No consensus found…Foreign ownership regulations subject to varying opinions by industry experts

There is no better time to do an indepth analysis of the major issue facing the Canadian telecommunications sector, foreign ownership restrictions. It is a topic Network Letter has dealt with several times in the past and no doubt will in the future. But there is a difference this time. We extended an invitation to several interested parties to offer their assessments on what the government should do. You will find the responses of some of them in the following pages. What is most striking is how industry opinion is frequently at odds with the beliefs held by the general public. Last June, Decima Research Inc asked nearly 1200 Canadians how they felt about loosening foreign ownership limits (NL, July 3/01). Surprisingly, outside control of broadcasters was deemed more acceptable than foreign ownership of telcos. Only 37 per cent of respondents favoured foreign majority control, while 59 per cent opposed it. Only newspapers registered greater support for continued Canadian control. Canadians told Decima Research they want to keep media and communications companies in domestic hands for various reasons. The most often cited were loss of national identity and culture, loss of control of the country’s economy and worries about economic impact and loss of jobs. It is important to note, however, that these sentiments refer to foreign control. Investment by outsiders was seen to be a good thing. Importing money from abroad benefits the nation, 62 per cent feel. Only 24 per cent are against foreign investment. The survey results mean telecom executives and government leaders who wish to amend the ownership restrictions have an incredible public relations challenge facing them. They must overcome the fears of the general public. Task force urges review The issue was discussed most recently in the final report of the National Broadband Task Force (NL, June 18/01). It advocated an "urgent review" of the limits. But most observers believe this wording was little more than a compromise between the hard-liners who want the regulations scrapped and those who prefer the status quo. By adopting the less contentious language, panel members were able to present a united front. But that unity crumbled within minutes of the publication of the study. After the report was released, competitors rallied around to proclaim the need for more liberalized investment laws (NL, July 3/01). The established telcos are less enthusiastic. BCE Inc president Michael Sabia blasted the idea vehemently. The question remains: does Industry minister Brian Tobin have the support in cabinet to shepherd through the changes so many seek? Even if he does, how long will it take to proceed through the government’s legislative agenda? Any lifting of the limits will take months, if not years. It will not be an easy sell by any means. The task force study has been widely misrepresented by those commenting on it. Coverage in the mainstream press has been uniformly uninformed. People are being told the fish tale that taxpayers will be on the hook for $4.5 billion to roll out Internet services to the most remote regions of the country. The fact this is blatantly untrue has not hindered the editorialists and the letters to the editor correspondents from devoting oceans of ink to the misconception. The topic of foreign investment needs to be constantly studied. It was barely a year ago that nine telcos commissioned a report on the restrictions (NL, July 17/00). Since then, one of the CLECs that joined the consortium has gone into receivership, the ILEC involved purchased one of the wireless carriers and the parent company of another telco put it up for sale. Several other telecom firms that were not involved with the paper have disappeared in the last few months. When the study was released last year, it found that the limits needed to be changed, but that fact tended to be overlooked due to "the healthy state of the industry". Reminiscences of a healthy telecom market seem as quaint today as the rotary phone. A quick look at the sector these days will reveal that competition has not proceeded as originally planned. While there is active competition for the local, LD and Internet services in the business market, residential customers have been ignored. The rollout of competitive services has likewise been selective. It is easy for a company to find a competitive carrier in Vancouver or Montreal. But firms in Prince George or Val d’Or have much fewer options. We have gone to those most affected by the rules to ask what should be done. We have submissions from an ILEC, a CLEC, an ISP, a labour union and a telecom consultant. We do not have consensus. We do have the beginnings of a vigorous debate. When we undertook this project we approached several telecom experts. Some accepted our invitation, some declined and some did not respond. In two cases, telcos that had planned to participate found at the last minute that they were unable to submit their positions. Perhaps they will do so in the future. And perhaps the discussion initiated in this edition will convince others whom we did not contact to offer their opinions. We welcome any responses and may consider them for future issues of Network Letter. We are proud to make this contribution to the debate over the vital topic of foreign ownership.

No consensus found…Foreign ownership regulations subject to varying opinions by industry experts

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

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