Times are changing in the Canadian Telecom Industry with changes to the foreign ownership rules

by Jeff Wiener on March 4, 2010

There is currently a 46.7-per-cent maximum on foreign ownership in the telecommunications, and cable industries in Canada. Changing those foreign ownership restrictions would require a change of the Canadian Telecommunications Act.

And yesterday’s throne speech addressed what’s been a dark cloud hanging over the Telecom industry resulting from Industry Minister Tony Clement’s decision last fall to make an exception in Globalive’s foreign ownership (you can read more about that here). For those that don’t know, an exception was made last fall that overturned the CRTC’s foreign ownership rules with respect to Orascom’s control over Wind Mobile. You can’t make an exception for one firm without addressing the level playing field issue for the rest of the industry.

And it looks like that change is here.

Alex Krstajic, Public Mobile’s President has taken the federal government to task as of late by complaining of this ownership inequity.

Although the short term net result will mean access to more foreign funds for upstarts like Mobilicity and Public Mobile, the longer term impact could mean more consolidation locally by forcing a Bell / Telus merger, and certainly investment from US giants like Verizon and AT&T.

Good news ?

Well, it addresses the current inbalance. And yes, good news. The foreign ownership rules are outdated, especially in light of easy access to foreign content, and the need for Canadian firms to stay competitive and seek foreign funds to build infrastructure and expand.

Although we will get more information today, the direction has been clearly set with yesterday’s comments as follows:

“Our government will open Canada’s doors further to venture capital and to foreign investment in key sectors, including the satellite and telecommunications industries, giving Canadian firms access to the funds and expertise they need,”

Of course this major policy direction needs to pass through parliament, not a small under taking in a minority government.

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Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

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