Canada’s closed-shop telecommunications industry is being thrown open to foreign competition, setting the stage for more wireless players and possibly lower rates for cellphones and other telecom services.
The government signalled in the throne speech Wednesday it is opening key sectors, including the satellite and telecommunications industries, to both venture capital and investment from outside the country.
The move is not entirely a surprise, given that Industry Minister Tony Clement recently overturned a CRTC ruling that disqualified a new entrant into the wireless market, Toronto-based Globalive Wireless, for being too foreign owned.
And nearly two years ago, a government-appointed commission headed by former BCE chief executive Lynton Wilson recommended Ottawa loosen foreign ownership rules in communications, uranium and some other sectors.
Globalive, effectively controlled by an Egyptian company, has been selling its Wind Mobile wireless services since Christmas.
But now the Harper government appears ready to make the Globalive precedent the rule rather than the exception.
"Our government will open Canada’s doors 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," the document states.
Further details are expected in today’s budget, but industry analysts say the policy shift could harbinger great changes in Canada wireless market.
The digital transition next year opens the possibility of the government auctioning off a wide swath of new spectrum, allowing new players to bid and win space to operate new networks, as Globalive did last year.
"I think this is long overdue," said Michael Geist, a professor of e-commerce law at the University of Ottawa.
"The possibility of a Verizon or Deutche Telekom, or [Japan’s] NTT Docomo, some of the large global players that have been investing in other markets, might see Canada as more open to business."
Globalive chairman Anthony Lacavera also welcomed the move, saying it will give consumers more choices.
"Canada has got one of the least competitive wireless markets in the world demonstrated by the high pricing and low penetration [of mobile phones]," he said.
Lacavera said he isn’t sure whether the Globalive precedent–the company is 65% owned by Egyptian telecom giant Orascom–played a role in the federal government move.
Critics of the current system say Canadians pay significantly more for wireless services than Europe, which allows foreign competition.
Even if no new foreign player materializes, the loosening of the rules that require majority Canadian ownership and control would allow entrants to seek more financing outside the Canada’s borders.
Currently, Canada’s wireless market is dominated by three players–Bell, Rogers and Telus.
But Ian Morrison of the Friends of Canadian Broadcasting warned the changes could also be the first step in exposing the country’s broadcasters to foreign ownership.
"It’s a slippery slope. It’s not inconceivable that ultimately you get CTV owned in New York," he said.
