INST Committee Report

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BLOC QUÉBÉCOIS DISSENTING OPINION

Background

The Liberal government, extensively financed by the telecommunications industry, has given the Committee on Industry, Science and Technology a mandate to study the restrictions on foreign investment in telecommunications.

The recommendations adopted by the Committee do not resolve the difficulties experienced by most telecommunications carriers, are contrary to the interests of Quebec’s consumers and workers, and constitute a failure to protect the Canadian and Québec cultural sphere. For these reasons, the Bloc Québécois is opposed to any increase in foreign investment in telecommunications carriers. In our opinion, relaxing the ownership rules is not an appropriate solution. The industry’s problems go far beyond the ownership issue.

Cultural sovereignty

We oppose the idea of doing away with the status quo because we think that deregulation of ownership would irreparably erode the government’s ability to regulate local content delivery.

We note that ownership controls have made it possible to maintain the content requirements that have served the cultural industries well in Québec and Canada. We believe that this framework must be maintained and that it must certainly not be studied in a vacuum, with no attention to the position of the Standing Committee on Canadian Heritage.

The Bloc Québécois’s Members are once again amazed that it is up to them to remind parliamentarians from other parties, and particularly other MPs from Québec, that cultural sovereignty must be jealously protected and not undermined.

An industry neglected by the federal government

The consultations that led up to the Committee’s Report spotlighted some of the main issues confronting telecommunications carriers:

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high debt levels

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shrinking market capitalization

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declining investments

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inadequate regulations

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etc.

The Bloc Québécois is receptive to the complaints of the telecommunications carriers. We believe it is necessary to rethink government intervention in this sector, in order to stimulate innovation and competition.

On the other hand, the Bloc Québécois does not believe that deregulating ownership and allowing an influx of foreign capital would resolve the difficulties that are eating away at the industry.

In the short term, the arrival of new capital, without changes to the conditions for access to the networks of the incumbent carriers, would at best make it possible to wipe out the carriers’ debts and at worst encourage an unhealthy price war. The incumbents, which are still in a monopoly situation, would undoubtedly resist assaults from new competitors by cutting prices temporarily and investing massively in advertising and promotion to win back their customers. In the end, the new capital would oblige the telecommunications carriers to invest excessively in marketing at the expense of R&D and infrastructure investment.

Protecting the consumer

The Committee’s recommendations do not reflect the best interests of consumers. Let us recall that:

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when Quebec’s Union des consommateurs appeared before the Committee on February 4, 2003, it called for maintenance of the restrictions on foreign ownership. The Union fears a drop in quality of service;

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a Decima poll conducted in December 2002 found that 72% of consumers were opposed to any change making possible increased foreign ownership of media and telecommunications undertakings.

The Bloc Québécois considers that deregulation of ownership does not respond to the needs of consumers, whose priorities are:

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fair consumer pricing, and

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access to the technology.

The Bloc Québécois members on the Committee note that the CRTC, especially in outlying regions, has not been able to ensure democratic access to communications technologies. It is legitimate to think that freer ownership will erode still further the CRTC’s capacity to regulate the industry.

Protection for workers

More foreign involvement in the communications sector will result in fewer jobs. A variety of evidence, rejected by the Liberal majority, made these points:

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The National Alliance of Communications Unions, representing employees with such companies as Aliant, Bell Canada, Manitoba Telecom Services, Sasktel, Telus and AT&T Canada, considers that “centralization of essential services and networks will displace employees south of the border.”¹

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In the view of the Union des consommateurs, “Diluting Canadian ownership has as a corollary a reorganization of those companies which would encourage strategic north-south alliances with a view to increasing productivity. Given the type of services offered in the telephone industry, this is an area that is particularly prone to delocalization of activities.”²

The Bloc Québécois cannot join in encouraging the federal government to send thousands of workers in the telecommunications industry down such an uncertain path.

Protecting the Canadian and Quebec telecommunications market

The rules on foreign investment are currently under negotiation at the WTO. The negotiations on telecommunications are scheduled to conclude by 2005.

It seems to us highly inappropriate for a parliamentary committee to recommend the softening of the Canadian position at this stage of multilateral negotiations without having obtained guarantees of reciprocity from our partners. We think the Committee’s Report will weaken Canada’s bargaining position. As a result, we share the opinion expressed by a number of telecommunications carriers, including BCE, which are calling for caution. Canada must not show its hand before the current negotiations are completed.

The Bloc Québécois wishes that recommendation 4 and 1 of the report be quickly implemented by allowing members of the Canadian Heritage committee to participate at the Joint committee.

Conclusion

In Canada, so-called “deregulation” has never happened. Since long-distance competition was introduced, the CRTC has been more active than ever.³ For example, it has had to establish standards for interconnection between incumbent networks and those of newcomers and ensure that those standards are respected. In our opinion, it would be more accurate to speak of a period of “re-regulation”, where the CRTC has tried to introduce competition into telecommunications by applying an asymmetrical system designed to allow newcomers to compete with local monopolies. The Bloc Québécois regards this policy as a failure that has given Canadian and Québec consumers and investors the worst of both worlds:

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a more cumbersome regulatory framework;

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slower penetration of new communications technologies in outlying regions, despite promised service improvement plans;

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an end to cross-subsidization and an increase in rates for basic services;

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a weakening of incumbent carriers without any real increase in competition;

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a slow-down in R&D investment.

In the opinion of the Bloc Québécois, reducing the restrictions on foreign ownership would only accelerate these phenomena and erode the ability to protect Québec and Canadian culture. We therefore dissociate ourselves from this Report.

Paul Crête, MP for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques and
Bloc Québécois Industry Critic

¹	Pess release, February 19, 2003.

²	Brief tabled by the Union des consommateurs.

³	Kevin G. Wilson: “Du monopole à la compétition : la déréglementation des télécommunications au Canada et aux États-Unis”, Université du Québec — Télé-université, Sainte-Foy, 1999.