TORONTO – At least two top telecom executives said they’re pleased with how the federal government has been handling its telecom policy initiatives in recent months.
MTS Allstream CEO Pierre Blouin and Videotron president and CEO Robert Dépatie both extended their congratulations to Industry Canada this morning during each of their keynote speeches to attendees of the Canadian Telecom Summit.
MTS Allstream’s Blouin was reacting positively to Industry Canada Minister Tony Clement’s announcement at the Telecom Summit yesterday that the federal government is initiating a public consultation process into the issue of foreign investment in the telecommunications industry.
“I congratulate Minister Clement for his comments yesterday, reconfirming the federal government’s commitment to open telecommunications to greater foreign direct investment,” Blouin said. “And we look forward to participating in the consultation process. The direction is a very positive one.”
Pointing to the experience of telecom industry casualty AT&T Canada – which was rebranded as Allstream in 2003 and acquired by MTS in 2004 – Blouin said his company has first-hand knowledge of how restrictive foreign ownership rules can negatively impact a telco’s business viability. Staggering under $4 billion of debt accrued as a result of building out a national IP network, AT&T Canada went through a major restructuring before ultimately being swallowed up by the Winnipeg-based telco.
“This was due, in large part, to the fact that it was paying $400 million in annual interest charges on the debt required to fund its capital build – a situation that no Canadian incumbent would ever face,” Blouin said. “If not for Canada’s restrictions on foreign ownership, the build-out could have been funded with equity and not only debt, and the bankruptcy could have been avoided.”
MTS Allstream recently commissioned a Harris/Decima survey that found 63% of Canadian respondents support foreign investment in the Canadian telecom industry, according to Blouin.
“The survey showed that Canadians believe global investment in Canadian telecom will provide more consumer choices and more jobs, without harming Canadian culture,” Blouin said.
A succession of telecom policy review reports – starting with 2001’s Broadband Task Force Report and culminating most recently in the Red Wilson Competition Policy Review Panel report of 2008 – have advocated the easing of foreign investment restrictions, Blouin said.
“Now is the time to act, and I applaud Minister Clement’s leadership on this issue,” Blouin said.
During a question-and-answer session after his speech, Blouin said it remains to be seen how the government will reduce foreign ownership restrictions. But whether the government decides to fully remove restrictions on foreign investment in the telecom industry or it takes a staged approach by easing foreign ownership restrictions on smaller telecom players first, as recommended by the Wilson competition policy review, MTS Allstream will support either approach, Blouin said.
For his part, Videotron CEO Robert Dépatie was congratulatory toward the Canadian federal government for its overall efforts in recent years to foster increased competition in the telecom industry.
“Thanks to more competition, prices have already fallen and will fall further, and service quality will improve. We think the Canadian government deserves a lot of credit for having the courage to make the needed changes,” said Dépatie, whose company is building its wireless network now for a launch in Quebec later this summer.
In particular, Dépatie liked Industry Canada’s handling of the Advanced Wireless Spectrum (AWS) auction in 2008 (with spectrum set aside for newcomers and other rules which prevented incumbents from buying all the spectrum and forces things like tower sharing) and he said the federal government should replicate its approach in upcoming spectrum auctions.
“We must make more spectrum available on a timely basis, and we must make sure it goes to those who are ready and willing to use it,” Dépatie said. “The 700MHz and 2.5GHz spectrum auctions are coming, and the government will soon have another opportunity to prove it knows how to get things done.”
Dépatie said he expects to see “the usual posturing by the usual suspects”, with established telecom players calling for no restrictions whatsoever during the upcoming spectrum auctions (something that happened in the very next session, actually).
“I think such a course would be a mistake,” Dépatie said. “I think the government needs to approach these auctions like it approached the AWS auction – with vision, with courage, and with the greater good and public interest in mind.”
Dépatie said his concern is that a “hands-off approach” to the spectrum auctions will result in larger telecom players being able to bank spectrum, stifle competition and delay rollout of better services to consumers.
“These lower frequencies are the beachfront properties of the spectrum world,” Dépatie said. “Merely seeking the highest bidder, without restrictions, might not best serve the public interest.”
