The Canadian Wireless Telecommunications Association tells the federal government that it needs to level the fiscal playing field for wireless companies, so they can better compete at home and abroad. The following is an edited transcript of the CWTA’s submission to the Standing Committee on Finance on Sept 1. The Canadian wireless telecommunications industry has contributed significantly in enhancing the productivity of Canadian businesses and individuals through the introduction of low-cost mobile communications. Mobile communications have become an essential element for Canadian business productivity and international competitiveness. With a proper balance between governmental fiscal policies and private sector initiatives, commonly held goals of job creation and rising the quality of life for Canadians can be achieved. The Canadian wireless telecommunications industry supports the direction taken by the Government in its 1999 Speech from the Throne. By focusing efforts on research and development, reducing the fiscal burden and promoting the development of the knowledge based economy; a higher quality of life can be attained for Canadians. The wireless telecommunications industry will increasingly play an important role in attaining this key goal. For Canada to remain competitive, it is imperative that the Government takes the necessary steps to ensure that Canada remains at the forefront of the New Economy. Efforts need to be taken to ensure that Canada will continue to develop capabilities for electronic commerce (e-commerce). As part of those efforts, the Government needs to recognize that the next wave in the evolution of e-commerce will be the wireless-Internet convergence also known as mobile commerce (m-commerce). The wireless - Internet revolution will accelerate the development of e-commerce and the knowledge- based economy, creating jobs and raising the quality of life for Canadians. The Canadian wireless industry is well poised in assisting to meet the Prime Minister’s challenge to all sectors of Canada to work together toward the goal of capturing 5 per cent of the world share of e-commerce for Canada by the year 2003 and to conduct over $200 billion worth of business in this way. The wireless telecommunications industry has already begun to deliver the tools that will be necessary to reach this goal. The major mobile phone manufacturers are already delivering ‘Internet ready" phones and other wireless devices that will allow Canadians to browse the Net, purchase airline tickets, take care of their banking needs and conduct other forms of m-commerce while they are on the move. For their part, Canadian wireless carriers have and are increasingly introducing services to accommodate mobile access to the Internet. The evolution of the wireless-Internet will be further enhanced as additional spectrum becomes available, which will allow the development of even more wireless applications over the Internet. The Canadian wireless telecommunications industry applauds the Government’s timely decision to release additional spectrum towards this end. On June 28th, 2000 the government announced the parameters to be used in the up coming Personal Communications Services (PCS) spectrum auction. . The CWTA supports the release of additional spectrum, and looks forward to working with the Government to promote the evolution of the wireless - Internet and to accelerate the use of m-commerce in Canada. Yet challenges for the wireless industry still remain. In order for the wireless telecommunications industry to continue to do its share to achieve the Government’s economic and social objectives, the proper fiscal policy environment needs to be created. Fiscal pressures continue to limit the industry’s potential to create jobs and to service high cost areas. The Canadian wireless telecommunications industry collectively lost approximately $1 billion in 1999. The fiscal pressures exerted by the federal government accentuate these losses. Last year alone, CWTA members paid over $150 million in licence fees to the Consolidated Revenue Fund (CRF). Furthermore, the CRTC is currently reviewing its contribution regime, which could see the contribution paid by wireless carriers increase from $14 million in 1999 to over $100 million annually. These fiscal pressures are over and above the federal, provincial, and municipal taxes the industry pays. The Canadian wireless telecommunications industry recognizes the difficult task that the Government faces to balance economic and social priorities. However, the industry is also conscious of the existing surplus situation in federal public finance and has developed its proposals conscious that the Government’s choices in the next budget have the potential to contribute to economic and social growth in Canada for years to come. Notwithstanding this surplus situation, the CWTA believes that fiscal stability and responsibility need to be maintained as corner stones in Canada’s budgetary process. For the 2001 Budget the Canadian wireless industry proposes that the Government keep its focus on: Alleviating the fiscal burden- by refraining from increasing fiscal pressure on the wireless industry through higher CRTC contribution charges and reducing personal/corporate taxes- as a means ofreducing personal/corporate taxes as a means of retaining and attracting highly skilled workers, which are essential for the Canadian wireless industry. Corporate tax reduction will also increase fiscal flexibility for companies, which could lead to further investments in capital and research, extending services to more Canadians and creating more jobs. We would also encourage the federal Government to work with the provinces in developing a coordinated approach to value added taxes that reflect the evolution of the wireless telecommunications industry. Reducing the national debt- as a means of encouraging a positive economic environment of low interest rates, and low inflation. A positive economic environment is essential for a growing industry such as ours, which needs access to financing from capital markets. Financing from capital markets is used by the Canadian wireless industry to further develop Canada’s telecommunications infrastructure, which in turn develops the new knowledge- based economy, which creates jobs. Investing in research and development- as a means of strengthening Canada’s innovation infrastructure, will strengthen the capacity for private and public sector initiatives in developing new services and products capable of increasing productivity for all sectors in the Canadian economy. As the knowledge- based economy evolves, wireless applications will play an increasingly important role. The Government’s research activities should recognize the increasing importance of wireless by increasing research into wireless applications through the granting councils, including CANARIE. Promoting the knowledge based economy- as a means of developing jobs and growth for the future of Canadians. The "Connectivity" programs, such as Community Access Program, School Net should recognize the value of wireless technologies in meeting their connectedness objectives , and Government On Line should include wireless portals, which would to facilitate wireless access to the information highway. In the interest of promoting the development of the wireless industry services to Canadians and accelerating mobile commerce, Government should continue to release spectrum, suitableas required, for fixed and mobile broadband applications and should minimize, to the extent possible, the imposition of higher contribution charges on wireless carriers.