AT&T Inc. has appealed to Industry Canada to relax Foreign Direct Investment (FDI) restrictions in the telecom sector saying it should be an integral part of any policy changes that occur as a res...
November 1, 2006
AT&T Inc. has appealed to Industry Canada to relax Foreign Direct Investment (FDI) restrictions in the telecom sector saying it should be an integral part of any policy changes that occur as a result of the Telecommunications Policy Review Panel.
“The foreign ownership restrictions impede our ability to have the flexibility in how we build our network components,” says Maura Lendon, the company’s chief counsel in Canada.
In March, members of the panel released a report containing 127 recommendations delivered to Industry Canada minister Maxime Bernier for review.
Panel chair Dr. Gerri Sinclair said in a statement that reform of the policy framework needs to begin immediately.
“Although our telecommunications policy has served Canada well, we have concluded that it is now time we started to make fundamental changes,” he said. “Otherwise, our competitiveness and productivity will lag and Canadians will be deprived of the full benefits of continuing technological innovation.”
Panel member Hank Intven said the panel’s advice in the 400-page report reflects the lessons learned in Canada and other countries in recent decades about using “targeted government measures” only when economic and social goals are not met.
“It is our position that if you are going to move towards more market-based regulation, you have to look at the issues that inhibit the market from being truly competitive,” said Lendon.
David Denault, president and general manager of AT&T Global Services Canada Co., said the issue of foreign ownership needs to be addressed because Canada has one of the most restrictive telecommunications regimes in the world when it comes to foreign ownership.
“In the U.S., for example, we own the facilities and the fiber in the ground,” he said. “We are able to make capital investments or respond quicker to situations that may arise much quicker than we can in Canada. Here, there are times when a customer may require something from us, yet we are dependent on another service provider. That is unfortunate.
“We do business all around the world. We are lobbying the government to relax the restrictions because we need to compete globally. We will only be successful in Canada if our customers are successful globally.”
Lendon outlined the company concerns in a letter sent in August to Leonard St. Aubin, acting director general of Industry Canada’s Telecommunications Branch.
The removal of FDI restrictions, she wrote, will ensure faster deployment of new technologies and service innovation and ensure better service availability is to those customers who require it.
“The harmful market impacts of FDI restrictions are well known to Canadian policy makers. As Canada’s House of Commons Standing Committee on Industry, Science and Technology found in 2003, (they) not only impede telecommunications industry competition, but also limit broader economic growth.”
As an example, current restrictions require AT&T Global Services to lease network infrastructure rather than own it, which the company argues prevents it from making “economically” efficient build versus buy decisions with respect to customer access and backbone facilities.
AT&T and all other non-Canadian controlled telecommunications service providers are prevented from buying or leasing and subsequently lighting dark fiber facilities, Lendon wrote.
She added that the inability of non-Canadians to control the operations of local telecom exchange carriers precludes the company from securing operational, business and competitive synergies: “Thus, AT&T’s Canadian subsidiaries cannot fully expand their product portfolios, and cannot optimize network design efficiencies. This, in turn, artificially restricts our Canadian customers access to proven service innovations and price benefits that open competition delivers.”
While Lendon had yet to hear back from Industry Canada at press time, she is optimistic change will occur: “This is a government of action and the minister is very entrepreneurial,” she said. “The chance of seeing legislative reform in the next 18 months is greater than they have ever been.”