Nortel will survive, Tobin says: $100M IN FUNDING ANNOUNCED
Some tech firms won't make it, but Nortel a 'champion'
Joan Bryden
Southam Newspapers
Industry Minister Brian Tobin predicted Tuesday that some high-tech companies won't survive the current market meltdown, but insisted telecom giant Nortel Networks will remain a "Canadian champion."
Speaking to reporters after announcing $100 million in federal funding for social science research into the impact of the new economy on Canadian society, Tobin refused to comment specifically on suggestions that Nortel, with its plummeting share price, is ripe for a foreign takeover.
"I don't think we should prejudge the market," he said.
Nevertheless, Tobin said, he's "very confident that Nortel will continue to be a major player both in this country and around the world.
"I think anybody who comes to the conclusion that the game is over in terms of technology and the expansion of the services provided by Nortel is making a very big mistake."
Tobin said Nortel is a fundamentally sound company with a good product, but is suffering from lower-than-expected demand for its high-tech equipment. "So, there's going to be some contraction, some excess capacity is going to be bled away, some of the capacity to build equipment is going to be reduced as a result of mergers or acquisitions."
In a show of the federal government's faith that the telecom sector will bounce back, Tobin announced Tuesday that it is giving $100 million to the Social Sciences and Humanities Research Council to help fund research into the impact of the new, knowledge-based economy on business, education and society.
The announcement is part of the Liberals' election commitment to double spending on research and development by 2010.
As further proof of the government's faith, Tobin pointed to Ottawa's commitment to find about $2 billion, shared with the private sector and other levels of government, to connect every community in Canada to high-speed, broadband Internet service by 2004.
While such government initiatives will likely give a boost to beleaguered telecommunications equipment makers, Tobin said that's not the government's goal.
"I think we should only think about making investments that help, in the long run, Canada. If, as a consequence of that, there are opportunities for Nortel or others, so be it and that is good."
Tobin also cast himself as the champion of rural Canada, lashing out at "pompous" snobs who have sneered at the federal government's plan to hook up remote Canadian communities to high-speed Internet service.
"I think that kind of pompous, arrogant, misguided, short-sighted thinking has no place in a modern, contemporary Canada, where we want to ensure that every single citizen has an opportunity to achieve his or her full potential and everybody has a chance to get online," Tobin told reporters.
He said critics of the scheme seem to believe rural Canadians are poor and uneducated, with neither the interest nor the means to purchase a computer, and should remain that way.
To the critics, connecting rural Canadians to high-speed, high-capacity Internet service is "as silly as suggesting some rural people might want to go to university. Don't they know their place? Mines, forests, fish, farms. Some of them are getting uppity."
Tobin last week unveiled a task force report that concluded it will cost $2 billion to $4.5 billion to deliver the Liberal government's election promise to provide all Canadians with access to high-speed, broadband Internet service by 2004.
While no final decisions have been made, Tobin has signalled the government will look at a scaled-back $2-billion project, cost-shared with the private sector and provincial governments, to hook up public institutions in every community. |
