Astral, CHUM, Alliance Atlantis want status quo on foreign ownership, Johnston says no

The head of the former National Broadband Task Force told a Parliamentary committee reviewing foreign ownership in the telecommunications sector that the restrictions must be removed entirely in order for Canadian telecommunications companies to remain competitive. David Johnston’s message to the House of Commons Standing Committee on Industry, Science and Technology on February 12 was at odds with that delivered by a coalition of broadcasters, who warned that eliminating foreign ownership restrictions in the telecom sector would eventually have a trickle down negative effect on the broadcast industry. Appearing before the committee, Johnston argued that an inflow of foreign investment is needed in the capital intensive telecom industry for Canadian companies to develop higher value-added technology and business development. Greater participation by non-Canadian firms in Canadian telecommunications innovation would also enhance the ability of Canadians to participate in the rollout of telecom networks around the world, he stated. Johnston’s support for the elimination of foreign ownership restrictions comes as no surprise because one of the recommendations from the task force he chaired was that the government conduct a review of foreign investment restrictions for telco common carriers and distribution undertakings. At the time, that recommendation was opposed by some task force members, including Alliance Atlantis Communications Inc. chairman and CEO Michael MacMillan (CCR, May 24/01). Also appearing before the committee on February 12, MacMillan and his broadcast colleagues at Astral Media and CHUM Ltd. warned that eliminating foreign ownership restrictions in the telecom industry would eventually have an effect on the broadcast industry. "There is a unique relationship between broadcasting content companies and broadcasting distributors that has little to do with solutions of structural accounting and separation. The role of a broadcast distribution undertaking in our system is difficult to ‘surgically remove’ from the overall anatomy of our broadcasting system," Phyllis Yaffe, CEO of Alliance Atlantis Broadcasting, stated. "Once the ‘ownership distribution genie’ is let out of the bottle, the prospect of non-Canadian influence over programming services is raised." The trio of broadcasters essentially reiterated testimony they presented late last year to the Standing Committee on Canadian Heritage, which looked at foreign ownership rules as part of its broad study of the Canadian broadcasting system. Alliance Atlantis, CHUM and Astral want the status quo with foreign ownership restrictions – a limit of 20% direct investment and 33% indirect investment (CCR, Dec. 13/02; Dec. 5/02). The broadcast trio repeated that if the rules were changed, then policy makers should prohibit any non-Canadian from acquiring control of distribution and from retaining any interest in a Canadian programming service. In making his plea for the elimination of foreign ownership limits, however, University of Waterloo president Johnston made a clear distinction between telecommunications carriers and content providers. He noted that the CRTC regulates the telecom and broadcast sectors separately under different Acts – the Telecommunications Act and the Broadcasting Act, each of which has different goals. He said any problems of undue preference could be sorted out by the CRTC under the Broadcasting Act. "There are clearly definitional problems (between carriers and content suppliers) as there are in any converging industries. But that said, that’s what regulatory courts and commissions are designed to do – to sort out those distinctions," Johnston tells Canadian Communications Reports. "In my remarks I was very careful to avoid discussion of whether there should be content restrictions on content providers or not as opposed to carriers because I believe they are two different worlds. My own view is that in a relatively small country like Canada, we probably have to do some special things to ensure that Canadian culture is promoted to our own citizens and to the world."

Astral, CHUM, Alliance Atlantis want status quo on foreign ownership, Johnston says no

News | 02/13/2003 5:00 am EST

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