Foreign ownership telecom restrictions lifted by federal government

Small telecom companies taking on incumbent carriers for a larger slice of Canada’s wireless pie will soon be able to access more foreign money to help them compete, according to the federal government.

Industry Minister Christian Paradis announced just after markets closed Ottawa’s intent to loosen foreign ownership restrictions on carriers that control less than 10 per cent of Canada’s wireless market share by revenue. The exemption will still hold for companies that increase market share beyond 10 per cent so long as it’s done without merging with another telecom company.

Currently, the telecommunications act restricts foreign investment to 46.7 per cent when direct and indirect ownership are combined.

Canadian telecom companies have been campaigning for months to win over public opinion and gain favourable rules for the next spectrum auction, which will be the first one held since 2008. That auction sold the spectrum that would be used by new entrants to the wireless space such as Globalive’s Wind Mobile, Mobilicity, and Public Mobile.  

Foreign ownership was previously a controversy for Wind Mobile. Egypt-based Orascom Telecom Holding owns 65 per cent of the equity of parent company Globalive, and also much of its debt. Orascom itself merged with Moscow-based VimpelCom Ltd. last April.

A Federal Cabinet decision was made to overturn a Canadian Radio-television and Telecommunications Commission (CRTC) ruling that Wind was prohibited due to having too much foreign funding. In January of 2010, Public Mobile filed a lawsuit protesting that Wind Mobile received special treatment from the government.

“What we want to achieve here with the balanced approach is to have that fourth player everywhere in the country,” Paradis said at a press conference in Russell, Ont. “I can’t speculate about what player will do what in what market, because this market is evolving so fast.”

The next spectrum auction will have limits on how much spectrum incumbents can purchase, Paradis said. That will ensure new entrants are able to buy up some of the new bandwidth. The spectrum at stake is technically ideal for 4G networks, providng fast speeds and better reception inside buildings.

Rogers Communications has been promoting an “I want my LTE!” campaign online, asking consumers to send a tweet to Paradis asking that he support a “fair and open spectrum auction.”

The 700 MHz spectrum auction will be held by the government in the first half of 2013, Paradis said. There will also be changes to roaming policies and antenna tower sharing rules.

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