Canadian Cabinet Approval for New Wireless Entrant a Surprise Holiday Package

In a move that caught many observers by surprise, the Canadian Minister of Industry, Tony Clement, announced that the federal Cabinet has overturned a decision made on October 29, 2009 by the Canadian Radio-television and Telecommunications Commission (CRTC) and will permit Globalive Communications to operate an advanced wireless telecommunications service. The earlier denial by the CRTC was based on its interpretation of the ownership structure and level of foreign ownership and control of Globalive. The CRTC had ruled that because almost all of Globalive’s debt and most of its equity was held by an Egyptian company, Orascom Telecom, Globalive was controlled in fact by non-Canadians, making it ineligible to operate as a Canadian carrier. Although the Cabinet decision was framed by the Minister as one applying to the narrow facts of this particular case, several commentators predict that it will be difficult to avoid the perception that Canada’s foreign ownership restrictions have been considerably diluted. The New York Times noted, for example, that although the move will benefit Canadian consumers, who pay relatively high wireless fees compared to those in other countries, the decision “appeared to undermine [existing] foreign ownership restrictions”. Incumbent Canadian operators were generally cautious in their comments on the new competition, although a representative of one of them was quoted by CBC News as having said on his Twitter page that “If Wind [the brand name of the new entrant] is Canadian, then so was King Tut”. In a later development, the Communications Energy and Paperworkers’ Union (Union), which represents several thousand employees in the telecommunications sector across Canada, said that it will challenge the Cabinet decision in a proceeding to be launched in Federal Court. According to the Union President, “this decision is illegal … [and] … we’re going to challenge it in court”. For media reports, visit: CBC.ca; The New York Times; and The Globe and Mail For a backgrounder and comments from the Minister of Industry, visit: Industry Canada web site Summary by: The Editor