It is time to end foreign ownership restrictions in the Canadian telecommunications sector, to make better use of competitive forces in providing telecommunication services to consumers. This is the majority view (PDF) of the C.D. Howe Institute’s Competition Policy Council, which held its inaugural meeting June 17, 2011.
The Competition Policy Council comprises top-ranked academics and practitioners active in competition policy. The Council, chaired by Finn Poschmann, Vice President, Research at the C.D. Howe Institute, provides analysis of emerging competition policy issues, including those potentially faced by the federal Competition Bureau. The Council, whose members participate in their personal capacities, convenes a neutral forum to test competing visions of competition policy and share views with policymakers and the public.
At the June 17 meeting, the Council addressed the following question: “Should the federal government end existing foreign ownership restrictions in Canadian telecom because of their impact on competition?”
The Council called for the abolition of ownership restrictions in Canadian telecommunications and network infrastructure used for distribution. At present, the Telecommunications Act and its regulations require that a telecommunications company be controlled by a Canadian, and that nonresidents may control shares representing not more than 20 percent of an operating company and 33.3 percent of a holding company. The Broadcasting Act requires Canadian ownership and control of the broadcasting system, including broadcast distribution undertakings.
The Council recommended that:
- foreign ownership restrictions be lifted for all market participants, including new entrants and incumbents;
- owing to corporate and technological convergence in telecommunications services and broadcasting, foreign ownership restrictions simultaneously should be lifted for telecommunications carriers and broadcast distribution undertakings (BDUs, including broadcast distributors that are also content providers);
- to permit speedy competition for the market, restrictions on ownership should be removed in full and at once, without gradual raising of ownership thresholds; and
- measures for pursuing discrete public policy objectives, such as Canadian content requirements for broadcasters, should continue to be met through other means, including better targeted policy tools, such as subsidies for content production.