April 15, 2010 / 6:25 PM / 7 years ago

Canada telecoms say rule changes must apply to all

OTTAWA (Reuters) - Any changes Canada makes to ease restrictions on foreign control and ownership of telecom companies must apply to all carriers, including cable operators, the country’s biggest telecoms companies told a parliamentary hearing on Thursday.

BCE Inc, Rogers Communications and Telus Corp told lawmakers that all carriers must be included because networks today typically carry an array of traffic including phone calls, TV programs and data.

Canada is holding hearings to consider raising the limits on foreign ownership of domestic telecoms as a way to boost competition, create jobs and foster innovation.

The issue was brought into focus late last year when the federal cabinet overturned a ruling by the regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), and allowed Egyptian-backed start-up Globalive to offer wireless phone service in Canada.

The CRTC had ruled that Globalive’s ownership was not sufficiently Canadian.

Foreign ownership is now limited to 20 percent of a company’s shares, while direct and indirect foreign control is capped at 46.7 percent.

“Fairness requires equal treatment for all Canadian carriers,” said Michael Hennessy, senior vice-president of regulatory and government affairs at Telus.

“Parliament must recognize that communications today is an integrated business and you cannot effect change without changing the Telecommunications Act and parts of the Broadcasting Act at the same time.”

Worries that Canadian culture will be hurt are unfounded, the executives said. Restrictions can remain for foreign control of broadcast companies that create programs, while being eased for distributors or carriers that transmit the content.

Canada’s Telecommunications Act has long been criticized as overly restrictive and archaic in light of technological advances. But worries persist that Canadian companies would be swallowed up if barriers were removed.

Current rules choke off access to foreign capital, companies say, which restricts new entrants and capital spending by established companies.

“Removing these rules lowers the cost of capital, absolutely,” Kenneth Engelhart, a Rogers Communications senior vice-president, told lawmakers.

The corporate presentations came after CRTC Chairman Konrad von Finckenstein said this week that restrictions must be kept in place to protect Canadian content, but should be simplified and competition encouraged.

Von Finckenstein said foreigners should not be allowed to own more than 49 percent of the shares of telecoms operators or gain control of them.

In prepared remarks for a speech he is giving in Toronto on Thursday, Globalive Chairman Tony Lacavera said Canadian investors for his company have been hard to find.

“Despite offering very attractive terms, we have been unable to secure any material Canadian investment to date,” Lacavera said.

“If we’re serious about competition to provide greater benefits for Canadians, then we have to allow the free market to work.”

Reporting by Susan Taylor; editing by Peter Galloway

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