As part of its plan to auction rights for the 700 MHz spectrum
band, the Canadian government announced yesterday
that it plans to amend the Telecommunications
Act to lift foreign investment restrictions for
telecommunications companies holding less than a 10 per-cent share
of the total Canadian telecommunications market.
The Honourable Christian Paradis, Minister of Industry,
announced the following commitments designed to provide Canadians
with greater choice and lower prices in the market for wireless
The foreign investment restrictions in the
Telecommunications Act will be amended in order to allow
non-Canadian investors to control 100% of domestic wireless firms
that have a market share of 10 per-cent or less;
The government will support an upcoming spectrum auction by
applying caps so as to guarantee new wireless competitors as well
as incumbents access to the spectrum up for auction;
Specific measures will be introduced in the 700 MHz auction to
ensure that rural Canadians have equal access to telecommunications
Improvements and extensions for the existing policy on roaming
and tower sharing to support competition and limit the
proliferation of new cellphone towers;
Reserving a portion of the 700 MHz spectrum for public safety
users including police and firefighter services across Canada.
In 2008, the government auctioned Advanced Wireless Services
spectrum in order to set aside spectrum for new entrants, while the
Canadian Radio and Telecommunications Commission (CRTC) established
policies to support the entry of new competitors in the market for
wireless services. In the upcoming spectrum auction, which is set
to take place in 2013, the government has said it will apply caps
enabling four or more service providers in each region to obtain
spectrum in both the 700 MHz and the 2500 MHz bands.
at least 80% of the members of the board of directors of the
carrier must be Canadian;
non-Canadians may not beneficially own, directly or indirectly,
more than 20% of the carrier's voting shares;
non-Canadians may not beneficially own directly or indirectly
more than 33 1/3 % of the voting shares of the
carrier's holding company; and
the carrier or the holding company may not otherwise be
controlled by non-Canadians (i.e., "control in
fact" – a test set out by the CRTC in the
Canadian Airlines decision and discussed in Telecom Decision CRTC
The government has said that the proposed amendments will be
apply to the Telecommunications Act and will create a
threshold exemption whereby no foreign ownership restrictions will
apply to telecommunications providers with revenue representing
less than 10% of the total Canadian telecommunications market. In
addition, the planned changes are designed to encourage long-term
investment in Canada's telecommunications industry by allowing
foreign-controlled companies that are successful in growing their
market shares beyond 10 percent - other than by merger or
acquisition - to continue to be exempt from the restrictions.
It should be noted, however, that in spite of the
government's commitment to reform ownership restrictions under
the Telecommunications Act, restrictions will remain in
place under the Broadcasting
Act and direct foreign investment will
continue to be subject to the controls found in the Investment Canada
For more background on the Canadian governments' plans to
liberalize the telecom sector and the implications for foreign
ownership please see our backgrounder and our previous blog post on this topic.
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