TORONTO -- The country’s big communications firms presented a unified front yesterday during parliamentary hearings into whether Ottawa should lift foreign-ownership restrictions in the telecom sector as a way to promote competition, enhance services and create jobs.
Canada’s big three integrated telecoms, Rogers Communications Inc., BCE Inc., and Telus Corp. told parliamentarians that if they insisted on meddling in the sector, it must be done in a “symmetrical” fashion.
“New rules cannot advantage foreign investors to the detriment of Canadian companies,” said Michael Hennessy, senior vice-president of regulatory at Telus Corp. “Fairness requires equal treatment.”
A movement to open up the market has roots in a 2006 policy report warning that Canada’s telecommunications sector should be liberalized to avoid competitive stagnation and its economic consequences. A second panel two years ago endorsed the 2006 study, suggesting a gradual lifting of foreign-ownership restrictions in two phases over five years.
The first phase would remove barriers for new entrants and smaller players that command less than 10% market share, allowing international capital to fund firms who could grow to rival incumbents. The second phase would contemplate lifting restrictions on incumbents.
Telus, Bell and Rogers attacked the notion, saying it would disadvantage the three dominant telecoms. “Make it symmetrical,” said Mirko Bibic, Bell’s chief of regulatory. “We should all have access to foreign capital.”
That argument has its critics. Rogers, Bell and Telus dominate Internet, phone, cable and wireless services and have no trouble accessing capital at attractive rates at home or in international debt markets.
In contrast, smaller and new firms in the sector like the raft of new wireless players still pay very high costs for capital, analysts say, and face an extremely difficult task of growing share.
“This group are all not going to survive and the market knows that. The risk premium is very high,” said one legal source close to a new entrant. “So it’s not accurate for Bell and Telus to argue that Public Mobile, [Mobilicity] and Globalive would be at a competitive advantage in accessing foreign markets.”
The House of Commons hearing was convened in light of the controversial decision by cabinet to allow Globalive Wireless Management Corp., which has partnered with Egyptian carrier Orascom, to enter Canada’s cellphone market.
The December decision was followed by remarks in last month’s Speech from the Throne that indicate the Harper Conservatives support the 2006 and 2008 panel suggestions.
On Tuesday, regulatory chief Konrad von Finckenstein said the CRTC opposed complete liberalization but did support raising foreign control to 49%. The committee is expected to release a response by summer.
Financial Post
jasturgeon@nationalpost.com
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