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NDP, Wind Mobile disagree on foreign ownership in the telecom industry by LuAnn LaSalle

Jan 19, 2012

Source: Winnipeg Free Press

MONTREAL - The head of Wind Mobile says Canada should clarify its ownership rules for the wireless industry to attract more foreign investment, not discourage it, because the outside capital has brought consumers more competition and lower prices.

Anthony Lacavera, chairman and CEO of Wind Mobile said Thursday, Lacavera was responding to the New Democratic Party coming out against loosening foreign ownership rules in the telecommunications industry

Lacavera said new arrivals in Canada's wireless industry have significant foreign financing and "consumers are enjoying the most competitive wireless industry in about a decade."

"Foreign capital has helped consumers," Lacavera said from Toronto. "Going forward, we need the rules to be clarified so that investors can invest with confidence."

The NDP argues there's no strong correlation between the number of competitors and pricing for wireless telecommunications.

NDP Industry critic Guy Caron said the Conservative government has to make the case that easing foreign ownership restrictions would benefit consumers.

"That consequence hasn't been demonstrated," Caron said.

"If you want to go in that direction and you're saying it will benefit quality of services and it will bring lower pricing, demonstrate it, show it. But I haven't seen anything yet," he said.

Analysts have noted that prices in the cellphone industry have come down in the last several years as a result of increased competition and some have said deep discounting on monthly plans isn't sustainable for the small wireless companies.

UBS analyst Phillip Huang said there are no signs yet of "more rational" pricing in the wireless industry.

New player Mobilicity has announced free data options for three of their unlimited talk and text plans, Huang said in a research note.

Currently, telecom operators in Canada are restricted to a maximum 46.7 per cent in direct and indirect foreign investment.

Last year, the federal government announced it was looking at three options on ownership. Removing all restrictions, removing restrictions for small players, or upping the foreign ownership limit to 49 per cent.

Wind Mobile was financially backed by Egyptian-based telecom Orascom, which is now owned by Russia's VimpelCom Group. The CRTC originally decided the company wasn't Canadian owned or controlled before that decision was overturned by the federal cabinet in December 2009.

Lacavera noted the NDP supports setting aside spectrum — radio waves — in an auction for new wireless companies to upgrade and expand their networks, which he said would protect companies such as his from being outbid by Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T).

But foreign ownership rules and the upcoming spectrum auction shouldn't be linked together, he said.

However, Caron said both the spectrum auction and foreign ownership rules address competition in the telecom industry.

"Both are different issues but they both want to tackle the same problem which is the level of competition."

Set-aside spectrum in the 700 megahertz band would make it easier for small and new entrants to bid for radio waves and to operate and compete in the sector dominated by Rogers, Bell and Telus.

Public Mobile and Mobilicity have also said they are in favour of spectrum being set aside, as it was in the 2008 auction, for the new wireless entrants.

© Winnipeg Free Press