2010 Canadian Telecom Summit

Speaking Notes

The Honourable Tony Clement, PC, MP
Minister of Industry

Toronto, Ontario
June 7, 2010

Check Against Delivery

Thank you and good morning, everyone!

It’s great to be with you again. Every year, the Canadian Telecom Summit just keeps getting better and better — and bigger and bigger. Which only makes sense. After all, telecommunications is already a $40-billion industry and is fast becoming one of our economy’s pre-eminent avenues of innovation, driving productivity and creating opportunity across the country.

For Canada, a dynamic telecommunications sector is a “must have.” It is a condition necessary to our future prosperity. The question today is, how do we boost telecommunications to the next level? How do we really unleash its full potential? And how do we leverage your ability to drive productivity throughout the entire economy?

This morning, I’d like to speak for just a few minutes about some of the steps our government is taking in response to these questions.

In the 2010 Speech from the Throne, our government committed to building the jobs and industries of the future. Central to that, of course, are two issues that relate directly to the telecommunications sector:

• developing the digital economy, which is propelling growth and enhancing Canadians’ quality of life; and
• further opening Canada’s doors to venture capital and foreign direct investment in key sectors, including the satellite and telecommunications industries.

A few weeks ago, we launched extensive consultations on a national digital economy strategy to answer some fundamental questions:

• How can we improve the adoption and use of digital technologies in the rest of Canada’s economy?
• What kind of digital infrastructure will we need for the 21st century?
• What is needed in terms of investment, research and skills to grow the information and communications technology (ICT) industry and the number of ICT firms headquartered in Canada?

We also want to know how we can develop digital media and content to promote a digital economy. And how we can ensure that Canadians develop the skills they’ll need to fully participate in an economy driven by ICT.

I invite you to share your views on the Digital Economy Strategy before July 9 at http://www.digitaleconomy.gc.ca.

Let me just focus for a moment on two areas of the consultations: encouraging innovation through the use of digital technologies, and building a world-class infrastructure.

You understand just how important the digital economy is in enabling innovation across the economy. After all, it’s your businesses that provide the platform on which the digital economy operates, the infrastructure that makes it possible. We see this contribution every day, as our wireless companies — some of the very best in the world — build our high-speed packet access networks that are so critical to innovations such as the iPhone and the BlackBerry.

ICTs continue to fundamentally transform the way we communicate, run our businesses and conduct commerce. They’re revolutionizing how medical professionals keep us healthy, how research is carried out and how students learn.

Companies in the ICT sector account for about 5 percent of our gross domestic product, but their products and services drive the competitiveness of the other 95 percent. We need to continue to propel the benefits of ICT into every capillary of our economy, creating a digital advantage through the smart use of these technologies. That’s how companies will keep up with their competitors. That’s how Canada will compete in a global economy.

In terms of building the next generation of infrastructure, we know that you are making important decisions about massive capital investments, so it’s critical that we have the right regulatory framework in place. We need to develop the environment that will encourage investment and ensure Canadians have access to world-leading telecommunications services.

Our government has worked hard creating these conditions. Lowering corporate taxes. Providing significant funding for science and technology. Committing $225 million to expanding access to broadband Internet service and giving a two-year, $200-million boost to the Industrial Research Assistance Program — a program that is widely regarded as one of the most effective programs for supporting innovation in the world.

We also accelerated the capital cost allowance for computer hardware and systems software — a measure that the Information Technology Association of Canada has estimated will have a $700-million effect on the ICT marketplace over the next two years.

Today, even as the consultations proceed on the digital economy strategy, we are pushing forward — with the recent introduction of important legislation such as the proposed Fighting Internet and Wireless Spam Act, the Safeguarding Canadians’ Personal Information Act and the Copyright Modernization Act. We are building confidence in the online marketplace among consumers, and protecting the rights of Canadians whose research, development and artistic creativity contribute to Canada’s prosperity.

Let me turn now to one of the other keys to building the digital economy: opening Canada’s doors to venture capital and foreign investment. At the moment, the Organisation for Economic Co-operation and Development ranks Canada as one of its most restrictive member countries when it comes to telecommunications investment.

And so, we need to make sure that Canadian companies have access to the capital they need to grow, to be the best in terms of knowledge and expertise. And we need to facilitate competition that will benefit Canadian consumers.

Three years ago, we set up the Competition Policy Review Panel, chaired by Red Wilson. This panel made a series of wide-ranging recommendations on how to ensure that the Canadian economy remains vibrant and competitive. We have implemented many of these recommendations — modernizing the Investment Canada Act and the Competition Act, for example.

The Panel, in its final report, included recommendations for the telecommunications sector. It noted that new entrants lead to more competition and better results for consumers, and that the best way to inspire the emergence of newcomers to the marketplace would be through liberalizing foreign investment.

And consistent with this approach, our government committed, in the Speech from the Throne, to further opening Canada’s doors to venture capital and to foreign investment in key sectors, including the satellite and telecommunications industries.

With respect to the satellite sector in particular, our government introduced measures in the budget to liberalize foreign direct investment. Immediate action was necessary because Canadian satellite providers were facing an immediate challenge: direct competition from foreign satellites operating in Canada. The problem is that these foreign providers are not subject to investment restrictions, either in Canada or at home. This has created an uneven playing field in an industry that is, by its nature, global. Amending foreign ownership restrictions will allow Canadian satellite companies to gain access to international capital and advanced technologies. And it will enable them to form global relationships, achieve economies of scale and earn their share of international business.

In 2006, we issued a policy direction to the Canadian Radio-television and Telecommunications Commission (CRTC) to rely on market forces and place less emphasis on regulation. I want to assure you all here today that we have not strayed from that approach. Markets determine outcomes, not governments.

In 2008, we set aside spectrum for new market entrants. Since then, Globalive Wireless, DAVE Wireless and Public Mobile have all launched new wireless services. That’s good news for consumers. It’s good news for competition in the industry. And it’s good news for Canada.

We also know that access to capital — especially venture capital — is critical to innovation, so we eliminated the need for tax reporting under section 116 of the Income Tax Act. A technical point, perhaps, but one that Terry Matthews and others have said will help attract venture capital to Canadian companies, bringing important foreign investors with it.

With all of these actions — the policy direction to the CRTC, the spectrum set aside to encourage new entrants and tax changes to encourage more foreign investment — we have sent a clear, consistent message: this government believes in free markets, in greater competition and in more choice for consumers.

Encouraging greater foreign direct investment in the telecommunications sector is an important next step. As many of you know, the House of Commons Standing Committee on Industry, Science and Technology is expected to release its report on foreign direct investment in telecommunications this month, and we will be looking carefully at what it has to say.

In the next few days, I will be releasing a consultation paper on this subject as well, and I will be looking forward to hearing your views on this important issue. Let me give you a little taste of what this consultation paper will be about. First of all, we will be confirming that we are intending to move ahead with telecommunications reform when it comes to foreign direct investment, and of the need for that reform. Secondly, we will have a relatively short, but important, discussion period in the next few days, commencing with the release of the report, so that we can get feedback from both the industry and Canadian consumers.

In the third place, this report and this discussion will centre around three options for reform. These options revolve around the large incumbents and their access to foreign direct investment, the smaller newer entrants, and how to ensure that the capital needs of each are met. And of course, the goals remain steadfastly the same: increased innovation, increased competition, better service and better prices for consumers.

Now, with respect to broadcasting, content and culture, I think that it is important to put some perspective on the objectives of the two governing pieces of legislation. The thrust of the Telecommunications Act and its policy objectives is economic — competition, innovation and a reliance on market forces. The policy objectives of the Broadcasting Act are primarily social — encouraging the production and availability of Canadian content to all Canadians. We will not consider anything that might impair our ability to pursue our Canadian culture and content policy objectives. This is a complex issue, which is why we intend to move with prudence and undertake consultations.

In each of these areas, as in so many other sectors, your industry plays a key role. Our goal is to provide you with the best policy framework and access to the most appropriate resources so that you can continue to do what you do best: build businesses, create jobs and drive innovation.

Our actions on the digital economy strategy and telecommunications policy demonstrate a government ready to listen and prepared to act. These issues are priorities for our government, and for me personally, because they are critical to a more prosperous and competitive Canada.

As I close, I would be remiss if I did not talk about the good things I heard at the World Congress on Information Technology (WCIT) in Amsterdam a couple of weeks ago. I am proud to say that Canada is seen in a very positive light internationally when it comes to telecommunications. And as we prepare to welcome the WCIT to Montréal in 2012, I know that you will continue to make big contributions to the industry at large.

Ladies and gentlemen, let me again thank you for the enormous contributions you are making to our economy, our country and our kids’ futures. I look forward to hearing your ideas and input in the days ahead, and to working with all of you as we build an even more dynamic and competitive telecommunications sector for Canadians.

Thank you.