Released on May 14, 2010
The House of Commons Industry Committee is concluding hearings this week on the lifting of foreign ownership rules in telecommunications. Many witnesses have called for relaxation of current restrictions indicating that a more permissive foreign ownership regime will result in more competition and reduced prices.
The Government of Saskatchewan believes that new rules will impact pricing and services in urban areas, but rural areas are not likely to benefit from these developments. This will lead to an increasing digital divide in Canada.
"The Government of Saskatchewan and SaskTel are supportive of the Federal Government's desire to revise the foreign ownership legislation for telecommunications," Minister responsible for Information Technology Office June Draude said. "However, foreign ownership must be instituted in such a way that rural interests are protected. We recommend reforming the CRTC's National Contribution Fund to meet the future needs of rural telecommunications, including the provision of affordable broadband."
The National Contribution Fund is currently used to ensure rural areas have affordable basic telephone rates by covering the difference between the revenues that service providers receive from local services in rural areas and the costs of providing service.
In Saskatchewan, more than 40 per cent of SaskTel's residential customers - in excess of 160,000 households - are located in High Cost Areas where the cost of service exceeds revenues.
Rural areas are not likely to benefit from changes to the rules, as increased competition will focus on urban areas to the detriment of rural areas. Absent an appropriate subsidy regime, the ability of service providers like SaskTel to continue to invest and evolve communications networks in rural and less populated provinces such as Saskatchewan will become even more challenging.
"It is critically important that safeguards are put in place to ensure investment in advanced services in rural areas and to ensure that rural residents can benefit from these services, such as broadband, at prices similar to their urban counterparts," Draude said.
The CRTC is reviewing whether the local contribution regime is still needed - if eliminated, basic rural telephone rates will increase and rural infrastructure investment will be at risk.
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For more information, contact:
Richard Murray
Information Technology Office
Regina
Phone: 306-787-9586
Email: rmurray@gov.sk.ca
Cell: 306-536-4758