Clement says government looking at relaxing foreign investment rules for both incumbents and new players

TORONTO—Industry Minister Tony Clement says the government will propose measures to liberalize foreign investment in the telecom sector for both incumbents and new entrants—but some big players say they are not convinced this means the government supports a "level playing field." In a speech at the Canadian Telecom Summit conference in Toronto on Monday, Clement said the government will release, in a few days, a consultation paper on the liberalization of foreign direct investment in the sector. Clement said the paper will propose three options to consider how to meet the capital needs of both incumbents and new entrants. But insiders say one of the proposals may be a "tiered approach," in which incumbent players would face loosened foreign investment restrictions—while new entrants like Wind Mobile and Public Mobile would face none. Rogers said it would be against a tiered approach. "First and foremost, we think it should be a level playing field," Rob Bruce, president of communications at Rogers Communications Inc., said in an interview at the conference. "These regulations will not get changed very frequently, so we don't want to be in a position where we're not on a level playing field with our competitors. We don't think that's fair." But if the government's consultation paper proposes a tiered approach, it will only be one option on the table. It's not yet clear which three options the government will propose, but insiders say the top choices include: increasing the foreign investment restrictions for all companies under the Telecom Act — currently limited to 20 per cent of the voting shares in the carrier and 33 per cent in the holding company — to 49 per cent respectively, as proposed by CRTC chairman Konrad von Finckenstein; lifting the foreign ownership restrictions, but only for smaller companies and new entrants that have no more than 10 per cent of the Canadian telecom market, as recommended by the 2008 Competition Policy Review Panel Report, chaired by Lynton (Red) Wilson; or scrapping the foreign investment restrictions in the Telecom Act for both the incumbent companies and new entrants (the Investment Canada Act could still protect against foreign takeovers). When asked about the concerns of the incumbent telecom companies Monday, Clement noted that he wants to meet the needs of new entrants and the incumbents. "There has to be a consideration of liberalization in both of these fields, in our estimation," Clement said. Clement said the consultation period will be "relatively short." Due to previous consultations, most players' views are known. He said the government wants to "move ahead" on the issue in the fall session of Parliament, and that the consultation will be an opportunity to receive feedback from industry and consumers on specific questions. "We'll have some face-to-face discussions with the industry as well, but it's not going to be a travelling road show," he said. "I don't want to preclude any options." Clement reiterated that he does not have any plans to amend the Broadcasting Act. "None of this will involve changing the broadcasting rules or relaxing the broadcasting rules. The focus is on the telecom side," he said. But he acknowledged that relaxing the foreign investment restrictions for telecom — when convergence is seeing large, vertically integrated media companies serving as broadcasters, Internet service providers, wireless providers, and television distributors — will not be easy. Clement's comments suggested convergence and the impact on broadcasting could also come up during the consultations. "With respect to broadcasting, telecom and culture, I think it's important to have the right perspective on this issue," Clement said during his speech. "This makes a complex issue even more complex, which is why we intend to move with prudence and undertake these consultations." Bruce said that if the foreign investment restrictions are loosened, they should be for telecom and cable companies. "It needs to be for the pipes," Bruce said. Michael Hennessey, senior vice-president of regulatory affairs at Telus Corp., said in an interview that the aim of the policy should be to let market forces work and allow companies to have access to the capital they need. He added that he is heartened to see that the government appears to be trying to find its way through convergence and come up with a way to separate content from carriage. "All carriers are increasingly offering bundles," he said. "We're optimistic that there seems to be a move in government to try to remove the impediments, in terms of foreign ownership, across the board." sdoyle@thewirereport.ca

Clement says government looking at relaxing foreign investment rules for both incumbents and new players

Broadcast | June 7, 2010

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