Canadian telecom industry wants less tax, more talent

With 5G mobile technology just around the corner, the Canadian telecommunications industry recognized that it needs to be a leader in innovation, targeting several areas for improvement at the Canadian Telecom Summit held in Toronto from June 5 to 7.

Several industry experts and academics expressed their desire for less regulation, taxes, and government involvement in the Canadian telecommunications sector, while highlighting a need for more investment in Canadian talent and idea-to-commercialization scale-up.

The federal government “taxes the heck out of the telecommunications sector,” Jack Mintz, president’s fellow at the University of Calgary’s school of public policy, told the crowd.

“The telecom sector gets taxed 22 per cent in most cases, which is the third highest for any sector in Canada. If we truly believe in innovation and want to see ourselves be leaders in this field, why are we putting one of the highest tax rates on a sector so critical to innovation?” he questioned.

Mintz looked south of the border to make his point, mentioning that with the US talking about policy deregulation and tax reform for businesses, Canada could quickly fall behind.

“If the US actually moves towards deregulation, Canada won’t be competitive anymore. The government needs to reduce telecom regulations to increase competition and spur a greater desire for innovation within the sector,” he added.

Daniel Schwanen, VP of research at independent Toronto-based research firm C.D. Howe Institute, agreed with this sentiment, adding that to foster better competition within the private telecom sector, the government needs to make sure its regulations aren’t anti-competitive.

“The regulatory environment in Canada and how it applies to innovating sectors needs to be reevaluated in our current increasingly digitized economy,” he said. “The protection of rights and making products available to the public quickly can often be at odds with each other, but where do you draw the line so that innovation is promoted instead of stifled?”

5G needs teamwork

5G mobile connectivity will be more than 1,000 times faster than current 4G networks today, according to Lloyd Switzer, senior vice president of network transformation at Telus, meaning that telecom networks and infrastructure will somehow have to accommodate this exponential increase in data consumption.

“The pace of innovation is accelerating – cell towers used to have a lifespan of eight to 10 years, now it’s barely two or three. The future of mobile technology – 5G – is arriving quicker than anyone anticipated and it will be the backbone of our future economy,” Switzer said.

He explained that 5G will enable enhanced connectivity and innovations such as autonomous vehicles, but to get to that point, the industry and every level of government will need to work together.

“This is just the beginning, and for 5G to be a viable reality, we need to work together to flourish. Industry, government, and regulations need to align so that Canada can remain a world leader.”

The right kind of government involvement

C.D. Howe’s Schwanen pointed out that Canada frequently ranks low on lists that study a country’s level of innovation – however, that’s not because Canada doesn’t have innovative ideas.

“The source of the problem is the lack of commercialization here. There’s a great pool of talent in the country that’s coming up with great ideas, but the ideas they produce tend to be commercialized by others,” he said.

This happens for a number of reasons, Schwanen continued, the most prominent being the number of foreign companies in the country and a lack of resources dedicated to scaling up Canadian ideas.

“Foreign-owned companies employ a lot of Canadians, but they also own all the intellectual property. Canadian ideas are essentially being mined because we don’t have the resources to develop it into a commercial product ourselves, but someone else does,” he said.

Canada “registers a surplus in research activities and patentable content,” but more needs to be done to ensure Canadian ideas stay in the country and develop into commercially viable products, Schwanen added.

He welcomed the latest federal budget announced in March, which placed a special focus on innovation and driving Canada’s tech industry, and commended its commitment to accelerating the work visa process to fill the IT skills gap in the country. He also approved of the government’s innovation supercluster idea that identifies six areas in which Canadians have extensive knowledge and research for additional funding.

“The government is shifting to foster a nation of innovators. Creating these superclusters is an intriguing idea, and I think it will connect the knowledge side of Canada, which we have a lot of, with venture capitalists who can fund their development,” Schwanen said.

Talent, talent, talent

David Walsh, the president, CEO and chairman of US-based communication software solutions provider Genband, echoed these thoughts. He said he wants to see further investment from the Canadian government in talent, starting with youths.

“The government is already doing it, but I can’t stress enough how important developing talent is – everything starts there,” he emphasized. “If the government wants to see more innovation, there needs to be investment in youth. So many kids go to post-secondary school with no idea what to do after, so I want to see a direct path through college to help people find their way into this industry; that will be a game changer.”

Overall, Canada is on the right track, he continued. While it’s a small country by population, Walsh pointed out that Canada’s good education, loyal workers, and commitment to success will propel it to the forefront of global telecom innovation.

“Second to Silicon Valley [California], there isn’t a more innovative place in the world besides where we’re standing right now. Look at what’s coming out of this country; it’s a market committed to being successful and that will continue as long as we focus on enabling young people to keep innovating,” he concluded.

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Jim Love, Chief Content Officer, IT World Canada

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Mandy Kovacs
Mandy Kovacs
Mandy is a lineup editor at CTV News. A former staffer at IT World Canada, she's now contributing as a part-time podcast host on Hashtag Trending. She is a Carleton University journalism graduate with extensive experience in the B2B market. When not writing about tech, you can find her active on Twitter following political news and sports, and preparing for her future as a cat lady.

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