The Adoption of U.S. Technology in Canada: Is All this Waiting Really Necessary?

A recent article written by Colin Campbell from Maclean’s discussed the unfortunate fact that Canada is usually far behind other nations when it comes to adopting new technologies that have been developed in the United States and abroad. His discussion begins with a reference to the Kindle DX. This is the new, wireless e-book reading device that is currently being developed and distributed by in the U.S. While Amazon estimates that approximately 500,000 units were sold in the U.S. last year, they have given no indication that this highly desirable, cutting-edge product will be available in Canada anytime soon. According to Mr. Campbell, there are a few main reasons why Canada cannot obtain various U.S. technologies faster.

The first reason is market size. Due to its relatively small market size, it is not cost effective to bring these technologies to Canada during the early stages of development. If a particular product proves to be successful in the early stages of development in the U.S., there would be minimal incentive to export the product to Canada due to the unfavourable cost-benefit ratio that comes with a relatively small market size. The second reason is rights issues. Once a company ultimately decides that they would like to expand and make their technology available in Canada, it may not necessarily be that easy. For example, is a website that streams popular U.S. television shows, sporting events and news reports, usually a day after they have initially aired. However, if you are not a U.S. resident, you will not have much luck accessing the wealth of media that would otherwise be available through this site. According to Michael Geist, law professor at the University of Ottawa, the primary reason for this is licensing. He explains that when a Canadian broadcaster purchases a U.S. sitcom, they typically acquire all online rights that are associated with that sitcom. For Hulu to have a realistic chance of being able to make the content on their site available in Canada, they would need to provide an incentive for these networks to give up the online rights that they have acquired. Another alternative would be for Hulu to wait until the contracts entered into by these Canadian broadcasters are renegotiated by the U.S. networks, but who knows how long that could take.

Ken Coates, dean of arts at the University of Waterloo, emphasizes that Canada should be looking to countries like Japan, Finland, Israel and Singapore, in its pursuit to become a more aggressive player in terms of attracting distributors of high-tech products during the early stages of development. He believes that Canada is missing out on some sizable economic advantages by not being an adopter of tech products during the early stages of development. This is demonstrated by the fact that most tech companies are inclined to conduct business in locations where their new technologies can be tested with relative ease. Even Research in Motion, which is based in Waterloo, Ontario, conducts most of their early stage testing in the United States.

Mr. Campbell stresses that Canada is rapidly becoming known as a jurisdiction that is unfriendly to new technology. To ensure that this country emerges from the current economic crisis as a competitive player on a global scale, it is absolutely imperative that Canada fundamentally change its current approach and become more friendly and receptive with respect to the development of new technology domestically. Notwithstanding various other potential solutions, Canada could accomplish this by providing U.S. companies and their Canadian subsidiaries (if applicable) with tax breaks that would be directly proportional to the economic advantages realized as a result of the influx of this early-stage technology.