Ladies and gentlemen, we'll call the 41st meeting of the Standing Committee on Industry, Science and Technology to order. We are here today, pursuant to Standing Order 108(2), for a study on the deregulation of telecommunications.
We have two sessions today. The first is with the CRTC, and the second is with the Department of Industry and the Competition Bureau.
We have an hour with three representatives from the Canadian Radio-television and Telecommunications Commission. The first person we have is Mr. Richard French, vice-chair, telecommunications. The second person we have is Mr. John Keogh, senior general counsel. The third person we have is Ms. Fiona Gilfillan, acting associate executive director.
We have up to ten minutes available for a presentation, and then we'll go directly to questions from members.
Mr. French, I believe you'll be leading off.
Thank you, Mr. Chairman.
We're very pleased to be here. We won't be speaking for ten minutes; it will perhaps be three to four minutes.
I'm here to speak for the CRTC.
Our new chairman, Konrad von Finckenstein, has asked me to communicate his regrets to the members of the committee. As you may be aware, he's been in office exactly one week. He's very busy getting up to speed on the commission and his new responsibilities.
He is looking forward to appearing before you at your convenience, once he has mastered the various issues which face the commission. And that will not be long because he works very hard.
We're very pleased to have the opportunity to join the committee for an hour to discuss the important issues in the turbulent environment of telecommunications. We know the debates you undertake are important in a democracy. In industrialized democracies, the function that we have of independent regulation, carried out within the laws and policies that are the product of responsible government, is also important.
We hope that today we'll be able to help you to frame the issues. As I said, the environment's been a rapidly changing turbulent one for the companies we regulate, for the consumers who use telecom services, for the various public interest groups, and for the CRTC itself.
It is our role to adapt as rapidly as possible to all forms of change, in pursuing the objectives of our act.
It's what we've been doing, and it's what we will continue to do.
The status of a quasi-judicial tribunal, which is ours, imposes a certain constraint on my candour today. It is incumbent on the commission, for example, to forswear a full participation in public debate. As much as we would like to express our views fully and freely, we can't always do so. I hope the members of the committee will understand that I can't always be as frank and as complete in my responses as you would wish.
The commission cannot, by the words of its members such as myself, bind itself with respect to issues that may subsequently come before it. For example, if I were to be asked my views on something the commission might have to implement or rule upon, I could not express myself in definitive fashion without creating an impression of bias.
However, I want to stress that I will remain available to provide as much information as possible in order to assist members of the committee and instruct them in their reflection.
We'll do our best today to overcome those limitations and to try to ensure they don't defeat your purposes.
Thank you, Mr. Chairman.
Thank you, colleagues for being here today. I wish you didn't have to be here.
First of all, on behalf of my party, I want to compliment you on the work you've done to enhance competition in wireless, the Internet, and long distance.
Of course, our view is that the order was done prematurely, so I have a very specific question for you, Mr. French, or your colleagues.
Given that section 34 of the Telecommunications Act calls for a factual determination of the level of competition, in that we all know market power is crucial in terms of determining how the CRTC can make a determination by counting the numbers of companies supposedly offering services, what if there are three companies, but one has a 90% market share and the others each have 5%? Are you certain the interests of consumers will be protected by deregulating the pricing of the company with 90%, without knowing more under the circumstances?
Well, I don't share all of the premises of your question, Mr. McTeague.
I recognize that the incumbent telephone companies will be formidable competitors. I must note that the rapidity with which they have lost market share in those areas where major cable companies are offering voice-over-Internet protocol gives me reason to be optimistic about the vitality of that particular competitive pairing. Whether or not other players will come into the marketplace I think is an important consideration and not one on which any of us can necessarily see clearly enough into the future.
Perhaps I'd just make a neutral observation that doesn't come from the commission, but in placing the forbearance scenario traced out by the commission in its decision, and comparing or placing it beside the draft order in council, the financial analysts have asked themselves if it would result in faster forbearance, greater or less competition. They've suggested that forbearance would be advanced by a matter of six to ten months under the order relative to what it would have been under the original CRTC decision. I guess we have to ask ourselves whether those six to ten months in the major markets where large cable companies are presently competing represent a major danger to the vitality of competition or not.
I really don't feel I can go much further, because it raises issues the commission may find itself grappling with in the coming months.
Briefly, there was a change in the access-independent VoIP services regulations. I must say that this a fairly minor change in daily terms.
The CRTC must respect the various elements of the guideline we received. For example, we implemented a procedure over an 18-month period, which represents a great deal of work. The purpose of this procedure is to revise the overall regulations for incumbent telephone companies and ensure that their competitors have an opportunity to take advantage of their overall network. This process is the result of the panel's report and the minister's response to that report. We began an ongoing process in cooperation with the Competition Bureau. You can talk to the woman responsible for this subject.
Basically, we are taking our cue from the panel's report, the minor change to the regulation on VoIP, and management. There is clearly a lack of enthusiasm and support from the minister with regard to the CRTC's activities, which seeks to guide the market so as to promote competition.
Thank you very much, Mr. Chair.
I'd like to thank you very much for coming here today.
I would like to clear something up right at the beginning. In the last session we had here in committee, certain members of the opposition were saying that we're pushing forward too quickly and perhaps improperly. We even had one member say, “You have the possibility here of an illegal action by the minister who has used his order-in-council powers in order to subvert parts of the Telecommunications Act.”
I was wondering, with regard to the policy direction and the process, if in your opinion the minister acted properly.
I said before that the major cable companies that have offered VOIP products are, as one can see by reading their marketing and financial reporting, very pleased with the performance of their voice-over-Internet products. If we look at the data, we can see that they are making rapid incursions into the marketplace historically dominated by the incumbent companies.
We could give you data if you're interested, or leave it with the committee. Those data suggest that the market share of competitors, in the twenty months from December 2004 to August 2006, tripled to about 11% or 12%. That's a rate of change that, if it occurred in the beer industry, in the entire marketing apparatus of all the beer companies, would see everybody fired overnight. It's a very rapid change in market shares by the standards of most businesses, and certainly by the standards of the telecom business.
I'm talking about residential, Mr. Carrie; I'm not talking about business markets. I said it's where the cable companies are competing, and they're not competing in the business market, generally speaking.
In a way, we're going to have to hand the ball off to our colleagues in the Competition Bureau. I think it's fair to say that we both hope there will be legislative amendments to our respective legislation that will clarify that hand-off and make it more effective, but we've been working together in the absence of those changes to try to ensure that we understand their position, and they understand our position.
They recently published their draft information bulletin on the abuse-of-dominance provisions as applied to the telecommunications industry. That was in September 2006. It was fully their responsibility, but it was the product of long conversations with us. We tried to benefit from their knowledge of competition law and economics and they tried to benefit from our knowledge of the telecommunications industry and the technological implications of different forms of anti-competitive behaviour or potentially anti-competitive behaviour.
The product is, I think, a much more solid relationship than historically had been there, and we hope—and you can ask Ms. Scott—that the legislature may, in the medium term, help us to clarify our relationship even more. There are some problems of arrimage, some problems of relationship between the two laws.
Thank you, Mr. French and panel, for attending today's session.
has had an interesting record with the CRTC in the past year, to say the least. He has called on the CRTC to reverse some major decisions on voice-over-Internet protocol. He has proposed an executive direction to the CRTC. He has introduced a bill replacing the CRTC's proactive power. He has also proposed a cabinet order that would lead to premature deregulation of the local telephone service.
I'm not asking you, Mr. French, to comment with your opinion on it, but in comparison to that of previous ministers, how would this activity relate in terms of their interaction with the CRTC to this current situation?
I may just ask Mr. McCallum at the end...for a split second. I think he has one small question.
I'd like to follow up on that last point, Mr. French. I don't want to belabour it, but I am concerned. Our understanding is that the increase was for all phone customer services and that it was not revenue neutral for loyal, existing customers whose rates are going up. It would appear that they've also increased, at the same time, business rates, including that of the Government of Canada, by 10%.
I'll leave that, because I think the real issue that is of great concern to us is that normally, in the past, section 34 of the Telecommunications Act calls on the CRTC to find as a question of fact that competition is sufficient to justify forbearance in any given situation. Given that you've been removed, and to use your words that there's no precedent for this removal from the equation, how are we then to determine whether or not forbearance can in fact take place in the retail pricing structure of a company? How are we now going to do it? We've removed our eyes, our ears, our ability to see what's happening. We've thrown this over to the Competition Bureau, which will be another question I have. How do you expect to be able to do this? Is there a chance of reversibility if this is wrong?
Here's the counterintuitive reality: Nowhere in the world has competition in a former monopoly telecom system--and they were all former monopoly telecom systems--ever occurred without policy initiatives to foster that competition in the early stages. The discussion and debate right now are on how soon you walk away from those pro-competitive initiatives. They're very counterintuitive.
It's a bit like the airline industry or the railway industry. You've historically had these network industries where competition cannot be fostered without a public policy that creates access for the competitor to facilities owned by the former monopolist. The real question is when you stop doing that. The answer is that we don't know, and there's never been a simple conclusion to that in any country in the world.
As the regulator backs away, there's controversy. Right now we're going through an intense one of those periods. It's extremely important, I think, to recognize that we're talking about network industries that formerly had, under government policy, 100% of the market. The things you do to foster competition in those former monopolies are not the things you do when you're policing competition for soap flakes or cars. It's a different problem.
I can't give you an answer, but I'll give you two answers. I'll try to make it short.
One point of view--from a rural operator who has 4,000 to 12,000 customers and competes with Telus, SaskTel, Bell Canada, or Aliant--is why would I invest to bring my network and organization up to the capacity where I can offer voice-over-Internet protocol when, under the minister's proposed order in council, Bell Canada, Aliant, or SaskTel, my incumbent competitor, is immediately forborne and can immediately compete, targeting my customers? He'll know exactly when someone leaves his network, and he'll phone that person and make an offer. His financial capacity and his organizational capacity are hugely larger than mine, so why would I even try, under those circumstances? That's what you're going to hear from the small cable companies.
My second answer is inspired by a certain notion that the business is going to packages. You're not going to survive with a single stand-alone communications offering. You'll need to have, at a minimum, high-speed Internet, television, and telecom. These companies will need to have that or they will not succeed in the marketplace, because the television companies are going to roll out their television products.
If these companies find themselves at a sub-economic scale where they don't have the organizational wherewithal to meet the challenge of a multi-product offering, they should probably make the rational decision to be consolidated into a larger company.
So those are the two answers. Where you sit on it depends a lot on your feelings and your notion on the role of the state.
Mr. Chairman is telling me my two answers are long enough. Thank you.
We'll raise that at a meeting on future business. Thank you.
I don't know if we'll need to suspend. We have all the witnesses here.
We welcome Ms. Sheridan Scott, Commissioner of Competition from the Competition Bureau. Welcome, Ms. Scott.
Also from the Competition Bureau, we have Mr. Richard Taylor, the deputy commissioner of the civil matters branch.
As with the last witnesses, we have allotted you an opening statement time of up to ten minutes, and then we will go directly to questions from members.
Ms. Scott, you'll be starting off.
Thank you very much, Mr. Chairman and members of the committee.
I'm pleased to have this opportunity to appear before you today to discuss recent developments concerning regulation in the telecommunications sector. As Mr. Rajotte mentioned, I'm accompanied today by Richard Taylor, deputy commissioner of competition in the civil matters branch of the bureau.
In my opening remarks I would just like to highlight the bureau's position with respect to telecommunications deregulation and the steps the bureau is currently taking to prepare itself for the coming changes in the telecommunications regulatory environment. As you would expect, the bureau strongly supports efforts to place greater reliance on market forces in this vital industry.
The bureau has a long history of engaging itself in the debate about telecommunications regulatory reform. Under section 125 of the Competition Act, the commissioner has a statutory right to make representations and to call evidence before federal boards, commissions, or tribunals in respect of competition in relevant proceedings. This power of intervention has been used extensively by the bureau over the years in a number of industries, but in none more extensively than in telecommunications. Since 1990, the bureau has made 65 interventions before the CRTC, including full participation in the 2005 local forbearance proceedings.
The bureau's objective has always been the same. Our role is to encourage regulators to adopt approaches that rely to the greatest extent possible on market forces. Where regulation is necessary, the bureau has advocated that regulation be at the minimal degree necessary to achieve the objectives of the regulator.
Over this period of time, the Bureau has advanced several guiding principles which we believe provide an effective framework for deregulation.
Where competition in an industry is feasible, that is, when it is not a natural or government monopoly, one should move to rely on market forces as soon as possible.
Second, where continued regulatory oversight is required, one should adopt the regulatory model that emulates market outcomes as closely as possible.
Third, where regulation has distorted the prices, regulators should move quickly to ensure that prices reflect the costs of providing the service.
Fourth, if new entrants do not have market power, they should not be regulated.
Fifth, former monopolies should be deregulated as soon as market conditions are such that you have sustainable and effective competition to protect consumers.
Sixth, the period of transition, where some market participants are regulated while others are not, should be no longer than necessary.
As the telecommunications policy review panel noted in its final report, the telecommunications sector has evolved through technological change and innovation to a point in most markets where it is now safe to move away from continued regulatory oversight and to begin to place greater reliance on market forces. Indeed, competition has already replaced regulation for a number of telecommunications services, such as long distance, the Internet, and wireless. Local telephony is the next step in this transition.
As deregulation continues, the bureau will have an increasing role in encouraging and maintaining competition in the telecommunications sector. This means that it will be competition and market forces, not a regulator, that will discipline the activities of the industry and will determine prices and levels of service. The bureau's role will be as it is with any industry: to intervene only in those specific circumstances where anti-competitive conduct threatens the proper functioning of the market. It will not consist of ongoing regulatory oversight.
Nonetheless, the bureau anticipates that it will initially see an increase in the level of complaints in this industry. In this regard, we have been developing and refining our tools and resources. The bureau recently supplemented its general abuse-of-dominance enforcement guidelines with a draft information bulletin on abuse of dominance in the telecommunications industry. This document sets out the specific types of conduct the bureau believes could result in enforcement action under the act. The purpose of this bulletin is to provide clarity for industry participants on the conditions that must be met under the Competition Act before the Competition Tribunal can issue a remedial order. The bureau has recently completed its consultations with interested parties and is in the process of finalizing the bulletin for release later this spring.
As a final point, I would note that the TPRP recommended that the Bureau and the CRTC collaborate on finding ways to make the best use of our respective areas of expertise. In this regard, even before the publication of the panel's final report, we were working to improve the level of cooperation between our two agencies. Subsequent to the release of the final report, we put in place a working group to follow up on the panel's recommendations. This provided a valuable forum for the Bureau to draw on the expertise of staff of the CRTC as we developed the Telecom Abuse Bulletin. Subject to the limits imposed by the existing legislative framework, we believe that there is scope for even further cooperation and information sharing and I look forward to working with the new chair, Konrad von Finckenstein, in this regard.
We would be pleased to answer any questions that the members may have. Thank you.
It's great to have you here, Commissioner, and congratulations, belatedly. I never had a chance to sit on this committee when you were elevated, and I want to take the time to thank you for the good work you've been doing.
There are a lot of documents and information here that have never been made public, although they've been shared. The order itself by the minister has a number of effects. The first is, of course, it would eliminate two very common tests that are used to assess market power, the first being market-share loss, and the second being evidence of rivalry, with a much more rudimentary competitor presence test.
Given the time it takes to argue or to bring before the bureau a case dealing with abuse of dominance, is it fair to say that these tests, including the fact that the competitor presence test, would no longer have a structured rule of reason paradigm? How do you propose to be able to stop or arrest an anti-competitive abuse-of-dominance situation in a given market, especially given that there's been no market analysis, which usually follows in every other OECD country prior to deregulation taking place?
There are two aspects to your question, first with respect to the tests that are being proposed in the variance of the CRTC's decision. One of those tests is a test that we, the Competition Bureau, developed ourselves to assist the CRTC that was looking for an administratively streamlined and efficient test to apply to determine whether there should be forbearance in the market. So we tried to use our expertise to develop what could be a relatively straightforward test for forbearance purposes, and we believe that's a test that does incorporate many of these elements you're speaking about. It has a rivalry dimension to it; it looks at the nature of the competition between the parties in the marketplace. So that is going to be one of the tests that is available.
With respect to looking at abuse of dominance, should those issues come to us once there is deregulation, following a forbearance order by the CRTC, then we will obviously use the traditional tools we have at our disposal. Richard may wish to add some comment to what I'm talking about. He is responsible for that.
I would say when we are focused in a market, we can move with huge speed. I know some of the parties that have been speaking to you have suggested we take many, many years to carry out our work. I'm not sure that's an accurate description. When we have a major issue before us and we put the resources on it, we can work in a fairly expeditious timeframe. For example, when we had one of the major complaints in the airline industry, we were able to investigate the entire issue in a process of five months. We were able to obtain relatively speedy injunctions where we felt that was necessary.
For the last year, Richard has also been very active in streamlining how he comes at abuse-of-dominance complaints, and this is across all industries we regulate. I think we will be able to put our resources on this issue if we need to and be fairly quick in the marketplace.
Thank you, Mr. Chairman.
In your document you list seven criteria with regard to deregulation. It begins as follows: "Where regulation is necessary, the Bureau has advocated that [...]".
Do you feel that the minister's current decision, according to which local telephone services did not need to be regulated, is based on actual facts?
Ms. Sheridan Scott: What part of the document are you referring to?
Mr. Paul Crête: In the paragraph preceding the list of criteria, you stated: "Where regulation is necessary [...]".
Normally, it's the CRTC that decides whether regulations are necessary, but the minister decided to go beyond his own powers.
Do you know if the minister's decision is based on some study to determine whether there currently is real competition in the local telephone service market?
Well, in many cases you will have additional obligations that remain on the company being deregulated. Our advice has always been that one should very carefully look at the objective the regulator is pursuing, have the least interventionist restriction in the marketplace, and move as quickly as possible to full reliance on market forces.
Now, that being said, we recognize that there are other appropriate objectives in society one wants to pursue, other than competition; health and safety would be obvious ones. The CRTC will almost certainly be retaining those sorts of regulations that deal with the social side of their jurisdiction.
But to the extent you're looking at economic regulation and trying to deregulate, all we're saying is remove the obstacles as quickly as you can. Some examples of that would be the restrictions, for example, on win-backs and promotions. It would be an example of trying to move out of that regime and into one that fully relies on market forces.
It's a reasonable observation that they've made.
We've actually given it a fair amount of thought. I would say our thinking evolved over time, if you look at our various public positionings on this. We were relatively cautious. We hadn't decided or determined our view on this yet, and we moved on to one view that said once deregulated, it probably could be safely removed.
I think if you look at our bulletin on abuse of dominance, you will see we are suggesting that as long as there is no suggestion of predatory pricing being pursued through a win-back strategy, we would be comfortable with those restrictions being removed immediately.
Let me come back to that question, because there are different parts of our jurisdiction that will be engaged by telecommunications deregulation. I was talking to you about the consumer complaints we get about false and misleading advertising. That tends to be most of our consumer jurisdiction. Issues with respect to abuse of dominance tend to be raised more frequently by business participants, rather than consumers.
Now, with respect to abuse of dominance, we don't actually receive that many complaints. Again, I may hand this off to Richard to talk to you about his workload and whatnot. He has instituted a process to move very quickly through complaints now so that we can pull apart the more serious ones from the less serious ones.
Richard, why don't you say a bit about abuse of dominance, in particular.
Is that what you're interested in hearing about?
Let me just say a few words about that, and you can tell me if it's sufficient, or if you'd like to hear from Richard.
With respect to our resources in particular, you're right, over the years we've had this constant challenge of attempting to have an adjustment to our base so that we're not always going back cap in hand. That process isn't completed, but I can tell you we are getting a very warm reception wherever we go on this. I think I said this to you the last time you asked me the question, we're actually feeling relatively reassured that the gap will be addressed.
I must say we're also getting a relatively warm reception that we may need to have some temporary resources to address telecommunications in particular, for a short period of time, say five years.
It's not finalized yet, but we do get a positive feeling about it.
Thank you, Mr. Chairman.
Thank you for being here, Ms. Scott.
I've been listening to your questions and answers, as well as those of the representative from CRTC. If you look at the question of competition as opposed to a monopoly or a regulatory system, a regulated service, it sounds good. Everybody will agree that if I get people competing with me with equal or better services for an equal or better price, then as a consumer, I will have improved access. But it's not always the case. There tends to be a lot of competition on the low-hanging fruit, in the urban areas where the markets are good and very profitable. But that does not always translate or seldom translates to rural areas. We've seen that in airline travel. While it has improved maybe for a lot of people, in a lot of areas we've lost service.
On the question of telephony and these services, I have great concerns. In rural Nova Scotia, where I live, we don't have that competition out there. We don't have broadband. We don't have cable everywhere. In some areas, we've been able to negotiate with small cable companies to get broadband, with government assistance on the infrastructure costs, but it's still not there for everybody. Voice-over is not available. The incumbents are providing the telephone service at a very expensive price. Getting the wires and the switching equipment and those things in those rural areas is a lot more expensive, per revenue, than in the urban areas.
If we let competition go unregulated, with no interference, don't we risk at one point that the reinvestment in the less profitable areas by the incumbents will be at such a point that the service is not available or of very inferior quality to that of 50% of Canadians?
It's interesting to look at the evolution of competition in many markets. You're quite right that, generally speaking, competition begins in more concentrated urban markets and what not. Certainly one can see this in telecommunications in general. The introduction of long-distance competition, Internet, and wireless began in the more densely populated centres. But what we also observe is that it slowly moves out into the less populated areas and you have the arrival of competition.
Our view is that, generally speaking, if one were to compare regulation versus competition, one wants to rely as much as possible on market forces because they will bring competitive prices and greater choice. There's no doubt that it's not going to be a perfect solution everywhere, and if one looks at the various tests that have been proposed and been debated today, it could very well be that you will continue to have regulation in some areas. That is a possibility, and the regulator will substitute itself for market forces. But that is what the regulator does.
I spent ten years of my career at the CRTC, actually. What one is trying to do is to get as close as you possibly can to the market forces, because you're trying to provide those efficiencies and pass those on to consumers because you believe they are going to bring advantages to consumers.
So, sure, there isn't going to be a perfect solution and it's certainly not going to work overnight. But if we're going to pick a model that we want to rely on and work toward, I would just suggest to you that relying on market forces is going to be, I believe, a better model in the long run than relying on government regulation.
When you tell me that, you are also telling me that you are having trouble studying the markets. You say that it is difficult, because you do not have the figures or the data from the unregulated market.
What we are afraid of is that in a market with large providers, like Bell, as you know, the flexibility available to smaller companies and the possibility that others could replace them...
And this is in accordance with your criteria. Do you not think that it would have been better to continue with the intermediary stage proposed by the CRTC, whereby regulations apply up to the point where someone reaches 25%, and past that point, we have a truly competitive market?
There are a couple of minutes left. I am actually going to take the next Conservative spot, as that's the chair's prerogative.
First of all, I think the main issue, if you try to get away from some of the jargon, is that you're almost looking at two approaches here. You're looking at an approach that says you have to rely on percentage of market power, for instance, which is the approach the CRTC takes with respect to forbearance for local telephony, which obviously impacts VOIP. Or you take an approach, which to me the minister is trying to do, that looks at whether there are actually competitive services available.
It seems to me from your answers and your presentation that you adopt the latter approach—at least in philosophy. Whether you would specifically advocate for that or not, I'm not saying.
So you've got the 25% market power on one side, and then on the other side you've got competition between three facilities, two wireline and one wireless.
If you look at the figures given by Mr. French, he talked about 11%, I believe, for COGECO, Vidéotron, Shaw, and Rogers; and then he talked about the 25% needed for the forbearance issue. If I just look at the city of Edmonton, a mid- to large-size city, you've got Telus providing local service, telephony, Internet, including ADSL; you've got Shaw for television, local telephony, and Internet through cable. You've got VOIP with Vonage. Vonage exists in Devon, a community of 7,000 outside the city of Edmonton, and in Leduc, a community of 17,000, You've got wireless, Telus, Bell, and Rogers. And yet I would suspect that Telus's share of the market is greater than 75% local telephony.
So if you take the first approach, you would actually not deregulate the market, and yet as a consumer in the city of Edmonton it would just seem to me common sense that in that situation—albeit perhaps not in a rural area—you would just say yes, that as a consumer I can switch to ADSL with Telus, or to Shaw and get my Internet that way, or I can switch back and forth on wireless if I don't like the Telus service or don't like the Bell service.
So it seems to me, and I just want to clarify this, that you favour the second approach, looking with common sense at the situation existing on the ground and saying yes, there are companies there that can provide services, rather than relying on a 25% market power figure, which to me seems increasingly unrealistic in the world we're dealing with in telecommunications.
We came up the middle on that, in a sense. I think I've said several times that the market share tests are useful, but they don't determine the matter in all cases. We don't like market share; we wouldn't agree with the 25% test. What we're looking at instead is whether there is another equally efficient competitor that could provide service.
Again, it's a shortened version of our normal analysis. The test is present right now in the regulation the minister is proposing. We would have looked at a couple of things, such as the cost structure, the presence of rivals and what not. Because we're looking at the presence of two competing infrastructures in our test, we are closer to simply having independent infrastructures that can provide a competitive alternative. Had we been doing this analysis when we first started talking about forbearance two years ago, we might have looked at some of these elements.
Something we would also observe now is exactly the series of figures you're citing--the percentage presence in the marketplace. There are 1.1 million consumers who are now served by cable systems, and there are another 300,000 served by Call-Net. We would see those figures as evidence that parts of our test likely satisfied the rivalry and those sorts of elements.
I think you will find we're partway in, but we're certainly not on the market-share side of the analysis. We are clearly proposing a test that relies on the importance of those competing infrastructures.
Thank you very much, Ms. Scott.
I just want to wrap up by saying I appreciated your reference to yourself as a terrier. I think that was a very good example.
As the chair, I think I certainly speak for members regarding your direct responses, your forthrightness, and your knowledge of your files, which were very impressive.
We appreciated your appearance here today--both of you. Thank you.
We can certainly write to the commissioner and seek to obtain that information.
Thank you, Ms. Scott, and thank you, Mr. Taylor.
We are going to go in camera. I promise members it will be a very brief session. I just want to highlight what we're doing tomorrow with the release of the manufacturing report.
We will have only members and their staff in the committee room.
[Proceedings continue in camera]