Use NAFTA talks to lift Cana­dian tele­com pro­tec­tions: U of T prof

Open­ing tele­com in­dus­try to for­eign play­ers would re­sult in cheaper wire­less rates for con­sumers, He­jazi says

The Guardian (Charlottetown) - - CANADA - BY TERRY PEDWELL

Canada’s over­all econ­omy — not just con­sumers — would ben­e­fit if Canada were to open its tele­com in­dus­try to greater com­pe­ti­tion through up­com­ing North Amer­i­can free trade talks, says a Uni­ver­sity of Toronto pro­fes­sor who’s been study­ing the in­dus­try’s im­pacts.

Get­ting to that point at the NAFTA ne­go­ti­at­ing ta­ble, how­ever, may just be wish­ful think­ing, says an­other aca­demic who pre­dicts U.S. de­mands for greater ac­cess to Canada’s tele­com mar­ket won’t sur­vive to the fi­nal round of bar­gain­ing.

In its ob­jec­tives for the NAFTA rene­go­ti­a­tion, the Trump ad­min­is­tra­tion in­cluded telecom­mu­ni­ca­tions among a list of trade ir­ri­tants made pub­lic last week, say­ing it wants to pro­mote the com­pet­i­tive sup­ply of telecom­mu­ni­ca­tions ser­vices and se­cure com­mit­ments “to pro­vide rea­son­able net­work ac­cess for telecom­mu­ni­ca­tions sup­pli­ers.”

Uni­ver­sity of Toronto pro­fes­sor Walid He­jazi says open­ing the tele­com in­dus­try to for­eign play­ers would re­sult in new jobs, in­creased pro­duc­tiv­ity across a wide range of in­dus­tries and cheaper wire­less rates for con­sumers.

While Canada’s tele­com mar­ket was par­tially lib­er­al­ized in 2012 when the fed­eral govern­ment opened the door to for­eign own­er­ship of Cana­dian cell­phone ser­vice car­ri­ers that have less than 10 per cent of the Cana­dian mar­ket share, cur­rent reg­u­la­tions for­bid for­eign ma­jor­ity own­er­ship of a ma­jor tele­com com­pany.

Re­moval of the for­eign own­er­ship re­stric­tions would re­quire an amend­ment to the Telecom­mu­ni­ca­tions Act.

The tele­com own­er­ship pro­vi­sions are com­pli­cated fur­ther by the fact that Canada’s big three ser­vice providers, Bell, Telus and Rogers, are also in­ter­twined with the coun­try’s broad­cast­ing net­works, which have their own set of own­er­ship and li­cens­ing re­stric­tions.

Suc­ces­sive ex­pert pan­els have over the years rec­om­mended own­er­ship re­stric­tions be lifted, but few ac­tions have been taken amid con­cerns that a takeover of a Cana­dian tele­com com­pany by a U.S. or other in­ter­na­tional con­glom­er­ate would re­sult in for­eign in­ter­ests con­trol­ling a Cana­dian broad­caster as well, po­ten­tially lead­ing to a wa­ter­ing down of Cana­dian con­tent.

He­jazi said the NAFTA talks present a per­fect op­por­tu­nity to lift the pro­tec­tions from for­eign com­pe­ti­tion en­joyed by the trio.

“The tele­com in­dus­try in Canada should not be pro­tected. Full stop, end of story,” said He­jazi.

“You have three com­pa­nies that are pro­tected from in­ter­na­tional com­pe­ti­tion and the ser­vice they pro­vide us is in­fe­rior.”

Paul Beaudry, the di­rec­tor of de­vel­op­ment at the Uni­ver­sity of Cal­gary’s School of Pub­lic Pol­icy and a re­search as­so­ciate at the Mon­treal Eco­nomic In­sti­tute, doubts that the Trump ad­min­is­tra­tion will push hard for greater ac­cess by U.S. play­ers to Canada’s tele­com mar­ket.

Beaudry said he doesn’t see tele­com changes as a “hill to die on” and pre­dicted the is­sue won’t make it to a fi­nal round of bar­gain­ing once the talks in­ten­sify.

“I don’t think we’re go­ing to get to tele­com,” he said.

“I don’t think that, if you were to grill an Amer­i­can ne­go­tia­tor at this stage, they would iden­tify tele­com as a crit­i­cal as­pect that kind of mo­ti­vates the Amer­i­can govern­ment.”

At most, the U.S. govern­ment may be sat­is­fied in gain­ing greater ac­cess to the Cana­dian mar­ket by small Amer­i­can re­sellers of tele­com ser­vices, said Beaudry.

A fail­ure to use the talks to fur­ther lib­er­al­ize the tele­com sec­tor would be a wasted op­por­tu­nity to cre­ate jobs, and would run counter to the Lib­eral govern­ment’s in­sis­tence that it makes de­ci­sions based on ev­i­dence, said He­jazi, who is also the aca­demic di­rec­tor at the Rot­man School of Man­age­ment.

“Ev­ery com­pany in the coun­try has to work with the tele­com in­dus­try,” he said.

“The pro­duc­tiv­ity and em­ploy­ment across the en­tire Cana­dian econ­omy are neg­a­tively im­pacted by the lack of ef­fi­ciency and investments in that sec­tor.”

The Or­ga­ni­za­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment called on Canada last year to open its tele­com in­dus­tries, along with air­lines and broad­cast­ers, to for­eign own­er­ship.

The OECD said such a move would “sharpen com­pet­i­tive pres­sures, raise pro­duc­tiv­ity and re­duce prices for con­sumers.”

Egyp­tian bil­lion­aire busi­ness­man Naguib Sawiris learned a bit­ter les­son about Canada’s tele­com rules nearly a decade ago when his com­pany, Oras­com Tele­com Hold­ing, in­vested in Wind Mo­bile Canada, hop­ing to turn it into a ma­jor player.

The in­vest­ment soon turned sour af­ter Ot­tawa blocked his bid to ac­quire All­stream from Man­i­toba Tele­com Ser­vices Inc., through his in­vest­ment firm, Ac­celero Hold­ings Inc.

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