The Globe and Mail - 24.10.2019

B6| REPORT ON BUSINESS O THE GLOBE AND MAIL| THURSDAY,OCTOBER24,2019

However, Republicans and Dem-
ocratics made it clear on
Wednesday they were not yet
ready to permit a social-media
company that has been at the
centre of scandals over data-pri-
vacy, election interference and
the spread of misinformation to
lead what several argued would
amount to a privately run mone-
tary system.
“We need to know what this is.
We have to regulate it,” Ed Perl-
mutter, a Democratic Congress-
man from Colorado, told the
Facebook founder. “And I’m not
sure you guys understand what
it is.”
Facebook announced plans
for Libra in June, pitching it as a
global alternative to the tradi-
tional financial system. Mr. Zuck-
erberg said on Wednesday that
“sending money should be as
easy and secure as sending a text
message.”
Facebook expected to have
100 partners in the Libra Associ-
ation before a launch early next
year. It also said it would create a
subsidiary, Calibra, to operate a
digital wallet to store the elec-
tronic coins. Calibra would re-
quire users to verify their identi-
ty and would not share customer
data with its parent company,
Facebook has said.
While the company has posi-
tioned Libra as a group effort,
the cryptocurrency is expected
to make it easier for advertisers

to sell their products to Face-

book’s more than two billion us-

ers directly through the compa-

ny’s platforms and private-mess-

aging apps.

Mr. Zuckerberg has also said

U.S. tech companies are threat-

ened by the growing success of

social-media platforms and dig-

ital payment systems being de-

veloped in China. On Wednesday,

he pointed to plans by China’s

central bank for a digital curren-

cy to help facilitate the country’s

global development strategy

known as the Belt and Road ini-

tiative.

Libra’s rollout has been

plagued with problems, getting a

cool reception from European fi-

nancial regulators. The Group of

Seven this month warned that

stablecoins such as Libra could

threaten global financial stability

and cede too much control to a

few private companies.

The response has been even

harsher at home. Democratic

lawmakers have called for a mo-

ratorium on Libra until Congress

can pass regulations. Republi-

cans pressed Mr. Zuckerberg on

why he launched the Libra Asso-

ciation in Switzerland.

Rattled by the regulatory re-

sponse, several high-profile busi-

ness partners dropped out of the

project in recent weeks, includ-

ing Visa, MasterCard and PayPal,

raising questions about whether

Libra can launch next year.

Mr. Zuckerberg has said it was

necessary to unveil Libra in its

early stages to get regulators on

board before the technology was

too far along. But on Wednesday,

he struggled to explain exactly

how Libra would work. Many of

the details are still up for debate,

he said, including whether Libra

would be backed by a basket of

currencies as planned, or be a

payments system built to inter-

act with individual sovereign

currencies separately.

He said he was also open to a

requirement that Libra maintain

a minimum amount of U.S. dol-

lar assets to protect the dollar’s

status as the world’s reserve cur-

rency. Libra’s partners are still

working on other issues, such as

how to refund fraudulent pay-

ments. “We clearly have not

locked down exactly how this is

going to work yet,” he said.

FACEBOOK (FB)

CLOSE: US$186.15, UP US$3.81

Zuckerberg:RolloutofFacebook’scryptocurrencyhasbeenplaguedwithproblems

FROMB1

FacebookCEOMark

Zuckerberg,seen

preparingtotestify

beforeaHouse

committeeonCapitolHill

inWashingtonon

Wednesday,struggled

duringhistestimony

toexplainhow

thecompany’s

cryptocurrencywould

work.PETE MAROVICH/

THE NEW YORK TIMES

It has struggled with a massive buildup in environmental lia-

bilities as the energy sector’s fortunes has suffered.

It was also dealing with a major distraction. In early Octo-

ber, Alberta’s Public Interest Commissioner, Auditor-General

and Ethics Commissioner issued reports describing how for-

mer chief executive officer Jim Ellis and a handful of allied

senior AER officials had diverted a portion of the regulator’s

funds, staff and other resources into a affiliated unit called

the International Centre of Regulatory Excellence (ICORE),

and deceived the board as they went about doing so.

ICORE was touted as a not-for-profit unit aimed at in-

structing other jurisdictions on how to oversee their energy

industries. However, the investigators concluded that the

executives’ real aim was to create future work and contracts

for themselves.

Energy Minister Sonya Savage had previously announced

the government’s own review of the AER, saying the approval

process for projects takes too long compared with other ju-

risdictions. With that, she named an interim board that in-

cludes two former seniorAlbertagovernment officials – the

chairwoman, Bev Yee, and Grant Sprague. Both were deputy

ministers. In a brief statement, the AER confirmed that the

three executives, who had reported to Mr. Ellis, were no long-

er with the regulator. It also said the board was continuing its

work with thegovernment on its review.

Late last week, Ms. Yee told the regulator’s 1,200 employees

that the board was “hitting

pause” on the reorganization,

dubbed “AER 2.0,” to rethink

what changes are needed.

“Your board will be taking a

deeper dive into how the AER op-

erates and where we can make

improvements to ensure any

changes we make are made for

the right reasons,” Ms. Yee said in

a staff e-mail. “We will be working

with the Government of Alberta

to manage the budget implica-

tions from taking this extra time.”

Ms. Savage said on Wednesday

that the province’s review in-

cludes studying the AER’s man-

date, organization and how to

prioritize and place staff. It is also

conducting round-table discus-

sions with interested parties as well as reviewing online sub-

missions. These will “obviously then feed into how the AER

should be organized,” she said.

It is not known how long the work will take, or how much

of a cut in budget and staff might be in the offing. The AER is

funded by levies charged to oil and gas companies, and its

new budget is expected to be presented as part of the pro-

vincial budget, to be tabled on Thursday. Mr. Kenney has said

the levies are “unacceptably high.” Previously, the agency

had been redesigning plans based on a budget cut of 18 per

cent, according to AER documents.

Work on AER 2.0 was entering its final stages. Just last

week, Mr. Taylor told employees he believed that the govern-

ment and the AER were on the same page regarding the ma-

keover, according to internal documents.

The agency planned to trim the number of directors and

vice-presidents and had already decided who would fill the

positions that remained, Mr. Taylor explained. The AER

planned to announce these changes at the end of the month.

Further, these executives would then appoint managers,

with staff announcements to follow. The AER expected the

shakeup to wrap up next month.

Mr. Lambert held a town-hall meeting with staff on Oct. 9

to discuss conclusions of the probes into the ICORE contro-

versy. During that call, he said a new structure was expected

before year end.

The AER has been widely expected to undergo cuts after

the departure of Mr. Ellis, who resigned late last year amid the

probes. Investigators described a toxic work environment

under his leadership, in which employees who questioned

ICORE activities faced the threat of dismissal. They also said

said the regulator was distracted from such priorities as deal-

ing with growing environmental liabilities tied to aging oil

and gas wells.

Meanwhile, Ms. Yee confirmed in her e-mail to staff that

Mr. Lambert is not in the running as the AER seeks a new CEO.

He stepped into the job after Mr. Ellis left.

With a report from Emma Graney

AER:Provincialreview

includesstudyingregulator’s

mandateandorganization

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Your board will be

taking a deeper dive

into how the AER

operates and where

we can make

improvements to

ensure any changes

we make are made

for the right reasons.

BEVYEE

INTERIM BOARD MEMBER IN

AN E-MAIL TO EMPLOYEES

The group’s board consists of Mr.
Barton, Willa Black, Goldy Hyder,
Tom Milroy, Andrew Pickersgill
and Mark Wiseman.
Mr. Barton was named Cana-
da’s ambassador to China in Sep-
tember and is a former global
managing partner at consulting
firm McKinsey & Co. and an ad-
viser to Prime Minister Justin
Trudeau.
Ms. Black is an executive at
Cisco Systems Inc. Mr. Hyder is
chief executive of the Business
Council of Canada and former
head of Hill+Knowlton Strate-
gies in Canada. Mr. Milroy is the
former chief executive of Bank of
Montreal’s investment dealer.
Mr. Pickersgill is a Toronto-based
managing partner at McKinsey.
Mr. Wiseman is senior managing
director of BlackRock Inc. and
former chief executive of the
Canada Pension Plan Investment
Board.
To support population growth
that would see major cities triple
in size – the report projects the
Greater Toronto Area will be
home to 33 million, while
Montreal and Vancouver will
each hit 12 million – Century Ini-
tiative recommends significant
investment in infrastructure and
education by bothgovernments
and the private sector.
However, the group’s key
message is that the Canadian
government should hike its cur-
rent target of 350,000 immi-
grants annually to 400,000 new-
comers next year, and then
boost the goal by 20,000 each

year, until 2026.

At that point, Canada will

bring in 1.25 per cent of its total

population each year or more

than 500,000 immigrants an-

nually.

To make a sharp rise in im-

migration palatable to current ci-

tizens, the report stresses the

need for an education and mar-

keting campaign that sells the

merits of population growth.

The Century Initiative’s mem-

bers said: “Despite the vital need

for increased immigration to en-

sure Canada’s long-term prosper-

ity, Canadian public opinion

around immigration is conflict-

ed.”

The group recognized that in

Quebec, the prospect of new-

comers pouring over the border

is a hot-button issue.

Quebec has the right to set its

own immigration targets and

population growth in the prov-

ince trails other regions.

“Quebec will need to take in

far more immigrants if it wishes

to maintain its historic share of

the population – not the direc-

tion it is currently going,” the

Century Initiative team said. “As

the rest of the country grows,

Quebec runs the risk of shrink-

ing its relative size within Con-

federation.”

The need for population

growth is even more acute in At-

lantic Canada, according to the

Century Institute.

The region faces a “demo-

graphic storm” brought on by ag-

ing populations, migration and a

decline in the size of the work

force.

The 88-page Century Initiative

study pointed out that in the fu-

ture, successful countries will an-

chored by densely populated ci-

ties, and said these “mega-re-

gions” bring social benefits.

“Properly planned, greater densi-

ty is energy efficient, reduces en-

vironmental impact and delivers

a high quality of life for resi-

dents,” the report said. A low-

carbon economy requires scale,

and the group said: “Under-pop-

ulation harms Canada’s climate

and ecological future in key

ways.”

Century Initiative recognized

that immigrants and those al-

ready in the Canadian work force

would need new skills and train-

ing to keep pace in an increas-

ingly global economy that

features fewer jobs in traditional

sectors such as manufacturing.

Populace:AtlanticCanada,facinga‘demographic

storm,’hasacuteneedforpopulationgrowth

FROMB1

To support population

growth that would see

major cities triple in size

• the report projects the
  Greater Toronto Area will
  be home to 33 million,
  while Montreal and
  Vancouver will each hit
  12 million – Century
  Initiative recommends
  significant investment in
  infrastructure and
  education by both
  governments and the
  private sector.

Rogers chief executive Joe Natale
cautioned investors to expect
more volatility in the quarters
ahead, as part of a necessary tran-
sition away from relying on data
overages as a revenue driver.
“This dynamic was both un-
sustainable and limiting to our
future,” Mr. Natale said in a con-
ference call with analysts. “Cana-
dians had become increasingly
afraid to use data given the evolu-
tion of overage rates in our indus-
try.”
Unlimited data is quickly be-
coming the industry norm, after
all three national carriers intro-
duced plans eliminating overage
fees in June.
With Canadians paying a total
of $1.2-billion in 2017 for exceed-
ing their data caps, hefty overage
fees have long been maligned by
consumer advocates and policy
makers for contributing to the
relatively high cost of mobile
phone service in Canada.
In the latest federal election
campaign, the Liberals vowed to
reduce wireless bills by 25 per
cent, while the NDP said it would
cap cellphone prices at the global
average.
It’s not clear how either cam-

paign promise would be fulfilled,

while the industry says that

prices are coming down without

intervention, largely by virtue of

unlimited data plans.

“We’re ... very much aligned

on the topic of affordability,” Mr.

Natale said. He pointed out that

overage fees represent about 5

per cent of Rogers’ wireless ser-

vice revenue, which is down by

half over the past couple of years.

By this time next year, overages

are expected to have just a 1-per-

cent share of the top line.

That kind of swift decline to an

important piece of Rogers’ busi-

ness, however, is proving a signif-

icant strain on financial perform-

ance.

The biggest impact in the third

quarter was on revenue from

wireless services, which declined

by 1.6 per cent over the same

quarter last year – “a rare result

for a wireless incumbent,” Ara-

vinda Galappatthige, an analyst

at Canaccord Genuity, said in a

note.

And since the industry’s transi-

tion seems to be unfolding far

quicker than anticipated, Rogers

was forced to reduce its forecast

for 2019 sales growth to between a

decline of 1 per cent and a gain of 1

per cent, a substantial cut from

the previous target range of a gain

of 3 per cent to 5 per cent.

“Wireless results are likely to

get worse before they get better,

and consensus expectations have

to be reset,” Scotia Capital tele-

com analyst Jeff Fan wrote.

But there is a turning point in

sight, Mr. Natale said, once the

dwindling of overage revenue has

been absorbed over the next four

or five quarters.

About 60 per cent of custom-

ers migrating to unlimited data

have actually upgraded from

cheaper plans. And they are using

an average of 50 per cent more da-

ta without the threat of overage

charges.

And while charging for excess

data usage may be waning, the

company offers higher priced

plans for faster speeds.

Additionally, the industry’s

new pricing paradigm gives Rog-

ers the chance to “collect a sim-

plicity dividend,” Mr. Natale said.

“If you make things clear, sim-

ple and fair, customers will call

less, have fewer billing disputes,

they will spend less time when

they do call, and will be more sat-

isfied over all.”

ROGERS(RCI.B)

CLOSE: $61, DOWN $5.39

Rogers:Companyalsooffershigher-priced,

unlimiteddataplansforfasterspeeds

FROMB1