Renews call to remove foreign ownership restrictions
By Greg O’Brien
GATINEAU – It’s been 18 years since Darren Entwistle, president and CEO of Telus, has personally appeared in front of the CRTC at a formal hearing. So why come to one?
“I’m frustrated,” he said to a small group of people in the hearing room in Gatineau a few minutes before he sat down for his four-plus-hour turn in front of the Commission as it examines wireless policy in Canada.
How frustrated? Enough to reduce network investments by $1 billion with a corresponding loss of 5,000 jobs, apparently.
While the entire Telus presentation was rather filled with newsy bits which we’ll get to below, including a renewed call for the federal government to jettison foreign ownership restrictions in telecom, Entwistle dropped the possible job cuts news at the tail end of his appearance.
He offered to file with the CRTC a unanimous resolution recently passed by the Telus board of directors which, he told the hearing, says if the CRTC does go ahead and mandate mobile virtual network operators access to incumbents’ networks, as it has proposed to do, Telus will react in the only way it can afford to, said Entwistle (pictured above in a cpac.ca screen cap).
“There’s been a lot of conjecture related to disinvestment or reduced investment… And there are some views that this is just theatre perpetrated by the incumbents and that if mandated MVNOs come to fruition, and an another enforced 25% price reduction, that we will go on with status quo investing.”
That won’t be so, he continued.
“One of the additional things I would like to file with you in confidence… is a board resolution at Telus, signed by all of our board directors, instructing management to pursue an investment reduction plan and a job reduction plan and a philanthropic giving reduction plan should these eventualities present themselves,” said Entwistle.
“The reduction is… in the vicinity of a billion dollars of reduced investment over the next five years, reduced employment in the zip code of 5,000 jobs over the next five years, and I would ask that as we look holistically on the eve of 5G what is the right thing to do for Canada that we include quantitatively all of these factors and reach a net conclusion as to what is the best way forward. Is it the continuation of facilities-based competition or is it a divergence thereof?”
We asked Telus representatives if they would make the full board resolution public, but they declined. (Ed note: Ice Wireless CEO Samer Bishay was quick on Twitter to react, tweeting on his company’s behalf “Don’t worry, we are hiring.”)
The demanded 25% rate cut Entwistle referred to is the federal government’s promise to take wireless rates down further than they have already fallen – something Telus recently addressed here.
“We know that this hearing room, this process and this institution are more than a mere antechamber to the Minister’s office.” – Stephen Schmidt, Telus
The company also took a swing at the federal government in its opening statement in a way others have not yet been so direct, reminding the CRTC it is an evidence-based, arm’s-length agency. “The Commission is not seeking to be re-elected in the next 18 months and has a longer time horizon and wider view than that afforded by the pressures and pragmatism of politics and the media,” said VP federal government and regulatory affairs Stephen Schmidt. “We know that this hearing room, this process and this institution are more than a mere antechamber to the Minister’s office.
“This process and this institution afford us the ability to chart a different path forward – one anchored in fact and expertise – in order to deliver meaningful, durable benefits for Canada and Canadians.”
One of the major challenges the industry faces – one which Entwistle expressed his sadness after CRTC chair Ian Scott pointed out Canadians are angry about wireless pricing “whether well-informed or not” – is that Canadians perceive their wireless and telecom companies in such a negative way. While the CEO laid part of that at the feet of politicians constantly taking shots at successful companies which employ around 400,000 Canadians (and he even said a higher rate of mental health challenges found among Canadian telecom employees is partly caused by the “cacophony” of politician-fueled negativity towards wireless companies), he also said the industry itself has done a poor job at expressing itself because prices are affordable, networks are excellent, competition is strong and incumbents are huge drivers of economic good in Canada.
“Part of the culpability sits with the industry – we could have done a better job articulating everything from affordability, the value, to the world leadership that we consistently exemplify in relation to the performance of our networks. It saddens me greatly,” Entwistle said.
“I don’t believe there is the justification to move away from facilities-based competition in this country and forcibly introduce MVNOs in any of the formats that have been discussed.” – Darren Entwistle, Telus
He also told the CRTC that if the federal government really wants to open the Canadian market for competition, it should drop all foreign ownership requirements in the telecom sector. When asked by commissioner Christopher MacDonald what he would consider the least-bad option when it comes to MVNOs – like what was asked of Bell the day before – Entwistle refused to make a choice and reached back to present a future solution.
“I don’t believe there is the justification to move away from facilities-based competition in this country and forcibly introduce MVNOs in any of the formats that have been discussed.
“If you would like to understand what model I would propose, I would go back to what I said to Red Wilson… that Canada should liberalize foreign ownership restrictions and let free market forces determine the competitive outcomes at the end of the day.”
This is the 2008 federal government competition report we believe Entwistle was referring to.
When MacDonald asked him to expand, Entwistle was more direct. “I mean the full opening of our market applied in a homogenous fashion applied to all players within the market and the elimination of foreign ownership caps in that regard.”
That’s not something the CRTC can do in this proceeding, but perhaps Entwistle’s target for this and the topics above, were the folks across the river from Gatineau.
The hearing continues tomorrow with Eastlink, CN Railway, TekSavvy, Mobilexchange, the Federation of Canadian Municipalities and the Province of British Columbia.
