What we really said to Industry Committee

Yesterday TELUS called again for a complete removal of foreign ownership restrictions on carriers but not content .Here is the text

Remarks of Michael Hennessy, senior vice president
Regulatory and Government Affairs, TELUS
Corporation to the House of Commons Standing
Committee on Industry, Science and Technology
Foreign ownership
Introduction
TELUS appreciates this opportunity to present its views on whether or not to
liberalize Canada’s restrictions on foreign ownership of telecommunications. The
issue is obviously one of national importance, and it is an issue that only Parliament
can ultimately decide.
I can sum up the TELUS presentation in a few easy messages:
• New rules cannot advantage foreign investors to the detriment of Canadian
companies. Fairness requires equal treatment for all Canadian carriers;
• Parliament must recognize that communications today is an integrated
business and you cannot effect change without changing the
Telecommunications Act and part of the Broadcasting Act at the same time;
• Liberalization that does not include integrated companies will damage the
competitiveness of Canadian companies and reduce the benefits of
liberalization for consumers; and
• Culture is not impacted by liberalization because it is easy to separate the
ownership of broadcast channels from the transmission of these channels on
carrier systems.
TELUS has long supported liberalization of the rules for all carriers, including cable
and satellite companies, while still maintaining these restrictions with respect to
the ownership of broadcast channels.
The Canadian market, like the US, is unique in terms of a much greater degree of
competition between cable and telecom carriers across all markets. Virtually every
communications carrier in Canada carries voice, video and data traffic over
integrated networks. As a consequence, there is no way to fairly change our
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ownership restrictions unless we liberalize both carriage under the
Telecommunications Act and carriage under the Broadcasting Act at same time.
We remain convinced that you can change the Broadcasting Act, only on the
carriage side, to achieve the full benefits of competition, without undermining our
cultural objectives. All that is required is a rule prohibiting foreign controlled
carriers owning broadcasting stations or TV channels.
TELUS has a record of investment
A principal argument supporting liberalization is that Canadian enterprises are not
competing or investing sufficiently. Even though we support liberalization we
reject this argument.
Ten years ago, TELUS did not exist as a national competitor. TELUS was just another
regionally based local monopoly telephone company operating only in Alberta,
British Columbia and eastern Quebec. Now, we compete across Canada for
wireless, small business and enterprise solutions, video conferencing, e‐health
services and business data services. In the west and eastern Quebec, TELUS
competes head to head for phone, internet, television and wireless customers.
We have accomplished this because over the last 10 years, TELUS has invested $20
billion in capital to grow from that regional telephone company into a multi‐service,
national competitor in business, wireless and e‐health services markets.
• TELUS has maintained the highest wireline re‐investment rate among major
telecom North American companies and competitors over the past few years
o capital investments since 2001 across our entire business exceed 20%
of total revenues earned over that period
o by comparison, Verizon and AT&T have not had even a single year
since 2006 in which their total capital investments reached 20% of
their revenues
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We have invested in Canada, both when and where it counts, including in areas no
foreign investor is likely to ever consider
• In the depths of the recession, TELUS increased its 2009 capital spend by 13
percent to $2.1billion and built one the largest and most advanced wireless
networks in the world.
o TELUS’ 3G+ wireless network now reaches 93% of Canadians, with
world leading advanced wireless broadband services
o In 2010 we are investing over $1.7 billion in a fiber‐supported internet
TV build in western Canada and in eastern Quebec in order to increase
competitive intensity in the cable and internet market
These investments have produced real competition, real jobs and real consumer
benefits where none existed before.
Full liberalization of FDI restrictions on carriage can lower costs and
increase choice and innovation as long as Canadian companies are
treated fairly
Where Canada differs from the US today is a lack of similar scale. More scale
translates into lower costs, more investment and more opportunity to reduce
prices.
Therefore any change that does not allow all Canadian carriers to equally benefit
from scale opportunities will be changes for the worse since Canadian carriers have
the largest territory to serve and the smallest population to fund investment, of any
of our major trading partners.
And that is why any changes should ensure that the companies that continue to
invest in Canadian employees, Canadian infrastructure and Canadian communities,
rather than investing only in the most profitable business like wireless or the
biggest cities like Montreal or Toronto, are not harmed by any changes.
Canadian companies rely on integration, and the cross‐subsidies that allows, to
keep all of our businesses viable as much as we need scale to grow. If asymmetric
policy undermines that, in the name of wireless competition or cultural protection,
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by restricting domestic carrier growth, the integrated Canadian model begins to fall
apart.
The Canadian system has always benefitted from a level of cross‐subsidy be it from
urban to rural or from growth business to high cost segments. That remains true
today. In Canada, wireless is currently the growth engine that generates the
revenues and earnings that support reinvestment in next generation broadband
and phone networks. This is a critical point to consider. Growth businesses like
wireless or Internet, support declining businesses like telephony. That does not
mean growth businesses should be insulated from increased competition but
rather competition, and particularly foreign competition should not be advantaged
by handicapping Canadian companies.
Liberalization has to be as fair to Canadians as it will be to foreign entrants.
That is why Parliament must support liberalization for all carriers, because unless all
carriers are able to benefit from liberalization, the opportunities from increased
scale like lower prices or more investment are diminished for many consumers and
communities.
That is also why fairness dictates that both broadcast distribution and
telecommunications carriage must be changed at the same time.
I look forward to your questions