November 29, 2011 / 9:18 PM / in 6 years

Canada mum on telecom spectrum rules, ownership

TORONTO (Reuters) - Canada has yet to decide whether it will loosen foreign ownership restrictions in the telecom sector, Industry Minister Christian Paradis said on Tuesday.

Nor has the Conservative government decided if it will set aside airwaves for recent wireless entrants in next year’s spectrum auction as a way to boost competition, Paradis said.

The twin decisions could have a profound effect on a once closed industry that has witnessed falling prices since the government enabled the entry of new wireless competitors by setting aside spectrum for them in a 2008 auction.

“Given the importance and the serious impact this will have on the lives of Canadians for years to come, this is not a decision that I nor this government will be taking lightly,” Paradis said in prepared remarks to an International Institute of Communications conference in Ottawa.

“We are not looking at one discrete policy decision, but rather a balance of interconnected decisions that must be considered in concert,” he said.

Established operators BCE Inc, Rogers Communications and Telus want an open auction in which they are not kept from bidding on any of the 700 megahertz-range airwaves, which are coveted for their ability to cover long distances and penetrate thick walls.

But critics say the three big players - which have a combined 95 percent share of the wireless market - already own similar low-frequency spectrum and would pay more just to keep new entrants out.

In 2008, the three were blocked from bidding for some spectrum, which was bought by regional media company Quebecor Inc, Globalive’s Wind Mobile and Mobilicity. Another new entrant, Public Mobile, bought airwaves that were not set aside.

“They’ve birthed these new entrants and we’re just starting to walk, and if they want thriving competition in Canada they have to sustain us to be able to compete even more,” Mobilicity’s Executive Chairman John Bitove told Reuters.

Another new entrant, Wind Mobile, won a court battle in June that restored a government ruling it was not unduly influenced by its financial backer, Egypt’s Orascom Telecom.

That case highlighted the need for Ottawa to clarify ownership rules before running the capital-intensive spectrum auction.

Currently, a telecom company operating in Canada must have no more than 46.7 percent direct and indirect foreign funding.

Ottawa is weighing whether to raise that slightly, lift it completely for companies with less than 10 percent market share, or drop the restrictions completely.

The government has long said its focus is on robust competition and broad access to high-quality communications.

Reporting by Alastair Sharp; editing by Rob Wilson

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