Clement delays decision on foreign telecom ownership

The telecommunications industry shouldn’t worry that Industry Minister Tony Clement is delaying promised reform of the country’s telecommunications foreign ownership regulations, says a consultant.

“I’m really quite happy,” Iain Grant, managing director of the SeaBoard Group telecommunications consultancy, said Monday after reading reports of Clement’s remarks.

The minister told reporters that the government’s position on new telecom foreign ownership legislation – promised for this fall – will have to hold off until it has set the rules for the 700 MHz wireless spectrum auction.

At the same time he said the government’s digital economy strategy will be announced next spring.

“I think [telecom ownership change] will happen relatively early in 2011,” Grant predicts, once the Harper government has let the heat cool a few months after its refusal to allow an Australian mining company to take over Saskatchewan’s Potash Corp.

In particular, Grant was cheered that Clement (pictured) told reporters in effect that “his compass is steered by consumer benefit, and that it’s very clear to him consumer benefit equates to foreign ownership.”

Clement told a communications industry conference earlier in the day that his department will shortly begin consulting on structuring an auction for spectrum in the 700 MHz, eagerly anticipated by many carriers because that spectrum is ideal for the next generation of high speed wireless technology called LTE. That auction, he added, will be held late in 2012.

Earlier this year Clement introduced three choices the government is discussing for telecommunications ownership reform, and said the Harper government would make a choice this fall.

There is speculation that tying the auction rules to foreign ownership Clement is signaling the government really wants to put it off until after the next federal election.

Grant disagrees. “Any political party that is driven by consumers will be driven by votes, and I think that means sooner rather than later.”

“I can see this being a Tory election plank,” Grant added: “Vote for us, we’ll bring you lower wireless prices.”

As to whether the government wants small or radical change to the ownership laws, Grant notes Clement was quoted as saying Canadians are more concerned about the ends – more competition and lower prices – than the means.

It makes sense to link the auction to foreign ownership. New wireless entrants such as Wind Mobile, Mobilicity and Public Mobile, who started their business from scratch, could want the money foreign investment brings to get a fair shot at winning more spectrum. Without an adequate supply of spectrum a carrier could strangle. Significantly eased ownership rules will work for them; minor changes won’t.

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The rules on telecom foreign ownership become muddied exactly a year ago when the government overturned a decision by the Canadian Radio-television and Telecommunications Commission (CRTC) that Wind’s parent, Globalive Wireless Management, wasn’t Canadian controlled.

The Harper government said its decision wasn’t a precedent, but it also admitted a conflict in the existing laws had to be cleared up.

The government also has to create a consistence approach to foreign ownership following the Potash decision. In that case Clement said the takeover wasn’t in the interests of the country without defining what that means.

Meanwhile the new entrants will likely be cheered that the next auction won’t take place until 2012. Later rather than sooner allows them to raise money.

Similarly, said Grant, incumbent carriers who have been rooting for an early auction – such as Rogers Communications Inc. – will be disappointed.

New entrants may also be cheered that Clement department is looking into the effectiveness of its tower sharing and roaming policy for the rookie carriers. The policy is aimed at forcing incumbents to share their towers with the new entrants to ease their start-up costs. But there are complaints the incumbents have a never-ending list of obstacles.

Clement did announce one thing to please incumbents: The length of wireless broadband licences will be extended to 20 years from 10 for all future spectrum auctions and upcoming licence renewals.

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