Von Finckenstein calls for single statute to cover broadcasting, telecom

OTTAWA--Canada needs a single piece of legislation to cover telecom, broadcasting and radio communications in a converged technological world, Konrad von Finckenstein, chair of the CRTC, told the House of Commons Standing Committee on Industry, Science and Technology Tuesday. “The legislative and regulatory structure we administer still preserves the old distinctions of broadcasting and telecommunications, in other words, the distinctions between content and carriage,” von Finckenstein said. “For Canada to remain a leader in a converged world, we need to abandon these artificial and outdated concepts.” Momentum for a unified “Communications Act” appears to be building. In testimony before the House heritage committee last month, Michael Geist, the Canada research chair in Internet and e-commerce law at the University of Ottawa, recommended a similar approach to regulating the telecommunications and broadcasting industries. Geist said the CRTC’s “silo” approach to broadcasting and telecom “has almost completely broken down,” and that the government should revisit the separation of the Telecommunications Act and the Broadcasting Act to come up with a single, broader, “Communications Act.” The House industry committee is studying the liberalization of Canada’s foreign ownership restrictions following the government’s throne speech pledge to open the doors to foreign investment in the telecom sector. As the lines between broadcasting distributors and telecommunications carriers become blurred, von Finckenstein said the government should apply the same rules across the board. “Konrad is right in the sense that the telcos are now broadcasters and the broadcasters are now telcos,” Lawson Hunter, counsel at Stikeman Elliott LLP in Ottawa, and a former executive with Bell Canada, told The Wire Report. “I don’t think you can have one rule under the Telecommunications Act and another under the Broadcasting Act,” Hunter said. “We have got to be level-headed about where convergence is taking us.” In a headline-grabbing statement, von Finckenstein also told the committee that the foreign ownership restrictions could be loosened, but that no foreign entity in the telecom or broadcasting sector should be allowed to own more than 49 per cent of the issued voting shares either directly (with the Canadian carrier) or indirectly (with the holding company). That would be a significant increase from the current rules under the Telecommunications Act, which limits foreign investment to 20 per cent of the voting shares in the carrier and 33 per cent of the voting shares in the holding company. Under von Finckenstein’s proposal, the carrier and the holding company would remain more than 50 per cent Canadian owned and controlled. The CRTC made the same proposal to the Competition Policy Review Panel, which issued its final report in June 2008. “Like in any other industry, competition brings a discipline into the market and makes sure you have innovation and good consumer benefits,” von Finckenstein told the committee. Von Finckenstein said there must be limits in place to protect Canadian culture from outside interests. “It should be an overwhelmingly Canadian system giving access to Canadian content,” he said. “I’m not sure how telecom is different from so many other parts of the economy, where we welcome foreign investment,” said Sheridan Scott, a partner in Bennett Jones LLP and former commissioner of the Competition Bureau. “Clearly, he stated that he believes that to look at the option for more foreign ownership is something that we should be looking at,” Mike Wallace, a Conservative MP and member of the industry committee, told The Wire Report after question period Tuesday. “To be honest with you. Mr. von Finckenstein put some valuable information in front of us, from the CRTC’s position, of where we should go.” Several opposition MPs took the opportunity to ask von Finckenstein about the CRTC’s Globalive decision, which the government overturned last year. Marc Garneau, the Liberal Party’s industry critic, asked von Finckenstein why there was a delay of several months between Industry Canada’s approval of Globalive’s corporate structure after the 2008 spectrum auction and, following that, the CRTC’s rejection of the company’s ownership structure. Von Finckenstein said it is difficult to give a company clearance before it purchases spectrum. He added that there needs to be better cooperation between Industry Canada and the CRTC to avoid similar situations. Earlier in the day, Dimitri Ypsilanti, head of the information, communications and consumer policy division at the Organisation for Economic Co-operation and Development (OECD), appeared before the committee. Ypsilanti said Canada has the most restrictive foreign ownership regulations in the telecommunications sector of all 30 OECD countries. “Canada is the most restrictive in terms of foreign investment in the telecom sector,” he said. Ypsilanti, who lives in Paris, France, said his city is an example of the benefits derived from more foreign competition in the telecommunications sector. “I live in Paris and I can get, for 40 Canadian dollars, Internet access at 20 Mbps, 300 TV channels, free calls to local and national numbers, and free calls to 100 international numbers.” Carole Lavallée, the Bloc Québécois’ heritage critic, said the “threat” to Canadian culture from the United States is real and that opening the doors to foreign ownership could threaten Canada’s cultural sovereignty. Ypsilanti replied Canada’s broadcasting regulations would still protect Canadian content if more foreign ownership was allowed into the telecommunications sector. All carriers—whether Canadian-owned—all behave the same way and will invest when there are profits to be made, he added. “That framework, which we can adapt quite easily to a new environment where telcos offer programming online, doesn’t have anything to do with restricting investment,” Ypsilanti said. “I don’t see any danger in opening investment on the network.” The question of whether Internet service providers (ISPs) could be subject to the the Broadcasting Act as "broadcasting undertakings" is currently before the Federal Court of Appeal. The CRTC referred the legal question to the Federal Court of Appeal last summer. A hearing is scheduled for June 1, 2010. jmigneault@thewirereport.ca

Von Finckenstein calls for single statute to cover broadcasting, telecom

Broadcast | April 13, 2010

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