The fate of Globalive Wireless Management Corp. is in the hands of the federal cabinet, but Industry Minister Tony Clement has given no indication of when it will make a decision.
“I think there is some urgency” given that Globalive says its wants to launch its Wind Mobile brand soon, he told reporters in Toronto on Thursday. “On the other hand I’m not a big believer in ‘Ready, fire, aim,’ so if it takes us an extra couple of days to make the right decision, we’ll take the extra couple of days.”
Asked if a decision will be made before the end of the year, Clement would only say it has to be discussed by the cabinet.
Clement, in the city for a luncheon speech, said that he has just received letters of advice from the provinces about October’s controversial Canadian Radio-television and Telecommunications (CRTC) decision denying Globalive its carrier licence because the startup is dominated by its Egyptian partner, Orascom Telecom S.A.E.
That ruling has created a problem over interpreting the telecom foreign ownership requirements, for Clement and his department came to the opposite finding for Globalive earlier this year.
To decide what to do next, Clement has asked for opinions from a number of sides, including the telecommunications industry and wireless incumbents Bell Canada Enterprises Inc., Rogers Communications Inc. and Telus Corp., who opposed Globalive at October’s CRTC hearings.
Asked what the government will do, Clement said that “it’s still within cabinet to assess the situation … We’re sifting though all of that information and then we’ll be able to render an informed, and I believe correct, decision.”
Clement refused to say what his reaction was to the decision, which ran counter to his finding that Globalive met the Canadian ownership and control requirements under federal regulations.
“What you have in this case is that we both looked at the same set of laws and we both came to different opinions, which are based on subjective judgments,” he said. “And I use the term subjective not in a pejorative sense but there’s no objective test here. It’s all looking at the same set of facts and making a subjective judgment.”
However, he did partly address complaints from telecommunications industry consultants who said the division is affecting foreign investment in the sector as well as wireless competition.
“I want to say this for the markets and for observers, [that] the government’s policy is designed to increase competitiveness in the wireless space. That is important for Canadian consumers because it increases choice, it increases quality and it decreases cost. That still remains the policy of the government of Canada.”
He said the cabinet’s options include waiting for a formal appeal to cabinet of the CRTC ruling from Globalive, overturning or varying the ruling, kicking it back to the CRTC or letting it stand.
Few industry observers believe that the government would completely overturn the ruling. First, there are doubts the cabinet would over-rule an arm’s length body. Second, incumbents would launch court actions for allowing a company with overwhelming foreign debt, which they aren’t allowed to have, to compete against them.
Depending on the wording, slightly changing or clarifying the ruling could give Globalive the potential of launching. But a launch could be significantly delayed if the essence of the ruling is to require Globalive to find more Canadian funding. The company has already said it couldn’t find more Canadian money before the CRTC hearing, and the ruling has crippled efforts since.
Finally, forcing Globalive to make a formal cabinet appeal, or an appeal to the Federal Court, certainly would delay its launch.
Clement also refused to say whether he believes the impending launch of other startups — including Toronto-based DAVE Wireless Inc., Public Mobile Inc. and the new network of Quebecor Inc.s’ Videotron cable division – will be enough wireless competition for the government. “If I start to answers questions like that, that will lead to speculation [on what cabinet will do], and this is market-sensitive.”
While the CRTC ruling has put the launch of one startup in jeopardy, Clement defended the rules around last summer’s AWS auction, which set aside spectrum that only new entrants could bid on. The auction was successful, he said – in fact it pulled in more than $4 billion for the government, about twice more than was expected – in getting more competitors.
However, Clement refused to comment when a reporter pointed out that incumbents complain that the Canadian ownership of bidders should have been finalized and approved before the auction to avoid problems like Globalive, which arose after the government has cashed its cheque.
“We’re getting into an analysis of something that has not been responded to by the Canadian government, so I think the safest thing for me is to not speculate. We’ll all have the chance to discuss these issues in the fullness of time.”
