Source: Calgary Herald

Canada's national broadcast regulator warned Tuesday of the need for a "massive subsidization" for Canadian content by the federal government if Ottawa moves to allow foreign ownership of telecom operators.

Failing such a subsidization regime, content created by the broadcasting sector and other culturally sensitive industries would wither to nothing under non-Canadian ownership of the country's distribution businesses, said Konrad von Finckenstein, chairman of the Canadian Radio-television and Telecommunications Commission.

The remarks to a telecom conference in Toronto were in response to the announcement Monday from federal Industry Minister Tony Clement that he would be seeking comment on ways to open Canada's telecommunications sector to foreign direct investment. The initiative would invite more capital, competition and eventually economic benefits to the country, according to proponents. 

The minister clearly stated changes would only be applied to the telecom sector, with no impact on broadcasting industry, which is also considered a sensitive sector and must remain Canadian-owned under the current rules.

However, von Finckenstein suggested "technological convergence" has wrought commercial convergence and that it's difficult to apply rule changes to distribution or network assets without applying changes to broadcasting.

"If you do separate (telecom and broadcasting) and take away restrictions (on foreign ownership) I think inevitably you're going to have to go to a regime of massive subsidization of Canadian content, otherwise I think you'll see the disappearance of the Canadian broadcasting system," he said during a keynote discussion at the Telecom Summit.

Rogers Communications Inc., for example, is the biggest integrated telecom and media company in the country, providing wireless, cable and Internet services, while operating a range of content assets from Sportsnet specialty channels to the City-TV television network. Under the current thinking from Clement and others, media holdings could be spun out into separate companies owned by Canadians.

But that scenario is fraught with risk to Canadian content, von Finckenstein said. International carriers could shirk carriage of Canadian content once in the market, muting Canadian voices. But a liberalization of the Telecommunications Act could presage opening up broadcast to foreign ownership also to attract more capital. That would present a risk of erosion of Canadian content in general, and without some kind of subsidy scheme, content would wilt, he said later in an interview.

"Our system right now is based on control of access. If you take that away because you let foreigners in, you run the danger of our broadcast industry being overtaken by foreigners and they would obviously produce as little content as they could get away with," he said. Yet there are mechanisms already in place used to flow money from cable distributors and taxpayers back into Canadian content. The Local Programming Improvement Fund's $100-million annual contribution is one. All told, more than $400 million currently goes into the creation of Canadian broadcast content.

Some suggest the risks addressed by von Finckenstein are blown out of proportion, and that a clean separation could take place that preserves Canadian broadcast content.

"The fact that cable carriers don't carry the real HBO and do carry the (Canadian) W Network has nothing to do because they're Canadian and want to, it's because the CRTC has told them in both situations what they could and could not do," Michael Hennessy, senior vice-president of regulatory at Telus Corp. "And it makes no difference whether it's a foreign owner."

© Calgary Herald