Backtracking on Foreign Investment in Telecom

The government appears to be backtracking on quickly opening the Canadian telecom market to foreign investment.  Industry Minister Tony Clement's press secretary now says "our government will also be investigating the existing restrictions for the telecommunications industry. This is a complex issue involving changes to business models, rapidly evolving technology, and existing legislation, such as the 1993 Telecommunications Act."


  1. Yes, but…
    If I read the second last paragraph properly, simply opening it up would confuse the matter. Let’s not forget the GlobeAlive debacle. They were permitted to bid as they met the foreign ownership criteria of the RadioCommunications Act, but were denied later under the foreign ownership criteria of the TeleCommunications Act.

    Certainly making rules consistent under those two acts, plus the Investment Canada Act (plus any other applicable acts) would be a first, and to me required, step prior to opening the flood gates to foreign investment, in particular given that the telecoms sector is affected by these three acts. Once that is done, get on with some limited opening of the market.

    The question is how much foreign ownership of Canadian infrastructure is palatable to the Canadian public? We all want more competition. The question becomes how much of it are we willing to allow it to be controlled by companies that are foreign controlled?

  2. Canadian companies are deeply entrenched right now. If they aren’t willing to fight hard enough to hang onto market share then I don’t care if any of it is owned by Canadians. Packets go down the pipe no matter who owns them.

  3. Can I take it then that it is palatable to you? Are you willing to have your phone conversations diverted so that Fatherland, er, Homeland Security or the FSS can more easily tap your lines? That is the kind of questions that need to be asked and addressed.

    Sure, one could argue that under the PIPEDA regs they couldn’t do that… However, what can the Canadian government do if PIPEDA is broken? Toss them out? Oops, now a whack of customers are without service.

    I am not arguing against the competition. My concern is specifically with foreign control of the competition, in particular where Canadian laws conflict with the laws of that country.

  4. Darryl Moore says:

    Foreign ownership not a big issue
    “Sure, one could argue that under the PIPEDA regs they couldn’t do that… However, what can the Canadian government do if PIPEDA is broken? Toss them out? Oops, now a whack of customers are without service.”

    Errr, why would they have to be without service? Just because you kick the company out, doesn’t mean that they take the infrastructure with them. Call it a “proceeds of crime bill” if you like. You break the law, you pay the price. Resell the infrastructure to some someone who plays by the rules. Proportionately is would actually be a lot less severe than existing statutory damages for copyright infringement.

    Granted, you bring up a reasonable issue, but it is not an unresolvable issue.

  5. @Darryl Moore: Really? Nationalize the service for a short period and then sell it? What prevents them from removing key infrastructure on the way? For instance, key nodes in the system, or nodes which control the system (assuming that they are in Canada to start with, such as billing, etc)… Sure, it may be sabotage, but what incentive is there for them to turn their investment over to the Canadian government? Even if they don’t remove key infrastructure, how does that deal with retribution from the other country. I suggest you look into the reason why the US originally created the embargo against Cuba.

    Now, I realize that my first para about the FSS and Homeland Security was a bit extreme, but remember that, where Canadian laws and the laws of the home country of the foreign company clash, expect Canadian law to lose. For this reason, I would suggest that opening up ownership of infrastructure to foreign ownership should be a last resort rather than a first resort to get additional competition.

    In fact, one could make an argument that the infrastructure should be owned by the government, the companies then resell access to the infrastructure. This means that the government needs deal with only a few companies, and the companies deal with the thousands of subscribers and all of the attendant headaches that come with it (such as not paying the bill, etc). We already have something similar in Canada, the difference being that the landline phone infrastructure is owned by private companies and resold by others (for instance, isn’t this what Verizon does?).