Industry Committee on April 1st, 2010

[The Chair, Conservative, Michael Chong]

Good morning to members and witnesses of this committee. Welcome to the seventh meeting of the Standing Committee on Industry, Science and Technology. This is April 1, 2010.

We are here pursuant to Standing Order 108(2), concerning a study of Canada's telecommunications sector and Canada's foreign ownership rules and regulations in that sector.

We're going to have two panels this morning, one from 9 to 10, and another one from 10 to 11.

Our first panel is made up of three representatives of three different groups. We have Madam Parker and Madam Schechter from the Writers Guild of Canada. We also have Mr. Murdoch from the Communications, Energy and Paperworkers Union of Canada. Finally, we have Mr. Pineau and Mr. Neil from the Canadian Conference of the Arts.

Welcome to all of you.

We'll begin with five- to seven-minute opening statements from each of the three groups, beginning with the Writers Guild of Canada.

[Maureen Parker, Executive Director, Writers Guild of Canada]

Thank you.

Good morning, members of the industry committee. My name is Maureen Parker, and I'm the executive director of the Writers Guild of Canada. Sitting next to me is Rebecca Schechter, president of the Writers Guild and professional screenwriter. The Writers Guild welcomes this opportunity to appear before the Standing Committee on Industry, Science and Technology.

The Writers Guild is the national association representing more than 2,000 professional screenwriters working in English-language film, television, radio, and digital production in Canada. We regularly advocate for a strong broadcasting system before the Canadian heritage committee and the CRTC. We believe that Canadians must have the choice to watch high-quality Canadian programming on our airwaves.

The impetus for this review was the Speech from the Throne, which discussed a plan to open the satellite and telecommunications industry to foreign capital. This was in response to public demand for improved telecommunication services at lower prices. Screenwriters are consumers too, so we share these concerns, but we are not convinced that easing restrictions on foreign ownership will guarantee consumers lower prices and better services.

The government has assured this committee that it does not intend to touch broadcasting; however, given the consolidation and convergence that has taken place in our media landscape in the past few years, we do not see how this could be possible. For example, Rogers owns wireless, Internet, cable delivery, and broadcasting stations. If a foreign company gained control of Rogers Communications it would gain control over its subsidiaries: Rogers Telecom Inc., which also owns Rogers Wireless Inc.; Rogers Media Inc., which owns the radio and television businesses, as well as the magazine publishing industry; and Rogers Cable, which offers Internet and telephone services in addition to cable. Foreign ownership of the parent company would disqualify the subsidiaries from owning their Canadian cable and broadcast licences.

Even if it were possible to permit foreign investment into integrated media companies, there would still be potential risks to the broadcasting assets in these companies. Investors tend to make decisions based on international corporate agendas. This makes perfect sense, but can leave domestic businesses in jeopardy. If a foreign owner decides that its Canadian asset is underperforming in comparison to the balance of its global assets, it could sell off that asset or cut its services in the name of efficiency. In our sector, broadcasting assets are the most vulnerable because they have a much lower profit margin than telecom or cable.

Rebecca.

[Rebecca Schechter, President, Writers Guild of Canada]

Thank you, Maureen.

The challenge in Canada is even greater now that every market in the world is faced with convergence. As a screenwriter it's now conceivable that I could be engaged by Rogers Wireless to write a digital series that would be available on their wireless platform and delivered to consumers through Rogers Internet or broadcast on Rogers Citytv.

The kind of content that I create is protected under the Broadcasting Act, which was created with the specific purpose of maintaining a public service essential to the maintenance and enhancement of national identity and cultural sovereignty.

Canada is uniquely challenged in maintaining its cultural sovereignty for a number of reasons: our closest neighbour and trading partner, the United States, is the largest exporter of film and television in the world; Canada shares a language and many cultural touch points with the U.S.; and U.S. broadcast signals spill over the border and are watched by millions of Canadians every night, resulting in a very fragmented market here. We also have a small population of just over 33 million, spread over a large territory, making indigenous TV production more costly to deliver with lower profit margins than in more densely populated territories.

By comparison, France and Germany have been able to relax their foreign ownership restrictions in broadcasting because they don't have these challenges. They can rely instead on their distinct cultures and languages, their large populations, cohesive markets, and dominant public broadcasters to protect their cultural identity. We wish we could do the same.

Cultural identity is what it comes down to for us. We're the people who create the content that fills the airwaves. Our industry is not like other industries. We're not making shoes or cars--important as these things are. There is no Canadian car. This is not a tragedy for our country. But if there were no Canadian stories on our airwaves, it would be.

In closing, we urge the government to conduct an impact study that would result in a clear plan of action before loosening any foreign ownership restrictions in the telecommunications sector that could irreparably harm the broadcasting industry. We know that there have been other reviews and studies of foreign ownership in the past. However, we are now in the midst of a digital revolution where carriers and content providers are becoming one and the same. The government is right to consider consumers' interests, but consumers have more than money at stake here.

We thank you for your time and look forward to answering any questions.

Thank you.

[The Chair, Conservative, Michael Chong]

Thank you, Madam Schechter.

We'll now hear an opening statement from Mr. Murdoch.

[Peter Murdoch, Vice-President, Media, Communications, Energy and Paperworkers Union of Canada]

Thank you.

Good morning, Mr. Chairman, members, and committee staff. For the record, my name is Peter Murdoch, and I am the vice-president, media, of the Communications, Energy and Paperworkers Union of Canada. With me is Michel Ouimet, executive vice-president for our Quebec region.

As Canada's largest communications union, CEP is pleased to appear before you. Our 32,000 telecommunications and broadcasting members, including 12,000 in Quebec, and thousands more across Canada, support a strong and prosperous communications system. It provides our members with high-quality jobs and pensions.

We firmly oppose the government's proposal to let non-Canadians own this country's communication system. Most importantly, the government simply hasn't made a case to show why we need foreign control. Last week the Department of Industry's officials implied that Canada should allow foreign control because countries like Mexico and Korea have already done so and this will somehow make prices fall while improving innovation.

Framing the debate this way ignores relevant facts. For instance, the number of competitors has actually decreased since competition was permitted in Canadian telecommunications. In 1951, Canada had 3,200 independent telephone systems. In 2006, 10 companies took in 93% of all telecommunications service revenues. After 20 years of price-based competition in both cable and telecommunications, prices in this country have not dropped, so why would foreign ownership in this sector be any different? Ironically, foreign investors might be even more attracted to Canadian telecommunications precisely because they could maintain high prices.

As for innovation, the OECD reported two years ago that Korea's fibre penetration is higher than total broadband penetration in five OECD countries. Looking at the Korean numbers more closely shows that they include the broadband-enabled mobile phones available in almost every household, which made its broadband penetration figures look higher than everywhere else.

We have some of the best universities and minds in the world. A Canadian invented radio. Canada was the third country to launch a communications satellite. RIM is a world leader in telecommunications technology. So why is the Canadian government now saying that the only way Canadians can enjoy new technology is to beg, borrow, or buy it from other nations?

The real problem has been that Canada's regulated telecommunications service providers have not had to innovate to reduce prices because the Telecommunications Act does not require the CRTC to regulate in the public interest.

As an advanced country, founded on the rule of law, with a well-educated workforce, Canada is obviously attractive to foreign investors. It has a stable economy, largely due to a highly praised and well-regulated banking system. Regulation has proved its worth to Canada's financial sector.

What will protect Canadians from problems related to oligopolies, privacy, and national security?

On Tuesday, for example, you heard that Canada's Competition Act will prevent large foreign companies from buying up Canadian telecommunications firms and acquiring market dominance. But even domestically this legislation has not worked well. It certainly has not stopped Canada's cable systems from buying up their competitors so that five companies now set the prices for 90% of all cable subscribers in Canada. And neither the Competition Act nor the Broadcasting Act stopped Jim Shaw Sr. and Ted Rogers from agreeing ten years ago that although they could compete in each other's market, they would not. When the CRTC ignores this behaviour and it does not even publish information about how much Canadians are actually paying each month for cable or telephone, it's little wonder that prices shoot up without restraint, making the sector even more attractive to foreign purchasers.

As for privacy, Canada's Privacy Commissioner has already warned that when data leaves Canada, its control rests in the hands of other countries, not Canadians. Even if foreign-owned Canadian companies must follow Canadian personal information law, what stops foreign parent companies from sharing Canadians' personal information and data with their own countries' governments? For instance, how many of us know that U.S. laws allow American companies to obtain intelligence information from telecommunications companies outside the U.S?

Now, let's say accessing new technology and the chance of lower telephone rates are more important than privacy, oligopolies, and national security. No one just shares technology any more. Today's foreign investment contracts govern precisely how much information foreign companies will share with Canadians. As for any new research and development that foreign companies undertake in Canada, consumers might at some point benefit from it, but the foreign companies, not Canadians, will hold the patent rights to those technologies. The revenues from those inventions will be leaving this country, not remaining here to support new investment and innovation.

Let's not forget that any industrial policy enacted by government must be based on more than prices or shareholder value. It must be based on employment opportunities for Canadians. Since 1999, every major merger in Canadian broadcasting has been financed by layoffs, close to 9,000 to date. Maybe it will be different in telecommunications, but that's hard to say, because data published by the CRTC about employment trends there are very difficult to find.

But suppose we allow AT&T to buy Telus. If the U.S. economy happened to lose ground, why would AT&T ignore the savings it could gain by cutting jobs in Canada?

Michel.

[Michel Ouimet, Executive Vice-President, Québec, Communications, Energy and Paperworkers Union of Canada]

I'll continue in French.

The fact is that Canada does not make sense to economists. They do not like large, sparsely populated areas. They think that people who live outside of cities should pay for that privilege, and that policies that support rural Canada are wrong-headed. We disagree—and so do Canadians, especially those who are fortunate enough to live in places like Erin, Nipissing or Chicoutimi.

But let us be clear. Allowing foreign ownership of our telecommunications companies will bring these very hard questions to light, and will pit rural and urban neighbours against each other. Of course it's easier to serve densely populated countries like Korea and Japan—but members of this House have always acted to ensure that in this country, all Canadians can access the communications services they need, across five time zones, from coast to coast to coast.

Then there is the spectrum issue. The licences held by telecommunications and broadcasting companies are temporary permits to use the spectrum owned by Canadians. But last year the Supreme Court of Canada decided that today's commercial realities mean that licences are a type of property that is subject to seizure during bankruptcy. If we allow non-Canadians to own Canadian telecommunications companies, are we inadvertently giving non-Canadians ownership of our spectrum? We don't pretend to have the answer—but this is a difficult question that must be addressed before we allow foreign ownership.

Finally, you've already heard that untangling telecommunications from broadcasting pipes will be a messy business, if not impossible. Foreign ownership of our communications system—broadcasting and telecommunications—puts Canada on a path that threatens its domestic and cultural sovereignty, as well as its national security. As an organization representing thousands of people in the news and information business we are particularly concerned about what this might mean for the content of Canada's news media. Foreign ownership will influence style and substance of content of our news and information programming.

For example, last year, the CRTC asked the Federal Court of Appeal to decide whether Internet service providers are broadcasters or telecommunications service providers and it hasn't decided yet. But even though section 36 of the Telecommunications Act prohibits telecommunications companies from interfering with the content they carry, the CRTC lets Internet companies throttle content under specific conditions. U.S. wireless carriers have already censored text message content for both political and business reasons. Should Canadians be required to balance their constitutional right to freedom of expression against lower cell phone rates? How, in any event, will they even know when content is being censored?

In conclusion, let us repeat what we said at the beginning of our presentation. CEP supports and encourages a strong, healthy and innovative communications system. But we submit that before recommending foreign ownership of these systems, this committee needs evidence to explain why telecommunications rates have remained high despite deregulation and increased competition. You need evidence proving that foreign ownership will reduce rates, and evidence demonstrating that Canadians' socio-economic interests will be better served if Canadian companies sell our telecommunications system to foreign interests. We do not believe this evidence exists.

And we agree with other witnesses that Canada needs new communications legislation to unite our telecommunications, radiocommunications and broadcasting acts, specifically to require the federal regulator to serve the public interest.

So before this government changes foreign investment levels in this complex sector, it should first establish a communications ministry to provide reliable data, solid analysis, and impartial research to answer the questions we have raised.

Going forward, Canada needs strong legislation to protect the interests of this country and its citizens—not just the interests of a few extremely large corporations and their shareholders. The Canadians who created and paid for our telecommunications infrastructure left us with a communications system that for decades was the envy of the world. Canadians still have the talent and expertise to improve our system. Our engineering, technical, and business schools are second to none. Parliament must ensure that this talent, expertise and education are employed by Canadian companies to improve their performance and our communications systems.

We have other information to give you, but we have limited our presentation to five to seven minutes. We were told this morning that we had 10 minutes. So we apologize. We'll have other concrete examples to give committee members later on.

Thank you.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Ouimet.

We now hand over to the people from the Canadian Conference of the Arts.

[Alain Pineau, National Director, Canadian Conference of the Arts]

Good morning, Mr. Chairman, committee members.

My name is Alain Pineau, and I am the National Director of the Canadian Conference of the Arts. Beside me are Mr. Garry Neil, President of Neil Craig Associates, our foreign ownership advisor. CCA is the oldest and most broadly-based arts, culture and heritage umbrella organization in Canada. Its mandate is to contribute to an informed debate on all federal policy and regulatory issues that in one way or another concern this large sector.

We thank you for this opportunity to intervene in the study you are conducting on foreign ownership rules and regulations in the telecommunications sector. This is a fundamentally important issue for Canadian culture in general, quite apart from the specific issues in the audiovisual sector. As a result of technological convergence and ownership concentration, the Canadian telecommunications and broadcasting sectors are in fact two aspects of the same reality. Telecommunications, cable and satellite companies, traditional broadcasters are increasingly owned by the same interest groups that compete against each other in the same sectors, including that of access to cultural content, and increasingly elsewhere.

This is why we believe it is virtually impossible to change foreign ownership rules in telecom and isolate broadcasting from the consequences of doing so. Opening the door to foreign control of satellite and telecoms can only lead to a domino effect and to foreign ownership of cable companies and broadcasters.

Some of Canada's largest corporations operate in these fields, and they would apply tremendous pressure on policy-makers to level the playing field, as we know, with their competitors and permit them to obtain foreign investment on the same terms. How will it be possible to deny one protagonist access to foreign investment granted to its main competitor? We've already seen Globalive. Where can we draw a clear line between the tangled interests of BCE, Rogers, CTVglobemedia, Telus, Shaw, or Quebecor--Quebecor in particular?

It has long been recognized in this country that market forces alone are insufficient to ensure we have access to a reasonable supply of high-quality Canadian choices in every medium, and that we need to have public policies and regulations to achieve these objectives. Ensuring Canadian ownership and effective control of our cultural industries is based on the notion that it is far easier to regulate Canadian-owned firms than foreign ones--not that we're making a success of it.

The absence of appropriate regulation in the movie industry is the best illustration of the impacts of foreign ownership and control of a cultural industry. Because film distribution policy does not effectively distinguish the distribution rights for the Canadian market from North American rights for most of the largest distributors, foreign film distributors maintain a lock on the majority of the film distribution activity in Canada. Foreign films--i.e., U.S. movies--occupy over 98% of screen time in English Canada. The situation is somewhat better in Quebec cinemas, for obvious reasons.

This is an eloquent example of foreign-controlled cultural industry shutting Canadian cultural goods and services out of the market with impunity, in a weak or ineffective policy context. Cultural products are not products like any other, as has been mentioned before. That fact was recognized by the Canadian government when it sought and obtained the cultural exemption clause in the free trade agreement in NAFTA. The fact that cultural products play a defining role for Canada as a nation is also a reason why Canada remains a key proponent of the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions.

For the past several decades, the operating principle in Canadian cultural policy has been that Canadian ownership and effective control of our cultural industries will ensure more Canadian content is made available to Canadians. Canadians are more likely than non-Canadians to tell our own stories and to present our own view of the world based on our own values. Statistics support this belief. Canadian-owned firms are responsible for the overwhelming preponderance of production by Canadian artisan creators, even when they have only a small share of the domestic market.

It's also worth noting that Canada currently forbids foreign investment in Canadian broadcasting and telecom services. It simply prohibits foreign nationals from controlling those services. There is also no evidence that lack of foreign investment has hurt either industry.

Garry.

[Garry Neil, President of Neil Craig Associates, Canadian Conference of the Arts]

Thank you, Alain.

Others have explained the interconnectedness between Canada's telecommunications and cable companies. All the big players now offer wireless and home telephone, radio and television services, and the Internet. Between Canadian cable companies and broadcasters, all the big players own services that produce, acquire, and schedule television programs and movies.

We don't have time to fully explore the international trade implications of opening up our foreign ownership rules; however, we are extremely concerned about the implications of NAFTA--notwithstanding the so-called cultural exemption--and specifically its chapter 11, which provides foreign investors with a right to sue the Canadian government and seek compensation for government actions. This includes those regulatory agencies such as the CRTC, which investors believe violate their rights under NAFTA.

So what are we concerned about here?

First, in relation to NAFTA overall, we would point out that the so-called cultural exemption is limited in scope to the cultural industries that existed at the time. Importantly, this did not include the new media sector, such as interactive television, computer games, and so on.

Second, chapter 11 rights could potentially come into play in two ways. If the rules in telecom were changed, a foreign company that decided to invest in a Canadian cable company or broadcaster could structure a deal in a way that would mirror the new telecom rules. If the CRTC were to prevent them from proceeding, they could launch a chapter 11 challenge on the basis that they were being treated unfairly in relation to a direct competitor operating in the same marketplace.

If foreign companies are permitted to enter, or force entry, into Canada's broadcasting system, existing rules and regulations relating to the production and distribution of Canadian content productions may be sustainable since the foreign company is entering the market when those rules exist. But if the CRTC or the government were to try to update the rules to reflect a new environment, the foreign company now operating in Canada might have a cause of action under chapter 11.

CCA continues to believe that some regulatory requirements should apply to all platforms with respect to the production and exhibition of Canadian programs. If such a policy were to be adopted, it might be unsustainable with respect to foreign-owned companies.

There are, of course, other reasons to maintain the current restrictions on ownership. We will leave it to others to point to the threats to Canadian sovereignty and simply note that most of our major trading partners, including the E.U. and the U.S., also maintain foreign ownership limits, particularly in broadcasting, which is deemed to be a sector of vital national interest. Subjecting Canadian communications infrastructure to foreign ownership or control presents a substantial risk that foreign national interests may dictate how we can use this infrastructure, a point that has been made clear on several occasions within the past century.

Alain.

[Alain Pineau]

The complexity and interconnectedness of the various instruments set up to promote and sustain Canadian cultural expression cannot be fully appreciated by taking a scattergun approach to federal policy development. Opening up foreign ownership and control of our telecommunications can only lead to tremendous pressures to do the same in cable and broadcasting.

The potential impact of any such move through international trade must be fully understood by parliamentarians and by the government. New distribution technology opened the world to Canadian cultural products. It is crucial that we not jeopardize the ownership requirements and other regulations and subsidies that ensure such products are made.

It is for these reasons that I would ask that the amendment included in omnibus Bill C-9, modifying subsection 16(1) of the Telecommunications Act, to include satellites, not be passed. This is not the way to change the rules of the game--through the back door.

Thank you for your attention.

[The Chair, Conservative, Michael Chong]

Thank you very much.

We'll now deal with questions and comments from members of the committee, beginning with Mr. Garneau.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you, Mr. Chairman.

First, I would like to thank you for coming and expressing your opinion on this extremely important subject. Your views are very important to us and I want to assure you that, for my party, our country's cultural sovereignty is not negotiable. It is absolutely essential that we protect our culture here in Canada. I am very pleased that the broadcasting legislation is not on the table today or in the coming months.

I have a question for all of you. There's a hypothesis floating around a lot these days that says Canadians are not getting sufficient access--I'm talking to not just old media but primarily new media--and that Canadians are not getting sufficient access to the information they want to have. They're not getting it at the costs they would like. They're not getting the choice they would like. They're not getting the speeds they would like when we're talking about the Internet.

There's the theory brought forward that, “Well, we can solve this, because the problem is due to a lack of competition.” Following through on that reasoning, the next point that's brought up is, “Well, we can increase competition by having greater foreign investment, and we therefore should consider foreign ownership as well to bring in this outside capital.”

Of course, the whole issue came above the radar screen with the recent decision concerning Globalive, where the government reversed the CRTC's decision and decided, in fact, that Globalive satisfied Canadian requirements—and, in my opinion, effectively changed foreign ownership rules unilaterally in the process of making that decision. But the government certainly wants to look at foreign ownership. They've made it very clear in their throne speech.

What do you think of the hypothesis I've brought forward that Canadians want more, they believe competition will help, and competition requires foreign ownership? Is that a flawed solution?

I would like to hear your opinions on that.

[The Chair, Conservative, Michael Chong]

Go ahead, Mr. Ouimet.

[Michel Ouimet]

I come from Bell myself. There are a number of assumptions in what you said, but it is certain that CEP has been opposed to raising the restrictions on foreign policy for more than 35 years. Here we're talking about Videotron, Bell and Telus, but Bell and Videotron are the ones I know best as regards the modernization of their networks and high-speed Internet access in particular. Those companies still target the major centres.

You're asking whether competition would be more beneficial for Canadians. That might perhaps be the case in the major centres like Montreal, Toronto and Vancouver. Subscribers would be better served. However, in the areas adjacent to those major centres or out a little further, in the rural areas, people have been fighting for years for universality and access at the same price. It costs a great deal more to serve rural areas because it is extremely costly to install networks in those regions.

I believe that none of the stakeholders here have any trouble with Canadian competition as it currently stands. As you mentioned, the government has decided to reverse the CRTC's decision, which we think is appropriate. That's what scares us. Globalive's entry in the cellular market leaves the door wide open. As noted in the media:...the government has just allowed foreign ownership in Canada beyond what is provided for by the act. Every foreign company that can find a front can now enter the country by replicating the model.

Here we're talking about the Globalive model. That company is a small communications player, but if the foreign ownership restriction were raised and companies like AT&T, Verizon, Deutsche Telekom and Nippon Telegraph and Telephone decided to come to Canada, they could buy Bell, Telus and Videotron in one fell swoop. Who would the Canadian clientele then be served by? What would happen to jobs in the sector in Canada? Of course, direct customer service would remain here. Technicians and their trucks couldn't be sent to India or Japan. However, all administrative jobs would be transferred elsewhere.

Here's the best example I can give you. As I told the chairman earlier, we represent the employees of Teleglobe, which was bought up by Tata Communications, an Indian company. Eighty per cent of the jobs of the members we represent were transferred to India. It is clear that, if we allow foreign companies to invest in this market, that will not only constitute a threat to everything we've mentioned in our presentation, but it will also ensure that jobs are transferred elsewhere. That's what troubles us.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Would anyone else like to speak?

[The Chair, Conservative, Michael Chong]

Mr. Pineau.

[Alain Pineau]

Mr. Garneau, I would like to answer your question on the assumption. I don't know whether this is what Canadians want, but I can tell you I found this in today's Citizen—it's an advertisement for the new WIND service. It's selling very well to Canadians, who think that telecommunications are too expensive.

So something's not working in the system. That said, we don't think this is the solution. It's something else. Competition is part of the problem. Regulation is the other part.

Market forces don't often meet expectations regarding the common good, despite what we may think. The individual good, yes, but not the common good. A nation defines itself based on common goods it generally pursues through regulation. That's what Canada has done. In addition, what Mr. Ouimet said earlier is terrible because we were global leaders in telecommunications. When I was a young boy, that was one of our achievements, as well as the sale of iron from Ungava. I don't know where the iron from Ungava went, but I do know where our brains are going, where our creativity is going, and that's outside the country, not here. We look at the knowledge society, creativity, and we're selling our creative businesses. I don't understand that. That's why I'm telling you that the satellite shouldn't be the first finger in the dike.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Pineau.

Ms. Parker.

[Maureen Parker]

I think the government is right to be concerned about those issues, access and speed and cost. Those are things to be concerned about. That's why we are recommending yet another study. I know you think, “Yet another study”, but we really are in the midst of a digital revolution. We can tell you that because we're really in it. The people who are creating this content are in it. We're working one day for Rogers Wireless, creating web series. We're delivering broadcast content. It's all over the map right now.

So those are valid concerns. We're not economists, but if you conduct a study and you look into how to address them, I just question whether or not foreign ownership will be the answer when you weigh all the other problems, the integration with other businesses, convergence, consolidation. It's a very big puzzle.

That's why we do recommend that if you are looking for answers in these areas, important answers, you conduct a review and you carefully analyze what are the pros, what are the cons, and what are the problems. Will foreign ownership address some of these things?

I question whether a foreign company would actually want to provide services in Kapuskasing. But maybe we'll be surprised.

We recommend that you do conduct a review, given the changing times.

[The Chair, Conservative, Michael Chong]

Thank you, Ms. Parker.

Mr. Cardin.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chairman.

Good morning, ladies and gentlemen. We are here as a result of the government's decision to reverse the CRTC decision to allow Globalive, that is to say foreign interests, to set up shop. The unions said at the time: “This decision is clearly illegal and an affront to Canadian democracy.”

No laws have been changed, but no consideration was given to the CRTC decision or to the will of Parliament or parliamentarians. Furthermore, in the Speech from the Throne, the government clearly stated: We want foreign interests in telecommunications. Implementation of the budget resulted in amendments to the act and enabled foreign companies to acquire satellites. So, contrary to what Mr. Garneau said earlier, the government clearly intends, in practical terms, to sell foreign interests content as well as equipment.

How could foreign ownership jeopardize sovereignty in all its forms, including culture and security? The government clearly states that it's for the sake of competition, to create more innovation. Do you think it would be possible to have healthy competition in the current context and, if so, how? How can we pursue, maintain and even increase innovation with strictly Canadian interests and, in addition, give the entire regional population access?

[Peter Murdoch]

Let me begin by saying, first of all to Mr. Garneau, that in terms of the cost, speed, choice, information, etc., all you have to do is look at the ads or read the AGMs of all the big companies: they have those bases covered. Look at the ads; they have speed, choice, and so on. So I think the very companies that you suggest might benefit from foreign ownership will tell both shareholders and customers that they have the bases covered right now.

On our concern about the crossover between foreign ownership, particularly in broadcasting, I'm not going to review the entanglement we now have with telecommunications and broadcasting. I think it's self-evident. Again, all you have to do is look at the ads and see where the Internet, television, and telecommunications intersect. It's there that it's happening.

Let me give you an example that will demonstrate our concern. Say Fox News buys CTV, or has enough muscle, in terms of its investment, to start making some decisions or helping some decisions. Why wouldn't Fox News ask why they need a Canadian correspondent and a U.S. correspondent in Jerusalem? Why wouldn't they ask if they need only one correspondent there? And believe you me, that one correspondent will be American. Why do we need so many correspondents and reporters on the Hill? Why do we have...? There will be a shaping of Canadian news that is not there now, a polarization of Canadian news that is not there now but is clearly there in the American media.

More importantly, we have a very distinct point of view on both our own politics and international politics that I think in some ways we can be very proud of. It helps provide the stature we have in this world. If we start to allow foreign investment to shape that kind of coverage, we will find ourselves in serious trouble.

[Garry Neil]

I want to quickly make three points. The first is relative to satellites and foreign ownership of satellites.

Let me put the following hypothesis on the table. General Electric, which is heavily involved in the satellite business around the world, buys Telesat or a Canadian satellite company. One of my arguments is that it then might have rights under chapter 11 of NAFTA to challenge government and CRTC regulations that would prevent it from giving preference to NBC Universal, because that's owned by General Electric, and perhaps even to Comcast, because that will most likely soon be coming under the ownership of General Electric as well. So even in the satellite area you see the overlap with the others, as we've been saying.

Second, I don't understand the notion that we don't allow foreign investment in our telecommunications business. Orascom owns 65% of the equity of Wind Mobile and provided 100% of the debt financing. The CRTC said that was okay, but you can't control it in fact--which they do under issues like the veto rights they have, and liquidity rights--so the ability to fundamentally control the direction of it. But it seems to me that is foreign ownership: 65% equity ownership, and 100% of the debt financing. Why do you need any more if it's about investment and competition? That's the point I make.

Third, as both of you pointed out with your excellent questions, and as Maureen said earlier, this is a very complex issue once you begin to drill down and explore the questions of choice for consumers and the price we pay. I hate how much it costs for my BlackBerry, and I know from my European colleagues how much cheaper it would be if I had a supplier from Europe. But also involved in there are the fundamental questions of Canadian content, Canadian sovereignty, and our right as a people to decide that we want our culture to be seen on our airwaves.

Thank you.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Neil.

Madam Parker.

[Maureen Parker]

I'd like to answer Mr. Cardin's question about whether it will affect our cultural sovereignty.

Just to touch on the theme that I think you're hearing a lot of us discuss, it's the integration of these businesses. That is new. That has greatly changed over the last three years. We are now poised to see Shaw Communications purchase Canwest, a conventional private, with really most of our specialty channel holdings. That's going to be quite a move in our industry.

The thing to know about broadcasting...and I know that none of you want to talk about broadcasting. Sometimes I don't want to either. But it's kind of the elephant in the room. You are going to have to talk about it, because it's there, and it's all part of this mix. Broadcasting is a difficult business. I hate to admit it, because I don't like to give them that, but it's a difficult business. Your profit margins are variable. You're buying content that is very expensive and that you are not sure is going to perform in your marketplace. It's a real risk. Who knows what show will be a hit, and what will be a miss? You still had to produce it, you had to do all of the R and D, and you're carrying that cost.

In our marketplace, because it is small, you have certain recoupment issues. But the thing about addressing this by just keeping it to telecom is that you can't, because it's all integrated. And broadcasting is a business with lower profit margins. So you are going to have to look at that and you're going to have to ask if it's possible to keep those things separate. Broadcasting is our cultural sovereignty. Those are our stories. That's where we tell stories about ourselves, we learn about our history and our values, our communities--that's where it's at. That is at risk if you open this up.