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Ottawa delays decision on telecom investment rules

The Harper government is delaying a decision on loosening foreign investment restrictions in the telecom sector until some time in 2011 or 2012 - meaning there may be no resolution of the matter before the next federal election.

The move comes just weeks after the Conservatives wavered on their commitment to open up Canada to more foreign ownership by blocking a controversial overseas bid for Potash Corporation of Saskatchewan Inc.

Industry Minister Tony Clement announced today that he will continue - rather than wrap up - consultations on liberalizing foreign investment rules for telecom firms that have been taking place since June.

He said he will postpone any decision on the matter until he considers how to structure a planned 2012 auction of new wireless frequencies for mobile phones. "By spring of next year, I will be in a position to assess how all these elements fit together and decide on the best way forward."

Clement's new timetable means the Tories can avoid the risk of any political backlash over liberalizing telco rules as they gird for a possible spring election.

The Harper government demonstrated how worried it is about a pre-election backlash over foreign ownership when it rejected an Australian mining giant's unwelcome bid for PotashCorp.

It's very possible the minority Harper government may be defeated on its early 2011 federal budget, which would send Canadians back to the polls before any decision on easing foreign investment limits on telecom firms is announced. The last election was in October, 2008.

"With respect to foreign ownership, I have been consulting throughout the summer on whether the current restrictions constitute an impediment to growth in the wireless sector," Clement told an Ottawa telecommunications conference.

"Those consultations will continue as we proceed with our discussions on the 700 MHz spectrum."

Clement said it "just makes sense to consider the two issues together.

"After all, how spectrum is allocated and who is eligible to compete for it - and pay for it - are interrelated issues," he told the International Institute of Communications Conference.

"And so we will consider foreign investment rules and decisions around the 700 MHz auction together, as part of an integrated regulatory approach."

The growing wireless market and foreign ownership questions collided last year when the Harper government overruled the CRTC to approve the wireless license of Globalive Wireless Management Corp. The wireless company operates Wind Mobile, a cellphone company that is largely financed by a Cairo-based communications giant.

Globalive was among the most aggressive bidders for the new licenses that came up for grabs, spending $442 million during a government-held auction - with much of that money coming from the Egyptian firm.

Canada's incumbent cellphone companies argued that allowing that structure would open the door for other firms to seek large amounts of foreign investment, thereby altering the landscape of the Canadian industry. Rogers Communications Inc., Telus Corp. and BCE Inc. all opposed Globalive at CRTC hearings in September.

The Industry Minister also said he'll be looking at the issue of tower sharing and roaming among wireless companies.

"While I was consulting, it became clear another important element of the regulatory framework is the issue of tower sharing and roaming," Clement said.

"We introduced these policies to encourage competitive entry competition among new entrants and reduce tower proliferation," he said.

"To assess whether these policies are working as intended, I have instructed my department to conduct a review, starting immediately."

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