SEMINAR ON COMMUNICATIONS TO THE BRITISH COLUMBIA GOVERNMENT

RICHMOND, B.C. APRIL 25TH – 27TH, 1980

Plants only grow in the right climate. This is true whether we are talking about plants that grow flowers or plants that manufacture things.

For decades governments at all levels have increasingly tried to ‘help’ industrial development by either controlling it or owning it. The result has been ‘the British syndrome’ with such symptoms as:

• lowered productivity

• ever growing overheads

• new developments left to committee management.

All this has led to fewer goods at higher costs. This in turn is a major cause of the current runaway money supply, with the final result of the current combination of inflation and stagnant economies.

This is not to imply that private enterprise is perfect, but at least there is a natural pruning process that comes about as a result of the profit motive.

It is my contention that this natural market process should be interfered with as little as possible.

We all acknowledge that a hybrid approach is needed to some degree in industrial development. Consumers and workers need to be protected in such matters as safety, the environment and reasonable quality standards. But, particularly in the communications industry, if the government endeavours to go beyond this there is the danger of content control. This can lead to a very serious threat to the right of the user of any communications media to read, listen to or view whatever he or she wants.

If a government feels it must bias content, a better approach is the positive tactic of making it more attractive, i.e. profitable, to produce certain kinds of programming. This does not prevent anyone from taking risks in content creation if they believe their approach is saleable. An example of the positive incentives are those given to the film industry by the rapid tax write-off method.

However, beyond these general observations, in this seminar we have been asked to comment in particular on questions of ownership and control of communications structures, with the following specific topics:

1. FRANCHISE VERSUS OPEN COMPETITION

The default option should always be open competition. This does not mean there is absolutely no room for monopoly operations. I believe that Canada does benefit from a single voice grade switched telephone system. This should not be taken to mean, however, that because such a system exists it should be the only communications system.

Cable is an existing ‘local loop’ system but cable itself should not be considered a monopoly. Cable already has all kinds of competition:

• over-the-air broadcasts direct broadcast by satellite

• video discs

• recordings

• the telcos themselves in some instances.

If cable companies are required to perform certain duties, e.g. repackaging the over-the-air broadcast signals and presenting them in some desired sequence to the Canadian public, then in return for this they should get a form of monopoly, i.e. the license to wire an area. However, in the years to come I fully expect that the telcos will over-wire many urban areas with coaxial cable or other communications facilities, and I see no harm in this type of healthy competition.

Presumably in the foreseeable future cable companies would be precluded from handling switched voice traffic, while the telcos would be precluded from broadcast or entertainment carriage, but in many other areas they would and should logically compete.

2. CARRIAGE VERSUS CONTENT

This is essentially an artificial distinction. Cable companies already provide both. As a matter of fact, so do the telcos who are now offering such facilities as in-the-home security services.

With the wealth of opportunities facing the whole communications industry we will need more sources of content not less. If large organisations such as the telcos and cable companies can logically provide some of the content, I again see no harm in this.

Both organisations will have to ensure that reasonable access for non-carriers is provided. No doubt the leasing of cable channels will become a fact of life in the not too distant future. This in itself is one reason why cable companies will need lots of channel capacity.

Some years ago I supported the concept of the telcos or other organisations being allowed into the computer services field. I note that AT&T has finally announced it is doing this in the United States, now that its non-telephone operations have been deregulated. I recommended only that any organisation providing content on its own carriage facilities should do so through separate arms length subsidiaries.

3. NEW BOUNDARIES

Frankly, we won’t know where these new boundaries are unless the climate is right for risking investment in new areas. There must be the freedom to innovate and the freedom to succeed or fail based on the commercial acceptance of the products or services offered.

Essentially, the approach is to put the viewing or listening choice back to the consumers.

Central control usually leads to narrow boundaries because the type of committee management that normally emerges almost ensures that there are: no risk takers

• a propensity to listen to too many narrow points of view, leading to watered down decisions

• a fear of ever making a mistake.

The right climate is where entrepreneurs are allowed to test the market first. If abuses appear or problems arise then legislation can be brought in to correct these. But this should only be done once the abuse is clearly identified.

The problem with preemptive controls is that governments are so concerned about possibly upsetting some part of society they allow little if anything to happen. This is very much like demanding that all banks be closed because there is an occasional robbery.

SUMMARY

The most constructive single thing in my opinion, that the B.C. Government can do is to create the right climate for entrepreneurial development. This I define as ensuring there is only the minimum industrial regulation to physically protect the worker and the consumer. Let the consumer determine the content and both program production and the physical delivery systems will be developed in a way that will create new jobs and opportunities in B.C.