TORONTO – Mobilicity is the latest new entrant wireless carrier to find itself in the CRTC’s ownership review crosshairs, but the company’s chief executive says it is much ado about nothing.
In a letter to the Toronto-based company dated March 5th, the Commission said that while the service provider appears to comply with the legal control requirements in the Telecommunications Act, it points to a significant debt facility from foreign interests and the “sufficiently complex nature” of its ownership structure as reason to investigate whether Canadians remain in control of the company. In ‘legalese’, this is referred to as control in fact.
According to documents submitted to the CRTC, non-Canadian entities have contributed 76% of the company’s equity but control 22% of the voting shares. As well, slightly more than 50% of Mobilicity’s debt comes from foreign sources.
Mobilicity’s ownership review will not be as rigorous or as public as the one that Globalive Wireless (now Wind Mobile) was subjected to last Fall. For starters, the CRTC has opted to conduct what it refers to as a Type 2 review, one that involves only the Commission and the company.
Mobilicity president Dave Dobbin told Cartt.ca that was exactly what he had expected.
“We figured we’d have a Type 2 review because our ownership structure is not especially novel or complex like some others that have before us,” he said.
And according to Dobbin, approval should be pretty much a slam dunk. The company’s management team is comprised of Canadians, two-thirds of its Board is Canadian, and not one member of the senior management team is affiliated with its foreign investors, he said.
“Also, there’s no technical services agreement between us and a foreign operator,” Dobbin continued. “So we operate our business, it’s not operated outside the country. When they look at our structure and our documents, there’s very little question these guys are Canadian.”
When asked whether there’s any chance that the CRTC could conclude that Mobilicity isn’t Canadian enough, (as it did in the Globalive case), Dobbin said that he is confident in a successful outcome.
“It is not for me to speculate on the behaviour of regulators but I do not foresee any issues with our ownership review,” he said.
Like Mobilicity, new wireless entrant Public Mobile is also scheduled to launch this Spring, and is also subject to a Type 2 review by the CRTC. In a letter to the company last December, the Commission named the complex nature of Public Mobile’s ownership structure and its foreign equity and debt as the reasons for its review.
Senior representatives for the Toronto-based company said they were unavailable for an interview about their ownership review.
Telecom industry consultant Johanne Lemay, co-president of Lemay-Yates Associates, said that the CRTC seems to have latched on to the amount of foreign debt and whether the associated conditions would give control of the two companies to foreign interests.
But she questioned why the Commission would focus on this issue when the Telecom Act does not restrict the amount of foreign debt that a Canadian wireless company can hold.
“(A wireless company) can have 100% foreign debt”, Lemay told Cartt.ca. “So why do they even mention this? It seems to be their justification to say that they are reviewing this.”
Lemay said that she also doesn’t know why it is taking so long to approve the ownership structures of the two wireless startups.
“These companies were awarded their spectrum licences more than a year ago and there is still no determination from the CRTC that they are Canadian firms. So you have to wonder why it is taking so much time and why (the CRTC is) doing this on this timeline because it seems to me that the timeline is an issue,” she said. “It’s almost two years from the auction. How long does it take in Canada to get a determination? How long? Three years? Four years? Or do you need to get the government to overturn a decision to be able to operate. You have to wonder.”
The Advanced Wireless Services (AWS) spectrum auction began on May 28, 2008, almost two years ago. Mobilicity officially received its licences on February 11, 2009, while Public Mobile was awarded theirs on March 26, 2009.
But Dobbin says that the fact that company ownership is still being debated almost two years removed from the AWS auction is not an issue for him.
“You’ve got to look at this thing from a much larger view and realize that it is what it is, and regulators are what regulators are, and they do what they do. You just come in with your eyes open, knowing what’s going to happen,” he said.
Besides, Dobbin added, it’s a walk in the park compared to the approval process in the U.S.
“In Canada, we’ve got two regulators. Try the U.S., they’ve got 53”, he said. “You want to become certified to be a wireless carrier in the U.S., you don’t just get certified by the (Federal Communications Commission), you get certified by every state. Then you’ve got to get certified in municipalities to terminate. So having two regulators here isn’t so bad.”
