Free Telecommunication Policy in Canada: Feasible or Fairytale?

  1.  Introduction 

The expansion of telecommunication technology, in particular the development of the Information Highway, has placed Canadians on the edge of a new frontier.  This new frontier is a deeper adventure into the channels of human interaction and interpersonal communication. The advancement of telecommunication technology would provide the ability to communicate and share individual ideas around the world and virtually receive a response to those ideas instantly. Similar to the invention of the ship, railroad, automobile, and airplane, today’s telecommunication technology is bridging the last gap between Canadian citizens, foreign citizens, foreign societies, and government. 

Dealing with a new frontier and advancement in technology, history has thoughts that as technologies develop old technologies pass by the wayside and become obsolete. With the current development of the internet two questions arise: Is the currently used long-distance telephone service obsolete or is it becoming obsolete: Should and could the Canadian Federal Government provide free telecommunication service to its citizens.  

In seeking answers to the above questions it was necessary to review information from several different sources since there has not been any directly related discussions pertaining to the above questions. The different areas explored were as follows: government policy, basic economic theory, telecommunication development studies, and the economics and regulations of the telecommunication industry.

The criteria used in selecting source materials from the above subject areas were:  (a) the source must be within the last three years, [except economic theory] (b) source must not be prepared by a telecommunication company, (c) reputable authors, and (d) a clear bias in favour of the expansion of the current telecommunication industry. Using the above criteria resulted in the selection of five different sources from different areas of concentration on the telecommunication industry. 

2. Summary of Sources 

The Canadian Federal Government published a booklet in 1996 titled Building the Information Society:  Moving Canada into the 21st Century. The booklet explains the government’s views, policies and initiatives on the construction of Canada’s information highway. The Federal government explains the essential need for an information highway in response to the growing pressure of foreign competition and to guide Canadian society into the age of the Information Revolution. 

Among the list of the government’s policies and initiatives, the government recognizes the essential need to make access to the informational highway affordable and realizes the economic benefits in accomplishing this task. The government’s position is as follows: “all Canadians must have affordable access to the Information Highway, no matter where they live.” (2) and “Realizing the economic and social benefits for all Canadians of the Information Highway and allowing them to participate fully in the emerging information society.” 

However, the Federal Government points out that the massive amount of capital required to accomplish this task requires cooperation between government, private industry, labour and associations. 

In 1993, Bernard Ostry wrote a report titled The Electronic Connection: The Essential Kay to Canadians Survival. The purpose of Ostry’s report was “to provide an enabling policy to encourage private investment, speed the work and development of new services, and ensure that high-speed networks connect with other networks in Canada and the world.” Throughout the report, Ostry discusses the history of the electronic highway system in the following three phases:  1965-75 “convergence of digitized communications and computer technologies”, 1976-85 “marriage of hardware and software concerns of the DOC [Department of Communications]”, 1986-93 “Canada, from being a world leader and pace-setting in telecommunications had fallen behind its global competitors.”

Ostry submitted a series of recommendations to the Canadian Federal Government concerning the necessity of becoming actively involved with the construction of the electronic highway.  He concludes the following: “Yes, we do need an EHS (electronic highway system) and what we need it for is to help solve some of our most severe educational problems, improve our competitive position in international trade by at least ensuring a highly skilled workforce, provide business and universities with improved channels of communication, promote self-reliance, strengthen our national identity, integrate government services so that they are more efficient and effective and help build “Team Canada.” (VIX)

Richard G. Lispey, Douglas D. Purvis, and Peter O. Sener published the seventh Canadian edition of their book titled Economics in 1991.  In the chapter dealing with types of marketplaces, Lispey et al. state the basic economic principle between the monopoly of marketplace verse the competitive marketplace as follows: “Even if the price system allocated goods and services with complete efficiency, members of a society may not wish to rely completely on the market if they have other goals that they wish to achieve.” (460)  Hence, by leaving the telecommunication market to the competitive marketplace forces, Canadians may not be able to reach the goal of having a super-communication system. This could result if the competing companies find they are not earning enough profit in this small market and decide to pull out of Canada. The economic and political power held by these companies could have some serious consequences for Canadian citizens in the future.  

Human resources study of the Canadian Telecommunications Industry was published in 1996, written by KPMG Management Consulting in association with Pacific Leadership INc., Tech Team Management and Abt Associates for the Steering Committee of the Human Resources Study of the Canadian Telecommunication Industry. This detailed report describes the current formation or the telecommunication industry and reports that basic telecommunication revenues will reach approximately 18.1 Billion Cdn. by the year 2000. KPMG et al. states there is currently a decrease in jobs in the telecommunication carriers (TC) sector. The decrease in TC jobs is a result of the advancement in technology and improved reliability of the currently used equipment. 

Also, the report details the raging battle between the cable companies and the telephony companies, all fighting to dominate the communication medium to be used in the future.  Hence, cable companies are trying to break into the telecommunication service sector by lobbying different levels of government to deregulate telecommunications over cable lines. On the other side of the battlefield, the telephony companies are fighting tooth and nail to retain a monopoly environment. Expanding into add-value services such as voice mail, etc., telephony companies are hoping to gain the upper hand in the competitive marketplace. Taking the battle to another front, the telephony companies are attempting to purchase their way into the television cable market (1-10).

A member of The INformation Highway Advisory Council, George Harvey, wrote an article titled “Toward the Information Highway: Consumers, Regulation and the Competitive Market”.  The article was published in a book titled Perspectives on the New Economics and Regulations for Telecommunications edited by W.T. Stanbury in 1996. Harvey indicates that currently an estimated 8.5 billion dollars in revenue for Canadian telephony companies results from long-distance charges. The extremely low long-distance rates Canadians are experiencing, Harvey writes, are a direct result of the change from a monopolistic telecommunications industry to a competitive one. 

As Canadians, in order to maintain one of the best telecommunication systems in the world, it is essential to continually expand and develop the existing system. With the requirement of enormous amounts of capital, expansion in research and development in the field can only be accomplished through the cooperation of both private and government enterprises. (177)

3. Discussion of sources

Each of the sources stress the essential need for a complete interconnected information highway in order to transform Canada into an Informational Society. Future research and further development in the Canadian telecommunication system will require enormous amounts of capital to continue to be internationally competitive as one of the best telecommunication systems in the world. The benefits of the development of such an infrastructure are equally important as was the development of roads and the railway. 

4. Conclusion

In conclusion, perhaps at this time a “Free Telecommunication Policy” announcement by the federal government would be a fairytale. With the enormous changes in technology and current rivalry between cable companies, wireless communication providers, and traditional telephony companies, such an announcement would prove detrimental to the development of the Canadian telecommunication system. 

The enormous amount of capital required for further research and development into telecommunication technology can only come from a competitive marketplace. However, in unleashing the forces of the competitive marketplace the federal government must be extremely cautious that the marketplace remains competitive and not succumb to a dominant foreign multinational corporation. 

The federal government seems to be going in the right direction and is attempting to take steps to ensure a competitive marketplace. Perhaps someday the fairytale will become feasible, breaking the last chain of oppression on our freedom to communicate with a “Free Telecommunication Policy.” 


Canada. Minister of Supply and Services. Building the Information Society: Moving Canada into the 21st Century. Ottawa, 1996.  

Harvey, George. “Toward the Information Highway: Consumers, Regulation and the Competitive Market.” Perspectives on the New Economics and Regulation of Telecommunications. Ed. W.T. Stanbury. Montreal: The Institute for Research on Public Policy (IRPP), 1996. 177-185.

KPMG Management Consulting, et al. Human Resources Study fo the Canadian Telecommunications Industry.  Ottawa:  Human Resources Development Canada, Sector Studies Division, Human Resources Partnership Directorate, 1996.

Lipsey, Richard G., and Douglas D. Purvis, and Peter O. Steiner. Economics. 7th ed. New York: HarpersCollins, 1991. 

Ostry, Bernard. “The Electronic Connection: An Essential Key to Canadians Survival.” Diss. University of Winnipeg, 1993. 

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