MTS to feds: Change foreign ownership law

With the possibility of a federal election this summer, the head of a major telecommunications provider is calling on the government to change the Telecommunications Act, which forbids non-Canadians from holding more than 20 per cent of Canadian telcos.

“These investment restrictions in telecom are over 20 years old,” said Pierre Blouin, chief executive officer of Winnipeg-based MTS Allstream. “It’s about time we take a fresh look at this legislation to make sure Canada is well positioned.”

Blouin made his remarks Tuesday at The Canadian Telecom Summit, co-produced by Mark H. Goldberg Associates Inc. and NBI/Michael Sone Associates Inc. and held at the Toronto Congress Centre.

Blouin suggested allowing carriers to have foreign owners is important because Canadian businesses “have to use every tool at their disposal to be more efficient players in the marketplace.”

The Telecommunications Act requires at least 80 per cent of voting shares of telecommunications carriers be held by Canadians. This was one of the reasons it took so long for Industry Canada to approve a wireless spectrum application from Globalive Wireless, which is part-owned by Egypt-based Orascom Telecom Holding.

In 2003, when Jean Chretien was Prime Minister, the House of Commons Standing Committee on Industry, Science and Technology, recommended the foreign ownership limits be lifted. But the committee for Heritage made the opposite recommendation, meaning the restrictions stayed in place.

Changing the law would require an act of parliament, but one federal telecom official Tuesday argued in favour of the status quo.

“Ownership restrictions are unfortunately a cost of doing business in Canada,” said Konrad von Fickenstein, chairman of the Canadian Radio-television and Telecommunications Commission, in an interview after his keynote speech at the Telecom Summit. “I do not see how you can have a Canadian broadcasting system that is totally foreign owned.”

Asked whether telecom carriers, as opposed to broadcasters, should continue to have foreign ownership limits, he did not see a distinction.

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“What’s the difference? We are in an age of convergence,” von Fickenstein said, alluding to the fact that most major carriers provide – or plan to offer – broadcast services such as satellite or fibre to the home, while cable companies also offer telecommunications service.

During his speech, von Fickenstein summarized recent CRTC decisions and upcoming hearings. For example, he noted the commission in April issued a call for comments on “nomadic” voice over Internet Protocol services, whereby phone numbers are not tied to specific addresses. The current federal regulations require the VoIP providers to connect 911 callers to a call centre, which will ask for the caller’s location and then connect them to the nearest emergency dispatch centre.

“The problem is, with emergency calls people are agitated, there may be language problems and as we all know there have been unfortunate instances where ambulances have been sent to the wrong cities,” von Fickenstein said. “There should be a way we can solve this.”

The commission is taking comments until August 7. A complete schedule of proceedings is posted at the CRTC Web site.

“We hope that some time by 2010 we can come up with a solution,” so that when someone using VoIP and calls 911, the dispatcher can automatically figure out where they are, von Fickenstein said.

Another issue the CRTC wants to address is the question of whether Internet service providers and wireless carriers should have Canadian content restrictions. Earlier this month the commission announced it would continue to exclude “new media” from the regulations imposed on television and radio broadcasters but has asked the industry to comment by July 6. At the time the CRTC said content providers will eventually have to provide reports on the content delivered via new media.

“Nobody has decent metrics” on Canadian content delivered by the Internet or wireless services, von Fickenstein said. “We are going to impose new reporting requirements.”

Although the CRTC decided not to impose fees on ISPs, the regulator will send a legal reference to the Federal Court of Appeal asking if the CRTC can impose fees on ISPs under the Broadcasting Act.

Federal regulation was a bone of contention for other speakers at the Telecom Summit, which ends Wednesday. At a panel discussion – dubbed Regulatory Blockbuster – executives with Bell Canada and MTS Allstream argued over the regulations on resale of Ethernet and fibre to the node services.

Mirko Babic, Bell Canada’s senior vice-president for regulatory and government affairs, slammed the feds for requiring his company to resell fibre to the node at regulated rates to competitors.

“Because of all of this we had to re-evaluate the pace, extent and location of our fibre rollouts,” he said, adding Bell Canada would think twice before offering fibre to the node in mid-sized cities or small towns. “After building from scratch, it’s completely inappropriate to give newcomers any access they want, at subsidized, low, mandated rates. This is tantamount to saying, ‘heads, competitors win, and tails, facilities-based ISPs lose.’”

Chris Peirce, chief corporate officer at MTS Allstream, argued that in areas where there’s little competition in phone lines for small to mid-sized companies, the prices go up.

“Without competitive market forces especially in the business wireline market you will see higher prices,” he said.

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