OTTAWA – It’s time to open up Canada’s telecom borders to foreign investment, the Organisation for Economic Cooperation and Development told the federal government this morning.
Dimitri Ypsilanti, head of the information, communications and consumer policy division directorate on science, technology and industry with the OECD in Paris discounted the both cultural and network sensitivity reasons for maintaining foreign investment restrictions in telecom during his chat this morning with the Standing Committee on Industry, Science and Technology which is examining the rules on foreign investment in Canadian telecom companies.
“There’s no reason in my mind to believe that foreign telecom network operators will necessitate in a change in regulations governing the diffusion of content,” he told committee members. “Canada is in fact one of many OECD countries that have regulations favouring local content, favouring the diffusion of domestic broadcast content and yet, these other countries do not seem to find the need to restrict investment in the telecommunications sector. If they want to protect the content sector, they do so directly with other laws and regulations.”
Under questioning Ypsilanti insisted that opening telecom networks to greater foreign investment won’t have an impact on broadcasting or cultural-related issues.
“If you want to control programmed television whether it’s provided free to air, whether it’s provided on cable networks or on high speed Internet networks, you can do that directly with regulations, many of which you have in place already without necessarily going all the way back to the network and restricting investment in the network. I find that totally unnecessary,” he said in response to a question from Liberal MP Denis Coderre.
Ypsilanti is equally suspicious of the need for foreign investment restrictions due to the sensitivity of Canadian networks. OECD countries including Canada have laws and regulations to protect telecom networks but they don’t need to prevent foreign investment, he said.
“There are more direct regulations which ensure that there’s a protection of the infrastructure,” he said. “So the argument with respect to sensitivity is to my mind fairly spurious.”
The committee saw both sides of the coin Tuesday as CRTC chairman Konrad von Finckenstein advocated for a continuation of the rules, albeit with some slight modifications and simplifications.
While the OECD could see no logical reason to maintain Canada’s “severely restrictive” foreign investment regime, von Finckenstein argued that the Canadian telecommunications and broadcasting system should remain firmly in Canadian hands. But as a result of convergence between telecommunications and broadcasting, the government needs to re-think how it regulates both sectors, he added.
Current rules across the Telecommunications Act, the Broadcasting Act and the Radiocommunication Act “make up a complicated web of boundaries, categories and constraints,” von Finckenstein said during his opening remarks. “But the legislative and regulatory structure we administer still preserves the old distinctions of broadcasting and telecommunications or, in other words, the distinctions between content and carriage. For Canada to remain a leader in a converged world, we need to abandon these artificial and outdated concepts.”
Von Finckenstein called for a complete overhaul of the telecommunications and broadcasting legislative framework with the ultimate goal of establishing a single unified Act governing both sectors. The CRTC raised the issue of a converged Act more than three years ago during the Competition Policy Review Panel’s consultation. And in June 2008, von Finckenstein spoke about the need for a unified Act in a presentation at the 2008 Canadian Telecom Summit.
The CRTC has also proposed a much more simplified test for foreign investment, applying to both telecommunications firms and broadcasters. Under the Commission’s model, foreign entities would be limited to controlling 49% of the issued voting shares and no foreign entity should have control in fact of Canadian communications company.
“Make it very simple for a foreign company,” von Finckenstein said in response to a question from Liberal MP Marc Garneau. “As long as a Canadian owns 51% of the voting shares and the control in fact is there, you can invest as much as you can in Canada,” he said, noting that Rogers Communications is a perfect example.
“[It] had huge financial from abroad, but there was no question that Ted Rogers was in control.”
