Ottawa — Canada's telecommunications industry urgently needs fundamental reforms, including deregulation and elimination of restrictions on foreign ownership of some domestic firms, an industry panel concluded Wednesday.

Some experts believe that if the panel's rules are broadly adopted, it could lead to more competition and that in turn could lead to lower consumer prices for some telecom services, such as Internet access or local phone service.

But the panel also acknowledged fears that open, unregulated competition could harm consumers in rural and remote parts of Canada.

The panel, in its recommendations, tried to balance those two views by calling for less regulation and more competition while at the same time calling for the federal government to set affordable and universal access as a top policy priority.

"We have concluded that it is now time we started to make fundamental changes (to Canada's telecommunications industry)," wrote Gerri Sinclair, a former Microsoft Canada executive who chaired the three-person panel.

"Otherwise our competitiveness and productivity will lag, and Canadians will be deprived of the full benefits of continuing technological innovation and the increasing competitiveness of our telecom industry."

It's unclear, though, when or if the federal government will act on these regulations.

While Industry Minister Maxime Bernier has said he generally favours deregulation, an overhaul of Canada's telecommunications is not one of the Harper government's top priorities.

In the last few weeks, senior government officials, including Prime Minister Stephen Harper, have indicated that they plan to focus on their priorities – daycare reform, the GST cut, a federal accountability act, toughening the criminal justice system, and eliminating health care wait times – and not introduce other major new initiatives.

As a result, an overhaul of Canada's telecommunications sector may have to wait until at least after the next federal general election.

The panel, which included Sinclair as well as lawyer Hank Intven and former Microcell Communications CEO Andre Tremblay, drew up 127 recommendations, including:

• A call to limit the use of government regulation only to instances where market forces are unlikely to achieve public policy goals.
• The establishment of a new Telecommunications Competition Tribunal, jointly administered by the Canadian Radio-television and Telecommunications Commission and the federal Competition Bureau.
• The establishment of a Telecommunications Consumer Agency, to handle consumer complaints. All telecommunications companies in Canada would be required to be a member of this agency.
• A call to clarify the roles of agencies like Industry Canada and the CRTC and to streamline the approvals process for those agencies.

The panel, convened last year by then-industry minister David Emerson, published a 400-page report today which Bernier promised to review.

On the question of foreign ownership, the panel urges the federal government to "liberalize" restrictions for telecommunications carriers. Under existing rules, foreign owners are effectively capped at about 47 per cent ownership of any Canadian carrier such as Telus Corp. or Bell Canada.

(Bell Canada is owned by BCE Inc. of Montreal which is a part owner of Bell Globemedia, the company which controls CTV.)

"Among (industrialized) countries, Canada has maintained one of the most restrictive and inflexible rules limiting foreign investment in the telecommunications sector," the panel wrote.

"Liberalization of the restriction on foreign investment in Canadian telecommunications common carriers would increase the competitiveness of the telecommunications industry, improve the productivity of Canadian telecommunications markets, and be generally more consistent with Canada's open trade and investment policies."

But even as it calls for liberalizing ownership restrictions on telecommunications carriers – the companies that provide telephone, television and Internet services – the panel says that no changes should be made to the current limits of foreign ownership of Canadian broadcasters, such as CTV.

The panel says that when there is a proposal for foreign firms to take control of a Canadian telecommunications carrier, the federal government ought to be governed by a "public interest" test in determining if such a proposal ought to proceed.

Canadian cable television companies, such as Rogers Communications Inc. and Shaw Communications Inc. had been pushing hard to lift foreign ownership restrictions. Canada's major telephone companies were also in general agreement that foreign ownership restrictions ought to be lifted.

The panel also calls for a substantial shift in government attitude when it comes to regulation of any telecommunication service. Under existing legislation, the need for regulation is automatic and most companies wishing to offer a service must first get government approval, usually through the CRTC.

The panel says that kind of thinking ought to be reversed: Federal government regulations ought not to be automatic but should apply only in limited and well-defined cases.

It also calls for regulations to apply to all companies in the same way.

That is a particularly important issue for entrenched players, such as Bell or Telus, which have often complained that the CRTC has hobbled industry giants by limiting the pricing or availability of certain services but freeing smaller or newer competitors from those rules.

The panel also calls on the federal government to adopt a new strategy which would have as its goal to deliver broadband or high-speed Internet coverage to almost all of Canada.

This strategy, dubbed the Ubiquitous Canadian Access Network or U-CAN, would see broadband access available at a reasonable price to 98 per cent of homes in Canada by the year 2010.