Sunday, March 07, 2010

Canada - Consumers seen as winners in plan to open telecoms market

[canoe] Consumers could be the big winner under the Canadian government's plan to liberalize foreign investment in the country's telecommunications sector, with easier access to capital enabling carriers to lower prices and offer more choice.

Long criticized as overly restrictive and out-of-date, Canada's Telecommunications Act caps foreign ownership at 20 percent of a Canadian carrier's voting shares. Restrictions on direct and indirect control are 46.7 percent.

In a policy speech on Wednesday, the minority Conservative government said that it wants to allow more foreign investment in such key sectors as telecoms and satellites. Industry Minister Tony Clement said the government is open to discussions about foreign investors holding a majority stake in domestic carriers.

``I think that the clear winner is consumers, to the extent that a free flow of capital, presumably, will result in greater choice,'' said BMO Capital Markets analyst Peter Rhamey.

That choice could extend to carriers, brands and prices.

But analysts caution that complexities in Canadian legislation could hamper the pace of reform and political tussles could stall the government's efforts to overhaul regulations.

Canada's closed-shop policy came into question in December 2009 after the government's contentious decision to overturn a regulator's ruling to block Egyptian-backed Globalive from offering wireless service.

Ottawa decided that Globalive, which has received financial backing from Egypt's Orascom Telecom estimated at more than C$500 million, is a Canadian company, meeting ownership and control requirements

Shares of Rogers Communications, BCE Inc and Telus Corp all fell on that news, as investors worried that competition would eat into the 95 percent market share and profits enjoyed by Canada's big three carriers.

Globalive's Wind Mobile service will be joined by new entrants Public Mobile and Mobilicity this year. All three were successful bidders in the government's 2008 wireless spectrum action, which aimed to spark new competition.

Consumers seen as winners in plan to open telecoms market

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