Will the New Conservative Majority Diminish Foreign Ownership Restrictions?

by Jordan Richardson on May 4, 2011

When the dust settled on Canada’s election night, Stephen Harper’s Conservative government held a “stable majority.” The Liberals were largely washed out and Jack Layton’s New Democrats headed into a new territory as the Official Opposition. In the telecommunications world, the news has interesting connotations.

The Conservative government has supported the lessening of foreign ownership restrictions in the industry. When the Tories were serving in a minority government capacity, they were unable to ram through their designs because of the opposing parties. But the majority government status gives the party more space to move and, as such, more space to open the doors to foreign competition in Canada’s troubled sector.

What this means is that companies like AT&T, France Telecom, T-Mobile, and more could bring their games to Canada. Along with a selection of new companies, some of Canada’s smaller players could have access to more cash. Telecommunications operators with less than 10 percent of the market share could receive a big boost in funding if the restrictions are relaxed. That’s good news for the likes of WIND Mobile and Public Mobile – for now.

Industry Minister Tony Clement has been fiddling around with the issue for a while now. Many remember the three options he proposed back in June of last year. Where these options stand now remains to be seen, of course, but there are many within the industry that prefer the removal of foreign ownership restrictions outright.

This leaves open what could be a slew of problems for Canada’s established players. What would the likes of Rogers or Bell do in the face of more substantial competition from “outside forces?” While many do see the sunny side, at least in the short term, what would unfettered market access to foreign investments and foreign companies mean for Canada’s struggling sector?

Consumers would benefit, at least in for the time being. There’s no telling how long it would take to establish a “new paradigm” under a new set of companies and options. Canadians currently “enjoy” a fairly uniform pricing scheme, so it’s interesting to contemplate just how that could be altered in light of new competitors. So far, the addition of some new market players has made little impact with respect to what Canadians are being charged for services.

In the end, only time will tell how the relaxing of foreign ownership restrictions will impact the industry. And only Harper and Co. know just what form Canada’s telecommunications sector will take under a majority government.

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Written by: Jordan Richardson. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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