Communications, Energy and Paperworkers Union of CanadaSyndicat canadien des communications, de l’énergie et du papier

Telecommunications, Telecommunications, Regulation Regulation

and Outsourcingand Outsourcing

What are the issues?

Foreign Ownership of Telecommunications Industry Foreign interests may own up to 46.7% of a telecom or

broadcasting company. This limit ensures that control remains in Canadian hands. This control is endangered by a mounting campaign to

deregulate the industry.

Outsourcing and Offshoring Thousands of jobs in the telecom industry have been either

outsourced in Canada or offshored outside of the country in the past 20 years.

Good jobs have been lost and replaced with low-wage jobs, leading to a lower quality of service.

Foreign Ownership of Telecom Industry

The Canadian public is opposed to foreign control

Foreign Ownership of Telecom Industry

Competition Policy Review Panel

Lynton Ronald "Red" Wilson, served as President and Chief Executive Officer of Bell Canada Enterprises (BCE) Inc. from 1992 to 1998.

Isabelle Hudon, President and Chief Executive Officer of the Board of Trade of Metropolitan Montreal.

P. Thomas Jenkins, Executive Chairman and Chief Strategy Officer of Open Text Corporation, based in Waterloo, Ontario.

Brian Levitt, co-chair of Osler, Hoskin & Harcourt LLP and one of the leading corporate governance and mergers and acquisitions advisors in Canada.

N. Murray Edwards, owner and President of Edco Financial Holdings Ltd., a Calgary based management firm.

Foreign Ownership of Telecom Industry

Competition Policy Review Panel Introduce greater liberalization of investment restrictions in

regulated sectors in order to increase Canada’s competitiveness by:

… Allowing foreign firms to establish or acquire Canadian

telecom companies with less than a 10% market share, and, following a review of broadcasting and cultural policies, further liberalizing investment restrictions in the telecom and broadcasting sectors;

…

Foreign Ownership of Telecom Industry

Jim Flaherty “Let there be no doubt of the government’s view that increasing

foreign direct investment has certainly been a priority of our government”… (January 2008, before the Panel Report)

Stephen Harper At a campaign stop in Halifax on September 12, 2008, Harper

pledged to loosen foreign-ownership rules in airlines and uranium mining, but said that he has no plans to open up Canada's telecom sector to more foreign investment, saying that Canada is not ready.

Under what conditions the market would be considered ready? Only the Conservatives know…

Foreign Ownership of Telecom Industry

Lifting barriers to foreign ownership in the telecom industry will have major negative impacts

Foreign ownership threatens cultural content in TV, music, news, etc. as telecommunications and media have merged with new technology and company ownership.

Foreign ownership is not required to increase capital investment.

Foreign ownership threatens Canadians’ privacy and security rights.

Foreign ownership leaves Canadian customers with fewer political remedies.

Foreign Ownership of Telecom Industry

Lifting barriers to foreign ownership in the telecom industry will have major negative impacts

Allowing foreign ownership will chill regulation in the public interest.

Foreign control leaves Canada’s telecommunications system vulnerable to external shocks.

Canadians need to deal with net neutrality. Canadians don’t need foreign ownership to do a better job. Canadian law doesn’t apply to foreign investment.

Foreign Ownership of Telecom Industry

A CEP Solution: Converged Legislation

What we need is a new converged legislation that will offer a universal, reliable and affordable telecom service (including broadband access) to urban and rural regions without discrimination on content (unfiltered and uncensored) in the network systems.

Outsourcing

Why do companies outsource? To reduce operating costs

Lower wages: The difference in wages between North American and India telephone workers can reach a 12:1 ratio.

Offloading of benefits, like supplementary health insurance. Offloading of payroll taxes, like EI and CPP.

To de-unionize their workforce To avoid labour standards To take advantage of tax incentives

Regina: Attracted 800 StarTek jobs with $3,25 million in tax breaks ($4,000 per job)

Buffalo: Attracted 2,500 Geico insurance jobs with $100 million in tax breaks ($40,000 per job)

Outsourcing

Why doesn’t outsourcing work? Costs Overrun

70% of companies have had negative experiences; 44% didn’t see cost savings; 57% had to absorb costs they thought were in contract; Almost 50% cited hidden costs as their biggest problem.

Lower quality of service Outsourcing eliminates direct communication with customer; Prevents building solid relationships with customers; Loss of key company skills; Staff turnover is higher in outsourced companies than in

outsourcing companies.

Outsourcing

Why doesn’t outsourcing work? Linguistic & Cultural Differences

People in other countries just aren’t familiar with the context of the people they're dealing with;

“I get a lot of complaints from Bell Sympatico customers, and of all Bell divisions, it’s the most outsourced to India.” (Ellen Roseman, Toronto Star)

Security Issues The door is wide open for identity theft: Sub-contracting companies

often sub-sub-contract their work; Privacy Issues and the USA Patriot Act; Outsourcing industries in Eastern Europe and Latin America have

been targeted by criminals seeking access to customer data.

Outsourcing

How can we fight outsourcing?

Collective bargaining Mandatory High Severance Pay

Article 235 of Canada Labour Code (Part III); Current language: 2 days wages per year of service; Proposed language: 4 weeks wages per year of service, up to a maximum of

78 weeks wages; Automatic Successor Rights

Four provinces have successor provisions in their labour codes (Quebec, Manitoba, Saskatchewan, British Columbia)

CRTC Performance Requirements Customer Service is currently not a performance requirement for attribution

of licenses to telecommunications companies. Interprovincial Agreements

Communications, Energy and Paperworkers Union of CanadaSyndicat canadien des communications, de l’énergie et du papier

THANK YOU!301 Laurier Avenue West

Ottawa, ON K1P 6M6Phone (613) 230-5200

Fax (613) 230-5801www.cep.ca