There will be a silver lining for Alberta’s technology industry after the current storm of negative market activity — but the industry must still accelerate in some areas to remain competitive, two recent reports indicate.

The Alberta Technology Report 2000 reveals a majority of senior technology executives surveyed believe the province’s technology industry will grow faster than other tech regions in Canada within the next five years.

Eighty-three per cent feel Alberta’s tech industry is growing, with 76 per cent saying this province will outstrip others, according to the Ernst and Young survey of nearly 300 Alberta CEOs and top execs conducted by Ipsos-Reid and released last week.

“Alberta has a lot of technology-able entrepreneurs who are actively identifying opportunities in the growth areas of the Internet and wireless,” said Rick Cormier of Ernst and Young. “The venture-capital community is broadening, with several new funds being created in the last 12-24 months looking to assist these entrepreneurs in building on those growth opportunities.”

Alberta is also leading other provinces in creating the economic conditions and Internet networks needed to make Canada a world player in e-business, but like other provinces must accelerate Internet business activity or risk falling behind the United States and other countries, members of a roundtable group of industry leaders say.

“Too many Canadian businesses, educators and governments are still talking about e-business, but not enough are engaging in it,” the Canadian E-Business Opportunities Roundtable says in its second annual report. The national group is chaired by Nortel Networks Ltd. chief executive John Roth and David Pecaut, president of iFormation Group.

The risks of slowing down e-business development include a lower standard of living for Canadians, a deteriorating social support system, fewer job opportunities and a worsening “brain drain,” roundtable members from Western Canada say.

“There are some encouraging signs in Western Canada,” said member Hal Ryckman, executive vice-president of EDS Canada’s western region. “In particular, Alberta is taking the lead” in committing $300 million to build Supernet, he said.

Supernet, announced last November, is a broadband network to link 420 Alberta communities to a high-speed fibre-optic backbone.

“Alberta also has done a great job of building a business-friendly environment” with low corporate and personal income taxes and no sales tax, says roundtable member Leonard Brody, vice-president of corporate development at Onvia.com Canada, an Internet business-to-business exchange based in Vancouver. British Columbia, on the other hand, still has a ways to go, Brody said.

But roundtable members warned that Alberta, like the rest of Canada, still lags behind the U.S. in securing venture capital to support startup firms and in providing government services online.

Venture capital investment in Canada rose to $2.7 billion in 1999 from $1.7 billion the previous year — a 59-per-cent jump. But U.S. venture-capital investments were 35 times larger than those in Canada by the end of the second quarter of 2000.

“We tend not to be as good at getting money to small startups,” said roundtable member Roger Palmer, assistant deputy minister of the Alberta Innovation and Science department. “That’s why they tend to go south of the border to raise capital and get going.”

The Alberta government is working on an international marketing campaign to promote the province as a good place for venture-capital investment, Palmer said. “The trouble with some of the major financial centres, be they Bay Street or Wall Street, is that they tend not to think of Alberta as generating the deals that we’re in fact starting to develop.”

The campaign is still in the planning stage. Finalization of a budget and a launch date will have to wait until after the provincial election, Palmer added.

While the Alberta government touted Supernet as the first high-speed network of its kind in North America, Business Edge has learned that a final contract has yet to be signed between the provincial government and Bell Intrigna, which is heading the consortium that will build the network.

Palmer confirmed that the contract is still being negotiated, four months after Supernet was announced. But he’s confident a deal will be inked soon. “I’m absolutely certain you’re going to see real linkage starting this summer.”

Palmer said that when it comes to encouraging venture-capital investment in e-business, it would be against the provincial Conservative government’s free-market principles to intervene directly and offer tax subsidies.

But Brody said that the federal and provincial governments should at least create more tax shelters to encourage investment in high-tech, such as through labour-sponsored pension funds, a model that has been successful in Ontario.

Brian Pow, technology analyst with Acumen Capital Finance Partners Limited in Calgary, agreed that while government should provide more tax incentives, “venture capital doesn’t happen overnight . . . it’s an evolution.”

The roundtable report also cited a scarcity of federal, provincial and municipal government services provided online as a hurdle in accelerating e-business.

“There’s very, very minimal progress,” said EDS Canada’s Ryckman. “Everybody’s talking about it, nobody’s really doing very much.”

Palmer, of Alberta Innovation and Science, said the province has formed a new department to promote and co-ordinate more online access to government services. The initiative includes municipal governments in Calgary and Edmonton.

Long-term funding and a timeline to implement the services, however, aren’t expected to be finalized until after the election, Palmer said.

Ryckman said Canada’s “mass-production assembly-line” education system also needs a major overhaul for the country to become a global leader in Internet business. In a world where grade-school students turn to the Internet before their teacher to get information, the classroom-lecture style of learning “is largely and rapidly becoming irrelevant to young students,” Ryckman said.

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