Mr. David Sweet, M.P.
Chair of the Standing
Industry, Science and
House of Commons
Standing Order 109 of the House of Commons, I am pleased to respond on
behalf of the Government of Canada to the recommendations contained in Canada’s
Foreign Ownership Rules and Regulations in the Telecommunications Sector,
tabled in the House of Commons on June 16, 2010.
the telecommunications industry is critical to the modern digital economy, the
importance of having a telecommunications regulatory framework that promotes
innovation, competition, and investment has never been greater. As a result of
this importance, the Government of Canada has taken consistent policy actions
to put into place such a framework.
the foreign investment restrictions is a potential policy action which is often
discussed in the context of contributing to the creation of a
telecommunications regulatory framework that promotes innovation, competition,
and investment. As you are no doubt aware, the Government is currently engaged
in a review of the telecommunications foreign investment restrictions. A
consultation document was released on June 11, 2010, in order to receive Canadians’
views on this important issue. The consultation closed on July 30, 2010. I
was pleased with the level of response that was generated by this consultation;
the Government received almost 400 submissions from interested organizations
and individual Canadians.
Government’s interest in this issue, I followed the Committee’s proceedings
with great interest. I was pleased to see that the Committee heard a
comprehensive and broad range of testimony, from academics, incumbent and new
entrant telecommunications companies, content producers, cultural groups, and
others. This testimony has conveyed the full range and complexity of the
issues at hand, including rapidly changing technologies, convergence,
integrated networks and product offerings, carriage, national security
concerns, broadcasting, content and culture.
Committee’s report adds to a growing body of literature that argues that there
are compelling economic arguments in favour of increased foreign investment. The
Committee’s report also acknowledges that there are potential social and
cultural concerns with increased telecommunications foreign investment.
Committee made two recommendations on which I would like to comment:
Clarify the interpretation
of the "Control in Fact" test.
The "control in
fact" test is common to legislation in many sectors, including the
telecommunications, broadcasting, aviation, and banking sectors. It is also
present in income tax legislation. In these instances, "control in
fact" is assessed on a case‑by‑case basis depending on the
unique circumstances of each case. Where guidelines or information bulletins
on "control in fact" have been issued, it has commonly been in
recognition of the importance of determinations of "control in fact"
being conditional upon the unique facts of each situation. In the ensuing
months, the Government will be examining whether, and in what ways, it might
address the concerns raised by the Committee with respect to clarification of
the interpretation of the "control in fact" test.
Remove the foreign ownership
restrictions in respect of satellite ownership or operation in Canada given that Canadian satellite companies (e.g., Telesat) already face
competition from foreign entities in the domestic market.
In the Speech from the
Throne of March 3, 2010, the Government announced its intention to "open Canada’s doors further to venture capital and to foreign investment in key sectors,
including the satellite and telecommunications industries, giving Canadian
firms access to the funds and expertise they need."
Subsequently, in Budget
2010, the Government announced that:
Consistent with the
recommendations of the Competition Policy Review Panel, the Government is
acting in Budget 2010 to remove the existing restrictions on foreign
ownership of Canadian satellites. This will allow firms to access foreign
capital and know‑how and to invest in new and advanced technologies. The
removal of restrictions will also allow Canadian firms to develop strategic
global relationships that will enable them to participate fully in foreign
The appropriate legislative
amendment to implement this government priority and remove the foreign
ownership restrictions in respect of satellite ownership or operation in Canada is contained in Bill C‑9, the Jobs and Economic Growth Act. Bill C‑9
received Royal Assent on July 12, 2010. The foreign ownership restrictions in
respect of satellite ownership or operation have been removed.
On behalf of
the Government of Canada and as Minister of Industry, I thank the Committee and
its staff, as well as the many witnesses who appeared before the Committee, be
they individuals, enterprises or otherwise, for their insightful testimony.
c.c. Ms. Michelle A. Tittley, Clerk of the Standing Committee on
Industry, Science and Technology