CRTC Chief Urges Telecom Overhaul

by Gaurav Kheterpal on April 15, 2010

Konrad von Finckenstein, the head of Canada’s broadcasting and communications regulator, is calling for a massive telecom overhaul in Canada but remains firm against opening up the domestic market to foreign ownership. He has emphasized a strong need for the federal government to simplify and eventually merge the telecommunications and broadcasting acts.

Finckenstein believes that Canada should put a foreign ownership cap of 49% on both the telecom and broadcasting sectors. The current limit for foreign direct and indirect investment is 46.7%. The Telecommunications Act is currently being examined by the Canadian Parliament subsequent to Government’s announcement to change foreign ownership rules in order to create jobs and boost innovation.

In a statement to the standing Committee on Industry, Science and Technology, Finckenstein uses strong words to indicate that the Canadian Telecom system is going through a crisis and needs a major overhaul sooner than later. The CRTC Chief proposes the following two rules to liberalize the ownership rules.

* First, no foreign entity should be allowed to own, directly or indirectly, more than 49% of the issued voting shares of a Canadian communications company.

* Secondly, no foreign entity should have “control in fact” of a Canadian communications company.

Further, he recommends the adoption of comprehensive AMPs with respect to all CRTC responsibilities.

“The CRTC should have the ability to assess Administrative Monetary Penalties, or AMPs, under both the Telecommunications Act and the Broadcasting Act. In telecom, we are now applying smarter and lighter regulation. We are moving away from the old approach that prescribed in advance to the players what they were permitted to do. We now prefer to prohibit certain conduct and only step in if somebody breaks the rules.”

I’d agree with Finckenstein that the Canadian Telecom and Broadcasting acts need serious reform. However, I’m not sure if the 49% cap is justified and I certainly do not agree with the CRTC policy that foreign communications companies owning a majority stake in Canadian carriers will be a threat to “Canadian cultural and social values”. I fail to understand how foreign players will have an effect on our cultural and social values? I think the CRTC Chief has definitely messed up with his rather strange choice of words. What do you think?

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.com by:RSS,Twitter,Identi.ca, or Friendfeed

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