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Over the past two decades, the technological and competitive global telecommunications landscape has changed dramatically. Networking technologies, especially the Internet, have revolutionized the way that consumers and industry conduct their activities. The growing digitalization of communications networks means that data, audio and video can increasingly travel over the same or multiple delivery platforms; this convergence of technologies has blurred the lines that used to separate the services offered by the various telecommunications and broadcasting market sectors. At the same time, the global liberalization of telecommunications markets has increased competition and innovation in the telecommunications sector.
Changes to the telecommunications market in Canada mirror global trends: regulatory reform has allowed the market to move from a monopoly to a more competitive regime, and Canadians have access to a wide variety of modern telecommunications services delivered over multiple delivery platforms. Canada is a world leader in both the telecommunications equipment and services sectors. Compared to consumers in other OECD countries, Canadians have relatively high-quality services at a low price, and have access to the newest technologies available on the telecommunications market. However, competition for local telephone service is still limited, and not all regions of the country have access to new technologies (e.g., high-speed Internet) and a choice of services.
In this chapter, the Committee explores whether changing the FDI restrictions applicable to telecommunications common carriers could increase access to emerging telecommunications technologies or improve services for consumers. The Committee also addresses the issue of technological convergence and examines whether broadcasting distribution undertakings should be subject to the same foreign ownership rules as telecommunications common carriers.
The Canadian Telecommunications Landscape
The introduction of new technologies, competition and convergence has changed the face of the telecommunications landscape around the world. In recent years, nearly all OECD countries have liberalized their telecommunications markets. A series of reforms to the Canadian telecommunications regulatory framework over the last 20 years (see Appendix 2) has opened the telecommunications services sector to competition, resulting in the elimination of almost all of the original telephone monopolies in Canada. Incumbent carriers still dominate the Canadian telecommunications services sector in terms of share of total market revenues, but this share has decreased gradually over the last few years (from 83.4% in 1998 to 78.5% in 200118). Although there is considerable competition in the long-distance wireline market, (e.g., competitors’ share of total long-distance minutes was 35.8% or 26% of total revenues in 200119), competition in local wireline services (which is the largest component of total telecommunications service revenues) is limited, but growing. In 2001, the competitors’ share of local business revenues was 4.7%, up from 0.6% in 1998. For the local residential market, the competitors’ share of revenues was 0.4% in 2001.20
The three markets that have experienced the highest growth rates in recent years are data and private line services, mobile communications and the Internet. Growth in these areas reflects rapid technological changes and competition that have led to greatly improved services for consumers. Technological advances in the areas of fixed wireless broadband, 3G wireless and satellite-based communications promise to change the telecommunications services sector even further, particularly in terms of providing broadband access to the Internet. Utility companies’ entry into the telecommunications services market will offer additional choice to consumers, especially in the area of broadband access for the business sector.
The telecommunications landscape has been further transformed by technological convergence, which has led to overlap in the distribution networks and services offered by telecommunications carriers and broadcasting distribution undertakings. Telephone companies, using digital video compression, can send video signals to customers over their existing infrastructures. Since 1998, telecommunications common carriers have been allowed to apply for broadcasting distribution licences. The CRTC has already licensed some telecommunications carriers (NBTel, SaskTel, MTS and Télébec) to operate as cable distribution undertakings, and BCE owns both Bell Canada and Bell ExpressVu, a direct-to-home (DTH) satellite distribution undertaking. Conversely, cable companies, using either circuit-switched or Internet Protocol-based technology, can provide local telephone service over their cable networks. The only cable service provider in Canada to provide local telephony service at present is Eastlink in Nova Scotia. In the important high-speed Internet market, telecommunications companies (using digital subscriber line [DSL] technology) and cable companies (via cable modem) compete head-to-head. Other technologies, such as DTH satellite and multipoint distribution systems (MDS), also offer high-speed Internet access to customers, and fixed wireless broadband is available in certain areas of the country. Vertical integration and cross-media ownership further cloud the line separating the telecommunications and broadcasting industries, with companies such as BCE holding ownership stakes in telecommunications, broadcasting distribution, programming and print media.
New Entrants and Access to New Technologies and Services
Facilities-based competitive service providers (“new” entrants to the industry) have played a major role in introducing innovative telecommunications services to Canada. Their presence in the market has led to greater choice for customers, higher quality services and a range of new services. New entrants have made huge capital investments to expand and improve networks and bring new products to market. These investments allow them to compete against incumbent telephone companies, but they also result in large start-up losses for new entrants. In order to make (and continue making) such investments and remain competitive, new entrants require access to large sources of risk capital at a reasonable cost, capital that cannot be accessed from Canadian sources alone. The facilities-based competitive service providers argue that restrictions on FDI limit investment in infrastructure, increase the cost of capital, and, ultimately, delay the diffusion of new telecommunications technologies. The Committee shares these views and believes that removing FDI restrictions would stimulate competition and increase innovation in the telecommunications service industry.
Universal Access to Services
Canadian telecommunications policy, like that of many other OECD countries, has as one of its objectives the provision of basic telecommunications services at affordable rates to consumers living in all regions of the country. This policy is set out in section 7(b) of the Telecommunications Act of 1993: “to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada.” Canada’s large land mass and its low population density make the provision of telecommunications infrastructure to all Canadian communities an expensive proposition. Universal access has historically been supported by cross-subsidies among services: profitable areas (usually urban) and profitable services (long distance, optional services) subsidize local service and areas with high operating costs (usually rural or remote). The result of this policy is that more than 98% of Canadian households have basic telephone access.
In the “new,” knowledge-based economy, technologies that allow information to be rapidly and widely disseminated are generally viewed as important social and economic development tools. These technologies help create new economic opportunities and improve people’s education, skills and quality of life. In this economy, universal access to basic telecommunications services and important emerging technologies is thus more critical than ever before.
The Internet and Broadband Access21
One of the most important information and communications technologies in terms of its socio-economic potential is the Internet. Although Canada first connected to the Internet in 1981, a commercial market for Internet access did not develop until 1991. In 1999, the CRTC introduced, as a basic service objective for wireline companies, the provision of “individual line local service with touch-tone dialling, provided by a digital switch with capability to connect via low speed data transmission to the Internet at local rates.”22 At the time of this decision, more than 97% of access lines already met this goal.
Basic dial-up access (telephone line and modem) to the Internet is relatively cheap and widely accessible, but the service is slow and the technology is not sufficient for high bandwidth applications. A wide range of communications services and applications requires high levels of bandwidth. Canada enjoys one of the highest broadband penetration rates in the world. Compared to other OECD countries in the first half of 2002, Canada’s penetration rate (approximately 10.3%) was second only to Korea’s (approximately 19.2%), and ahead of Sweden’s (6.8%) and the United States’ (5.8%).23 Despite this relatively high penetration rate, broadband access is not available across all regions of Canada.
Various carrier technologies available in Canada deliver high-speed (broadband or wideband) Internet access. The two most popular technologies for residential subscribers are DSL and cable modem, but they are not available in all regions of the country. Satellite technology is widely available, but is relatively expensive. A number of communities have access to fixed wireless broadband service, but it too is relatively expensive. In late 2001, mobile providers began to provide Internet access via their 2.5G networks, but the access speeds offered are only slightly faster than those provided by narrowband technologies. In 2001, 1.6 million Canadian households subscribed to the Internet via cable and 924,000 via DSL. Only 9,000 households used another technology for high-speed access (most via fixed wireless access; less than 1% of residential subscriptions were provided directly over fibre).24 For businesses, high-speed Internet access makes considerable use of fibre-optic cable, which provides true broadband access to the Internet (in 2001, 54% of high-speed Internet access expenditure by business was on fibre, 32% on DSL, and 14% on cable or other technologies).25
Recent figures indicate that 76% of Canadian communities (or 15% of the population) do not have high-speed access to the Internet, whereas 15% of communities have one supplier of high-speed Internet access, and 9% of communities have two or more suppliers.26 The majority of Canada’s rural communities do not have high-speed access. Expanding broadband to all communities in Canada is an extremely expensive proposition requiring large amounts of capital. Extending broadband services to rural and remote areas is not commercially viable at this time because of the large gap between the incremental costs of constructing and operating new facilities, and the price that consumers and businesses are willing to pay for the services. Although some emerging technologies such as satellite and wireless offer some promise in reducing deployment costs for broadband in rural and remote areas, mass-market deployment of these technologies is, by some estimates, up to five years away.27
In 2001, the National Broadband Task Force recommended that the federal government review whether foreign investment restrictions applicable to telecommunications common carriers and broadcasting distribution undertakings restrict, or are likely to restrict, increased industry participation in the competitive deployment of broadband infrastructure in Canada.28 This question is raised in Industry Canada’s discussion paper on FDI restrictions applicable to telecommunications common carriers.29 Most witnesses appearing before the Committee indicated that changes to FDI restrictions would not change the speed or nature of broadband deployment in these communities. These witnesses pointed out that an injection of new money into the industry (whether from foreign or domestic sources) would go to those markets where the greatest opportunity for a rapid return on investment exists. In their view, rural and remote areas would be unlikely to attract new monies for the development of broadband facilities since there is no opportunity for investors to recoup their investment. A few witnesses, however, suggested that increased access to cheaper capital on foreign markets would make it easier for companies to construct a viable business case for expanding their networks into otherwise unprofitable communities. On a global level, there is no clear link between the liberalization of foreign ownership and control rules and increased access to broadband. The two OECD countries with the highest broadband penetration rates (Korea at 19.2% and Canada at 10.3% in the first half of 2002) both have restrictions on FDI in their telecommunications sectors, whereas countries without such restrictions have lower penetration rates (e.g., United States at 5.8% and the United Kingdom at 1.3%). Many OECD countries (regardless of FDI regimes) have divides between rural and urban areas in terms of access to broadband.
The central governments of most OECD countries believe that widespread broadband access is important for future socio-economic development and global competitiveness, and many of them have introduced policies to encourage investment in broadband infrastructure and to improve broadband access. Canadian federal and provincial initiatives in this area include: (a) contracting for government institutes or personnel, (b) providing seed funding to community projects, (c) providing capital funding for infrastructure projects, (d) offering research and development tax credits to equipment manufacturers, (e) funding trials for broadband applications, and (f) developing and supporting online content.30 The most recent federal initiative, the Broadband for Rural and Northern Development Pilot Program, provides funding through a competitive process to bring publicly available broadband access to Canadian communities, with priority given to First Nations, northern, remote and rural communities which are currently without DSL or cable modem service. This program forms part of the federal government’s commitment to ensure broadband access is available to all Canadian communities by 2005. Many witnesses stressed that the private sector should drive the roll-out of broadband across Canada. At the same time, however, witnesses indicated that there is a role for government in facilitating the deployment of broadband to areas where there is no business case for such deployment.
Based on the evidence it heard, the Committee is not convinced that changing the restrictions on FDI applicable to telecommunications common carriers will lead to increased access to broadband in rural and remote communities in the short term.
Convergence and Broadcasting Distribution Undertakings
Technological advances and convergence of technologies, especially over the last decade, have blurred the lines that previously separated the services offered by telecommunications common carriers and broadcasting distribution undertakings (“BDUs,” including cable companies, DTH satellite service providers and MDS). Telecommunications carriers and BDUs are now competing for the same customers in some markets (e.g., high-speed Internet service). The telecommunications and broadcasting landscape is further complicated by vertical integration and by cross-media ownership. Clearly, defining an enterprise as a pure “telco” or “BDU” on the basis of their underlying distribution networks or the services they provide is becoming more and more difficult (see Figure 4.1). In an era of digitalization and convergence, an examination of potential changes to FDI restrictions (or any other component of the regulatory framework) applicable to telecommunications common carriers must take account of the impact of such changes on BDUs.
Section 3(a) of the Broadcasting Act states, “the Canadian broadcasting system shall be effectively owned and controlled by Canadians.” The definition of “Canadian” for the purposes of the Act, and the rules pertaining to ownership, are laid out in a direction to the CRTC from the Governor in Council.31 Under the Direction, a corporation that meets the definition of a “qualified corporation” is classified as Canadian. A non-Canadian may own directly up to 20% of the voting shares of a Canadian corporation before that corporation loses its status as a qualified corporation. A non-Canadian may also own up to 33⅓% of the voting shares of a holding company before a subsidiary corporation of the holding company loses this status. Therefore, non-Canadians may, directly and indirectly, hold up to 46⅔% of a Canadian corporation. Furthermore, a corporation’s chief executive officer and at least 80% of its directors must be Canadian in order for it to meet the definition of a “qualified” corporation. If a non-Canadian controls a Canadian corporation (by any means), regardless of the number of voting shares held, the corporation loses its status as a qualified corporation. The Direction states that broadcasting licences may be issued only to qualified corporations.
Figure 4.1
Telecommunications and Broadcasting Landscape in Canada
Many BDUs argue that if the FDI restrictions applicable to telecommunications common carriers are loosened or removed altogether, the same should be done for BDUs. They argue that their industry relies heavily on capital investment and that they too need improved access to foreign capital at a lower cost to ensure continued growth, competition and innovation in the sector. These companies point out that because of technical convergence, many of them are competing in the same markets as telecommunications common carriers, and should be subject to the same ownership rules. The BDUs suggest that if the telecommunications companies were subject to less stringent FDI restrictions than were BDUs, BDUs would be at a competitive disadvantage. They argue that the removal or relaxation of the restrictions only for telecommunications common carriers will distort competition for capital, impair the development of competition among various technologies, reduce choice for consumers, and contradict the principle of technological neutrality in Canadian regulatory policy. The Competition Bureau agrees with these arguments and suggests that all carriers of signals (be they telephone or broadcasting) should enjoy the same access to capital and be subject to the same ownership rules.
Opponents of an extension of any change in FDI restrictions to BDUs argue that despite technological convergence, BDUs and telecommunications common carriers are not the same “animal.” They point out that there are cultural issues attached to the operation of BDUs that, at least at this juncture, are not associated with telecommunications common carriers. The opponents suggest that allowing foreigners to control BDUs would have a negative impact on the government’s cultural policy goals.
Although the CRTC is responsible for setting the general rules about which signals may or may not be carried by BDUs, BDUs influence programming in that they make decisions about which services to market, package and promote, about channel positioning, and about retail rates. Opponents of changing the restrictions on FDI for BDUs suggest that the restrictions ensure that these programming decisions are made by Canadians, not by foreign interests, and that BDUs continue to transmit a wide range of Canadian programming. They argue that if the rules were changed, foreign companies might gain strategic control of a Canadian BDU and would promote their own (non-Canadian) content. Furthermore, they suggest that since foreigners are permitted to own minority ownership stakes in programming undertakings, a foreign media conglomerate that owns such stakes and controls a Canadian BDU would have even more ability to influence programming decisions. Such influence over programming, critics argue, would undermine one of the goals of the Broadcasting Act that the Canadian broadcasting system maintain and enhance national identity and cultural sovereignty.
A representative of CanWest Global Communications Corp., a Canadian-owned and controlled international media company, who appeared before the Committee contended, however, that the nationality of the owner of a programming undertaking has no measurable impact on the programming that the undertaking carries. He suggested that television programming schedules in Canada are a reflection of CRTC requirements and the expectations of viewers and advertisers. To illustrate his point, he described CanWest’s television networks abroad; CanWest’s foreign broadcasting operations are locally regulated, and local management determines the content. Its international operations meet or exceed regulatory or licence requirements for local content in each of the jurisdictions where it operates. The programming carried on CanWest’s foreign television networks does not reflect the fact that CanWest is a Canadian-owned and controlled company.
The BDUs suggest that the separation of distribution undertakings from programming undertakings would eliminate the concerns about self-dealing described above. Under such an arrangement, BDUs that own programming services could spin them off into a separate company and retain the transmission assets in the original company. Only the transmission assets would be eligible for sale to non-Canadians. Furthermore, BDUs note that the CRTC would continue to ensure that BDUs respect Canadian content requirements, regardless of whether the undertakings are owned by domestic or foreign interests.
Canadian Content and the Role of the CRTC
The Broadcasting Act sets out various cultural policy and other public policy objectives related to the Canadian broadcasting system. One of the major goals of the Act and its regulations is the maintenance and development of Canadian content in the Canadian broadcasting system. According to the CRTC, Canadian content is “… about Canadian artists and Canadian stories having access to Canadian airwaves.” The federal government deems Canadian content to be important for cultural and economic reasons: Canadian programs and music “give voice to Canadians, to their talent and their shared experiences,” and provide jobs for Canadians in the creation, production and distribution of material.32
The CRTC interprets and applies the broad policy objectives of the Broadcasting Act by establishing specific policies and regulations in the following areas: (a) creation and production of Canadian programs and music; (b) financial support by the broadcasting system for the creation of Canadian content; (c) how much Canadian content must be aired on radio and television; (d) ratio of Canadian and non-Canadian programming services distributed by Canadian cable companies, DTH satellite services and multipoint distribution systems; and (e) Canadian ownership and control of the broadcasting system. Television programs and music must meet certain requirements in order to qualify as Canadian.33
No evidence was presented to the Committee to suggest that the CRTC’s capacity to regulate BDUs (or for that matter, programming undertakings) would be compromised if these undertakings were foreign-owned and/or controlled. The CRTC confirms that it has adjusted to new ownership rules in the past and will do so again should Parliament change them once more. Many other industries in Canada are wholly or partially foreign-owned and controlled. These industries (as well as domestic-owned industries) must still abide by regulatory requirements imposed by provincial and federal governments to achieve various public policy objectives. The Committee believes that in the absence of restrictions on foreign ownership for BDUs, CRTC regulations (along with other policy instruments, such as subsidies) are sufficient to support and promote Canadian content in the Canadian broadcasting system. Structural separation of broadcasting and programming undertakings would act as a further safeguard. Furthermore, the Committee notes that the Investment Canada Act reviews major investments in Canada by foreigners to ensure that such investments are of “net benefit” to Canada. Additional provisions in the Act and in the Investment Canada Regulations allow for the review of investments that would otherwise not normally be reviewed under the Act if the Governor in Council deems that they relate to Canada’s cultural heritage or national identity.
The Committee is of the opinion that telecommunications common carriers and BDUs 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. Cultural policy objectives can thus be achieved by treating content and carriage separately. In light of technological convergence, the Committee therefore recommends:
3. 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.
The Committee believes that full liberalization of foreign ownership rules on a symmetrical basis for all carriers of signals competing in the same markets is the best way of achieving the government objectives laid out in the Telecommunications Act and the Broadcasting Act. The Committee is of the opinion that changes to the foreign ownership restrictions must be accompanied by a broad review of the political governance structure of both telecommunications carriers and broadcasting distribution undertakings. That review must address whether our current legislative approach and the division of departmental responsibilities between Industry Canada and Canadian Heritage is optimal in light of technological and services convergence. It should also address whether the CRTC has — and will continue to have — the necessary tools to ensure that issues such as universal access to services and Canadian culture and values continue to be protected and promoted. As such, the Committee recommends:
4. 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 in light of technological convergence. 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 Canadian Radio-television and Telecommunications Commission. |
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Our industry continues to be very much in the midst of change. … Advances in technology have changed a lot of things. Digitization, the Internet have created a common platform, a universal medium that allows any kind of information to be delivered any time, anywhere over any device. … The barriers that once separated the different silos in this industry frankly are being trashed by the technology itself. [Michael Sabia, Bell Canada Enterprises, 20:9:20]
[O]nly a handful of OECD markets had competitive telecom frameworks in 1993. Today 29 of 30 OECD countries have fully competitive telecommunications markets. The last country to open up will be Turkey, which will do that January 1, 2004. [Dimitri Ypsilanti, Organisation for Economic Co-operation and Development, 19:15:30]
Canadians have always been innovators in this industry. I'll just give you a few examples … the world's first domestic communications satellite in geostationary orbit, the first cellular phone service in North America, the first OECD country to launch residential high-speed Internet access, the first wireless Internet browser in North America … [Michael Sabia, Bell Canada Enterprises, 20:9:20]
[W]e believe that the path that we will go down in creating local residential competition, and we will create it, is first with the expansion of cable telephony. It's happening in EastLink in Halifax. EastLink today has 25% share in the greater Halifax market. This is going to happen if for no other reason than as we participate in the video business through our satellite company, they will come into the telephone business. This is inevitable. [Michael Sabia, Bell Canada Enterprises, 20:9:35]
[I]t’s immensely expensive to replicate the wire line network of the existing telecoms. I think the answer to that is to be technologically innovative and imaginative. … [T]he way to compete with a wire line system isn’t to duplicate the wireline system, the way to come on it is to come around behind it with a wireless system. [Hudson Janisch, University of Toronto, 16:16:20]
Restricting foreign investments has a particularly negative effect on new entrants, the very players who are driving innovation. [André Tremblay, Microcell Telecommunications Inc., 13:15:55]
A sustainable, robust competitive telecommunications system is a sine qua non for the pursuit of any strategy for innovation. Without healthy telecommunications competition Canada will unavoidably be reduced to the status of an innovation laggard, not an innovation leader. Without the compelling, powerful force of competition, our telecommunications providers will inevitably be satisfied with being innovation application purchasers, not creators. [Richard Schultz, McGill University, 21:16:05]
The telephone infrastructure and system was brilliantly conceived and set up over the first 125 years … All of the profits and money and additional cash was generated in the large urban areas … [T]here were very elaborate systems set up to roll that excess capital out into the rural areas, and the non-populated areas to create basic ubiquitous telephone service at a very, very low cost. But who paid for that was downtown Toronto. And that’s the way it’s been set up all over the world. It was simple but brilliant. [John McLennan, AT&T Canada, 14:17:00]
[T]here have significant changes in the telecommunications market. Perhaps the most significant has been explosive growth of the Internet and services supported by high-speed networks. For the OECD, we've estimated that there are now about 250 million Internet subscribers and 52 million of these subscribe to high-speed Internet broadband connections. [Dimitri Ypsilanti, Organisation for Economic Co-operation and Development, 19:15:30]
I think it’s important that Canada be moving forward in the 21st century on all cylinders and not have 25 to 30% of the country and the rural economy not functioning. [Vic Allen, Upper Canada Networks, 14:16:45]
[R]egions with low-density population, whether in rural or remote areas, have remained almost untouched by competition. The competitors concentrated their investments in high-population density areas, and were almost absent from the rural or remote region. Even the major licensees, namely those which controlled the market when the competition came into play, limited their investments in low-population density regions. … [Jean-François Hébert, Association des Compagnies de Téléphone du Québec, 16:15:30]
Regardless, if we are talking about restrictions on foreign investments or anything else, the situation will not change as regards low population density regions in either the short or medium term. [Jean François Hébert, Association des Compagnies de Téléphone du Québec, 16:15:35]
[T]here is no link whatsoever between expanding high speed broadband service to rural and remote regions of Canada and the lifting of foreign ownership restrictions. The factor limiting broadband expansion is the lack of an underlying business case to justify the investment. [Donald Ching, SaskTel, 24:16:20]
[T]he cable industry supports liberalization of foreign ownership rules for broadcast distribution undertakings and telecom companies. We believe there are significant benefits that would flow from these changes in terms of access to larger pools of capital at lower cost. It would increase incentives to expand our integrated broadband networks, and it would increase competition and innovation in these industries. [Janet Yale, Canadian Cable Television Association, 25:15:30]
[I]t is imperative that the private sector drive this roll-out, relying on competitive market forces. The roll-out of the federal government of this deployment should be to ensure that any contributions required to facilitate broadband development are introduced in the least market-distorting manner possible. Indeed the government has already begun some projects to this end. [Michael Murphy, The Canadian Chamber of Commerce, 17:15:55]
[I]t’s no longer readily apparent who in Canada is a telecommunications service provider. With convergence attempts to label companies as pure cable, wireless, telephone, broadcast or Internet service providers are virtually impossible. [James Peters, TELUS Corporation, 16:15:45]
[W]e believe that, in order to maintain a fully competitive and innovative communications sector and to enhance the overall business climate in Canada, the foreign investment restrictions should be fully liberalized symmetrically, meaning that no company should be placed at a competitive disadvantage by liberalizing the rules for some companies but not others competing in those markets. [Michael Murphy, The Canadian Chamber of Commerce, 17:15:50]
[W]e are suggesting that competitive equity will require that cable companies and telephone companies be treated the same way under liberalized foreign ownership rules. [Louis Audet, COGECO Inc., 25:15:40]
[W]e're talking about signals being transported over a pipe. Whether that signal is a telephone signal, whether it's an Internet signal or whether it's a broadcasting signal, it makes no difference … [Y]ou have a pipe and you're sending electronic signals through it. The rules for that should be the same. [Konrad von Finkenstein, Competition Bureau, Industry Canada, 23:17:00]
Once the ownership distribution genie is let out of the bottle, the prospect of non-Canadian influence over programming services is raised. [Phyllis Yaffe, Alliance Atlantis Communications Inc., 17:15:40]
Any changes in the rules that applies only to telecom companies would soon be of competitive significance to broadcasters as telecom companies move increasingly into the BDU and broadcasting businesses. [Leonard Asper, CanWest Global Communications, 26:9:10]
[I]t is difficult at times to make the distinction between content providers and carriers … particularly with distribution undertakings and programming. But I would suggest it’s not impossible. In fact, much of our framework of telecommunication and broadcasting turns on that very distinction. [David Johnston, University of Waterloo, 17:16:45]
BDUs have suggested that the problem can be solved by structural separation. … This is not an acceptable solution … In the current situation, the role of a BDU is central and critical to the Canadian broadcasting system. Whereas a telephone company is prohibited from controlling or influencing the content of what is being carried, the BDUs function is very different. It has a very active role in controlling or influencing what the content provider offers [Grant Buchanan, Directors Guild of Canada, 19:15:50]
[W]e recognize that the more we move to incorporate satellite and cable television companies, the closer we move to Canada’s vital cultural interests. A delicate balance … is the centrepiece of the challenge … [Michael Sabia, Bell Canada Enterprises, 20:9:20]
[F]rom the Commission’s perspective we administer the rules that government chooses to give us … we’ve lived with some changes in the rules and we’ve never found them an obstacle to doing our work. [Charles Dalfen, Canadian Radio television and Telecommunications Commission, 23:15:35]
Clearly the carriage company could not own any channels, do any broadcasting or do anything content. All they will be doing is conveying an electronic signal. Now you set up the framework that way, it's up to them whether they want to take advantage of themselves and split themselves or whether they think they are not synergies and having the two under one roof and pay the penalty of foreign ownership restriction. That's for them to decide. [Konrad von Finkenstein, Competition Bureau, Industry Canada, 23:17:00]
[W]e believe that structural or that ownership separation could be achieved quite easily in a number of different ways, the rules, as they relate to how broadcast distribution undertakings, cable companies, carry content services would remain unchanged. [John Tory, Rogers Cable Inc., 5:15:45]
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