Globalive urges Canada to open up telecom sector

Reuters News
Posted: Jun 02, 2011 10:39 AM
Globalive urges Canada to open up telecom sector

TORONTO (Reuters) - Globalive had no choice but to seek foreign funds for its Wind Mobile service and wants Canada to loosen restrictions on outside influence quickly, its chairman said on Thursday.

"It is time for competition to work in this country," Anthony Lacavera told industry executives at the Canadian Telecom Summit in Toronto. "The existing telecommunications foreign control restrictions are, in our view, an overly broad and inefficient regulatory tool," he said.

The company's fate as a contender in Canada's wireless industry rests with the courts, after the government overturned a regulator ruling that said funding from Egypt's Orascom Telecom gave the foreign company too much influence.

"The reality is that in order to form an effective, lasting, competitive alternative, we must access an extraordinary amount of capital," Lacavera said.

"Unlike mining and resources, the Canadian capital markets for telecommunications are very small. More importantly, the business interests of our Canadian banks with the incumbents make it virtually impossible to access Canadian capital to the scale that is required."

Canada's Telecommunications Act restricts foreign ownership to 20 percent of a telecom company's voting shares and limits direct and indirect foreign control to 46.7 percent.

The Conservative government, reelected in May with a majority, has long championed the idea of greater competition in the sector, but new industry minister Christian Paradis has declined to say how he expects to rule.

Lacavera said Canadians should be more concerned by increasing concentration of broadcasting assets in the hands of network owners.

"Where we once had a variety of voices; we are increasingly living in a Canada where our content distributors own our content."

Rogers Communications owns CityTV, Shaw Communications purchased CanWest last year and BCE Inc's Bell Canada recently closed a deal for CTV, Canada's largest private broadcaster.

"Those same content distributors will find ways to use their distribution pipelines to steer customers toward content they control and away from content controlled by their competitors," he warned.

Canada's broadcast and telecom regulator is studying this convergence in a closely watched regulatory process.

Globalive was able to enter the wireless market after a 2008 spectrum auction in which some airwaves were set aside for new entrants to foster competition.

The government plans another auction, of valuable 700 MHz spectrum that travel long distances and penetrates obstacles, due late next year.

Globalive has asked for incumbents to be completely blocked from the sale.

"The government should create rules allowing the new entrants a chance to bid for access to spectrum in upcoming auctions and ensure incumbents do not acquire it at any price to stave off further competition," he said.

(Reporting by Alastair Sharp; editing by Janet Guttsman)