Foreign Ownership Rules in the Telecom Industry: It Affects Us All

A debate is swirling around the proposed removal of foreign ownership restrictions in the telecom sector. Even the chairman of the Canadian Radio-television and Telecommunications Commission (CRTC) has deemed the rules set out in the current Telecommunications Act to be too restrictive and complicated. To address the issue, in March 2010, the House of Commons Standing Committee on Industry, Science and Technology began a review of Canada's foreign ownership rules and regulations under the Telecommunications Act and the Radiocommunication Act

Primus is advocating for removal of the foreign direct investment (FDI) restrictions for Canadian telecom carriers with less than 10% of total telecom revenues. These are the benefits we see for business:

  • Opening up foreign investment will increase competition and investment in the telecom industry, which is good for small and medium-sized businesses (SMB) as it will provide greater choice
  • Removing the FDI restrictions will strengthen competitors and competition in the SMB market, enabling Primus and other competitors to continue to respond to the needs of the market with innovative and SMB focused products.

An increased availability of competitive and innovative service offerings will enable SMBs to increase their efficiency and productivity, which will provide significant benefits to both SMBs and the Canadian economy.

Where things stand
Based on a study published in 2009 by the International Telecommunications Union, (ITU), Canada ranked 19th of 154 countries in terms of information and communication technologies (ICT) development (based on 2007 data). In addition, the level of concentration in the Canadian telecommunications industry is high. Indeed, the large incumbent telephone companies and large cable carriers currently hold 94% of the total Canadian telecommunications market.

Primus believes Canada can do better. "A natural result of greater investment in telecommunications networks will be an increase in the competitive supply for telecommunication companies seeking to expand their networks and service capability and an increase in the availability of alternative service providers to Canadian consumers," said Andrew Day, CEO of Primus, in the company's submission to Industry Canada on the issue. Further, "an increase in backbone and transport network facilities will result in greater competition in the wholesale market and, therefore, increased customer choice."

In a nutshell, Primus has championed these benefits and is a prime example of a telecommunications company that has provided greater competition, innovation and investment in the telecom industry to date under the existing rules. Removal of the foreign ownership rules would allow us an even greater ability to make offerings to you, our customer, that will help you thrive and grow. Giving us stronger flexibility to go about our business will, in turn, increase your choices as to how you go about your business. We encourage - and want to participate in - the continued development of a world-class Canadian telecommunications industry.

What's next
The government is currently reviewing the Standing Committee's 5th report, which examined the issue of foreign ownership under economic, social and equity and cultural considerations.

Primus encourages our readers to research the issue and get involved. Examine the pros and cons of opening up foreign investment as outlined in the Report of the House of Commons Standing Committee on Industry, Science and Technology on Canada's Foreign Ownership Rules and Regulations in The Telecommunications Sector and read Primus' full Submission to the Industry Canada Consultation on the Foreign Investment Restrictions in the Telecommunications Sector.

We would also encourage you to tell us what you think. Send your comments to