The Conservative government is sounding more ambiguous and indefinite on its vow to allow foreign investors a bigger stake in the telecom industry.
A year ago, the Conservatives pledged in a Throne Speech to “open Canada’s doors further” to foreign investment in the telecom industry as a means of lowering prices. On Tuesday, however, newly minted Industry Minister Christian Paradis made it clear even a majority Tory government has still not decided how to proceed.
It was last fall that the Conservatives first put their foreign investment liberalization plans on hold, just weeks after nixing the sale of Saskatchewan’s iconic Potash Corp. to overseas bidders. At the time, the Harper government said it would delay any decision on the matter until it resolved how to design the next spectrum auction of wireless frequencies for mobile phone companies.
On Tuesday, in his first speech as Industry Minister, Mr. Paradis signalled the Tories are still debating the matter. “As part of an integrated regulatory approach to the spectrum auction, we continue to examine tower sharing and roaming and foreign investment,” the Quebec MP told the 2011 Canadian Telecom Summit in Toronto.
“Foreign ownership, meanwhile, remains an important piece of this puzzle, and one that I am personally committed to getting right.”
Mr. Paradis did not elaborate on his comments when he spoke to reporters after. But they echoed what Prime Minister Stephen Harper said during the election campaign, when he told reporters he wasn’t sure how to move forward. “We’ve not made a final decision on the nature of what we’re seeking there,” he said during an April 25 campaign stop.
The Conservatives have been deluged with warnings from big incumbent telecom carriers that greater foreign competition could erode their ability to make the necessary infrastructure investments to offer faster and richer wireless services.
Mr. Paradis seemed mindful of this in his Tuesday speech when he talked about the need for a “predictable regulatory framework that ensures an appropriate balance between competition and investment.”
Speaking with reporters later, Mr. Paradis said he had met earlier with Rogers Communications Inc. president Rob Bruce. On Tuesday morning, Mr. Bruce used a keynote address at the conference to say that if the minister acted contrary to Rogers’ interests in structuring the next auction, it would be “a slap in the face to our nine million customers.”
“We don’t think it matters if you’re large or small – new or old – as long as you’re committed to investing in both urban and rural markets today, and for decades to come,” Mr. Bruce told the audience.
Mr. Paradis is facing pressure from big incumbents to limit or do away with special treatment for small or regional players in the next auction of wireless spectrum. Ken Engelhart, Rogers’ top regulatory executive, argued at the conference against preferential treatment, such as setting aside a portion of spectrum.
“Government handouts and government favours become like a kind of heroin, that people get addicted to and they keep asking for more and more,” Mr. Engelhart said. “And at some point the government has to let them go cold turkey.”
In the final weeks of the election campaign, Mr. Harper vowed that Ottawa would not do anything to jeopardize the telecom industry. “We’re guided by two things: First of all to ensure whatever changes we make, they are oriented towards providing more choice and options and competition and competitive prices for consumers,” he said.
“And also that we do not lose a strong telecommunications sector here in this country. So we are proceeding very cautiously.”
The telecom liberalization option the government is believed to be favouring is to allow foreigners to own 100 per cent of new-market entrants or existing players who have a market share of 10 per cent or less. Current restrictions limit direct and indirect foreign investment in a Canadian telecom firm to a combined total of 46.7 per cent.
