Hey there, time traveller! This article was published 14/3/2012 (2043 days ago), so information in it may no longer be current.
MTS Allstream got what it wished for Wednesday when Ottawa announced it will lift foreign ownership restrictions on small telecom companies.
The ruling eliminates foreign ownership restrictions on companies with less than 10 per cent of the telecom market.
The announcement coincided with new measures also released Wednesday that will allow new wireless carriers into the market with the coming wireless spectrum auction expected next year.
"This is exactly what we have been asking them to do for some time," said Chris Peirce, chief corporate officer with MTS.
MTS and others have been lobbying Ottawa for some time for the change, arguing small telecom providers and new entrants are handicapped by foreign investment restrictions.
Under the ruling, MTS's Allstream division would be eligible for the loosened foreign investment allowance, not MTS's Manitoba operations.
"We have said for some time that we need a different kind of investment to be able to achieve what we know we can achieve with Allstream," Peirce said. "It's a different type of capital that's needed. Allstream is a growth story."
It's not clear how the Winnipeg-based telco will be able to attract foreign investment targeted only at Allstream, but analysts have long believed MTS's Allstream division would benefit if the restrictions were loosened.
Industry Minister Christian Paradis said the measures will allow new wireless carriers into the market and foster greater competition after the auction expected next year. "We want to have a fourth player," Paradis said.
"This is the bottom line here: we have the three incumbents. We want to have a fourth player. So what we are bringing here are the tools that will likely help to achieve this target."
Canada's wireless market is dominated by 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, making one block available for one smaller player.
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 big cities.
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 of the spectrum auction if space wasn't set aside for smaller players.
Anthony Lacavera, chairman and CEO of Wind Mobile, said Wednesday he's pleased by the decision to lift the foreign ownership limits, but said the cap system handicaps the smaller companies because there isn't enough of the valuable 700 MHz spectrum available.
Rogers spokeswoman Patricia Trott said the company would review the minister's decision.
"We've always said a fair and open auction is the best way to ensure Canadians have access to the best and latest technology," Trott said.
The new spectrum up for auction has the ability to allow cellphone calls in elevators, deep in underground parking lots in big cities and in basements and attics in suburban areas.
The frequencies, made available by the switch to digital TV signals, also provide better and more affordable coverage in rural Canada because fewer cellphone towers are needed.