Current ownership rules are fair and reasonable, SaskTel believes

As expected, there are differing views on whether foreign ownership restrictions in the telecommunications, cable and satellite fields should be lifted. We have heard the arguments from some that a relaxation of the rules would make Canadian companies better able to compete with other global players, increase their access to badly needed capital and create the means for companies to build broadband networks to the most remote parts of Canada. At the outset, SaskTel would note that the absence of ownership limits will not help push broadband services to rural and remote regions of Canada. There is no link whatsoever between expanding high-speed broadband service to these areas and the lifting of foreign ownership restrictions. Rather, the limiting factor on such expansion is the lack of an underlying business case to justify the investment, which will not be impacted one iota by amending limits on the ownership of telecommunications assets. Outside observers agree Well-known independent analysts have made the same observation. The Yankee Group has stated that, "Deutsche Telekom AG is not going to invest hundreds of millions of dollars in Canadian facilities just to serve 100 households in a remote village on the shores of Hudson’s Bay." Similarly, Eamon Hoey has commented that lifting ownership restrictions is unlikely to spark a frenzy of capital spending in Canada’s remote and rural regions. "Valuations will change for the benefit of the owners of existing telecommunication and cable assets, but the level of capital expenditures won’t change." SaskTel believes that the current foreign ownership regulations are fair and reasonable, and that the public interest is best served when Canadian telecommunications traffic is carried over Canadian-owned facilities as asserted in the policy objectives of the Telecommunications Act. SaskTel suggests that these policy objectives remain relevant in today’s environment. Telecommunications and the services of the Information Highway are recognized as being critical to the growth of the Canadian economy and its international competitiveness. Lifting foreign investment restrictions threatens the very existence of a truly national communications system in Canada. Canada will become increasingly dependent on foreign controlled infrastructures and even more susceptible to the economic demands on our country from external sources. If Canada and Saskatchewan are to position themselves on the world stage, they must do so as independent economic competitors. Allowing foreign control of a key public infrastructure would not be conducive to such a position. As Michael Sabia of BCE Inc has stated on this issue, "It’s about ensuring that Canada and Canadians are in a position to play a leading role in the evolution of this sector." Evidence also suggests there is no need to lift foreign restrictions either to improve the competitive landscape or to ensure broadband deployment. Marketplace competitive In recent years, significant progress has been made to develop a fully competitive marketplace. In cases where market forces have been relied upon exclusively or with very little regulatory intervention, Canadian industry has been extremely successful in delivering benefits to customers. Canadian wireless and Internet access markets have enjoyed some of the most advanced services at the lowest prices in the world. Tele-phone penetration rates in Canada are among the highest anywhere, and Canada leads in the deployment of high-speed Internet access. In today’s rapidly converging Canadian communications industry, there exists a sufficient and growing number of large, well-financed Canadian companies prepared to meet the challenges of an evolving marketplace. Contrary to the assertions of some parties, the competitive fabric of the telecommunications industry in Canada is not starting to unravel. Even in those cases where results have been mixed - the case of the local services market - much progress has been made toward the framework required to develop competition, and this is translating into concrete terms. In recent months, several independent analyses of the local telecommunications market have provided optimistic overviews of the development of local competition. Even industry participants have stated that the consolidation and shake-out in the CLEC industry in the past year "was both inevitable and necessary." Lots of foreign interest already With the current foreign ownership restrictions in Canada, there seems to be no shortage of foreign interests. Minority positions are held in Telus (by GTE/Bell Atlantic) and in Bell Canada (by Ameritech/SBC). AT&T Canada, Sprint Canada and Primus Canada all sport the name of their U.S. partner. The wireless industry displays similar configurations. If foreign ownership restrictions are lifted, it will lead to the heightened presence of the foreign entities that are already here, as well as the possible entry of others that are not. Consideration must be given to the long-term implications on Canadian culture and content of allowing foreign investment in Canadian telecommunications. Although Minister Tobin has said that cultural industries are not part of the review, the recent rapid convergence between telecommunications and media will ultimately mean that Canadian culture and broadcasting will be threatened irreversibly by a relaxation of the rules. Moreover, in a converging marketplace, any measures that provide additional capital to the telecommunications sector will result in pressure to lift broadcasting ownership restrictions as well. Public opposition Finally, it must be noted that the general public is clearly opposed to changing current foreign ownership laws for media and communications companies. It is clear that easing foreign ownership restrictions will not contribute to increasing access to capital, improving Canada’s global competitiveness, or increasing broadband deployment. Canadian tele-communications companies are strong and competitive, delivering diverse, high-quality services across the country, and equal to the task set out by the National Broadband Task Force. Furthermore, looser restrictions would have undesirable and dangerous negative effects, creating clear threats to Canadian culture and broadcasting as well as the loss of control over Canadian telecommunications. SaskTel feels that the current restrictions under the Telecommunications Act have succeeded in creating the best environment for the Canadian telecommunications industry, the Canadian marketplace, and Canadian people. Donald Ching is president/CEO of SaskTel.

Current ownership rules are fair and reasonable, SaskTel believes

News | 08/13/2001 4:00 am EDT

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