INST Committee Report

CHAIR’S FOREWORD

Canada’s economic structure is changing rapidly as the country becomes part of the global knowledge-based, networked economy. Since this economy depends heavily on the efficient communication of information, a modern telecommunications infrastructure and a robust telecommunications sector are essential to Canada’s economic success.

In recent years, advances in information and communications technologies (ICTs) and the diffusion of ICTs throughout the economy have increased the efficiency of industry and boosted productivity growth in many industrialized nations, including Canada. Much of the growth in ICT markets is attributable to the telecommunications sector, an industry in which Canada is a world-leader. Expansion and innovation in the telecommunications services sector do not come cheaply; large amounts of capital are required to finance new and enhanced infrastructure. Accessing sufficient levels of high-risk capital on Canada’s domestic markets has proven difficult. Attracting foreign capital is, therefore, vital for expansion of the telecommunications sector in Canada.

Canada’s restrictions on foreign direct investment (FDI) applicable to telecommunications common carriers are intended to ensure that there is a balance between encouraging investment in the sector, and maintaining Canada’s sovereignty policy objectives. Concerns have been raised, however, that these restrictions are limiting the telecommunications sector’s access to capital and acting as a barrier to innovation and growth in the sector. In response to these concerns, and in the interests of maintaining a modern and competitive telecommunications sector, the Minister of Industry recently called for a review of the FDI restrictions applicable to telecommunications common carriers. The call for such a review also forms part of the federal government’s efforts, as presented in its Canada’s Innovation Strategy, to improve Canada’s regulatory environment in order to promote innovation.

In response to the Minister’s request, the House of Commons Standing Committee on Industry, Science and Technology immediately undertook an intensive study of the issue of FDI restrictions applicable to telecommunications common carriers, and heard a wide range of views on this and related issues. The Committee believes that implementing the recommendations contained in this report will help to improve investment and innovation in the Canadian telecommunications sector, provide better services to consumers, and achieve the government’s telecommunications policy goals.

I would like to thank the individuals and companies that took part in this series of hearings, and express my appreciation to them for the helpful insights and analysis they provided. The Committee will continue to work hard to ensure that Canada’s telecommunications sector has the necessary levels of investment to be innovative and competitive in today’s globally networked economy. The Committee believes that it is essential that the federal government and Parliament keep abreast of technological and industrial changes in the telecommunications services sector. The legislative framework governing the sector should reflect, and even anticipate, change in order that growth and innovation is not constrained by outdated legislation. In closing, the Committee looks forward to having the Minister appear before the Committee to explain how the federal government will act on the Committee’s recommendations.