Canada's Industry Minister Christian Paradis speaks during Question Period in the House of Commons on Parliament Hill in Ottawa on Nov. 21, 2011.Chris Wattie/Reuters
Industry Minister Christian Paradis will tell telecom industry players in a speech on Tuesday that he's not yet ready to announce changes to foreign investment restrictions for the sector.
He will signal during the address to the International Institute of Communications conference in Ottawa that an announcement on foreign investment is unlikely to come this year. He will not be taking questions from reporters after his speech.
Later this week, Mr. Paradis heads to New York City to promote Canada, but has cancelled a meeting there with telecom analysts.
The Globe and Mail reported last week that a key cabinet committee was considering a proposal to allow 100-per-cent foreign ownership of telecom firms with a 10 per cent or less share of the Canadian market. Current law restricts direct and indirect foreign investment in telecom companies to a combined total of 46.7 per cent.
A proposal titled "Increasing Competition and Choice in the Telecommunications Sector" was put before the priorities and planning committee last Tuesday.
But in his speech to the Ottawa conference, Mr. Paradis will stress that no decision has been made on how to proceed.
The minister is also busy hammering out plans for the next auction of wireless frequencies. As The Globe reported last week, the Harper government is looking at proceeding without setting aside licences for smaller players, as happened in 2008.
Instead, the government is contemplating capping the amount of spectrum any one company can purchase at 10 megahertz of bandwidth.
Ottawa has said it will make a decision about foreign investment before setting the rules for a planned auction of wireless licences in 2012.
Some new wireless entrants argue that it would be a mistake for Ottawa to link the two issues. For example, Mobilicity executive chairman John Bitove has said potential changes to foreign investment rules would be meaningless to his company if Ottawa allows the big three incumbents (Rogers Communications Inc., BCE Inc. and Telus Corp.) to dominate the next wireless auction.
"The foreign investment rules have nothing to do with the auction. We have [four]new entrants in business since the last auction and one more [Bragg]getting set to go," Mr. Bitove said in an e-mail. Of primary importance, he said, is that the coming auction gives new entrants "good spectrum" because the latest handsets are being made to run in key blocks of the highly desired 700-MHz frequency.
Like other wireless newcomers, Mobilicity wants Ottawa to set aside wireless licences for smaller players. Failing that, it should set a "very low" cap on the amount that any one company can purchase "so the Big Three can't shut us all out from this spectrum," Mr. Bitove added.
Small Canadian telecom players are struggling against well-established players in a weak economic climate. Allowing them greater access to global capital markets could spur competition by providing them with deeper war chests.
The wireless upstarts that launched in Canada – including Wind Mobile, Public Mobile and Mobilicity – have managed to bring down prices in the industry. But they have not managed to take much market share from the three big incumbents, which dominate with about 95 per cent of the wireless market.
Ottawa should clarify its position on foreign investment for industry players sooner rather than later, said Carmi Levy, an independent technology analyst in London, Ont.
"Financing for participation in an auction process is starting now. So, you need to at least give some indication of where the rules are heading to give all participants – both within Canada as well as outside Canada – some idea of how they need to position themselves for the process," Mr. Levy said. "For all potential bidders, it would have been better ... had the minister been a little faster off the mark."
Anthony Lacavera, chairman of Globalive Wireless Management Corp., said he is confident the government will ultimately adopt a "pro-competitive" stance on both foreign ownership and how it structures the spectrum auction. Caps, he argues, would ultimately spell the "end of competition" in the Canadian market. (Globalive operates under the Wind Mobile brand name in Canada.)
"I think there is only solution and it has to be a set-aside," Mr. Lacavera said. He later added: "I am confident that this government wants to see competition in wireless continued."