In its 2010 Budget delivered Thursday, March 4, Stephen
Harper's Conservative government announced that it will remove
the restrictions on foreign ownership of Canadian satellites. The
Speech from the Throne, delivered the previous day, had held out
the possibility of loosening the restrictions on foreign investment
in telecommunications companies more generally, and it remains
likely that this government will try to take broader steps in this
regard. For the time being, however, the Government is likely
playing it safe by addressing a relatively small and
uncontroversial segment of the market.
The Speech from the Throne
"Our Government will open Canada's doors further to
venture capital and to foreign investment in key sectors, including
the satellite and telecommunications industries, giving Canadian
firms access to the funds and expertise they need."
This statement, delivered Wednesday in the Speech from the
Throne, engendered anticipation and speculation about the potential
for liberalizing Canada's telecommunications ownership regime,
which places limits on foreign investment in facilities-based
"telecommunications common carriers", including
traditional telephone companies, wireless providers, satellite
owners and cable companies.
The Speech from the Throne was vague, with the details of any
proposed liberalization left for another day. There was speculation
in the press, however, that the Government would follow the
recommendations of the June 2008 Competition Policy Review Panel
and the earlier Telecommunications Policy Review Panel's
proposal for the staged removal of the ownership restrictions. In
the first phase, for a period of five years, foreign investment
would be permitted on a greenfield basis or by acquiring an
incumbent Canadian telecom company with a market share of 10
percent or less. In a second phase, beginning at the end of the
five-year period, there would be a broader liberalization of the
foreign investment rules for both telecommunications and
broadcasting. The Speech from the Throne was completely silent on
the subject of foreign ownership restrictions over broadcasting,
In the budget document released Thursday, the Government
referenced these recommendations, but only addressed the
restrictions as they relate to owners of Canadian satellites
– principally, Telesat Canada and Ciel Satellite. These
entities compete internationally and the Canadian satellite regime
has long permitted the use of foreign satellites for many
applications. Neither Telesat nor Ciel own broadcasting assets,
moreover. This likely made this niche segment an ideal candidate
for liberalization without raising political questions over content
It remains to be seen how the Government will pursue its now
explicit policy to open Canada's doors to increased venture
capital and foreign investment in the telecommunications industry.
We will continue to inform you of developments in this critical
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
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