Debate on foreign ownership needs to begin immediately, wireless players say

Security issues shouldn’t put an urgent discussion of foreign ownership limits on the backburner, delegates at the Canadian Wireless Telecommunications Association’s Communications 2001 were told. While the foreign ownership issue has taken a backseat to national protection in the wake of the Sept. 11 attacks in the U.S., wireless carriers are still in agreement that the time for action on relaxing current rules is now. Each of the country’s wireless companies is in favour of lowering foreign ownership thresholds, but are still struggling with an appropriate timeframe to move in that direction. While some advocate quick resolution to the situation, others are proposing a go-slow approach that would see the limits changed within a few years. At the annual conference and trade show of the CWTA in Toronto last week, the most vocal proponents of moving quickly to a broad discussion of the issue were Chris Pierce, VP regulatory and government affairs of AT&T Canada, and Microcell Telecommunications Inc.’s VP regulatory affairs Dean Proctor. Proctor stressed that access to equity – as opposed to debt financing – is imperative to minimize the cost of capital, especially for CLECs. He gave the example of the cost of capital for BCE Inc., with its comparatively low debt/equity ratio, of about 6.3 per cent compared to GT Group Telecom’s cost of approximately 20 per cent. Lowering foreign ownership thresholds, he argued, could help close the gap by reducing smaller companies’ reliance on debt financing. What’s in the public interest? Pierce asked the sparse crowd of about 20 people attending the focus session if it is in the public interest to maintain the current limit a foreign company can own in a Canadian telecommunications service provider. He explained that the primary reason Canada needs to loosen the restrictions is the lack of capital upon which Canadian carriers can draw to build out networks. To compete with incumbent providers, CLECs need a well-funded strategy, he said, but as several high-profile CLEC failures of late have proven, the regulatory environment also needs to be modified. The need to maintain current restrictions should rest on the shoulders of those advocating them, Pierce said, not on those who want them removed. "The burden of proof should be on those that would retain restrictions like these to justify why the national interest requires Canada to restrict investment in an industry that is so important to achieving our national goals through growth, investment and innovation," he said during the session. "The question shouldn’t be, are any changes required? The question should be, are the restrictions still required?"

Debate on foreign ownership needs to begin immediately, wireless players say

News | 11/13/2001 5:00 am EST

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