Backgrounder—Facts About Foreign Investment in Telecommunications: More Choice

In 2012, the Government amended the Telecommunications Act to lift foreign investment restrictions for companies that hold less than a 10-percent share of the total Canadian telecommunications market. Allowing new entrants to access the kind of significant and sustained investments they need to grow and compete in this sector will promote the timely availability of advanced services for all Canadians, including those in rural areas.

In order to encourage long-term investment in Canada's telecommunications industry, companies that are successful in growing their market shares in excess of 10 percent of total Canadian telecommunications market revenues other than by way of merger or acquisitions will continue to be exempt from the restrictions.

However, a foreign entrant wishing to enter the Canadian market cannot acquire Canadian companies that push them beyond the 10-percent limit; they must grow beyond this level by competing and adding to their subscriber base.

All carriers will continue to be subject to Canadian laws, including those enacted to protect public safety and national security and the Investment Canada Act. Restrictions on foreign ownership under the Broadcasting Act are in place for all carriers with broadcasting distribution activities.

The Government's policy is to encourage new entrants into the wireless market in order to increase competition and benefit all Canadians through more choice, better services and lower prices.

This policy is the result of extensive consultations over a number of years. In 2008, the Competition Policy Review Panel recommended raising Canada's overall economic performance through greater competition, thereby providing Canadians with a higher standard of living. The Panel also suggested that Canada relax its restrictions on foreign investment in the telecommunications sector to achieve three objectives:

• greater access to capital and expertise;
• increased competition in the sector; and
• improved services for consumers.