Clement talks digital issues, says functional separation ‘completely unrealistic’

Conservative candidate and Industry Minister Tony Clement calls the Liberal party “completely unrealistic” for its support of functional separation, a regulatory approach that attempts to encourage competition by requiring incumbent telcos to divide their wholesale and retail services. “The whole industry is going to convergence, not splitting off. I think that’s completely unrealistic of the Liberals to suggest that they’re in favour of that,” Clement, the industry minister who is running for reelection in the riding of Parry Sound-Muskoka, Ont., told The Wire Report in an interview about digital policy issues Thursday. “Having said that, convergence does also create challenges and problems. My North Star on these things is competition and choice. To the extent that we can encourage that through government policy, I will be in favour of that.” Clement was responding to an online discussion on April 11, when Marc Garneau, the former Liberal party industry critic and now a candidate in Westmount-Ville-Marie, Que., answered questions from OpenMedia.ca’s Steve Anderson and University of Ottawa law professor Michael Geist as part of the party’s digital platform release. During the discussion, Garneau answered “yes” when pressed on whether a Liberal government would adopt functional separation, a form of regulation that would require Internet service providers (ISPs) to create separate divisions for their wholesale and retail services. The regulatory approach, which has as many detractors as supporters, is said to create a level playing field between incumbent and small, reseller ISPs. The Liberal party, which during the election campaign also pledged to issue an “open Internet directive” to the CRTC, has previously said it supports Internet policies requiring speed matching and, like the NDP, net neutrality. In a phone interview, Clement also weighed on the controversy over broadcasters’ calls for a CRTC consultation on the role over foreign-owned, over-the-top content portals like Netflix in the Canadian broadcasting system. Pressure is mounting on the CRTC to hold a proceeding to look at what, if anything, online over-the-top services should be contributing to the Canadian broadcasting system. “They’re asking for a consultation, but I guess I’m skeptical of the reasoning of the mainline broadcasters—that they’re doing this in the hopes of fairness and equity. I think it’s also a way to strangle the competition,” Clement said. Although he said Heritage Minister James Moore has primary responsibility for broadcasting issues, Clement said he is “quite concerned” about the possibility of requiring Netflix Inc. to pay a portion of its revenues to support the Canadian broadcasting system—as broadcasting distributors are required to do under broadcasting regulations. “I’m quite concerned that what’s happening is this will go against our strategy of giving consumers more choice and more competition,” Clement said. “If this regulatory request is a Trojan horse for hobbling Netflix, so that they can’t compete with the established providers, I have a problem with that.” Clement pointed out that the Conservative budget—which died in the House of Commons when Parliament dissolved last month for an election—pledged $80 million in new funding over three years for the digital economy. The money would go to help small and medium-sized businesses to accelerate the adoption of information and communications technologies in collaboration with colleges. Clement would not say whether a re-elected Conservative government would allocate proceeds from Industry Canada’s auction of the 700 MHz band to support the digital economy. The 700 MHz auction, slated for sometime next year, is expected to generate more revenues than Industry Canada’s 2008 wireless auction, whose proceeds totalled more than $4.25 billion. The Liberals have pledged to use $500 million from the proceeds of the auction to reach 100 per cent high-speed Internet connectivity of at least 1.5 Mbps for all Canadian communities within three years of being elected. Although the Conservative budget did not provide any new money for broadband connectivity, Clement said its Broadband Canada plan, which in 2009 allocated $225 million over three years to extend broadband coverage in rural and remote areas, will make broadband services available to 98 per cent of homes. “My responsibility is to get us to that number, which I think is very doable. I don’t know how the Liberals are going to spend another $500 million to get an extra two per cent in broadband coverage. That’s a lot of money for that amount. Our first responsibility is to meet our goals and objectives for the moneys that are already allocated,” he said. He said a Conservative government would complete its consultation on a policy framework for the 700 MHz auction before announcing any plans on how the auction proceeds will be spent. “We’ve made no commitments on moneys coming in from the spectrum auction. That’s premature. We were in the middle of a consultation process when the election was called, and I think it would be irresponsible of us as a government to short-circuit that process by dedicating moneys when that consultation process has not been completed,” Clement said. The Wire Report asked Clement whether he had hoped to see the Conservative party take a position during the election on the foreign ownership restrictions for the telecom sector, but he said decisions on foreign ownership cannot be made in isolation of a 700 MHz auction policy. “You have to know how you’re constructing the spectrum auction,” he said. “That will dictate how much foreign capital versus domestic capital will be necessary to ensure that we have more competition and more choice, which is still a hallmark of my strategy. As we’re moving along, making decisions on the spectrum auction, we will simultaneously be making decisions on access to foreign capital.” Clement added that a re-elected Conservative government would reintroduce its former copyright reform legislation, Bill C-32, which died on the order paper in March. He said he hopes the parties of the House would agree to move the bill back to committee stage, where it was under study when Parliament dissolved. “There were some good amendments that were proposed. We never said that we were against amendments, but we didn’t even get to the amendments stage,” Clement said. “I’m hoping that we can at least fast-forward to the amendments stage and get that done and get it through the House fairly quickly.” The Liberal party could not be reached for comment Thursday afternoon. sdoyle@thewirereport.ca

Clement talks digital issues, says functional separation ‘completely unrealistic’

Broadcast | April 21, 2011

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