Thank you, Mr. Chairman, for the invitation to attend this morning.
With 6,000 employees across Canada, $1.9 billion in revenues, nearly two million total customer connections spanning business customers across Canada and residential consumers throughout the province of Manitoba, and a national broadband and fibre optic network that spans almost 30,000 kilometres, MTS Allstream is one of Canada's leading telecommunications providers.
We compete with TELUS in the west; Bell in the east; and Bell, TELUS, Rogers, and Shaw, among others, in Manitoba, where we are the incumbent.
We are the only national facilities-based competitor advocating for a pro-competitive regulatory and policy framework left in Canada. There were at least 14 facilities-based competitors present in Canada in 2000, all of which failed or were consolidated into the existing incumbents, in part because of Canada's foreign investment restrictions.
As a result of our history, we have unparalleled experience investing as a national competitor. We were the first competitor to successfully build out a national IP-enabled network. We did so at a cost of approximately $4 billion and with the consequence that, as AT&T Canada, we also underwent the second-largest CCAA proceeding in Canadian history as of that time. This was due in large part to the fact that we were paying $400 million in annual interest charges on the foreign debt required to fund our capital build, a situation no large incumbent would ever face.
My point is that MTS Allstream has a proven track record as an innovative and successful competitor and is one of Canada's most innovative telecom providers. We also have the scars to prove it, and the perspective, we believe, to contribute to this very important discussion we're having today about foreign direct investment and the need to increase competition and innovation in Canada's telecom market, and ultimately, economic productivity in Canada as a whole.
We offer a unique perspective on these discussions for two reasons: first, because we operate and derive half of our revenue respectively as an incumbent in Manitoba and a competitor across the rest of the country; and second, because as a competitor we have experience in trying to establish and maintain international partnership with AT&T and have directly experienced the negative effects of current foreign investment restrictions.
The government's decision to move forward and examine ways to increase foreign investment in our telecommunications sector is welcome news for Canadian consumers and business. It has been recognized for some time now that the current restrictions on foreign investment in the telecom sector are counterproductive to Canada's goals of maintaining leadership in the realm of telecommunications and ICT and of ensuring Canada possesses the infrastructure necessary to support and enable the innovation and productivity-enhancing technologies that are key to our economic success. Our national interest is represented in welcoming global investment to assist in this essential task and thereby empower Canadians and Canadian businesses.
The need for reform has been recognized in numerous reports and studies: the 2001 broadband task force report; the 2000 report of this standing committee, Opening Canadian Communications to the World; the Telecommunications Policy Review Panel Final Report 2006; and the 2008 competition policy review panel report.
Among the expert bodies that have studied this issue, there is remarkable unanimity. For the last decade, all have advocated scrapping the sector-specific restrictions. None have made the opposite case. In every case, the current rules have been recognized as slowing competition, innovation, and productivity.
What's more, Canada's rules are out of step with the rest of the world. According to the OECD, Mexico, South Korea, and Canada have the most closed markets with respect to foreign investment. Since this study was published, both Mexico and Korea have begun easing their restrictions, leaving Canada as the sole laggard in this regard.
In short, in 27 out of 30 OECD countries, a company like MTS Allstream would be able to access capital from anywhere in the world. This may help explain why so many international companies have effectively left the Canadian marketplace over the last decade, including AT&T, Verizon, MCI, Sprint, SBC, and British Telecom.
Greater foreign direct investment plays an important role in generating innovation, competition, and prosperity. Removing the current restrictions from the Canadian telecommunications market would bring tangible benefits. As the telecommunications policy review panel noted in its final report,
The economic case for liberalization of FDI is so well established in Canada and other OECD countries that the main area of economic debate is not whether it boosts domestic competitiveness and productivity, but by how much.
Greater direct foreign investment encourages the growth of efficient Canadian companies that can better compete at home and abroad. It would help foster a more dynamic and competitive business market. Indeed, Bank of Canada Governor Mark Carney is the most recent economic expert to link foreign direct investment to increased productivity.
One need only look at the oil and gas sector to see what can happen to Canadian industry when capital investment is allowed to flow unimpeded and Canadian corporate ambition is not snuffed at the border. In the 1970s, over three quarters of the industry was foreign-owned. The industry was highly regulated and subject to the oversight of the Foreign Investment Review Agency.