In the recent brouhaha over the possible entry of Verizon into the Canadian telecom market, the Big Three telecommunication companies sponsored a number of joint advertisements that played up their “Canadian” status.
One ad, with a wide-eyed Telco employee from the east coast, asked other Canadians to consider if a “foreign” and American-based telecommunications company would be bad for Canada, hinting that rural communities and those employed by the existing telecom companies would be worse off.
“Patriotism is the last refuge of a scoundrel,” wrote Samuel Johnson, but it is often the first tack of would-be nationalists seeking either an advantage over others or protection from competition.
In this case, the three Canadian-based telecommunication companies had (and have) a legitimate beef: the proposed auctioning off of wireless spectrum was biased against them.
As it happens though, and as of writing, it turns out Verizon’s possible interest in Canada was overblown, and the company announced it was buying another company in the international market and had no intention of coming to Canada. But the federal government still plans to forge ahead in the same manner as previously planned.
The critics of the federal government’s existing approach have ranged from unions whose employees work for the Big Three and who like protectionism to Fraser Institute senior fellow and business professor Steven Globerman. In his recent paper for the institute, Globerman noted how the federal government was creating rules that handicapped Canada’s three large telecoms in a manner that “could make consumers worse off rather than better off.”
Globerman’s point is still valid even after the Verizon decision to skip Canada. Usefully, while Globerman pointed out the possible effect of current wireless policy, he also pointed to the way in which Canada’s consumers could be helped: throw open ownership of telecoms to any and all companies, i.e., drop the ban on any significant holdings in telecom companies for “foreigners.”
Of note: Rogers, one of the Big Three telecommunications companies, also favours that idea.
But here, the sensible Globerman suggestion will run into an oppositional wall from self-described Canadian nationalists. That includes unions whose members have jobs at the Big Three and politicians who think they do Canadians some sort of favour by banning “foreign” ownership in or takeovers of Canadian-based companies.
Part of the blame for misguided nationalism must accrue to the Stephen Harper government. While in this latest policy area, the Conservative government has gone overboard in trying to attract foreign investment with preferential treatment as opposed to a neutral telecom policy, its stance since its election in 2006 has been contradictory and downright unhelpful some days.
On the one hand, the federal Conservatives have rightly forged ahead on free trade agreements, signing a few since they came to power and pursuing more, including a much-desired pact with the European Union (still in the process as I write).
However, other days, the Harper Conservatives have been a throwback to 1970s-era Waffle socialism and anti-foreigner rhetoric.
Recall the best example of the Harper government’s confused approach to foreign ownership, when, back in 2010, it kiboshed the proposed takeover of Potash Corp. in Saskatchewan by the Australian mining company BHP Billiton Ltd., this as if an Australian company were some sort of existential threat to Canada.
It makes sense to ban, say, an Iranian company from buying up a Canadian mining operation that extracts uranium; it also makes sense to restrict possible full takeovers where the prospective buyer is a state-owned company, as the Harper government did last fall with regards to ownership in the energy sector and a Chinese state-owned company.
But it makes zero sense to prevent “foreign” companies located in friendly, law-abiding, human-rights-respecting countries from investing in Canada. •
It also make little sense, whether in telecom policy or in other sectors, to try to favour foreign competitors one day (as in the current federal approach to wireless spectrum auction) and then continue to restrict foreign ownership in that sector (to 10%) and in others. But that is the current federal approach. •
