INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, November 27, 1997

• 0911

[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I would call this meeting to order pursuant to an order of reference of the House dated Tuesday, November 25, 1997, consideration of Bill C-17, an act to amend the Telecommunications Act and the Teleglobe Canada Reorganization and Divestiture Act. The meeting is now commenced for the industry committee.

We have before us today witnesses from the Department of Industry: Michael Binder, Assistant Deputy Minister, Spectrum, Information Technologies and Telecommunications; Allan MacGillivray, Director, Industry Framework, Telecommunications Policy Branch; Larry Shaw, Deputy Director General, Telecommunications Policy Branch; and Millie Nickason, legal counsel.

Welcome. I'll turn it over to you to begin. I don't know who is starting.

Mr. Eugène Bellemare (Carleton—Gloucester, Lib.): Would these be the only witnesses we're going to hear at this time?

The Chair: Yes. Today we just have a briefing from the department on Bill C-17.

Mr. Eugène Bellemare: And then?

The Chair: That's what we have today.

Mr. Eugène Bellemare: Today, and then do we have a series of witnesses on another day?

The Chair: We have a series of witnesses Tuesday, Wednesday, and Thursday next week.

Mr. Eugène Bellemare: Have the lists we submitted been looked at?

The Chair: Yes. They've all been contacted by the clerk, and she's trying to arrange times to fit them in.

Mr. Eugène Bellemare: Has Teleglobe been notified?

The Chair: Yes.

Mr. Eugène Bellemare: Are they coming?

The Chair: Yes.

Mr. Eugène Bellemare: Thank you.

The Chair: Thank you, Monsieur Bellemare.

Mr. Binder.

Mr. Michael Binder (Assistant Deputy Minister, Spectrum, Information Technologies and Telecommunications, Department of Industry): Okay. Let me start right into the bill itself.

I assume everybody understands that we consider this bill to be an important bill that is required to implement the WTO arrangement entered into last February.

Bill C-17 is an act to amend the Telecommunications Act and the Teleglobe Act. The bill addresses two main areas. It amends the two acts in order for Canada to make specific requirements made in Canada's offer last February in the General Agreement on Trade in Services under the World Trade Organization. It also includes other amendments that we feel are required to meet the new realities of a more liberalized and competitive market. It contains 23 clauses, and they are broken into five main subjects.

By the way, Madam Chair, we've circulated a slide deck, and I hope everybody has a copy of this. I'm going through it.

[Translation]

The presentation is also offered in French.

[English]

The first area is licensing of telecommunications service providers. Maybe I should go quickly through each area.

In the telecommunication service providers licensing, clauses 1, 3 and 7 deal with amendments to the Telecommunications Act concerning the licensing of telecommunications service providers.

The liberalization in international services as a result of the end of Teleglobe monopoly on overseas business requires that we have an effective tool to ensure that the objectives of the Telecommunications Act continue to be met in this new competitive environment, and particularly, to ensure that currently unregulated subsidiaries of foreign carriers compete fairly with Canadian companies.

• 0915

The proposed amendment will give the CRTC the authority to establish and enforce rules for the provision of international telecommunication services, and ensure that the use of Canadian facilities is promoted.

The introduction of a licensing regime would be in accordance with a WTO-GATS requirement, and it's consistent with regimes that exist now in many of our trading partners, particularly the United States.

The second area is with respect to ownership of international submarine cables and satellite earth stations. We're talking about clauses 2, 4 and 5. They would amend the Telecommunications Act with regard to the commitment made about the ownership of international submarine cables and satellite earth stations.

We've committed to removing foreign ownership restrictions from international submarine cables landing in Canada, and from satellite earth stations.

Again, these commitments are consistent with other measures that were taken to liberalize the international telecommunications market. More significant is the removal of traffic routing rules for all international services and all satellite services by March 1, 2000.

I would like to remind everybody that while we're exempting foreign ownership requirements, the owners and operators of cable landings and earth stations will still be subject to all the other provisions of the Telecommunications Act.

The third area of the bill is telecommunications numbering, and here we're dealing with clause 6. I would just remind members that historically numbering has been administered by the telephone companies.

Everybody agrees that as we're entering into a new competitive environment, particularly as we get into the local competition, it is no longer appropriate to rely on the incumbent telephone companies to carry out numbering, administration of subsidies, and other administrative issues that would come up.

So clause 6 will allow for the use of third parties working in cooperation with industry to administer these various telecommunications services.

The CRTC authority over these third parties would be established so it can retain an oversight function to intervene when and if necessary.

The fourth area is dealing with telecommunications apparatus. We're dealing with clauses 8 to 10. These clauses will provide a firmer legislative basis for the Minister of Industry to prohibit the importation, distribution and sale of uncertified telecommunications equipment in Canada, augmenting domestic telecommunications equipment certification procedures that already exist.

This provision will ensure that all equipment for sale in Canada has been certified as meeting Canadian standards, and that the integrity of the telecommunications network is maintained. It will also allow for Canadian equipment manufacturers to certify their equipment in Canada for sale in foreign markets. I think this is an important achievement.

The approach put forth in this bill is modelled on a provision in place in the Radiocommunication Act for radio apparatus, which has worked well for many years.

The last area is amending the Teleglobe act, and we're dealing here with clauses 11 to 23. Basically we are removing special ownership restrictions on Teleglobe that prohibit investment by foreign telecommunications carriers, and limit investment by the Stentor companies in Teleglobe.

So Teleglobe will remain subject to the generally prevailing ownership rules of the Telecommunications Act. The remaining clauses would repeal other provisions of the act. They are no longer required, given that the Teleglobe monopoly is ending.

These are my introductory remarks, and I would be happy to take questions.

• 0920

The Chair: Thank you very much. Thank you, Mr. Binder.

Mr. Pankiw.

Mr. Jim Pankiw (Saskatoon—Humboldt, Ref.): I'll defer to Mr. Lowther.

The Chair: Mr. Lowther.

Mr. Eric Lowther (Calgary Centre, Ref.): The first question I have pertains to the administrative requirement to set up a body to administer the numbering. You made reference to what clause that was. Could you just help me find that again? I think it was proposed section 46.1.

Mr. Michael Binder: Yes, clause 6.

Mr. Eric Lowther: When I look at this clause, I can understand the rationale of moving the assignment of numbering out of the telcos and into some impartial third body. I guess that makes some sense. But I was particularly concerned about proposed paragraph 46.1(1)(b). It says the commission may administer “any other activities that the Governor in Council may prescribe that are related to the provision of telecommunications services by Canadian carriers”.

What it's saying is yes, we're setting this up for numbering. It seems to me, though, unless I've missed it, that we've written into the legislation the ability to set in place any kind of administrative body the CRTC may require for any activity that might ever happen any time in the future. It seems extremely broad to me. I don't know why that would be such an open-ended paragraph. Maybe you can bring some clarification to that.

Mr. Michael Binder: We view this clause as relating to other activities relating to numbering activities.

Maybe I can ask our expert to give some advice. Larry?

Mr. Larry Shaw (Deputy Director General, Telecommunications Policy Branch, Department of Industry): Thank you.

The best example, of course, is the numbering itself, where an activity that was formerly undertaken by the telephone companies and was entirely appropriate in a monopoly regime is not appropriate on a going-forward basis. Everyone agrees with that, including the telephone companies. They don't want to be responsible for assigning numbers to their competitors.

The provision in proposed paragraph 46.1(1)(b) keeps it open, if in the future the CRTC and the Governor in Council agree that there is another administrative function similar to numbering administration that should properly be assigned to a third-party administrator.

A possible example of that would be where, moving into local competition now, it may at some point in the future be appropriate to have a third party administer the directory database—in other words, so that all competitors can equally access the directory database. That's an example. There may be other examples that we simply haven't thought of.

The safeguard on it is that it's administered by the CRTC. The CRTC would of course have a full public process, and it's with the agreement of the Governor in Council.

Mr. Eric Lowther: Correct me if I'm mistaken here. I understand the numbering situation to be something that has almost been birthed out of industry itself saying “This is no longer working, for the telcos to administer this numbering. We'd like a third party to take this on.” This legislation is sort of stepping up to that. That seems to be good, and I think that's appropriate.

What I'm concerned about is that the industry has brought forward an issue that needs to be administered by the industry collectively, but now in response to that, in this clause, we're sort of writing an open-ended blank cheque that says any activities prescribed under this proposed paragraph (b)....

I hope the rest of the committee is following where I'm at, because I think this is a fairly important point. It's from proposed paragraph 46.1(1)(b) to proposed section 46.2.

• 0925

It says a commission can actually establish who will be on this administrative body. They can create it. They can establish it. There is no reference to its being something that is in response to what industry may want, nor are there any terms about when it would actually be applied.

To me it's a blank cheque to the commission to create administrative bodies that would have mini-CRTC powers over the industry, with really no constraints. I guess we can all say we're trusting that the CRTC will use this only when they really have to. That might be true today, but it might not be true tomorrow.

I think we need to think through a bit more these proposed sections and maybe have some clarification of when these open-ended administrative powers would be used.

It seems to be in conflict with what we have stated by the minister—moving away from greater regulation. Here we have the ability for a great deal of increased regulation, and for no specific purpose. We have the numbering situation, yes, and that's fine, but because of the numbering situation we're writing in this great increase in power to the commission. I guess the only explanation I'm hearing is something might come up in the future for which we need to use this, we don't know what it might be but something might come up so we're going to put it in there. That sends off a bit of a concern for me personally.

I don't know if you want to respond to this. Maybe I'm mistaken, so I'm certainly open to correction.

Mr. Michael Binder: Well, we don't see it that way. We have two keys here, maybe three keys.

First of all, there is a problem to solve. Let me give you a specific example. If you want to set up a 411 or an emergency system in a local competitive market, the telephone companies may not want to do it because you're going to have more players in one local market. We, as a government, don't want this service to the public to be left alone. We may have to intervene and say although it is a very competitive market, we need to provide service to the public.

We can therefore set up at arm's length, hopefully self-managed by industry, a mechanism. That's the intention here. The CRTC does provide an oversight, and it's a two-key approval process. The CRTC and the government both have to agree that this is a worthwhile activity.

We in fact do view this as deregulation. Now CRTC gets involved in micro-management. Practically every activity gets to the point at which you have to go to CRTC. You have to use a very indirect tariff hearing to deal with issues such as directory services.

I think the intention here is to provide less of a regulatory regime, less micro-management, and to allow set entities to regulate service to the public.

The Chair: Thank you, Mr. Lowther. Mr. Lastewka.

Mr. Walt Lastewka (St. Catharines, Lib.): I have two questions I would like to ask the witnesses to expand on.

Further to the numbering situation—and you mentioned third party—you started to explain the third party. Do we have third party people at the present time who would take on that responsibility? Would this be a new set-up, or would it be kept Canadian as far as certain—

Mr. Michael Binder: My understanding is yes.

Larry, do you want to talk about this?

Mr. Larry Shaw: Yes.

As I mentioned, we are well in the process of introducing local competition. The industry collectively, under the supervision of the CRTC, has been working for some time at establishing what's called local number portability. The industry has recently contracted with a company—it's a joint venture between Northern Telecom and Perot Systems of the U.S.—to set up a trial of the local number portability database of the system. That is Canadian-based.

• 0930

Following the trial they will be going to tender for a permanent local number portability administrator. That is expected to be done over the next four or five months. This procedural provision makes it much easier and more direct to do that. Right now they are using a consortium approach, which is not very direct.

Mr. Walt Lastewka: Could you give us some information on SaskTel's policies currently with the federal government and how this bill interrelates?

Mr. Michael Binder: Right now SaskTel, when it comes to numbering, is a member of Stentor. As such we have been working with all the telephone companies trying to be very fair with the numbering issue. They are working as part of the industry and are trying to find a solution to the issue of entering into a competitive market. They are working in the Stentor group of companies to try to find a solution.

Mr. Walt Lastewka: Okay.

The Chair: Thank you, Mr. Lastewka. Madam Lalonde.

[Translation]

Ms. Francine Lalonde (Mercier, BQ): The Bloc supported the principle of this bill, particularly because it included a provision on Canadian majority ownership and provided for increased regulatory power for both the Minister and the CRTC, but they must also use it. We observed fairly recently that the Minister had been understanding with the telephone companies, while consumers, who haven't understood what's happening to them for a few years now, did not get the same hearing by the Minister.

We have asked many questions and there are many more to come. Do clauses 69.2 and 69.3, together with paragraph 73(2)(a), give the Minister the power to prevent the grey market that was possible in Canada, at least until the second judgment that was handed down in Ontario, but which will no doubt be appealed? Through these provisions, is he granting himself the power to ban any telecommunications instrument that does not hold a technical acceptance certificate from the skies?

Mr. Michael Binder: No, this bill has nothing to do with broadcasting, absolutely nothing. It only concerns telecommunications and has nothing to do with importing and satellite dishes. The answer is no.

Ms. Francine Lalonde: Okay. Not at all?

Mr. Michael Binder: I could...

Ms. Francine Lalonde: We're not limiting ourselves to the bill; we're trying to look at everything, from the moment the waves take to the highway.

Mr. Michael Binder: Yes, but we don't intend to use this act to prevent...

Ms. Francine Lalonde: Well, that's something else.

Mr. Michael Binder: No, but based on the opinion we've received, nothing here would facilitate the introduction of satellite dishes.

[English]

It doesn't deal with satellite dishes,

[Translation]

not at all.

Ms. Francine Lalonde: Clause 69.2 states "... for which a technical acceptance certificate is required". Will this certificate be issued by regulation?

• 0935

What types of telecommunications apparatus are contemplated here? Subclause 69.2(1) states:

69.2(1) No person shall distribute, lease, offer for sale, sell or import any telecommunications apparatus for which a technical acceptance certificate is required...

Who is going to determine that?

[English]

Mr. Michael Binder: Right now, the way.... Let me use the Radiocommunication Act as an example. If you want to import a broadcasting amateur radio, you have to get a certificate from the Government of Canada or from a laboratory to certify that this particular apparatus works in accordance with the rules established by industry with government.

We don't have such a thing in the telecommunications field, so we get equipment coming from abroad with absolutely no assurance that it will work when it is plugged into our networks. Yet when our telephone companies or equipment manufacturers want to export equipment to other markets, they are always told they must meet specifications set by the foreign markets. This allows for entering into mutual recognition agreements where once we certify that equipment meets our standard, it will be automatically accepted by a foreign country and vice versa.

This lets the government make it easy for our exporters to export equipment into markets that we want to enter. It will also ensure that when consumers buy a piece of equipment it can get plugged into our telecommunications networks, that it's compatible with the networks. It will not injure the network or cause the network to fail.

[Translation]

Ms. Francine Lalonde: Your answer begs a sub-question. Do we still have a little time with them?

[English]

The Chair: Briefly, Madam Lalonde.

[Translation]

Ms. Francine Lalonde: I'll be brief, but then...

[English]

The Chair: No, we'll come back after.

[Translation]

Ms. Francine Lalonde: Have you determined what this technical acceptance of apparatuses, which may be extremely numerous and could come into the markets, could require of you?

Mr. Michael Binder: We have acquired a great deal of experience in the field of radiocommunications, that is to say with all the types of wireless equipment, and certain types of telephone apparatus. I believe that's been in existence for 30 years.

[English]

How long has the radio been taken off?

[Translation]

Ms. Millie Nickason (Legislative Counsel, Department of Industry): A little more than 10 years ago, I believe.

Mr. Michael Binder: This same provision already appears in other states and we also want it to apply to this equipment in the same way.

Ms. Francine Lalonde: And if the other equipment already appeared in the act, you wouldn't need to say it again.

Mr. Michael Binder: This provision is part of the Radiocommunication Act. We have three acts. So we're including the same provision as regards our telephone system.

Ms. Francine Lalonde: If you're adding this provision, it's because it wasn't already there.

Mr. Michael Binder: Not in the Telecommunications Act. So we are adding it to

[English]

make it consistent with the Radiocommunication Act.

[Translation]

Ms. Francine Lalonde: Yes, but you weren't doing it before either?

Mr. Michael Binder: No.

Ms. Francine Lalonde: So it's new.

[English]

The Chair: Mr. Binder.

Mr. Michael Binder: Administratively, we have always been managing it that way, although we didn't have the authority. We always found some administrative way of making sure the network did not get injured in any way, but we didn't have the legal ground to do it.

• 0940

[Translation]

Ms. Millie Nickason: We now have a system based on the policy, on the Minister's power. That is the administrative power...

Ms. Francine Lalonde: The Minister's general power.

Ms. Millie Nickason: ... provided for by the act that governs the Department of Industry. But it's voluntary, not mandatory.

Ms. Francine Lalonde: Oh, so it would be mandatory.

Ms. Millie Nickason: Yes, the objective of these provisions is to make the system mandatory.

Ms. Francine Lalonde: That's still not a big difference.

[English]

The Chair: Thank you, Mrs. Lalonde. Mr. Bellemare.

[Translation]

Mr. Eugène Bellemare: Thank you, Madam Chair.

Madam Chair, I thought I understood that certain groups opposed to the federal government's current policy regarding Sasktel would like to appear before the committee. Could anyone tell me exactly how the current policy on Sasktel could create concerns in certain quarters?

Mr. Michael Binder: This has nothing to do with Sasktel.

Mr. Eugène Bellemare: Why not?

Mr. Michael Binder: We are here to implement an international agreement negotiated with nearly 70 countries. The only challenge of this act is the implementation of this agreement. This has nothing to do with Sasktel.

Mr. Eugène Bellemare: Just a minute. That means that we aren't concerned with all 10 provinces, but rather nine-tenths of the country. There's a hole or a void somewhere and that's Sasktel. The purpose of these agreements is to reach an agreement on everything that goes on in the world and to ensure that our country is in step with the others. But if one province of our country, in this instance Saskatchewan, is not involved, does Sasktel hold a kind of monopoly over the system?

[English]

Mr. Michael Binder: No. Sorry if I misled you here.

This provision will apply to everybody. This is an international agreement, and as the federal government is a signatory to this international agreement, all provinces and all telecommunication—

Mr. Eugène Bellemare: You're not answering my question.

The Canadian Wireless Telecommunication Association—they are Canadian and represent all of Canada, and we're supposed to be acting for all Canadians—in a letter to Susan Baldwin, the clerk of the committee, wrote that:

Section 133 of the Telecommunications Act needs to be amended in order to bring SaskTel under federal jurisdiction in order to conform to Canada's commitments as a signatory to the General Agreement on Trade in Services of the World Trade Organization.

What's your comment on that?

Mr. Michael Binder: The only difference between Saskatchewan and the rest of the provinces is that when the Telecommunications Act came into force, SaskTel had a five-year exemption from getting under the act. This exemption runs out in October 1998 and SaskTel will come under the Telecommunications Act. It will be subject to the same provisions as everybody else. It required the government to pass an order in council. That is the arrangement now, so as far as we are concerned it's a done deal.

Mr. Eugène Bellemare: Did Canada make any commitments to GATS regarding SaskTel?

• 0945

Mr. Larry Shaw: As Mr. Binder said, the current situation is that for a minimum of five years SaskTel is not regulated by the CRTC. Under the GATS agreement we have committed to having independent regulators, which are defined as regulators who are independent of the telephone company. Also, as Mr. Binder indicated, Saskatchewan is subject to that same obligation. With the coming into effect of the agreement the regulator of SaskTel, as with the regulator of all the other companies in Canada, must be independent from the company. So it's up to Saskatchewan, at least during that period while SaskTel is not regulated by the CRTC, to ensure that there is separation, that there is independence of the regulator from the telephone company. Saskatchewan is well aware of that requirement, and we must assume that they will take the appropriate steps to ensure they don't create a breach of the agreement.

Mr. Eugène Bellemare: Thank you, Madam Chair.

The Chair: Thank you, Mr. Bellemare. Mr. Lowther.

Mr. Eric Lowther: Thank you, Madam Chair.

I'd like to follow up on Mrs. Lalonde's questioning on the equipment acceptance criteria. I understand the desire to ensure that we're connecting approved devices to the network. I know that's been a long-standing, unresolved...there haven't been controls around that.

I'm looking for some clarification on the approach taken in this proposed legislation. First of all, in order to ensure that we have approved telecommunications hardware connected to the network, I see in proposed paragraph 69.3(1)(h) that we're going to appoint some inspectors or create a new class of inspector to do this inspection work. Then we talk about certificates being applied to the equipment. Proposed paragraph 69.5(1)(a) says these inspectors can enter any place of business, examine the logs and reports and all the material without any prior notice to the person who runs the business. They can just come in there and take over, it sounds like, and even require the owner of the business to prepare all the information that the inspector demands. There just seems to be a little bit of overkill to me.

What's the intent of that extensive power being granted to a new group of CRTC inspectors? It seems a little police state-ish.

Mr. Michael Binder: No, these are existing inspectors. We are now doing the same thing in radio communication. There's a nearly identical provision under the Radiocommunication Act that allows an inspector, when we know there are serious illegal interference activities, to go and collect equipment, information and evidence in a place of business. These are not private residences. This is a place of business we're talking about here. We've been doing this for many years. These are Industry Canada inspectors who have been carrying on this activitiy for years.

Mr. Larry Shaw: To add to that, this is not a CRTC power. This is granted to the Minister of Industry. The substantive inspectors, as Mr. Binder said, already exist. By and large it's two agencies. Customs Canada or the customs division of Revenue Canada and the RCMP are the inspectors that are identified here.

• 0950

Mr. Eric Lowther: With that in mind, is there a requirement to even include in this legislation the stated inspectors for the purposes of this part? If we already have them, why do we need that clause?

Ms. Millie Nickason: This is necessary so that there's a legal basis to appoint them to perform these particular functions. In the absence of this provision we wouldn't be able to appoint them to handle these particular functions.

Mr. Eric Lowther: Thank you.

Going back to the licensing portion, proposed sections 16.1 to 16.4 I believe it is, I've already had some discussion on this with some of the industry people, but maybe it would be a good idea to bring it out in this forum.

I understand that what we're trying to do with this piece of legislation is open up the international long-distance market to competition. Yet when I look at proposed sections 16.1 to 16.4 and maybe even beyond, we are bringing in a new licensing regime that not only applies to those who are involved in international long-distance traffic, but will actually apply to anybody and everybody who is a telecommunications service provider. Even those who resell Canadian facilities would now come under some new licensing structure.

I've had some discussion on this, and I'm trying to see the need to bring a new licensing regime to people who operate within Canada who really don't have anything to do with long-distance communication outside of Canada at this point, and who don't operate under a licensing regime today and are doing perfectly well without it. Because of long-distance competition outside the country, we're going to put these people all under a new licensing regime. We're going to keep track of licences and add to the bureaucracy and people to keep track of them, renew them, file them and all the things that go along with that.

Can you connect those two dots for me? They don't seem to line up.

Mr. Michael Binder: We're trying to set up a regime where all competitors play by the same rules. That's the intention of this licensing provision. Since there was a monopoly by Teleglobe and supposedly nobody carried international traffic.... Through Teleglobe, it was relatively easy to regulate and understand what's going on in the marketplace. The moment you do away with borders in the international traffic, differentiating between a domestic reseller and an international reseller is very difficult to do. The intention was to make sure there was a very light administrative oversight to ensure that everybody who does business in Canada for Canadians has the same rules and meets the same objectives of the Telecommunications Act.

One objective of the Telecommunications Act is to continue to promote the use of Canadian facilities wherever possible. We want to make sure you don't bypass, things of that nature. We just want to make sure that everybody is playing by the same rules. That's the intention of the clause.

The Chair: Mr. Lowther.

Mr. Eric Lowther: I might come back to that question.

The Chair: Okay. Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): I presume that a lot of this regulation has to do with the protection of intellectual property rights in the sense of the overview of the importation of telecommunications equipment. I assume there is similar wording in similar agreements with some of our GATT trading partners. Is that fair to say—that there is similar protection for Canadian telecommunications equipment being exported into Europe?

Mr. Michael Binder: My understanding is that the real purpose here is to break the ability of certain countries to use certification as a barrier to entry. If you talk to many of our equipment manufacturers they'll tell you that if they have a box, say, they want to sell to a particular country, all of a sudden they're told, well, you know, we have to make sure it works within our networks. Before you know it, they have the whole weight of bureaucracy on them, and they do not get a licence or certification that their equipment is consistent with the network of that particular country.

• 0955

What we're trying to do is to find a regime that will make it easier. If it works in our country, and we've certified that it's good, don't second-guess it. Accept it as good in your own country. That's the kind of mutual recognition we're trying to put in place here.

Mr. Alex Shepherd: I guess the concern is that as we live in a global economy, the importation of technology is going to become more and more rapid. It seems to me we're putting in some kind of a regime here.

Have you thought about putting some kind of time line as to how long...? I assume things like modems would be covered by this, because they're being attached.

Mr. Michael Binder: Yes.

Mr. Alex Shepherd: What's the length of time for approval?

Mr. Michael Binder: Here is where the quid pro quo comes into place. We've been a very open market. We've set up very little barriers for entry. You can get equipment modems that are manufactured all over the world.

I hasten to say, it's not the same, many times, when you go with Canadian equipment abroad. That's what we're trying to set up here. Allow us to have a mutual recognition agreement that will say “I'll approve yours if you'll approve ours”.

Mr. Alex Shepherd: Yes, I understand that process. The question I'm asking is, have you put some thought into that window of how long...? Disregarding that somebody's giving us a hard time in another country, let's say I present my new and improved modem to you, to be used in the system. How long is it going to take to get certification?

Mr. Allan MacGillivray (Director, Industry Framework, Telecommunications Policy Branch, Department of Industry): Actually, the system as it works now involves the industry and the government working on a committee to develop the standards. Practically speaking, it's the industry that develops the standards with us, the Department of Industry.

Generally the practice is that there will be a type approval, which means that after the equipment is developed it will be tested in a third-party laboratory, which we also certify. This is all intended to facilitate all of the equipment coming to market as quickly as possible, so that the approval process is not an impediment.

All we're doing is ensuring that it meets the standards, which means there isn't any harm to the consumer when they plug it in and it at the same doesn't harm the network when it's attached. That, I think, is a very light-handed way of going about this so things can move to market very quickly.

Mr. Alex Shepherd: When you talk about guidelines, is one of the things you're going to focus on to have an intent...? I know different technological processes are going to take different kinds of time lines, but as legislators obviously we're concerned that we have a new technology that's good for the Canadian economy, somehow or other, but it takes a year or two years for you people to certify it. How are we to prevent that from happening?

Mr. Allan MacGillivray: Actually, all we do is work very closely with the industry to make sure that doesn't happen. It's up to industry to develop the standard. We work with them. We work as fast as they will work. We haven't noted this to be a concern in the past.

Mr. Larry Shaw: It's worth adding that the bulk of the certification takes place in independent labs, and this bill establishes the legal framework for all that delegation. So it's actually quite a competitive market in terms of certification, but they have to work to the standards that are agreed to, domestically and increasingly internationally.

Mr. Alex Shepherd: So you're saying as a supplier of this I have some control over how long it takes. I can push my certification agency or whatever.

Mr. Michael Binder: Correct.

The Chair: Madam Lalonde.

[Translation]

Ms. Francine Lalonde: The apparatuses are important, but it's the licence that will enable a person to carry the calls.

• 1000

The bill states:

19.(1) The Minister may on application issue an international submarine cable licence to a person who is eligible under the regulations to hold the licence. Are these regulations available?

Ms. Millie Nickason: Yes, they currently exist.

Ms. Francine Lalonde: Even though the regulations are supposed to express the act, it's completely open. Can you tell us what the spirit of these regulations is when they say that the Minister issues a licence to a person who is eligible?

Ms. Millie Nickason: We're in the process of adjusting the regulations to ensure they are perfectly consistent with the bill and the new provisions.

Ms. Francine Lalonde: When you talk about persons who are eligible, will it be specifically stated that they must necessarily use the Canadian systems or whether they may bypass our systems? Those were important issues.

Mr. Michael Binder: Using Canadian systems is one of our fundamental principles.

Ms. Francine Lalonde: Then will this condition be attached to the licence?

Mr. Michael Binder: Absolutely.

Ms. Francine Lalonde: So it's important to have regulations because we don't see this assurance in the act itself.

Mr. Michael Binder: Yes, but we can't finalize the regulations before the act is formulated.

Ms. Francine Lalonde: You understand my view when I say it's very important to ensure that no one can go outside Canadian systems. You're telling me that no such provision appears anywhere in the act and that I should trust you since it's in the regulations. In any case, the regulations can't go further than the act.

Mr. Michael Binder: No, but this provision appears in the act itself. It doesn't have to be stated in the regulations. It's in the act and it's absolutely necessary and absolutely essential. No one may go outside the Canadian systems, even if they hold a submarine cable licence.

[English]

The moment you land in Canada to give traffic, to come in here to use Canadian facilities.... It's already in the law and continues to be in the law. We have not—

[Translation]

Ms. Francine Lalonde: I would like you to point out to me where this is.

My next question will be similar. The old act stated:

(c) prescribing classes of international submarine cable licences and determining the persons eligible to hold licences of any particular class.

Now it would seem to state instead "the persons who may hold licences of any particular class". What is the difference between these two wordings? Does this mean that, from now on, a person would not need to be a corporation?

Ms. Millie Nickason: Between the two provisions of the bill?

Ms. Francine Lalonde: Between a corporation and a person who is eligible.

Ms. Millie Nickason: The Telecommunications Act defines the word "person" and the definition is very broad. It includes corporations, associations and individuals.

Ms. Francine Lalonde: So you're saying it may include individuals who do not form a corporation.

Ms. Millie Nickason: It concerns a number of types of persons. Our objective was to broaden the groups of persons who would be eligible to obtain a submarine cable licence.

Ms. Francine Lalonde: Have you assessed the consequences? Wouldn't that be more dangerous for the consumer?

Ms. Millie Nickason: No, because the Minister will always have the power to set the conditions for obtaining licences to ensure that

[English]

the behaviour of the licensee protects the interest of the consumer.

[Translation]

Ms. Francine Lalonde: So we have to trust the Minister.

Subclause 46.6(1) states:

46.6(1) The Commission may require any telecommunications service provider to contribute, subject to any conditions that the Commission may set, to a fund to support continuing access by Canadians to basic telecommunications services.

Is this the only element we can find that permits a certain amount of accessibility? Are we to understand that if rates were considered too high, a fund could be established and compensation granted, as some have already considered doing within the national telephone system?

• 1005

[English]

Mr. Larry Shaw: It's important to separate.... Proposed section 46.6 refers only to a support mechanism to maintain accessible local rates. But let me separate that from the requirements in the Telecommunications Act itself that rates be just and reasonable. That is the primary area, the primary power given to the CRTC to ensure that rates are just and reasonable. This provision, proposed section 46.6, exists solely to provide an administrative mechanism with respect to the flow of subsidies in the system.

Again, previously subsidies have been handled exclusively by the telephone companies, because they're the only ones providing local service. All long-distance providers pay what's known as contributions to the telephone companies. So many cents per minute on a long-distance call go to the telephone companies, and that's targeted to support local rates.

We're moving into a competitive environment with many players both contributing and withdrawing from this fund. Therefore, it's important to have a third party administer that.

This is strictly with respect to the administration of the subsidy flows. I mean administration as a bookkeeping function. The actual rates, though, are set by the commission using its other powers under the Telecommunications Act.

[Translation]

Ms. Francine Lalonde: You're not reassuring me because consumers will generally see their telephone rates rise from approximately $12 to $27 between 1992 and 2002. These monthly rates are very high.

The companies answer—and I can understand them—that there is no monopoly now and that they now have to determine not only how they are going to make profits in the range of 11 or 12 percent, but also how they will adjust to the very large competitors who may come from the United States, for example. So now the competitive race is on. However, we know that competition tends to favour places where there is large volume, and that's true in the transportation field. But where there aren't many consumers, there may be increasing rates for everyone, and the CRTC's previous practice has not reassured us. So we can be quite concerned.

[English]

Mr. Michael Binder: The Telecommunications Act has a provision in it that we continue to have an objective of setting up affordable access to telecommunications services throughout the whole country. The commission is absolutely obliged to regulate with that intention.

In fact just very recently they've had extensive affordability hearings, where there was a lot of discussion just about your point, about affordability of telecommunications. And their conclusion was that as of today telephone services in this country are affordable and second to none in terms of service and quality of service.

Nevertheless, to worry about the future, they set up in place a system whereby the telephone companies have to report back to the commission, on a quarterly basis, on how prices are moving.

When and if the commission decides that telephone services in this country become too expensive, or people get disconnected, with this kind of provision the commission has the power to establish a mechanism to ensure that access in this country continues to be a priority.

[Translation]

Ms. Francine Lalonde: Is that what clause 46.6 provides for?

[English]

Mr. Michael Binder: That would allow them to set up a mechanism that permits the sharing of the cost of making sure everybody has this kind of access.

• 1010

The Chair: Mr. Ianno.

Mr. Tony Ianno (Trinity—Spadina, Lib.): Thank you very much, Madam Chair.

I guess I'm trying to figure out the intent of the bill. I gather it's to somehow get rid of monopolies and to make prices affordable for Canadians. Is that correct?

Mr. Michael Binder: Quite frankly, we view the bill as a very technical implementation of an international agreement. We do some of those things. We eliminate the final existing monopolies, but mainly we open up markets, internationally and domestically.

Mr. Tony Ianno: For whose benefit?

Mr. Michael Binder: We believe the benefit will be to Canadians because we're going to get competition and innovation.

Mr. Tony Ianno: So the intent of the bill is to somehow benefit Canadians—is that correct?

Mr. Michael Binder: It will also benefit the private sector, which will have new access to markets that were not previously available.

Mr. Tony Ianno: Is the bill then to benefit the private sector or Canadians?

Mr. Michael Binder: It will benefit all Canadians, including the private sector.

Mr. Tony Ianno: In other words, to benefit Canadians this bill is being brought forward so the monopolies will in effect disappear. Is that correct? Okay.

Then I see SaskTel still has a monopoly. Can you explain to me why this bill does not erase that if the intent of the bill is to help Canadians, and Saskatchewan residents are Canadians?

Mr. Michael Binder: SaskTel no longer has a monopoly in long distance. Long-distance competition was recently introduced.

Mr. Tony Ianno: Who introduced long-distance competition?

Mr. Michael Binder: In Saskatchewan there is now long-distance competition from AT&T, Sprint, and Fonorola.

Mr. Larry Shaw: They are all operating.

Mr. Michael Binder: They are all operating in Saskatchewan.

Mr. Tony Ianno: What about the local market?

Mr. Michael Binder: As you know, there is still an existing monopoly, but the monopoly exists everywhere. Nobody has yet entered into a true competitive local market. Hopefully they will be allowed to enter into the local market very soon.

Mr. Tony Ianno: Teleglobe has a monopoly and the bill is here to get rid of that monopoly. So as of today, until the bill passes the monopoly still exists. But the intent of this bill is to get rid of the monopoly. Is that correct?

Mr. Michael Binder: Right.

Mr. Tony Ianno: How will this bill help people in Saskatchewan so when the monopoly is gone, there is a potential for competition and their rates go down?

Mr. Michael Binder: Teleglobe is an international service. The Saskatchewan people will—

Mr. Tony Ianno: Canadians from Saskatchewan.

Mr. Michael Binder: Canadians from Saskatchewan, I assume, will get lower international rates because hopefully as competition is coming—

Mr. Tony Ianno: For Teleglobe, right?

Mr. Michael Binder: Yes.

Mr. Tony Ianno: What about their local services when they want Internet and all the rest of the stuff that is required?

Mr. Michael Binder: When competition comes into the local markets throughout the country, not only in Saskatchewan, hopefully the consumers will benefit.

Mr. Tony Ianno: Does this provision that says until October 1998 not still protect the monopoly there?

Mr. Larry Shaw: I think it's important to separate the so-called monopoly from who regulates SaskTel. The provision in the Telecommunications Act, section 133—

Mr. Tony Ianno: Requires Teleglobe to be a part of the CRTC.

Mr. Larry Shaw: No, that's SaskTel, not Teleglobe. It means SaskTel isn't regulated by the CRTC.

Mr. Tony Ianno: I understand, but with the bill, Teleglobe—

Mr. Larry Shaw: The bill doesn't affect that.

With respect to the monopoly in Saskatchewan, as Mr. Binder said, there's already competition in long distance. The Government of Saskatchewan, as the regulator of SaskTel, has started a process that is intended to lead to competition. Whether it does or not is another question.

Mr. Tony Ianno: The CRTC, as Mr. Binder said, has a provision in there that accessibility and affordability are major considerations and it has the power to do something with them. Since SaskTel is exempted from being part of the CRTC, how does that provision fit for it in Saskatchewan?

Mr. Michael Binder: In section 133 there's a provision for terminating this in October 1998.

Mr. Tony Ianno: There are the usual regulatories, right? Why will it terminate then and not now?

• 1015

Mr. Michael Binder: That was an arrangement that was agreed to when the bill was introduced and passed in the House. Saskatchewan received a five-year exemption.

Mr. Tony Ianno: Was that 1992 or 1993?

Mr. Larry Shaw: It was 1993.

Mr. Michael Binder: Yes, 1993.

Mr. Tony Ianno: What was the reason for that? Were you there? Did the department have an understanding as to why that existed?

Mr. Michael Binder: It was felt that Saskatchewan was not ready at that time. It was a crown corporation. It had to get its own house in order, and it was decided to allow them a five-year transition.

Mr. Tony Ianno: And once October 1998 comes forward, is it automatic that they are automatically under the CRTC, without anything else required?

Mr. Michael Binder: No, it's required that the government passes an order in council.

Mr. Tony Ianno: Why doesn't part of this bill change the words “until October”—or at least “1998”—to “once”, so that when the five-year agreement is over, it's done with and they are therefore under it?

Mr. Michael Binder: It's in the bill right now. There is a provision in section 133 saying that the moment the government passes an order in council, the Telecommunications Act applies.

Mr. Tony Ianno: What I'm asking is why it isn't in the legislation that in October 1998 it doesn't happen automatically without a government order in council.

Mr. Michael Binder: That was the original intent. That was the original bill. It would be reneging on an agreement that runs to October 1998.

Mr. Tony Ianno: And what was the agreement?

Mr. Michael Binder: The agreement was to exempt them for five years from the CRTC, and to then kick in this exemption with a government approval. In other words, it's not automatic that it requires government approval. The idea was that the two governments, the Government of Saskatchewan and the Government of Canada, will reassess the situation to determine—

Mr. Tony Ianno: So the agreement of the 1993 Tory government was that in 1998 the new government will assess whether or not an additional exemption should exist. Is that what you're saying?

Mr. Michael Binder: You're putting words.... It will pass an order in council.

Mr. Tony Ianno: Who will pass the order in council?

Mr. Michael Binder: The Government of Canada must pass the order in council.

Mr. Tony Ianno: They're trying to get rid of the monopolies with this piece of legislation, which is new, which is today. Is that correct? Why doesn't the Government of Canada put that in there in such a way that it says that in October 1998 all other exemptions are gone, that nothing else is required in the legislation? Why doesn't it say that we are passing this and are getting rid of monopolies, in being in with CRTC regulation, so that affordability and accountability and all the rest, which is standard throughout Canada, exists without any additional government action?

Mr. Michael Binder: The simple answer is that the original agreement with the Saskatchewan government was for this particular clause. In other words, this will be done at the government level, not through legislation.

Mr. Tony Ianno: But it was in 1992 or 1993 when that happened, right? What you are now presenting, or what the government is presenting, is a new bill.

The Chair: Mr. Ianno, with all due respect, we are getting into a policy question, which is not really in the realm of the civil servants to answer. It's probably a question best directed towards the minister himself.

Mr. Tony Ianno: I only have one question, Madam Chair. If it is to be a policy, that's fine. But what I need to know is whether or not the previous bill of 1992 or 1993 states that the only way the exemption can be gotten rid of is by order in council. At that point, since a new government is in place, the question I have is whether or not that 1992 or 1993 agreement forces the government to not be able to introduce this new bill. If that is the case, why don't we wait until 1998, when we have the freedom to do everything?

The Chair: Well, that again is probably a policy decision more by—

Mr. Michael Binder: However, there's a technical issue here. The agreement, as the bill constitutes right now in section 133, is an agreement entered into by two governments. I find it a bit strange that you want to unilaterally change this agreement.

Mr. Tony Ianno: No, I'm not saying to change it. I'm saying that once it runs out, this is how it's going to be governed. You put “October 1998” in there already so that when the agreement runs out there is no requirement for an order in council. It's automatic in the legislation.

Mr. Michael Binder: All I'm trying to say is that part of the deal was that it will not be automatic. It will be under government consideration. That was the original deal.

The Chair: That's part of the agreement—

Mr. Michael Binder: Right, that's part of the agreement.

The Chair: —so we'd be unilaterally changing the agreement to have that.

• 1020

I just want to let committee members and witnesses know that we're concerned about the issue of SaskTel, although it's not part of the legislation before us, because a number of witnesses are looking at it as part of the things they want to bring up.

It's outside the parameters of our committee to amend part of a bill that's not before us. Let me just make committee members aware that section 133 is not before us. It is not part of the legislation. We don't have the authority to amend that section.

We are asking the questions now as to why they were admitted so that we have an understanding of the witnesses who are going to come before us. We're not going to try to get into something that's not before us. I appreciate Mr. Ianno's questions because I had some of the very same questions about why they were excluded.

With that, are you finished, Mr. Ianno?

Mr. Tony Ianno: I am. Thank you.

The Chair: Mr. Power, do you have any questions?

Mr. Charlie Power (St. John's West, PC): I'll just ask one simple question. With respect to the whole effect of this, is it actually going to cause consumers, either households or businesses, to have an increase or a decrease in rates?

Mr. Michael Binder: I would hope you would see a decrease on an international level.

Mr. Charlie Power: A decrease?

Mr. Michael Binder: Yes. Again, it's a mug's game to get into the forecasting business. My assessment is that when there was competition in practically every place where there was a monopoly, as that monopoly was replaced by competitive markets, prices went down.

Mr. Charlie Power: And domestically?

Mr. Michael Binder: Domestically, we already have some pretty intense long-distance competitive services, as you are aware. I don't know how much room there is. That may have a marginal impact here. Still, I believe that in the long run you're going to see more services and more innovation. Again, the consumer will benefit.

The Chair: Thank you.

Mr. Lowther, do you have another question?

Mr. Eric Lowther: I was just wondering about the licensing part of it. I think we're all starting to appreciate the complexity of the industry. I certainly understand that it can be a bit frustrating to sort through some of these things. Having worked in this industry for a while, I know that once you get into it it's hard to get out of it, because you're the only guy who understands it. And I'm not saying I'm there, but on the licensing part of it, you said that we need the licensing to create a level playing field. Do we not have a level playing field today?

Mr. Michael Binder: What we have right now is a monopoly in international services. All the rest of the reseller service providers have to go through that monopoly. What we're doing is removing that monopoly. Therefore, the market itself, the structure of the market, will be different. There will be all kinds of new service providers, presumably, that will provide international service.

Therefore, the question is how one ensures that all those new entrants and existing providers have the same rules of the game. That's what we're trying to do.

Mr. Eric Lowther: Is licensing the only way, then, to create a level playing field once this monopoly is dissolved? We have a level playing field today without licensing. Can we not, through CRTC authority and the act and all the rest of it, continue to have a level playing field without licensing?

You still have the authority under the act. If you have someone out there who isn't following the rules that you lay down—or I guess we're concerned about this Canada-Canada bypass—who is breaching the rules, then deal with that specific case, rather than putting in place this new regime of licensing for the intent of, as I understand it, creating a level playing field.

Have you thought of a less onerous way to do this? It seems like we're laying another bureaucracy on top of the existing one we have. We have a set of regulations and powers already given to the CRTC, the industry, the commission and everybody that are quite broad and sweeping. Now we're coming up with another level here. Is that really necessary for the level playing field?

• 1025

Mr. Michael Binder: Let me answer you this way. One way of assessing how you're doing is your benchmark—your behaviour against some of your partners internationally. Every country with any significant traffic between Canada and that particular country is a licensing regime, including our friends to the south. You cannot just walk into the United States and deliver international traffic without going before the FCC and getting a licence to do so. You can be a reseller and do whatever. It doesn't necessarily mean that is a heavy-handed regulatory regime.

I would argue that by removing the monopoly of Teleglobe you will simplify. Enforcing a monopoly service wasn't very simple because you couldn't monitor what resellers were doing and there was a lot of bypassing. You had to go before the CRTC and complain and get into a real debate.

What we have in mind here is a very light regulatory regime, almost registration, where we will ask a service provider to abide by the intent of the law to use Canadian infrastructure where it should, etc. Then it will be a free market, more or less. So we're viewing it as a very light regulatory regime.

Mr. Larry Shaw: If I may add to that, it's important to recognize the form of licensing. Licensing can be extremely onerous or not. The intention here is that it be an open-entry regime—as Mr. Binder said, registration—and that there be class licence conditions. There won't be individual licence conditions for the members of the class; there will be a set of conditions that all members have to respect. Presumably that list of conditions would be quite limited. It wouldn't be specifically designed for individual companies.

Mr. Eric Lowther: I appreciate that it gives some measure of control. These licences will need to be renewed. It says in the legislation that the terms of the licence can be changed at the discretion of the commission at any time. There's no time limit on that.

I'm hearing that because other countries use licensing, we should use licensing to create this level playing field. I understand that your intent is not for it to be onerous, although there's certainly nothing that would constrain it from not becoming onerous when I look at the legislation. That whole part of it makes me a bit nervous.

Let's go beyond that. Do you foresee a day when we won't need this licensing? I understand you're saying the intent of this licensing is to ensure a level playing field and to ensure we protect Canadian facilities so Canadian facilities only carry Canadian telecommunications traffic. We will pull the licence of anybody who doesn't do that, and that's our control.

We look at some of the new technologies with the Iridium satellite networks and things. We're going to have digitization in a satellite environment and convergence and all those other good things that are happening in this industry. Do you foresee the day when trying to ensure through licensing that all telecommunication traffic flows on Canada terrestrial networks will be impossible? This licensing thing sooner or later will fall apart just because of the drive of the technology itself, for one thing.

Mr. Michael Binder: You're painting an ideal world and I hope maybe in the future we can reach it. But I must tell you that if this is predicted to become a global business, you must make sure behaviour here is such that everybody is playing by the same rules. We have already had experience with people abusing the current regime, which is heavily regulated, yet people abuse it. We had some significant abuse, and we're very aware of that, but having the heavy regulation didn't prevent that abuse.

• 1030

If you open up markets, increase the number of players, increase competition, get into international bilateral arrangements, I am not as convinced that everybody will play by the same rules internationally. What we are trying to do is make sure that everybody entering into our country understands the rules. That's really the intent here.

Mr. Eric Lowther: In regard to the consumer and the question that was asked earlier, what if we didn't protect the Canadian networks with what we're trying to do here? What if we just said that whoever wants to come in here and wants to route their calls however can do so, that they don't have to route them through a Canadian network, while at the same time we are proactively leaving Canada and are expanding our own networks internationally in other markets, with the WTO as sort of the referee for any concerns that exist?

What I'm concerned about is the protection of Canadian networks. What is that doing for the consumer? Is it artificially inflating the cost for him? We're saying that we're opening this up to competition, yet we're making sure the Canadian consumer does not have access to a truly global service at the same time. He is forced to have his calls carried on a Canadian network.

We have one of the best telecommunications operations in the world. We keep lauding it. In fact, in our hardware side of it we export 70% of our manufactured product. I think we could do well on the international stage, and the international stage may do well here, yet this protectionist approach through licensing in order to ensure that all the incumbent players have a captive market potentially could be detrimental to the end consumer. I suggest to you that sooner or later, just due to the technology, you're going to have a very hard time trying to hang on to this licensing control approach that you have today.

Mr. Michael Binder: You're quite right that we are going through a transition period. It was only in 1992 that we started long distance competition. In five years, look at where we are now. I would surmise that we will be in a much more competitive world five years from now. All we're trying to do is create a transition period that will be the least harmful to everybody, including our consumers, and that will also allow us to make sure that the oversight to our government is very light.

I know where you're coming from. I think we have the same intention, and that's to be very light in regulating here. Nevertheless, when you're facing another administration internationally, one that uses certification excuses to prevent entry, it would be nice to have a legal basis, a double-edged sword to use with them if they want into Canada.

I can tell you that with our present communication level, as Allan explained, our tightening approval, we've never had any complaints. The industry itself approved those things. We just certify the industry's certification authorities. It's never been a problem, really, so the bottlenecks will not be in Canada. Any foreign country that wants to export to Canada had better open their markets to our products.

Mr. Eric Lowther: I guess that's exactly where I'm coming from. If we have the WTO there anyway, and if we have players that have signed on to the agreement, I would suggest that maybe that's the direction this should be going. If you're a WTO member and you've signed on to the agreement, that means you allow access into your own country without licensing regimes, as we would reciprocally. Only those players who are not part of the agreement would be required to take on a licence when they come here, because they haven't given us access there.

This is sort of similar to the whole tariff argument. Protective tariffs sometimes may limit the strength of our own industry in the sense that it becomes dependent on a captive market as opposed to fully entering into the global market.

• 1035

I think this industry is one of our best and is probably more capable than any other industry we have. Yet we continue to kind of do the protectionist thing on the world stage because everybody's got their licensing hurdles that everybody has to jump over. However, we have the opportunity through the WTO agreement to get past that.

Now that I've had a chance to express my opinion, do I have a question?

The Chair: Madam Lalonde, please.

[Translation]

Ms. Francine Lalonde: I have some comments about the remarks by my colleague, who, I believe, feels, like Jean-Jacques Rousseau, that man is a noble savage, but that is not the case. We can see how hard it was for Teleglobe to obtain a restricted licence in the United States.

Nor should it be forgotten that Teleglobe is an asset that was built up with the money of Quebeckers and Canadians and which went private. Teleglobe was originally, and later became, very efficient while remaining very public and a Crown corporation. We should not throw everything up into the air according to this new magic of globalization.

My question concerns perhaps the other side of the question asked by my honourable colleague. By liberalizing as we are doing and thus by becoming less able to exercise direct control over a company that holds a monopoly, how will we be able to continue to protect privacy and personal information?

I went to Teleglobe and I saw a demonstration of international call switching. It's amazing what they know. If they can know what they know, imagine what any competitor will be able to know in five years, without even listening in, which I won't even talk about.

It seems to me that protecting personal information is an extremely urgent matter because it is ultimately consumers who make the profits of these large businesses possible. As far as I know, the air waves are public and are one of the rare public assets, like water.

Perhaps you can't give me a precise answer, but you can at least say yes, I agree with you.

Mr. Michael Binder: I agree with you completely. But that's our bill; that's our intention.

Ms. Francine Lalonde: I can hardly wait because we're always told yes, yes, yes, and that doesn't happen often.

Mr. Michael Binder: Yes, but we are trying to study this problem and to intervene.

Ms. Francine Lalonde: Thank you.

[English]

The Chair: Thank you, Madam Lalonde.

Mr. Lowther, you had a brief question.

Mr. Eric Lowther: Yes. I'm coming back down from outer space and the lofty drivers of this whole industry to kind of a nuts and bolts issue in proposed section 69.3, which deals with the telecommunications apparatus and the approval process for the acceptability of this apparatus on the networks.

I'm just curious here. It seems that in proposed section 69.3 we're going beyond just the approvability of the material. When I look at proposed paragraph 69.3(1)(f), it says:

(f) that the Minister considers appropriate respecting the present and proposed use of telecommunications apparatus in question;

So it seems like we're putting sort of an unnecessary regulatory and filing burden on industry participants here. It's not only whether it's acceptable, but you also have to file in detail how you plan to use it.

Couldn't we pare this back? What are we going to lose if we pare that back and take that out of the legislation?

Mr. Michael Binder: The only thing I can offer you here is that we've had ten years' experience with another piece of legislation, the Radiocommunication Act. I think that subject to legal counsel's advice, we almost borrowed some of the wording from that act, because it's been around for ten years and we rarely, if ever, get any complaints. It seems to be a reasonable approach to use something that's been working rather than creating something new.

• 1040

Mr. Eric Lowther: If I can just make a closing comment, Madam Chair, I think it's really a good idea that we have a number of witnesses from the industry who intend to come and speak to this committee. We have an excellent representation from the industry department group here, and I believe they are putting forward a good case, but I think we also need to hear the other side of the story from industry to get the full picture. I would certainly concur that we need to give them a full hearing in the days ahead.

The Chair: Thank you, Mr. Lowther.

Madam Lalonde, you have one more question.

[Translation]

Ms. Francine Lalonde: Yes, I would like to make one closing remark. I was talking with one of those bigwigs in the industry— not the international telephone industry—and I told him that he was singing the praises of the magnificent information highway. I mentioned that, for the moment, an hour and 15 minutes from Montreal, we can't get access to the Internet and that it isn't heavy competition that will make companies rush in to provide three systems in St. Whozits. I told them that would take regulation and he answered, "Yes, Madam." So they'll say "Yes, Madam" because competition tends to favour places where there's volume, whereas the matter is quite different where there isn't any. Except for satellites, which we'll talk about again later.

Mr. Michael Binder: We could talk about them. The Internet will be available everywhere. We submitted...

Ms. Francine Lalonde: We'll see what it will cost.

Mr. Michael Binder: It's a new...

Ms. Francine Lalonde: Sympatico is advertising the Internet and we can't get access to it. I know they're in a hurry, but every time I tell them that, they turn red. It's coming, apparently.

[English]

The Chair: Madam Lalonde has raised an interesting question about the Internet's actual cost. Is it going to be available to all Canadians? I live in what's considered a very urban area, although it's a rural-urban riding, and there's only long-distance Internet available in certain parts of my riding, which is astounding if you consider the proximity to a large group of people in neighbouring Michigan.

But setting that aside, I have two quick comments and questions for you. We need to know if there's a time line on this legislation. There seems to be some suggestion that the international agreements that we're a part of require us to have legislation in place by December 31. Is that correct?

Mr. Larry Shaw: The short answer is no. We have a number of commitments under our GATS agreement that kick in at various times. The commitments in this legislation pertaining to Teleglobe must be in place by next October 1 or we're in breach.

Having said that, though, subject to the will of Parliament it would definitely be preferable to have this legislation in place by January 1 or as soon thereafter as possible, in part because of some of the other measures in here. For example, we talked earlier about the numbering. It would definitely be preferable if the numbering administration provisions were in place as soon as possible to permit the industry to get on with their plans for number portability. We recognize that the House is very busy, but—

Mr. Michael Binder: If I may, let me add also that the business community likes certainty and as much advance notice as possible because there are a lot of technical regulatory and planning issues that have to be worked out. And so does the CRTC. There will be this light regulatory oversight, and the CRTC will probably want to consult extensively as to how you do that, etc. So all of this augurs early passage.

Mr. Larry Shaw: I should add, Madam Chair, that the CRTC has already begun a full public proceeding on international services in anticipation of both the end of the Teleglobe monopoly and the licensing of international service providers coming into effect. Again, it's anticipatory. They recognize that the bill may not become law in exactly its present form, but they've started that process, and the kind of certainty industry needs would certainly be aided if this did become law at an early as opposed to a later date.

• 1045

The Chair: Finally then, due to the fact that some of these agreements don't take place until October, this discussion about SaskTel may become irrelevant in some ways in parts to this bill. If the plan is that this bill won't really be enforced until later in the year, if we're giving advanced notice to business then they'll have the same notice as everyone else. Am I missing something?

Mr. Michael Binder: Are you asking whether it would be nice to give advance notice on SaskTel?

The Chair: In asking for the time line and the response being that it's not necessarily going to be in effect January 1 even if the legislation is passed, it's more of advanced notice to the industry for a date later in the year.

We're talking about a time line, if I understood the conversation right, and witnesses are concerned about the federal policy on SaskTel and the fact they have this five-year exemption. Their five-year exemption ends in October. I'm just trying to correlate the time lines here, and some of the comments are that some of this won't be in effect anyhow until later in the year of 1998, in January. If their exemption ends at some time in 1998 by order in council, then we're looking at a few months maybe in difference if you're telling me that when their exemption ends they come under all policy. Is that correct?

Mr. Michael Binder: I would like to point out that the two issues are really separate. The SaskTel issue has its own track; it's already cast and the government is reviewing the situation as we speak. It has nothing to do with this bill. With all honesty, this bill is independent of the Saskatchewan file. I would argue that putting the two together will not yield any positive or faster results.

The Chair: To clarify one last point then, SaskTel in any agreement that they enter into would not be in conflict after October of 1998 with anything we're doing here?

Mr. Michael Binder: No. Everything is consistently laid out here.

The Chair: So we should try to separate the two as much as possible through the committee hearings.

Mr. Michael Binder: Right.

The Chair: We will do that then.

Thank you very much, Mr. Binder, Mr. Shaw, Mr. MacGillivray.

Mr. Michael Binder: Thank you, Madam Chair.

The Chair: We'll adjourn to the call of the chair.