Cable chiefs want rules scrapped by Simon Tuck

by Simon Tuck

OTTAWA – Foreign ownership limits on Canada's cable television and telephone industries should be scrapped, the country's top cable industry chiefs told a key parliamentary committee yesterday.

John Tory, chief executive officer of Toronto-based Rogers Cable Inc., said Canada can have a well-funded "carrier" industry while still preserving the country's cultural needs by maintaining the ownership rules for program makers and other content providers.

"You can have your cake and eat it too," Mr. Tory said.

Mr. Tory, along with CEO Jim Shaw of Calgary-based Shaw Communications Inc. and Louis Audet, CEO of Cogeco Inc., said current regulations are starving the cable and phone industries of the capital they need to expand. That means fewer customer services, higher costs for the companies and their customers, and fewer jobs, they said.

The issue of foreign ownership of cable and phone companies has been a hot topic.

Industry Minister Allan Rock last week announced a long-proposed review of the law restricting foreign ownership to one-fifth of voting stock in telecom operating companies. The cable companies were not included in the review, although they increasingly compete against the telcos.

The Commons heritage committee, meanwhile, has been conducting an extensive review of the broadcast business. The touchy subject of foreign ownership has also led to at least one heated exchange between Mr. Rock and Heritage Minister Sheila Copps. Ms. Copps, a staunch supporter of cultural protection, oversees the cable and broadcast businesses, while Mr. Rock is responsible for the telcos.

After the cable industry's presentation to the Commons committee, Mr. Shaw told reporters that it doesn't matter who owns the cable companies as long as the systems work. He earlier had told the committee that the cable industry needs more money so it can continue to invest in infrastructure and providing customer access to new technology such as high-definition television [HDTV], high-speed Internet service, and interactive television. The Canadian industry says it invested $5.5-billion between 1998 and 2001.

"The cable operators have invested heavily and yet more is required," Mr. Shaw said.

The cable companies also argued that they're having difficulty raising more money in Canada because of the limited size of the domestic capital market and because some banks are reducing their exposure to their business. "It's not an easy market," said Mr. Audet of Cogeco Inc., the Montreal holding company that controls Cogeco Cable Inc. "It's not an easy battlefield."

The cable players told the committee that they must have the same ownership rules as the telephone companies because the two industries frequently compete in such lucrative markets as high-speed Internet access and the distribution of television services.

Asked by Canadian Alliance MP Chuck Strahl what would happen if the industry didn't get the changes it seeks, Mr. Shaw said the industry would still progress but that Canada would stand less chance of continuing its international leadership in cable penetration and access to high-speed Internet. "We see people wanting more access to their networks."

But Ian Morrison, spokesman for The Friends of Canadian Broadcasting, said the industry's proposed changes to ownership restrictions would threaten to hand one of the country's telecommunications highways to foreign companies. He also warned the committee not to accept the industry's bid to position itself as the underdog to the telephone companies.

"They should in no way always get what they want."

Mr. Morrison suggested the cable guys would have more money for capital costs if they didn't make poor investments, such as Rogers' acquisition of the money-losing Toronto Blue Jays baseball club.

"But why bother if the federal government can solve the problem?" he said facetiously.

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