Communications, Energy and Paperworkers Union of Canada

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Telecommunications, Regulation and Outsourcing
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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.

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Foreign Ownership of Telecom Industry

• The Canadian public is opposed to foreign control

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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.

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Foreign Ownership of Telecom Industry

• Competition Policy Review Panel
• Introduce greater liberalization of investment
  restrictions in regulated sectors in order to
  increase Canadas 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

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Foreign Ownership of Telecom Industry

• Jim Flaherty
• Let there be no doubt of the governments 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

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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.

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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 Canadas
  telecommunications system vulnerable to external
  shocks.
• Canadians need to deal with net neutrality.
• Canadians dont need foreign ownership to do a
  better job.
• Canadian law doesnt apply to foreign investment.

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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.

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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 121 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)

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Outsourcing

• Why doesnt outsourcing work?
• Costs Overrun
• 70 of companies have had negative experiences
• 44 didnt 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.

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Outsourcing

• Why doesnt outsourcing work?
• Linguistic Cultural Differences
• People in other countries just arent 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, its 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.

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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

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230-5801www.cep.ca