Telecom union blasts Harper for lack of clarity on telecom foreign ownership

Prime Minister Stephen Harper's announcement last Friday to maintain limits on foreign ownership of Canadian telecom companies isn't winning any praise from the country's biggest communications union which warns things could change quickly if the Conservatives win a majority government this fall.At a campaign stop in Halifax September 12, Harper pledged to loosen foreign-ownership rules in airlines and uranium mining, but told reporters afterwards that he has no plans to open up Canada's telecom sector to more foreign investment, saying that Canada is not ready."We understand why the Wilson (Competition Policy Review Panel) report recommended proceeding with liberalization in the area of banking and telecommunications. We don't believe the marketplace is ready for that ... so we are not proposing to move forward with those recommendations," he told reporters at the event.While some might view the announcement as welcomed news to telecom unions and cultural groups that have lobbied hard to maintain the status quo, an official with the Communications, Energy and Paperworkers Union of Canada (CEP) cautions that Harper didn't specify when or under what conditions the market will be ready for unhindered foreign investment of telecom."(Harper) didn't say he's not going to do it. He said the market isn't ready yet. I have no clue what that means. So who's to say in six months to a year, or even right away if he had a majority government, that he wouldn't say, ‘now the market is ready'," Julie White, director of research at CEP, told Tech Media Reports.In a memo posted online, CPE president Dave Coles suggests the Conservatives don't want to raise the ire of cultural groups who oppose any easing of the foreign ownership restrictions for telecom or broadcasting. The Tories are already on the defensive for Bill C-10, which would allow the feds to deny tax credits to productions it considers offensive."Doubtless in the middle of an election campaign, Harper is reluctant to unleash the opposition that would appear to any move to sell off Canada's telecommunications and broadcasting industries. Poll after poll has shown that Canadians are opposed to foreign control of our cultural sector," states Coles.He goes onto say that Harper's statement about whether the market is ready for foreign competition "is meant to confuse, not clarify the government's position. He adds that "Canadians deserve a clear statement that the government supports Canadian control of telecommunications and broadcasting and will not sell them off to foreign interests."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 telecom carriers.Tories on record as supporting foreign ownershipThe Conservatives have made no secret of their preference for increasing competition in several protected industry sectors, including uranium mining and airlines (would be dropped under a new Conservative government), as well as banking and telecommunications (still on hold). As early as 2004, a Conservative Policy Briefing Note articulated the party's support for "relaxing foreign ownership rules on Canadian industry in concert with our major trading partners in the telecommunications, broadcasting distribution, and airline industry. We will conduct an immediate review to determine whether to reduce or completely remove these rules."The debate over foreign ownership of telecoms has been raging for over a decade in Canada. In 2001, the Liberal-appointed National Broadband Task Force urged the government to conduct an urgent review of the investment threshold to determine if the restrictions hinder competition.A year later, the Standing Committee on Industry, Science and Technology held extensive hearings into the issue, with 67 witnesses appearing. Its 2003 report called for the complete removal of existing foreign ownership restrictions on all telecom common carriers, including broadcast distribution undertakings. At the time, both the Liberals and the Canadian Alliance supported the report.The policy deadlock over this issue was further aggravated just a few months later when the House Heritage Committee recommended that all foreign ownership restrictions in the communications industry be retained.A subsequent review began in April 2005 when a minority Liberal government established the Telecommunications Policy Review Panel. In March 2006, just two months after the Conservatives toppled the Liberals to form a minority government, the Panel released its report, which recommended a phased approach to liberalization of Canada's foreign investment restrictions.Preferring perhaps that such recommendations come from a Conservative-appointed body, the government in July 2007 established the Competition Review Panel, chaired by LR "Red" Wilson. That report, released in June, said Canada should allow foreign telecom firms to establish Canadian beachheads or acquire smaller service providers - those with less than 10% market share - as a first step to easy restrictions on foreign direct investment in Canada's communications sectors.Like the Telecom Policy Review, the Wilson panel also recommended a slow-go approach to removing foreign ownership rules for telecom, with much broader liberalization of foreign investment rules for both telecom and broadcasting after five years. While Harper may have delayed any immediate action with respect to lifting the ownership cap, CPE's White says she expects the issue is very much alive within the Conservative ranks."Everything (the Conservatives) have said and everything they have done indicates that they favour competition. It pushes aside issues of culture, issues of identify, issues of sovereignty," says White. "But I don't think Harper is in a position in an election, or previously in a minority government, to come out and do what it's obvious their whole orientation and philosophy tells them to do, which is to deregulate."

Telecom union blasts Harper for lack of clarity on telecom foreign ownership

Broadcast | September 15, 2008

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