Liberal party says maintain Canadian control, ownership of telecom sector

OTTAWA—The Liberal party took an official position on foreign ownership in the telecom sector Wednesday, saying that networks and telecom companies should remain in Canadian hands at a minimum of 51 per cent. The Liberals wrote a separate opinion in a report on Canada’s foreign ownership rules in the telecom sector, released Wednesday by the House Standing Committee on Industry, Science and Technology. The party said the current foreign ownership restrictions should remain in place until a departmental or expert panel review is undertaken on the impact a more open market could have on the broadcasting sector. Right now, the broadcasting and telecom regulatory frameworks limit foreign investment at maximums of 20 per cent in the operating company and 33 per cent in the holding company. “We believe that for the moment we should maintain the status quo, in terms of current foreign ownership restrictions, until we have done a thorough review of the implications of removing the restrictions,” Marc Garneau, Liberal industry critic and a member of the industry committee, told The Wire Report. “We received lots of witnesses on the cultural side of things who were concerned that if we make changes to foreign ownership in the Telecommunications Act, that this will entail changes in the Broadcasting Act, which at the moment is not supposed to be touched,” Garneau said. The Conservative government has launched a consultation on how to proceed on opening the Canadian telecom sector to further investment. Conservative MP Mike Lake, parliamentary secretary to the minister of industry, said the impact of opening up the telecommunications market to foreign investment and ownership has already been studied. “I would point out that there has been study, after study, after study and at some point you actually have to take some action,” Lake told The Wire Report. “We have no intention to open up the Broadcasting Act. There is no question here about changing any rules relating to Canadian content.” Garneau said the Liberals may be open to loosening both of the restrictions under the Telecom Act (20 per cent in the operating company and 33 per cent in the holding company) to 49 per—so that Canadian control is maintained at a minimum of 51 per cent—but, for now, he said the party supports the existing restrictions. Conservative MP Mike Wallace, a member of the industry committee, said in an interview he does not believe restricting foreign ownership to 49 per cent of the shares in a company is the best approach. “We only heard that number from one individual, the chair of the CRTC . He’s the only one who brought that forward,” Wallace said. “My personal view is that the Minister takes the input that we heard at the committee … and confers with the bureaucratic staff to look at what is workable.” Due to disagreement between the political parties, the committee report arrived at only two recommendations. One is that the interpretation of the “control in fact” test be clarified, saying that it requires too much interpretation. Control in fact examines the powers a foreign entity can exert over a company outside traditional ownership structures, such as control of debt or non-voting but participating shares in a company. During the CRTC’s review of Globalive Wireless Management Corp.’s foreign ownership structure, the commission found that the company did not meet the control in fact test and rejected its operation in Canada. Cabinet reversed the commission’s decision last December, finding that Globalive met the control in fact test. The committee cited a National Transportation Agency decision of 1993, which said that, “There is not one standard definition of control in fact but generally, it can be viewed as the ongoing power or ability, whether exercised or not, to determine or decide the strategic decision making activities of an enterprise.” The committee also recommended foreign ownership restrictions be removed for the satellite sector. The Conservative government’s budget implementation bill, C-9, followed up on a pledge to amend the Telecommunications Act so that satellite companies are no longer subject to foreign ownership restrictions. The budget bill is now being studied at the Senate national finance committee. In a separate opinion in the report, the Conservative members of the committee said the government should implement policies that allow for more foreign investment in the Canadian telecom sector to further competition, encourage innovation and benefit consumers. “Nothing really came out of this report,” Serge Cardin, Bloc Québécois MP, his party’s telecom, science and technology critic, and member of the industry committee, told The Wire Report. The NDP agreed with the Liberals, saying that more study is needed to evaluate the impact foreign ownership could have on Canada’s cultural sector. In its own dissenting report, the NDP advocated maintaining the status quo in the telecom sector for two years to see how new wireless entrants Wind Mobile, Public Mobile and Mobilicity affect the market. “We just had this new wave come in,” NDP MP and industry committee member Brian Masse said in an interview. “Let’s see whether it benefits consumers, whether or not we’re going to be able to advance technologies, services and pricing components to be more effective for consumers, and then from there see if other alterations are necessary.” Masse added that taking down barriers to foreign ownership may not benefit consumers. “If we take off the restrictions, you could have immediate buyouts, no innovation, consolidation and less consumer choice,” he said. In a separate opinion, the Bloc Québécois advocated for further study of new legislation to integrate telecommunications and broadcasting. The Bloc said stronger regulations are the only way to ensure competition and better consumer choice. “We support maintaining the current foreign ownership restrictions,” Cardin said. Like the NDP, he said the Bloc supports watching how the market is affected by new wireless carriers over the next couple of years. The Bloc says it is especially concerned with the impact that more foreign ownership in the telecom sector could have on Canadian and Quebec culture. Cardin said mobile devices are not regulated for Canadian content and can now be used to broadcast content. “What preoccupies foreign companies the most is not necessarily to protect our culture,” Cardin said. Wallace said he expects the government to make a decision on foreign ownership when the House returns to business in the fall. “I’m expecting that there will be a decision made and a position taken,” he said. jmigneault@thewirereport.ca

Liberal party says maintain Canadian control, ownership of telecom sector

News | June 17, 2010

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