Cable hails Industry committee recommendations, but questions arise about weight of the report

The cable industry is giving a thumbs up to a Parliamentary committee report released late last month, but questions remain as to just how much weight it will have in the lead-up to a Liberal Party of Canada leadership campaign. The House of Commons Standing Committee on Industry, Science and Technology released on April 28 its report Opening Canadian Communications to the World, which calls for the complete removal of existing foreign ownership restrictions for telephone companies. The cable industry is particularly pleased with one of four recommendations that calls for the government to “ensure that any changes made to the Canadian ownership and control requirements applicable to telecommunications common carriers be applied equally to broadcasting distribution undertakings.” “We’re delighted with the report because it really accepted our essential argument that both telecommunications and cable are capital intensive industries that require greater access to capital,” says Janet Yale, president and CEO of the Canadian Cable Television Association (CCTA). “If telephone companies have a pipe, they can carry telecommunications, voice, data, and increasingly video. It’s the same for cable companies. The fact that we have a big two-way broadband pipe is what is allowing us to move out of television delivery into high-speed Internet and over time telephony. What you really want to encourage is facilities-based competition between the two pipes to the home across a full spectrum of services.” But with the Standing Committee on Canadian Heritage set to come out with recommendations in support of existing foreign ownership regulations, many believe the issue will become entangled in political rhetoric rather than becoming policy. Currently, foreign investment is limited to 20% direct investment and 33% indirect investment for a total possible ownership of 46.7% in the voting equity of Canadian cablecos. Politicians and industry players alike admit that the issue has become caught up in the leadership aspirations of contenders Sheila Copps, currently minister of Canadian Heritage, and Paul Martin. Although the Industry committee review was initiated by Industry minister Allan Rock when he was considering running, it was noted during the release of the Industry committee report that the committee was packed with Martin supporters. “I’m sure it will become a leadership debate. It shouldn’t, it really shouldn’t,” Industry committee chair Walt Lastewka said at the April 28 news conference unveiling the report. Brian Masse, NDP critic for Industry, Science and Technology who dissented on the report, added: “We see two departments that are going to come to loggerheads. That’s what’s going to happen and I think that’s going to undermine and perhaps even make this drawn out even farther.” The Liberals and the Canadian Alliance supported the report, with the Bloc Québécois and the New Democratic Party dissenting (CCR Update, April 30/03). Lawson Hunter, executive VP of BCE Inc., agrees that the debate over foreign investment isn’t over, since the Heritage committee has yet to release its report. “I think they (the Industry committee) dealt with the issues and it’s certainly a good document as this debate unfolds. It’s obviously not over,” he says. “...I think it’s important that we take some time to get it right. We shouldn’t be rushing into this.” Christiane Gagnon, a member of the Standing Committee on Canadian Heritage who appeared at the news conference unveiling the Industry committee’s report to voice the Bloc Québécois’ opposition, confirmed to Canadian Communications Reports that her committee’s report will have radically different recommendations (CCR, March 13/03, Dec. 13/02). “The draft (of the Heritage report) is done and we’re rewriting the final recommendations,” Gagnon said. “Without saying what’s in the report, it’s not the same as the Industry committee. Between the Canadian Heritage committee and the Industry committee, we don’t have the same points of view. The challenges are very different. Our goal is content.” The cable industry has repeatedly argued that it needs access to additional capital to fund plant upgrades and roll out new products, such as video-on-demand and high-speed Internet (CCR Update, March 5/03; CCR, Dec. 5/02). But some content providers worry that increased foreign investment will lead to influence over control of what gets on Canada’s airwaves (CCR, Feb. 13/03). That’s an argument supported by the Heritage committee, but rejected by the Industry committee. “I want to make sure that I’m very clear that the programming side – that side where we encourage Canadian culture and so forth, we stayed right out of that area,” Lastewka said. “If the government wants to put more money into that area to develop more Canadian talent, that’s the government’s business. But what we’re saying is don’t stop progress in the telecommunications, the satellite and cable industry...because of the other areas.” Yale agrees, saying that the convergence argument used to expand the Industry committee’s recommendation to eliminate foreign ownership limits for telcos to cablecos doesn’t apply to possible convergence between cable carriers and content. “The convergence argument is about the pipes and the carriage business, and the fact that these two industries (telco and cable) compete vigorously with each other for the delivery of services to the home. Carriage and content don’t share those kinds of synergies. The carriage business is the carriage business and the content business is a separate entity. That fact that there is a common owner (between carriage and content) doesn’t really create the kinds of synergies of integration that we’re talking about when we’re talking about integrated carriage.” (For an alternative view, see the Newsmakers column in this issue.) John Tory, co-chair and CEO of Rogers Cable Inc., says that even if the government does move ahead on the recommendations, it will be a while before the legislation is changed. “I hope the government will move the issue along,” he says. “I’m not sure where it will fit in the political timetable, with an election coming up, and the government process takes time. But I hope the government will act on (the recommendations).” The committee has given the Industry minister 150 days from the release of the report to provide a “comprehensive response” to the recommendations. But with Rock’s decision to abandon plans to run for leader of the Liberal party, his interest in the review seems to have waned. “I know the committee would want me to take as much care with its report as its members put into preparing it,” he said in Question Period on April 29. “I am going to speak to the people who are involved, discuss it with my caucus and Cabinet colleagues and respond at the appropriate time.” The release of the Industry committee report follows public hearings held throughout the winter, at which 67 witnesses appeared. Other recommendations include that the government require a mandatory review of the Telecommunications Act by a Parliamentary committee every five years, and that the government establish a special Parliamentary committee to undertake a comprehensive review of the governance structure of both the telecommunications and broadcasting sectors in Canada in light of technological convergence. It was suggested that such a review would include, as a minimum, an examination of the regulatory framework governing Canada’s telecommunications and broadcasting sectors; approaches that the federal government could adopt to continue to facilitate broadband deployment in rural and remote communities; the organization of the federal departments of Industry Canada and Canadian Heritage; and the jurisdiction, role and mandate of the CRTC. Although the Industry committee began its hearings well after the Heritage committee began its review, it has managed to be first out of the gate with its report. There were not-so-subtle criticisms by Lastewka about the tardiness of the release of the Heritage committee report at the unveiling of the Industry committee report. But Gagnon defended the Heritage committee, saying the report would be out at the end of May or early June. “We have a big study that took a year and a half almost, and we had many areas to cover, not just one, like Industry. We would have liked to come out with our position (on foreign ownership) but we decided we had to report on all of the things (in broadcasting that were studied) together.”

Cable hails Industry committee recommendations, but questions arise about weight of the report

Broadcast | May 8, 2003

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