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The wind that blows the potash

At the federal level, the only thing that is clear is that political decisions are making a mockery of consistent public policy on wireless.


January 1, 2011  


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Maybe it is a function of living in Toronto, where the Maple Leafs have not won a Stanley Cup in decades: I often find myself rooting for the underdog. So I find myself in the unusual situation of feeling pangs of sympathy for Canada’s big three incumbent wireless companies.

Because from where I am sitting Bell, Rogers and Telus just do not know which way the regulatory wind is going to blow from one day to the next.

Now before anybody’s blood pressure rises, I am not passing judgment in this column on the various government decisions that have affected Canada’s telecom industry over the past several years.

I am not going to question whether governments were wise to throw a financial lifeline to drowning Detroit automakers, while keeping their hands in their pockets when the once-mighty Nortel Networks struggled to stay afloat.

I am not wading into the debate over whether start-up wireless companies like Globalive Wireless Management need to meet the established rules of Canadian ownership or, if they do not, whether incumbent wireless operators should benefit from the same opportunity to secure foreign capital.

I have nothing to say about the strategic importance of potash, which last year became front-page news, versus the long-running transformation of our country’s information and communications technology sector from a global manufacturing powerhouse to a branch-plant economy.

But here is an observation I will throw into the ring: Whether or not their policy is clear, governments seem reluctant to provide the wireless industry — or any sector for that matter — with consistent investment and foreign ownership rules.

What is a strategic asset? We do not know.

How do we measure “net benefit to Canada”? Beats me.

Can foreign telecom companies and others invest in Canadian companies? It depends.

At the federal level, the only thing that is clear is that political decisions are making a mockery of consistent public policy. It is true of every example I have cited earlier in this column.

This must be frustrating for Industry Minister Tony Clement. I’ve heard him speak on several occasions at events such as this year’s Canada 3.0 conference and it is clear that he understands the importance of the Digital Economy and Digital Society to Canada’s future. I also think he genuinely wants to help.

And he has to realize that inconsistent messages about the public policy environment in which companies must operate make it difficult for multinationals to commit to long-term investment decisions in Canada.

I have a hard time imagining that Clement thinks the fuzzy answers about the Investment Canada Act provides the clarity that investors need.

So what is up with the mixed messages and uncertainty?

Since we are starting a new year, here are some ideas to improve things:

1. Review the Investment Canada Act with a goal of making it clearer and more consistent. Holding Parliamentary hearings would add some much needed transparency to this process.

2. Clarify foreign ownership rules for the telecom sector. They’ve been an issue every time there’s a spectrum auction or a call for proposals for licenses. They’ll be an issue again.

3. Decide how important it is to have a strong ICT sector — and if it is, then clarify what “strategic high-tech asset” means and what the government will do to protect them.

4. Move ahead on Canada’s Digital Society strategy.

Last May, Clement launched a public consultation on this with a pretty tight deadline for comments. This suggested that the government felt there was some urgency to addressing the issue. But as of this writing, we have heard nothing — not even hints — of what is happening with this.

If the strategy is not a key part of the 2011 Federal Budget, the wireless industry and others in the tech sector need to join forces to put pressure on Ottawa to take action.

Obviously, each player in the telecom sector has its own agenda, and those agendas conflict. Any decision to change foreign ownership regulations or provide public assistance to a struggling high-tech asset will immediately result in somebody, somewhere in the country, being mad as hell and calling for heads to roll.

But when the shouting subsides, every stakeholder will agree that clearly defined investment policies are preferable to inconsistent, case-by-case rule-making. Understanding ahead of time how regulators will respond to a proposal is far preferable to consulting Ouija boards, Magic 8 Balls, goat entrails and so on to try to guess whether one’s business plan has a chance of success. CNS