Clement to Consider Raising Telecom Ownership Limits

Canada will consider raising foreign ownership limits for telephone providers such as BCE Inc. before it moves ahead with the sale of wireless spectrum, Industry Minister Tony Clement said today.

Canada plans to auction 700-megahertz spectrum by 2012, Clement said today in a speech in Ottawa. The governing Conservative Party next year will also begin consultations on selling 2500-megahertz spectrum, Clement said.

Changing the rules on foreign ownership “would have to come before the auction,” Clement told reporters after the speech, because participating companies would need to know “how the auction is going to work” and “what their sources of capital are going to be.”

The government said in June it will consider eliminating or raising the 47 percent cap on foreign ownership to increase competition in the C$40 billion ($39.2 billion) industry. At the time, Clement said the consultations would last until July 30 and the government would introduce legislation “as quickly as possible.”

In his speech today, Clement said he has been consulting “throughout the summer on whether the current restrictions constitute an impediment to growth,” adding that “how spectrum is allocated and who is eligible to compete for it, and pay for it, are interrelated issues.”

New Companies

“By spring of next year, I will be in a position to assess how all these elements fit together and decide on the best way forward,” Clement, 49, said.

Canadian telephone companies, including Telus Corp. and Rogers Communications Inc., bid C$4.25 billion ($4.18 billion) for wireless airwaves in the country’s last auction in 2008. In that sale, Canada set aside some spectrum for new companies. Clement’s consultations may examine if the government should do the same at the next auction and if it should sell the 700-MHz and 2500-MHz spectrum at the same time.

Airwaves in the 700-MHz area will become available when analog television broadcasting ends next year. AT&T Inc. and Verizon Communications Inc., which bought spectrum in that range last year, say radio signals can be sent farther and more effectively using less power at that frequency.

Clement also said Canada is asking its financing agencies to encourage companies to invest in information and communication technologies. He said the Business Development Bank of Canada will make “ICT adoption a core part of its mandate,” Clement said. “I have also asked the BDC to more aggressively market its financial products that provide companies with the capital they need to purchase new equipment.”

Similarly, Export Development Canada is looking at new ways to encourage companies to invest in research and development and commercialization, Clement said. “This is a critical reorientation by EDC,” he said.

To contact the reporters on this story: Alexandre Deslongchamps in Ottawa at adeslongcham@bloomberg.net; Greg Quinn in Ottawa at gquinn1@bloomberg.net

To contact the editors responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net.

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