The Harper government is delaying plans - possibly by years - to open up the telecom sector to more foreign investment only weeks after bowing to a political backlash and nixing the sale of Potash Corp. to overseas bidders.
This buries a possible lightning rod for criticism in advance of an expected 2011 federal election, ensuring the Conservatives don't head to the polls facing partisan accusations of selling out Canadian companies.
Telecom industry sources said privately they believe the minority Harper government had been spooked by strong public opposition to the Potash sale, which threatened seats in Saskatchewan.
Industry Minister Tony Clement announced Monday the Conservatives are postponing a decision on easing restrictions on ownership of telecommunications companies by non-Canadians until some undefined point in 2011 or 2012.
The Harper government pledged to liberalize foreign investment rules for telecom firms in its March Throne Speech - and Mr. Clement launched consultations on this in June.
On Monday, however, the minister revealed that he will delay any decision on the matter until he resolves how to design the next auction of wireless frequencies for mobile phone companies - a sale not scheduled to take place until late 2012.
He later told reporters that the deadline for action to lift foreign investment limits is now "some time before we initiate the auction in 2012." That means it could be two years before the Conservatives act on this.
Mr. Clement sounded equivocal Monday on the question of increased foreign investment in telecom, telling reporters he's found opinions mixed during months of consultations on opening the door wider to non-Canadians.
"There was no ability for the sector to come to a common conclusion on that," he said.
He also couldn't say whether he thought Canadians want more foreigners in the business of providing them with mobile phones, handhelds and telecom services.
"I don't know how to answer that. I don't have polling in my back pocket," Mr. Clement said. "My gut tells me that Canadians are … less concerned about the means to an end than the end in itself."
Foreign investment is not the only way to improve the phone market, the Industry Minister said.
"I think what Canadians want is a telecom sector that continues to offer greater choice, greater competitiveness in terms of price and quality. … There are many different ways to get there. One of them could be increasing foreign investment, but there are other ways to get there as well."
The Harper government, which faces a likely defeat over its next budget in early 2011, has been preparing this month for a return to the polls, clearing issues from the deck that could hurt it on the campaign trail. The last election was in October, 2008.
Last week, the Conservatives struck a deal with Michael Ignatieff's Official Opposition Liberals to extend Canada's participation in the war in Afghanistan until 2014. The agreement, which shifts the focus to training from combat, ensures the Liberals won't attack the Tories over Canada's bloody and costly Afghan mission in the upcoming election.
Current restrictions limit direct and indirect foreign investment in a Canadian telecom firm to a combined total of 46.7 per cent.
The liberalization option the Tories are believed to have favoured was to allow foreigners to set up wholly owned new telecom providers or buy established Canadian firms with a market share of 10 per cent or less.
Mr. Clement said it "just makes sense" to consider it in tandem with the next auction of wireless frequencies. "After all, how spectrum is allocated and who is eligible to compete for it - and pay for it - are interrelated issues."