Past Problems and Current Issues In Canadian Telecommunication Policy: A Sense of Deja Vu Regina Costa B. A. Simon Fraser University, 1984 THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS . in the Department of Communication O Regina Costa 1988 SIMON FRASER UNIVERSITY APPROVAL Name : Regina Marie Costa Degree: Master of Arts (Communication) Title of Thesis: Past Problems and Current Issues in Canadian Telecommunication Policy: A Sense of Deja Vu Examining Committee: Chairperson: Dr. William D. Richards, Jr. Ms. R. Liora Sal~er Associate Professor S-r S-r Supervisor / Dr\. RoberFj S. nderson Associate Trofet sor Mr. PGter s. Anderson Research Associate Department of Commuriication ard J. Gathercole B.C. Public Interest Advocacy Centre Vancouver, B .C . External Examiner Date Approved: 25 September 1987 PARTIAL COPYRIGHT LICENSE I hereby grant to Simon Fraser University the right to lend my thesis or dissertation (the title of which is shown below) to users of the Simon Fraser University Library, and to make partial or single copies only for such users or in response to a request from the library of any other university, or other educational institution, on its own behalf or for one of its users. I further agree that permission for multiple copying of this thesis for scholarly purposes may be granted by me or the Dean of Graduate Studies. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. C Title of Thesis/Dissertation: Past Problems and Current Issues in Canadian Telecommunication Policy: A Sense of Deja Vu Author : - Regina Marie Costa name September 25, 1987 date iii Abstract This thesis examinies historical concerns regarding telephone service and their ramifications for current telecommunication policy issues. Since 1906, federally chartered telephone companies have been regulated to ensure that rates charged for service are "just and reasonable" and in "the public interest." The thesis identifies conflicting notions of how the public interest could best be served, as the notions were manifest in historical debates regarding the extension of service, federal regulation and the capitalization of telephone companies. Historical material is drawn from the 1905 proceedings of the House of Commons Select Committee on Telephones and Debates of the House of Commons from 1903 through 1967. A case study of Bell Canada's contract to provide a telephone system for the Government of the Kingdom of Saudi Arabia is presented to demonstrate the contemporary manifestation of historical policy concerns. The thesis raises three major questions that have emerged repeatedly throughout the years regarding the regulation of federal!y charted telephone companies: 1) whether the corporate objectives of private firms might conflict with "the public interest;" 2) whether regulators have had adequate power to review aspects of telephone. company operations which are essential for effective regulation; and 3) whether regulators have adequate power to regulate provision of service. Based on the historical material and the more recent case study, the thesis argues that while the scope of regulation has widened in recent years as the current regulatory agency employed a broader interpretation of its mandate, the historical problems identified above remain and are manifest in current regulatory and policy issues. This is due to partially conflicting assumptions, evident as early as 1905, regarding telephone companies and the publlc interest. With the emerging emphasis on the "information economy," today, telephone companies are deemed important to industrial policy objectives because of their central role in the telecommunication infrastructure and their relationship with manufacturing and consulting subsidiaries which compete in international markets. Promotion of industrial policy objectives partially conflicts with the process of rate of return regulation. The thesis briefly discusses implications of continuing problems for current debates regarding rate restructuring. .. Acknowledgements I wish to thank my senior supervisor, Professor Liora Salter, for her guidance, constructive criticism, loyalty and multi-faceted support. In addition to supervising my thesis, Liora has provided me with seven years of training as a policy researcher in the classroom and on a. variety of research projects. For this and everything else I am most grateful. Peter Anderson was always available to discuss the issues and critique my work and I thank him for this and for his friendship. I am grateful to Professor Robert Anderson for his constructive critique and inciteful comments regarding industrial policy issues. I am also indebted to Dr. Robin Mansell for her thorough critique of the study, to Professor Dallas Smythe for providing me with a background in the political economy of communication and to Professor William Melody for several years of instruction and counsel regarding telecommunication regulatory and policy issues and the opportunity to contribute to projects in this field. This thesis is one of several tangible and intangible results stemming from seven years as an undergraduate and graduate student in the Department of Communication, Simon Fraser University. The Department has provided a - stimulating environment for intellectual and political activity. Of the many people who contributed to this, Robin Mansell, Rohan Samarajiwa, Peter Cook, Jane Walker, Marguerite Vogel, Debbie McGee, Lynne Hissey, Laurie Jones, Ron Trepanier, Pamela Parford and Lucie Menkveld have special significance to me. Table of Contents .. Approval ........................................................................................................................11 ... Abstract .........................................................................................................................111 Acknowledgements ....................................................................................................... v I . Introduction ...................................................................................................... 1 Background .......................................................................................................1 Methodology ......................................................................................................2 Research ............................................................................................................6 Definitions ........................................................................................................ 7 Outline of Chapters .......................................................................................... 9 I1. Parliament's Select Committee on Telephones (The Mulock Committee) .......................................................................... 12 Introduction .....................................................................................................12 Factors Leading to Establishment of the Committee ........................................ The Mulock Committee ....................................................................................22 Conclusions ......................................................................................................-45 1II.Policy through construction. Regulation and Reaction: 1906- 1968 .......................................................................... 55 Introduction .................................................................................................... -55 Extension of Service ....................................................................................... 57 Policy Issues Related to Federally Chartered Telephone Companies ......................................... 63 Conclusions ...................................................................................................... -97 IV . Conflicting Approaches to Current Policy Issues: 1968 . 1987 ................................................................................................. 107 Introduction .............................................................................................. .... 107 Policy Objectives and the 'Information Revolution' ....... ;....................... 110 Economic Opportunities and the 'Information Revolution ...................120 Issues Surrounding Bell's Saudi Project .................................................... 128 Conclusions ..................................................................................................... 148 V . Conclusions .......................................................................................................156 Selected Bibliography ................................................................................................ 176 I. Introduction This study began with a question. What aspects of current debates regarding telephone policy issues are present in historical debates regarding federal telephone policy? This question arose because although there is currently a great deal of public debate regarding telephone issues, which has been accompanied by numerous academic papers and Government-sponsored research studies, little if any effort has been devoted to placing current policy debates in an historical perspective. An initial review of papers, research studies, books and parliamentary material regarding historical telephone issues showed that many issues currently being debated, such as extension of service,