Debates of Nov. 4th, 1997

Telecommunications Act

[Rob Anders, Reform, Calgary West, AB]

Mr. Speaker, I asked the question and, indeed, a lack of understanding of economics was proven by the member from the NDP. I have done a fair amount of trading and as far as I know the markets, if Canada were to go ahead and create a tax on currency trading unilaterally, we could be guaranteed there would be a sucking sound which would be the capital leaving this country. Or capital may never come into the country again.

By proposing that we tax these transactions, the member is actually encouraging the driving out of capital. I just do not understand how that would create jobs. Obviously in the member's fantasy world the economy has orange skies if she believes that this may work in creating jobs. It will not.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, it is really unfortunate that the member would dismiss another point of view and other arguments as somehow being a fantasy. If the member would listen closely to what really is now developing as a huge concern for Canadians about the impact of trade liberalization, then the member would not be so quick to judge that these concerns are somehow a fantasy or should not be taken seriously.

Second, if the member had been listening closely he would have heard that what was being advanced in our comments on the bill was the need for international institutions that have the ability to also provide regulations. We are facing globalization. Therefore, the issue before us is how to ensure that there is a level playing field and that Canadians do not lose out in the short run as well as the long run.

The member needs to listen carefully to what is actually being put forward.

[Rob Anders, Reform, Calgary West, AB]

Mr. Speaker, if Canada was unilaterally to go ahead and act against currency trading or if there were to be a multinational universal agreement in terms of taxing currency trading, all we would be doing is regulating it to death. What would be the point of even having a floating currency?

The hon. member for the NDP should suggest a fixed currency in terms of a gold standard, for example, rather than suggest that somehow the multilateral agreement should end it. It is not that I support it necessarily but then at least it could be credibly argued from her point of view.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, very briefly I think it comes down to a question of priorities. The priority for the NDP is to ensure that Canadians have good jobs. We have seen a drastic decline in that regard under the Liberal government.

What the Reform Party has offered in that regard has been no different from that offered by the Liberal Party.

[The Acting Speaker (Mr. McClelland)]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time adjournment are as follows: the hon. member for Delta—South Richmond, Mefloquine; the hon. member for Burnaby—Douglas, Foreign Aid; the hon. member for Brandon—Souris, Fisheries; and the hon. member for Frontenac—Megantic, Program for Older Worker Adjustment.

[Charlie Power, Progressive Conservative, St. John's West, NL]

Mr. Speaker, I am pleased to say that the PC caucus will be supporting the legislation. We see it as a way to prove to the rest of the world that we can be competitive, can create jobs and can do it through a free trade agreement.

I am amazed that the NDP caucus still fights against the free trade agreement. I guess it is not as changeable as the Liberal Party and the Government of Canada are today. All parties fought against the free trade agreement when we brought it in back in 1988. Basically it was a big issue. It was to be terrible for Canada. At least the Liberals had sense enough to realize that it was good for Canada. They have been building on it ever since. The NDP is consistent in its opposition even when it is a good idea.

I will be sharing my brief time with the member for Compton—Stanstead.

Bill C-17 amends the Telecommunications Act and the Teleglobe Canada Reorganization and Divestiture Act in keeping with our obligations to liberalize basic international telecommunications services under the GATS, an agreement which Canada signed this past February.

Under the terms of the GATS, Canada agreed to end monopolies held in the area of overseas telephone services and fixed satellite services. Canada also agreed to eliminate restrictions on foreign ownership in satellite earth stations and the laying of international submarine cables. Bill C-17 ensures that Canada fulfils these obligations.

Bill C-17 amends the Telecommunications Act by establishing a licensing regime for international service providers to be administered by the CRTC. This is a similar system to that of many other countries.

Bill C-17 empowers the CRTC to contract out the need for a telecommunications numbering service and overseeing the collection and distribution of local subsidies.

Bill C-17 also clarifies the Telecommunications Act with respect to the role of Industry Canada in the certification and inspection of telecommunications equipment for use in Canada.

In order to protect the integrity of our telecommunications system under the bill non-certified equipment cannot be used in Canada. The bill also gives Industry Canada powers to set technical standards, inspect equipment and enforce penalties for those selling non-standard equipment within Canada.

The Teleglobe Canada Reorganization and Divestiture Act is amended by repealing the provisions that create a monopoly environment in Teleglobe Canada. It opens up the telecommunications market between Canada and the rest of the world, allowing other providers the opportunity to provide services within Canada. This is expected to result in cheaper long distance rates due to increased competition.

The opening up of the telecommunications industry is a policy of the Progressive Conservative Party which began in 1987 when we privatized Teleglobe Canada. After a few years of functioning as a private sector business Teleglobe's management decided to expand its operations. In 1995 it recognized that its future was in servicing foreign markets and it proceeded to do so. Now two years later it has increased its share of telecommunications carrier services between several non-Canadian destinations by over threefold.

When the PC Party began privatizing many crown corporations federal Liberal Party members in particular fought against the plans. They believed we would lose our identity in the process but are now expanding on the achievements of our party by further opening up markets and allowing non-Canadian carriers access to our telecommunications sector. Is it not odd how they have changed?

When we privatized Telesat Canada the official opposition of the day also fought against our plans, stating that it needed all the government support it could muster to challenge the world in the face of global competition. Reformers have gone now from advocating interference to opting for a freer marketplace. With the FTA and the North American Free Trade Agreement the PC Party further liberalized trade in telecommunications for Canadian businesses. The official opposition of the day also fought against these.

They now stand as avid free traders, signing the GATS and extending the North American Free Trade Agreement. Our obligations under the GATS mean that Teleglobe Canada will relinquish its exclusive access to the Canadian market as of October 1, 1998. Telesat's monopoly will end on March 1, 2000. Therefore current ownership restrictions have to be removed from the Telecommunications Act.

Our caucus supports the GATS because it is a free trade agreement. We continue to support the principle of free trade. The relinquishing of Teleglobe Canada's exclusive rights to the Canadian market has led the U.S. to open up access to its market, which is what we thought would happen in the beginning.

Canada also benefits from greater access to European and other developing nations. Furthermore, as I stated earlier, the consumer will be rewarded with the possibility of cheaper long distance rates due to increased competition in the marketplace.

When the Telesat divestiture act was being debated it was argued that the 10-year monopoly was not enough; it had to be longer. The government now realizes the 10 years was more than enough. After 8 years we are debating the opening of the marketplace. Industry wants less control in exchange for open access to the rest of the world. That is really the principle of the free trade agreement. It will not grow without these changes and the government has finally recognized it.

The PC Party is supporting the legislation because it continues the process we started of enhancing the competitiveness of Canadian firms. It is because of our initiatives that Canadians enjoy the great degree of prosperity we have today.

Our evolutionary approach has produced well positioned Canadian companies that are today strong enough to compete globally. We support them in their continued efforts.

[Rob Anders, Reform, Calgary West, AB]

Mr. Speaker, I should like to make some comments with regard to the Tory member who just spoke.

Those oh so avid free trading Tories are the ones who brought us the GST, the ones who did not eliminate the interprovincial barriers to trade or make significant steps to that effect. My comments are not strictly reserved for them. They are also directed to the Liberals across the way. I will say in the NDP's defence that it was against free trade then and is against free trade now.

The Liberals have flip flopped all over on the issue. They were against it. Now they are for it. Now they are continuing it, promoting it and extending it.

Those Tories, those free marketeers, what a joke. If they had been free marketeers, if they had actually believed in freer trade, in smaller government and less regulation, they would have balanced the budget in the nine years they had in power. They failed to do so. Shame on them.

Why do the Tories across the way not talk about their record in terms of regulation and spending?

[Charlie Power, Progressive Conservative, St. John's West, NL]

Mr. Speaker, oh those righteous Reformers. They stand and criticize the Liberals. They criticize NDP members for opposing the free trade legislation because they think they will build fences around Canada. The Tories opened up Canada to the world. We showed the world we could compete in telecommunications and in many other sectors, but now the only people who know anything about managing Canada's economy are the righteous Reformers.

They have a long way to go before they can do some of the good things the Conservative Party did for Canada. Free trade was one of them and the GST was another.

Today the country is in decent financial shape because of the GST. Nobody liked it. Nobody liked free trade. However, anybody who looks back in an historical unbiased way will say that both those actions of the Conservative Party were very good for Canada.

[Rob Anders, Reform, Calgary West, AB]

Mr. Speaker, years after their government fell from 177 seats down to two, lo and behold in 1997 the Tories are still proud of their record of introducing the goods and services tax. Nothing ceases to amaze me.

In terms of regulation, these free marketeers kept the CRTC around through thick and thin during Tory governments, Brian Mulroney governments. As part of its mandate some time after the turn of the millennium 100% of all programming in Canada was to be Canadian content. There would not be anything allowed outside Canadian content.

We may be proud of some of the programs we produce in Canada, but shame on those Tories who supported the idea that people should not be able to watch anything other than Canadian content.

[Charlie Power, Progressive Conservative, St. John's West, NL]

Mr. Speaker, I agree with the member with respect to deregulation. It is something we all have to do.

Today a piece of legislation is being presented that deregulates and opens up a Canadian industry so that more jobs can be created through deregulation. I cannot understand how the Reformers say in one case it is good and in the next case it is bad. They have to be consistent. In our case we are consistent.

We believe in free trade. It creates jobs in Canada and we are proud of our record on that accomplishment.

[David Price, Progressive Conservative, Compton—Stanstead, QC]

Mr. Speaker, I am pleased to speak today on Bill C-17, introduced last week by the Minister of Industry.

The Telecommunications Act and Teleglobe Canada Reorganization and Divestiture Act follow in the path of removing monopolies and trade barriers in the service sector to allow Canadian firms to capitalize on their strong reputation in the international marketplace.

Canada's $18 billion telecommunications industry provides over a 145,000 direct and indirect jobs to the Canadian economy. The international telecommunications sector stood at $770 billion in value in 1995 and is expected to grow to $1.2 trillion in 2002.

The bill allows our Canadian telecommunications sector to serve the international community and increase its overall value by gaining valuable market access not only to the world's largest telecommunications nation, the United States, but also in 65 other markets.

Canada held extensive negotiations with the United States at the World Trade Organization last February where 67 countries were involved in trade services agreement negotiations. Canada coupled with the United States are important players in the international telecommunications industry because we have the largest volume of bilateral telephone traffic in the world. We obviously love to talk.

Since the days of Alexander Graham Bell and Marconi Canada, Canada has been a major in telecommunications. As with any trade objective certain aspects of the bill before us should be given serious consideration. Before I outline these portions of the bill I would like to examine the importance of Canada's overall trade competitiveness today.

It is important to note several factors that seem to surround our trade partnerships today. Since the signing of the free trade agreement and the subsequent NAFTA negotiations, Canada has become a prominent player on the international trade scene. Thanks to the foresight of a previous government, Canada has recognized the importance of free trade in today's global economy.

Without the original free trade agreement Canada's ability to secure its place in the vast North American marketplace could have been lost forever. Thankfully the once hotly debated issue of free trade has even been accepted by many groups and individuals adamantly opposed to it in 1998.

Because of a previous government's initiative Canada's main objective of having secure access to the American market is now a reality and this bill increases that access. With it comes certain consequences.

Since the American economy is considerably larger than our own, we have found ourselves at times willing to trade away reasonable access to the American market in return for little or limited access. This has caused some to decry that free trade with the U.S. is really only a form of managed trade.

There are examples where the government has failed in this area. The reason lies in the tentative nature in which Canada approaches invoking trade remedies and the lack of progress in negotiations surrounding this topic. Granted, this can create difficulty for certain industry sectors. However it is part and parcel of holding such open access to the American market, a position which many other countries would certainly relish.

The facts are undeniable. Canada's exports have grown from $105 billion before free trade to $245 billion last year. American imports have also grown substantially, from $92 billion to $210 billion. Overall, Canada's trade surplus has grown considerably, reaching the $40 billion level last year. Furthermore, free trade has catalysed significant growth in productivity and has promoted economies of scale. The result has yielded greater Canadian competitiveness in export merchandise.

This bill though deals with the service sector and follows the World Trade Agreement reached last February in Geneva. When one studies a bill like this, it is useful to know the context in which it was signed. The World Trade Organization agreement saw Europe and the United States allow greater foreign control of telephone service companies thereby catalysing competition and construction of the international networks, thereby following the philosophy of the federal trade agreement and ensuring that Canadian firms have market access to the larger international markets like the United States.

In turn, the government has had to end monopolies held by two Canadian companies in key sectors. Teleglobe Canada's monopoly on overseas telecommunications will end in October 1998 while Telesat Canada, which now controls all domestic long distance satellite phone service, will see its monopoly end in March 2000.

Private sector industry officials state that these types of concessions were necessary, given that the North American market is heading in the direction of open access enabling Canadian firms to partner with others to offer international services. Furthermore the increase in international market access will also benefit telecommunications equipment manufacturers in Canada, some being in my own riding.

I find it interesting that the government is willing to advocate the privatization by the previous Conservative government of Teleglobe and Telesat Canada. At the time the former opposition party argued that we would lose our identity if the privatization process continued. This is another example of the Liberal government's ability to read public opinion polls and change sides on an issue depending on how it will play with the public.

Given the fact that the government is now supporting and furthering the policy of the previous government, our party will support Bill C-17. I look forward to having further discussions on this bill in committee.

[Rob Anders, Reform, Calgary West, AB]

Mr. Speaker, once again I cannot resist commenting.

We have had Tories standing in the House today talking about how they do not like monopolies and how they are encouraged by these liberalizing trade initiatives. However, they still have people out and about in my province who are in favour of monopolies.

As a matter of fact, Harvey Andre, who used to be the government House whip and was also in charge of Canada Post, still believes in Canada Post and to this day writes letters to Calgary publications. He said that Canada Post should have an exclusive monopoly and that nobody else should be able to deliver mail in the country, that if there is a courier within a city that can deliver mail overnight for 19¢, they should not be allowed to do it. As a result, Harvey Andre was in support of disallowing the city of Calgary to deliver bills more cheaply than Canada Post could do it. As well, Harvey Andre supports Canada Post using Purolator Courier to subsidize its competition against United Parcel Service and Federal Express as private couriers.

I wonder whether or not the Tory members in this House today support the monopolies that Canada Post enjoys and uses to subsidize, driving its private competitors out of its industry.

[David Price, Progressive Conservative, Compton—Stanstead, QC]

Mr. Speaker, if the member looks a little bit further than that, we are looking a little further down the road as we always have done.

One thing is a little scary. We have come a long way. The hon. member is sitting in the House here. Luckily he is not the government. That would really be a scary thought.

The bottom line of the whole thing is that it was the Tory government that did start the process toward privatization. I do not think anything else need be said on it.

[Ted White, Reform, North Vancouver, BC]

Mr. Speaker, I am pleased to say that unlike my other colleague in the Reform Party, I do not really have any PCs running around writing letters to the newspaper and so on in my riding, not to say that there might not be at some stage but there is certainly not right now.

I am pleased to see that at least those PCs who are here in this House are talking more and more about taking away these monopolies.

I mentioned earlier that I was in the telecommunications industry prior to becoming a member of Parliament and was directly involved with the CRTC and Teleglobe. Anyone who was directly involved in that industry can see the tremendous benefits that have occurred from deregulation.

The prices of telephone calls for example. We see advertisements now on television where calls can be made to anywhere in the country on Sunday for 10¢ or 5¢, or whatever it is. Certainly in the early 1980s it would be something like $1.60 a minute. When we go back those 15 years or more we can see that it was really a tremendously expensive exercise.

These deregulations benefit ordinary people, the average wage earner tremendously. I was very pleased to hear from the content of the speech that at least the Tories are starting to see that taking monopolies out of existence is a good idea.

[David Price, Progressive Conservative, Compton—Stanstead, QC]

Mr. Speaker, this is a scary thought in that I am having to agree with Reform, but I guess there again the bottom line is that we did start the process.

[Walt Lastewka, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I am going to be splitting my time with the hon. member for London West in the discussion on Bill C-17, an act to amend the Telecommunications Act and the Teleglobe Canada Reorganization and Divestiture Act.

We have heard the legislation before the House is a necessary step toward implementing the GATS agreement on basic telecommunications and liberalizing global telecommunications. That agreement covers more than 69 countries with more than 90% of the world's $880 billion telecommunications market. It liberalizes basic telecommunications services which includes voice and data but not broadcasting.

It is a good deal for Canada. It will dramatically expand the $880 billion world market in telecommunications services, creating a demand for Canadian products and services. That will lead to more high quality jobs and economic growth.

Telecommunications are vital to Canada and have always been, ever since Alexander Graham Bell invented the telephone. Canadians have gone on to become leaders in the telecommunications industry.

In Canada we already have in place the world's first coast to coast commercial microwave network, the world's longest fibre optic communications network, the world's two longest competitive cellular networks, the world's first national digital microwave network, and the world's first domestic geostationary satellite telecommunications network.

It is easy to see why the telecommunications industry is an essential component of the Canadian economy. It employs some 115,000 people and accounts for 3.36% of our GDP. These are high wage jobs with average weekly earnings that are 44% higher than in all industries combined. Telecommunications is also a pivotal enabling technology that is increasingly an integral part of all types of businesses and public sector agencies.

The bill now before the House continues the liberalization of Canada's telecommunications market begun more than 10 years ago. We have already seen the benefits of that domestic liberalization for Canadians and Canadian telecommunications companies. Now we will see them in the international arena.

One of the government's key objectives during the GATS negotiations was to gain more access to foreign markets for Canadian telecommunications companies. That goal was achieved. These companies will now have more secure access to markets like the United States, the European Union, Japan, and the developing markets of Asia and Latin America.

As part of the deal Canada will make a number of changes to its domestic regime. We have made the following undertakings.

We will remove all restrictions on the use of foreign controlled global mobile satellites that provide services to Canadians.

We will end the Telesat monopoly on fixed satellite services.

We will maintain our transparent and independent regulatory and competition regimes.

We will end Teleglobe Canada's monopoly on overseas traffic and its special ownership restrictions which prohibit investment by foreign telecommunications carriers.

We will allow 100% foreign ownership and control of international submarine cable landings in Canada.

We will however continue our overall foreign investments rules to ensure that our industry remains Canadian owned and controlled.

The agreement on basic telecommunications is also an international milestone. GATS which came into effect on January 1, 1995 is the first ever multilateral set of rules for trade in services. It covers almost all the service sectors, including with this agreement basic telecommunications services. The new agreement establishes a clear set of multilateral rules in a sector that previously had no rules. Licensing processes will be governed by clear rules and disputes will be resolved in a timely manner through the WTO dispute settlement process.

The WTO dispute settlement understanding, or DSU, provides a number of mechanisms to resolve disagreements, including consultations, panels and reports. The objective of this process is to arrange either the withdrawal of the offending measure or if that is impractical, compensation to the injured third party.

This dispute settlement process provides the safeguards needed to ensure that countries respect their commitments. It is this mechanism that underpins the entire agreement. Without it no participating nation could have confidence that the terms of the agreement would be respected. And without it no telecommunications company could have the confidence necessary to make investments.

The dispute settlement process also provides Canada with a guarantee that the improved access we have won to the U.S. market is secure. Under the agreement, reciprocity tests in the FCC licensing process will be severely restrained.

Canada has one of the most open telecommunications markets in the world but the government believes strongly that an open market is not just about ownership. It requires a commitment to clear, transparent and consistently applied ground rules that ensure access and fair treatment.

With this agreement Canada has secured the commitment and the many benefits the agreement will bring to Canadians. Canadian businesses and consumers will benefit from enhanced services provided by an emerging global telephone system by establishing a transparent and predictable framework for trade and investment in telecommunications services.

The agreement will create a demand for Canadian products and services as it opens the doors to foreign markets. This will support a strong domestic communications industry and ensure that Canadians will continue to enjoy excellent communications services at competitive prices.

Given our many accomplishments in information and communications technology, there can be no doubt that Canada is poised to take full advantage of the newly expanded global markets in telecommunications services.

Technologies that are Canadian specialties are already creating whole new industries. Knowledge based industries are growing faster than any other sector in the Canadian economy.

As one of the most wired countries in the world, Canada has the communications and network infrastructure necessary to take full advantage of the information technologies such as electronic commerce.

The government consulted extensively with the telecommunications industry and with consumer groups before signing the agreement and found strong support for it. Now it will be up to Canadian industry to move forward in the global arena and take full advantage of the opportunities presented by this agreement.

In conclusion I urge the House to act quickly in passing this bill.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, I thank the hon. parliamentary secretary for those comments.

I think it is great that we have a gentleman who was a senior executive with one of the larger automobile manufacturing enterprises here in Canada.

I would like to ask him if he could articulate for us exactly how the new licensing regime will help the establishment, development and growth of small businesses rather than big businesses.

[Walt Lastewka, Liberal, St. Catharines, ON]

Mr. Speaker, the act specifies that the controlling of the licensing is there to have an even playing field. As we change from a monopoly organization into a freer licensing factor it allows more people to get licences and have the same rules.

This is very important in this agreement. There are a number of things in this agreement which are trying to put forward an even playing field. By having an even playing field this allows other entrants into the marketplace.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, in principle I suppose one would agree but I am asking myself the question that the bill does not in any way suggest how these licences will be granted, what the parameters will be and how the actual way in which these licences will be given. How could this then create a level playing field when nobody knows exactly what the licences will be or what the guidelines will be as to who gets licences and what the conditions of the licences will be?

[Walt Lastewka, Liberal, St. Catharines, ON]

Mr. Speaker, one must understand that once the act is passed there will be total consultation on this subject. Licensing is not unique to Canada. In fact, the U.S., the UK and the European Union have licensing agreements today and they apply them.

Therefore under the CRTC we would be consulting with the stakeholders and coming forth with the most effective licensing arrangement at the lowest costs. That is always an item which is close to everybody's heart, to make sure that fees are very low and only for the implementation of the licensing. Those consultations will follow and the licensing rules will be established.

[Sue Barnes, Liberal, Parliamentary Secretary to Minister of National Revenue]

Mr. Speaker, since this is the first occasion in this Parliament that I have had a chance to speak, I wish to congratulate the Speakers and to say that I will co-operate and respect this office and this Parliament.

I also take the opportunity to thank very strongly the voters in my riding of London West. I appreciate their support and I will continue to work with the dedication and the integrity and I hope the intelligence that they so richly deserve.

I would also like to point out that as we work in this capacity as parliamentarians there is a price in our families. I want to thank my husband and my children and also say to my colleagues across the floor of the House that I hope that throughout this Parliament I can continue to treat them with the respect and courtesy that any member of Parliament deserves.

I am pleased to speak on behalf of Bill C-17 which supports the government's strategy to make Canada a leader in the knowledge economy of the 21st century. Our overarching goal is to connect Canadians, to make Canada the most connected country in the world and to ensure that all Canadians have access to the information highway and the new economy which it supports.

The Minister of Industry has correctly identified this as perhaps the single most important action that the government can take to ensure our success in the knowledge based economy and I believe we all know that in our own ridings.

Underpinning any strategy to connect Canadians to this new economy is a competitive dynamic telecommunications industry. This is a very vital sector to the Canadian economy. It produces already 115,000 high wage jobs, high intelligence jobs, jobs that are in all our sectors across this country. It accounts for 3.36% of our gross domestic product and I see this growing.

If we take these necessary steps to encourage this industry's growth, we can take on the world. If we do not, we can sit back and watch international competitors take our share. There will be no more high quality jobs, no enhanced communications services, no new economy. I know that is not where Canada wants to be.

We are not sitting back. As a government we have moved decisively over the last four years to continue the liberalization of Canada's telecommunications sector. I want to review some of the steps we have taken.

The liberalization began in 1984 with the licensing of competitive cellular telephone service. It moved forward with the privatization of Teleglobe in 1987 and Telesat in 1992, and still it advanced further with the introduction of long distance competition in 1992 and the passage in 1993 of a new telecommunications act.

The process has continued over the last two years with the licensing of competitive personal communications services in 1995 and local multipoint communications services in 1996. Further in 1996 the government set out its policy and principles for the convergence of cable and telephone services, creating one of the most competition driven policy regimes in the world.

This legislation marks the latest stage of this liberalization and clears the way for Canada's participation in the GATS agreement on basic telecommunications which was concluded last February. The agreement covers 69 countries with more than 90% of the world's $880 billion telecommunications market. It covers basic telecommunications services, voice and data, but not broadcasting.

The immediate purpose of the legislation is to implement those changes to Canada's regulatory regime that are necessary. The longer term objective is to foster competition, one of the government's top priorities in this area. We are already a world leader in this sector and we will get more of that market share when we widen it up with very visible rules.

Competition is not an end in itself. We need competition because it fosters innovation and innovation leads to the development of new products and services, more choice at cheaper cost for consumers, Canadians, voters, the people in this country who deserve this, and it creates jobs and economic growth. Still a longer term objective of fostering competition is to ensure Canadians have the advanced technologies they need to gain access to the knowledge economy.

Over the past four years we have developed and initiated a plan to ensure that Canada does take full advantage of these technologies. We are building an information highway where all Canadians can connect at a reasonable cost. We have created those conditions needed to encourage the private sector to build this information highway. Hardware and software developers and suppliers and content developers are now among the fastest growing industries in this nation.

Opening competition in telecommunications services is an important part of our strategy as a government. We know the best and fastest way to build the infrastructure for the knowledge based economy is through open competition. By developing a national strategy for the development of this infrastructure, the government will enable all Canadians to find new opportunities for business, learning and communicating with one another. This can only be good.

Canadians want us to move forward quickly to secure for them the benefits of a new economy. The government is working on a number of fronts to do this. For example, we will have high level talks at the OECD conference on electronic commerce coming up in the fall of 1998. Electronic commerce is not only central to a modern knowledge based economy, it is also the foundation for future growth and job creation.

By creating the best environment for electronic commerce, Canada will become the world leader in this emerging field, generating increased investment in electronic networks and growth in areas such as electronic transactions, multimedia products and online services. The OECD Canada conference ensures we can support, participate in and influence the creation of an open, transparent multilateral electronic commerce regime. The government is also working toward using electronic commerce when doing business with its own clients. By being a model user the federal government can encourage the private sector and other levels of government to adopt the technology. But it does not stop there.

As part of our national strategy, the government initiated a number of programs to ensure that Canadians acquire the tools and skills from the earliest age that they need to prosper in this new economy. These include computers for schools programs through which government departments, businesses and institutions donate surplus computer equipment and software to schools. It includes the student connection program which enables university and college students to help small businesses learn to use the Internet, as my colleague suggested. The community access program connects and will connect every rural Canadian community with more than 400 people to the Internet by the year 2000. And how could we forget the SchoolNet program which connects all our 16,500 schools and 3,400 public libraries in Canada to the Internet.

Across this country students, teachers, professionals, business people and just Canadians are using these facilities because we have to ensure Internet literacy and move forward into the next century which will be different than the last century. The government is going online itself making government services accessible to people wherever they are, 24 hours a day, seven days a week. This is being done in every department and agency in this country.

None of this would be possible without telecommunications infrastructure and those supports for it. We cannot have that infrastructure without a strong, dynamic telecommunications industry. This bill before us today is a necessary step toward giving our telecommunications sector service companies the keys they need to open the doors to the new world, the world market of vast proportions. Once that door is open we can rely on Canadian expertise, Canadian entrepreneurship in all our ridings to do the rest.

The result will be better telecommunications services. An infrastructure will support us in the next century. I suggest we are on the information highway and we will move forward on that highway together.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, I have been both exhilarated and disappointed today. We have before us a bill that on the one hand is being exalted as the greatest development that will advance the causes of technology and communication that has ever hit the floor of this House. It has given members of the government the opportunity to brag, to extol the virtues of how much they are doing to get Canadians on to the information highway and to make sure that all communities and all Canadians everywhere will be connected to this information highway.

At the same time these very same people recognize that there is not the capacity in Canada to do that right now. It is a noble goal, we all agree, and I support that, but the interesting thing with regard to this bill is that it has brought together two things that I submit do not belong together in the same bill. Whatever connection there is is tenuous at best.

We have one bill with two parts. The first part deals with amendments to the Telecommunications Act and the other part of the bill deals with amendments to the the Teleglobe Canada Reorganization and Divestiture Act. Those two things are completely separate. I submit that it would have been very much better if the government had submitted two bills, one which dealt with amendments to the Telecommunications Act, the other which dealt with amendments to the Teleglobe Canada Reorganization and Divestiture Act. It would have been far more successful and far more logical.

The issue behind this bill is to recognize the principle involved. There is not much doubt or argument about the basic principles of increasing competition, expanding the ownership possibilities of telecommunications vehicles and ending monopolies. It is rather encouraging that the Liberals, who tend to govern from the top down and intrude into business, have seen this as a major principle.

It is about time that Canadians recognized that government does not have all the answers. Yet within this very bill, we are reverting to government regulation and control of business.

I want to hearken back to the Information Highway Advisory Committee. This committee started with one set of recommendations in its first volume and then it came up with a second volume in which it began to implement things. One of the principles which the committee stated very unequivocally in the first report which it presented to the Minister of Industry was that the origin of the capital of a particular business, particularly a business in telecommunications, ought not to be so much the concern of the government, but rather the concern should be how that capital is applied. Is the capital applied in such a way that meets the economic and social goals of Canada? If the capital does those things it does not matter where it originated.

We need to focus very carefully and clearly on what it is we want to achieve in any legislation, particularly in legislation that deals with such a pervasive issue as telecommunications, the linking of people talking with one another through electronic means.

Two parliamentary secretaries expressed great pride in how broad the consultation had been on this bill. I do not know with whom they spoke. I have a report from an Internet service provider which arrived about five minutes ago. In fact, the report is from the legal counsel to the Internet service provider. He makes this observation:

I am concerned that this bill empowers the CRTC to declare that something is a basic telecommunications service, without any criteria to define “basic”, and then subject the service provider to a licensing regime. This licensing regime overturns the previous scheme of the Telecommunications Act in a fundamental way. The previous act—the one now in force—says that anyone may operate as a Canadian carrier who satisfies ownership criteria. The new one subjects every service that the CRTC wishes to regulate to a comprehensive scheme of licensing.

The key phrase is whatever service the CRTC wishes to regulate. This is a major departure. It is an intrusion into the operation of telecommunications such as we have never seen before. It was never a part of the Telecommunications Act.

When the Minister of Industry gave his speech in defence of Bill C-17 we were all enamoured by his commitment, by his seriousness and by his total support for the development of telecommunications and the whole business of innovation, science and technology developments and the application and commercialization of new ideas. He used the telecommunications business as an example of how this could be done. I congratulate the minister for doing that.

However, the minister failed to comment on one aspect of the bill which is an intrusion into the affairs of business. We have to get serious about that.

I want to refer directly to the mandate of the CRTC. The CRTC is a body with administrative and quasi-judicial authority. This is no itsy-bitsy committee whose members get together every once in a while to talk to one another and have a good time, go out for a beer or a coffee or whatever. This is a quasi-judicial body that can bind businesses or individuals and can determine how much you and I pay for our telephone rates. It can determine who will be the supplier of the pipe or the line or the fibre optic or satellite communication or wireless. It has the right to determine these kinds of things.

The CRTC has been given a brand new mandate and authority it did not have before. It has been given the authority, in clause 3, the new section 16, for new powers of licensing.

It is very interesting what these powers actually are. These powers establish classes of licences. That is one thing it does. It establishes the classes of services that would require a licence. Now we are hitting on two sides. First, it tells us the kinds of licences we will have. Second, it tell us these are the service providers who will be required to have a licence. They may be the same but they may also be different. The act is completely ambiguous in declaring exactly what is going to happen in this area.

I would like to make several observations with regard to this ambiguity. What does this ambiguity permit? First, it allows the establishment of many or few classes. The more classes there are the more administration, the more distributors, the more ways in which you find the CRTC getting into various areas. It decides how many of these classes there will be.

Second, it allows the CRTC to establish classes on an arbitrary basis. It does not provide any indication of the conditions and guidelines to be used before a particular class of licence is established. This is a figment of somebody's imagination first and then it is how much can fit here.

It sounds like someone who is getting ready for a Ph.D. dissertation. He takes a particular position and says this is my hypothesis. Then he draws a conclusion and says that this is my conclusion. He wonders around until he finds enough evidence to prove his conclusion given the hypothesis, rather than deciding on the hypothesis and looking for the evidence.

This is very serious. That is the kind of thing that could happen here. Far worse than that, the classes of licences could perpetuate obsolescence. It puts into a straitjacket the conditions that qualify a business or service provider getting a licence in the first place. That is terrible.

We would not have the advancement in telecommunications if we had had these kinds of constraints placed on new service providers, with new ideas and new ways of applying the technology. We should look at this very carefully.

The CRTC may now establish the conditions for the licences. Not only can it establish the classes of licences, the kinds of businesses that would be required to have a licence, but now the conditions. These too have no guidelines.

What will the conditions be? Will a service provider need a particular financial capability? Does it mean there has to have a particular concentration of ownership or if the ownership is too concentrated it will not get a licence? Will it be a coverage area that is involved or the range of services that will be provided? Then the question becomes is this a range of services that relates to the Internet? Will this be a service that will be on the information highway or could it be something that is independent of that? Will it have to do with the number of technical people who are employed by an organization or will a certain portion of the profits have to be be placed into R and D? Are these some of the conditions that are going to be placed on the licensee? We do not know.

However, we do know that the government is already on record insisting that in order for a certain kind of business to operate it must commit a certain proportion of its earnings and revenues toward research and development. I do not think that is necessarily a bad requirement. In fact, we need far more research and development in this country.

Canada is well down the list of OECD countries in spending on R and D. As an industrial nation it does not fare well in the way that the government presents R and D. Government does not provide as much money to research and development as could be the case. Neither does private enterprise commit to research and development in the proportion that it should. We need that kind of commitment. For that to be a possible condition for a licence is rather difficult.

These are some of the questions on the business of licensing. However, there is an even more significant part to licensing. It is not only the people who will get the licences and the conditions of licences, the bill goes even further and states that the CRTC may establish conditions relative to circumstances of the licensee.

This raises all kinds of questions. Does this now escalate the problem above and beyond direct political and/or commission arbitrariness. Now we are not only determining the conditions but the circumstances that would be involved.

It could prevent certain people from entering the market by making regulations that are so demanding it would be impossible for them to ever get into the business. It is sort of like issuing a tender for a motorcycle and setting the specifications for that motorcycle in such a way that there would only be one possible manufacturer that could meet those specifications. These are very serious possibilities.

There is also the possibility of capriciousness, which is to set different conditions for one class of licence apart from another class of licence so that in one case it may be on a certain financial base, while on the other side financial basis will not matter, but the concentration of ownership will.

It could also bring about that those who would get a licence would be friends of the government, those who are friends of management or directors of the CRTC, perhaps people in a particular management structure. Who knows? This could possibly create different cost structures for different classes of licences. We do not know what the circumstances would be.

If we put those four things in the legislative provision of licences, we would begin to ask ourselves how could anyone truly and honestly and fairly administer such a system?

If I was a bureaucrat and I wanted to establish myself as a bureaucratic entrepreneur, that is getting more and more people to come under my supervision, I would use this kind of a system. It would mean that I could have the whole world before me. I could create the types of licences I wanted, the kinds of services that would get the licences and then I could determine the conditions and the circumstances. It would be possible to build an empire that would be so great that it would be absolutely impossible for anybody to do anything without first of all coming to me to ask “How will we do this?” It has tremendous and horrendous implications.

The bottom line question in all of this is that it does not increase flexibility. It is the very opposite.

Not long ago the CRTC stated in one of its publications that it wanted local competition, a development I heralded with great support at the time and still do. I think it is wonderful. A great thing has happened, and I think the bill moves away from it.

In 1995-96 the commission initiated four different public proceedings to put into place conditions for effective competition in the local telephone market. These proceedings deal with co-location, local interconnection, network component unbundling, local number portability and price cap regulation.

Co-location is intended to facilitate competition by providing competitors with the option of delivering their traffic to local switches over either leased or owned facilities.

Unbundling refers to the requirement that incumbent local telephone companies make available at tariffied rates elements of their facilities to which competitors would require access to effectively enter the local telephone market. This is a tremendous policy for the CRTC to develop. It is exactly what should happen.

Last night I had the opportunity to meet with a couple of entrepreneurs who were doing exactly that. They have put in the ground loops of fibre optic cable which now allows them to get into local telephone market. This will put them in direct competition with the B.C. Tels and the Bells that have monopolies in these areas. Finally we have competition. That is absolutely tremendous and the CRTC ought to be commended for it. The legislation indicates what the CRTC did over here but gives it the power to frustrate what it had over there.

The CRTC goes on to say that another major element of the Reform Party was a series of adjustments to local telephone rates which stem from the commission's split rate based decision to bring prices closer to the true cost of providing service. This adjustment will produce artificial subsidies to residential local service that complicate the introduction of competition.

Implementation of a price cap regime will also give service providers more freedom to price individual services and to reap the benefits of productivity improvements.

This is tremendous stuff. In spite of that concern I have complete support for the other part of the bill which would change or amend the reorganization of Teleglobe Canada Reorganization and Divestiture Act. That should be moved forward expeditiously. Tomorrow we should do that if we possibly could.

[Walt Lastewka, Liberal, St. Catharines, ON]

Madam Speaker, I thank the member for Kelowna for his remarks. I know his preparedness as industry critic is always fine tuned.

I am sure that as the industry critic he appreciates the fact Canadians are becoming more and more connected. More and more people are using the Internet and programs like Strategis which has well over 2,000 hits a day. He appreciates the importance of telecommunications.

I want to ask a number of questions. If we are to deregulate and have more people in the telecommunications business, does he believe there should be a level playing field among the participants and that new participants should be allowed to come in with a certain approval requirement, or does he believe that it should be wide open?

[Werner Schmidt, Reform, Kelowna, BC]

Madam Speaker, I believe the government's role should be to create an environment in which innovation and entrepreneurship can express themselves. The playing field should be level in the sense that an opportunity exists for all kinds of players to enter.

Let those who are particularly successful and good win the day. I do not think governments should decide ahead of time who should be the winner or who should be the loser. That is the difficulty with the bill.

In a short answer, my position is yes, let us let people go in and compete. We would not have the IBMs. We would not have the Apples. We would not have various other groups that have brought about all kinds of Internet service projects. We would not have them today if we had regulations that said they could not come in unless they met some conditions. They came because they had a service. They came because the service met the needs of people.

The time has come for government to create the overall broad framework so that we can succeed in that environment and let the market decide who will provide the best service for the least cost.

[Walt Lastewka, Liberal, Parliamentary Secretary to Minister of Industry]

Madam Speaker, I appreciate the time to debate this issue with the hon. member for Kelowna.

I want to make sure people understand that the proposed approach is not intended to restrict the entry of new players into the market or to exclude players. I understand the CRTC is doing some advance consultation now with the industry. Its objective will be to consult with the industry on what is required to have the rules participants will operate under.

This lesson has been learned in the U.S., in the U.K. and in the European Union. It is not any different from what we want to propose in Canada. If we are to have a level playing field we need the rules of the playing field and to let the industry decide what the conditions should be.

The government wants to do exactly that. It wants to make sure the rules are understood and the players can compete. Would the member for Kelowna disagree with that?