The Tax-Free Six Step Approach to a Digital Economy Strategy

Several months ago in a speech to the Economic Club of Canada, Industry Minister Christian Paradis promised to unveil a Canadian digital economy strategy by the end of the year. Unless there is a late December surprise, however, 2012 will end in the same manner as every other year – with Canada as one of the only developed economies without a clear plan for success in the online environment.

The digital economy strategy file – dubbed the Penske file due to years of “work” with no results – now stands an unequivocal failure. Despite a public consultation on the issue and numerous models to emulate, the government has puzzlingly been unable to develop a coherent vision for Canada’s digital future.

The government could have pointed to any number of developments – copyright reform, anti-spam legislation, research tax credit changes, a pro-consumer approach at the Canadian Radio-television and Telecommunications Commission, the forthcoming spectrum auction, and reversal of the hated Internet billing dispute – as evidence that it has been active on the issue. Yet without a clear map for the future, the efforts are understandably perceived to be a policy mish-mash without a clear target.

How to fix the digital economy strategy mess in a fiscal environment where there is little, if any, money available to pay for it?  My weekly technology law column (Toronto Star version, homepage version) points to a tax-free digital economy strategy that would have six components.

First, a Canadian digital economy strategy needs a single, compelling objective. The obvious choice would be universal, affordable access to computers and high-speed Internet access by 2015. The government need not foot the entire bill. Rather, it could bring together the private sector along with provincial governments to establish a program with private sector commitments for inexpensive access and computing equipment for low-income Canadians.

Second, the government must finish what it started on the legislative front. Anti-spam legislation received royal assent in 2010, but it has still not taken effect as Industry Canada has delayed introducing the necessary regulations for the past year and a half. Similarly, Bill C-12, a privacy reform bill that addresses recommendations dating back to 2006 has languished in the House of Commons. The government should put these initiatives back on the agenda with a commitment to having the laws operational within six months.

Third, foreign investment restrictions in both the telecommunications and broadcasting sectors should be dropped in an effort to foster a more competitive marketplace. The potential entry of new deep-pocketed competitors within the Canadian economy will serve consumers well and force the incumbents to compete more aggressively.

Fourth, the existing multi-billion dollar public expenditures on research and cultural subsidies should be used to promote greater openness and digital access. Many countries have adopted mandatory open access policies for taxpayer-funded research, an approach that leverages research investment by making the results more readily accessible to businesses and the general public. Moreover, cultural subsidies in areas such as book publishing should be linked more directly to ensuring access to electronic versions of publications in local libraries.

Fifth, the government should replicate its public interest, consumer-focused model now found at the CRTC at similarly placed administrative agencies and tribunals. The Copyright Board of Canada, which has developed a reputation for being inaccessible to all but a few copyright collectives and industry stakeholders, should be re-examined and the Privacy Commissioner of Canada should be given the enforcement tools necessary to fulfill her mandate.

Sixth, there should be a commitment to allocate a portion of the proceeds from the forthcoming spectrum auction toward digital economy issues. Many Canadians need access to digital training or literacy skills. Programs funded through the billions generated by the auction would better position Canadian workers in the digital economy, while ensuring that taxpayers are not hit with the bill.


  1. I’ll put a check beside #1 for sure. I live in a rural community with slow (2m-bit) internet that is easily disrupted by the weather. I realize though that many without, would be happy even with that. Having internet access allows me to work from home, better more wide spread access would allow more people to be increasingly productive contributors to the digital economy (and economy in general).

    I am hoping that soon the frequency spectrum freed up by the suspension of analog TV signals will be used to implement a robust rural wide-area broadband service.

  2. I agree with your comments on the digital economy strategy with the exception of foreign ownership. I believe the government has it right allowing foreign ownership for smaller/new entrants but it would be a disaster for larger Bell, Telus, etc. If you compare capital investment from telcos in Canada to the US we are much stronger on a per capita basis and as anyone who travels in the US knows the coverage there is also very spotty. If you were AT&T or Verizon would you invest capital in New York or Manitoba?? Allowing foreign ownership of major Canadian Telcos would be a disaster.

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