Canada to allow foreign ownership for small telecoms

The current limit of direct foreign investment in broadcasting and telecommunications carriers is 46.7 percent.

Paradis told a press conference the restriction would be lifted for telecom companies that hold less than a 10-percent share of the total Canadian telecommunications market to allow smaller players access to capital to grow.

In turn, this would increase competition and put pressure on telecoms to lower prices, he said.

Paradis also said caps would be applied in an upcoming auction to guarantee that new entrants in the Canadian sector have access to the spectrum up for grabs, alongside incumbent carriers.

"The measures I am outlining today will ensure the timely availability of world-class wireless services at low prices for Canadian families, including those in rural areas," the minister said.

But opposition parties were skeptical, saying there is no guarantee the measures would result in lower mobile rates for consumers.

According to a government consultation paper, only three countries that are members of the Organization for Economic Cooperation and Development restrict foreign investment in their telecommunications sectors: Canada, Mexico and South Korea.

Among them, Canada's rules are the strictest.

Three carriers -- Bell, Rogers and Telus -- currently dominate the Canadian telecommunications sector, which is worth 40 billion dollars annually.

In 2008, the government set aside spectrum licenses for new entrants to try to boost competition, after Canadians began protesting high cell phone rates which are among the highest in the world.

These small players now serve one million Canadians.

Paradis said that first step led average mobile rates to go down by 10 percent since 2008.

But incumbents still control 85 percent of the mobile spectrum, including all of the low frequency spectrum, especially desirable due to its ability to propagate over long distances and penetrate buildings.

Global mobile data use has tripled each year since 2008. In Canada, eight million people already own a smartphone and the number is increasing rapidly.

The government is now making additional spectrum available for mobile services to help meet the rapidly growing demand for high-speed wireless services such as high-definition video and video conferencing, Paradis said.

But a condition of the new licenses is that providers must quickly make advanced services widely available, including in sparsely-populated rural areas in a country with the second largest land mass in the world.

The 700 MHz spectrum auction would be held in the first half of 2013 and would be followed within a year by a 2500 MHz for data auction, the minister said.