INST Committee News Release
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N E W S R E L
E A S E
House Of Commons
Standing Committee On Industry, Science And Technology Tables Report On
Canada’s Foreign Investment Restrictions Applicable to Telecommunications
Common Carriers.
FOR IMMEDIATE RELEASE
Ottawa, April 28, 2003 –
The House of Commons Standing Committee on Industry, Science and Technology tabled in Parliament today the
Committee’s report on Canada’s Foreign Investment Restrictions
Applicable to Telecommunications Common Carriers. The Honourable Allan Rock,
Minister of Industry, had asked the Committee to solicit views on Canada’s
foreign direct investment restrictions. The report, entitled Opening Canadian
Telecommunications to the World,
is the product of the Committee’s three-month investigation into
the impacts of these restrictions on the telecommunications sector.
“Most telecommunications companies seeking outside sources of capital for investment purposes that appeared at the Committee’s hearings claimed to have encountered problems trying to raise capital in the past decade” said Mr. Lastewka. “They experienced either reduced access to capital, or higher cost of capital, or both.”
The Committee heard from stakeholders in both the telecommunications and broadcasting industries. Wireless companies, wireline incumbent local exchange carriers (ILECs) and competitive local exchange carriers (CLECs), and cable television companies recounted their experiences in raising investment capital under the current foreign ownership regime. The evidence provided to the Committee indicated that:
“The impact of
foreign ownership restrictions was felt hardest on the newest telecom
companies. These restrictions were, in part, responsible for the scaling back
of investment plans and the taking on of more debt by these companies. Their higher debt-equity positions also led
to considerably higher financial instability within the industry” said Mr. Lastewka.
The
Committee also concluded that, because of technological convergence over the
past two decades, telecommunications common carriers and broadcasting
distribution undertakings – that is, cable television, satellite television and
multipoint distribution systems – can no longer be separated on the basis of
their underlying distribution networks or the services they provide. The Committee
believes that carriage and content are distinct entities, and that distribution
can be separated from programming undertakings.
Two of the Committee’s four recommendations directly addressed the
foreign ownership restrictions. The Committee recommended:
That the
Government of Canada remove entirely the minimum Canadian ownership
requirements, including the requirement of Canadian control, applicable to
telecommunications common carriers.
That the Government of
Canada ensure that any changes made to the Canadian ownership and control
requirements applicable to telecommunications common carriers be applied
equally to broadcasting distribution undertakings.
There were two additional issues beyond
that of the foreign ownership restrictions that preoccupied the Committee.
First, the
Committee recognized that the private sector is adapting well to the new
telecommunications landscape created by digital technologies and technological
convergence, but Canada’s legislative framework does not show the same
flexibility. The Committee recommended:
That the
Government of Canada amend the Telecommunications Act to require a
mandatory five-year review of the Act by a parliamentary committee.
Finally, in
light of the technological convergence and a significant degree of horizontal
and vertical integration within and between telecommunications and broadcasting
sectors, it was not obvious to the Committee that these sectors should continue
to be treated as two distinct silos. Since
this issue went beyond the Committee’s mandate and deserved more research, it
recommended:
That the
Government of Canada strike a special parliamentary committee to undertake a
comprehensive review of the governance structure of both telecommunications and
broadcasting sectors in Canada. The
review should include, as a minimum, an examination of:
(a) the regulatory
framework governing Canada’s telecommunications and broadcasting sectors;
(b) approaches
that the federal government could adopt to continue to facilitate broadband
deployment in rural and remote communities;
(c) federal departmental
organization (Industry Canada and Canadian Heritage); and
(d) the jurisdiction,
role and mandate of the CRTC.
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For further information, please contact:
Jean-François
Pagé, Clerk
House of Commons
Room 671, Wellington Building
OTTAWA, Ontario
K1A 0A6
Telephone: (613) 947-1971
Fax: (613) 943-0307
Email: inst@parl.gc.ca