With the introduction of the federal government's latest
budget bill, Canada is a step closer to lifting foreign ownership
restrictions for some telecommunications providers.
In mid-March, the Minister of Industry announced planned changes
to the current foreign ownership restrictions that are intended to
provide greater access to capital and expertise for new entrants
and smaller telecommunications carriers. Last week's
budget bill, which amends over 50 statutes, contains amendments to
the Telecommunications Act
that are designed to put these changes to the Canadian ownership
rules into effect.
Under the proposed amendments, which commence at section 595 of
Bill C-38, the Jobs, Growth and
Long-term Prosperity Act, Canadian ownership
rules will no longer apply to a telecommunications common carrier
if the carrier and all its affiliates have total annual
telecommunications revenues that represent less than 10% of total
Canadian telecommunications revenues, as determined by the
Based on the most recent Communications Monitoring
Report, in which total Canadian telecommunications
revenues for 2010 were reported at $41.7 billion, this means that
telecommunications common carriers with annual revenues from
telecommunications services of less than $4.2 billion will not be
required to meet Canadian ownership requirements.
If a carrier that was eligible to operate without meeting
Canadian ownership requirement exceeds the 10% threshold through
internal growth, they will continue to be unaffected by Canadian
ownership rules; however, those that exceed the threshold due to
the acquisition of control of another carrier, or the acquisition
of the assets of another carrier will become subject to ownership
requirements. In fact, the amendments contain a new
requirement that telecommunications carriers with less than 10% of
total Canadian telecommunications revenues must notify the CRTC
when it acquires control of another carrier or acquires assets used
by a carrier to provide telecommunications services.
The amendments would also introduce a number of new definitions
to the Telecommunications Act.
One of the more notable new definitions fixes a current feature
in the Act which provides that only corporations can be eligible to
operate as Canadian carriers. Over the years, this limitation
has provided some challenges of interpretation with respect to
other forms of business associations, such as partnerships, where
the Commission has found that in
order to be eligible to operate, each partner in a partnership must
be a corporation that meets Canadian ownership and control
The proposed amendments to the Telecommunications Act
would add a new definition of an "entity," which would
encompass not only corporations, but also to partnerships, trusts
and joint ventures, each of which would now be eligible to operate
in Canada, provided that they meet any applicable ownership
requirements. The requisite level of ownership and control
for non-corporations would be determined based on the "voting
interest" in a partnership, trust or joint venture, being the
ownership interest in the assets of the business that entitles the
owner to receive a share of the profits and to share in the assets
upon dissolution. At the operating company level, at least
80% of such voting interests would have to be beneficially owned by
Other proposed amendments to the Act relate to telemarketing rules and the National Do Not
Call List, giving the CRTC the explicit power to
conduct investigations to determine whether there has been a
contravention of any order made by the Commission with respect to
its telemarketing rules, and clarifying the Commission's power
to set fees for the use of the National Do Not Call list and
Since it is contained in the budget bill of a majority
government, it is expected that these amendments will be passed in
the coming weeks.
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