June 11, 2010 / 5:47 PM / in 8 years

Canada to consult public on telecoms investment

OTTAWA (Reuters) - Canada’s industry minister said on Friday the government will seek opinions from the public on three options it is suggesting for changing foreign investment restrictions in the telecommunications sector.

Industry Minister Tony Clement said the government will accept submissions until July 30.

Canada’s 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.

The options for reform are:

-Increase the limit for direct foreign investment in broadcasters and carriers to 49 percent

-Lift all restrictions on carriers that have a market share of 10 percent, or less, as measured by revenue

-Completely remove restrictions on direct foreign investment in telecoms.

Long criticized as overly restrictive, existing regulations came into stark relief in December 2009 when the government overturned a regulator’s ruling that would have blocked Egyptian-backed telecoms startup Globalive from offering wireless service in Canada.

The government decided that Globalive, which has financial backing from Egypt’s Orascom Telecom estimated at more than C$500 million ($480.8 million), met Canadian ownership and control requirements.

Globalive’s Wind brand was recently joined by two other new market entrants, Public Mobile and Mobilicity. The three were successful bidders in the government’s 2008 wireless spectrum action, which was designed to spark competition.

The sector in now dominated by three companies with close to 95 percent market share: BCE Inc’s Bell Canada, Rogers Communications and Telus Corp.

At a parliamentary hearing in April, the Big Three phone companies said that any changes to telecoms restrictions must apply to all carriers, including cable operators, because telecommunications networks today typically carry phone calls, TV programs and data.

Carriers agree that current rules choke off access to foreign capital and elevate the cost of capital.

Canadian Radio-television and Telecommunications Commission Chairman Konrad von Finckenstein has said 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 telecom operators or gain control of them.

Canada’s minority Conservative government said in a policy speech in March that it wants to allow more foreign investment in such key sectors as telecoms and satellites.

The government will accept submissions by post or email. Details can be found at www.ic.gc.ca/telecominvestment.

($1=$1.04 Canadian)

Reporting by Susan Taylor; editing by Peter Galloway

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