Ottawa — Industry Minister Tony Clement is being warned that overturning a regulatory ruling blocking Egyptian-backed Globalive from launching cellular phone service here would effectively undo Canada's restrictions on foreign ownership of telecom companies.
That would be unfair, market players say, because other firms stayed within existing ownership rules when bidding for frequencies in the 2008 wireless spectrum auction.
Western Canadian telco rivals Telus Corp. and Shaw Communications Inc. joined forces to publish an open appeal to Mr. Clement in this week's edition of The Hill Times, a Parliament Hill newspaper.
They're asking the industry minister to ignore calls to reverse a Oct. 29 decision by the Canadian Radio-television and Telecommunications Commission. The CRTC said Globalive Wireless Management Corp. could not start service because it was in violation of ownership rules.
It would send “a very bad message to companies that complied with the Canadian ownership laws as they were required to do in the auction and spent over $4-billion bidding: that the rules can be changed at any time in the game,” Michael Hennessy, Telus's senior vice-president of regulatory and government affairs, said in an interview.
The CRTC's October decision throws a wrench in the Harper government's plans to introduce more competition in the cellular service market. Globalive is one of the new market entrants that recently purchased spectrum to compete with existing players.
Mr. Clement is trying to decide whether to ask the Harper cabinet to overturn the CRTC decision and allow Globalive to launch its cellular service. He's set a deadline of Nov. 18 for submissions on the matter.
Signatories to the open letter to Mr. Clement protesting such an action include Telus, Shaw, the Canadian Film and Television Production Association and Public Mobile, another new wireless market entrant. They say that allowing Globalive to proceed under its current structure would be unfair to other firms that stayed within foreign ownership rules.
“The CRTC had no choice but to find Globalive non-compliant,” Telus and the other signatories said. “The evidence as presented in an open hearing is irrefutable. Globalive's majority owner, Egyptian carrier Orascom, controls 82 per cent of Globalive's capital structure. That is way offside of the law.”
“For the CRTC to have interpreted the law in any other fashion would have rendered meaningless Canada's foreign ownership laws, not just as they apply in this case, but as they apply to all Canadian wireless, telecommunications, cable and broadcast companies currently operating in our country.”
Letting Globalive proceed without changes to its ownership structure would set a precedent for foreign takeovers that would grant all non-Canadian firms the same deeper level of control over acquisitions in Canada, they said. Canada's obligations under the North American free-trade agreement and the General Agreement on Trade in Services would dictate this.
“As signatories to international trade agreements like, NAFTA and the GATS, if we now decide that up to 82 per cent foreign ownership and control of the capital structure of a company is the new threshold to determine what is ‘Canadian,' then we are obliged to offer equivalent treatment to any other foreign carriers that wish to enter our market.”
Under CRTC rules, a Canadian carrier is eligible to operate as long as it is a Canadian-owned and controlled corporation. At least 80 per cent of the board of directors must be Canadian, at least 80 per cent of the voting shares must be owned by Canadians, and the company can't be indirectly controlled by non-Canadians, through holding companies.
© The Globe and Mail
