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Darren Entwistle, the outgoing president and CEO of Telus, has made a passionate call for the Canadian government to reassess its foreign ownership restrictions on major telecommunications firms. As he prepares to retire on June 30 and relocate to Britain, Entwistle remains a fervent critic of outdated regulations that he argues stifle competition and hinder Canada’s position in the global market, particularly in light of ongoing trade disputes with the United States.
A Call for Change
During a recent visit to The Globe and Mail’s headquarters in Toronto, Entwistle expressed his frustration with Canada’s reluctance to adapt to the evolving trade landscape. With the United States and Canada currently navigating a complex trade relationship, he believes that it is essential for Ottawa to reconsider its stance on foreign investment in the telecommunications sector.
“Let’s let free market forces reign,” he stated, reinforcing his long-held belief that the barriers restricting foreign investment need to be removed. While smaller telecom companies have seen regulations relaxed, larger entities like Telus, Rogers, and Bell are still constrained by ownership caps that limit foreign investment to 46.7 per cent and require Canadian citizens to fill 80 per cent of board seats.
Historical Context
These ownership restrictions have their roots in the early 1990s, introduced primarily to prevent U.S. corporations from acquiring Canadian telecommunications firms following the signing of the original North American Free Trade Agreement (NAFTA). Despite recommendations from various expert panels, including the Telecommunications Policy Review Panel in 2006 and the Competition Policy Review Panel in 2008, the federal government has remained stubbornly resistant to change.
In 2012, legislative updates did allow for 100 per cent foreign ownership of small telecoms with minimal market share, yet the anticipated relaxation of rules for larger players has not materialised. Entwistle argues that this delay is detrimental to consumers and the overall market, stating, “It’s time for Ottawa to give it a fresh look.”
A Strategic Approach
Entwistle suggests that lawmakers should approach this issue with a broader perspective, taking into account its implications for free trade as a whole. He remarked, “I think there’s a list of fair U.S. irritants. So, why don’t we address some of those and put ourselves in a better position to get a negotiated outcome?” This shift could help establish a more balanced trading relationship with the U.S., enhancing both countries’ economic prospects.
Furthermore, he emphasised that any changes to foreign ownership laws must be accompanied by robust measures to prevent anti-competitive behaviour. He pointed to the effectiveness of the European Union’s regulatory framework, which allows for strict enforcement against monopolistic practices, suggesting that Canada could benefit from a similar approach.
The Status Quo
Entwistle’s views on foreign ownership have not been without controversy. Critics argue that his push for deregulation is self-serving, considering Telus does not have media assets like its competitors. However, he counters that harmonising ownership rules across telecom and broadcasting sectors is crucial for a competitive marketplace.
As he steps down from his role at Telus, Entwistle’s advocacy for reform remains a testament to his commitment to fostering a dynamic and competitive Canadian telecom sector. He urges federal legislators to take decisive action, stating, “Do it cleanly. Don’t monkey around with silly parameters.”
Why it Matters
The future of Canada’s telecommunications industry hinges on its ability to adapt to changing global dynamics. Entwistle’s arguments spotlight the need for a modern regulatory framework that not only promotes competition but also aligns with international trade standards. By dismantling outdated ownership restrictions and empowering regulatory bodies, Canada could enhance its competitive edge, ultimately benefiting consumers and businesses alike. As trade tensions escalate, the decision to embrace a more open market could prove pivotal for the nation’s economic future.
