Foreign investment restrictions lifted for smaller players in wireless auction

Ottawa moved Wednesday to level the wireless playing field by placing limits on the coming wireless spectrum auction and lifting foreign-investment limits on small telecom firms in an effort to boost competition.

RUSSELL, Ont. — Ottawa moved Wednesday to level the wireless playing field by placing limits on the coming wireless spectrum auction and lifting foreign-investment limits on small telecom firms in an effort to boost competition.

Industry Minister Christian Paradis says the new measures will allow new wireless carriers into the market and foster greater competition in the telecom industry after the auction expected next year.

“The measures I am outlining today will ensure the timely availability of world-class wireless services at low prices for Canadian families, including those in rural areas,” Paradis said in a statement.

Canada’s wireless market is dominated by three big players: Telus (TSX:T), Rogers (TSX:RCI.B) and Bell (TSX:BCE).

The changes to the auction rules will let at least four companies obtain spectrum in each of Canada’s 14 licence areas, effectively making one block available for one of the smaller players.

As well, companies with less than 10 per cent of the telecom market will no longer have restrictions on foreign investment.

The government is also applying measures to the 700-MHz wireless spectrum auction to ensure rural Canadians receive the same level of service as people who live in bigger towns and cities.

“Wireless services are changing our families, our work, our economy and our communities. Think of the BlackBerry. It is a work tool that many could not live without. Not to mention to how we watch television,” Paradis said.

“The importance of these technologies are undeniable. It is essential that these be offered at affordable prices in every region of our country.”

Companies that hold more than one block of spectrum will have to provide wireless services to 90 per cent of their coverage areas within five years, and to 97 per cent of their coverage areas within seven years.

Antenna tower-sharing and roaming policies will also be changed, and a certain portion of the spectrum will be set aside for public-safety services such as firefighters and police.

Amit Kaminer, an analyst at the SeaBoard Group, a telecommunications and technology consulting firm, said Industry Canada tried to balance the interests of all sides.

“Relaxing the foreign ownership rules of smaller firms is an important step in the right direction but without set-asides the incentive for the new entrants to bid in the auction in the first place is greatly reduced,” he said.

“That said, the caps structure does leave small but important opportunity for the new entrant to access a limited amount of spectrum.”

Wind Mobile and Public Mobile — two of Canada’s smallest cellphone companies — had threatened to sit out spectrum auction if space wasn’t set aside for smaller players like themselves.

Anthony Lacavera, chairman and CEO of Wind Mobile, said Wednesday he was pleased by the decision to lift the foreign ownership limits.

“It is a clear win for Canadians, it is a clear win for Canadian consumers and I’m very proud that we’ve been fighting that battle as long as we have,” he said. “Finally, we’ve gotten it across the goal line.”