In July 2007, the Canadian government appointed the Competition Policy Review Panel, chaired by former telecom industry executive L.R. (Red) Wilson, to review key elements of Canada's competition and investment policies to ensure they are working effectively. Among the specific issues under examination are restrictions on foreign ownership in the Canadian telecommunications and broadcasting industries.
Currently, Canada imposes restrictions on foreign investors in the telecommunications and broadcasting sectors. The restrictions include the proportion of voting shares that non-Canadians can hold, directorship positions occupied by non-Canadians and the requirement that non-Canadians not have "control in fact" over the telecommunications or broadcasting entity. The restrictions derive from the Telecommunications Act, regulations under that Act and the Radiocommunication Act, and, in the case of broadcasting undertakings (including cable TV operators), pursuant to a Government Direction under the Broadcasting Act.
The foreign-ownership restrictions in the telecommunications sector have been repeatedly criticized as counter-productive to Canada's goal of achieving increased productivity and competitiveness. These criticisms have come not only from domestic bodies such the Canadian Competition Bureau and the 2006 Telecommunications Policy Review Panel, but also from international organizations such as the OECD. By contrast, support has been expressed for maintaining the restrictions in the broadcasting sector, given its cultural importance.
Thus far the Panel has issued a consultation paper, solicited submissions and conducted in-person consultations. Submissions have been received from numerous carriers, broadcasters and other interested parties, including US companies such as Level 3, Nextwave, Verizon and Vonage, and the Satellite Industry Association. Cultural groups, unions, and some of the incumbent operators have generally advocated maintaining the status quo in both the telecommunications and broadcasting sectors; non-incumbent telecom, satellite, and cable companies have generally supported eliminating or reducing foreign ownership restrictions, particularly in the telecommunications sector.
The Panel is scheduled to report to the Minister of Industry by the end of June. The Government will then decide what steps to take to respond to the Panel's recommendations.
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