Editor’s note. A previous version of this story incorrectly stated the approvals still needed for the proposed Shaw-Rogers merger. The deal is still awaiting approval from the competition bureau and the minister of innovation, science and economic development.
Rogers Communications Inc. is planning to spend at least $250 million to create an “always on” network that would guard against future outages, the company’s CEO testified to the House of Commons industry committee on Monday.
Rogers CEO Tony Staffieri opened his testimony to members of Parliament saying the company would do everything in its power — “and then some” — to restore the confidence of Canadians after an outage on July 8 disrupted cellular networks and payments for businesses.
Among major concerns was the inability for some customers to dial 911 or receive emergency alerts during the outage.
Part of Staffieri’s commitment includes plans to split the telecom giant’s network between wireless and internet components to create an “always on network” that would offer a degree of redundancy in the event of an outage.
“To be frank, this added layer of protection will be expensive. We estimate it will cost at least a quarter of a billion dollars, but we know it is the right thing to do,” Staffieri said Monday.
Rogers, in a submission to the CRTC filed on Friday, explained that the outage occurred when a coding error between two pieces of equipment from separate vendors removed a key filter that flooded the network with data, overwhelming critical infrastructure.
Staffieri conceded to the committee that, “on that day, we failed to deliver on our promise to be Canada’s most reliable network.”
Queen’s University professor Christian Leuprecht told Global News on Monday that it’s “wireless 101″ to have a built-in redundancy to avoid single points of failure.
“The disclosure by Rogers that they’re running their wireline and wireless business on the same back end in itself is quite stunning,” he said.
“There’s a significant gap between the Rogers rhetoric and clearly what we’re seeing from Rogers in terms of the resilience of its network.”
Is Canadian telecom competitive enough?
Industry Minister François-Philippe Champagne, who testified earlier in the day, gave Rogers and its industry competitors 60 days to come up with a solution for a seamless transition of connectivity between providers during an outage when it comes to 911 access.
With 45 days left on that ultimatum, Rogers’ chief executive was grilled Monday by MPs on the committee about whether the outage showed the need to declare telecommunications an essential service and whether telecoms should be a public utility in Canada.
Liberal MP Nathaniel Erskine-Smith asked Staffieri if he considered the services the company provides to be “essential.”
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“We do provide connectivity to millions of customers and to the extent that some of our enterprise and business customers have customers that rely on them, then we have a role to play in that,” he said.
“We fully appreciate the reliance that Canadians have on our network and the networks of our industry. And we take this responsibility seriously.”
Erskine-Smith also asked Staffieri whether the concentration of customers in one single company is a challenge to network resiliency.
“We work every day in a very competitive environment and we work hard to bring the best value in money for customers,” said Staffieri.
“You’re saying that with a straight face?” responded Erskine-Smith.
The outage has drawn fresh scrutiny of Rogers’ proposed $26-billion merger with Shaw Communications, which is currently awaiting sign-off from the competition bureau and the minister of innovation, science and economic development.
Staffieri argued Monday that the Shaw merger would help improve reliability of the networks, because together the companies could make investments in infrastructure that neither could make alone. He said the project of separating Rogers’ wireline and wireless service could be done in “half the time it normally would” with Shaw’s resources.
But for Geoff White, executive director of the Competitive Network Operators of Canada (CNOC), told Global News that any arrangement that results in less competition in Canadian telecom is not likely to promote more reliable or affordable internet service. CNOC is a non-profit that represents roughly 30 independent network service providers in the country.
“Allowing Rogers to get bigger through the acquisition of Shaw is not a guarantee of nothing’s getting any better. It’s likely not going to do anything in terms of consumer pricing. It’s probably going to do the opposite, as the market concentrates,” he said.
White said that Canadian telecommunications companies are already among the most profitable in the world, and already have the cash flow to make investments to make networks more reliable. The issue is that they don’t have the imperative to do so because of the lack of competitive options for Canadians to switch over to if they’re not happy, he said.
“To suggest that they need to get even bigger to make their network better, it’s just not plausible.”
What's going to change? Who is responsible?
MPs questioned Staffieri and Canadian Radio-television and Telecommunications Commission (CRTC) chair Ian Scott about what the path to change and accountability might look like on Monday.
The NDP’s Brian Masse asked what penalties are in the telecom regulator’s toolbelt following the investigation into the outage.
Scott said there are monetary penalties the CRTC can levy against Rogers, but he said those are more designed to ensure compliance with rules rather than as “punitive” measures. The regulator can also issue a variety of orders to operators, but Scott said it was premature to suggest what the outcome of the probe would be as he hadn’t fully reviewed Rogers’ submission.
Conservative MP Tracy Gray asked whether Staffieri or anyone else on the company’s board of directors would lose their job over the debacle.
“I’m accountable to ensure this doesn’t happen again,” Rogers’ top executive said.
The company’s chief technology officer at the time of the outage, Jorge Fernandes, was replaced last week by Ron McKenzie, who answered technical questions at the committee Monday.
MPs also directed questions to Champagne on government action in response to the outage.
New Democrat MP Brian Masse pressed Champagne about passing legislation to make the internet a public utility, saying that COVID-19 had proved the internet to be an essential service.
Without more government power to regulate the internet, Masse told the House of Commons industry committee hearing, “We have to rely on any minister being buddy-buddy with a bunch of CEOs.”
Champagne defended his meeting with the telecom CEOs and while he did not say whether he would support legislation to make the internet a public utility, he said he was open to working across party lines and taking in the recommendations of the committee.
Masse also asked Staffieri if he would support a bill of rights for consumers, but the Rogers executive deflected.
“We are very much focused on what we need to do to ensure the resiliency and redundancy of our networks,” Staffieri said.
Champagne said on the day of the outage he reached out to Staffieri to inquire about the situation but the conversation was not between a CEO and a cabinet minister, rather Champagne was speaking on behalf of Canadians.
— with files from Global News’s Shallima Maharaj, The Canadian Press
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