Sean Kilpatrick
Canada should put a foreign ownership cap of 49 per cent on both the telecom and broadcasting sectors, the head of the federal regulator on Tuesday told a parliamentary committee investigating foreign ownership restrictions.
Konrad von Finckenstein, chairman of the Canadian Radio-television and Telecommunications Commission, said converging technologies have resulted in converged companies, and that it is impossible to talk of reducing foreign ownership restrictions in one sector without doing so in the other. Currently, foreign ownership restrictions limit direct and indirect investment to 46.7 per cent.
Mr. von Finckenstein added that the current regulatory regime, which has a separate broadcasting act and telecommunications act, is overly complicated and has resulted in companies taking on "artificial" and "inefficient" structures to comply with the rules. Eventually, the acts should be merged, he said, though in the short term it would be much easier to make ownership restrictions flat across both of them.
"Canada clearly needs unified legislation to cover telecom, broadcasting and radio communications," Mr. von Finckenstein said. "We need to simplify these rules. We should not be juggling complicated percentage requirements for operating and holding companies."
These hearings follow the government's stated intent in the federal budget gradually to liberalize foreign ownership restrictions in the regulated telecommunications and satellite sectors. Industry Minister Tony Clement has said that the satellite sector, mainly one company in Canada, can be liberalized before telecom because it is more clear cut. In Canada's telecom sector, many companies also own broadcasting assets, which are subject to Canadian content regulations and concerns about cultural heritage.
Despite stressing that cultural considerations can be handled in separate legislation, Mr. von Finckenstein faced tough questioning from MPs on the committee, who expressed concerns about that Canadian broadcasting content.
Opposition politicians, who largely agree that there needs to be more competition in the telecommunications sector, have seized on the cultural aspects of the debate; they have repeatedly raised the idea that liberalizing foreign ownership could endanger Canadian broadcasting and programming.
The CRTC head also faced questioning about its decision to bar Globalive Wireless Management Corp. from obtaining an operating licence, a decision which in December was overruled by the federal cabinet. The government has been public about its wish to see more competition in the sector.
Liberal industry critic Marc Garneau pushed Mr. von Finckenstein on the point, noting Globalive had received prior approval from Industry Canada and that this decision may have been "mishandled."
"We made this decision and we issued this and that's the end of the story as far as we're concerned," Mr. von Finckenstein replied, after noting the regulator's decision was based on the evidence presented to the CRTC and not the evidence that was before Industry Canada.