Regulatory changes dominate update on Digital Economy Strategy

Scheduled for completion in Spring

The federal government is moving to stimulate Canada's information and communications technology (ICT) sector prior to launching its digital economy strategy (DES) in the spring of 2011, with several regulatory and minor funding initiatives. Industry minister Tony Clement provided an update of the DES on November 22nd which included new direction for the Business Development Bank of Canada (BDC) to make ICT a key strategic investment focus, and an overdue announcement of 25 research grants to identify knowledge gaps in critical areas and take stock of relevant pools of knowledge (see page 2).

Recent weeks have also seen movement on key pieces of legislation such as the introduction of a new copyright bill and other measures designed to enhance the business environment for ICT firms.

The Industry department is now preparing submissions to Cabinet in support of the DES, limiting what the minister can reveal about specific proposed initiatives. But some industry observers say the update underscores the high priority being placed on the DES, although its fiscal challenges throw into question what financial resources it can or will provide to help strengthen the sector.

"This is a whole-of-government approach that covers the full range of issues you need to develop a proper strategy," says Bernard Courtois, president of the Information Technology Association of Canada (ITAC). "We're now half way through the process. The government is making recommendations to Cabinet so the minister's hands are tied in what he can reveal. The update talked about aligning everyone and setting aspirational goals. It's a live document."

The DES was launched May 3rd in Stratford ON at the Canada 3.0 Conference as a central plank in the government's innovation strategy (R$, May 21/10). The strategy is aimed at ensuring Canadian firms play a central role in providing new products and services on a global basis by anticipating the rapid evolution of digital technologies and their pervasive use throughout the economy and society.

On the spectrum aide, the government is opening up new mobile spectrum with an auction scheduled for late 2012. It has also frozen fees for cellular spectrum and personal communications services and extended the length of licences for mobile broadband spectrum to 20 years.

Clement also announced that he will team with his Quebec counterpart — Clément Gignac — in early 2011 to co-host a meeting of economic development ministers to discuss issues such as digital skills development and broadband in remote and rural areas.

To further encourage investment, BDC has been asked to assist firms evaluate their level of ICT integration and offer new consulting services to enhance company capacity to use ICT technologies. Canada's investment in ICT per worker us just 62% that of the US, which many experts contend is a major contributor to stagnant productivity.

"The BDC direction he (Clement) provided is quite innovative. ICT is to be assessed for all of the bank's investments," says Courtois. "The government is using all the right language. Part of the strategy is to set aspirations. It will need a massive communications and information campaign around it, to promote digital skills, technology adoption and reinforce the idea of where the future is going."

Not all observers endorse the DES so unreservedly. Canadian Advanced Technology Alliance (CATA) president John Reid says Industry Canada defines ICT and the digital economy too narrowly, increasing the risk that other elements spelled out in CATA's Innovation Nation manifesto won't be addressed. While Reid views the government's high priority for the digital economy as "very positive", he says other issues must also be urgently addressed and the language used by government to convey its messaging needs to be simpler and designed to reach beyond segments of the population that are directly engaged in ICT.

"The digital economy is a core component for success in an innovation nation (but) I don't want to lose other key issues. We need to engage all groups in this kind of innovation discussion," he says.

Reid points to the depressing metrics surrounding Canadian ICT performance and usage as the basis for a more holistic approach to the DES, not the least of which is the scientific research and experimental development (SR&ED) tax credit program.

"We have to address and reverse these metrics such as lagging SR&ED and have strategic discussions to address each tool to see if they contribute to the innovation economy," says Reid.

Courtois disagrees with those who contend that ICT in Canada is in trouble, saying the growth of the sector is outpacing the economy as a whole.

"Discordant voices are not helpful to government," says Courtois. "The sector is growing and will continue to grow. It has not declined as a share of GDP."

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