Canada badly needs muscle in fast-paced wired world

We think of Canada as big--because, geographically, it is. We may also think of Canada as big in the world of information technology--because, internationally, outfits like Northern Telecom, Mitel, Corel and Newbridge Networks have cut themselves big niches in specific technology markets. But be assured, in the buying and selling of IT of all types worldwide--big Canada ain't. And there's a chance we could become even smaller.

Take telecommunications. No country has more experience with transferring voice, images and data over long distances than ours. Beginning in the 1950s the Bell companies and CP Telecommunications began tying the country with the world's longest integrated telephone and microwave systems.

Next, Telesat Canada lifted our telecom expertise even higher. Its domestic satellite system has run smoothly now for a quarter of a century.

That's earned us a world reputation and a number of international success stories. Northern Telecom went global in the wake of its reputation for building the best big phone switches. Telesat Canada's consulting services will now earn the company more than $30 million a year from foreign clients. Newbridge has set the world standard in the asynchronous transfer mode (ATM) technology that promises to make the world a multimedia village. And yet even in telecommunications, we are playing for peanuts. Of the world's $1.5-trillion annual market for telecom goods and services, Canadian firms are cornering only about three per cent of it.

Indeed, according to the International Telecommunications Union (ITU), only in one measure of telecommunications strength does Canada lead the world--and even then it is a shared position. The U.S./Canada telecom route carries over four billion minutes of voice, image and data traffic per year--more than double any other route on earth. But on our own, Canadians don't even rank in the top 10 as measured by the total minutes of outgoing international traffic we dial up every year. Nor is there a Canadian company among the top 10 telecommunications operators. Nippon Telephone and Telegraph (NTT) of Japan is the earth's top bell ringer.

Canada is only tenth in the number of main telephone lines in place. Nor is our penetration of lines per capita as good as, say, Sweden, the world leader. Swedes enjoy 68.31 main telephone lines per 100 inhabitants. Canada is a mere fifth with 57.54 lines per 100 Canadians.

And we are positively weak when it comes to wringing revenues and productivity from our telecom systems and people. Among the top 10 countries, we are last in terms of revenues generated per main phone line and second last in terms of how much revenue each telecom employee produces.

This poor business position of our telecommunications could be Canada's Achilles' heel in the ever more crowded race for international market share. Meanwhile, more than 50 other countries are currently untying the government ownership strings that restrain their telecoms from full-fledged competition. Once untied, they will loose a flood of vigorous new threats to Canadian companies operating internationally.

To combat this, the federal government has recognized that the Canadian high-tech industry needs a revitalized environment. New federal research and development tax credits are in the works to encourage firms to innovate. The government is also moving, albeit with glacial slowness, to deregulate telecommunications monopolies so that transmission prices fall. Canadian rates for ATM broadband services that drive banking machines, for instance, are as much as five times those in the United States. With cheaper transmission costs, more firms are likely to test, share and market more products. And the feds for some time have been co-ordinating international marketing efforts with a Team Canada approach to trade fairs.

At one of the biggest, Telecom 95 in Geneva last fall, Industry Minister John Manley led a contingent of over 70 Canadian firms. There a reporter asked Manley just how long it would take his government to establish a high-tech climate more conducive to international trade. Promised Manley: "It is not going to take a long time to determine the framework. We are moving quickly."

Quickly or not, Manley is moving. In July, his Department of Industry began a review of Teleglobe Canada's monopoly for carrying international satellite traffic in and out of the country. (In November, Teleglobe said it would not reapply for a monopoly at the end of its licence.) Earlier he had set in motion the "convergence hearings" conducted by the CRTC. And in September he accepted the report of the Information Highway Advisory Council (IHAC). Unfortunately, neither the CRTC nor the IHAC reports yelled loudly enough about the need for Canada to gird itself more swiftly for international competition.

Yet it is competition for an enormous, unexploited market that will be going soon to the swiftest and cheapest.

Copyright Plesman Publications Ltd. Jan 1996
Provided by ProQuest Information and Learning Company. All rights Reserved