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The WIND mobile store at the Holt Renfrew centre in Toronto is seen on December 15, 2010. (JENNIFER ROBERTS For The Globe and Mail)
The WIND mobile store at the Holt Renfrew centre in Toronto is seen on December 15, 2010. (JENNIFER ROBERTS For The Globe and Mail)

Globe Editorial

Telecom needs a dose of foreign money Add to ...

Canadian policy around telecommunications and culture is bordering on incoherence, with regulation being relaxed in some areas, but maintained or increased elsewhere. That makes the Federal Court of Canada's scathing broadside, in overturning a Cabinet decision around the licence approval for the wireless operator Globalive, quite understandable; it said the federal government was "misdirected…in law…. It is for Parliament not the [cabinet]to rewrite the [Telecommunications]Act."

The federal government is appealing the decision, but it should go further, and table amendments to the Act. Telecommunications and broadcasting are an integrated whole, and the current regime leads to higher phone and Internet bills and restrictive download caps. The path ahead will have to include an easing of the onerous restrictions on foreign ownership.

On foreign ownership, Canada stands apart from most of the developed world. Of the 34 OECD member countries, only Canada, South Korea and Mexico have significant investment and ownership restrictions for telecom companies, and Canada's rules are the most restrictive.

The result? Consumers are served by regional duopolies - a limited choice between a phone company and a cable company. That keeps prices for both phone and Internet services relatively high - a glimpse is evident in the usage-based billing debate, with Internet service providers charging for extra data at a rate many times in excess of the actual costs of providing it, and far above comparable rates in the U.S.

The prospect for direct foreign investment in Internet services at home may be limited. But foreign operators can inject new capital into existing companies, and foreign investment in wireless Internet access - increasingly important in the age of the smartphone and the iPad - would have knock-on effects for all forms of online access.

With a measure of foreign ownership in broadcasting, Canadian culture could still be directly subsidized - and enjoyed.

Allowing foreign investment would give Canadians and businesses more certainty, so they could invest in the next online video plan, or the next wireless network.It would lower prices for consumers. And it would send a clear signal that Canada is confident in the strength of its culture, without outdated, unnecessary regulations.

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