Rookie minister treads carefully on telecom investment
Steven Chase and Iain Marlow, The Globe and Mail
3:45 PM, E.T. | May 31, 2011Technology
The Harper government is sounding more ambiguous and indefinite on its vow to allow foreign investors a bigger stake in the telecom industry.
Telecom firms provide service for wireless devices from iPads to cellphones but the Canadian market has long been criticized for charging consumers far more than other countries.
It was 13 months ago the Conservatives pledged in their last Throne Speech to “open Canada’s doors further” to foreign investment in the telecom industry as a means of lowering prices.
Tuesday, however, newly-minted Industry Minister Christian Paradis made it clear even a majority Tory government has still not decided how to proceed.
It was last fall the Tories first put their foreign investment liberalization plans on hold – just weeks after bowing to a political backlash and nixing the sale of Saskatchewan’s iconic Potash Corp. to overseas bidders.
At the time the Conservatives said they would delay any decision on the matter until they resolve how to design the next spectrum auction of wireless frequencies for mobile phone companies. On Tuesday, in his first speech as Industry Minister, Paradis signalled the Tories are still debating the matter.
“As part of an integrated regulatory approach to the spectrum auction, we continue to examine tower sharing and roaming and foreign investment,” the Quebec MP told the 2011 Canadian Telecom Summit in Toronto.
“Foreign ownership, meanwhile, remains an important piece of this puzzle, and one that I am personally committed to getting right.”
This reflects what Stephen Harper himself said during the election campaign, when the Conservative Leader told reporters he wasn’t sure how to move forward. “We’ve not made a final decision on the nature of what we’re seeking there,” he said during an April 25 campaign stop.
The Conservatives have been deluged with warnings from big incumbent telecom carriers that greater foreign competition could erode their ability to make the necessary infrastructure investments to offer faster and richer wireless services.
It’s a debatable question but Paradis seemed mindful of this in his Tuesday speech when he talked about the need for a “predictable regulatory framework that ensures an appropriate balance between competition and investment.”
In April, Harper vowed that Ottawa would not do anything that would jeopardize the existing telecom industry. “I can tell you this: we’re guided by two things: first of all to ensure whatever changes we make, they are oriented towards providing more choice and options and competition and competitive prices for consumers,” he said at the time.
“And also that we do not lose a strong telecommunications sector here in this country. So we are proceeding very cautiously.”
The telecom liberalization option the Tories are believed to favour is allowing foreigners to own 100 percent of new market entrants or existing players who have a market share of 10 percent or less. Current restrictions limit direct and indirect foreign investment in a Canadian telecom firm to a combined total of 46.7 percent.
The growing wireless market and foreign ownership questions collided last year when the Harper government overruled the CRTC to approve the wireless licence 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.
A Federal Court judge later threw in question Globalive’s Wind Mobile cellular service by striking down the Harper cabinet’s decision to let the new competitor operate. Ottawa has appealed the issue.
Paradis reiterated the Conservative government’s intention to rewrite copyright legislation to expand protections for digital intellectual property such as movies, music and games. “Our government will keep its commitments to support content creators and users and privacy law amendments to increase the security of online transactions,” he said.
This legislation has been long sought by the United States, home to Hollywood and huge music and gaming industries. Breaking the digital encryption on a movie DVD – even if copying it for personal use – would make individual Canadians liable for legal damages of up to $5,000 under Tory plans.
The intention is to put new legal heft behind the digital locks, or encryptions, that copyright holders place on products such as movies, video games and electronic books.
Plus, the Tories want to go after the big fish in Internet copyright infringement, giving copyright owners stronger legal tools to shut down “pirate websites” in Canada that support file-sharing and introducing a separate criminal penalty of up to $1 million for serious cases where commercially motivated pirates crack digital encryptions.