Wireless competition would improve without foreign ownership limits

Opening Canadas $19 billion wireless market to foreign ownership would promote competition far better than existing rules, which cap investment but give preferential access to offshore telecom giants, the Fraser Institute says.In a research paper released Monday, the policy think-tank said eliminating remaining restrictions would clear the way for foreign investors to enter the country on a large scale through acquisitions and mergers.Just the threat of a foreign takeover, it added, would give major carriers Rogers, Bell and Telus a greater incentive to offer customers better pricing and service.

There are more efficient ways to bring additional competition to Canadas wireless market that dont require unfairly handicapping the existing large Canadian telecom firms, says the paper by Fraser Institute senior fellow Steven Globerman.If the Canadian government is willing to rely upon market competition to maximize the consumer benefits of wireless telecommunications, it could do so immediately by lifting foreign investment restrictions.The paper says the chance of expansion through full acquisitions might help lure foreign-owned firms now restricted to buying companies with less than 10 per cent of the wireless market as measured by revenue.It lauds Ottawa for relying on market forces to improve services for consumers, but challenges the governments view that the wireless landscape in this country is fundamentally uncompetitive.

While the big three carriers dominate sales, the paper cites an OECD study that found wireless prices were lower in Canada than in the United States in four of six usage scenarios, although they were higher than the average for all OECD countries.As such, it says theres a lack of justification for rules that expand new entrants access to networks built by the incumbents, and give them the right to bid on more prime cell spectrum and the ability to acquire telecom assets that are effectively off-limits to established carriers. Those rules could even discourage investment as the big three are forced to defend their turf, the paper said.

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