3740 The second area is the terrain. And so there are unique differences across Canada, across our country. The example I gave earlier is on the outlier where you make a commitment that you're going to serve a country; you make a commitment that you're going to deliver coverage where there's never been coverage. Cost in those cases is not a factor; it's delivering the service. And so that example is on the upper end of construction, where you're hiring a helicopter to pour 77 runs ‑‑ it took 77 runs to pour the foundation. In other areas, like northern Ontario, the Canadian Shield, I can't plow. So there's multiple ways that you can install services.

3741 The biggest challenges I had in my opening statement is where the incumbents have a unique position is access to duct structure, pole attachment rights, and history ‑‑ history of being a telephone company. And being a telephone company, they have attachment rights on poles. So in places where I'm trying to serve a remote community, I'm having to pull fibre and having to plow or use other techniques. So hence, the costs could be higher. It does vary by terrain. It's not necessarily unique to any one geography because it's equally tough to do in the Canadian Shield of northern Ontario or northern Quebec as it is when you're doing mountaintops or areas in the west.

3742 It's more the biggest thing that Commission could do is open up access to passive infrastructure. That would dramatically accelerate the pace of infrastructure builders. And we're a builder. That's our focus.

3743 COMMISSIONER DESMOND: Okay, thank you.

3744 I'd like to have a short conversation with you about investments, and I'm sure my colleagues will be asking you about investments as well. It's been a popular theme this week.

3745 As you know, Bell Canada has announced that it would reduce network investments by a billion dollars if there were to be rollout of this mandate. Wondering if you could speak to that. Do you have a sense of, in your view, whether or not that reduction would actually come to pass, what if any options the Commission has in front of it?

3746 MR. SHAIKH: Well, it won't surprise you we're not going to comment on what Bell said in response to the interim decision about the investment impact.

3747 I will say, though, that you know in 2019, those rates had a serious impact on all carriers and our investment planning, in our investment decisions. So I do agree ‑‑ and this is not commenting on the interim decision or the Bell position ‑‑ but I do fundamentally agree that distortionary below‑cost rates will have a serious and harmful impact on investment and competition over the long‑term affordable access to next‑generation services.

3748 I know you've referred to this a few times, and we heard from Eastlink, Lee Bragg, about the fact that it's critical to get the rates right. We don't say it's the only thing that matters, but it's certainly the most important thing in this proceeding. You have to get the rates right. And getting the rates right means compensatory cost‑based rates.

3749 And if you don't get those rates right, then you'll experience across Canada, and not just in Eastlink's markets and not just the impact that Bell has been describing, but across Canada, every facilities‑based competitor on whom Canadians rely for their affordable access to next‑generation services will suffer because we'll be faced with difficult decisions, including those related to investment risk.

3750 I don't know, I think, Ron, you should ‑‑

3751 MR. McKENZIE: Yeah. And I mentioned, and I'm happy to share more, and I, once again, as the technology guy, appreciate the opportunity to kind of spend some time and share how this actually works.

3752 The infrastructure ‑‑ we're at a real generational point. What I described earlier in terms of what consumers do, we model well ahead what we think consumers are going to want to do in terms of how they utilize their services, what's happening in the home, how many devices are connected in the home.

3753 You know, today, and this has been just in a short while, the highest growth or highest demand of bandwidth, 60 per cent of bandwidth is over‑the‑top video services that come into Canada through streaming. Sixty per cent of the traffic. And so imagine the amount of investment we have to make to carry 60 per cent of the volume of traffic from over‑the‑top out‑of‑country streaming services.

3754 So when you look ahead, it's the advancement of infrastructure investment that we're making that is generational but more importantly sets up the next phase of what consumers are going to want to do in the home.

3755 We saw this during the COVID pandemic. When everyone went into a shelter‑in‑place across the country, literally overnight, I can share, we saw a 40 per cent increase in traffic overnight. Overnight. When you design a network, you don't need ‑‑ if you're not thinking two moves ahead, and you're not investing for the long term, you're not going to design it to have elasticity to take on 40 per cent increase in traffic overnight.

3756 That wasn't a planned event. That wasn't something we knew, Oh, we have to be ready for in three years or five years. It just happened. And every facilities‑based network in this country held up. Every network. That's because we're all thinking ahead. That's what's key in this framework is get the rate right, get the framework right. That gave us the elasticity to deliver.

3757 And I think as we look ahead, we'll talk about innovation, but that's the part I'm so excited about in terms of what we're going to enable to bring to Canada in terms of new innovative services. So that's sort of the background on it.

3758 COMMISSIONER DESMOND: And I appreciate that. And I appreciate your reference in your opening statement to the number of devices that Canadians are using. That's really interesting.

3759 I am interested, though, as well in terms of your plans vis‑à‑vis investments if there were to be a mandate. Have you thought through what that would mean for you and your investments practically if that mandate were to come into place?

3760 MR. SHAIKH: Well, we're not going to ‑‑ obviously, that's going to, you know, invite questions about our internal planning and modelling that could be competitively sensitive. Obviously, we're considering what the impact would be of highly distortionary below‑cost rates. We're hopeful you'll get it right and we won't have to experience that. We're hopeful that you'll get it right with rates that actually reflect our costs.

3761 I do want to ask Renée, because we hired Brattle to actually address this very question, what are the impacts of rates that are below cost and how that impacts investment.

3762 MS. DUPLANTIS: Sure, Dean. And I would tie back to what you said a moment ago that, you know, all facilities‑based providers could have their investments impacted as a result of getting the rates wrong. We've undertaken an incremental cash‑flow analysis. And the one that we've undertaken in this proceeding is fundamentally the same as the one that we undertook in the 2019 proceeding. And in that one, we actually did it on behalf of all cablecos, so on behalf of Rogers, Shaw, Cogeco, Eastlink, and Vidéotron.

3763 In this proceeding, we're only doing it on behalf of Rogers, and we've added a few real‑world complexities to our analysis from the prior consultation. But fundamentally, we're assessing the impact on Rogers' incremental cash flows that stems from a potential change in the regime itself or from a given reduction in wholesale access rates. And we show empirically that there would be a decrease in Rogers investments, incentives to invest and expand its wireless capabilities. And I would just point you to section 4B of our report at pages 42 to 52.

3764 But we undertook two analyses. The first, we looked at the impact on the incremental cash flows on Rogers' nascent development of its FTTP network resulting from a mandated regime. So we compare the baseline model today, which does not have mandated access, to multiple scenarios with mandated access, whereby mandating that access induces customers to switch from being a Rogers residential customer to a TPIA subscriber. And the difference between those scenarios ‑‑ which I won't go into any numbers, they're in our report ‑‑ shows the effect on their incremental cash flows and therefore their investment decisions.

3765 In the second analysis, we calculate the impact on their incremental cash flows for the FTTP and HFC products as a result of potential assumed reductions in the wholesale access rates. So we compare the baseline model that we've come up with using Rogers' proposed aggregated access rates to multiple scenarios where the proposed rates are reduced by 10 per cent, 20 per cent, or 30 per cent, and use that to assess what would be the impact on Rogers' incremental cash flows and ultimately their incentives to invest. And we show that under both scenarios, these changes negatively impact their investments at large and their incentives to invest in the future.

3766 COMMISSIONER DESMOND: Okay, thank you.

3767 I did actually go through the Brattle report. And in particular, paragraph 77, there was a sentence that jumped out at me. And it said that one potential impact of resale regulation would be to reduce incentives because obviously, as you've said, they would be less likely to invest and they couldn't recoup an adequate return.

3768 But ‑‑ and I think this is where our conversation is going ‑‑ doesn't that of course depend on the rate that's set? And earlier this week we heard from Bragg Communications, who said, you know, if the rate is correct, they would be agnostic. So I'm just wondering if, you know, would that be your view as well? If the rate is properly set, reflective of costs, then you could be agnostic?

3769 MR. SHAIKH: If you ‑‑ and I might ask Howard to comment on this as well about our approach to Phase 2 cost ‑‑ if you adopt our rates as proposed, which are based on a rigorous comprehensive examination of our costs, a very responsible one, and those are the rates, then the wholesale regime could work, and our investments will not be undermined as suggested in the Brattle report.

3770 And I know from an economics perspective, you always like to say incentive to invest. Really, this is a question of our ability to invest. I mean, as Ron said, we're builders. We want to invest. We have every incentive and desire to invest. This is really a question of whether we're able to invest. And I think we certainly share Eastlink's view in this regard.

3771 MR. SLAWNER: Yeah, no, I don't have much to add to that. I think it's crucial that, you know, the costs are based on ‑‑ or the rates are actually based on our underlying cost which we provided to you through our Phase 2 cost study. So I think if the rate is based upon those analyses, then I think we will be indifferent, although we always do prefer actually having a direct relationship with the customers. But from an economic standpoint, we would be indifferent.

3772 COMMISSIONER DESMOND: Okay, thank you.

3773 I wanted to move on now and talk a little bit about this concept of things being inequitable or asymmetrical. You know, there's a history ‑‑ and this has been talked about this week ‑‑ a history of the ILECs having a head start and the system as it exists creates this asymmetric disadvantage, arguably, to the cable carriers.

3774 So I think your argument is that your FTTP facilities should be excluded if there were to be a mandate to address that asymmetry, and that that would give you the opportunity to continue to provide your services at higher speeds.

3775 So I'm wondering if you could just speak a little bit more about how you see this asymmetry and addressing it in a way that you think is fair and equitable.

3776 MR. SHAIKH: Yeah, I'm happy to. I think it's critical that, if there's a wholesale regime, resellers would have access to the networks provided by cable companies and ILECs. But it should only be one network. In our case, we're committed to HFC. We're committed to next generation investments in DOCSIS. And as Ron explained earlier, to build out DOCSIS 4.0. FTTP is not the core part of our future planning. It really is about that next generation of DOCSIS.

3777 So what you really want in a symmetrical framework is two competing networks, in our case, cable HFC against the ILEC FTTP. You want that at retail and you want that at wholesale.

3778 There would be significant consequences to us if we had to encounter multiple configurations, if we had to ‑‑ and I know that in this proceeding, there's still an open debate about whether you need both aggregated and disaggregated, which introduces new complexities. If we had to encounter those problems or just build out wholesale provisioning for both FTTP and DOCSIS, it would significantly harm our investment, and it would be difficult to provision.

3779 I'm going to actually ask Christine to explain a little bit more about how difficult that would be.

3780 MS. POP: Sure. Thanks, Dean.

3781 I think to say it would be operationally burdensome, to say the least. At Rogers, we take our obligations to provide a good level of service under the current regime very seriously. We've made substantial investments to enable that on our current platforms in the east through a portal. And we're working to extend those same capabilities in the west.

3782 So to undertake to enable another distinct technology and, as Dean mentioned, for such an insignificant part of our network, is a significant effort. So that would require setting up a completely different stack of systems, one in the east and one in the west, to enable the whole provisioning process. Everything from serviceability, order placement, service delivery, service activation, truck roll, service assurance, et cetera.

3783 So number one, to have to stand that up and invest in the development of that is substantial. And as we've outlined in our submission, we estimate that that would probably take about 12 months. But the burden is also in the ongoing maintenance and operation of those various systems and, again, for such a relatively small part of our footprint.

3784 COMMISSIONER DESMOND: Okay. So in those areas where you did have FTTP facilities, like what would the impact then be on the consumer?

3785 MS. POP: Sorry, in terms of not...?

3786 COMMISSIONER DESMOND: If it wasn't available for access by other players and you had your footprint in certain spaces, but not open for access and other people couldn’t compete to have access, the competitor then would be left with fewer choices?

3787 MR. SHAIKH: There's limited areas of entry for us in FTTP, typically Greenfield. I think in most cases where that would take place there would be an ILEC providing FTTP as well. So, again, there would be no harm to the consumer. There would be a high‑speed alternative available to them.

3788 And I think our ability to continue to grow our footprint and grow FTTP and more Greenfield builds would be supported by the symmetrical framework that I’m describing where we could have some level of certainty, some cost certainty, and a symmetrical framework that lets us focus on our HFC build and be selective about our FTTP deployment, but the consumer would not be harmed.

3789 COMMISSIONER DESMOND: Just to fully understand the proposal, for that ILEC that was operational in that territory, they potentially could be open for access and they would be providing access. But in your case, you wouldn’t be providing access? Is that correct? That’s kind of the concept?

3790 MR. SHAIKH: Yes.

3791 COMMISSIONER DESMOND: There's been conversation this week about the head start rule and if there should be an opportunity to give the facilities‑based providers an opportunity to recoup their investments.

3792 I’m wondering if you could comment on that or what your views are on the head start proposal?

3793 MR. SHAIKH: Well, there's been a number of proposals in various contexts, so I’ll try and place in the one I think you’re understanding. I mean, of course we’re coming from a history of where the ILECs have enjoyed a long long regulatory holiday on their build out of FTTP, which has meant, and I’m going to come back to this point, that cable carries an incredibly disproportionate burden in terms of wholesale access. Most of the resellers are on cable networks, not FTTP.

3794 So this concept of the holiday I think, as Bell explained, with their new builds they want yet another holiday. And so it’s a bit complicated, because actually when they describe the rationale in support of a holiday because of their investments, it does make sense to us in the sense that of course as you’re building out your networks you want to have some confidence that you can recoup your costs.

3795 Which means, if they get a holiday and if you’re going to have a symmetrical regime, we need a holiday. But we don’t have a starting point from a holiday, so it actually takes us back to the position that you really should not mandate wholesale access. If there are any holidays, they have to be symmetrical.

3796 COMMISSIONER DESMOND: What if the provider was a smaller incumbent like Eastlink, for example? What would your views be on a head start rule with respect to a smaller service provider?

3797 MR. SHAIKH: Well, and you know, I think very highly of Eastlink and their position in this proceeding and the work they’ve done, and I view them as a cable peer.

3798 But when I think of other cable carriers, you know, even though we’re talking about them as being small across the country, in every market the cable incumbent is the cable leader in that market, including Eastlink in its markets, Cogeco in its markets, Videotron in its markets. And we all compete fiercely head to head with the ILECs.

3799 So I really think, because markets are local, any kind of consideration of what cable carriers need to support our investments and provide us with certainty applies to all cable carriers.

3800 The issue here is there’s been a historical asymmetry that needs to be resolved somewhat and certainly cannot be exacerbated to make sure that Canadians continue to enjoy the benefits of cable ILEC facilities competition.

3801 COMMISSIONER DESMOND: Okay, thank you. I’ll ask the same question with respect to the sunset clause and, you’re right, I should probably clarify. But there’s been so many conversations about what a sunset clause would look like, whether it’s three years, five years, seven years.

3802 But maybe you have a view on that? If you do have a view, what your preferred timeframe would be?

3803 MR. SHAIKH: Sure. And, obviously we’ve been listening to the proceeding, I think Cogeco’s moved away slightly from its 350K households position. I don’t really think you can have a homes passed or number of subscribers position apply equally to all carriers, because we have obviously a different set of subscribers and subscriber base. So I don’t think that works.

3804 What we’re actually asking for is that you rely on HFC competition with FTTP. So we’re not really talking about that being sunset at any point in time. You could, at some point in time, revisit in another proceeding, which could be three years from now.

3805 I’ve heard that number expressed about whether, because we’ve grown, because other carriers have grown their FTTP footprint, if the exemption no longer makes sense. But we actually are asking for our FTTP, as we build it, to be exempt from wholesale access.

3806 COMMISSIONER DESMOND: Can you offer a little bit of clarity with respect to when you choose to roll out the FTTP versus maybe investing in maintenance or your cable systems?

3807 MR. McKENZIE: I can help with that one. From an investment standpoint, so we typically will look at an area and we’ll choose different approaches to technology. So, once again, some of the proceedings didn’t fully explain.

3808 When you’re actually building fibre to the premises you want to actually connect every home during the construction phase. So it is extremely disruptive to overbuild an existing facility because you’re tearing up neighbourhoods, lawns, directional boring into every house or aerial into every house.

3809 And so what we do is typically Greenfield, so their new home construction and new areas are an MDU. We use fibre to the premises for those types of communities, because you can cover everything with the least disruption to the customer. That’s the key.

3810 For rural builds we use fibre because you’re typically pulling backhaul into long runs, and so you can get a lot more distance. And so that way we use, if we’re doing rural communities and remote areas, we’ll use fibre, similar to like we do with our wireless and cellular sites where we’ll pull fibre to those sites.

3811 The benefit of DOCSIS is I have fibre into every community today, we always have. The benefit of this, and that’s what I think our competitors sometimes like to not recognize, fibre is in every neighbourhood. And all we’re doing is converting those optical signals to electrical, just like you would in cellular, except we’re transmitting it on a connection into the home.

3812 And the power of DOCSIS 4 is just like wireless, where I have all these different frequency bands to add all the capacity. I can add all those frequency and modulations approaches and unique techniques to deliver 10Gb to every house. So I don’t have to tear‑up every neighbourhood. I have the advantage of being able to connect customers that already have a connection to the house on the existing infrastructure.

3813 So what we look at is the least disruption to the customer, what’s the fastest way I can deploy. And that’s why, today, we’re modernizing at record pace the network to be ready to deliver DOCSIS 4.0. It’s a massive investment that we’re doing. So that’s where our focus is. We’ll choose the technology that makes sense and as we’re starting to see, similar to what we saw in the United States, we’re starting to see alternate technologies.

3814 So when I go into remote areas now I do see LEO, low Earth orbit satellites with Starlink, and there’ll be many other services, they’ll come online, it’s a wonderful technology for remote areas. And then I’m also seeing fixed wireless, which is one of the investment areas that we look at.

3815 Because we actually see multiple technologies that can be applied to deliver connections, depending on where the customer is or how they want to operate or how they want to be served. So that’s the focus of how we make our choices.

3816 COMMISSIONER DESMOND: Thank you. If in fact the Commission were to decide that a mandate should be imposed, there’s been conversation about whether the larger players, Bell, TELUS and Rogers, would have access inside their own serving territories.

3817 So TELUS, for example, was here on Tuesday and suggested that their serving territory would be Alberta and BC, but their access could be outside of those serving areas.

3818 So I’d be interested to hear your views on that approach.

3819 MR. SHAIKH: And you won't be surprised that this is a conversation that we’re interested in having. It’s a very important question. We appreciate the amount of time you’re spending on it to make sure you get it right. We want to spend some time on it to make sure you don’t get it wrong, and explain what is sort of the evolution in our thinking as we’ve listened to the hearing.

3820 Sort of on a principles basis I think you’ve heard from us today, and in our submissions the things that are most important to us are facilities‑based competition and regulatory symmetry.

3821 And what we’re most afraid of is any distortions in that market that harm our investment, harm our ability to compete with facilities‑based players or that distort competition.

3822 So we don’t want there to be distortionary rates. Any level of distortion with rates, or even if they are the right rates, we would see further market distortion from self‑serving proposals like those put forward by TELUS.

3823 And you’ve already heard from others, and we strongly agree with their position that TELUS’s proposal is hypocritical, it's self‑serving, and it’s based on a misleading premise that TELUS is this plucky regional carrier that’s going to provide competition. That’s simply not true.

3824 To explore further the impact of the TELUS proposal and what it means, let’s explain what it would look like.

3825 Rogers competes directly with TELUS and it competes directly with Bell, and we view ourselves as competing with the ILECs, we compete with Bellus that has the benefits of a network share, and some of the problems that arise because of that.

3826 So now what you would potentially be creating, if you adopted the TELUS proposal, is that in every market where we compete we would be competing against an ILEC facilities player; out east that would be Bell, out west that would be TELUS. And we would potentially be competing with an ILEC reseller; out east now that would be TELUS, and out west that would be Bell. And we would have no ability to resell on their networks.

3827 So what TELUS is asking you to do, quite frankly, is to position them to severely undermine our ability to invest by reselling on our networks when we have no ability to respond as a reseller on any ILEC network.

3828 That would be incredibly harmful to competition, to investment, and ultimately to consumers because it would devastate the facilities‑based competition between cable and ILECs that we fundamentally rely upon

3829 And let’s be clear, we’re competitors, we like to complete, we want to compete with TELUS. We do a good job at it. We want to compete with Bell, we do a good job competing with Bell. We want to continue to compete with them on a symmetrical basis. We’re against any regulatory decision that distorts that competitive framework and creates new asymmetries, especially when we’ve had 10 years of asymmetries between cable and telco.

3830 And I just add a couple more points, and I’m going to return to this point. Cable has continued to, will continue to bear a disproportionate burden or resale. So what we’re really expecting is if Bell and TELUS are put in that position, it’s really going to be our network that they’re riding on; Bell will ride on our cable network out west, TELUS will ride on our cable network out east. They’re not really going to be riding on each other’s networks.

3831 A lot of the reasons come out of that, Bellus network share that they already have that creates the problems I’ve described. And I actually appreciate the position that Bell took where they actually said, this is ridiculous. And Mr. Malcolmson had some choice words for the proposal, and I agree with those.

3832 So I think this is probably the worst thing you could do, is adopt the TELUS proposal.

3833 COMMISSIONER DESMOND: I think TELUS does express concern that you might abandon your cable network and become a competitor on the networks of Bell and TELUS. So I think even the Competition Bureau states this as a possible outcome if it were to be mandated.

3834 Is that something you would foresee as a possibility? You talked about TELUS and Bell using your network, but couldn’t you also use the networks of Bell and TELUS?

3835 MR. SHAIKH: We could not in the proposal that TELUS has provided, and I think that’s intentional. They’ve devised a proposal where they could ride on our networks across Canada, we could not ride on theirs. Even outside of that proposal, Ron said this, we’ll say it again, we’re builders, we’re committed facilities‑based competitors.

3836 The way others have described the fact that Bell, TELUS, Rogers are now entering resale, that doesn’t really describe Rogers. We’ve had a modest entry in resale, but we are primarily a facilities‑based competitor. We want to build our own networks and we want to compete for customers with our own networks.

3837 COMMISSIONER DESMOND: I actually did have a questioning about that. If I’m correct, you recently purchased Comwave. So I’m curious, if you could speak to whether or not that’s an opportunity for you to leverage wholesale HSA services as a result of that acquisition?

3838 MR. SHAIKH: It's a very modest acquisition. To be honest, this proceeding was part of the rationale for pursuing that transaction. We had to position ourselves for certain outcomes where we might need to have a resale option. It’s not a big part of our business.

3839 Kendall, do you want to...?

3840 MS. MILNE‑BANCROFT: So, like Dean said, that transaction happened in Q4, so it’s relatively recent. It was with this hearing in mind, knowing if things went a certain way and we weren’t able to get the rates right from our perspective, that we might have to pursue different distribution strategies.

3841 But we’re not actively pursuing that aggressively going to market with anything right now. And you’ll see some of the other folks who were here earlier this week have taken a very different approach; talked about sub‑brands that they’re putting into the market and other things. That is not our approach and would not be our intention if we can get the rates right and stay focused on our facilities‑based.

3842 COMMISSIONER DESMOND: Okay. I think those are all of my questions. Thank you very much for your time.

3843 THE CHAIRPERSON: So maybe ‑‑ I’ll look at you, we will take a break at some point. I’d like to turn to Vice‑Chair Scott. But did you want to take a break now, do you want to keep going? We’re in your hands.

3844 MR. SHAIKH: We're in your hands.

3845 THE CHAIRPERSON: Okay. Why don't we start with Vice‑Chair Scott and see how that goes?

3846 Thank you.

3847 VICE‑CHAIRPERSON SCOTT: Thank you, Madam Chair. So Mr. McKenzie, when you were talking about your network investments you used the phrase enormous risk. And others this week have described it similarly.

3848 I’d like to hear more about the nature of those risks. We’ve spoken a lot about regulatory risk. Because at a certain level, investing in a network that delivers a service that people say is essential to every aspect of their daily life, people talk about it like water, people are choosing internet over food, in some respects it doesn’t seem particularly risky. I don’t think people think of Rogers as a particularly risky company.

3849 Could you just enlighten us as to what types of risks you’re talking about?

3850 MR. McKENZIE: Sure. When you build, and once again some of the builds that we’re doing ‑‑ and this came up in other responses as well from other operators, there’s no one formula that says, oh, this is what the cost is per house or this is what the cost to build this is, and this is the year’s payback.

3851 I have some areas where I probably will never get a payback for that house that I built over 25 years. But it was part of service expansion, it was done for a reason of investment, to be able to serve a community as part of a commitment we made.

3852 So when we look at these things we actually look at the communities, we look at penetration rate. So you look at how many houses you think you will serve, how many customers. But you have to earn every customer through your service.

3853 So we plan, as much as we can, the models that say, okay, can we earn the trust and earn the service with the consumers in those communities? And once again, then you have to look at the competitive landscape of what other technologies are there, what other platforms are being delivered. And then you look at the whole package of services that you’re going to bring to that customer.

3854 So the risk that you take is, for example, if you don’t get the penetration, your payback periods are going to be years. And so one of the things about the wrong wholesale regime is you could never achieve the penetration rates, so you’ll never get the payback.

3855 And so when we look at it, you know, once again ‑‑ and that’s going to vary depending upon if it’s wide‑open access people can go into any community, so you could have high levels of concentration that essentially I look at it and I say, well, geez, should I bother to build or upgrade that community, or am I better off to go to this community?

3856 So you create a disproportion for what consumers are going to get. And so when I look at risk I look at it from that perspective. I look at it starting with the customer and the consumer and I look at, you know, just as I described, the 40 per cent increase in devices in the home and 60 per cent of the traffic is streaming video. Just look what’s next, which is augmented reality and virtual reality.

3857 When you have those types of services you’re going to need low latency, you’re going to need edge compute, you’re going to need computing as close to the customer as you can. And so all those things are the risks of what we look at when we look at what a consumer’s going to do and what other services are available.

3858 VICE‑CHAIRPERSON SCOTT: Okay. Thank you for that. That was very helpful. So I think fair to summarize it as really competitive risk, right? So you may not get the number of customers you’ve been planning for. And then that could be exacerbated by a regulatory risk.

3859 MR. McKENZIE: Yes. There's competitive risk and technology risk, right? Because you’ve got to look at it in both fashions. Because you’ve got to get both aspects of knowing what the consumer is going to ‑‑ what the house is. The days of just a simple connection to the house are gone, they’re gone.

3860 You know, for everyone that has a family, all you have to do is watch what’s going on with the number of devices and the connected home, and you look at the security cameras and you look at, you know, time of day of how people are, you know, in many ways conducting their work life and their personal life and their entertainment, all now from the home.

3861 And so that’s where getting those aspects right equal to the technology.

3862 VICE‑CHAIRPERSON SCOTT: Right. I appreciate that, thank you. So in talking about the competitive landscape you did make specific reference to LEO and fixed wireless aspect alongside cable and fibre.

3863 But are those really substitutable? Is there any home where a customer is sitting there with four flyers on the table wondering if they should take Starlink or fibre to the premises, or are most households really choosing either between cable and fibre because they’re available or fixed wireless or LEO because cable’s not available?

3864 MS. MILNE‑BANCROFT: So from a consumer perspective, we see ‑‑ basically we call it consumer segments but, you know, different consumer use cases dictate different needs for the technology. So to your point, in our facilities‑based footprint very low need for fixed wireless access, but we do have some use cases where it’s a back‑up device or they might want to use something that’s transportable.

3865 So having all the different access types obviously gives us more products and services we can offer. And then absolutely what you were describing, in some of the more remote areas where there’s one type of access, but we’re happy that we have something that we can offer, then we go to market with that as well.

3866 But we are finding new use cases all the time based on consumer behaviours.

3867 VICE‑CHAIRPERSON SCOTT: Okay. So for the bulk of the customers you serve on your cable infrastructure, they’ve got the choice of cable infrastructure, the telcos’ infrastructure, or anybody wholesaling, that’s really the choice most people are facing absent the rural and remote scenarios?

3868 MS. MILNE‑BANCROFT: Yes.

3869 MR. McKENZIE: Yes.

3870 MR. SHAIKH: I mean, I think the other point to add here is you need a forward‑looking regulatory framework. And you can’t look at this point in time and say they’re not substitutes, they’re becoming substitutes, they’re increasingly likely to become substitutes. So you think about what is the future? We’re planning for the future, we’re preparing for the future, so should the regulator.

3871 Just to put on my other hat, on broadcasting it’s like 10 years ago where you were saying, where people were saying that over‑the‑top is not a substitute for cable, and we obviously know that not to be true.

3872 MR. McKENZIE: I would offer the forward‑looking is key. The technology substitution, there are countries where their primary service, because of their uniqueness of location or their uniqueness of their competitive landscape where wireless‑only providers have offered and are actually growing faster in certain countries around the world.

3873 So I see this through, you know, the connections with the other CTOs around the world. Some have chosen the technologies. Once again, you need the whole infrastructure. So you need access to spectrum. You don’t have spectrum caps in those countries. You have wide open build capabilities.

3874 And in those countries, it’s incredibly competitive what’s happened. So I wouldn’t underestimate technology in the future.

3875 VICE‑CHAIRPERSON SCOTT: Thank you.

3876 A variation of the Goldilocks question that I’ve been asking all week. Thursday’s the day where I start to sound like a broken record. But you had spoken about getting the rates right and if the rates are right, then the wholesale regime could work. I don’t want to overstate your position.

3877 Like, that is definitely one half of the equation for the wholesale regime to work, it should compensate you for your cost and continue to incentivize investment.

3878 But from a public policy perspective for the wholesale framework to work, it has to do more than that, it also actually has to make additional competitive choice available to consumers, keep downward pressure on pricing, give consumers something to choose that meets their needs.

3879 So what are your thoughts on how much space there is given a rate that satisfies your half of the Goldilocks equation? Is there any space once your costs are accounted for? Can somebody realistically come in, take a compensatory cost‑based rate and still compete using that rate in a way that benefits Canadians?

3880 MR. SHAIKH: Yes. So, you know, I was prepared for this question. Don’t worry, you don’t sound like a broken record. And I’m glad you mix it up a bit in the way you’ve presented it to us.

3881 So certainly it won’t surprise you that our view that the so‑called Goldilocks rate is the cost‑based compensatory rate that’s reflected in our Phase II costing. That is the Goldilocks rate.

3882 And the second part of your question, does it work? It has worked. We, you know, for the most part over the past several years with the rates that have been presented to the Commission that are largely cost‑based, resellers have grabbed market share. They have had an impact on the market. So it is working.

3883 Again, I’ll come back to the point. Consumers are primarily going to benefit from ‑‑ and this is me being a broken record ‑‑ but consumers are going to primarily benefit from facilities‑based competition. That’s the most important driver of affordable access to next generation services. You can’t undermine those investments, you can’t get the rates wrong, that sacrifice is that outcome. That’s the most important thing to consumers and to competition.

3884 Within that still, with appropriate rates, there’s actually always going to be a group of consumers who don’t want to go with the incumbent and want to explore other options. And with cost‑based rates, resellers are going to be that option.

3885 VICE‑CHAIRPERSON SCOTT: Great, thank you. Then a related question. And, Madam Chair, for planning purposes, I think this will be my last one. The notion of below‑cost retail pricing. Would you agree that it makes it incredibly difficult for wholesale providers to compete in the market when they’re faced with below‑cost pricing from the network operator, especially when that pricing can be targeted?

3886 We heard from Beanfield today that sometimes the targeting is very specific. Does that distort the playing field? Is that counter to our goals in terms of advancing competition?

3887 MR. SHAIKH: I'll start and then I’m going to ask Howard to weigh in. I think there’s a question there, and I don’t want to use the phrase predatory pricing, but I think that’s where you’re taking us. So I might as well have that conversation.

3888 We price, and I think Kendall can confirm this, we price based on a number of factors. We need to recover our investments and we need to compete primarily with the telcos. We never design pricing based on a strategy that would in any way resemble what’s been described as predatory pricing. I don’t think we have a market where that strategy, even if anyone were to adopt it, would be effective or would kind of fit the test of the Competition Bureau for predatory pricing.

3889 As far as whether, with the rates proposed, are they doing it for the costs and can resellers compete ‑‑

3890 MR. SLAWNER: Yes, I mean, our costs generally reflect our costs. So the proposed tariff rates that we give or the existing tariff rates, because we have a lot of wholesale customers on our network right now generally reflect what our costs are.

3891 The issue though with those retail rates is a little more complicated in that some of the people who have come before you so far this week have tried to look at retail rates, look at the promotional rates, right? They look at the Boxing Day sale or something, and then try to suggest that somehow those are below our cost.

3892 And I think what’s really important is to look at what is the average retail price? That is the more accurate depiction of exactly what’s happening in the retail market. And I think, especially in our network, if you look at all our wholesale customers, you’ll see that the tariffs are below the average retail price.

3893 The other thing you have to remember is for retail prices we don’t look at an individual customer on an individual plan at a singular moment in time.

3894 We look at the lifetime value of this customer; what product do they have today, what product they’re going to order tomorrow, are they going to upgrade their service, are they going to buy another product, are they going to have a family and have more lines on the account? So there’s a whole revenue stream that this customer actually can generate.

3895 The difference with the wholesale revenue is that all we can get is that wholesale customer at that given moment in time. We don’t have the relationship with the customer, there’s no potential for us to generate more revenue. So we have to recover our costs through the wholesale rate.

3896 The wholesaler, however, does have that direct relationship, they can upsell, they can sell other products and services, they can take a long‑term view to that customer. So there is definitely a business and a margin to be made. You see it because all the successful wholesalers are already out there, they have been out there, taking share over the last few years.

3897 So I don’t think that this idea that the rates are below cost is accurate, that there’s no room for wholesalers. Because there has been room, we have seen it.

3898 VICE‑CHAIRPERSON SCOTT: Okay. To help us put some more meat on that bone, I’ve asked some of the other network operators for an undertaking. They won’t let me install a VPN on my laptop here, so I’m actually not able to get live pricing because we don’t have facilities on here.

3899 But maybe could you take a 1Gbps service undertaking to provide us information on what your advertised ‑‑ your rack rate is, your other various price points at which you sell that service, and a sense of the number of customers to whom you sell at those various price points?

3900 MR. SHAIKH: Yes, we'll take that undertaking.

Undertaking

3901 VICE‑CHAIRPERSON SCOTT: Thank you. Madam Chair, that’s it for me.

3902 THE CHAIRPERSON: Okay. Maybe I can just follow‑up on that question before we take a short break, because I would like to turn things over to Commissioner Naidoo after the break.

3903 Maybe just looking at it from a bit of a different perspective and truly from a competition perspective and, you know, anything about predatory pricing. And TekSavvy will be here tomorrow, they’ve already shared with us, you know, examples, and they’re not the only ones of, you know, retail rates being less than half of the wholesale rate.

3904 Should we not be concerned at the Commission with the ability of ISPs to complete in that kind of scenario where the retail rates is less than half the wholesale rate?

3905 MR. SHAIKH: I think you have to be very careful about looking at specific tiers and specific rates instead of looking across the portfolio of products and tiers that are offered to a reseller.

3906 And across our tiers, it’s absolutely the case that resellers have margin and can build margin and profitably compete in the market.

3907 That’s actually kind of ‑‑ I don’t know if I want to put Richard Feasey on the spot, but I mean that’s actually the approach that European regulators have taken, where they pay closer attention to whether a reseller can be profitable across all of its services.

3908 Richard, do you mind weighing in a bit there?

3909 MR. FEASEY: Sure. So precisely that. I mean, one of the challenges in Europe that we found was that if you have a very rigid and very siloed approach to assessing the relationship between retail revenues and input costs for the wholesalers, then you impose a lot of rigidity on the sort of pricing practices both of the wholesale providers and also to some extent the competitors.

3910 Particularly with new technologies and new services, like gigabit services, where there’s a lot of uncertainty about willingness to pay of customers for different speeds, and different types of services, you want to try and avoid creating a regulatory framework which inhibits the ability of firms to experiment with different prices, including penetration pricing and things of that kind.

3911 So the way the Europeans have addressed that is really to have regard for the economic space in which the wholesalers can compete, but thinking about the ability of a wholesaler competing across the portfolio of services and competing over time.

3912 So there’s not an objective to ensure that you can compete in every particular niche or on every particular product, but the expectation is that you do have to have concern if you’ve got this sort of regime that there is enough economic space for sustainable competition over time.

3913 But the key point I would make I guess is that that needs to enable, in designing that, the market as a whole to experiment with pricing. Because we’re dealing with quite uncertain demand situations here.

3914 THE CHAIRPERSON: Okay, thank you very much for that.

3915 Madam Secretary, do we want to perhaps take a short break?

3916 THE SECRETARY: Absolutely. So we will go for a break and resume at 3:10.

3917 Thank you.

‑‑‑ Upon recessing at 2:58 p.m.

‑‑‑ Upon resuming at 3:11 p.m.

3918 THE SECRETARY: Madam Chairperson, we're ready to continue, thank you.

3919 THE CHAIRPERSON: Okay, great. Thank you very much. Why don't we just go over to Commissioner Naidoo? Thank you.

3920 COMMISSIONER NAIDOO: Hi, thanks. Thanks for being here.

3921 I think one of the advantages of being here on a Thursday afternoon, in a week‑long hearing, is that you actually get to have heard what some of the other interveners have said, who have come before us earlier in the week.

3922 So, I'm going to give you an opportunity to respond to some of the things that we heard from the other interveners, so far.

3923 I'm going to start up with Bell. They told us yesterday ‑‑ you probably saw this ‑‑ that they're now selling internet over cable in areas where they have not deployed fibre.

3924 Are you experiencing this dynamic and if you are, to what extent? And, does it have any impact at all on your competitive strategy?

3925 MS. MILNE‑BANCROFT: Sure. So, maybe I'll take the ‑‑ at least the first part of the question. Yes, we have seen that, both in the East and the West, through the couple of acquisitions that they've done.

3926 For the most part it has been status quo. We've noticed some increase in out of territory but by and large it's been status quo, is what we've seen, from the resellers, historically.

3927 Yes, and just to address this strategy question, so as of right now it hasn't impacted our strategy. We compete locally with any provider that's there, and that would include Bell showing up as a smaller ISP under a different brand. So, to date, no changes.

3928 COMMISSIONER NAIDOO: All right, thank you. Bell also said yesterday that they get a competitive advantage whenever they upgrade a house to fibre. Would you agree with that? And how do you adapt when Bell builds fibre into a neighbourhood that you're currently serving?

3929 MR. McKENZIE: Well, let me ‑‑ I can't talk to the technology part. So, the legacy infrastructure that was in place ‑‑ and I think some of the other operators shared ‑‑ it was built for the telephone network. So, it's unshielded, twisted copper loops. It has a limitation in speed. And so, they were faced with a bit of a technology challenge that technology in end‑of‑life, obsolete, they had to invest.

3930 And so, from their perspective they chose, instead of upgrading to other technologies, maybe, G.fast or others, they went fibre‑to‑the‑home.

3931 In our case, as I say, we already have fibre in all the neighbourhoods, so I'm already ‑‑ very similar structure, where you have fibre ‑‑ in our case, to a node, they have fibre to what's called an OLT, and then they passive‑connect to the home, and they share ‑‑ that's the thing, it's not dedicated fibre, it's actually shared. The houses are all sharing the port.

3932 So, you know, from a competitive standpoint, we line ourselves up fine against that infrastructure, and as we upgrade and the investments that we're making with DOCSIS 4 ‑‑ think of fibre and DOCSIS 4 as the same, in terms of being able to deliver 10 gigabit services to every house that we're connected to.

3933 MS. MILNE‑BANCROFT: And, just to build from what Ron was saying, for us, like he said, we've got the speeds that consumers absolutely need, and we spend more time focusing on the attributes that consumers really care about, so that's reliable, fast, secure. And so for us, absolutely, they're different technologies but they deliver what the consumer needs in the home, and then it's everything inside of the home, is where you can really differentiate yourself. And so, we really focus on that.

3934 COMMISSIONER NAIDOO: Okay, thank you.

3935 Let's move to Cogeco. They have told us this morning that nearly 50 percent of their wholesale subscribers are now end customers of Bell, TELUS or Rogers.

3936 So, I'm wondering if you can help us to understand what the sudden interest in wholesale access is?

3937 MR. SHAIKH: Well, I'll start and then I'm going to ask Christine to add.

3938 I think they said Bell, TELUS and Rogers, but I think when you talk about the resell regime it's predominantly Bell and TELUS, and to a much lower extent it's Rogers. So, we said repeatedly, we're builders and we prefer to compete with our own facilities.

3939 MR. POP: Sure, and I think maybe this ties back to the question around acquisitions. So, we have seen a number of acquisitions of ISPs and as we've heard earlier this week, I think that there's a number of different reasons behind that. I think if we were to compare with Cogeco, if we were to look at our TPIA base, it would be roughly about 30 or so percent of that that is now owned by facilities‑based providers.

3940 MR. SHAIKH: And I just want to further explain some of the questions. You're asking about Bell exploring resell on our networks or us exploring resell and what the competitive impact has been ‑‑ because it might go back to an earlier discussion about why we're opposed the TELUS exclusion would involve and what the impact would be.

3941 Currently, with the rates that are in the market the competition that they provide, even as resell, has been effective competition as a reseller, based on the costs that exist in the market they're still primarily acting as facilities‑based players. But if we're looking at potential impacts, if incentives changed or asymmetries were created, like the model proposed by TELUS, if they were to start reselling in our market, we think that especially with the potential for below‑cost rates or even without below‑cost rates the intent would actually do real harm, potentially, to competition and investment, and not to the benefit of consumers.

3942 COMMISSIONER NAIDOO: TELUS, yesterday, said that there is no national market for internet service. There are no national income‑based, they said. TELUS argues that it should be considered a new entrant with respect to Ontario and most of Quebec.

3943 I'm wondering what your responses to that and whether or not you agree.

3944 MR. SHAIKH: Well, as we've explained ‑‑ and I think others have explained ‑‑ we do not agree with that position, in terms of TELUS being a new entrant. Certainly, it's not a national market there; we don't have a national broadband market. There are local and regional markets that are all intensely competitive.

3945 So, there's no link between TELUS' position that it's a national market, to suggest that there's no national market, to suggest that it is, as they describe, this new entrant in other parts of the country. TELUS does have a national presence, even if the markets are not national.

3946 COMMISSIONER NAIDOO: Okay, thank you for that. TELUS also said yesterday that ‑‑ they were saying that the larger compagnies are exactly who the Commission should be prioritizing for wholesale access, because of the competition that they can bring to the market, they were arguing.

3947 You have a different view, that large incumbents are precisely the ones who should be excluded from wholesale access.

3948 So, given that a number of wholesale‑based competitors have been acquired in recent years how can we be sure that consumers will have enough choice and competition if we were to prohibit larger companies from wholesale access?

3949 MR. SHAIKH: Well, I'll start with the fact that we have, as we said, a highly competitive market with intense competition between cable and the IECs, other wholesale providers, potential new entrance, looking into the future, and that's all good for Canadians and it's good for competition.

3950 And I want to explore the TELUS proposal that you have to look to players like TELUS to provide wholesale. And I think this echoes some of the comments expressed by Cogeco earlier.

3951 Let's go back to what the original intent and rationale behind the wholesale framework was, it was to provide small, new entrants with an opportunity to enter, gain market share and build, hopefully with a disaggregated regime. You enter and then you make your own investments, then you build your own facilities and then competition thrives.

3952 I'm alarmed by any suggestion that we would go in the complete opposite direction and say that builders, like Rogers and quite honestly, like Bell, in the way they expressed it yesterday, should be incented or forced to stop building and instead resell.

3953 So, the idea that you're going to bend‑in the rationale for wholesale, in support of this notion of making facilities‑based carriers abandon their investments and instead just ride on someone else's network, is antithetical to the entire original basis for the wholesale regime, and incredibly harmful to competition, going forward, and incredibly harmful to consumers.

3954 COMMISSIONER NAIDOO: Thank you for answering my questions. Those are all the questions that I have, but I know my colleagues have questions as well. Thank you.

3955 THE CHAIRPERSON: Okay, thanks, Commissioner Naidoo.

3956 Maybe we can just pick up where you left off right now, saying that it's a highly competitive market.

3957 As you know, because I'm sure you've been following the proceeding, we have heard from other interveners that it is not a highly competitive market. You know, we've heard that competition drives lower prices, more choice, innovation, all these great things, and when it comes to consumers, that is not what is being represented to us.

3958 We've heard from PIAC on Monday, we heard from OpenMedia, we heard from Manitoba Coalition and others, that Canadians are frustrated, in some cases desperate. I think Vice‑Chair Scott referred to one of the stories that we heard about, where somebody was having to sort of choose kind of internet over food, feel that, you know, internet is less affordable today.

3959 So, can you respond to that or help us reconcile those views?

3960 MR. SHAIKH: Well, we certainly understand the concerns of consumers and we're sympathetic to their views in an inflationary environment. We can't deny the fact that there is inflation, and it's impacting a number of products and services. It's not actually impacting broadband in the same way. In fact, as we have demonstrated, and others have demonstrated, prices for broadband are going down, especially price per gigabit level, which reflects the fact that we're investing to compete and to deliver affordable access to next‑generation services, which is vital to the needs of Canadians.

3961 And we also continue to offer a variety of plans, including low‑cost plans. We offer a connect‑for‑success plan.

3962 So, we are committed to serving all our customers, including those who are in financial need.

3963 Your friend, I think, surveyed data, and of course, when customers are surveyed, you know, we have to look at prices, even when prices are lower, you know what the answer is for any product and service, but I don't think that's the data upon which you should rely on.

3964 THE CHAIRPERSON: Okay. Thank you for that. You've talked a lot about asymmetry and you have said that there has been asymmetry for a long time.

3965 Wouldn't requiring both telcos and cable companies to offer wholesale access to all end users connected to their respective wireline networks be a good way to establish regulatory symmetry?

3966 MR. SHAIKH: Let me ‑‑ if you don't mind, Chairperson, if I understand exactly what you're proposing or you're saying, should we just mandate wholesale access across the board? Which I think is what's being proposed in this proceeding. I think for a variety of reasons we think there's logic in support of phasing out wholesale access, and there still would be opportunity for off‑tariff agreements.

3967 But again, you're right, if you do continue to mandate wholesale access it should be symmetrical and it would be technologically neutral. And I think the best way to establish that is, as we've said, one regime for cable, HFC that's subject to the wholesale regime and one regime for telco FTTP that's subject to the wholesale regime.

3968 And ideally, you'd get it right, in terms of level of aggregation, so you would make sure that those who were choosing to resell would be in some way incented to make some investments, and we would have both an aggregated and disaggregated regime. I think we would prefer to continue to incent a or support disaggregation.

3969 Howard, do you want to add anything on that?

3970 MR. SLAWNER: Yeah. I think if you see our proposal for the aggregated regime, we took multiple polls in provinces, like four to five in Alberta and BC, and about nine or ten in Ontario and Quebec, which we feel at least keeps some of the intention behind the original regime, which was to transition from aggregated to disaggregated. It would incent the who wholesalers to deploy some capital, make some investments on their network and take some ownership on the products and services that they offer.

3971 So, it would keep a little bit of the spirit alive from the original decision, even as you move back towards more of an aggregated model.

3972 THE CHAIRPERSON: Okay, thank you for that. Perhaps I could ask you about FTTN and what we heard from Bell, and what we heard from TELUS, and perhaps you could react to that.

3973 So Bell doesn't challenge the continued mandated status of aggregated FTTN services but recommends that we freeze the FTTN rates.

3974 TELUS suggested that an FTTN service be discontinued in areas where FTTP exists, with FTTP rates applying to any remaining FTTN customers in those areas.

3975 I'm wondering what your view is on these proposals and if one were adopted, should it apply to ILECs, cable companies, or both?

3976 MR. SHAIKH: Well, it's not a proposal ‑‑ and I'll ask the technology question to Ron ‑‑ it's not a proposal that can be applied necessarily symmetrically, because, you know, the subscribers of FTTN is the legacy copper and they're, you know, overbuilding with FTTP, which is different from what we're doing on the cable side, which is continuing to upgrade and enhance our insisting DOCSIS 3.1 and building toward 4.0.

3977 So, without commenting directly on, and specifically ask for exemptions on the rates that are specific to them, I can tell you that the rationale behind decommissioning is different. It's two technologies. I don't know if Ron wants to talk about the technologies and Howard might add something about decommissioning.

3978 MR. McKENZIE: Yeah, it's interesting, it's the old DSL, is what it is, and so it's fibre to what's called a DSLAM ‑‑ Digital subscriber access loop ‑‑ and that's basically leveraging the copper loops that go to your house. It's just leveraging the old infrastructure that was in place, but that's for being able to deliver basic services.

3979 So, you know, it still has a viable use up to a certain speed, and that infrastructure has been there for a long time, but it's very different from a DOCSIS infrastructure, which is fibre direct to the node, and then your serving groups from the house are right from that node. So it's a very different between ‑‑ the two architectures are very different.

3980 Fibre to the home is a lot closer to what we do with DOCSIS. It's fibre out to ‑‑ in the case of fibre to the home, it's what is called an OLT ‑‑ an optical line terminal ‑‑ and then that's the powered unit that goes in your neighbourhood, and then it's passive fibre that you share with, you know, 64 of your neighbours or 32 of your neighbours that share on that port. Our nodes are very similar to that type of structure, to an OLT.

3981 So, it's what they're talking about ‑‑ which is kind of ‑‑ I've never kind of thought of it, is fibre to the node, or fibre to the curb. It's old DSL is what it is.

3982 MR. SLAWNER: Sorry, just from a decommissioning standpoint, what they're doing is more of a wholesale change, right? They're moving from copper to fibre‑to‑the‑home. We're not doing that. We're taking our current DOCSIS structure and we're just upgrading it. So, we're not going to be decommissioning, we're just going to build on top of our current network, and make it even better.

3983 So, we have no plans to decommission any portions of our network. There are a couple of instances that do arise from time to time, usually resulting from some developer or landlord that is renovating and our wires are impacted, or perhaps more of our wires got degraded because of exposure to weather. But those are uncommon. For the most part we will just continue to build upon our current knowledge and make it even better.

3984 MR. McKENZIE: And I don't want you to miss the fact that that investment that we're making in DOCSIS is as expensive as the investment they're making, so don't assume that it's an easy task, especially when we're going from DOCSIS 3.1 to 4.0, it is a massive investment that is not unlike the investment that the others are making on FTTP.

3985 THE CHAIRPERSON: Okay. Thank you for that. I only have two other questions and I'll look around to see if my colleagues have anything additional, before we turn it back over to you.

3986 We talked about investment and, you know, we had a discussion ‑‑ you had a discussion with the Panel. Is there anything else on investment that you would like to share with us? I mean, we've heard about the challenges, we've heard about rural and remote communities and how difficult it is to get there. We've heard about interest rates. We've heard a lot this week.

3987 Is there anything else that we didn't cover when we were talking about investment that you would like to share with us?

3988 MR. McKENZIE: Yeah, the one in particular I know I brough up earlier, and I'll keep coming back to this.

3989 Maybe unlike some other operators that have presented to you, we're builders. I'm building more last year than we have ever done, in terms of service expansion, modernization of homes. This year will be a record year for us again, in terms of our capital investment and our year of investment in upgrading the infrastructure.

3990 Access to pole and duct structures and making it a fair playing field, that if I could get access to poles the same way the ILECs do, if I could get access to duct structures the way the ILECs do, that's a level playing field. I think the Commission could go miles to help competitive landscape change, all builders, and then you're incenting infrastructure and more importantly, we can go faster. We can go faster, in terms of serving communities, because right now I'm having to go out on my own and do it.

3991 And so it would make a dramatic difference in the Canadian landscape if you took that challenge on.

3992 THE CHAIRPERSON: Okay, thank you very much for that.

3993 So, my last question is around the recent acquisitions of competitors. We've heard a lot about that this week as well, completely different views about what's happening and why that's happening. We've heard it's because the wholesale system is failing. We've heard that, you know, it's evidence of success, not failure, is what we heard from TELUS.

3994 I wonder if you could provide your views on this.

3995 MR. SHAIKH: Yeah, and I'll address it in such of the two ways it's been presented to interveners. One is what does it say about the state of competition in the market, and I would say it still indicates that we have a thriving competitive market. We're talking about companies that have gained significant share earning evaluation of their company, they were built by entrepreneurs and they've chosen to sell their company, which is entirely their right to do.

3996 The second part of that is, even though they've been acquired, there are still hundreds of resellers out there, so there's still a thriving competitive market, including through competition offered by resellers.

3997 So, those acquisitions are neither reflective of the market and not being competitive, nor is it as a consequence of a less competitive market.

3998 The other part of that is you asked that does it mean for the wholesale regime. I think the worst thing you can do is if you're ‑‑ and this is already a pretty interventionist wholesale regime, so the worst thing you can do is decide that you're unhappy with certain market outcomes and then become even more intrusive and add even more onerous regulations.

3999 So, the response can't be more regulation, more intervention.

4000 THE CHAIRPERSON: Okay. Thank you for that. I'm just looking around to see if there's anything further from the Panel? No?

4001 So, thank you. We will turn things back over to you for concluding remarks.

4002 MR. SHAIKH: Thank you, Chairperson. I know Ron is going to add a few comments as well.

4003 We know this is a challenging task in front of you. There's wide range of opinions, and we're here obviously trying to support you in that decisions‑making. As always, Rogers wants to come before you with thoughtful positions and have a candid discussion about our proposals and the proposals of others, because we're working toward the shared commitment of building a worldclass communications system that benefits all Canadians and the Canadian economy.

4004 And obviously you've heard from us already. You're going to hear from us again. The best way to deliver affordable access to next‑generation services and deliver what Canadians need is through facilities‑based competition in a framework that supports continued investment.

4005 I've also heard it said that you have to balance objectives or choose among objectives.

4006 We've always believed that affordability, investment, innovation, competition are complementary objectives that can be achieved with the right framework and obviously the correct reliance on facilities‑based competition, which let's us continue to invest.

4007 For builders, we want to invest, we want to deliver services to Canadians, and like I can't overstate the risks if you get this wrong, and if the rates are below costs, if the rates are distortionary, if you exacerbate the asymmetries or introduce new asymmetries between cable and telco, you will significantly undermine investment and competition that will harm Canadians, and we urge you against that. Let us build, let us invest, and then you can do what Ron wants to do.

4008 MR. McKENZIE: Well, first, to the Commissioners, I appreciate the opportunity. It's not a normal place for your technology lead to come out and spend time with you, and so I appreciate the opportunity to engage.

4009 As everybody here has said ‑‑ and maybe what's different about us being in front of you ‑‑ we're builders. We are on a pace right now that is the largest modernization service expansion, network coverage expansion, that we've ever been on. We did it last year, we're going to do it again this year. We're probably going to spend CAPEX that exceeds our other operators, and that is a focus on delivering to serve all Canadians.

4010 That massive investment ‑‑ also, once that foundation is there, what I am so excited about is bringing the innovations to Canada.

4011 One of the opportunities I've had the privilege of being part of is I chaired the technical committee of CableLabs. CableLabs is our industry association and our standards bodies for all of our industry. It's got representatives from Japan, from the UK, from Germany, from Latin America, all my fellow US operators, like Cox, Comcast, Charter, so all the CTOs, and we chaired that technical committee.

4012 We're leading the innovation of what you can do with infrastructure. That organization has over 600 patents. That's the research Canada used to have in the telephone network, and we want to bring that back to Canada, and we're passionate about building, passionate about innovation, and I think there's an enormous opportunity, if we get this right, to actually drive investments that deliver productivity and connectivity for all Canadians.

4013 And I think the biggest thing I would ask is let's get the framework right. Let's continue to encourage investment, because that's our competitive differentiation as a nation, and I think that innovation will set up generations ahead, and that's the part that I would love the Commission to remember, as you are thinking this through. Think about generations ahead. Think about innovation. Think about the foundation of what we can do as an industry.

4014 Let's go build.

4015 THE CHAIRPERSON: On behalf of the Panel I would like to thank Rogers. We've very much appreciated the discussion this afternoon. Thank you.

4016 MR. SHAIKH: Thank you.

4017 MR. McKENZIE: Thank you.

4018 THE SECRETARY: Thank you, Madam Chairperson. This concludes today's agenda, so the hearing is therefore adjourned for the day, and we will resume tomorrow at 9 a.m.

4019 Thank you.

‑‑‑ Whereupon the hearing adjourned at 3:38 p.m., to resume on Friday, February 16, 2024 at 9:00 a.m.

Reporters
Christine Ladouceur
Monique Mahoney
Lynda Johansson
Tania Mahoney
Brian Denton