Canada’s Foreign Ownership Conundrum Continues

by Jordan Richardson on November 28, 2011

It is rumoured that Industry Minister Christian Paradis may be outlining plans on foreign ownership rules in the Canadian telecommunications industry next Tuesday when he gives a speech at the International Institute of Communications conference in Ottawa.

The issue has been a contentious one, to say the least. Paradis has been tight-lipped about any plans, but the conservatives have stated their desires to open the industry up to foreign ownership.

“If government wants to change the rules, then let’s make sure we open up to everybody and let’s not make it selective,” Rogers CEO Nadir Mohamed said on Friday, adding that any changes to ownership rules should apply across the board and not just to small telecommunications player.

Rogers doesn’t back the notion of the federal government allowing 100 percent foreign ownership for small players with just 10 percent (or less) of the market because that would allow those small players to “benefit” from such “arbitrary” management of the industry.

Rogers and the other incumbents have long profited from Canada’s less-than-equitable telecommunications setting and Mohamed doubtlessly wants to maintain that competitive advantage.

That’s an issue Naguib Sawiris, the Egyptian founder of WIND Mobile backer Orascom, is painfully aware of.

After spending roughly $500 million in a 2008 wireless spectrum auction, Sawiris said he won’t be throwing his hat in the ring for the imminent round. In an interview with CBC’s Amanda Lang, the financier compared Canada’s telecommunications industry to that of China’s and added that financing WIND Mobile in this environment was a “bad idea.”

“There’s no real political will here to introduce competition into this closed market,” he said.

Citing Rogers’ lack of international exposure as evidence of the company’s ineptitude and wild cost structure, Sawiris wondered why Canada’s telecommunications giants aren’t “everywhere if they’re so good.”

With Rogers sounding off on any changes to the foreign ownership rules and Sawiris sounding off as to his experience thus far, what Paradis has to say on the subject will be most curious.

Canada’s industry has long been critiqued, rightly so, for extortionate prices and less-than-ideal service. Trapped in an oligopoly by definition, the variation promised by the manifestation of new competition has been sluggish. Still, with WIND Mobile now boasting 317,000 subscribers – in comparison to Rogers’ 9.1 million wireless customers, of course – there are some dents being made.

But without some form of systematic transformation, the future continues to look grim for Canadian consumers confined by the usual suspects.

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