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Marc Garneau appeals to consumers on telecom competition

Peter Nowak

Liberal leadership contender Marc Garneau is in favour of "throwing the doors open" on the telecommunications industry, with a plan to fully liberalize ownership restrictions on the sector.

Removing barriers to foreign companies will benefit consumers through increased choice and lower prices, he said at a press conference in Ottawa on Monday.

"Canadians are tired and frustrated with big bills, poor service and limited choices on wireless, Internet and phone services," Garneau said. "Only real, market-based competition will keep providers in line. With competition and choice, providers will weed out unnecessary fees, invest in service quality to retain customers and improve their product packages."

Foreign ownership restrictions have kept telecom prices high, with Canadians paying some of the highest wireless rates in the world, he said. Bills here are 20 per cent higher than in the United States, 70 per cent more than in France and double that of the United Kingdom and Germany.

"Germany, Sweden, Italy and France have no restrictions on foreign investment in telecommunications," he said. "It is time for Canada to enter fully into the global market as well."

Foreign investors had, until this year, been limited to effectively owning only 46.7 per cent of a Canadian telecommunications provider with its own infrastructure, with a further restriction preventing any "control in fact."

The federal government loosened those restrictions somewhat this summer with an amendment to the Telecommunications Act. The new rules allow ownership of any company that has less than 10 per cent of total industry revenues, which is almost shorthand code for everyone but Bell, Rogers and Telus, and possibly Shaw.

Yet Garneau said he would maintain restrictions on broadcasters, which are governed separately under the Broadcasting Act, in order to protect Canadian content and culture.

Carriers get the last laugh?

In an age when many telecom providers are also broadcasters, those remaining restrictions would likely act as a poison pill that would scuttle any potential investments by foreign investors. Bell, Rogers and Shaw, who own broadcasters CTV, CityTV and Global, respectively, could kill any foreign acquisition efforts by simply refusing to restructure or separate their broadcasting holdings from their telecom operations.

Other pure-play telecom companies, such as Telus and MTS Allstream, could also avoid foreign takeovers because their TV delivery services are licensed under the Broadcasting Act. It's a wrinkle that many industry observers have suggested needs fixing, since the delivery of television service over cables is clearly a telecommunications function and not something that needs cultural protection.

Aside from cultural groups such as the Alliance of Canadian Cinema, Television and Radio Artists and the Society of Composers, Authors and Music Publishers of Canada, support for maintaining ownership restrictions on broadcasters is also waning.

Numerous experts told the Senate Committee on Transport and Communications during hearings this summer that the requirements for funding the creation and airing of Canadian content can be maintained and enforced regardless of who actually owns the broadcaster.

"Foreign owned businesses face Canadian-specific regulations all the time - provincial regulations, tax laws, environmental rules, or financial reporting - and there is little evidence that Canadian businesses are more likely to comply with the law than foreign operators," said University of Ottawa professor Michael Geist in his deposition.

As such, it's hard to see how Garneau's proposition is any better than the recent 10-per-cent threshold liberalization. Without removing broadcasting ownership restrictions, it's still only smaller companies such as Wind Mobile or Mobilicity that are eligible for foreign investment or acquisition.