Wednesday, March 3, 2010

Ottawa to open cell phone market to foreign entrants: throne speech

OTTAWA — Canada's closed-shop telecommunications industry is being thrown open to foreign competition, setting the stage for more wireless players and possibly lower rates for cellphones and other telecom services.

The government signalled in the throne speech Wednesday it is opening key sectors, including the satellite and telecommunications industries, to both venture capital and investment from outside the country.

The move is not entirely a surprise, given that Industry Minister Tony Clement recently overturned a CRTC ruling that disqualified a new entrant into the wireless market, Toronto-based Globalive Wireless, for being too foreign owned.

And nearly two years ago, a government-appointed commission headed by former BCE chief executive Lynton Wilson recommended Ottawa loosen foreign ownership rules in communications, uranium and some other sectors.

Globalive, effectively controlled by an Egyptian company, has been selling its Wind Mobile wireless services since Christmas.

But now the Harper government appears ready to make the Globalive precedent the rule rather than the exception.

"Our government will open Canada's doors to venture capital and to foreign investment in key sectors, including the satellite and telecommunications industries, giving Canadian firms access to the funds and expertise they need," the document states.

The government said it will also make sure "unnecessary regulation" does unduly restrict foreign investment in Canada's uranium mining sector.

The world's biggest uranium company, Cameco Corp. (TSX:CCO) is based in Saskatoon and has partnerships with other foreign companies in the Athabasca region of northern Saskatchewan, one of the world's most prolific uranium mining areas.

But under provincial law the company is required to maintain its headquarters in Saskatchewan, which makes a potential merger or takeover more difficult.

In the past, Prime Minister Stephen Harper has said his government might open up its uranium sector to foreign takeovers provided Canada gets rights in the country of a foreign owner and that any investments from foreign parties meet a national security test.

Analysts said the door could be opened to a deal involving Cameco, but they don't expect a quick

Further details are expected in Thursday's budget, but industry analysts say the policy shift could harbinger great changes in Canada wireless market.

The digital transition next year opens the possibility of the government auctioning off a wide swath of new spectrum, allowing new players to bid and win space to operate new networks, as Globalive did last year.

"I think this is long overdue," said Michael Geist, a professor of e-commerce law at the University of Ottawa.

"The possibility of a Verizon or Deutche Telekom, or (Japan's) NTT Docomo, some of the large global players that have been investing in other markets might see Canada as more open to business."

Globalive chairman Anthony Lacavera also welcomed the move, saying it will give consumers more choices.

"Canada has got one of the least competitive wireless markets in the world demonstrated by the high pricing and low penetration (of mobile phones)," he said.

Lacavera said he isn't sure whether the Globalive precedent - the company is 65 per cent owned by Egyptian telecom giant Orascom -played a role in the federal government move.

Critics of the current system say Canadians pay significantly more for wireless services than Europe, which allows foreign competition.

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