April 25, 2011 / 6:29 PM / in 7 years

Harper promises balance in telecoms reform

SAULT STE MARIE, Ontario (Reuters) - Prime Minister Stephen Harper said on Monday that if he moved to lift foreign ownership limits in the telecoms industry he would tread carefully in order to protect domestic companies.

<p>Conservative leader and Canada's Prime Minister Stephen Harper speaks during a campaign event in Sault Ste. Marie, Ontario April 25, 2011. REUTERS/Chris Wattie</p>

The Conservative government has a long-stated commitment to relaxing investment rules to allow more foreign companies to operate in the Canadian telecommunications market.

Some industry players have criticized the government for dragging its feet on the issue, leading to an uncertain investment environment. Campaigning for the May 2 election, Harper was asked what precisely his plans were if reelected.

“We have not made a final decision on the nature of what we’re seeking there,” he told reporters.

“We’re guided by, first of all, to ensure whatever changes we make (are) oriented toward providing more choice and options and competition and competitive prices for consumers, and also that we do not lose a strong telecommunications sector here in this country,” he said.

His remarks would appear to rule out a complete liberalization of the industry in favor of a more balanced approach.

Industry Minister Tony Clement has said he is considering three possible changes: increasing foreign ownership to a cap of 49 percent, allowing foreign ownership of up to 100 percent in companies that have less than a 10 percent stake in the market, or eliminating all barriers to foreign ownership.

The Telecommunications Act now caps foreign ownership at 20 percent of a carrier’s voting shares and restricts direct and indirect control to 46.7 percent.

Canada’s wireless sector is dominated by three companies that together have close to 95 percent market share: BCE Inc’s Bell Canada, Rogers Communications and Telus Corp.

Harper likely wants to avoid the issue as much as possible during the campaign because opposition parties would accuse him of weakening Canadian control over a prized sector by opening the doors to foreign investment.

The government is also vulnerable on this issue after a court quashed its 2009 decision to overrule the telecoms regulator and allow the launch of Globalive’s Wind Mobile, which is backed by an Egyptian billionaire.

Polls show Harper’s Conservatives with a solid lead as political parties head into the final week of the election campaign.

Reporting by Allan Dowd; Writing by Louise Egan; editing by Peter Galloway

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