The Egyptians are coming! And Fox News may not be far behind

“Hello, Mr. Harper – you are cutting out on me and I don’t understand what you are saying”

“Sorry about that, but don’t worry: you are a consumer and we put the consumer first.”

“Prime Minister Harper, I am very concerned about the implications of this decision for Canadian culture.”

“You are breaking up there… must be a dead zone.  As I was saying, this is about quality and consumer choices.  There is too much regulation on choices that should be between you and your broadcaster, I mean cable company, damn it,  I mean phone company…”

This mobile conversation may turn out to be more than another dropped call in our dead zone of public policy.  It could be a preview of Canada’s most significant policy change since the Conservatives formed minority government.   Not to put too dramatic a spin on it, if you have been wondering how three years of a Stephen Harper government might change Canada fundamentally, this could be what you have been worrying about.

Like most big changes engineered by Conservatives, it is reactive and not up front or transparent. In this case: an appeal to cabinet to overturn the CRTC rejection of mobile telephone licenses for Globalive – WIND Mobile on the basis that the company is foreign owned by Egyptian telecom company Orascom.  

The cabinet decision will be about much more than a mobile telephone operating licenese – it will be about ownership of telephone companies, cable companies, broadcasters and even newspapers. 

Telus – one of the “big three” incumbents in wireless along with BCE and Rogers – made this crystal clear in its statement: "If the Government overturns the CRTC decision, it would render meaningless Canada's laws on foreign ownership not just for wireless firms, but also for broadcasters, media, cable companies and wireline telecommunications firms that are governed by the same regulations."

Globalive is indisputably foreign owned, with Egyptian based Orascom owning 65% of equity.  Don’t let the Egyptian label lead you to believe that this is less than a major foreign play on Canada's telecom market.  Orascom is the 11th largest mobile phone company in the world, several times larger than any Canadian telecom operator with more than 80 million subscribers.

Canada’s big three oppose the Orascom license on the basis that if they also could have lined up foreign money, they would have matched the $442 million that Globalive paid to buy Canadian “wireless spectrum.’

Telecom blogs are reporting that the Government has already decided to hold a full cabinet review of the CRTC decision, and that preliminary letters to the provinces for such a review have been issued.

There are three likely outcomes.  Orascom may be told to dilute its ownership of Globalive or withdraw.  A second possibility is a policy ruling to accept Globalive’s argument that regardless of who owns the company, if the directors are Canadian, it will be considered Canadian.  A third possibility is that the Government will announce its intention to change the Telecommunications Act and the Broadcast Act.

The push for foreign ownership in telecom and cable, which are regulated under the Telecommunications Act, is more than 6 years old.  At the outset the main drivers were the rich families that own our cable companies - Peledeau (Videotron), Shaw, Rogers.  These families saw their most direct route to enormous wealth through the opportunity to sell to U.S. and foreign investors.  For similar reasons, the Asper family and CanWest Global shareholders soon after also started pushing for foreign investment.

BCE at first was neutral or even opposed to foreign ownership, seeing US rivals coming into the Canadian market that they and Telus dominate.  That changed when BCE shareholders started their campaign for greater shareholder value (which led to the Ontario Teachers Pension Plan debacle).  Basically, all of the private players now want the option of selling out to foreign investors.  Their dispute with the Globalive license is merely that the foreigner Orascom would have a head start over all others.

During the last federal election, Stephen Harper was asked directly if he would lift the ban on foreign ownership in telecom if re-elected and he deftly avoided the question with the answer, “the market is not ready.” 

There is a very good case to be made that the Globalive issue has been spun out with the very purpose of showing that the market is now ready to open the doors to global telecom companies.  

Last May when Industry Canada auctioned off “wireless spectrums” to allow new mobile phone companies to operate, it ignored protests from the Canadian telecom companies that Globalive was ineligible because it was not Canadian owned. The Industry Canada hearing on the status of Globalive was ex parte, i.e. secret, and it ruled in favour of Globalive. 

The CRTC’s public hearing two weeks later came to a very different conclusion: “the record shows that Orascom, a non-Canadian, holds two-thirds of Globalive's equity; is the principal source of technical expertise; and provides Globalive with access to an established wireless trademark...  In other words, the Commission finds that Orascom has the ongoing ability to determine Globalive's strategic decision-making activities.”

It is important to remember that the campaign to eliminate foreign ownership restrictions began in 2002 with a report by the Industry Committee of Parliament, led by the Liberal Minister Alan Rock.  The Industry Committee was vigorously opposed by the Heritage Committee, led by Sheila Copp, which warned that telecom and cable are inseparable from broadcasting and that foreign ownership would have disastrous results for Canadian culture. 

The Liberal infighting turned out to be a fight to the death that both sides won.  However Industry Canada has never given up on its mission to bring AT&T and the Disney Channel to a community near you.  Over the past five years there have been a series of reviews and studies - all supporting the foreign ownership agenda.  Our current Industry Minister, Tony Clement, is the same Minister now conducting the review of the CRTC decision.  This time don't expect the Heritage Minister to wave the flag and take a stand.

Today’s Liberals appear to be nowhere on this issue.  On October 30, square in the middle of the Globalive controversy, the Liberals issued a lengthy statement on cellular and internet competition, urging a range of measures to increase competition and lower consumer prices.  However, on the key issue of foreign ownership, the Liberals uttered not a word.  Realistically, I wouldn’t bet fifteen cents for a text message that the Liberals will do anything to defend Canadian ownership in telecom and cable.

Tune into the blogs on this subject and you will enter a libertarian techno-zone where the CRTC is an authoritarian throwback and everyone else’s technology is better than ours and we must have it - now.  There is no discourse on Canadian culture or national interests like employment or technology transfers.   

There is no recognition or discussion of how telecom companies like BCE are already conventional broadcasters, or that cable company Rogers owns a bunch of specialty TV channels.  If we allow Orascom to own a telephone company, the inevitable logic is that Fox may also purchase CTV or Global TV.  In the digital world, cable companies, phone companies and broadcasters are made of the same fibre-optic DNA. 

In spite of the techno-libertarians every measure of public opinion still shows sizable opposition to foreign ownership in both telecom and media.  Most people have an innate sense of how it would change Canada.  What would change? Information, culture, politics and, ultimately, identity.

Comments