In his opening address to The 2010 Canadian Telecom Summit, Industry Minister Tony Clement announced that the department would shortly launch a consultation to determine the nature of liberalization of rules governing Foreign Direct Investment in the telecommunications sector.
That consultation was launched earlier today.
The status quo is not an option being entertained.
The 12-page consultation paper describes three options:
- The CRTC approach, which would see symmetric liberalization for broadcasting and telecom, but only opening up the market for both sectors to 49% foreign ownership;
- The approach described by the Telecom Policy Review Panel (TPRP) and endorsed by the Competition Policy Review, which would remove restrictions on telecommunications carriers that have lass than 10% market share;
- Open the doors to foreign direct investment in all carriers.
In the case of the second option, there is a question of which services basket or geography will be used to establish the market share. As the consultation paper indicates, the TPRP suggested that the 10% would be a test in ‘any’ market:
a presumption should be made that investments in any new startâup telecommunications investment or in any existing telecommunications common carrier with less than 10 percent of the revenue in any telecommunications service market would be in the public interest.
However, the language of the option laid out in the new paper [pdf] speaks about ‘total telecommunications market revenues’, which were just over $40B according to the latest CRTC monitoring report. This option has the effect of locking out investment flexibility for Canada’s big three: Bell, Rogers and TELUS.
While the consultation paper leaves a crack open for possible liberalization of cable companies and other broadcast distribution undertakings. Keep in mind that cable companies and all of the major phone companies hold broadcast distribution licenses. The consultation paper carefully tip-toes around whether we will see amendments to the Broadcast Act.
While it is recognized that telecommunications and broadcasting are increasingly converging, the policy objectives and legislative authorities under the Telecommunications Act and the Broadcasting Act are distinct, and the government is not considering changes to the Broadcasting Act. With respect to broadcasting content and culture, the government will not consider any action that could impair its ability to pursue Canadian culture and content policy objectives.
If the government wouldn’t consider the type of modifications proposed by Rogers to the House industry committee in April, it could have been simpler in its language with a clear statement like “the government will not consider changes to the Broadcasting Act.”Â
Comments are due July 30.