OTTAWA – Saying he’s defending consumer choice and competition, Industry Minister Tony Clement announced Tuesday that the Conservative government will appeal a Federal Court of Canada ruling that quashed a cabinet order allowing Egyptian-backed Globalive Wireless (whose retail brand is Wind) to operate in Canada.
The Communications, Energy and Paperworkers Union of Canada (CEP), ACTRA, and Friends of Canadian Broadcasting were intervenors in the case.
"Overturning the Cabinet decision is a victory for Canadian ownership rules and a victory for Canadian culture," said Stephen Waddell, ACTRA’s national executive director. "Globalive was potentially the beginning of the end of our foreign ownership laws, we’re ecstatic that the courts have stopped the train in its tracks."
The cultural coalition had intervened on the same side as Telus and Public Mobile in opposing the government’s decision. However, they were the only ones to raise cultural concerns to the table, contending that telecommunication companies have a responsibility under the Telecommunications Act to strengthen and safeguard Canadian cultural sovereignty.
Clement told reporters he’s confident cabinet made the right decision in 2009, as the government is "convinced" Globalive is a Canadian "enough" under the law.
In 2008 Globalive was one of several companies that successfully purchased a portion of the Canadian wireless spectrum during a weeks-long auction. But the company was initially unable to offer wireless services to Canadians after the CRTC ruled that Globalive did not meet Canadian ownership requirements under the Telecommunications Act.
In December 2009, Clement announced that Ottawa would overturn the CRTC decision that Globalive failed to meet foreign ownership rules in the sector. While Globalive’s board is majority Canadian, Egypt’s Orascom owns 65% of the equity and over 95% of the debt.
At the time Clement contended that Globalive is Canadian-controlled, since most of the company’s voting shares are owned by Canadians, and most of its board seats are occupied by Canadians. Clement added that the decision was made based on the facts of the case and the government’s interpretation of existing ownership rules under the Telecommunications Act, and that Ottawa wanted "more competition in the wireless space."
The CRTC said that because most of its equity and debt is owned by Orascom, an Egyptian telecom carrier, the foreign company had too much "control in fact" over Globalive.
Globalive has since drastically undercut the entrenched competition by launching cellphone services for as little as $15 a month under the Wind Mobile brand. It currently serves more than 250,000 customers. “We are pleased that the government has decided to appeal the Federal Court’s decision,” said Anthony Lacavera, chairman of Wind Mobile Canada.
“From the beginning, Industry Canada and then Cabinet maintained, with a full knowledge and understanding of the facts of our structure, that we are fully compliant with the Telecom Act rules, and we are pleased that the Government is vigorously defending its decision,” added Lacavera.
The recent Federal Court ruling has a 45-day stay of judgment, which allows Globalive the right to keep operating and figure out its next move during that time. (Ed note: Nobody really believes Globalive is really going to exit the market.)
“We are still considering our options but at this point, we hope our competitors will finally stop trying to game the regulatory system and allow everyone to focus on competing for customers,” continued Lacavera.
Industry analysts have said the Globalive decision has set a precedent and could have a major impact on the broadcasting industry. Clement has not made it clear if the government intends to increase competition in the broadcasting sector (including cable).
The intervenors contend that increasing convergence between telecom and broadcasting has made the need to maintain Canadian-ownership of both even more acute. Since the cultural groups were granted standing in this case two major telecommunications companies have converged with broadcasters – Shaw with CanWest, and BCE with CTVglobemedia.
"Foreign ownership was a looming threat to our entire communications industry, our ability to control our media and to protect our culture," added Ian Morrison, spokesperson for the Friends of Canadian Broadcasting. "The federal court’s assertion that our foreign ownership rules matter has brought a sigh of relief across our entire industry."
– John Bugailiskis
