Editorial – 24-16

By Mark Henderson, Editor

The federal government has deemed the home-grown, home-owned space assets of MacDonald Dettwiler & Associates to be of net benefit to Canada — a position it may also take with Potash Corp which is being sought by Australia-based BHP Billiton. But can the same litmus test be applied to Canadian information and communications technology (ICT) firms?

It appears that there is a correlation between Canadian ownership of major ICT firms and the overall competitiveness of the ICT sector. As key Canadian-owned firms are gobbled up by foreign multinationals (such as the IBM purchase of Cognos), the global ranking of Canada’s ICT sector is falling.

The correlation may not be direct but it’s certainly worth close examination. ICT has been cited by report after report as a key contributor to a nation’s productivity and competitiveness. With fewer players in domestic hands, the sector’s standing amongst OECD nations has declined over the past decade or so (see page 6).

The advantages of domestic ownership is well known. R&D function is closely linked to head office, which are typically co-located. There are obvious difference between ICT and natural resources or high-tech equipment, but a powerful argument can be made for the benefits a strong, domestically controlled ICT industry can contribute to the overall economy and national prosperity.

The dissolution of Nortel Networks Corp has shifted its intellectual property, personnel and physical assets into foreign hands. Perhaps the Nortel case is a good place to start for determining the pros and cons of domestic ICT ownership.