Ottawa, Ontario
May 7, 2014
Chris Seidl, Executive Director of Telecommunications, Canadian Radio-television and Telecommunications Commission
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Thank you, Mr. Chairman, and good evening.
My name is Chris Seidl. I am the Executive Director of Telecommunications at the Canadian Radio-television and Telecommunications Commission, the CRTC. With me today is Alastair Stewart, Senior Legal Counsel for the CRTC.
We are pleased to appear before you as you study Division 16 of Bill C-31. This legislation contains proposed amendments to the Telecommunications Act, including a provision to limit the roaming rates that Canadian wireless companies charge to other Canadian wireless companies.
Facts about the wireless sector
Let me begin with some facts about Canada’s wireless sector. With 28 million subscribers, this sector has grown quickly over the last few years and is of vital importance to the Canadian economy. In 2012, wireless companies reported total revenues of over $20 billion, which accounted for 46% of the total telecommunications revenues of $43.9 billion. According to the Canadian Wireless Telecommunications Association, over 280,000 people are employed in Canada as a result of the wireless industry.
In addition, smartphones are more popular than ever. An increasing number of Canadians rely on these devices as their primary means to talk, text, surf the Internet, download data and watch videos and television programs. From 2011 to 2012, the number of Canadians who owned a smartphone jumped from 38% to 51%.
The wireless networks that support smartphones, as well as tablets and other devices that access data over the Internet, are available to 99% of the population. Moreover, companies are making significant investments in next-generation networks, known as Long Term Evolution or LTE networks. The percentage of Canadians that can access these faster networks rose from 45% in 2011 to 72% in 2012. This is an impressive reach given the challenges posed by Canada’s size and geography.
We are currently gathering the data for 2013. The updated figures will be included in our annual publication, the Communications Monitoring Report.
When looking at the overall performance of the wireless sector, it is important to keep in mind that there is a retail market and a wholesale market.
Retail market
The retail market, of course, consists of the services companies offer to Canadian consumers.
Last year, the CRTC introduced a wireless code that is contributing to a more dynamic retail market. It ensures that Canadians can make informed choices about the services and companies that best meet their needs. A feature of the code is that Canadians can cancel their contracts at no cost after two years, if not sooner. The code offers wireless subscribers a number of additional protections, including a limit on national and international data roaming charges.
Wholesale market
The wholesale market, on the other hand, consists of agreements between companies. The revenues generated from these agreements, including roaming, came in at $800 million in 2012.
In Canada, many wireless companies have their own networks to serve their customers within specific geographic areas. However, they must rely on other companies’ networks when their customers travel outside their coverage area. This is referred to as roaming. Under roaming arrangements, wireless companies make their home networks available to each other. This ensures Canadians can continue using their cellphones and other mobile devices when travelling.
Ongoing proceedings
The CRTC wants to ensure that there is a sustainable level of competition in the wireless sector—today and in the years ahead. We recently published an ambitious Three-Year Plan that will take us to 2017, in which we have identified a number of activities to achieve this goal. I would like to give you an update on the public consultations we recently launched with respect to the wireless sector, as well as what we have planned in the months ahead.
In 2013, the CRTC conducted a fact-finding exercise on the rates, terms and conditions associated with roaming arrangements in Canada. Based on the information we gathered, we learned that some national wireless companies are charging or were planning to charge smaller competitors higher wholesale roaming rates than those charged to U.S.-based companies. In December 2013, we launched a public consultation to investigate whether these arrangements may be putting certain companies at an unfair disadvantage.
We are currently studying the comments we received from the wireless sector, the public and other interested parties, and expect to issue a decision in the next few months.
Earlier this year, the CRTC launched a second public consultation on the wireless sector in Canada. The scope of this consultation is much broader than the one I just explained, as it aims to review whether the mobile wireless market as a whole is sufficiently competitive. Notably, we are examining the wholesale services, including roaming, that wireless companies obtain from other wireless companies.
The CRTC sought comments on three questions: First, what is the state of competition in the market for wholesale wireless services? Second, what impact does the wholesale wireless market have on the prices and services that Canadian consumers pay for and receive? And third, do we need more regulatory oversight for the wholesale wireless market?
The deadline to submit the first round of comments is on May 15th. We will examine the submissions in preparation for a public hearing that will be held in the National Capital Region in late September.
In carrying out these activities, the CRTC wants to make certain that the competitive environment in the wireless sector is sustainable and provides benefits to Canadians. These include having access to high-quality networks and innovative services at reasonable prices.
Division 16 of Bill C-31
Bill C-31 proposes to limit wholesale wireless roaming rates in Canada pending the outcome of the CRTC consultations I have just explained. Bill C-31 sets out the formula that would be used to calculate the maximum wholesale rate for domestic wireless voice, data and text services that one wireless company can charge another in Canada.
The CRTC will be responsible for implementing the proposed amendments should Parliament decided to adopt the legislation.
We would now be pleased to answer your questions. That being said, there are a number of ongoing proceedings before the CRTC. Mr. Chairman, I hope the Committee members will understand that, depending on the question, our answers will necessarily be limited in order to maintain the integrity of those proceedings.
Thank you.
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