Open telecom to foreign investment, former competition commissioner says

A past Competition Bureau Commissioner is calling on the federal government to loosen the restrictions on foreign investment in telecommunications. Others say a fundamental change to the regime is needed. In January, Calvin Goldman published an op-ed, written with Toronto attorney Thomas Mathews, in the Globe and Mail urging more foreign competition for telecom and the airline industry. The pair expanded on their views in a wide-ranging interview with the Wire Report. Goldman and Mathews do not advocate opening the markets indiscriminately but would let telecom providers from select nations enter Canada. Invoking security concerns, the country could open the industry to investment from other members of the Five Eyes Alliance – Australia, New Zealand, the United Kingdom and the United States. Other close allies like Japan could also be allowed in. “Canada has every right to define the limitations,” Goldman stated. “There’s no need to open the door to every country across the globe.” “Once you put the national security stamp on these industries, so telecom – everyone knows around the world – is highly sensitive,” Mathews explained. “The government will have the ability to restrict access. So we trust our national intelligence with the United States, Britain, the other Five Eyes allies.” Some of these matters were at the heart of Competition Bureau hearings into the takeover of Shaw Communications by Rogers Communications Inc. “We’ve said let’s see the benefit of increased competition brought to Canadian consumers and businesses–small businesses and larger businesses–but especially Canadian consumers,” Goldman continued. “The very objectives that were in the Rogers-Shaw case but do it on a broader basis.” In their Globe article, the duo castigated current regulations as “outdated.” Any Canadian telecom representing more than 10 per cent of the market must be Canadian-owned, with 80 per cent of the board of directors and 80 per cent of the voting shares Canadian. Years ago the wireless sector had five major players but the market could not support it. ClearNet was sold to Telus Corp. and Microcell was taken over by Rogers. Goldman is not swayed by arguments that Canada is too small to welcome new entrants to the sector. “The market will respond accordingly. Let the market operate, let the market function,” he said. “We should not be presumptuous and try to dictate the number of players that will be able to prove viability in the market.” Foreign players may want to partner with existing Canadian telecoms to launch joint ventures. This happened when the long distance market opened up. Call-Net had Sprint as a minority partner and marketed itself as Sprint Canada. Mathews feels customers will be the ultimate victors in such a situation. “At the ground level, Canadian consumers are frustrated with what they feel is elevated telecom prices for the services they’re getting,” he stated. Robin Shaban of the Canadian Anti-Monopoly Project is not averse to opening up markets per se, but thinks the current practices of the Canadian telecoms precludes foreign entry. The Canadian players anticipate each other’s pricing and respond accordingly. That is a disincentive for new players, be they national or international. “Just because we open up the Canadian market in principle to foreign competition it doesn’t mean it’s going to solve the problem at this point,” they said. The tacit collusion among telecoms discourages true competition. “Frankly, I think the only solution going forward is a regulatory one, one where we’re working with the telcos to keep prices lower for Canadians and implementing perhaps more interventionist approaches to regulating prices,” Shaban remarked. An even more radical approach was posited by Mark Hancock, president of the Canadian Union of Public Employees. He wrote an opinion piece for our affiliated publication The Hill Times earlier this month, castigating telecoms – BCE Inc. in particular – for their labour policies. He called for renewal of the Telecommunications Act to keep jobs in Canada and ban outsourcing to other nations. “If this approach is unsuccessful, the nationalization of the entire telecommunications sector should be considered,” he wrote. “This would allow for a public service approach whereby data security, privacy, and local employment would be under direct public control, for the benefit of all Canadians.” Robert Malcolmson, EVP of BCE and Bell Canada, responded with a letter to the editor which rejected Hancock’s assertion that Bell jobs had been moved offshore during recent layoffs. The company used vacancies and attrition wherever possible and those who were laid off were offered “fair” severance packages, he added. – Reporting by Paul Park at ppark@thewirereport.ca

Open telecom to foreign investment, former competition commissioner says

News | April 26, 2024

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Open telecom to foreign investment, former competition commissioner says

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