OTTAWA – Allowing more foreign investment in the telecommunications business, particularly for broadcast distributors, will almost certainly have an impact on the content carried on Canadian airwaves, according to Astral Media Inc.’s chairman of the board, André Bureau.
Speaking to the House of Commons Standing Committee on Industry, Science and Technology for its study on foreign ownership restrictions in telecommunications, Bureau said broadcast distribution undertakings (BDUs) have an “enormous influence” over the programming offered to Canadian consumers.
“BDUs are not just pipes. BDUs make programming decisions everyday. They control and decide which programming services consumers will have access to. They make critical decisions about which services to market, promote, offer, how much they pay to these programming services and how they much charge to consumers,” he stated.
“Therefore any liberalization of BDU ownership restrictions could easily result in an unacceptable level of influence by non-Canadians over the broadcasting television system.”
Under questioning, Bureau, a former CRTC chairman, was even more pointed in his view that if BDUs were allowed to seek more foreign investment, the Canadian broadcasting system could be harmed. “They have a right of life and death over us,” he said, noting that cable and satellite companies decide channel location and how services will be packaged and marketed.
Astral argues that before adopting liberalized foreign investment rules for telecom and BDUs, the government must conduct a broad study on the implications of increased foreign ownership on the broadcasting sector. The company says such a study could be done by an independent panel much like was done for telecommunications and competition policy in recent years.
“In addition to the specific issue of foreign ownership restrictions the panel could also be mandated to conduct a larger review of the Canadian broadcasting policy and regulatory framework given the accelerated convergence of broadcasting, telecom and new media,” suggested Bureau.
Rules make it hard for Telesat to compete at home or abroad
Canada’s largest satellite operator, Telesat Canada, also appeared before the Industry committee this week with president and CEO Dan Goldberg arguing that current foreign investment restrictions impede the company’s ability to compete both internationally and on Canadian soil.
The Canadian satellite industry was opened to foreign competitors 1998 and since that time, Industry Canada has licensed 75 foreign satellites to provider service in Canada.
Goldberg told committee members that Telesat is hampered in its ability to compete with its much larger US and European competitors because it lacks the scale and size – the world’s largest satellite operator Intelsat has 56 satellites in orbit compared to Telesat’s 12. As well, Telesat has to abide certain conditions of licence such as covering all of Canada’s geography and reserving capacity for Canadian uses. Its competitors don’t have to observe such limits.
This, according to Goldberg, puts Telesat at a distinct disadvantage even when competing for business on Canadian soil.
“Our competitors…don’t have to pay Canadian licence fees, they don’t have to cover all of Canada, they’re not subject to same rules that we are at the CRTC where they can drag back our capacity for other applications. For a decade now, they’ve been authorized to come in and compete with us and they are,” Goldberg told committee members. “They cream-skim the bottom of the country.”
Competing internationally is also difficult, he added. The company recently lost the Department of National Defence (DND) account because it didn’t have the international reach that some of its competitors do, he said, noting that while the company has good coverage of Iraq, it doesn’t for Afghanistan.
Opening up the satellite communications market to greater foreign investment would “level the playing field” by allowing Telesat to grow through acquisitions or by issuing more equity through an initial public offering, said Goldberg. “The problem for Telesat is that Canada’s ownership restrictions materially impede our ability to grow through acquisitions and they limit our access to capital in the global equity markets.”
