Telcos, mobile wireless operators divided on timeline for foreign ownership changes

Pressure is mounting from some quarters in the telecommunications industry to implement a Parliamentary committee's recommendations to dismantle Canada's foreign ownership rules for telcos and cablecos, but other players are advocating a go-slow approach. On April 28, the Standing Committee on Industry, Science and Technology released its report, Opening Canadian Communications to the World, which recommends the complete elimination of foreign investment restrictions for telecommunications, cable and satellite carriers. The report also calls for the creation of a special Parliamentary committee to review the regulatory environment for both the telecom and broadcasting sectors, and for a review of the Telecommunications Act every five years. Dean Proctor, VP government and regulatory affairs at Microcell Telecommunications Inc., is among those calling for the immediate implementation of the committee's recommendations. "(The current) rules are for a different time and era and in many ways what the committee is doing is bringing Canada into the 1990s and we're now in the 21st century. We can do nothing but commend this committee for its recommendations, for an approach that I think is absolutely valid," he tells Report on Wireless. The Microcell executive also says there's no reason the recommendations can't now proceed to legislative drafting. "Certainly the sooner we can see changes the better as far as we're concerned," he adds. "Those are very good recommendations, too, because part of the issue that the committee saw was that this piece of legislation was enacted and within a year of its enactment it was out of date," Proctor explains. "It has taken us since 1993 to get to a point where the Industry committee could look at it. I think those are some pretty good recommendations that went in some ways beyond the initial questions that were asked." Not all parties that presented testimony during the six weeks of hearings held by the Industry committee are happy with the outcome. BCE Inc., the most vocal proponent of taking a slower approach to easing foreign ownership restrictions and using the issue as a bargaining chip at the next round of World Trade Organization (WTO) talks in 2005, was lukewarm to the recommendations. The communications and media conglomerate believes there are still many issues to deal with before moving forward, citing the Standing Committee on Canadian Heritage's pending report on the broadcasting industry, which also looked at foreign ownership of cablecos. "I think it's going to take some time and I think it's important that we have some time to get it right. We shouldn't be rushing into this," says Lawson Hunter, executive VP at BCE, echoing comments BCE president and CEO Michael Sabia made to the Industry committee on February 18 (RoW, Feb. 18/03). Making recommendations is one thing, but turning them into legislation is a completely different ball game. While there may be nothing stopping the government from moving ahead with changes to the foreign ownership regime, there has been considerable speculation about the political will to go forward. The government is still waiting for the Heritage committee to release its report on its review of the broadcasting sector, which is expected to recommend the status quo on foreign ownership for cablecos and broadcasters. Canadian Heritage minister Sheila Copps has already stated she is against loosening the current rules for cablecos and broadcasters. Proctor doesn't buy the point of view that there isn't enough political will to move forward quickly. "How many different reports do you need before this becomes obvious?" he asks. "You look at the political will, here you have an all-party committee where the official opposition and the party in power both adamantly agree on the way to go forward. How much political will is necessary?" Hunter doesn't agree, saying that there are aspects of a larger debate to take into consideration. "The committee recognized that they have their perspective, but there are other views, and the government was going to have to find a way forward that took all of that into account. I think that's part of the reason they recommended this special committee of Parliament." Ken Engelhart, VP regulatory of Rogers Communications Inc., says it's clear the industry needs help. "I think it is obvious to everyone that the telecom industry is in bad shape and, in particular, competition is in bad shape. The folks in Ottawa should be willing to tackle the foreign ownership issue in order give the telecom competition a shot in the arm," he says. There was speculation leading up to the release of the report that the committee would take a middle of the road approach and recommend either a tiered model or licensing regime. The majority of industry players rejected those two models during the hearings. But the Industry committee went much farther than some had believed it would. Even committee members from the official opposition were pleased with the recommendations. Canadian Alliance MP James Rajotte congratulated the Liberal-dominated committee for making such bold and clear recommendations, but posed one key question. "Does the Industry minister, now that he has this strong mandate from the main opposition party and the government, take this forward and lead on this issue?"Opposition remains strong, as well, from outside the industry. Rod Hiebert, president of the Telecommunications Workers Union, criticized the committee's recommendations. He repeated similar comments made by union leaders under the auspices of the National Alliance of Communications Unions during its presentation to the Industry committee on February 19 (RoW, March 4/03). The recommendation to remove foreign ownership limits isn't just about "giving up our sovereignty," it's about the loss of jobs when corporate headquarters are moved to other countries, Hiebert explains. "What happens when these huge companies from other countries start buying out majority ownership and just simply move head offices to other countries?" he asks. "We, Canadians, effectively lose control over our telephone company." Suggestions that the government could put in new job protection rules in any new legislation as has been done with the Auto Pact doesn't convince the union head either. "How can you legislate it in if you move the head office?" Hiebert asks. "We don't believe that once you've lost control you can legislate job protection. Any job that can be done on a computer can be done outside the country."

Telcos, mobile wireless operators divided on timeline for foreign ownership changes

News | May 13, 2003

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