Editorial - 23-12

Nortel Networks's bankruptcy fire sale of key technology assets presents the federal government with another difficult and depressing dilemma over whether to intervene in the marketplace and block their sale to foreign entities. The pressure is on the forbid the $1.3 billion sale of Nortel's CMDA and LTE assets to Ericsson AB, which represent both the present and future of wireless technology.

This marks the second time in little more than a year that the Harper government has been confronted with the issue of retaining nationally important technology or letting it be sold tom a foreign company. Last year, Industry Canada stepped in to block the sale of key space assets by MacDonald, Dettwiler and Associates to US-based Alliant Techsystems (R$, March 27/08).

The wild card in the current scenario is the late entry of Research in Motion Ltd (RIM) and its failed attempt to join the bidding process.

RIM is playing the nationalism card and gaining traction with the likes of the Ontario government and those who contend that technology developed with significant public investment gives Canada a say in how those assets are disposed of.

Many analysts are speculating that Ericsson is purchasing Nortel's LTE technology to eliminate competition for its own LTE assets. Nortel technology doesn't appear to be a close fit to RIM's current product lines, but an acquisition could dramatically alter the company's focus while keeping the technology solidly in Canadian hands. Industry Canada must think long and carefully before deciding on whether to enter the fray.