Opening the Canadian telecommunications industry to more foreign investment has wide support, but it probably won’t happen at least until a new prime minister takes office, according to industry experts.
In April, the House of Commons Standing Committee for Industry, Science and Technology
recommended the government remove restrictions that currently prevent foreign investors from holding more than 20 per cent of a Canadian carrier or more than one third of a holding company that controls one.
Competitive carriers hailed the report. Chris Peirce, Allstream Corp.’s senior vice-president of regulatory and government affairs, says his company needs capital to grow and cannot find enough in Canada.
The present rules lead to odd arrangements designed to let foreign-backed firms operate here. Ted Chislett, president of competitive carrier Primus Telecommunications Canada Inc., says he would like to own telecommunications facilities in Canada, but Primus is limited to resale because it is a wholly owned subsidiary of Primus Telecommunications Group Inc., a U.S. firm.
Even the incumbents accept the idea of a change. Willie Grieve, vice-president of public policy and regulatory affairs at Telus, says his company has no problems with access to capital, but wouldn’t object to loosening foreign-investment rules as long as the same rules apply to incumbents and new entrants alike.
Lawson Hunter, executive vice-president of BCE Inc., the holding company that controls Bell Canada, says looser restrictions could even benefit Bell.
Don’t hold your breath, though. Mark Quigley, research director at the Ottawa office of research firm The Yankee Group, says nothing is likely to happen until Jean Chretien steps down as prime minister next year.
Quigley says Industry Minister Allan Rock is believed to favour the changes – but Heritage Minister Sheila Copps, who has jurisdiction over the cable companies, does not. A report by the Standing Committee on Canadian Heritage in June recommended keeping the ownership restrictions.
With Chretien’s departure, of course, there will likely be other changes in the federal cabinet, which might break that logjam. But Quigley says it doesn’t matter much right now anyway. Given the present economic picture, he says, a change wouldn’t bring a sudden influx of capital.
More on competition in the telecom market in the September issue of Communications & Networking.