FREE ESSAY ON CANADIAN BUSINESS

CANADIAN BUSINESS

Canada has been transformed in recent years into an information based society. Nearly half
of the labour force in Canada works in occupations involving the collection and
processing of information. In a society in which information has become a commodity,
communications provide a vital link that can mean the difference between success or
failure. Telecommunications is a fundamental infrastructure of the Canadian economy and
society. For these reasons, an efficient and dynamic telecommunications industry is
necessary to ensure economic prosperity. Deregulating the Long Distance Industry is the
only sure way to ensure that prosperity.
Telecommunications in Canada, which include services and manufacturing, employ more than
125,000 people and generate over $21 billion in revenues (Dept. of Communications, 1992,
p7). Telecommunications helps to overcome the obstacles of distance in a vast country
such as Canada, permitting remote communities to benefit from services taken for granted
in large urban centres. More than 98 percent of Canadian households have a telephone, and
there are more than 15 million telephone lines for a population of nearly 27
million(Dept. of Communications, 1992, p7). It is therefore not surprising that Canadians
are among the biggest users of telecommunications in the world. For example, in 1990,
Canadians made more than three billion long-distance calls (Dept. of Communications,
1992, p8).
Innovations made possible through telecommunications have also contributed significantly
to the phenomenal growth of the Canadian telecommunications industry. For example, the
total value of the major telephone companies' investment in their facilities rose from
$17.8 billion in 1979 to $40.3 billion in 1990. In the same year, Canadian
telecommunications companies reported more than $15 billion in revenues, accounting for
an estimated 2.7 percent of the Gross Domestic Product (GDP). In addition, in 1990 the
telecom industry achieved a real growth rate (after inflation) of 8.6 percent compared to
0.3 percent for the Canadian economy as a whole. Telecommunications is also Canada's
leading high-technology industry; its Research and Development costs of $1.4 billion in
1990 represent about 24 percent of total expenditures in this area. This shows how
telecommunications has come to play such a vital role in our society, in addition to
being our most important high technology industry (Dept. of Communications, 1992,
p9-12).
Changes are constantly taking place in the telecom industry. These changes are caused by
rapid progress in telecommunications technology, growing demand for new services, the
globalization of trade and manufacturing operations, and increasing competition
worldwide. It is also important to note that the Canadian telecommunications market of
$15 billion is small compared to those of our major trading partners, the United States
($185 billion), the European Community ($125 billion) and Japan ($65 billion) (Blackwell,
1993, p26). These factors were a mounting source of pressure on the previous regulatory
structure of the Canadian telecom system. As regulation was eased in other countries
around the world, Canada was beginning to lose its competitiveness. The USA and Britain
have made strategic decisions to increase competition in telecommunications services and
to modernize their information infrastructures. Other countries such as Japan, Australia,
and New Zealand are following their lead. The European Community is considering
legislation to unify the European telecommunications market next year (Blackwell, 1993,
p22). In order to not be left behind, Canada updated its telecommunications legislation
to bring it in line with world developments. For example, a key piece of legislation that
regulated telecommunications, the Railway Act, dated back to 1908 (Beatty, 1990, p135).
Clearly, with such ancient legislation, new policy was required that would allow a more
flexible regulatory system, and not hamper the development of our telecommunications
industry (as the Railway Act did). The first steps toward such a policy were taken in
1987 by the Minister of Communications, who outlined three basic principles to guide
telecommunications policy making:
Maintaining a basic telephone service which is affordable and universally accessible;
Encouraging development of an effective and efficient telecommunications infrastructure;
and
Permitting Canadians in all regions to have access to the same levels of competitive
services (Beatty, 1990, p42).
Bill C-62 - the Telecom Act, passed in June of 1993, brought these principals to reality.
In addition, the legislation gave Canadian Parliament legislative authority over the
principal telecommunications common carriers (i.e. Bell Canada, Alberta Gov't Telephone,
BC-Tel) in Canada.
The new legislation defines the powers of the federal government and the regulation that
is required to bring Canada's telecommunications policy into the twenty-first century. It
ensures the efficient operation of our telecommunications system, maintains and promotes
and internationally competitive telecommunications industry, and guarantees all Canadians
access to reliable, affordable, and high-quality services. In order to achieve this, the
new law centres on two major principals: the first is to open the telecommunications
market by having a workable policy for the whole country under the guidance of a single
regulatory agency (i.e. the CRTC); the second is to establish a more flexible regulatory
framework. The new legislation modernizes and improves the existing system in three
ways:
1. By updating and modernizing existing legislation that governs telecommunications.
Namely, the Railway Act, the National Telecommunications Powers and Procedures Act, and
the Telegraphs Act.
2. By making a single agency responsible for regulating telecommunications, and