Paradis says no decision yet on foreign ownership rules, coming soon

TORONTO—Industry Minister Christian Paradis reaffirmed a government commitment to spurring competition in the telecom sector but remained mum on the specifics of spectrum auction rules and any changes to the foreign ownership rules in his first address in his new portfolio. Speaking at the Canadian Telecom Summit Tuesday, Paradis lauded his government’s record in the sector but didn’t stray far from the tracks of his predecessor Tony Clement, now president of the Treasury Board. “Foreign ownership in wireless remains an important piece in this puzzle, and one that I am committed to getting right,” Paradis told the audience. “As we have demonstrated since coming to office, the policy of our government has always been to favour more competition. New entrants mean more competition, which can lead to lower prices and more competitive services for Canadian consumers.” A decision on whether to allow foreign ownership in the telecom sector will come before the next spectrum auction, which will be held in late 2012 or early 2013, the minister said. Paradis noted that the government's policy of setting aside spectrum for new entrants in the 2008 auction led to better prices and services for consumers. But in a media scrum following the speech, the minister would not say whether set asides or spectrum caps would be used in the upcoming 700 MHz and 2500 MHz auctions. Paradis threw incumbent telcos a bone, commending their infrastructure investments and network upgrades. He also advocated for more predictable regulation following opposing decisions last year from the government and the CRTC on whether Globalive Wireless Management Corp. is in fact Canadian-owned. “What government must do is foster an environment that inspires the private sector to invest and grow. That means having a predictable regulatory framework that ensures an appropriate balance between competition and investment—one that encourages innovation and creativity and promotes the growth of successful telecom companies,” he told the audience. When asked about Canada’s digital economy strategy, whose release date before the spring election was set for May 2, Paradis said it was a priority but didn’t offer a new timeline. Rob Bruce, president of communications at Rogers Communications Inc., said in a keynote address Tuesday morning that the new minister has a challenging mandate with a lot at stake. “Three weeks ago, Canadians elected a majority government and it’s this government that will determine Canada’s success or failure for decades to come,” Bruce said. The executive said the government’s regulatory regime must reward and offer incentives to companies that invest in both urban and rural markets, and complained about what he called asymmetry in today’s market where “there’s a bias towards helping what are perceived as new, smaller players at the expense of large, established players.” Bruce said Industry Canada should make spectrum available more quickly, comparing Canada to the U.S., where 700 MHz spectrum has already been auctioned and is now in use. On a panel discussion about spectrum Tuesday afternoon, Xplornet Communications Inc.’s chief strategy officer Allison Lenehan seemed to agree with that point, calling for a prompt decision on the spectrum rules that would allow businesses to plan for the next few years. He added that the government should “think rural when deciding on your policy framework without impeding the development of mobile everywhere.” Bruce rejected calls from smaller players to set auction rules that would limit his company’s access to spectrum, saying the restrictions would amount to “a slap in the face to our nine million customers.” He compared the telecom sector to the mining industry, where he said large companies with a history of investment would never be restricted the same way. “If you look at other sectors with limited or precious resources like the 700 spectrum, our government has a long track record of creating a level playing field for these sectors,” he said. “In fact our government has a history of treating Canadian companies that have invested significantly equal to, or even better than, small startups or foreign-controlled entities. So why should the telecom sector be disadvantaged?” Bruce said in an interview with The Wire Report that the new minister should have more time to focus on telecom than did his predecessor. “With the economic recession, Minister Clement had to worry about the auto industry and all kinds of other things,” he said. “Now that we’ve kind of ridden our way through the recession, I think that telecom will get more attention.” Former industry minister Tony Clement held a consultation on loosening the restrictions on foreign investment in the telecom sector, but no decision was ever released. In the consultation, the government laid out three options for amending the Telecom Act: abolishing all restrictions; increasing the limit of foreign investment to 49 per cent; or eliminating the investment restrictions for companies whose market share is less than 10 per cent. Right now, the foreign investment limits are set at 20 per cent direct investment in the operating company and 33 per cent indirect investment in the holding company. Ken Engelhart, Rogers’ senior vice-president of regulatory affairs, said in an interview that his company wasn't happy with any of the three options Clement had put forward but ended up supporting the 49 per cent model. “We think now that the government has a majority and can take a broader-term view, they should liberalize foreign ownership, if they’re going to, for all players, big and small, and for cable and satellite players as well as for telecom,” Engelhart said. He said the precarious nature of the previous minority government interfered with bringing the cable companies and the cable distribution sector into earlier discussions. “There was a view that because cable’s under the Broadcasting Act, it’s a content business, which isn’t really true. They were worried about a sensitivity with the cultural industries,” he said. “Most countries regulate cable like telecom … It doesn’t make sense to view cable differently than telecom.” Bruce added that almost every telecom company now deals in video anyway, making for “enormous similarities” in what cablecos and telcos offer. “It’s just being delivered through twisted pair copper cable versus coax . It’s really no different,” he said. mburgess@thewirereport.ca

Paradis says no decision yet on foreign ownership rules, coming soon

News | May 31, 2011

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