Today is a great day for the wireless industry in Canada. Industry Minister Tony Clement has overturned the CRTC decision that kept Globalive/Wind Mobile from starting and gave them the green light to to start up its service “without delay:”
“Consumers will vote with their feet and their pocketbooks and that’s the way the market works,” Clement told reporters after the announcement in Ottawa.
I suspect that a lot of them are about to start voting, starting with the stock markets. BCE, Telus, and Rogers stock are all down as I type this. I guess the impending completion has sent some investors to the exits.
Oh, what does Globalive/Wind Mobile have to say about this? Here’s an excerpt from a press release issued not too long ago:
“This is a new day for wireless in Canada. This holiday season we will start to provide Canadians with the competitive choice that they want and deserve,” said Anthony Lacavera, Chairman of Globalive and WIND Mobile. “We thank the Government of Canada for a decision that will serve the best interests of Canadian consumers.”
In its decision today, the Government of Canada concluded that Globalive is a Canadian company that meets the Canadian ownership and control requirements under the Telecommunications Act by varying an October 29 CRTC decision (Telecom Decision CRTC 2009-678).
“For too long, Canadians have suffered from higher prices and an underwhelming customer experience,” said Ken Campbell, CEO of WIND Mobile. “We look forward to offering the most unforgettably positive mobile experience in Canada. In return, we’re asking Canadians to make a new choice in wireless and sign up on WINDmobile.ca today.”
I’m guessing that there’s a lot of stressed out execs who work for Rogers, Bell, and Telus. For them, Santa brought them a lump of coal for Christmas.
UPDATE: I e-mailed Bell, Telus, and Rogers for their comments on this story. My “best friends at Rogers” have given me this reply:
As for the Globalive decision, we believe competition is good for Canadian consumers. We’ve always thrived in a competitive environment and we’re ready to meet the competition head on.
I have to say that I may not always be a fan of Rogers, but at least they respond to my e-mails. Even if it’s to give me a bolierplate answer or to say no-comment. That’s more than I can say for some other companies that I’ve tried to e-mail for comments for this blog. Score one for Rogers.
I’ll let you know if I get a response from Bell or Telus, but from past experience I’m not holding my breath.
UPDATE #2: Much to my surprise, Telus responded. Here’s what they said via Media Relations person Sean Hall:
December 11, 2009
TELUS disappointed with Globalive decision
Vancouver, B.C. – TELUS is disappointed the federal Cabinet has overturned a recent decision by the Canadian Radio-television Telecommunications Commission (CRTC) regarding the application of Canada’s foreign ownership rules. The Cabinet decision to overturn the CRTC on this matter sets a new precedent for the interpretation of foreign ownership rules affecting a variety of sectors including telecom and broadcasting.
On October 29, the CRTC found that Globalive was controlled by Orascom Telecom, an Egyptian based carrier that owns more than 80 per cent of its capital structure, and that this unprecedented level of control does not meet Canada’s foreign ownership laws. Accordingly, the CRTC set out a path for Globalive to become compliant under the same rules all other companies in the industry are forced to abide by.
“We are disappointed with Cabinet’s decision to give one competitor a unique advantage, after bidders that spent $4 billion in the last auction were explicitly told that the rules prohibited foreign ownership and control,” said Michael Hennessy, TELUS senior vice-president of Regulatory and Government Affairs. “This decision has implications extending well beyond the telecommunications industry, given it creates a precedent on what constitutes compliance with foreign control restrictions.”
Hennessy added that it is clear Globalive should not have been allowed to participate in the June, 2009 Advanced Wireless Services (AWS) spectrum action and be licensed as a Canadian carrier to begin with, given it clearly was not complying with the laws governing Canada’s telecommunications industry. Not only did the CRTC find that Globalive was not compliant after a comprehensive and open public review process, but that decision followed a number of changes in the corporate structure and governance of Globalive through negotiations with Industry Canada and the CRTC in order to reduce the foreign control by Orascom. The CRTC ruling suggests that Globalive participated in the AWS auction while in a non compliant state thereby affecting the outcome for all bidders, including new entrants that had played by the rules.
“Overturning the CRTC will not change the fact other bidders, including new entrants and incumbents, that were directed by the auction rules to comply with federal law and structured their affairs accordingly feel they were misled,” said Hennessy. “If one foreign carrier can control 80 per cent of the capital in a company and still be called Canadian, then the law is now rendered either effectively meaningless or a double standard has been created for the benefit of one carrier, Globalive.”
As it did prior to the 2008 AWS wireless auction, TELUS continues to recommend to the government that in order to avoid similar situations arising again, all bidders in future spectrum auctions should be pre-qualified as legitimate, Canadian owned and controlled entities.
Taking an aggressive interpretation and thereby making a special exemption and setting a precedent with respect to Globalive’s ownership was not necessary to increase competition. Globalive could have amended its corporate structure and governance to become compliant without any need for government intervention in allowing it to circumvent Canada’s foreign ownership laws. Moreover, there are several new wireless companies entering the Canadian market, regardless of Globalive’s participation. TELUS welcomes healthy competition in the Canadian wireless industry but maintains that all industry entrants should all be required to adhere to Canadian laws that govern foreign ownership until Parliament debates and votes to change the law.
“TELUS has never been opposed to foreign ownership restrictions being lifted by Parliament,” said Hennessy. “All we have asked is simply that all communications companies in Canada operate under the same rules without an artificial and unfair advantage being handed to one company.”
About TELUS
TELUS (TSX: T, T.A; NYSE: TU) is a leading national telecommunications company in Canada, with $9.6 billion of annual revenue and 11.9 million customer connections including 6.4 million wireless subscribers, 4.1 million wireline network access lines and 1.2 million Internet subscribers and more than 100,000 TELUS TV customers. Led since 2000 by President and CEO, Darren Entwistle, TELUS provides a wide range of communications products and services including data, Internet protocol (IP), voice, entertainment and video. In support of our philosophy to give where we live, TELUS, our team members and retirees have contributed $137 million to charitable and not-for-profit organizations and volunteered more than 2.6 million hours of service to local communities since 2000. Nine TELUS Community Boards across Canada lead our local philanthropic initiatives. For more information about TELUS, please visit TELUS.com.
No word from Bell yet. Not that I expect to hear anything from them. But given that two of the big three in the wireless market in Canada have sent me a comment, perhaps they’ll wake up and comment.
CRTC To Undertake Ownership Review Of A Cell Carrier….. Again
Posted in Commentary with tags CRTC, Public Mobile on December 24, 2009 by itnerdI guess they didn’t learn their lesson the first time around with Wind Mobile.
The CRTC in their infinite wisdom has decided to look at the ownership structure of Public Mobile. Who are Public Mobile? They are a new wireless company that hopes to bring a low cost wireless phone network offering $40 a month unlimited voice plans to Quebec and Ontario. Here’s the weird part, the major backer of this company is OMERS which is one of Canada’s largest pension plans. So there’s no logical reason why this should even come up as an issue. But the CRTC doesn’t see it that way:
At this time, and based on the information available, the Commission considers that the ownership structure of Public Mobile is of a complex nature and could hold precedential value for the industry and the general public. The Commission does not consider, however, that the evidentiary record would be improved by third-party submissions.
The CRTC really needs to get a clue here as it’s a safe bet that even if they find that Public Mobile doesn’t comply with their rules, the Canadian Government who are no fans of the CRTC will simply overturn it as they have made it clear that competition in the wireless market is a good thing. After all, they’ve done it once before so there’s no reason to believe that they won’t do it again.
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