Canada's government is planning to reduce the barrier to foreign investment in the local telecoms market for telcos that have a market share of less than 10 percent. The proposals, which are only a slight loosening of the restrictive rules on foreign ownership were announced by Industry Minister Christian Paradis.

The move was in part prompted by the long-running dispute about the financial and technical backing offered to Canada's Globalive by Egypts Orascom Telecom.

Currently, the government restricts foreign investment to 46.7 per cent when direct and indirect ownership are combined.

Although the Egyptian firm was within the limits in terms of ownership of the company, the telecoms regulator ruled that it had an effective 65% stake in the company due to non-financial support. The government overturned the ruling in order to let the network launch its services, and the current government has said that it will loosen the rules.

Under the new proposals, a new entrant will be allowed to be majority controlled by a foreign investor, and can retain the the foreign shareholding once its market share exceeds 10%, so long as that growth was organic and not due to mergers or takeovers of rival networks.

"What we want to achieve here with the balanced approach is to have that fourth player everywhere in the country," Paradis said at a press conference. "I can't speculate about what player will do what in what market, because this market is evolving so fast."

The government is also planning a new spectrum auction, and will also impose a spectrum cap on the big-three networks in order to assist the smaller networks to compete.

The 700 MHz spectrum auction will be held by the government in the first half of 2013.