Foreign ownership rules too restrictive: BCE's Monty
5/15/01

Toronto - Canada risks falling behind in the convergence of communication businesses and information technologies without an updated public policy from Ottawa, the head of telecom giant BCE Inc. said Monday.

Citing corporate giants around the world "who operate in a world without national borders," Ottawa needs to alter its rules on foreign ownership of Canadian telecom companies and its restrictions on product pricing for companies to succeed outside this country, BCE chief executive Jean Monty said.

"We must develop an approach to convergence that will allow us to assume leadership in this new era or we will be relegated to being followers in a global game led by others," Monty, the head of Canada's largest multimedia company, said in a speech in Toronto.

Monty named companies -- including AOL Time Warner and Microsoft Corp. in the U.S., Vivendi Universal in France and Bertelsmann in Germany -- as examples of companies seeing the importance of merging communications and Internet operations.

Speaking to reporters following the speech, Monty said government policies are too concerned with stopping telecom companies from getting too big, with restrictions that prevent foreign takeovers and limit foreign ownership in a telecom holding company like BCE.

BCE's holdings include Canada's largest private broadcaster, CTV Inc., phone operator Bell Canada, the Globe and Mail newspaper and the Sympatico-Lycos Internet portal.

Bell Canada dominates the telecommunications industry despite the introduction of competition in 1998, sustaining a monopoly in the local residential telephone market and a near-monopoly in the business market.

However, long-distance market share has fallen from 100 per cent to about 60 per cent since competition was introduced.

In the Web portal market, BCE's Internet properties rank fourth with a 34 per cent market share, behind AOL, Yahoo Inc. and Microsoft's MSN.

Regulations that keep BCE's prices low for products and services, such as Internet connections, hamper the company's ability to make strong enough returns to finance future investments and growth, Monty said.

Last week, Ottawa announced a Commons heritage committee will begin this fall an 18-month series of round-table discussions on a host of broadcasting issues, including the impact of the Internet on ownership restrictions.

Monty said that while BCE is a large telecom holding company it needs the ability to grow as it isn't big enough to compete against a host of international rivals.

"Up front, we look big," he said. "At a distance, ranked against global convergence competitors, you'll find us barely in the top 10."

While public policies to protect and grow telecommunications companies have worked in the past, they're out of date and competition is healthy despite a rapid round of media consolidation, Monty said.

"We want to make sure people understand our views: that size shouldn't be that big a deal given everybody else's size in the world."


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