Commons committee begins drafting report on telco foreign ownership

Parliamentary committee hearings studying potential changes to Canada's telecom sector foreign ownership regime wrapped up last week and now the committee has begun to draft its recommendations to the minister of Industry. The committee is scheduled to deliver the report to Industry minister Allan Rock by the end of March or early April.The last two weeks of testimony at the House of Commons Standing Committee on Industry, Science and Technology were marked by significantly divergent opinions about the impact of removing current foreign investment restrictions, and potential remedies to concerns raised. On the one hand, opponents inundated the committee with the negative impacts of increased foreign investment such as job losses. On the other hand, supporters noted that a healthy competitive telecom market is in jeopardy if the government doesn't remove, or at least relax, foreign ownership limits for telecom carriers.In its testimony on February 19, the National Alliance of Communications Unions (NACU) opposed any changes to the current rules. The NACU, a coalition of the Communications, Energy & Paperworkers Union of Canada, the Tele-communications Workers Union, the Canadian Auto Workers Local 2000 and the Atlantic Communication and Technical Workers' Union, told committee members that the issue boils down to foreign control of Canadian telecommunications companies.The NACU explained that greater foreign investment will lead directly to a loss of Canadian jobs. It said that the United States would be the direct benefactor of increased foreign ownership in Canada's telecom sector.The alliance of telecom unions noted that Canada's telecommunications competitive landscape is operating well and problems aren't the result of a lack of access to affordable capital, but due to an overinvestment in the sector. The resulting impact has been the creation of excess capacity, which has led to bankruptcies, corporate restructurings and massive layoffs, it argued.On the other side, Richard Schultz, a McGill University professor, countered that the committee shouldn't fall victim to the fear mongering being waged by the opponents of increased foreign investment limits. Also appearing February 19, he suggested two models the government could implement if it feels the need to maintain a certain level of sovereignty over the country's telecommunications infrastructure.The Canadian government could either implement a tiered foreign investment regime or opt for a licensing scheme to allay any fears over the potential negative impacts of increased foreign ownership of the country's telecommunications carriers, Schultz told the committee."If we are so worried about Bell and Telus, let's leave them alone. They've already said they're not affected by the current restrictions. They've said that to this committee. So therefore let's deal with the new entrants and the smaller companies and see in fact if people are willing to come along," Schultz explained.Earlier witnesses had denounced any move to treat incumbents differently from new entrants. BCE Inc., Telus Corp. and Rogers Wireless Inc. told the committee in previous testimony that all companies need to operate on a level playing field. Microcell Telecommunications Inc. said it preferred a removal of rules for all carriers, but indicated it would approve of a tiered approach.Any advice the committee was hoping to get from Canada's telecommunications regulatory body was quickly thwarted by its chair. Appearing on February 24, the CRTC's Charles Dalfen dodged several questions about the impact of removing foreign ownership limits by citing the commission's mandate of regulating the industry based on rules set by the government."What I can say is that we don't want to give advice in that area," Dalfen told the committee. "We live with the rules that the government creates."While Dalfen and the CRTC weren't willing to give any advice to the committee, Competition Bureau commissioner Konrad von Finckenstein was more than willing to offer his opinions. While he put forth several recommendations, he alluded to the licensing regime as a possible solution for satisfying the government's public policy objectives."If the regulator's powers are insufficient to allow it to achieve the government's goals, this committee could contemplate amending the Telecommunications Act to introduce the requirement for licensing of telecom carriers. Such licences, of course, can be made subject to such terms and conditions as are necessary to achieve goals allegedly unattainable under the present regime," von Finckenstein told the committee on February 24.

Commons committee begins drafting report on telco foreign ownership

News | March 4, 2003

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