A $60 million loan from the federal government to March Networks Corp. and Mitel Networks Corp. for a major broadband application initiative is generating both praise and condemnation.The money will b...
January 1, 2003
A $60 million loan from the federal government to March Networks Corp. and Mitel Networks Corp. for a major broadband application initiative is generating both praise and condemnation.
The money will be invested in a $240 million mega-project designed to turn Canada into a “powerhouse” in Internet-enabled communications and paid through Technology Partnerships Canada (TPC), a controversial Industry Canada-administered investment fund launched in 1996.
The intent of the March-Mitel plan is to accelerate the adoption of broadband multimedia communications through hardware that converges voice, video and data over a single high-speed network.
Applications include broadband video applications that enable collaborative e-learning through the touch of a button on a desktop telephone and voice-enabled Internet sites for faster customer service and reduced operating costs.
In announcing the funding, Industry Minister Allan Rock said that TPC is helping Canadians develop innovative products, create high-quality jobs and support sustainable development through investments. It has the potential to create almost 900 jobs — 442 during the research and development phase and an additional 441 when, and if, it goes commercial.
Among the TPC’s biggest critics is the Canadian Taxpayers Federation (CTF), which has “vociferously and consistently argued again direct government financial assistance to all types of businesses, large and small.”
That point was made clear in a CTF audit conducted following two separate and successful Access to Information requests involving TPC activity. Findings showed that the return on investment on close to $1 billion over the last five years, has been a “paltry” 2.58 per cent. In dollar figures, that works out to $25.4 million.
Despite those alarming numbers, Rock insists that he expects “every nickel” of this investment to be returned. It helps that the person behind both organizations is successful IT entrepreneur Terry Matthews, the founder of Newbridge Networks Inc. and co-founder of Mitel. “The opportunity presented by broadband is immense in terms of both how this core technology can enhance the way Canadians work and live, and in our ability as a nation to build communications tools that are highly exportable and widely adopted,” he said at the time the initiative was announced.
He can also count on support from Gaylen Duncan, president and CEO of the Information Technology Association of Canada (ITAC), an organization that historically, has never been enamored with government handouts.
“The absolute best criterion you can have for qualifying for a loan is to have a successful track record,” he says. “You know you’re spreading seeds on good earth by picking these particular band of companies. My expectation is that this should be a profitable investment that will stimulate both interest and repayment.”
More importantly, Matthews can also expect the federation, which in the past has called for TPC to be wound down and eliminated, to monitor activity very closely. Its goal is to put an end to “corporate welfare.”