Fasken Perspectives - May 14 2026 - Telecom.mp4

Lesley Milton: [00:00:04] Hello and welcome to another episode of perspectives Fasken podcast series. This is the third episode of a new three part series presented by Fasken Communications Practice Group, exploring how Canada's upcoming trade negotiations with the United States and Mexico might impact Canada's broadcasting, telecommunications, and media sectors. I'm Lesley Milton, I'm a co-chair of the Fasken technology, Media and Telecommunications Group. Joining me today is Paul Burbank, who is a partner in our TMT group. In this segment, we will be discussing Kuzma treatment of telecommunications issues. Paul, to start, can you describe for us what the Kuzma review is and why it's relevant for the telecommunications sector.

Paul Burbank: [00:00:58] Absolutely. So the review itself is a it's built into Kuzma and it requires that Canada, the United States and Mexico to assess the operation of the agreement and consider whether adjustments are required to ensure that it continues to function as intended when it was initially agreed to. So unlike NAFTA, Kuzma contains a standalone telecommunications chapter, which is chapter 18, and that modernises and largely carries forward Canada's long standing market access and non-discrimination commitments. And it drew heavily on Canada's commitments under the WTO and Gats framework. So the chapter is designed to ensure predictable access to public telecommunications networks and services, while also preserving government authority to pursue legitimate public policy objectives. So the review itself provides a structured opportunity to examine whether that balance that was struck in chapter 18 continues to work in an environment where networks are increasingly intertwined with data, cloud computing, and cybersecurity policy.

Lesley Milton: [00:02:01] So you've mentioned a specific chapter on telecommunications and that it establishes regulatory framework requirements. We hear a lot about foreign ownership. Can you describe how foreign ownership restrictions fit within the context of this chapter 18 on telecommunications that you've described? Yeah.

Paul Burbank: [00:02:21] Foreign ownership and control remain important sensitivities in telecommunications policies in in Canada and elsewhere. Um Kuzma doesn't eliminate these restrictions. Instead, uh, Canada preserve them through an explicit reservation tied to the Telecommunications Act and the Investment Canada Act. So, um, from a technical trade perspective, these reservations are fairly narrow and stable. They affect ownership of major carriers rather than market entry more broadly. And they coexist with open access and interconnection obligations under chapter 18. And and for that reason, they do not reflect an unreasonable or unfair barrier to entry in the Canadian market.

Lesley Milton: [00:03:07] Now, I know you provided quite a high level summary of chapter 18. Um, is there anything more you want to say around sort of the basic framework requirements that that chapter imposes?

Paul Burbank: [00:03:22] Yeah. I mean, I think it's, I think it's very helpful to, to understand what the chapter says. I think a lot of observers of trade issues might not even, you know, be aware that that there's such a robust telecommunications chapter. So it's really important to understand what the text itself says. And so chapter 18 is concerned with how telecommunication services access and interconnect with public networks. It doesn't relate specifically to to things like content applications or digital policy more broadly. So its obligations focus on first non-discriminatory access to and use of public telecommunications networks and services. Second, transparency and reason decision making by national regulators. And third, flexibility in the choice of technology used to supply services but importantly, subject to certain public policy exceptions. Um, it's also important to recognise, however, that chapter 18 um preserves regulatory space. It contains explicit carve outs that allow parties to adopt measures to achieve important public policy objectives, things like network integrity, security, reliability. But provided those measures are as often the case under trade agreements implied in a non-arbitrary manner. And I think we'll we'll probably turn back to this later.

Lesley Milton: [00:04:43] Right. And clearly there's a relationship or integration between digital trade writ large and telecommunications. So I'm wondering if you can also provide some background on what Kuzma says about digital trade as it relates specifically to telecommunications.

Paul Burbank: [00:05:01] Yeah. Digital trade obligations, uh, are contained in a separate chapter, chapter 19. Um, it addresses things like cross border data flows and location of computing facilities. Uh, these provisions don't displace chapter 18. They, they operate alongside it. Um, these chapters interrelate because telecommunication networks are, you know, they're the logical infrastructure through which data flows occur. So chapter 18 telecommunications governs governs access to the networks, while chapter 19, the digital trade chapter addresses restrictions on how that data can be transferred or processed. So from an analytical analytical standpoint, the sequencing does matter. Many issues often characterised as digital trade questions, things like data routeing, traffic management or the use of infrastructure are constrained first by telecom regulatory rules and secondarily by by digital trade commitments in chapter 19.

Lesley Milton: [00:06:03] Right. And another big topic currently in telecommunications is cyber security and network resilience. And we know that the Canadian parliament is currently considering enacting new cybersecurity legislation. How might that fit within the Kuzma structure.

Paul Burbank: [00:06:24] So cybersecurity itself is addressed explicitly in the digital trade chapter, chapter 19. But it's also embedded in chapter 18 through through some of the exceptions I mentioned earlier that allow parties to protect things like security and integrity of telecommunication networks, very important public policy objectives, um, like a lot of other trade agreements. Kuzma doesn't harmonise cybersecurity standards or prescribe specific controls. Um, instead, it recognises that cybersecurity is firstly a legitimate regulatory objective and then encourages cooperation and information sharing between parties. So as you pointed out, this means that expanded domestic cyber security frameworks, particularly those applicable to telecom operators as critical infrastructure, are not inherently inconsistent with Kuzma. And so unsurprisingly for that purpose, we see both Canada and the United States legislating in this area, and most recently with Canadian Bill C8 close to becoming law and a patchwork of federal and state requirements in the United States.

Lesley Milton: [00:07:27] Right. And another thing we are hearing consistently daily in the news is AI. Ai and reference to data centres. I'm wondering if Kuzma has anything to say about the location of data centres for example.

Paul Burbank: [00:07:46] Yeah. Yeah. Kuzma was prepared and negotiated and agreed at a time when when AI wasn't a daily talking point by the water cooler or in the media. But it does address these issues in the digital trade chapter. Article 19.12 in particular is very short and reads. No party shall require a covered person to use or locate computing facilities in that party's territory as a condition for conducting business in that territory. So it's interesting. This is an enabling provision designed to support cross-border digital trade by allowing firms to determine where that data is processed or stored based on operational, technical and commercial considerations, rather than jurisdiction specific mandates or demands. But the obligation that that obligation there isn't absolute, um, as, as would apply as a as it applies to many other chapters, Kuzma preserves the ability of governments to adopt measures that are necessary to achieve those public policy objectives I mentioned. And in this case, including areas like security, most importantly, privacy and regulatory oversight. So as a result, article 19.1 establishes a baseline expectation of flexibility in terms of computing facility location, including for data centres, while leaving room for targeted domestic measures where they can be justified. It doesn't mandate a particular approach to AI infrastructure or data centre development, and it does not require parties to converge on a single regulatory model in this area. And for that reason, we're seeing very distinct models for AI infrastructure emerge that reflect naturally sovereign national interests.

Lesley Milton: [00:09:29] Right. And another related issue where we also have new legislation before Parliament is, is lawful access. And I would say that Canada is a bit late to the game with lawful access legislation that, um, requires telecommunication service providers to implement functionality that assists with law enforcement. How does Kuzma deal with this kind of legislation.

Paul Burbank: [00:09:57] I will start by saying I agree to that, and we in Canada have a long history of trying to bring forward effective, lawful access to legislation. So. So that very much is a is an active issue, even though it may not come up in all the time, but lawful access regimes. So requirements for telecommunications providers to facilitate access by law enforcement are best understood as a as a parallel regulatory track, rather than a specific trade issue or a specific issue within the text of Kuusamo. So comparable frameworks exist in the United States and the EU, and Kuzma explicitly preserves national authority in this area. From a trade perspective, lawful access becomes relevant if implementation measures begin to condition things like market access, network participation, or cross border operations in a in, or, they cause that to occur in a discriminatory manner. As is often the case, trade agreements focus on principles of non-discrimination. So to the extent national legislation and the lawful access area begins to prevent those things that trade agreements are trying to enable, that's when it becomes an issue. So as long as obligations apply neutrally and they remain tethered to domestic jurisdiction, they generally fall within the regulatory space that's contemplated by the agreement. And that would be the case with Kuzma as well.

Lesley Milton: [00:11:22] Thanks. Um another issue that we aren't hearing quite so much about right now, but we were five years ago is net neutrality. And we know that Canadian and US telecom regulators have sometimes gone in different directions in the past on net neutrality. I'm wondering if Kuzma has anything about this issue.

Paul Burbank: [00:11:43] Yeah. Kuzma doesn't uh adopt or require a prescriptive regime or framework for net neutrality. Um it establishes a set of high level principles relating to access to and use of the internet in the context of digital trade. So it's housed within the digital trade chapter. Article 19.1 includes principles that recognise things that consumers should be able to access and use lawful services and applications of their choice. They should be able to connect end user devices that don't harm the network. And importantly, consumers should be able to obtain transparency regarding network management practices. And as you know, we often see that that filter into the decision making and the policies of our national regulators. So all that must occur. However, while acknowledging the role of reasonable network management practices so naturally strikes a deliberate balance there from a structural perspective, article 19.1 is framed as a as a principles based commitment and not a harmonisation obligation. It doesn't require parties to align their domestic regulatory models or to maintain any particular form of net neutrality rules. And that is why we, of course, have seen different regulators at different time periods going different directions on net neutrality and certainly in different countries. So it provides a common reference point that accommodates different regulatory approaches, so long as the measures are consistent with the underlying principles that we've talked about all along in this in this podcast. So things like transparency, consumer choice and legitimate network management objectives.

Lesley Milton: [00:13:21] Great. Thanks very much, Paul. We've covered a lot of ground. That's all our time for today. I'm Leslie Milton with Paul Burbank. We hope you've enjoyed this discussion. If you haven't already, please consider watching our earlier episodes in this series, in which Jacob Wilson and Kira Boyd discuss trade issues that may impact copyright, and Scott Prescott and Riley ALP examine trade issues that may impact Canada's broadcasting sector. Thank you, everyone for joining us.