Canadian Telecoms Need Foreign Competition To Lower Prices: OECD

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Add the Organization for Economic Co-operation and Development (OECD) to the growing list of parties who want foreign investment in Canadian telecommunications.

In its 2016 Economic Survey of Canada, released Monday, the OECD makes a case for foreign entry into the Great White North's telecom market, saying it brings the potential for cheaper Internet and more subscriptions.

"Greater competition in telecoms and broadcasting could lower prices and increase access to fast, high-quality networks," it said.

telecom foreign ownership

The OECD ranked Canada as the toughest country to crack when it comes to telecommunications.

It noted that "foreign interests have been generally allowed to hold no more than 46.7 per cent of voting equity in any facilities-based telecommunications carrier or a broadcast distribution undertaking."

The federal government did away with such restrictions for any telecoms that had less than 10 per cent market share back in 2012, but that did nothing to attract foreign investment, it said.

bell store toronto
Entrance to Bell Store at Eaton Centre mall in Toronto. (Photo: Roberto Machado Noa/LightRocket via Getty Images)

The OECD quoted a trade policy paper which noted that trimming foreign ownership restrictions could "reduce price-cost margins by two percentage points from Canada's average of 26 per cent" for public companies.

This would create "tangible gains for consumers and downstream firms," it said.

Foreign investment would most likely come from the United States — which, it noted, had lower-quality services available at lower prices.

rogers store toronto
The Rogers logo sits on display outside the company's headquarters building in Toronto, Ont. on Oct. 26, 2010. (Photo: Norm Betts/Bloomberg via Getty Images)

The OECD isn't alone in calling for changes to Canada's broadcast and communications laws.

The C.D. Howe Institute issued a report last month calling on the federal government to do away with Canadian content quotas for broadcasters.

Local and specialty TV stations currently must fill half their prime-time programming with Canadian content, and the institute wants the rule abolished altogether.

It, too, argued for more foreign ownership of telecommunications.

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