OTTAWA – The tightly knit nature of the telecommunications and broadcasting sectors makes it impossible to open telecom markets to greater foreign investment without negatively affecting Canadian culture in some way, Friends of Canadian Broadcasting told the Standing Committee on Industry this week.
Ian Morrison, a spokesperson for Friends, highlighted the integrated nature of Canada’s largest communications and broadcasting companies during his opening remarks pointing Rogers Communications, Bell Canada and Quebecor. If Rogers were owned by foreigners, it would have to sell Rogers Media. Similarly, Bell couldn’t control Bell TV, he said.
“Disposing of these key broadcasting assets would destabilize the Canadian broadcasting system by reducing the investor pool as well as ending synergies between the component parts,” Morrison said. “It’s reasonable to assume that the affected players would instead call for changes to ownership requirements under the Broadcasting Act just as they did successfully when telecom ownership requirements were last changed in the 1990s.”
Morrison argued that Canadian broadcasting is a public good that facilitates the participation of citizens in the democratic process and contributes to building a distinct identity north of the 49th parallel. “Allowing such an important instrument of Canada’s national development to fall into foreign hands would signal the demise of our cultural sovereignty,” he said. “While no patriotic Canadian would deliberately counsel such an outcome, tinkering with foreign ownership rules in one of the media and communications industry will place other parts at risk.”
Richard Paradis, president and CEO of communications sector consulting firm CIC Group, questioned the need for hearings. “What has changed so drastically that we have to even think of opening our telecommunications sector to increased foreign ownership?” he asked. “Except for the banks, this is one of the most lucrative industrial sectors in the country even during an economic downturn.”
Paradis acknowledged that Canadians pay more for some telecommunications services such as mobile and text messaging. But, he added, this is not the result of Canada’s telecommunications markets not being competitive enough.
“The federal government has introduced competition in almost all sectors of communications through CRTC decisions and policies during the last 20 years. There is ample competition presently in the Canadian market,” he said. “The only reason prices are not coming down is because the industry is complacent. This will not necessarily drastically change by letting in foreign players.”
Steven Globerman, director of the Centre for International Business and the Kaiser professor at Western Washington University argued, however, that foreign investment is critical to improving the Canadian economy. “Foreign investment, inward investment, improves productivity in the host economy,” he said.
The academic, who has written extensively on this issue of foreign investment restrictions in the Canadian telecommunications sector, countered many suggestions from Morrison and Paradis. He discounted arguments that foreign managers and investors will be more concerned about profits than providing service to Canadians.
“Absolutely foreign managers and foreign investors are concerned with profits. So are Canadian managers, so are Canadian investors,” he said. “To the best of my understanding, the government of Canada has no less sovereignty over a foreign company operating in Canada than it does over a domestically owned company operating in Canada. There is nothing in any trade agreement that I know of that makes that invalid. A company is subject to the sovereign rules of the state in which it does business.”
Globerman also took issue with the argument that relaxing foreign investment restrictions would mean lost Canadian jobs. He described the concerns raised by Morrison and Paradis as “being front and centre in the 1970s and 1980s.”
“Most multinational companies…are moving towards global supply chains where very specific and specialized activities are being moved to locations where they’re most efficiently done,” he said. “Foreign companies are moving research and development facilities in Canada. Microsoft has moved a big research and development facility into Vancouver. It’s simply not an accurate characterization of how global companies operate today.”
Hearings continue on April 1 with cultural groups such as the Writers Guild of Canada and ACTRA appearing. Following a break next week, the committee resumes with hearings scheduled for April 13 and 15.