Open up telecom and broadcasting sectors to 49 per cent foreign investment: Bell Canada

TORONTO—CRTC chairman Konrad von Finckenstein has found an ally in his proposal to confront convergence and raise the foreign ownership limits in both the broadcasting and telecom sectors to 49 per cent. Mirko Bibic, senior vice president of regulatory and government affairs at Bell Canada, said at the 2010 Canadian Telecom Summit conference Tuesday that the foreign ownership rules should apply “symmetrically” for large and small companies in telecom and broadcasting. “We live in an era of convergence. We are integrated carriers,” Bibic said on a panel titled “Regulatory Blockbuster.” “The most practical perspective is to lift or raise the foreign ownership limits in a way that still allows for Canadian control of broadcasting and telecom. That’s the only way that you’re going to get the extra foreign capital that we desire.” Von Finckenstein has repeatedly called for a new converged “Communications Act” that merges the broadcasting and telecom acts and increases the foreign investment limits for the sectors. Right now, the broadcasting and telecom frameworks limit foreign investment at maximums of 20 per cent in the operating company and 33 per cent of the holding company. Von Kinckenstein has proposed increasing each of those limits to 49 per cent in any Canadian broadcasting or telecom “communications company.” In either case, Canadian ownership and control would be retained at a minimum of 51 per cent. Some may be calling for increased foreign investment limits across the board, but Industry Minister Tony Clement has pledged to tinker only with telecom. Clement is preparing to release a discussion paper in a few days that will launch a national consultation on how to go about opening the Canadian telecom sector to more foreign investment and meet the capital needs of big and small players in the industry. Clement has said repeatedly that he has no intention to amend the Broadcasting Act. Industry experts picked up on that point at the regulatory panel discussion Tuesday, saying von Finckenstein’s call for converged legislation and amendments to the broadcasting and telecom acts are a non-starter. “The train has left the station,” Edward Antecol, vice-president of regulatory affairs and carrier services at Globalive Communications Corp., said on the panel, noting that Clement’s piecemeal approach will start with the Telecommunication Act. Under Clement’s proposal, cable companies’ broadcasting assets will continue to be regulated under the Broadcasting Act, Antecol said. In an era of convergence, when many of Canada’s large communications companies—such as Bell, Rogers Communications Inc., and Telus Corp.—operate television, wireless, Internet, and phone services, the government’s proposal to loosen the foreign investment for the telecom sector only will require some creativity. Clement has said dealing with telecom and broadcasting separately will take some "stick handling," but that it can be done. Ken Engelhart, senior vice-president of regulatory affairs for Rogers, said on the panel that broadcasting services don’t require as much capital as “the pipe business.” “If you do it for telecom, you’ve got to do it for cable, and those businesses truly have converged. you don’t have to do it for radio and TV," he said. But keeping television services under the Broadcasting Act—while opening up a communications company’s telecommunications services to foreign control—would involve restructuring. Companies would have to divest themselves of assets so that only their telecommunications operations are open to further foreign investment. Communications companies’ specialty channels—as well as their operations as broadcasting distribution undertakings (BDUs)—would have to be hived off. “A rule that lifts the telecom rules only, but not broadcasting, puts integrated carriers—carriers that offer video, Internet, and phone—in a very difficult position,” Bibic told The Wire Report in an interview Tuesday. “We have integrated networks that offer video, home phone and Internet, and that’s the core of the business.” Bibic said if Bell had to divest of its content and BDU services, it would be “turning the network into a big fat pipe. We’re not in this business to be mere big fat pipes.” But Michael Hennessy, senior vice-president of regulatory affairs with Telus, said on the panel that television channels can be easily separated from distribution services--and only if companies chose to do it. “The culture thing is the biggest red herring being put on the table in this debate to obfuscate everything. It is the easiest thing to separate,” Hennessy said. He said companies like Rogers could choose to divest their broadcasting assets to gain access to more foreign investment. “They could keep it and be a little mini broadcaster, or they could sell it to another broadcaster, but they’d have to divest it,” he said. Von Finckenstein maintains that it’s not worth the effort to start tinkering with foreign ownership under the Telecom Act when the entire communications regulatory system needs an overhaul. In an interview with The Wire Report at the conference on Tuesday, von Finckenstein said control is “slowly fading,” and that separating broadcasting and telecom makes no sense in an age of convergence. “We have to rethink what we can do to create a Canadian communications industry,” von Finckenstein said. “We have to have one converged act and one consistent philosophy applied.” Bibic said cabinet could change the Broadcasting Act’s foreign ownership restrictions without amending the act. Bell is expected to make similar arguments in its submission to the government’s coming consultation on foreign ownership in the telecom sector. sdoyle@thewirereport.ca

Open up telecom and broadcasting sectors to 49 per cent foreign investment: Bell Canada

Broadcast | June 8, 2010

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