Toronto Star Editorial on RIM, Nortel, and Canadian Nationalism

29 07 2009

I’m posting a link to a Toronto Star editorial on RIM’s bid to take over Nortel’s wireless assetts. Thomas Walkom of the same paper has a perceptive article on the subjec.t

More About Nortel, RIM, and Canadian Economic Nationalism

28 07 2009

The Ontario government and the Official Opposition have sided with Jim Balsilie in his fight to acquire the wireless assets of Nortel networks. The leader of the Liberal Party, the usually somnolent Michael Ignatieff has roused himself and sent an open letter to Prime Minister Harper requesting that the federal government investigate that possibility of blocking the pending sale of Nortel’s wireless division to Swedish electronics giant Ericsson.

David Olive of the Toronto Star has provided ten reasons why the government should keep Nortel’s wireless assets in Canadian hands.

Dwight Duncan, Ontario’s finance minister, was interviewed about this issue (see here). I must say that Duncan’s performance in this interview was rather poor: he was unable to answer basic factual questions.

Conservative Industry Minister Tony Clement has said that he has not ruled out intervening in the deal. For its part, Ericsson says that it is confident the deal will be approved. Perhaps this is because Clement has shown in the past that he is (generally) lothe to intervene in foreign takeovers of Canadian firms.  Theo Peridis, professor of strategic management and international business at York University’s Schulich School of Business, notes that there is ample precedent for allowing Ericsson to take over Nortel. He says: “When you allow (miners) Inco, Falconbridge and Alcan – which are real icons and the wealth of Canada in terms of natural resources – to go into foreign hands, it’s very hard to make an about-face on Nortel.”

Check out this video slideshow on history of Nortel.

Jim Balsillie, Canadian Economic Nationalist

21 07 2009

Jim Balsillie, the co-CEO of RIM, the maker of the Blackberry, is upset that the wireless assets of Nortel Networks may end up in non-Canadian hands. (RIM hopes to acquire this part of the defunct Nortel empire for itself).

A RIM statesman said that the company believes that the loss of Canadian ownership of Nortel’s wireless businesses “may significantly, adversely affect national interests, with potential national security implications, and that the Government of Canada should review the situation closely.”

I’m pointing out this news story to remind everybody that Canadian economic nationalism, the venerable tradition that gave us the National Policy, FIRA, and much else, is not dead. Neither has economic nationalism become the exclusive concern of ivory tower intellectuals and left-wing journalists. Balsillie is an eminently successful businessman, but he has also shown some impressive nationalist credentials.


The last 24 hours have seen a flurry of news items related to Jim Balsillie’s efforts to acquire the wireless assets of Nortel. See here, here, here, here, and here. For a aarticularly good article about this in the Toronto Star, see here. An editorial in today’s Globe and Mail expresses cynicism about Mr Balsillie’s Canadian nationalism, calling his nationalist arguments “dubious” and dismissing them as empty rhetoric designed to cover his true interests. I’m not convinced that this is an accurate reading of the situation or that it is right to reduce all business behaviour in terms of a pure form of the rational actor/homo economicus model. Business people are, obviously, out to make money, but I do think that economic nationalism, a desire to benefit the collectivity, is also a force that influences how businesspersons operate.

Today’s Globe also contains an excellent column by Jeffrey Simpson in which he asks why the federal government had plenty of money to prop up the Canadian operations of two American corporations (GM and Chrysler), but was unwilling to help out Nortel, a genuinely Canadian company.

Second Update:

My understanding is that RIM’s interest in Nortel’s wireless assets relates to some patents held by Nortel. See here, here, and here. The patents are very attractive to RIM because they are for new technologies that allow more data to be sent faster over increasingly crowded networks. The patents are especially valuable since demand for wireless bandwidth is predicted to increase dramatically as people do more complex things, such as watch YouTube videos, with their mobile phones. To get a sense of the possible consequences of not addressing the issue of cell network congestion, consider that during Obama’s inauguration ceremony, most of the cell networks in Washington were overloaded because so many people in the crowd were simultaneously sending digital photos to their friends back home. Whichever mobile phone maker can solve this issue first will be able to deliver vaster content to customers and thus gain a real advantage.

Interestingly, Japan’s cell phone network deals with this issue much better than the networks of either European countries or North America. There is a consensus among experts and ordinary visitors to Japan (including myself), that Japanese mobile phones are more advanced than the ones used in other countries. (I can speak with some authority on this issue, as I live in a household that uses three different mobile phone standards, Japanese, UK, and Canadian).  A recent issue of the New York Times had a fascinating article examining why Japan’s superior mobile phone technology has not been adopted in other countries. If the Japanese can get other countries to adopt their standards, then Nortel’s patents may or may not be worth less than RIM and the other people bidding for them now think.