Mr. Chair, members of the committee, thank you for inviting us to appear before you today.
Friends of Canadian Broadcasting is a watchdog for Canadian programming on radio, television, and new media. We're supported by 100,000 Canadians. Our most recent appearance before this committee was in 2003 during the hearing on foreign investment restrictions applicable to telecommunications common carriers. Plus ça change....
Section 7 of the Telecommunications Act states that “telecommunications performs an essential role in the maintenance of Canada’s identity and sovereignty”. The act outlines objectives of Canadian telecommunications policy, including:
to facilitate the orderly development throughout Canada of a telecommunications system that serves to safeguard, enrich and strengthen the social and economic fabric of Canada and its regions; ... to promote the ownership and control of Canadian carriers by Canadians; ... and to stimulate research and development in Canada in the field of telecommunications...
Hence, section 16 requires that Canadian carriers be owned and controlled by Canadians.
We support these provisions of the act, and we note that, by a wide margin, so do Canadians. In a survey that Friends of Canadian Broadcasting, ACTRA, and the Communications, Energy and Paperworkers Union commissioned from Harris-Decima in November 2007, for example, 61% of Canadians had an unfavourable reaction towards foreign ownership of telephone companies. Among our concerns regarding a possible loss of Canadian ownership and control of Canadian carriers are the export of high-end jobs, reduced protection of the personal privacy of Canadians through the intrusion of such instruments as the United States Patriot Act, loss of sovereignty through dependence on the United States routes for data flow, reduced resilience in emergencies, and a threat to service access on the part of Canadians living in rural and remote areas.
Friends' principal concern, however, relates to Canada's cultural sovereignty. Canada's media and communication industries have converged in recent decades, and the pace of this convergence has recently increased. For your convenience, we have reproduced CRTC data on the corporate structure of Canada's biggest media and communication companies: BCE, Canwest, Cogeco, CTVglobemedia, Quebecor, Rogers, Shaw, and Telus.
Let's take Rogers as an example. Beneath the holding company known as Rogers Communications, of which the Rogers family controls 82% of the voting shares, Rogers' business lines include cable television, local and long distance telephone, Internet access, wireless broadcasting, baseball, and publishing. Last year its revenues approached $12 billion. Although Rogers may be the most converged media and communications company, it is by no means unique.
Shaw operates in the cable and Internet business and is entering wireless. Through the Shaw family's common ownership and control, Shaw is related to Corus, a radio and specialty television company. Quebecor controls Videotron, TVA, and Sun Media, and offers Internet access and plans to enter the wireless business. BCE controls Bell Canada, Bell Aliant, and Bell TV, and has a 15% stake in Bell Globemedia, which controls Canada's largest television company and The Globe and Mail.
In this integrated communication business, changing the foreign ownership requirement for one sector, telecom, can be expected to impact on the other sectors. If BCE were foreign-owned, it would become ineligible to control Bell TV. Rogers would have to dispose of Rogers Media and Rogers Cable, and so on. Disposing of these key broadcasting assets would destabilize the Canadian broadcasting system by reducing the investor pool as well as ending synergies between the component parts. For example, Rogers Cable's pipes carry Rogers Cable's telephone and Internet services.
It's reasonable to assume that the affected players would instead call for changes to ownership requirements under the Broadcasting Act, just as they did successfully when telecom ownership requirements were last changed in the 1990s.
The Montreal Gazette reported on November 23, 1995:
...the federal government is relaxing limits on foreign ownership of Canadian cable and broadcasting companies…. (Heritage Minister Michel) Dupuy said the rule changes put the broadcasting and cable industries on the same footing as telecommunications companies.
Indeed, CanWest's Leonard Asper told your predecessors during the 2003 hearings that:
Any changes in the rules that apply only to telecom companies would soon be of competitive significance to broadcasters as telecom companies move increasingly into the BDU and broadcasting businesses.
BDU means broadcast distribution undertaking. I call it CRTC, to speak for cable and satellite.
Cogeco's Louis Audet told the committee:
We are suggesting that competitive equity will require that cable companies and telephone companies be treated the same way under liberalized foreign ownership rules.
The 2003 industry committee's report underscored Mr. Audet's comment in the following passage:
Technological advances and convergence of technologies, especially over the last decade, have blurred the lines that previously separated the services offered by telecommunications common carriers and broadcasting distribution undertakings (BDUs, including cable companies, DTH satellite service providers and MDS). Telecommunications carriers and BDUs are now competing for the same customers in some markets (e.g., high-speed Internet service). The telecommunications and broadcasting landscape is further complicated by vertical integration and by cross-media ownership. Clearly, defining an enterprise as a pure “telco” or “BDU” on the basis of their underlying distribution networks or the services they provide is becoming more and more difficult.
That committee then produced a little visual that I find still applicable, and I ask to have it passed out for your consideration.
Canadian broadcasting is a public good that is essential to the communications infrastructure of local economies across the land. It facilitates the participation of citizens in the democratic process and contributes to building a distinct identity on the northern half of the North American continent. Allowing such an important instrument of Canada's national development to fall into foreign hands would signal the demise of our cultural sovereignty.
While no patriotic Canadian would deliberately counsel such an outcome, tinkering with foreign ownership rules in one part of the media and communications industry will place other parts at risk.
Last week you heard from Marta Morgan at Industry Canada that relaxing foreign ownership rules in telecom would serve to bring Canada in line with other OECD countries. None of them is immediately adjacent to the huge cultural and economic influence of the United States of America.
In view of Canada's unique position, we urge you to heed the advice of the Lincoln report--that's the heritage committee--that the existing foreign ownership limits for broadcasting and telecommunications be maintained at current levels.
Thanks for your attention.
Thank you for inviting us, Mr. Chair.