TORONTO and OTTAWA – Globalive could launch its Wind-branded mobile service as early as next week, chairman Anthony Lacavera said Friday after learning that Industry Canada had overturned the CRTC’s decision barring his company from entering the Canadian wireless market.
Amid cheers from staff, Lacavera thanked the government for its decision which he called “testament that this country needs (wireless) competition.”
Industry Canada declared Globalive a Canadian company that meets the Canadian ownership and control requirements under the Telecommunications Act early on Friday morning, contrary to the CRTC’s decision in the Fall which determined that the company was not sufficiently Canadian-owned and controlled. Section 12 of the Telecommunications Act gives the government the power to vary a CRTC decision on its own motion.
The Industry Canada variance also confirmed that Globalive does not need to make additional changes to its structure and shareholder arrangements, including to its debt and equity financing arrangements, and to the composition of its board of directors.
Telus, who led the charge into Globalive’s ownership review earlier this year, admitted to being both surprised and disappointed by Industry Canada’s decision.
“We believe that no matter how you cut it, 82% control of a company’s capital structure by a foreign carrier makes that company foreign”, said Michael Hennessy, Telus’ SVP of regulatory and government affairs, in an interview with Cartt.ca.
Hennessy also questioned whether the government may have inadvertently opened the door to foreign ownership challenges in other industries such as airlines, banking and broadcasting.
“I think what (Industry Canada) has done now, by applying what is effectively a new and unprecedented test for control, is rendered the ownership rules pretty meaningless", he said. "They have really reset the test, or the bar, for further foreign ownership incursions in other federally regulated sectors.”
The test for Canadian ownership and control under the Telecommunications Act is comprised of both a legal and factual requirement. According to background information supplied by Industry Canada, both the Government and the CRTC agreed that Globalive met the legal requirements for Canadian ownership. The factual requirement involved assessing whether a foreign entity controls "in fact" the company. Control in fact is the ongoing ability to determine the strategic decision-making or to manage the day-to-day operations of a company.
Lacavera called foreign investment integral to his company’s ability compete over the long term, noting that “this is not just a quick hit for us.”
“On the point of foreign investment, I think it’s critically important to have a partnership like an Orascom Telecom", he added. "The breadth, and scale, and experience that they have in wireless is absolutely critical in order to build a true, viable competitor for the Canadian incumbents.”
Both Telus and Rogers declined to elaborate on what steps they may take to challenge Industry Canada’s decision. And fellow new wireless entrant Data & Audio Visual Enterprises Wireless (DAVE), said that it’s business as usual for them, too.
“Our business plan has always been based on the expectation that Globalive will be in the market”, DAVE’s CEO Dave Dobbin told Cartt.ca. “We’re on schedule to launch the business exactly as we’ve always planned, we expected the competition, and are glad it’s there.”
Dobbin said that his company, which is gearing up to launch early in 2010, won’t actively seek foreign investment now, though said that it’s something that its board and shareholders could consider in the future.
“We’re done. We’re financed. We don’t need any more money”, he said.
With plans to lauch in Ottawa, Toronto, Calgary, Edmonton and Vancouver, Globalive’s Wind Mobile has tagged Toronto and Calgary as its original launch cities.
“Now the hard work actually starts,” Lacavera said. “We’ve got to now prove to Canadians that we are a carrier that they can trust, and a service provider that they can rely on.”
