Industry Minister Tony Clement has firmly defended the government’s decision to declare Globalive Wireless Management Corp. a Canadian controlled company, an order that set off a controversy over the status of the country’s telecom foreign investment law.
The facts before the cabinet were “quite clear,” Clement told the Commons Industry, Science and Technology committee on Thursday. But “reasonable minds could differ.”
Last December the federal cabinet overturned the Canadian Radio-television and Telecommunications Commission’s ruling that Globalive is controlled by its Egyptian partner, Orascom Telecom Holding S.A.E.
However, cabinet came to an opposite conclusion, he said, by looking at Globalive’s share structure. Toronto telecom entrepreneur and Globalive chairman Anthony Lacavera has a controlling interest in Globalive. In addition, Clement said, Canadians have day-to-day control over Wind.
He wouldn’t go into any more detail about cabinet’s decision because the government is being sued by startup Public Mobile, which says the ruling was unfair to other wireless carriers.
Clement also said there is no connection between cabinet’s Globalive decision and its vow to liberalize investment in the telecom industry.
Critics complain the cabinet ruling confused the industry on telecom foreign ownership rules with the Globalive decision, and suggest the government is trying to make amends now by changing the law.
But Clement said changing the investment rules is strictly a “public policy decision” to give Canadians more choice in telecom providers. “The two [decisions] are not connected,” he said.
The industry committee has been holding hearings into possible telecom foreign ownership liberalization after the government announced in March’s throne speech that it wants to “open Canada’s doors.’
But after Clement’s testimony the government’s plans still remain closely guarded. He did make one thing clear: The government will not liberalize foreign ownership in the cable industry.
“We’re not here to alter the Broadcasting Act,” he said.
Almost every cable operator in the country is in the telephony business, which is why at earlier hearings executives of Rogers Communications Inc. of Toronto and Shaw Communications Inc. of Calgary insisted that if the Conservative government changes the Telecommunications Act — which governs phone and wireless carriers — it has to change the Broadcasting Act in the same way.
Clement disagreed.
“I’m not saying it’s easy, but it’s certainly not impossible to draw a distinction between telecommunications as a field of endeavor, and broadcasting and the content that goes into broadcasting,” he told the committee. “There’s no question that there’s been convergence in the industry between those who are providing telecommunications and broadcasting. But it our view it is possible to deal with those separately.”
“Is that going to require some stick handling? There’s no question,” he said. “We are in shades of grey. But I think we can with good public policy that is clear with its intent and its description get to where we have to get to, to allow the ability for investment to occur in this sector.”
Clement didn’t say whether foreign investment would be liberalized only for wireless carriers, or whether liberal investment rules would be staged over several years or apply only to companies below a certain size. Those approaches are opposed by carriers.
Ken Engelhart, Rogers’ vice-president of regulatory affairs, called Clement’s hands-off approach to the Broadcasting Act disappointing.
“It doesn’t make sense to do [investment liberalization] for telecom and not for cable TV,” he said in an interview after Clement testified. “A typical cable TV provider has fibre optic-based network delivering voice, data and video. A typical telephone company is a fibre optic-based provider delivering voice data and video. It’s the same network, the same services. It you’re going to allow one pipe to be foreign owned you’ve got to allow all pipes to be foreign owned.
“We’re disappointed but we’re not giving up,” he said, hoping to convince the government “with force of logic.”
Liberalizing foreign ownership in broadcasting is sticky because the Broadcasting Act — not only covers cable companies, it also covers radio and TV stations and cable specialty channels, many of which are owned by cablecos including Rogers, Shaw and Quebecor Inc., which owns Quebec cable company Videotron Ltee. The act obliges broadcasters to meet Canadian content requirements broadcasters, and for a minority government to go near that will be difficult. Clement was emphatic his won’t.
“We will not consider anything that might impair our ability to pursue our Canadian content policy and objectives. Period. Full stop.”
But Clement couldn’t say what the government wants to do.
“The government has not made any decisions on how exactly to move forward on liberalization of telecom ownership and investment,” he said at one point. “And so anything this committee hears from and decides will all go into the hopper.”
Asked point-blank by Liberal MP Marc Garneau what the government is planning, Clement said it will consult. “We’re going to consult with the public, we’re going to consult with the players in the industry, we’re going to consult with this committee … We are reading very closely the testimony before this committee on these issues, and that will help animate the suite of options available to the government in terms of liberalization.”
The industry committee will make recommendations to Clement from the testimony. It will likely also consider a 2008 report on Canada’s competition policy, which recommended Ottawa follow the recommendations of a 2006 report commissioned by the then Industry minister. For more on those reports, click here.
