The federal government’s decision to review the foreign investment rules in the telecommunications industry is being heralded by all sides in the sector, even if they have vastly different thoughts about what the final outcome should be. If everyone who has expressed a desire to testify before the House of Commons Standing Committee on Industry, Science and Technology appears, the line would extend from Parliament Hill to Arnprior. "I really think that congratulations are due to Allan Rock for taking this step to initiate the consultation," Chris Peirce, VP regulatory & government affairs for AT&T Canada Corp., tells Network Letter. "So we are very pleased that this step has been taken to initiate a consultation and to put some framework around the timing of the review, understanding the fact the committee will set its own agenda." AT&T Canada has been at the forefront of the CLECs demanding an overhaul of the foreign ownership limits. But the head of another competitor warns that merely changing the regime will not be a panacea. "We could liberalize the rules and get financing from Mars," Bill Linton, president/CEO of Call-Net Enterprises Inc., told a conference of the Canadian chapter of the International Institute of Communications (IIC) last week in Ottawa. "The issue is profitability."There is plenty of financing available for telcos, he maintained. He wants to see the government look at pricing and the ground rules for competition. One of the dilemmas surrounding the review is the ambiguity of the language employed by the minister. The background paper released at the time of the announcement made repeated references to "infrastructure" in the telecommunications sector. That led the Canadian Cable Television Association to declare that cablecos are major players in the delivery of high-speed Internet and therefore should fall under the purview of the committee. "Including cable will open up capital markets," John Tory, president/CEO of Rogers Cable Inc. told the IIC session. "It would be inequitable if we loosened rules for one and not the other." Clear up uncertainties The president/COO of Canada’s largest ILEC welcomes the review but wants the uncertainties cleared up."We think it’s an issue that does need to be addressed fully," John Sheridan of Bell Canada tells Network Letter. "Our concern has been from the outset, and we made this clear, it’s a complex issue. It cuts across so many different axes. So Bell is supportive, BCE is supportive." The union that represents most Bell workers opposes the lifting of limits, but will be front and centre at the committee hearings stating its position. The Communications, Energy and Paperworkers Union of Canada (CEP) plans to continue the fight it began a decade ago when it argued against opening up the LD market. National representative James Kinkaid tells NL that American telcos could buy up Canadian firms and shift operations south of the border. Canadian headquarters will be mere shells or even eliminated. Equipment may be purchased from U.S. companies like Lucent Technologies rather than homegrown firms such as Nortel Networks Corp. "We’re thinking in terms of future network development. That could have some serious impact, too," Kinkaid explains. "Networks in the U.S., there’s an overcapacity right now, so they’d be in a position to easily service our long distance intra-Canada routes." The CEP may even repeat part of the strategy it employed in the LD fight. Just as it ran advertisements warning against the opening up of the telephony market in the early 1990s, it may launch a campaign opposing changes to the ownership restrictions. The union representative was one of several commentators who contributed to Network Letter’s special issue on foreign ownership last year (NL, Aug. 13/01). Another expert who offered his opinions on the topic is happy the review is finally taking place. "It needs to be done, should have been done before," states Gerry Wall, president of Wall Communications Inc. "It wasn’t done before, so is that an excuse to not do it? No. Get it done, do it. It’s a step forward." After the review was announced, some observers thought Rock was closing the barn door after the horse had fled. BCE is in the process of buying back the 20 per cent stake SBC Communications Inc. holds in subsidiary Bell Canada; AT&T Corp. has announced that it will be abandoning its investment in its Canadian counterpart. Since these telcos have already lessened foreign investment, the argument goes, the industry committee is wasting its time. Wall, a former publisher of Network Letter, finds that shortsighted. The problem is long-term, he maintains. While perhaps action would have been more appropriate three years ago, the study is still relevant. "I think it’s like when the stock markets were going up and up and up," Wall says. "Everyone was saying I’ve got to buy Nortel even though it’s a hundred bucks because it’s going to be $200. That’s just real tunnelvision that people say this is happening a month or two months in front of my nose and so that’s my world and I have to react to it. This is a long term issue that needs attention." Rock had suggested the committee report back to him by the end of February. The chair of the committee, Liberal MP Walt Lastewka, has been quoted as saying that is not enough time, noting that at least another month will be needed to clear other subjects from the committee’s plate. That doesn’t trouble interested parties that much. Peirce says another month won’t make much difference in the overall process."I think it’s important to continue the momentum and bring this issue to resolution," he remarks, "and so I’m certainly not comfortable with commentary that, ‘all in good time’ or ‘take a long time to review this.’ That can be code for ‘let’s try and not have action on this.’ We would certainly be concerned about that happening but thus far see no indication of that." Wall agrees that Rock may have been too optimistic in his projection. A more reasonable timeframe is six months, he believes. But by the same token, he adds, discussion has been going on for so long that many of the issues have been hashed out over the past several years.