Canadian Foreign Ownership Rules Could Change Beginning Spring 2011

The Canadian government looks to be getting cold feet over relaxing foreign ownership limits on domestic phone companies, a move likely to produce equal treatment for Canadian broadcasters down the road.

Federal industry minister Tony Clement, addressing the International Institute of Communications Canada conference in Ottawa, said the feds are weighing whether to lift foreign ownership limits above the current 20% level on domestic phone companies.

A decision on easing or eliminating foreign ownership rules in the telecom sector will also be made along with whether to allow foreign companies to participate in a planned 2012 auction of new wireless frequencies for mobile phones.

“By spring of next year, I will be in a position to assess how all these elements fit together and decide on the best way forward,” Clement said.

Current Canadian media ownership rules force U.S. and other foreign companies to jump through a series of regulatory and financial hoops before they can acquire stakes in culturally-sensitive domestic media companies.

The federal minister told the conference he has been consulting with the Canadian industry on current foreign ownership “restrictions” since the summer.

Delaying a decision on changing foreign ownership rules to spring 2011 is expected to give the ruling Conservatives some breathing room in case they are forced into an early federal election over their upcoming early 2011 federal budget.

Enabling foreigners to control more of the telecom sector is expected to have a domino effect on domestic broadcasters as Canadian content distribution and broadcasting is fast converging.

Ottawa is looking to open up the domestic telecom sector to increased competition and foreign growth capital.

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