Foreign ownership hearings to hear from Clement

 A House of Commons committee investigating Canada’s foreign ownership laws in telecommunications will eventually hear from Industry Minister Tony Clement, a government source said.

The Standing Committee on Industry, Science and Technology Thursday but the meeting was closed to the public. The purpose of that meeting was to discuss future committee business.

The federal government source told Network World Canada the Commons industry committee decided on Thursday they will later question additional sources about foreign ownership but would not say who the witnesses are.

The committee has been hearing evidence on the laws requiring Canadian ownership of facilities-based telecom providers. During the throne speech in March, the ruling Conservatives said they intend to “open the doors” to more foreign ownership in telecom.

Brownlee Thomas, a Montreal-based principal analyst with Forrester Research Inc., noted Cabinet did not go into detail on its reasons for overturning a decision by the Canadian Radio-television and Telecommunications Commission (CRTC) denying Globalive Wireless Communications Corp. its carrier licence last year.

Because Cabinet overruled the CRTC, Globalive was able to launch its Wind Mobile cellular service in December. Wind Mobile is the only new entrant that bought spectrum two years ago to actually launch service.

Public Mobile Inc. plans to launch next month. Other new entrants include Videotron and Mobilicity.

Currently facilities-based carriers must ensure at least 80 per cent of their directors are Canadian and 80 per cent of their voting shares are held by Canadians.

CRTC chairman Konrad von Fickenstein testified before the committee, defending the Canadian ownership law but calling for a change. Specifically he said the foreign ownership limit should be raised to 49 per cent.

“Going up to 49 per cent makes no meaningful distinction,” Thomas said in an interview, because a foreign company could, in theory, hold 47 per cent of voting shares. This is possible if the foreign entity holds the maximum 20 per cent of voting shares of the operating company, plus one-third of the shares of a holding firm that holds the other 80 per cent of voting shares of the operating firm.

The major issue with Globalive was its relationship with Orascom Telecom Holdings SAE of Egypt, which owns 20 per cent of its voting shares. Orascom has provided much of Globalive’s startup funding, owns the Wind brand and owns 65 per cent of its total equity.

Though the CRTC said this constitutes “control in fact” by Orascom, Globalive has countered that it’s based in Canada and 80 per cent of its voting shares are held by chairman Anthony Lacavera.

Thomas has criticized Canada’s foreign ownership restrictions in the past because, she says, they make it more difficult, and expensive, for carriers to raise money to upgrade networks.



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