The Dust Settles on Ottawa’s Telecom “Plans”

by Jordan Richardson on March 9, 2010

I’ve been talking about Ottawa’s proposed foreign ownership rule changes for quite a while and exploring various sides to the story. There are a number of potential storylines here, most of which have the potential to alter the telecommunications landscape in Canada for quite some time.

The telecommunications industry certainly felt confused and a little surprised after the Throne Speech. When news about the potential relaxing of foreign ownership rules was released, the shockwaves could be felt immediately. There was abrupt discussion of merger ideas that many had thought to be long gone and the stock market took an immediate hit before bouncing back later.

But now that the dust has settled and some of the speculation has run its course, it turns out that the reality of what the Throne Speech proposed is a little less than alarming. In fact, when the budget came out from Stephen Harper’s government it looked as though there was little by way of actual fiscal support to the telecommunications industry.

As Iain Marlow reported in Monday’s Globe and Mail, this sort of mixed message led to a sense of confusion around the industry. With “big telecom companies, analysts and investment bankers tried to ascertain the government’s actual intentions,” it’s easy to see how speculation can run rampant in a hurry.

The potential for a flurry of mergers and acquisitions may still be on the table, but, as Marlow points out, the moves may come a lot slower than many anticipate. As Canada’s telecommunications companies start studying and breaking down the industry further, their assessments of their potentially “new competition” may lead them to a host of possible actions.

“Our government will also be investigating the existing restrictions for the telecommunications industry. This is a complex issue involving changes to business models, rapidly evolving technology, and existing legislation, such as the 1993 Telecommunications Act,” said Industry Minister Tony Clement’s press secretary, Lynn Meahan, in an email to the Globe and Mail.

So the rather alarming idea of Canada’s Harper government striking down any and all barricades to foreign investment may not be what will occur, but the mere mention of the possibility certainly sent the industry spinning for a few days.

While government confusion is certainly nothing new, it is clear that this lack of clarity and precision from the Harper government had immediate impact on the industry. Talk of Canadian companies being bought out by foreign investors or of new companies being brought in with “outside money” may be on hold for now, but it certainly does appear that, for Harper and Co., almost anything is still on the table for Canada’s confused, shocked telecom industry.

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