Foreign ownership restrictions are still necessary to protect Canada, labour states

On February 19, the National Alliance of Communications Unions presented its views on foreign investment limits to the House of Commons industry committee. An edited version of that presentation appears here. In the context of the current hearings, which have been convened in response to the corporate call for relaxation of foreign ownership restrictions on Canada’s common carriers, we are compelled to raise concerns about the current thrust of governance and control of the industry, about prospects for its future, and about the likelihood that further liberalization will have a seriously detrimental effect on the people who work in the industry as well as members of the general public. We have perused the self-serving rhetoric and baseless promises coming from representatives of Canada’s monopoly cable barons, competitive local exchange carriers, and the dominant incumbent local exchange carriers—all of whom appear to favour liberalization of the restrictions on foreign ownership that currently govern Canadian communications. We wish to remind this committee that such liberalization would be the latest in a series of corporate-driven changes including privatization, competition, and deregulation, all of which have, over the last two decades resulted in significant job losses, degraded residential service quality, a doubling of telephone local rates and an unprecedented worldwide financial meltdown. Not to be deterred by the adverse effects of their earlier efforts, corporate-driven organizations like the OECD are now asking us to respond to the disaster they have already brought upon us by redoubling the effort through liberalization of foreign ownership restrictions (NL, Nov. 4/02). Given the fact that the existing mess was caused by the creation of massive overcapacity, it remains to be seen how embracing their advice to liberalize foreign ownership restrictions will address the problem. The simple fact is that foreign companies have no more reason to be interested in purchasing assets in this overbuilt industry than domestic ones are. In stark contrast to what their proponents promised, the combined effects of privatization, competition and deregulation have led us to an unprecedented number of bankruptcies and closures, widespread restructuring and massive layoffs. These, in turn, are now threatening national policy objectives, including the universal availability of high quality, affordable telecommunications services. We consider increased foreign ownership to be a direct threat to potential growth in infrastructure and employment in the industry. As technical capacity makes it possible, foreign companies controlling Canadian communications are increasingly likely to provide services in this country via facilities based abroad if they are allowed to do so.Furthermore, we share other Canadians’ concern that the present review is a prelude to upcoming GATS negotiations where our tele-communications sector will be treated as just another commodity to be traded away! Indeed, we are convinced that removing foreign investment restrictions could lead to massive loss of Canadian jobs in this sector. In an industry driven by technological changes and economies of scale, allowing increased foreign ownership could trigger further corporate consolidation and centralization of critical services and network operations south of the border. While Canada’s deregulated phone companies have been pursuing corporate strategies designed to maximize their financial positions, they were systematically failing to meet CRTC Quality of Service indicators and—as evidenced by companies’ own surveys—allowing customer satisfaction levels to drop significantly. Under a rate of return regulatory regime, incumbent companies had a clear incentive to maintain state-of-the-art, high quality services and networks throughout their servicing areas. Under the price cap regime, however, the emphasis has shifted toward reducing capital expenditures and emphasizing the generation of higher earnings by encouraging increased statistical measures of productivity levels by reducing staffing. Finally, opening our markets to increased foreign ownership could mean that over the next few years the Canadian telecommunications market could come to be dominated by American corporate giants who do little more than whipsaw Canadian consumers. If we were to allow foreign investment at higher levels than they are today, regulators would soon find themselves chatting with receptionists in Dallas about the weather, rather than CEOs in Montreal, Toronto, Winnipeg or Vancouver. We would become little more than a regional profit centre, a cultural Wal-Mart.

Foreign ownership restrictions are still necessary to protect Canada, labour states

News | February 24, 2003

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