Business

Globalive ruling to be appealed by Ottawa

Ottawa will appeal a Federal Court ruling striking down cabinet's 2009 decision allowing Globalive to launch its Wind Mobile wireless brand, Industry Minister Tony Clement says.

Clement not ready to outline changes to the law on foreign ownership

Ottawa will appeal a Federal Court ruling on Feb. 4 striking down cabinet's 2009 decision allowing Globalive to launch its Wind Mobile wireless brand, Industry Minister Tony Clement said Tuesday.

Clement said Globalive — majority-funded by Egyptian billionaire Naguib Sawiris's Orascom empire — does qualify as a Canadian company under the Telecommunications Act, and the government wants to foster consumer choice and competition.

Industry Minister Tony Clement, shown on Monday, said Tuesday Ottawa will appeal the Federal Court's ruling striking down cabinet's decision allowing Globalive to launch its Wind Mobile wireless brand. ((Adrian Wyld/Canadian Press))

The federal broadcast regulator originally found Globalive was in breach of Canada's limits on foreign ownership.

The CRTC based its decision on Globalive's complicated ownership structure.

But the federal cabinet overruled that decision in December 2009, allowing the company to launch Wind Mobile the same month.

On Feb. 4, Justice Roger Hughes found Ottawa's move was based on "errors of law," and ruled it null and void.

He also ordered a 45-day stay in the ruling, giving the company time to appeal and continue to operate in the interim.

Journalists asked Clement  on Tuesday why the government doesn't change the law, instead of challenging a regulatory ruling and a court interpretation of existing legislation.

He said Ottawa has not rejected the idea of opening the entire industry up to foreign investment, but added the government wasn't yet ready to outline its plans on relaxing or lifting foreign ownership limits for the industry.

Clement announced consultations on foreign ownership in May, outlining three options:

  • Removing all restrictions.
  • Increasing the limit of foreign investment from the current 20 to 49 per cent.
  • Lifting restrictions for carriers with less than 10 per cent market share.

"It's yet another big win for Canadian consumers and obviously we're very pleased to see our government stand behind Canadian consumers," said Anthony Lacavera, chairman of Globalive. 

"It obviously brings certainty to our operation. We are still assessing what action, if any, Globalive will take. We're not clear on that. This is a very unusual situation, obviously."

Wind has 250,000 customers.

"It [the appeal] was the right thing to do," Iain Grant, head of Montreal-based SeaBoard Group, a research and consulting firm, told CBC News.

Clement "couldn't let Globalive, who invested more than a billion dollars in the Canadian marketplace, based on the undertakings he gave them, he couldn't let them languish with uncertainly."

"Business loves certainty and there's nothing more uncertain than to be told that you have to shut down in 45 days," he said.

Legislative changes could take some time, Grant said, being "tough to stickhandle" as a minority government.

But NDP critic Brian Masse blamed the government for creating a situation where the issue of foreign ownership may take years to resolve as appeals stretch all the way to the Supreme Court. The legal limbo makes it less likely that competition will flourish in Canada, and that consumers will benefit through enhanced service and lower costs, he said. 

"There's was no good solution after the minister overturned [the CRTC]," he said. 

"What's going to happen now is there's going to be a cloud over this industry and all the competitors until the situation reaches another legal hurdle, and I'm not sure consumers are going to benefit at all."

Government responds to suggestions of interference

The government, in a release accompanying its announcement Tuesday, also responded to suggestions it has recently begun interfering with CRTC rulings.

The release said that since 2006, the cabinet has reviewed 13 of the 2,200 decisions issued by the broadcast regulator.

"Of those, the government has upheld seven decisions, varied three and referred three back to the CRTC for reconsideration," it said.

A former chair of the CRTC on Monday criticized the government for demanding a reversal of another decision —on usage-based internet billing — by the regulator.

Francoise Bertrand told The Canadian Press she finds the Conservative government's rejection of the decision "disturbing."

Bertrand, who under the Liberal government did not have a single decision overturned by cabinet, said that repeatedly questioning the decisions of the commission will only create confusion in the telecom and broadcasting industries, and potentially hamper investment.

"Now we have a minister, or I don't know who, who have not heard all the facts, all the elements, and decides arbitrarily that it's not a good decision and it should be the other way around," she said.

"What it means for business is that there is no longer predictability in the system. Right now there are rules, principles, policies, legislation and regulation, and businesses develop their business plans and they ... know what the parameters are, and they know how to calculate their risk."

Public Mobile says decision unfair

The Federal Court case was brought by Wind competitor Public Mobile, which argued the cabinet's decision was unfair to other wireless carriers, such as Public Mobile, that secured substantial Canadian investment to qualify for the government's wireless auction.

Though initially an Egyptian company, Orascom itself has seen a shift in the nationality of its ownership.

Last October, Russia's second-largest wireless provider, VimpelCom Ltd., and Weather Investments, majority owner of Orascom, announced a merger that would see the combined company become the world's fifth-largest mobile telecommunication service provider.

Weather, the investment company headed by Sawiris, owns 51.7 per cent of Orascom and all of Italy's Wind Telecomunicazioni SpA, both of which are headed by Sawiris.

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