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Aide Memoire:

Foreign Investment in Canadian Telecommunications

 
   

November 2011 - IGB Grant +1 514 849 3508, Amit Kaminer +1 416 413 1636, Trevor Marshall +1 416 878 7730, Mairi MacDonald, and Lindsay Shaddy

   
    OVERVIEW  
 

 

 

Foreign investment (the lack of it) has been, and remains, a burning issue in the Canadian telecommunications industry. With apologies to Harold Ramis, this has become the "Groundhog Day" issue for the sector, in which successive waves of new companies - eager to offer real choice, innovation and other benefits to Canadians - find themselves unable to raise sufficient capital to compete against older, entrenched incumbents. Ironically, the movie Groundhog Day was released in 1993 - same year as the Telecom Act. And the foreign investment debate is eerily reminiscent of Bill Murray's experience to the detriment of Canadians who miss the benefits of a more competitive marketplace.

It wasn't ever thus. Canada used to be in-step with its global trading partners. There was a time when restricting foreign investment was in vogue, not only in Canada but throughout the world. The reasons offered for keeping foreign money away differed. The rationale to restrict telecommunications network ownership ranged from culture, to national security, to economic sovereignty and even to political ideology. Whatever the reason, it was thought that domestic ownership and control was critical. Over the past decade-and-a-half, most of the world has moved on and eliminated restrictions; Canada has not.

Today, as borders have faded in light of international trade and communications, the free flow of investment has come to be seen as a help, rather than a hindrance, to the well-being of commerce and industry. With remarkable alacrity at the cusp of the new century, countries of all stripes scuttled their protectionist mores and their outmoded legislation in favour of open doors – capital was free to flow.

Some observers argue that the road to legislative reform is complicated, and that, with content carriers and content providers now often residing under the same corporate roof, changes cannot be made to The Telecommunications Act unless The Broadcast Act is also opened up. SeaBoard Group disagrees. If we have the will, we can find the way.

This report will explore how we got to where we are, what other countries are doing, and why SeaBoard believes that Canada must act now to ensure that Canadians continue to benefit from a more competitive telecommunications marketplace. We shall point out that, while wireless services have been the most obvious recent cause célèbre, Canada's foreign investment rules have hobbled other sectors of the marketplace as well. Canadians need choice in wireless and the benefits of more intense competition, true, but they also need choice in consumer broadband services and in business communications services – areas that also require considerable investment and have been deprived of the benefits of foreign capital access.

 

 
   


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Tuesday, 23 October 2018

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