STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, December 13, 1999

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I'm going to call the meeting to order. We're dealing with Bill C-276, an act to amend the Competition Act, 1998, negative option marketing.

We're very pleased to have with us this morning Action Réseau Consommateur. We have Madam Nathalie St-Pierre, director general, and Mr. Philippe Tousignant, analyst, policy and regulatory affairs, telecommunications, information highway, and broadcasting. That's a long title.

We'd like to start with your opening statement, and then we'll move to questions.

Madam St-Pierre.

Ms. Nathalie St-Pierre (Director General, Action Réseau Consommateur): May I ask a question?

The Chair: Sure.

Ms. Nathalie St-Pierre: I'm a bit curious and maybe disappointed to see that there are not more members. Was this scheduled at the last minute?

The Chair: In fact, to hear witnesses we need only have three members. That's a quorum we passed a long time ago, and we've often heard witnesses with three or four members. There will be more who come in. Some have different commitments, and it's Monday morning so some are still flying in. We don't normally meet on Monday mornings, but because of what happened last week we had to reschedule from Thursday to today. There are votes scheduled, though, in the House today, so we're going to have to begin because we could be called out for a vote. There will be more members coming in as we go on.

Ms. Nathalie St-Pierre: Okay. Thank you.

[Translation]

We would like to thank you for inviting us. Action Réseau Consommateur is an organization that has existed since 1978 and represents consumer associations in Quebec. Our organization was formerly known as the FNACQ, the Fédération nationale des associations de consommateurs du Québec.

We have been around for over 20 years, and we have been working for about the past 10 years on issues relating to regulation, the CRTC and the phone industry. Our aim is to improve public policies, especially those that affect people with low and modest incomes. Entitlement and access are at the centre of our concerns.

Although we will be making some recommendations today, this bill to prohibit negative option billing is extremely necessary. The right to chose, the right to compensation and the right to informed consent are fundamental rights in our society. They have been recognized by Consumers International and are the subject of UN guidelines. These are our priority issues. We have chosen to take a very practical approach and deal with the bill section by section. Mr. Tousignant and myself will spend the next few minutes reading our brief.

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We would like to begin by acknowledging that, in certain very specific cases and special conditions, the public interest can take precedence over individual consumer choice. That means that nuances are acceptable in certain cases, particularly for the purposes of cultural affirmation or the promotion of the French language, for example. Bill C-276 makes provision for these circumstances and we feel that the proposed amendments are a step in the right direction.

One sticking point is that of jurisdiction. It should be noted that the commercial practice of negative option billing violates section 230(a) of Quebec's Consumer Protection Act and is therefore illegal. We recognize the provinces have a role to play, in particular regarding contracts that come under provincial authority.

That said, we acknowledge the position of the Competition Bureau, which, firstly, proposed that some legislations originally subject to Bill C-276 be exempted and, secondly, pointed out during its appearance before this committee that the Bank Act, the Telecommunications Act and the Broadcasting Act are federal statutes. We have no intention of debating this issue here. It is up to you, as parliamentarians, and to the governments and the courts to resolve this matter, if necessary. Since our primary concern is consumer protection, regardless of jurisdiction, we feel that all parties must join forces to eliminate this unacceptable practice.

Mr. Philippe Tousignant (Analyst, Policy and Regulatory Affairs, Telecommunications, Information Highway and Broadcasting, Action Réseau Consommateur): I will now deal with the bill itself and present our recommendations and comments on the various sections, while trying to be as brief as possible.

Subsection 74.051(1) deals with the definition. Although we accept the idea, as Ms. St-Pierre mentioned, that it may sometimes be in the public interest to impose choices on consumers that have been made as a result of public debate, we do not feel the door should be opened wide to exemptions that would be determined by the governor in council, as proposed in section 128. We therefore believe that it would be preferable to limit possible exemptions, unless public hearings are held allowing participation in these decisions. We shall return to this point later.

The following section defines what is meant by new service. This definition may be confusing, and it is difficult to understand exactly what is understood by new service. We recommend that the bill be amended so that this definition is clear and applies not only to the creation of a service that did not exist before, but also to anything that adds to, changes or eliminates an existing service.

Paragraph 74.051(2)a) sets out conditions, which we support. We feel that consumers need to be well informed if enlightened consent is to be obtained. Since it is widely recognized that inserts provided by suppliers are not usually read, we are satisfied with the provision in Bill C-276 that consumers must be notified three times, not once.

We recommend that the bill also clearly provide that the notice should be sent on a separate sheet, printed in at least 12-point type, and indicate the consumer's situation before and after the changes, additions or eliminations being offered by the company. Consumers must be able to make comparisons quickly, without having to go to undue trouble, such as phoning the bank to see how much they are already paying. Moreover, it must be clearly indicated to consumers how they need to respond, the deadlines, etc. Consumers must have to sign to confirm that they accept the offer; otherwise—and in this regard we applaud the bill—there will be no changes, additions or eliminations with respect to the current contract.

Express consent is dealt with in paragraph 74.051(2)b). In our view, this is the heart of the issue. Overall, subject to the conditions mentioned above, we feel that the bill does allow consumers to make informed choices and act accordingly.

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In order to take into account new services, such as the Internet, fax machines and even the telephone, we recommend that the same rules and constraints apply. For example, if consent for a new offer is given by telephone, a paper copy should be sent and if consent is given over the Internet, a printout should be provided for the consumer's records. The notice, whether sent by mail, fax or E-mail, should contain the information recommended above.

If consent is requested by telephone, the person making the offer should read a notice including the information about the new product but also describe the existing contract, so that consumers can make comparisons. Consumers should be allowed a 7-day period to cancel their acceptance. If the consumer takes no action, the offer can be deemed to be accepted.

Another issue now under discussion, especially at the provincial level, is electronic signatures and steps should be taken soon to ensure that electronic documents and signatures can be validated. Harmonization should be carried out as quickly as possible.

Paragraph 74.051(3)a) deals with replacement. We recommend that this paragraph be withdrawn. Our concern is that it opens the door to too many breaches of the law. A company should not have the right to change the provisions of a contract just because it wants to and for no valid reason, once it has been signed by a consumer. Let us take the case of a customer with a bank account that allows 15 electronic transactions and 3 cheque transactions per month for a certain monthly fee. Suppose that the bank decides to change the offer, reducing the 15 electronic transactions to 8 but, in exchange, allowing 7 additional cheque transactions for the same monthly fee. Since there would be no change in the monthly fee, the bank could make this change without consulting the consumer. That is unacceptable. In order to retain the original package that suited him, the customer would have to choose another type of account that will cost more.

Although this clause may have been included in anticipation of cable companies replacing all channels with new ones for the same monthly cost, we do not consider it appropriate, since the bill already provides for exemptions for this industry. We also know that consumers do not appreciate having optional channels withdrawn from basic cable service and replaced by others, at the cable company's discretion, since the channel that was withdrawn is often placed in another tier that will cost consumers more if they wish to maintain their original line-up.

Paragraph 74.051(3)c) deals with prescribed provision or sale. We recommend that this clause, too, be withdrawn. If the bill is to protect consumers from abusive practices by the industries subject to the three acts, there is no need for this type of clause. Ironically, we claim to live in greater openness, deregulation and globalization, and that a multitude of services are offered to consumers.

These industries constitute a powerful lobby in comparison with public interest groups. If a clause in the bill enables the government to amend its own legislation to limit the scope of Bill C-276, we will not have gained much. In our opinion, the Department of Finance will be quick to propose amendments to its legislation to exempt certain banking activities. We cannot accept having the bill watered down in this way.

Where the Broadcasting Act is concerned, we feel that the provisions of proposed section 128 are adequate to allow some limitation of the scope of Bill C-276 in the public interest.

Paragraph 74.051(4) covers consumer waiving of regulatory notice. We are firmly opposed to this clause. In our view, it must be withdrawn from the bill if we want to achieve consistency with the spirit of this legislation. If consumers are allowed to waive in advance things that they do not even know about, they are automatically deprived of their right to be informed, their right to choose and their right to give informed consent. Moreover, allowing new consumers to waive their rights, as Mr. Swedlove suggested, should be illegal.

Finally, the Competition Bureau has said that

[English]

negative option marketing is not a pro-competitive marketing strategy.

[Translation]

Why, then, allow consumers to waive their right to receive information and to make informed choices about services?

I will now ask Nathalie to conclude our presentation.

Ms. Nathalie St-Pierre: We are almost finished. The last aspects we would like to go into concern the complaint process, penalties and the role of the Governor in Council.

We are concerned about having a process that needs to be initiated by consumers. It seems to us that a single complaint should suffice for a review. Given the high rate of illiteracy, we recommend that consumers be able to lodge complaint orally.

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Since the Competition Bureau is not well-known, consumers may have difficulty contacting it. There are already a number of ombudsmen, agencies and organizations to which one can complain and it is becoming increasingly difficult to know who to turn to. We recommend that the bill require all these organizations, including the CRTC, the Cable Television Standards Board and consumer protection agencies, to report all consumer complaints to the Competition Bureau, whether they are resolved or not, so that we can have a clear picture of the situation. Bill C-276 should also require that a person responsible for enforcing the legislation be identified.

In the final report it submits to you, the Competition Bureau should make public all complaints brought by consumers and not just those received by the Bureau. The report should also be made public on request and include the names of all companies that were the subject of consumer complaints.

I will now look at the issue of penalties. We find it of concern that there is never any mention of compensating consumers who complain. There should be provisions for a reimbursement or a return to the same conditions that existed before the new services were offered. We would have liked to see each individual offence give rise to an order under 74.1. For example, 154,000 offences should result in 154,000 possible fines, although we know that will not be the case. If the aim is really to protect consumers that will not be the case if the only benefit they get from lodging a complaint is to be told that those who violated the rule were given a little slap on the wrist. There must be fines and consumers must have their previous conditions reinstated.

Finally, we will look at the role of the Governor in Council. We recognize that the CRTC and the departments have a role to play. It is important to maintain the CRTC's role, since its presence guarantees us a process that is less political and more legal in nature, and provides some flexibility. Since we are dealing here with a whole new bill targeting industries that are not necessarily regulated in the same way, it is reasonable for the Governor in Council to have some role.

Paragraph 128(1.1) sets out a criterion of allowing enterprises to which the section applies to remain competitive in their sector of activity, provided that the exemption does not deprive consumers of their right to competitive prices and product choices. But who is going to do that and how? That criterion will be interesting. We recommend that there be a public debate, as is already going on at the CRTC. Public hearings should be held, which would be followed up by a recommendation from the Governor in Council. This exercise would take place in an interesting framework. Unfortunately, where the Bank Act is concerned, there are no such requirements, which is a gap that should be addressed.

We support paragraph 128(1.2), since we recognize that the Governor in Council and the Minister of Canadian Heritage may have a role to play, given that it is sometimes in the public interest to impose choices. We believe, however, as we said earlier, that there should be public debate and that the bill should be amended to take this into account. Publication in the Canada Gazette is inadequate. Citizens need to have an opportunity to participate and debate the issue.

Although we have made recommendations and suggested that certain clauses be amended or withdrawn, we respectfully submit that this is a necessary piece of legislation. I would have liked to have the most recent copy of our analysis before me, which I have just received.

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If consumer protection is central to your concerns, as it is to ours, we feel that negative-option billing must be halted, regardless of the final form of the bill. Thank you.

[English]

The Chair: Thank you very much, Madam St-Pierre. Now we'll move into questions.

Mr. Penson, please.

Mr. Charlie Penson (Peace River, Ref.): There are a number of detailed recommendations that you've made, and once the committee has a chance to translate the brief, I'll be happy to have a look at it and review it from that perspective. I have no questions at the moment, though.

The Chair: Mr. Brien.

[Translation]

Mr. Pierre Brien (Témiscamingue, BQ): I would like you to give us some examples of abusive practices or negative-option billing that you have seen in the past.

Ms. Nathalie St-Pierre: We know that Videotron, in 1997, intended to introduce a new tier and launch new services. There was a great deal of dissatisfaction, which is difficult to quantify, since even the calls that we made to Videotron for information were not answered. We know that consumers called us and called the Consumer Protection Office as well as Videotron.

The problem is that the situation is often resolved by an offer of reimbursement. When people complain, they are reimbursed. No complaint as such is registered, since the customer is considered to be satisfied. That is one example.

There are other examples in other areas, but none of the institutions is required to keep figures on the number of complaints received. Therefore we have no real measure of the situation.

Mr. Pierre Brien: Videotron, like the other companies, comes under the Consumer Protection Act. If what they were doing violated this statute, the individuals concerned had recourse. In fact, there was almost a court case.

Ms. Nathalie St-Pierre: There was one. There was a class action suit—

Mr. Pierre Brien: But it was settled out of court.

Ms. Nathalie St-Pierre: That was settled out of court, yes.

Mr. Pierre Brien: So there was legislation and people had recourse, because negative-option billing was a prohibited practice. If it was authorized by the Consumer Protection Office and people were unhappy with that decision, they did have somewhere to turn because there was legislation in place.

Ms. Nathalie St-Pierre: Exactly.

Mr. Pierre Brien: In concrete terms, what will the bill change in Quebec?

Ms. Nathalie St-Pierre: There may be recognition that the Consumer Protection Office has jurisdiction in this area. I think that the Competition Bureau maintains that the federal government has jurisdiction with respect to banking and telecommunications.

As we said in our opening remarks, this is an issue that should be debated by you, the politicians. Our concern is with consumer protection. If the Consumer Protection Office does not get involved in the banking sector, for example, then we will support adoption of a bill that will enable us to take action and get that practice prohibited, at whatever level is applicable.

Mr. Pierre Brien: You are a watchdog organization involved in consumer protection in Quebec. At the present time, do companies under federal jurisdiction and subject to this bill comply voluntarily with the Consumer Protection Act or are they forced to do so?

Ms. Nathalie St-Pierre: They do not comply with the Consumer Protection Act.

Mr. Pierre Brien: They are governed by the Consumer Protection Act.

Ms. Nathalie St-Pierre: In principle, they are, but in reality, they do not comply with it. Videotron launched channels and used negative-option billing, and the Office did not—

Mr. Pierre Brien: The company could even be violating a federal statute, but in that case, there would be a means of recourse. If Videotron commits an offence under an Act.... I cannot claim that the company is currently in that situation, since there was no court decision because the issue was settled out of court. So there was no legal ruling. However, Videotron was subject to legislation.

Four specialty channels will be launched in January. The CRTC has given its approval, but the channels will not be launched if the Consumer Protection Office does not give the go-ahead. That is a case of negative-option billing.

Ms. Nathalie St-Pierre: Yes. The provinces, including Quebec, can decide to enforce their laws, as it is within their jurisdiction to do, in the banking field and, in some cases, in the telecommunications field. Consumer advocacy and protection organizations that come under the government do not necessarily enforce the laws in the same way.

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We want consumers to be protected and, as an organization, we want it to be easier to have the law enforced. That is our objective for the time being.

Mr. Pierre Brien: I have another question. I do not agree with you that the law is not being enforced. They are subject to the Act, and there are two Supreme Court rulings to that effect.

As far as the CRTC's independence is concerned, I am rather surprised to see a consumer protection organization supporting the exemption clause proposed in this bill. Theoretically, the Minister can grant an exemption and allow the use of negative-option billing if, for example, the Minister feels that it is important from a cultural point of view to have more French-language channels. That exemption may be granted to a channel that has already obtained a licence.

But it is the CRTC that grants the licences. It would therefore be called on to decide on the licence without knowing whether an exemption will be granted afterwards. The CRTC told us here that discussions would be held with the government prior to or during the licence hearings to find out whether exemptions would be granted or not.

Do you not find it a bit strange that a regulatory body, which makes quasi-judicial decisions, would be called on to negotiate with the government or that this constitutes a kind of political interference? You want these decisions to be made independently on the basis of public debate, as during the CRTC hearings. Regardless of what you are saying, you want there to be public debate, which is not the case when decisions are made by the Cabinet.

Public debate is a legislative parliamentary process, but that is not the case here. A Cabinet decision is a final order. And you are supporting this approach that will allow these things to happen without public debate and with no oversight by an independent organization.

Ms. Nathalie St-Pierre: We want there to be oversight by an independent organization. Moreover, we want the question of negative option billing to be debated, because when there is public scrutiny in the hearing process of applications for licences, the costs will always be examined. For example, we'll look at the financial viability of the proposed channel or station, the target audience, the relevance, etc. We therefore want the recommendations to be made in the context of a public debate, and billing and marketing should be part of that debate.

We are aware that this introduces a more political dimension into a debate that should be non-political, and we agree with you on that. That said, we recognize that sometimes choices have to be imposed so that certain French-language channels and other relevant channels can survive. It would not be acceptable for consumers to make individual choices to receive only American channels. We have a duty to have a broader vision and, while we want to allow people choices, we need to take into account the wider public interest as well. That is why we need to allow for exemptions and to decide who will be eligible.

We are here because some ill-considered decisions have been made. The reason that people got upset is that at some point they had had enough. For viability purposes, certain things can be imposed, but the situation may have gone too far. My feeling is that we would not be here if these issues had not led to so many problems for consumers. Implementing a system that has enabled the CRTC to abuse, to some extent—

Mr. Pierre Brien: What are you referring to?

Ms. Nathalie St-Pierre: For example, there is this whole notion of basic telephone service, where services are withdrawn and reintroduced on a user-pay basis, such as 411. Where will it stop? The CRTC, whose mandate this comes under, is now defining basic service without looking at issues of affordability in a direct and open way. The same is true of broadcasting. The costs and benefits for consumers are not a high priority.

If the CRTC went back to the drawing board and really played its role with respect to affordability, we would not be in this situation. If it had played its role properly, there would not have been these charges which resulted in costs finally increasing beyond what people could pay, and consumers having the impression that they were being taken advantage of and things were being forced on them that they had to pay for. We are looking for some balance, even though we know it will not be perfect. The balance that used to exist at the CRTC has disappeared in recent years.

Mr. Pierre Brien: You see a link between affordability and this bill.

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Ms. Nathalie St-Pierre: Yes. Negative-option billing has supposedly been imposed to serve the public interest, ensure competitiveness and resolve technological problems involved in billing and accounts. That was the case, for example, in broadcasting. I think that is what launched the debate. It certainly raises issues of accessibility and affordability.

In rural areas, many consumers have complained about distributors like COGECO and Videotron, when the new tier was imposed in 1997. Their tolerance for that has certainly reached its limit.

[English]

The Chair: Thank you. Merci, M. Brien.

Mr. Lastewka, please.

Mr. Walt Lastewka (St. Catharines, Lib.): I have just a few questions, Madam Chair. I just want to get a reaction from the witnesses concerning financial institutions. Have you had many complaints from the financial institutions, whether it be the banks or the caisses populaires?

Ms. Nathalie St-Pierre: Do you mean general complaints?

Mr. Walt Lastewka: Yes, complaints concerning changing of fees, changing of packages, or something being forced.

Ms. Nathalie St-Pierre: Oh, yes. Those questions are a key issue right now everywhere in Canada, I would say. Certainly in Quebec as well, people are complaining that their services are changing, they have to use electronic means, and they don't get a discount on their bank fees. People have to shop, and it's very difficult to shop around because you can't compare. The level of disclosure is very difficult for consumers to really have a good idea of what's going on. We have to produce numerous magazine publications comparing different bank accounts to really help consumers figure out what they're getting for the price. So yes, there are a lot of concerns and complaints.

Mr. Walt Lastewka: During your opening comments you made remarks concerning new programs that had to be defined.

Ms. Nathalie St-Pierre: New service.

Mr. Walt Lastewka: Yes.

Ms. Nathalie St-Pierre: What you mean by new service in the bill, yes.

What we're saying is that we read the transcripts and we realized that new service for people could be anything, so we think it would be appropriate to make sure the bill states clearly what the definition of a new product is.

A new product, as far as we would like to see it, is one that includes.... If you modify an old product, it's not the same—it's a new one. If you want to add something to it, it's not the same product. It's a new product. If you want to abolish something and propose something else, it's a new product as well. As soon as you modify the contract I have, it becomes a new product that you're offering me, a new contract, and therefore it should be subject to Bill C-276.

Mr. Walt Lastewka: Did I understand you to say that you agreed that once three consecutive notices had been given it would be implied consent? You agreed with that procedure?

Ms. Nathalie St-Pierre: Yes, we agree with the conditions, except that we would like that the notice that's sent out to consumers include specifically what you have and what you're offered, so that you can tell what you're agreeing to or not agreeing to. We think you should be able to compare.

Let's say you're getting this cable, this, and this, and now we're proposing this to you. It's there. You can make a right decision. You sign; you send it back.

Mr. Walt Lastewka: Okay. Thank you.

The Chair: Mr. Galloway, please.

Mr. Roger Gallaway (Sarnia—Lambton, Lib.): Thank you, Madam Chair.

Ms. St-Pierre, the banks are coming here this afternoon to this committee and one of the points, according to their brief, that they're going to make is that in changing banking service packages, if I can put it that way, when they put out an offer—and their method has always been negative option, although in the banking sector they don't call it that; they just call it offering new services—there are some people who, if this legislation were to pass, would say yes, some who would say no, and some who wouldn't say anything. That, therefore, is the problem of this bill—those who are silent. They may be silent, I could envision, because they're in Florida, or they're in the hospital, or because they're just not interested.

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What do you say to the banks in that case, that because someone is silent, it presents a problem in terms of this proposed legislation?

Ms. Nathalie St-Pierre: I don't see why, because if you're silent, it means you want to keep your offer the way it was. And why shouldn't you be able to do that? I recognize that the banks may have to find a way to deal with having to increase a service because overtime costs are allegedly going up—which I doubt they are at this point in time. Maybe we can find mechanisms to deal with that. But if I'm satisfied with my bank account the way it is right now, and I agree that I want 15 transactions and this and that, I don't see why I should be forced because all of a sudden they think about me and they want to offer me a good new package that is benefiting me.

I think somehow in there we have to be careful, so the consumer can refuse a new offer. If people say no, it's the same difficulty. If people say no, then you remain with the same bank account. If I say no or I don't respond, I'm saying the same thing.

Mr. Roger Gallaway: One of the other points the bankers are making in their brief is that the financial services legislation that is being proposed—at some point, who knows when—by the government would include, and I don't know how they know this, an ombudsman, or whatever you want to call this office, that would be there to deal with these complaints. So if I woke up tomorrow and found out that I have all sorts of new banking services that I never wanted and for which I'm being charged, I could complain to this office. What do you think of that proposal?

Ms. Nathalie St-Pierre: The ombudsman that will be proposed has no teeth. It's a lion with no teeth, because the ombudsman that is proposed will be able to take consumer complaints, but won't be able to impose a decision. I think we still need the Competition Bureau to look into practices such as the negative option.

That's why I think it would be appropriate for the ombudsman's office to have the obligation to disclose to the Competition Bureau the complaints that this office receives. I think it's very important, because consumers will be at a loss as to where to complain. Will they be complaining at the CRTC? Will they be complaining directly to the cable? Or will they be complaining to the agency or to the ombudsman? Those complaints have to be registered. So they should have the obligation to disclose these complaints to the Competition Bureau, and the final report should include all the complaints, including theirs, so that you have a clear picture of the number of complaints and who is not respecting....

Mr. Roger Gallaway: I don't want to put words in your mouth, but what I'm hearing then is that you think the idea of a financial services commissioner, an ombudsman, or whatever you want to call him, is not the best idea.

Ms. Nathalie St-Pierre: Not to deal with practices such as these. I think the ombudsman is needed, and we've wanted an ombudsman for years. I'm certainly not denying that. What I'm saying is that in this particular case, when you need to have redress for a behaviour like this, I don't think it's the appropriate channel to do so.

Mr. Roger Gallaway: I have one final question. The banks suggest that when they start reshuffling the deck concerning all these service packages it is market driven—consumers want this, and they're just giving people what they want. A couple of questions come out of this.

First, as a consumer group, have you ever been privy to, have you ever seen, these studies done by banks? If you have, I wonder if you could comment, and if you have not, I wonder if you could comment as to your belief in their market-driven theories.

Ms. Nathalie St-Pierre: Personally, I haven't seen those studies. Probably, like in any other studies, there are pros and cons, and you could say that the questions are good or bad, but I don't want to judge by that.

What I know is that we deal with consumers on a daily basis. It is true that consumers are requiring more sophistication. And that's fine. I think we have to address that. They have a different requirement. At the same time, some consumers are not even given access to a bank account, and we do have to consider that as well. It may be true that consumers are asking for more services, but consumers are smarter about it and they want to make the right decisions.

So if you're going to respect your consumer and you're going to tell me that it's consumer-driven, give me the choice. Let me consent, and everybody will be happy. Why should you tell me it's consumer-driven and never let me make the choice to decide whether I want this?

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I don't believe it. If it's really consumer-driven, well, have the proof right there. They can say yes, and they can sign.

Mr. Roger Gallaway: Thank you.

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

Mr. Cannis.

Mr. John Cannis (Scarborough Centre, Lib.): Thank you, Madam Chair.

I have just one quick question, which stems from the question from my colleague, Mr. Lastewka. I want to clarify something.

You said earlier, Ms. St-Pierre, that if there's a change in product, the provider should provide in detail what the client had and what were the changes. You're saying that every time there's a new product coming out, or a change or improvement in the current product, the provider should then give full details of what the client had in addition to the new changes.

Is that right? I just want to clarify that.

Ms. Nathalie St-Pierre: No. The Competition Bureau stated quite clearly that most in industry will probably comply with the bill. Therefore, we'll not be using these three consecutive calls to the consumer with a request for consent. Only in those specific cases where you're asking the consumer to consent to a new product, which is not going to be every day, should that consent form include what you have now.

Let me be informed of what my product is now, and let me be informed of what I will be getting so that I can give my clear consent. That's all we're saying. It doesn't have to be on a regular basis, although it's a good practice and a nice idea.

Mr. John Cannis: I didn't say on a regular basis. Let's just take the hypothetical situation of a new program being added to a television package. I should be notified, as a consumer, as to what I had and what the additions are. Is that what you're saying?

Ms. Nathalie St-Pierre: If they want your consent, yes. It's been proven that something like 66% of consumers thought they had the basic service when in fact most of them had the basic service plus one tier. They didn't know what they had.

If we're going to be asking a consumer to have a new package, a redefined package, a new bundle or whatever, or one the CRTC imposes, for instance, and a decision's been made, you're not asking consent. If it's a decision made by the cabinet and by the minister, and it's imposed, that's it, that's all. But if you're going to reshuffle it on your own basis and ask consumers to consent to this new offer, yes, you should disclose what the consumer has and then what the offer is.

I mean, it's easy for them. It's all computerized.

Mr. John Cannis: Then it's awfully confusing even further, because what we're really saying, then, is that when I, as a consumer, first took on a product—television, for example—I didn't know what I was getting.

Ms. Nathalie St-Pierre: You should.

Mr. John Cannis: But that's really what you're saying.

Ms. Nathalie St-Pierre: It hasn't been very transparent. What we're saying is that if you're going to be asking consumers' consent for a new product, a new service, a new re-bundling of services, it should be clearly defined, and we should know what we're getting. Getting stuff without contracts is not the proper way to do business.

Mr. John Cannis: Oh, but I agree with you there, that when a new product or a new package is offered, the provider should say, all right, here's our new product, and it's going to include A, B, and C. I agree wholeheartedly. But what I can't seem to grasp here is saying to the consumer at the time that this is what you had for the past year on your television package and now this is what we're offering.

I mean, if I'm an educated consumer—and I should be—I should have known what I purchased two years ago and then what the new package is to help me make the decision of whether or not I should take it on.

Ms. Nathalie St-Pierre: But it doesn't work like that. Most consumers, unfortunately, because they're not given the proper information, don't know what they have.

The Chair: Thank you, Mr. Cannis.

Mr. John Cannis: Thank you, Madam Chair.

The Chair: I would like to follow up very briefly on that.

Madam St-Pierre, I do see your point. On my telephone bill, I don't know what I get any more. There's an amount that I pay there, and I've ordered certain things, but if you asked me what I'm paying for, I'd be hard-pressed to answer that question. I know I have caller ID, but I don't know how much I pay for that. I have voice, but it's not defined out. It's one item I now pay. A few years ago, when I signed up for it, I knew it was an extra $5 for this and an extra whatever for that.

So I think you've made a valid point, that we should know this. The same goes for cable. I know I no longer have the news channel I used to read. I don't know what happened to it, but it's now gone from my television screen. You've made a valid point.

• 1145

I also want to ask you a brief question about one of the comments in your brief. You talked about the fact that you are opposed to the waiver. I know new amendments have been drafted and circulated. I don't know if you've had a chance to see them.

I'll read to you what the change would be. It used to say this:

Paragraph 2(a) does not apply where the enterprise receives from the client a waiver of the notice requirement set out in that paragraph.

The proposed amendment now says this:

Paragraph 2(a) does not apply where the client has provided to the enterprise, by any means of communication including electronic or digital means of communication, an express consent for the purchase or reception of the new service from the enterprise.

So in fact it would no longer be a waiver but consent. That would be satisfactory, I assume, to your association?

Ms. Nathalie St-Pierre: Yes, because it's unacceptable to have a waiver.

The Chair: All right.

I want to thank you both for joining us here this morning. We've appreciated not only your very detailed brief but also the discussion that's taken place.

Ms. Nathalie St-Pierre: Thank you.

The Chair: We're now going to suspend as a committee for a few minutes as we change witnesses.

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• 1152

The Chair: We'll reconvene the meeting.

Just to let everyone know, we do have a vote in 26 minutes. I therefore propose that we start to hear from the witnesses until the 15-minute bell, at which time we'll break and head over for the vote. We'll come back after that.

I do apologize to the witnesses, but this is life on the Hill as we all know it.

I'm very pleased to welcome now Bell Canada, TELUS Corporation, and the Canadian Wireless Telecommunications Association.

I'm going to begin with Bell Canada's presentation.

Ms. Sheridan Scott (Chief Regulatory Officer, Bell Canada): Thank you, Madam Chairman and members of the committee, for the opportunity to address you concerning Bell Canada's views regarding the proposed amendments to the Competition Act as set out in Bill C-276.

[Translation]

My name is Sheridan Scott. I am Chief Regulatory Officer for Bell Canada and I am responsible for everything relating to regulations and the Competition Act. With me today is Linda Gervais, Vice-President, Federal Government Relations.

[English]

First of all, on behalf of Bell Canada, I would like to indicate our agreement with Mr. Gallaway that negative option marketing is not a desirable marketing practice. Bell Canada does not engage in such a marketing practice, since we do not believe it is in our customers' interests. I'm sure we would feel their displeasure quickly in the highly competitive communications marketplace in which we operate.

The communications marketplace is one that is changing rapidly, in many ways. As members of this committee are aware, Canada is quickly moving to a growing e-commerce economy. Indeed, under the government's connectedness agenda, efforts are being made to have every community wired to the Internet, making e-channel commerce a widely accepted norm and a desired government objective. Government itself is planning to become a model user.

We share the government's view of the growing importance of e-commerce. Already we see that our customers like to use electronic means to order goods and services. For example, when we introduced the new long-distance program for consumers in February of last year, fully 60% of our customers enrolled by means of electronic channels. These channels include the Internet, interactive voice recordings, or IVRs, and Vista 350 or 450 telephones.

In this environment, we have seen that our customers want easy, simple, and fast services. They want to be connected to us on their terms, not ours, and they've told us that they want an immediate, once-and-done response.

[Translation]

We would like to be sure that the Act will facilitate and encourage E-commerce initiatives and not hinder their development. As the government recognized in its “Connecting Canadians” program, consumers and citizens will be wanting services like these more and more. It is in this context, therefore, that we would like to suggest some changes today to the committee.

[English]

We have discussed these changes with Mr. Gallaway with a view to ensuring that they reflect the intention behind this legislation. We believe the proposals we bring today are absolutely consistent with the purpose of the bill. Moreover, as I've just indicated, they will reinforce other government objectives embodied in the connectedness agenda.

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I would like to take this opportunity to thank Mr. Gallaway for his willingness to meet with us and help us work through the changes we're proposing today.

Our suggested changes will not impact on the substantive objectives of the proposed legislation. Rather, they're intended merely to provide clarification.

The basic premise of our proposed changes is clear. We do not believe there is any intention to have this legislation apply to a situation where a customer has requested a service from us, electronically or otherwise, and where we have provided it in response to this request. Nor should it apply when we have made an offer to a customer and that customer has accepted it.

For example, when a customer chooses to take advantage of our three-way dialing for the first time by dialing star 71, it does not make sense to us to require advance notice to the customer before we can charge for it or receive payment for it, and yet the wording of the legislation appears to require exactly this.

Similarly, a customer may wish to switch to Bell long distance from one of our competitors using our website. The customer clicks on the site to indicate their desire to switch. It does not make sense to us to require further consent or notice in this case either, although the legislation appears to demand it.

Sometimes such an offer might include a free trial period. Again, we don't believe further consent or notice is required before we begin to charge for the service following the trial period.

We understand that the current amendment to paragraph 74.051(2)(a) of the legislation is meant to exclude these situations where the customer has initiated the request for service or has accepted our offer. However, we're concerned that the proposed wording does not accomplish this purpose in a clear and unambiguous way. Let me elaborate.

Our concern appears to have been addressed in the current draft by means of proposed subsection (4), which allows for express consent. Given that there's no section containing definitions, there's no guarantee that a customer-initiated call, using star 71, will be characterized as a situation where a customer has granted express consent. It is not clear how this term differs from consent—

The Chair: Ms. Scott, I'm going to have to stop you there. It appears they've started the vote without us, and some of the opposition members are going to head over to the House. I'm going to suspend now until after the vote.

Ms. Sheridan Scott: Okay.

The Chair: Thank you.

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The Chair: We're going to reconvene.

I want to apologize to the witnesses for that interruption.

Ms. Scott, please continue.

Ms. Sheridan Scott: I'm not quite sure where you'd like me to pick it up. Maybe I'll just do a recap.

It's our understanding that the intent of this legislation was not to capture those types of transactions where a customer initiates the transaction or where we have offered a service and they accept. That's the context in which I was speaking.

We understand that the current amendment to paragraph 74.051(2)(a) of the legislation is meant to exclude these situations, the ones I've just mentioned, including when the customer has initiated the request for service or has accepted our offer. However, we're concerned that the proposed wording of the legislation does not accomplish this purpose in a clear and unambiguous way. Let me elaborate.

Our concern appears to have been addressed in the current draft by means of proposed subsection (4), which allows for express consent. Given that there's no clause containing definitions, there's no guarantee that a customer-initiated call using star 71 will be characterized as a situation in which a customer has granted express consent. It's not clear how this term differs from simple consent and whether the acceptance demonstrated by the customer's initiation of the transaction will qualify.

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It's our view that if one took the common view of negative optioning, proposed subsection (2) would simply not apply when a customer has requested a service electronically, for example, by pressing star 71 or indeed by more conventional means, such as a telephone call to our business office or by pushing one of the telephone keys in response to an IVR. Indeed, it's our understanding that it was not Mr. Gallaway's intent to capture these transactions.

We understand that there will be an amendment proposed to deal with these issues, but in reviewing that amendment, we still have some concerns. We believe the following wording would provide greater certainty for business such as ours. We suggest that subsection 74.051(3) be amended by adding two new paragraphs to the exemption provision:

(d) where the service is requested by the client, or the client has agreed to receive the service, by any means of communication including electronic or digital means of communication.

(e) to services which are activated by the client's action and for which the client is required to pay a fee for each separate occasion on which the service is used or is received (pay per use).

In conclusion, Bell Canada supports Bill C-276 with the amendments we have proposed. We urge the committee to undertake minor modifications to this bill to make the legislation viable and effective. The proposed amendments are fully consistent with the intent of this legislation and will address other government objectives as well. We also support the changes proposed to date, such as the proposal to have negative option marketing addressed not as criminal conduct, but rather as reviewable under the civil reviewable matters section of the Competition Act.

Thank you for the opportunity to comment on Bill C-276. We'd be pleased to answer any of your questions.

The Chair: Thank you very much, Ms. Scott.

I just want to ask if the witnesses have received the revised amendments.

Ms. Sheridan Scott: That was the amendment I was referring to. This is the one that was dated December 9, and I was looking at page 7 of 15, paragraph (4). It says:

(4) Paragraph 2(a) does not apply where the client has provided

My comments address this issue of an “expressed consent” and the meaning that would be given to those words “expressed consent”, so our proposal is to substitute in the place of proposed subsection (4)—

The Chair: I just thought you wanted to add to proposed subsection (3).

Ms. Sheridan Scott: We would add to (3) in the place of (4). You could either amend (4) so that it included those words.... We just want it to be clear that when a customer initiates the transaction, that would be seen as acceptance.

The Chair: Okay, I imagine we'll have some questions on that, so we'll just wait until then.

Ms. Sheridan Scott: Okay, but we did look at (4), and we were addressing the expressed consent provision.

The Chair: Okay, thank you.

We're now going to move on to the next witness. From TELUS Corporation, we have Mr. Willie Grieve, the vice-president for government and regulatory affairs.

Mr. Grieve, please.

Mr. Willie Grieve (Vice-President, Government and Regulatory Affairs, TELUS Corporation): Thank you, Madam Chairperson and members of the committee. My name is Willie Grieve. I'm vice-president of government and regulatory affairs for TELUS.

TELUS is the second largest telecommunications company in Canada. We offer a full array of telecommunications services in Alberta and British Columbia, and we're in the process of entering new markets in other parts of Canada.

I'm pleased to be here today to offer TELUS's perspectives on Bill C-276. We have provided you with a copy of our written submission. I won't read it in its entirety, but I will offer some perspectives for you.

TELUS supports the principles that lie at the heart of Bill C-276. We all remember the public outcry that occurred when the cable companies engaged in negative option marketing in January 1995. Much of the anger expressed at that time arose because consumers felt trapped. The cable companies had a monopoly and consumers had no choice.

Our concern with Bill C-276 is that it imposes a regulatory system on the telecommunications industry when one does not appear to be necessary. There are three reasons for this.

Firstly, TELUS does not engage in negative option marketing, and we are unaware of any real problem with negative option marketing in the telecommunications industry.

The second reason is competition. We don't expect a problem to arise, because the industry is now fully open to competition. The last thing any company wants to do in a competitive market is anger or aggravate customers, because those customers can switch suppliers. This was not something they could do with cable in 1995, and until relatively recently it was not something they could do in telecommunications.

• 1220

The literature we've read, including the 1996 discussion paper by the Office of Consumer Affairs, recognizes that negative option marketing is really a problem in monopoly markets in which consumers have no choices. But you might ask about those telecommunications submarkets in which there are still some monopoly suppliers or in which one company has significant market power. This is the local market, your basic local services.

Here, too, we feel the forces of competition. We know from experience that if we aggravate customers in this market, they will react by switching to suppliers of more competitive services. While they would still be getting their basic local services from us, they would switch long-distance providers, Internet service providers, or even cellular service providers, if they weren't happy. Once we've lost them there, they are far more likely to switch local service providers at the first chance they get. In fact, that's the experience we're having, so if we're not sensitive to our customers even in markets where we are still the only provider, the market still operates to control our activities.

If negative option marketing is a problem or if a problem were to arise, there is already an existing regulatory structure designed to protect consumers. Under the Telecommunications Act, the CRTC's role is basically a consumer protection role. It is instructed to fulfil this role by introducing competition and relying on market forces. Where market forces are not sufficient, it is to regulate, and it has many tools available to control the activities of Canadian carriers under that act.

Quite simply, if the market is not doing the job, the CRTC steps in. More accurately, where the market is not yet sufficiently competitive to protect consumers, the CRTC continues to regulate. This is how the Telecommunications Act is set up. Canadian carriers are regulated in all the services they provide, unless competition is sufficient to protect users on a service-by-service basis. Where there is sufficient competition, the CRTC forebears from regulation, and most of the time it does so on a conditional basis. That is, it still retains some rules, depending on how competitive they think the market is.

Bill C-276 doesn't use the same approach. It does not acknowledge the effects of competition on disciplining market participants, and it does not distinguish between services. It applies to all services provided by all Canadian carriers, regardless of how competitive those services might be. As a result, it would be the case that Canadian carriers who are not regulated today because of competition will have this new regulatory regime applied to them.

Our view is that Bill C-276 need not apply to the telecommunications sector. Competition and regulation where competition is not sufficient are sufficient to protect users of telecommunications services from negative option marketing if it were to become a problem.

We've had an opportunity to review the December 9 proposed technical amendments to the bill and to hear Bell Canada today. The amendments, with the comments made by Ms. Scott, seem to be acceptable if the bill is to be applied to the telecommunications sector. Some of our principal concerns were the way in which clients would have to give consent. The provision permitting us to provide new services to clients before the end of three months—the one that is now there—once they have given their consent, would be acceptable.

We believe that if the bill is to apply to the telecommunications sector, its regulatory provisions should more fully reflect the policies of Parliament as expressed in the Telecommunications Act. Once again, that act relies on competition to protect consumers, and it relies on direct regulation where competition is not sufficient. There are two ways in which this could be achieved. Subsection 74.051(2) could be amended to read:

An enterprise engages in reviewable conduct if it charges or receives from a client any payment for the provision or sale of a new service provided in a market where the enterprise has significant market power

—meaning product and geographic market. And, of course, the Competition Bureau and the Commissioner of Competition are well placed to determine market power issues.

In our view, this would focus the bill on the real mischief that it seeks to remedy: monopoly suppliers using their position in the market to negative option market to customers where consumers don't enjoy competitive prices and choices. Indeed, this principle is embodied in subsection 128(2), which allows the Governor in Council to exempt services as long as the exemption does not deprive consumers of their right to competitive prices and product choices. That's what competitive markets do. But this section imposes a new regulatory system similar to but, interestingly, less onerous than the process the CRTC undergoes to determine whether there is sufficient competition to forbear.

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To make the regulatory systems more compatible, we believe the legislation could permit the CRTC in a forbearance order, which occurs after the CRTC has gone through a lengthy process sometimes with a hearing, or possibly with a hearing, to exempt the forborne services from the definition of services in the bill. In this way an application to CRTC for forbearance from the provisions of the Telecommunications Act could also include an application for exemption of the service from the definition of services in this act instead of us having to go through two channels to deal with the issue.

Of course, that doesn't mean that a forbearance order would automatically include an exemption from the bill. Compliance with the bill could still remain in suitable cases. The CRTC regularly issues forbearance orders that are subject to conditions and that do not forebear from all of the regulatory provisions of the act. It's not a forbearance or non-forbearance situation.

To make such a change a new subsection to section 128 could be added that would permit the CRTC in any order granted pursuant to section 34 of the Telecommunications Act to exempt a service or class of services from the definition of the service in this bill.

Those are our comments today, Madam Chairman. Thank you.

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

We're now going to turn to the Canadian Wireless Telecommunications Association, Mr. Roger Poirier, executive vice-president.

[Translation]

Mr. Roger Poirier (Executive Vice-President, Canadian Wireless Telecommunications Association): Thank you, Madam Chair.

[English]

and members of the committee. My name is Roger Poirier. I am executive vice-president of the Canadian Wireless Telecommunications Association, the CWTA.

[Translation]

The Canadian Wireless Telecommunications Association, or CWTA, speaks for the industry. Our members offer Canadians a variety of services which promote productivity, including mobile telephony, mobile radiocommunications, paging and mobile satellite telecommunications.

We appreciate this opportunity to take part in your hearings on Bill C-276. Wireless telecommunications are an integral part of the new economy, making possible information transfers in real time, no matter where or when. Broad-band wireless services will be a key element in the new economy in Canada as we change centuries and enter the new millennium.

Canada is very well served by its wireless telecommunications industry thanks to the efforts of five major enterprises. Ninety-four percent of the population has access to mobile telephone services, and that it saying a lot, given the size of the country and the scattered population.

[English]

It is our understanding that the intent of Bill C-276 is to ensure that federally regulated firms receive the express consent of the client for the purchase or reception of a new service by the client, essentially requiring notification where a firm uses negative option marketing to sell a new product.

However, based on our analysis of the bill, including the proposed amendments tabled by Mr. Roger Gallaway on November 15—and I stress November 15—the draft wording of the bill, in our opinion, indicates that it would apply to all services regardless of how they are marketed. This would have a major negative impact on the business activities of our industry.

We have therefore recommended some changes to the bill to provide for exception where express consent of the client has been received. Specifically, we recommend that subsection 74.051(4) of the act be amended to provide for an exception to the notification requirement outlined in subsection (2) where express consent of the client for the purchase or reception of a new service by the client has been received by the enterprise.

Moreover, we recommend that the express consent be broadly defined to include not only written consent but also oral consent and consent by electronic means. We note of course that amendments proposed on December 9 are in line with our recommendations and we generally support those amendments. We believe some clarification is possibly still required in line with Ms. Scott's recommendations to ensure that the types of activities that we are engaged with, that our customers are engaged with, are not captured by this bill.

In simple terms, what these changes would mean is that the wireless industry, in the conduct of normal business activities, would not be captured by the provisions of this bill.

The wireless industry in Canada is an extremely competitive one. It provides services to Canadians to meet ever-increasing demands for productivity, convenience, and security. The industry does not engage in negative option marketing practices, and the provisions of this bill should not apply to it in its normal course of business.

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In addition to the above change, the CWTA believes it would be useful to expand the exemption provided under proposed subsection 128(1.1) so that it provides for a public interest exemption. It is entirely possible that the wireless industry could be mandated by Industry Canada or the CRTC to provide services in the public interest. A good example would be the provision of emergency 911 service, where the industry could be mandated to provide the service without the regulator specifically setting a fee that is recoverable from our customers.

It is unclear whether the industry could easily collect such a fee from its customers without special exemption from the requirements outlined in the bill. In this regard we note that clause 4, proposed subsection 128(1.2), provides for the Minister of Canadian Heritage to recommend to the Governor in Council that certain services be exempted in order to achieve the objectives of the Broadcasting Act. It is also recommended that a new clause be added under section 128 affording the Minister of Industry the same opportunity to recommend to the Governor in Council that certain services be exempted in order to achieve the objectives set out in the Telecommunications Act and the Radiocommunication Act.

Again, we note a number of recommendations dealing with proposed section 128 of the bill. We think it doesn't go far enough. We believe the Minister of Industry should have that recommended power to the Governor in Council to make regulations.

If our understanding of Bill C-276 is correct and the amendments we have recommended are accepted, we would have no reservations supporting the bill. On the other hand, if the bill is intended to apply to all new services, regardless of how they are marketed, this would introduce, of course, serious and costly impediments to our business and customers. We would have serious concerns regarding the bill.

These concerns, along with recommended changes, are outlined in our detailed filing.

[Translation]

Thank you for your attention.

[English]

Thank you for your time. I would be happy to answer any questions you may have.

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

Now we begin with questions. Mr. Penson, please.

Mr. Charlie Penson: Thank you, Madam Chair. I'd like to welcome the panel here today. It was very informative, from my point of view.

My understanding is that it would be hard for the telecommunications industry to not accept this in principle, because you're in favour of increased competition in that industry and you're saying that the increased competition, the competition that's there, would really negate any real need for this bill in any case and that you are promoting the electronic side of things, so that's an option that should be used, not just a written consent.

My question would be, is there competition throughout all of Canada so that users in the telecommunications industry would be able to take advantage of that if Bill C-276 were to fail, so that if some company was engaging in negative option billing they'd have a choice to go somewhere else?

The second question would be, if you're going to use the electronic means of consent, would there be a double system where somebody didn't hit it by accident, you'd have to consent twice to that service, to make sure you got it right?

The Chair: Who wants to start? Mr. Grieve?

Mr. Willie Grieve: I'll start on the “competition everywhere” question.

As I acknowledged in my opening comments, all telecommunications product markets in most of Canada have been open to competition. There are some places where the market has not yet been opened to competition, for example, in NorthwesTel's territory, which is the three northern territories, but that is about to occur.

I have two points on that issue. One was that where we have monopoly or near monopoly today, even though the market is open to competition, it is not in our interest to do anything to aggravate customers, including negative option marketing. We don't engage in it for that reason. We don't want to aggravate our customers. For example, a local service customer, where we have market power or we might be a monopoly, could simply switch their long-distance service, and believe me they do that. We had a situation where we increased local rates and we lost market share in the long-distance market. Customers are very aware that we offer some services in a competitive market and some not.

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The second point was that the CRTC, under the Telecommunications Act...that act is basically a consumer protection act. There are many other provisions in it, but there are a series of objectives in that act, and the idea of the act is to introduce competition to protect consumers and to give them choices in prices and products. Where competition doesn't work, the CRTC steps in. The CRTC hasn't had a need to step in for negative option marketing because it hasn't occurred. It doesn't occur in the telecommunications industry. I can't say it's never occurred in 100 years, but it's certainly not a problem today.

So our position is that the act need not apply because there's already a complete regulatory system in telecommunications designed for exactly these kinds of things and many others where consumers might be abused by someone who has market power.

I'll let Ms. Scott answer the electronic....

Ms. Sheridan Scott: I'll add a few observations to what Mr. Grieve has said on the state of competition. If we look at where we are going, we are going to more and more competition, not less and less competition. All of our markets are open now. We face competition in each and every one of our lines of business. So if we're looking at where we're likely to evolve towards, it's going to be where consumers have choice, more choice, and more choice.

So I think if you look at that environment in which we'll operate...Mr. Grieve is absolutely correct that we will have to keep our eye on what customers like. We have to be “customer-centric”. So it will be an additional control on our activities.

With respect to the electronic transaction that takes place, and the way in which we offer these services, because a number of our services are now offered electronically, the customer actually has to initiate it. That is, there would be boxes on the screen. You would move your mouse, put the cursor over top of a box, and you click. So the person actually initiates an action and they can see the results of their action.

We have a mechanism where you can print out what you have done, so people will have a copy of the transaction that takes place. They can verify what they've done. Then they will be billed. So they will see that they initiated this and they're being billed for it. If they have made an error—

Mr. Charlie Penson: Just to get in there, what if that were a phone transaction? You're offering a service via phone, so the customer has to react in that case, right?

Ms. Sheridan Scott: There are two examples. One, you can come by phone into an interactive voice recording, the IVR, the tree sort of structure. There's an electronic pulse that's recorded, which indicates that someone has pressed a particular number that indicates an agreement to take a particular service. That's the counterpart to putting your mouse over the box and clicking. The third possibility would be when you speak on the phone to a customer service rep and they ask if you want the service and you say “Yes, I do”, and they check off the box themselves on the forms they fill out at their computer station.

In all those cases there's actually an activity, an action that takes place, and then it's confirmed, as I said, on the customer's bill. If the customer says “I didn't want to order that”, they look at their bill when it first comes in. Then they would get back in touch with us and say, “That wasn't what I ordered”. So the corrective mechanism—

Mr. Charlie Penson: My question was, at the time of initiation, shouldn't there be a double-check there?

Ms. Sheridan Scott: I'm not sure what a double-check would be, if you checked twice—

Mr. Charlie Penson: If you pressed star 76 or something, as you suggested, would you not have to do it again just to confirm that it's what you really want?

Ms. Sheridan Scott: Let me draw a distinction between the star 71 circumstance and ordering on the Internet. When you order on the Internet you have a screen in front of you that describes a service. Star 71 is when you actually just pick up your phone.... My daughter does this all the time. She's talking to a friend and she's doing homework, and they say, so and so is certain to have the answer to this, so they do star 71, and they get the third child on the line and the three of them then have a conversation. So she initiates that on the phone, and then there's a charge for that particular use of the phone. So it's a little bit different from the Internet screen.

Mr. Charlie Penson: But my point is there's a lot of Canadians who don't have computer and Internet at this point. So maybe they would want to react by...you would initiate a new service by phoning them and saying, “We're starting a new service. Would you like to take advantage of this?” If you do, there could be the voice consent or there could be an electronic consent by pressing a certain series of numbers. Right?

Ms. Sheridan Scott: Yes, that's correct.

Mr. Charlie Penson: I'm just saying that in the event it was the latter, it could be good to have a double-check where you have to do it twice. This is to confirm that I've actually started this action.

Ms. Sheridan Scott: It depends on the service and how complex your script is. One of the things we find out from our customers is they want to have relative simplicity in terms of their dealing with us. They want to know what it is they're getting and then they confirm one way or the other. So it's possible to have fail-safe mechanisms. Folks tend to want to get on and do it quickly when they're transacting business. As I said, there is a check on this because when they get their bill, they're going to know that they've ordered.

Mr. Charlie Penson: There's one short question I have—

The Chair: Mr. Penson, we haven't let Mr. Poirier respond to your first two questions.

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Mr. Charlie Penson: Oh, I'm sorry. But I do have one I'd like to just have a written answer to.

The Chair: You're not going to have time for a written answer. We go to clause-by-clause tomorrow.

Mr. Charlie Penson: I guess we just won't raise it then, will we?

The Chair: Well, when we come back for a second round, you can raise the question.

Mr. Poirier.

Mr. Roger Poirier: Let me be very brief.

In wireless telecommunications we are extremely competitive. It is probably one of the more competitive industries around. Just to give you an example, in Canada we now have the lowest pricing in the entire world in terms of wireless communications rates, which shows just how competitive this industry is. When you're that competitive, of course, you are extremely sensitive to consumer needs, consumer wants.

Just to answer again, we do a lot of electronic setup for phones. This is done through a number of means. It can be done over the Internet, it can be done using the phone, and it can even be done by voice. This goes on virtually thousands of times every day with not a lot of problems with our customers.

Again, it's an industry that's extremely competitive and very, very sensitive to customer relations in that regard.

The Chair: Thank you, Mr. Penson.

Mr. Lastewka.

Mr. Walt Lastewka: Thank you, Madam Chair.

I understand the message you're giving us, that you are competitive and you don't use negative option billing, but then I don't understand your points if Bill C-276 does apply to your industry. I understand what Ms. Scott said about some changes, but Mr. Grieve, I didn't get your message. If Bill C-276 is to apply to you, what changes would you want in the legislation, other than that it doesn't apply to you? That's not in the—

Mr. Willie Grieve: No, I understand.

We've had the benefit of seeing the December 9 amendments and we've had the benefit of hearing Bell Canada's proposals for specific changes, and we agree with those if they are to apply. We would also, though, suggest that the bill be amended in one of two ways to recognize that the intention of Parliament in the Telecommunications Act was to deal with the issue of consumer protection through the CRTC, through competition first, and, where there is no competition, through direct regulation by the commission.

There are two ways of dealing with the competition thing, and the second way also deals with the CRTC issue. The first one is to include in the act under the definition of “enterprise” a clause that says the act applies where the enterprise has significant market power in the market where it has market power. That recognizes Parliament's intention in the Telecommunications Act that the competitive markets be the means by which consumers are protected.

The second part, though, is a little more difficult. Right now the CRTC regulates Canadian carriers unless it forbears. So the idea of the act is that all Canadian carriers are regulated on pretty well everything they do in terms of supplying services to customers. Then when the commission makes a determination that there's sufficient competition to protect users, the commission forbears or refrains or stops regulating those particular services, and it issues orders saying these services are forborne, often under conditions. So if one service is forborne and you still have a monopoly in others, there are conditions such as bundling conditions that don't allow you to transfer your monopoly in one service over into the competitive service market.

The bill as proposed does have a provision that allows the Governor in Council to exempt services from the definition of “services” in the bill. So what would happen is we would go to the CRTC for a forbearance order, and then we would have to take a second step under a different regulatory scheme—this bill—to say consumers are protected and we're in a competitive market now, so we'll have a second step now to deal with the provisions of this bill.

To us it's just more regulation piled on where there's already an effective regulatory scheme for telecommunications that's a consumer protection type of legislation. That's the concern we have with a bunch of different regulatory schemes applying. It's difficult enough to keep track of the CRTC's rules.

Mr. Walt Lastewka: But I look at it from this standpoint. You're telling me you don't get into negative option billing at all and haven't for a long while, though you might have sometime before. Therefore this bill would not apply to you. But if your successor decided to take a different attitude, then the bill would apply. Isn't it as simple as that?

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Mr. Willie Grieve: In a case such as that, assuming competition continues to roll out at the rapid pace it is, I think it would take everyone in the industry deciding to start doing negative option marketing in a competitive market for that to be a problem, because if customers don't like it, they'll switch pretty quickly. And they do today, even when we do things other than negative option marketing, as I pointed out. Even a rate increase in a monopoly market leads to market share loss in other markets.

Mr. Walt Lastewka: So this bill won't apply to you, if you operate in the way you're saying you operate.

Mr. Willie Grieve: That's right. It shouldn't apply to us. The concern we have, though, is that we have legislation that includes us. It's just one more thing to monitor, one more thing to deal with administratively in the company, and we don't believe it's necessary.

Mr. Walt Lastewka: Okay.

The Chair: Thank you, Mr. Lastewka.

[Translation]

Mr. Brien, please go ahead.

Mr. Pierre Brien: Several consumers' associations which have appeared before us seem to think that your industry sometimes uses negative option billing, but you maintain that this is not the case. You say that you do not use this sort of billing for reasons of competition and it is not the sort of approach you would want to use with your clients. Why do consumers have this perception?

Ms. Sheridan Scott: It is hard for me to answer when there are no specific examples. I do not know whether these consumers gave you specific examples or talked about their own experiences.

Mr. Pierre Brien: No, they only mentioned it very briefly, but it was touched upon in their presentation. They referred to it among other matters when they were talking about services which you would be adding later. How do you proceed when you add these additional services?

Ms. Sheridan Scott: I will take the example of the star 71 service which my son and daughter use everyday. Before offering this service, we made an application to the CRTC to obtain approval for the resulting rate increase. There were public hearings on this application, which was subsequently approved by the CRTC. We then informed our clients by including an insert in their bill. In this way our clients are informed of any rate change approved by the CRTC.

Mr. Pierre Brien: In the case of star 71, the consumer can choose whether he wants to use this service or not.

Ms. Sheridan Scott: That is correct.

Mr. Pierre Brien: Fine. How do you get his consent?

Ms. Sheridan Scott: The client just has to press star 71 on his phone. As a matter of fact, this aspect was dealt with in one of our main applications. If the client is going to use this service, he has to decide to go to his telephone and initiate the call. That is why we feel that the Act does not apply to such transactions.

The Chair: Ms. Gervais.

Ms. Linda C. Gervais (Vice-President, Federal Government Relations, Bell Canada): I would like to add that our clients can use these services from time to time or subscribe to them on a monthly basis. Following our consultations with various groups, some clients told us that such services were so useful they would like to be able to use them without being obliged to subscribe to them on a monthly basis. That is why we decided to make some services available to our entire clientele, so that individual clients can decide which services they prefer and when they wish to use them. It is not just the one Ms. Scott was referring to. A client may use one or another service from time to time or decide to pay a monthly rate in order to use them all the time. The choice is up to him. We cannot speak for all consumers' groups, but we know that cable has had an influence on the environment.

If you gave us specific examples, we would be very pleased to look into the matter and let you know the results.

Mr. Pierre Brien: Since you are dealing with the CRTC at the present time, it could in theory exercise some control over your rates.

Ms. Sheridan Scott: Yes, in the case of services which are still subject to the CRTC. As Mr. Grieve has indicated, the rates for certain services are approved by the CRTC, whereas in other cases, they are determined by competition. While rates are subject to the rules of the CRTC, they are not established by this body.

Mr. Pierre Brien: What services are you talking about here?

Ms. Sheridan Scott: For example, long-distance rates do not require the approval of the CRTC although certain rules must be respected.

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Mr. Pierre Brien: Because of the very strong competition among companies in the long-distance sector.

Ms. Sheridan Scott: That is correct.

Mr. Pierre Brien: Quebec's consumer protection legislation forbids negative option billing. Do you consider yourself bound by the provisions of this legislation even though you come under federal jurisdiction?

Ms. Sheridan Scott: Even though our activities are regulated by federal rather than provincial legislation, we respect provincial acts in several areas. Since we offer services in Quebec, we respect those laws, even though there is no legislative obligation upon us to do so.

Mr. Pierre Brien: Thank you. If we wanted to deal with these questions through legislation and further regulate your sector, would it not be better to do so through amendments to the Broadcasting Act and the Telecommunications Act rather than to the Competition Act?

Ms. Sheridan Scott: I think it is up to you to decide which act you should be amending.

Mr. Pierre Brien: Here we have an act which everyone wants to amend, everyone wants to add his own exceptions. You and the cable operators want exceptions and a discretionary power. We find ourselves with a whole pile of exceptions which people want written into the Competition Act. Would it not be better to amend the Broadcasting Act and the Telecommunications Act to forbid negative option billing?

Ms. Sheridan Scott: It would be possible to amend the Telecommunications Act by including the amendments which we have suggested. As I was saying, if the proposed wording is accepted, certain transactions.

Mr. Pierre Brien: With respect to consent, among others.

Ms. Sheridan Scott: We have no objections to amendments being made to a precise act rather than to a general act.

[English]

Mr. Willie Grieve: Perhaps I could add something on that issue. The amendments we've discussed today are to this bill. You mentioned the Broadcasting Act. We are not regulated under the Broadcasting Act except to the extent that we might provide broadcasting services, and TELUS has a trial right now.

It's generally regulated under the Telecommunications Act. The Telecommunications Act is a consumer protection act.

As I said before, the objective is to get competition and to protect consumers. If the competition's not there, the commission steps in. If there's a problem, it regulates. Even where there is competition, if a problem arises, the commission can go back and amend its forbearance order in order to protect consumers in that case.

That is not the same as the Broadcasting Act. The principal purpose of the Broadcasting Act is to promote Canadian culture and sovereignty, to use the broadcasting system as a national unity kind of tool, to promote the industry, to promote Canadian performers and artists, those kinds of things. It has many objectives. Consumer protection is certainly in there, but it's not the principal focus of the Broadcasting Act. So the CRTC is sort of stuck between a rock and a hard place, I must say, when it comes to Broadcasting Act things, because it knows it needs to protect consumers, but it has this national, cultural, and sovereignty objective under the Broadcasting Act, and it has to balance those two.

Sometimes things get out of hand, and consumers react. In my opinion, the real mischief here is the problem that has occurred with the cable companies. People don't like that.

I think it would be very helpful to the CRTC to get some kind of guidance on that issue when it comes to its balancing of its two roles, consumer protection and using the industry for its cultural objectives. Therefore, a bill like this that deals with negative option marketing in cable would be very useful to the CRTC and to the industry as a whole.

[Translation]

Ms. Sheridan Scott: If I may, Madam Chair, I would like to comment on what Mr. Grieve has said. I do not know why one would decide to amend the Telecommunications Act with respect to this sector only. The Competition Act has a general application and covers all companies which correspond to the definition of an “enterpris”. I think it would be preferable to amend the Competition Act as this would avoid creating the impression that there is a specific problem in the field of telecommunications. I think that everyone representing our industry has been quite clear: this is not a practice in our industry and consumers will make sure that we continue along the same lines. Our sector has quite a positive record in this respect and I would prefer that it not be targeted.

Mr. Pierre Brien: Thank you.

[English]

The Chair: Thank you.

Mr. Gallaway, please.

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Mr. Roger Gallaway: Thank you, Madam Chair.

Mr. Grieve, you talked a lot about the telecommunications business being fully open to competition. I have an apartment in downtown Ottawa. When I wanted to have my phone installed, could I have called TELUS to have them install it?

Mr. Willie Grieve: I said it's fully open to competition, but there are some geographic and product markets that are not yet competitive.

Mr. Roger Gallaway: Where are those competitive markets, then, with regard to basic service for a home telephone?

Mr. Willie Grieve: There are places in Calgary today where a couple of competitors have entered and are starting to offer services. For us it's not a matter of whether it's fully competitive. What I said was that it's open to competition, so we know the competition is coming.

We also know that in Vancouver, for example, where customers have already switched their long-distance provider and that same long-distance provider becomes a local provider, the first people to switch to that new local provider are customers of theirs for long distance. So we have to be very careful that we don't aggravate customers in the local market in any way.

Mr. Roger Gallaway: So some part of Calgary is the only place where you have a choice.

Mr. Willie Grieve: Calgary and Vancouver.

Mr. Roger Gallaway: Is there a choice in Vancouver at this point with regard to basic service, or is it only for long distance?

Mr. Willie Grieve: No, I believe there is for basic service as well.

Mr. Roger Gallaway: Do you believe or do you know?

Mr. Willie Grieve: I know that Call-Net is buying unbundled loops from us and signing up local service residential customers who are currently their long-distance customers.

Mr. Roger Gallaway: Okay. Ms. Scott, you made a lot about star 71. You've mentioned that considerably. Let me ask you, are you a legal draftsperson?

Ms. Sheridan Scott: No.

Mr. Roger Gallaway: Would it come as a surprise to you that in reply to the Competition Bureau, the Department of Justice has said on three occasions that pushing star 71 is in fact expressed consent?

Ms. Sheridan Scott: It wouldn't surprise me one way or the other. I'm not sure I would necessarily agree, reading this the way the language is constructed.

Mr. Roger Gallaway: I understand that.

Ms. Sheridan Scott: It seems to me that in terms of drafting legislation, if one has a choice, one wants to be as clear as possible. When I look at the amendment that has been included here as proposed paragraph 53.1(2)(a), it does not apply where the client has provided to the enterprise an expressed consent. I look at that language and I don't find it as clear as the language we have proposed. I think we all have an interest in clarity in legislation.

I'm not an expert draftsperson, although I must admit that I drafted at least six series of regulations for the CRTC. So I do have considerable experience in that area.

I know that when one gets before a court, one can never be 100% certain which way they will go when they interpret the language, and the court will always prefer clarity where one describes particular instances. So it's really out of an abundance of caution, Mr. Gallaway, that we're proposing changes.

We do appreciate that the amendment to proposed subsection 53.1(4) has gone a considerable distance toward addressing our concerns. We really do appreciate that.

But this is the opportunity to pass the legislation, so I think we would all welcome as much clarity as possible.

Mr. Roger Gallaway: The point I want to make is this. There's your point, which is well taken, and then there's the point of those in the Competition Bureau who have been working on this regulation for some time. I don't presume to speak for them, but from my conversations with them, it would appear they believe it to be sufficiently clear. So what we have, then, is a difference of opinion between draftspeople, lawyers, or whatever. Is that a fair summary?

Ms. Sheridan Scott: That may be fair. When I was working at the CRTC drafting the cable regulations, if you can imagine, Keith Spicer was the chair, and he said to me, “Why don't you draft these regulations so that ordinary people can understand them?” I thought it was a pretty fair point, although I replied as a lawyer and said, “It's because judges interpret them, not ordinary people.”

I think he probably had a pretty good point, that you want to go into legislation and be able to speak to someone in a conversational manner and say, let me take you to the legislation and show what our parliamentarians have put in place. I think when one says something like “where the service is requested by the client” or “the client has agreed to receive the service by electronic means”, that is clearer to the ordinary person than “where the client has provided to the enterprise an expressed consent”. I just believe that's clearer in terms of English.

But in terms of legislative draftspersons, perhaps they live in their own world in terms of the experience they've had and the interpretation of judges.

Mr. Roger Gallaway: I would point out to you that there was a predecessor to this bill that was much narrower in scope, which Mr. Spicer, as chair of the CRTC, fully supported when it went to the Senate and was returned, and Madame Bertrand in fact was opposed to it. So within the CRTC, with a change of chairs, you could have a radical shift in policy.

• 1300

Ms. Sheridan Scott: Sure.

Mr. Roger Gallaway: Within three months they could do a 180-degree turn on a policy.

Ms. Sheridan Scott: We've been there.

Ms. Linda Gervais: Been there, done that.

Voices: Oh, oh!

Ms. Sheridan Scott: But I think we'd all agree that clarity is a good thing, and really our suggestions are made with that in mind.

Mr. Roger Gallaway: Yes.

I have one final point. The Consumers' Association was here. Let me give you an example of negative option through the phone companies, not picking on anyone here. I've received complaints in the past from students who moved into a university town, had their telephone hooked up, and were advised they could have call waiting for two months. What they weren't told was that at the end of two months, they'd better call and either say yes or no, or they would be charged for it. Would you like to comment on that?

Ms. Sheridan Scott: I know when we've offered this sort of service, we've instructed our customer service representatives that if the formula is that we're offering a service free for the first two months and then we charge for it, when we put that offer into the marketplace, it should be clear that's what we're offering. We are offering you call waiting and you will get two months free and then we'll start charging. Then you agree, yes or no, whether you want that service with the two free months and then paying after that. If that's clearly communicated to the customer and the customer agrees, I don't believe this legislation should apply. If they fail to communicate that, then we have a problem.

Mr. Roger Gallaway: Okay. Thank you.

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

Mr. Penson, please.

Mr. Charlie Penson: Actually that last point Mr. Gallaway made was mine.

The Chair: Mr. Schmidt.

Mr. Werner Schmidt (Kelowna, Ref.): I have just a very small point. Where does the agreement take place, at the beginning of the trial period or at the end of the trial period?

Ms. Sheridan Scott: Very clearly at the beginning. There's an offer: “I offer you this service. It will be free for two months and then you will pay x dollars per month. Do you accept that?” “Yes, I accept that.” The contract is concluded at the beginning of the period, before I begin to even offer you any service at all. Some of that service you don't pay for in the beginning. So I would say the contract is concluded at the beginning of the period. And anyone has the option to decide to cancel the service. That could take place at any time after the contract has been concluded.

So as long as the terms are clear, as long as I make it clear to you what it is I'm offering—

Mr. Werner Schmidt: The cancellation clause is also included in the original contract?

Ms. Sheridan Scott: It should be, yes. And it's a verbal contract.

Mr. Werner Schmidt: I know it should be, but is it?

Ms. Sheridan Scott: Yes. Yes, my understanding is that's how we make that offer in the marketplace where there is a trial period. And it might be another service.

Mr. Werner Schmidt: Sure, I understand that.

Ms. Linda Gervais: Could I add to that? If you are a customer of Bell, we are obliged by CRTC rules, and every year we send out, at least once a year, a notification to customers listing all of their services, so that they have it very clearly on the bill, listing any sets they may have rented from us. Anytime you change something of the services you get from us, we must do the same thing again. So in your next bill, you would have that listed and you would have this new service identified.

Mr. Grieve referenced the price increases as part of the price caps. That would generate.... All customers would get that on their bill. It would be a complete listing of their services. So again, if you take that two-month period, the customer would have subscribed to that service and then would have received on the bill a reference to that service, so they would know they have it.

That doesn't mean mistakes aren't made. We explain to customers—and if they don't know, it's in the phone book in the front pages—how to make a complaint, how to get your voice heard. We tend to err on the side of the consumer. If they say, “I didn't really order that” or “I didn't realize I had to pay for it and I don't want it”, then we retroactively compensate them, put a credit on their bill.

So that's how we would deal with it.

Mr. Werner Schmidt: This moves into a totally different direction that has to do with competition vis-à-vis wireless and land lines and the competition that operates here. Could I ask all of you to comment on that particular aspect of competition, between land lines and wireless?

• 1305

Mr. Roger Poirier: Maybe I'll start off as a representative of wireless.

If you define wireless as very broad, including what we call mobile communications as well as certain fixed wireless, it's clear the world is going wireless, not only in Canada and North America but around the world. Technologies are evolving very quickly, deploying wireless technology in all its forms is becoming less expensive, and the world is simply going wireless.

That to some degree is accelerated in certain countries, particularly in Scandinavian countries and European countries, because their wire telecommunication systems are very different from ours. They have metered billing, for example, and things of this nature. So in some parts of the world, we are now experiencing mobile penetrations in the order of 60% plus. At 60%, everybody has a mobile phone.

Increasingly people are using mobile phones as their principal, and in some cases their only, communications access. We are starting to see some of this in North America and in Canada, particularly among business professionals and students, where they simply have one phone; they forgo in some cases a wired phone.

The complicating factor of course is access to the Internet. Our industry, at least for the present, is not capable of meeting the sort of speed you get from conventional phone lines. But even that will be addressed as we move forward.

So in a brief statement, we are increasingly becoming a competitive alternative, I guess. I hate to use that word, but from a consumer point of view, consumers are starting to look at wireless—wireless phone, wireless technology—as an alternative to conventional wired telecommunications devices. But it's an evolutionary process and one that's very different in some countries from Canada.

Ms. Linda Gervais: I would agree with Mr. Poirier and just point out that perhaps the move to wireless as your main phone is slower in Canada because of the prices charged. I know a number of studies were recently published by the Yankee Group that pointed to the fact that prices in Bell territory are certainly lower, both residence and business, than you would get in the United States, or of course anywhere else where you're into a pay-per-use system. Our flat-rate calling and our large local calling areas have put us, as customers and as a country, in a tremendously advantageous position.

So the rollout of wireless being the sole phone is much more something for people who are on the move, such as students who are mobile, who aren't home very much. Instead of having two phones, they just keep the one. That's a growing percentage of the population. But as a phone company, we're also looking at wireless technology in terms of service deployment in rural territory. We have a number of trials, where as the technology of choice, we're providing basic service.

Certainly new competitors coming in will find wireless a cheaper infrastructure component in terms of building and competing in existing markets, because the big, big cost of providing service and of competing is what they call the local loop.

Mr. Willie Grieve: I can just add that I certainly agree that wireless services, in particular mobile wireless services, are every day becoming more competitive or more of a competitive alternative for the basic telecommunications service offered by the telephone companies. But if you look at the trend around the world, I think wireless is where voice will be carried, and wires are where data will be carried. Over 50% of our traffic now is data traffic—in other words, all traffic other than voice traffic. So I think that's how you'll see things evolve. And of course there's fixed wireless, which is very much like the phone you have today.

Mr. Werner Schmidt: I don't know how much longer we can go on with this, because there are some really interesting things I want to deal with at one point, and one has to do with bundling—the bundling of land lines with wireless. Are you doing that at all?

Ms. Sheridan Scott: Yes.

Ms. Linda Gervais: Yes.

Mr. Willie Grieve: Yes.

Mr. Werner Schmidt: If you do that, how does that affect the provisions of this bill?

Mr. Willie Grieve: The CRTC, as I've said before, is a consumer protection organization, but they also have a duty under the Telecommunications Act to be concerned about the rollout of competition. So what they do is impose bundling rules on us. First of all, if it's a basic service we're going to bundle with wireless, we can't bundle wireless with basic service and refuse to allow people to get basic service without wireless. So we always have to—

Mr. Werner Schmidt: Isn't that a good provision?

Mr. Willie Grieve: Yes, absolutely.

Mr. Werner Schmidt: Because it provides you with the infrastructure.

Mr. Willie Grieve: That's right.

Mr. Werner Schmidt: And it protects the infrastructure you already have.

• 1310

Mr. Willie Grieve: Sure. You can leverage.

What they don't want—and which is perfectly correct—is for us to be leveraging market power in one market into another market that's competitive by saying to customers that you only have one choice for basic service, and if you don't take your wireless service from us we're going to cut you off on the wireline. It won't happen. It's not permitted and it shouldn't be permitted.

Mr. Werner Schmidt: Yet.

Mr. Willie Grieve: It won't be permitted. You can't leverage into another market.

Mr. Werner Schmidt: Isn't that what bundling's all about?

Mr. Willie Grieve: No. Bundling, when done in competitive markets, is something consumers like. Consumers tell us over and over again that they would rather get bundles or packages of services than get a bill that has a whole list of things. It's how you do it, and it's when you have a monopoly in one market and you leverage that monopoly power into an adjacent market that there's a problem with bundling.

The Chair: Do you have another question, Mr. Schmidt?

Mr. Werner Schmidt: No, that's fine.

The Chair: Mr. Cannis, no questions?

No other questions? Mr. Brien?

Okay. I just have one question, then. I guess it goes back to the amendments you proposed, Ms. Scott. I guess we're going to disagree on what's clear and what's not clear, but you should know that the proposed amendment wording, in my understanding, comes from a court decision and has been well accepted in other legislation that is being put forward as well. I just point that out so you're aware of that in regard to the wording being put forward. That's where it comes from.

That expressed consent has also been defined through these court decisions to imply that if I press star 67 I'm giving my consent to pay that fee because I know there's a fee for using that service. I like to use that service, so I pay that fee. I think that's pretty clear: people do use that service and people want that service.

That being said, then, looking at my bill from the phone company...and in earlier conversations we've had with witnesses and talking about monthly services...I don't know what I pay for as a consumer. I got another little bundling thing in the mail, which I thought was really good marketing, a little bundling package, but it said that as I'm a SmartTouch customer as of October 19, I would pay a certain amount. But I never agreed to pay any more, so this maybe doesn't apply to me or maybe it's just a general mailing that you sent out. I don't know.

As a consumer, for me to even look at what you've sent out...and the option is there to take it or not take it, I recognize that. I won't look at it because I don't even know what I have. It's too much trouble for me to get involved in trying to figure out what I have. I opened my phone bill here this morning, because I hadn't yet opened it, and I brought this little package because I received this in the mail last week and I was thinking that it was interesting because we were all going to be talking about what happens. I don't know what I have, so I don't know if I want this. I don't know if it's advantageous or not. I don't think I have $18.95 worth of services right now, nor can I think of what I signed up for that would cost me that much money.

But that being said, I look at it and I know that it's optional, yet from a marketing point of view and from a customer point of view, I'm not sure I agree that you should be able to lump all my services into one line. I guess the CRTC says that's okay. As a consumer, I don't think it's okay.

Ms. Sheridan Scott: Well, I have just a couple of things. First of all, on the notion of the drafting, I'm comforted by the fact that you can reassure us there's jurisprudence on the record that would indicate that star 71 would be captured by this sort of amendment. Certainly the proceedings of this committee will be publicly available, and I guess if we end up in court we'll be pulling them out and saying, see, it wasn't meant to be captured. So I'm certainly happy to have the transcript of this committee available to us to make that submission to court should we end up there.

There's nothing like a lawyer. Is that what you're thinking, Linda?

The Chair: No, that's fine.

Ms. Sheridan Scott: It's just that my colleague is distracting me.

Secondly, in terms of your bill, I know there is a lumping together of those service charges once a year. That's why there's a requirement once a year to make sure we disaggregate those so that people know exactly.

It can be very lengthy, actually. People sometimes rent terminals from us and have numerous services from us and what not. So there's a billing issue for us in how much information we provide on a monthly basis. We ensure that we do it at least once a year because we think it's important for consumers to have it checked at least once a year. Then, as Mrs. Gervais indicated, when a new service is added, that's clearly disaggregated on your bill. It is not included in that single levy for basic services.

We're aware of this. It's an issue for consumers. They want to know what they're getting.

• 1315

In terms of the bundling literature you've received, I actually don't know exactly what that is. If you want to leave it with us, we can take a look at it and see if we can bring greater clarity to it. As I said, our practice is not to give people services that they have not requested and to increase their rates, so it would not be an example of that.

The Chair: I understand that. As a consumer, I just think there are a lot of offers out there. The reason I know this is from my phone bill. I don't pay it by cheque any more. It automatically comes out of my account, so it doesn't really matter when I read it; the money's out of my account by a certain day.

You check it eventually to see if it's right or wrong—perhaps you do, perhaps you don't. Every customer's different. So you pay less and less attention.

The fact that you spell those services out once a year...I haven't noticed that on my bill because, as I said, I don't often read my bill.

Ms. Sheridan Scott: It's interesting that under the terms of service that apply to federally regulated telephone companies, if we overcharge you, you can come after us for a certain period. It's whatever the period of limitation is for contract law in the province. In Ontario I believe it's six years. For six years if we've overcharged, you can come after us.

Meanwhile, if we've undercharged, we only have a year to come and claim against a consumer. In fact, the commission has created an enormous imbalance in the terms of service in order to protect consumers who can go back to their bills. You can look at the end of the year and you can say, I know I wasn't getting those services. And for up to six years you can come back to us and make those arguments.

There are a number of measures put in place by the CRTC to address these concerns of consumers who have made mistakes. As Ms. Gervais has indicated, we tend to err on the side of consumers who come forward and say they didn't order these services, and we would offer refunds.

The Chair: Just to clarify for the record, Ms. Scott, we will be having the representatives from the Competition Bureau back here tomorrow afternoon. I'm sure the question will come up about star 71, so you will have some evidence on the record. What I was referring to was the wording, specifically, that has appeared from court decisions. We'll clarify that as well with them to make you comfortable about the wording of the advantage.

Ms. Sheridan Scott: Thank you.

The Chair: Are there any final comments?

Mr. Willie Grieve: I'd just like to thank you very much for providing TELUS with a new marketing opportunity in Bell Canada's territory through your comments today.

Mr. Werner Schmidt: You couldn't resist, could you?

Mr. Willie Grieve: Also, to do a little marketing on our new Internet service...where you'll be able to pay your bills through electronic commerce over the Internet and see what all your services are regularly.

The Chair: When you can assure me that my electronic commerce and my cell phone are 100% secure, then I'd be happy to use that service. As long as people can pick up my phone calls when I use my cell phone, and as long as people can have access to my e-mail, I'm not comfortable with that. I'm one of those consumers who's going to take a lot of convincing. Right now, the fact that a local person in my hometown listens to my cell phone conversations on a regular basis drives me crazy. With that, I'm very careful what I say.

This meeting is now adjourned.