Inside the Government’s Trio of Telecom Options

by Jordan Richardson on June 14, 2010

Last Tuesday, we discussed Industry Minister Tony Clement’s confirmation that the Harper government was indeed looking at “liberalizing” Canada’s telecommunications industry. Changes to restrictions on foreign ownership were on the way, he said, and the plan to promote more “direct investment” was to be pieced together in the coming months.

Hints were made at “three options,” but no details had emerged at that time.

On Friday, Clement revealed and published the government’s consultation paper for how it should go about changing the rules in the telecommunications sector and how it should govern the concept of foreign ownership. In that paper are, of course, the three options.

The first option is to increase the limit on foreign ownership to 49%. This option openly addresses the fact that telecom companies and broadcasting companies have inevitably converged. The option also appeals to CRTC boss Konrad von Finckenstein, but doesn’t do much to the current rules and regulations on the subject. It’s a lukewarm fix, one that will give the Harper government political trouble when the “broadcasting” issue starts buzzing around.

The second option is to lift restrictions on telecommunications common carriers with 10% market share or less. This option would certainly be favoured by all of the new entrants, as they’d have a change at digging at the foreign capital while the other big dogs would not. Naturally the incumbents would not favour this option and might even feel slighted by the industry they believe they helped build. Their investments may decrease over time as a result.

The third and final option on the table is that of gutting foreign ownership restrictions on the industry entirely. The Harper government may secretly favour this option, as chopping up and selling industry to foreign companies is hardly a new concept, but this could end up costing nothing but trouble in Ottawa from a political standpoint. While the big dogs and the new entrants would certainly not mind having access to foreign capital across the board, this option doesn’t particularly ensure the rise of competition as heavily touted.

The paper containing the three options will be fielded for public consultation before new legislation will be put towards Parliament. Special interest groups, corporations and the ever-powerful ordinary citizens are invited to comment during this particular phase, which concludes on July 30.

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