TORONTO — Tony Clement, the federal Minister of Industry, confirmed Monday that Ottawa plans to move ahead on changes to foreign-ownership restrictions in the communications sector that will promote more direct investment in telecom services.
The changes will not however, disrupt key content assets considered important to maintaining Canadian culture.
“None of this will change broadcast rules,” he told industry members at the Canadian Telecom Summit in Toronto. “The focus is on the telecom side.”
The country’s two largest communications firms, Rogers Communications Inc. and BCE Inc. also own several media properties while a third, Shaw Communications Inc. is attempting to finalize a $2-billion acquisition of Canwest Global Communications Corp.’s television assets.
Some, including the chairman of the national regulator, Konrad von Finckenstein, say technological advancements have made it impossible to lift ownership rules on telecom without impacting rules governing the broadcasting and radio sectors. Lifting ownership on telecom could have adverse effects on the creation and carriage of Canadian content, some industry observers have suggested. Domestic operators are mandated to produce and distribute certain levels of content under the Broadcasting Act.
Mr. Clement said in parliamentary hearings last month that media assets owned by big, integrated telecom firms like Rogers and Bell could be safely spun out and remain in Canadian hands, opening up distribution assets, like cable and Internet networks to foreign investment.
The current rules forbid foreign firms from owning more than 20% of a communications operator, or 30% of a parent holding company. The minister said Monday Canada ranks as one of the most “restrictive” investment environments among member countries of the OECD.
He said a policy consultation paper is forthcoming that will address and is seeking comment on three options for liberalizing telecom foreign ownership rules. The minister failed to go into much detail but said he is seeking comment on large incumbents’ access to foreign direct investment, as well as how smaller companies, such as wireless new entrants like Mobilicity and Public Mobile, could meet their capital needs. The third area to be addressed is how best to manage overall industry needs.
Rob Bruce, the president of Rogers’ communications division which oversees cable, Internet and wireless services said he was listening to Mr.Clement’s remarks with “great interest” in an address made after the minister’s. He said Rogers was unopposed to reform but that communications companies must be treated equally regardless of size.
A 2008 policy report commissioned by the federal government supported the idea of lifting ownership rules on players with less than 10% market share ahead of market leaders like Rogers as a way to provide more access to funds and promote greater competition. After a five year period, ownership rules would be lifted on larger companies, the report suggested.
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