BCE supports full removal of telecom foreign ownership rules

BCE Inc. would support government efforts to fully remove foreign ownership restrictions for Canadian telecom companies, though the company “will never be foreign owned,” BCE chief executive George Cope said. “From my perspective, maybe it’s time to just do a foreign ownership review and just get rid of the ownership restrictions and move on,” Cope said Tuesday during a question and answer session at a BMO Capital Markets media and telecom conference in Toronto. “If that’s a place Ottawa wants to go, they’ll probably find BCE quite supportive of that," he said. The federal government eased restrictions on foreign ownership of Canadian telecom companies last year, allowing foreign ownership of telecom carriers with less than 10 per cent national market share. Telus Corp. said at the time that the government should go a step further and remove the restrictions for larger companies as well. If the government fully removed the restrictions on Canadian telecom companies, BCE would still face foreign ownership limits under the Broadcasting Act, which says the Canadian broadcasting system “shall be effectively owned and controlled by Canadians.” Cope did not say Tuesday whether he would support relaxing foreign ownership rules for broadcast companies, and BCE spokeswoman Jacqueline Michelis declined to comment when asked via email for the company’s position on the Broadcasting Act restrictions. BCE said in a 2010 Industry Canada consultation that the government should allow foreign companies or individuals to own up to 49 per cent of Canadian broadcast or telecom companies. It said at the time that removing the foreign ownership restrictions for large telecom companies would unfairly benefit larger carriers that don’t own broadcasting assets. Cope said Tuesday that removing foreign ownership restrictions would allow international investors to determine whether Canada’s telecom industry could support additional competitors. “Capital markets are efficient,” he said. “They will determine whether or not Canada should have two, three, four, or five competitors, period. So let’s just open it up and see what happens.” Incumbent wireless carriers Bell, Telus and Rogers Communications Inc. launched a public relations campaigns over the summer, aiming to change aspects of the federal government’s rules for the upcoming auction of 700 MHz wireless airwaves. The carriers say those rules provide unfair advantages to any large foreign competitor participating in the auction, while Industry Canada has argued that the rules are designed to spur more competition. Rogers chief executive Nadir Mohamed told Bloomberg last month that the government should consider removing foreign ownership restrictions for telecom companies instead of trying to encourage foreign entrants through favourable auction rules. John Lawford, executive director of the Public Interest Advocacy Centre (PIAC), said in a telephone interview that removing the restrictions for Canada’s large telecom companies would have little impact on competition. “It doesn’t reconfigure the market or add more competition if you just allow pure foreign ownership because they’ll just come in and buy a present player,” he said, noting that the government has given no indication that it wants to further ease its foreign ownership rules. BMO Capital Markets analyst Tim Casey said in a conference call with media Tuesday that relaxing the foreign ownership rules for telecom companies could affect competition, depending on who buys what and how the new players would intend to compete in the market. New foreign competitors, he said, could give consumers more options, so long as it’s not a case of “one guy in and another guy out.” Some could also extend their existing networks into Canada, if possible, he added. “So there’s other things that can play out as well,” he said. Any change to the foreign ownership rules “is not necessarily going to be reflected in lower prices right out of the gate,” Casey said. Lawford said Canadians would not support relaxed foreign ownership of Canada’s broadcast companies, meaning neither Bell nor Rogers could be the target of a foreign takeover. Without broadcast assets, he said, any foreign telecom that enters the Canadian market would find itself at an immediate disadvantage to Bell and Rogers, since it would have to licence the broadcasters’ content in order to offer bundled services that include a television product. Canadians would also be wary of any effort by a foreign company to take over BCE, an incumbent telco that owns and controls a large share of Canada’s communications infrastructure, Lawford said. Cope said he would be surprised if the government ever allowed a foreign entity to take over Bell. “Within the telecom world and sovereignty of nations and all those things, communications are a pretty important asset,” Cope said. —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

BCE supports full removal of telecom foreign ownership rules

News | September 10, 2013

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BCE supports full removal of telecom foreign ownership rules

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