Perhaps some Nortel Interest...
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December 1, 1999
Dow Jones Newswires
Nortel Sees C$56B Of Canadian E-Commerce By 2003
OTTAWA -- At a high-tech luncheon held in Ottawa's Chateau Laurier Hotel, Nortel Networks Corp. (NT) president and chief executive John Roth outlined his company's predictions for e-commerce and Internet traffic in Canada.
Excerpting from a comprehensive report to be released by Nortel in January, Roth said 350 million people are expected to be regular Internet users by 2003, up from the 130 million people who reported using the Internet in 1998.
In terms of commerce conducted on the Internet, Nortel Networks estimates that C$1.4 trillion worth of business will be done online by 2003, Roth said. Currently, Canada conducts C$4 billion worth of e-commerce a year, and that figure is expected to rise to C$56 billion by 2003, according to Nortel's report.
"If we don't make the Internet, and our networks, profitable, people will stop building (networks), and stop using (the Internet), and the dream will fade away," Roth told the assembled crowd of high-tech executives.
Roth pointed out that future Canadian e-commerce will pale in comparison to Internet business conducted in the U.S., which, according to Nortel, is expected to top C$700 billion by 2003.
Roth added that expanded e-commerce will benefit the entire Canadian economy - from retail to automotive, to shipping and utilities.
Nortel estimates that 17% of the Canadian population is currently using the Internet, and that Canadians spend an average of 12 hours a month online. While those numbers are expected to grow, Roth said it is important for more Canadians to get online if Canada is going to become the most "connected" country in the world and compete in the e-commerce universe, as claimed by Canadian Industry Minister John Manley last weekend.
However, Roth stressed that more needs to be done than simply introducing Canadians to the Internet. He emphasized that Canada needs to invest heavily in education to produce the world-class computer programmers and high-tech engineers, and also has to convince an educated workforce to remain in Canada.
With the theme of investing in Canada's education system, John Roth, president and chief executive of Nortel Networks Corp. (NT) said the company will donate C$20 million worth of computer science and engineering scholarships to Canadian universities over the next three years.
"Canada's problem isn't a brain drain, it's a job drain," said Roth. "And when jobs leave, Canada's tax bracket drops, and the quality of life declines for all Canadians."
Roth said the main obstacle facing Canadian high-tech companies today is the "tax bite." He said the income tax imposed on people earning C$100,000 a year or more is simply too high, relative to the U.S., and that the federal government should look at lightening the taxes placed on people in the C$100,000 to C$150,000 salary range, which he said is the starting income for many people in the high-tech industry.
As well, Roth said that the Canadian government should look at curbing taxes on stock options. In fact, Roth said if the Canadian government does one thing, it should cut taxes on stock options.
After his speech, Roth told reporters that "hundreds" of Nortel managers leave Canada for the U.S each year, and that those manager's departments eventually follow them south of the border.
When asked if Nortel is still a Canadian company, Roth responded, "We're constituted in Canada, and our head office is in Canada, but increasingly more and more of our people are moving their jobs to the U.S. It really becomes, what does Canada want in the way of its employment base? Canada really has to decide what kind of jobs it wants to see in Canada."
Roth refused to comment on rumours that Nortel is considering a bid to buy Newbridge Networks Corp. (NN), or that BCE Inc. (BCE) may reduce its stake in Nortel in the near future. When asked about Nortel's current job layoffs and restructuring plans, Roth said, "you always have to trim the ship," but refused to elaborate.
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