November 26, 2009 2:42 am
Personally I thought when Industry Minister Tony Clement sought more feedback from telecom players about the Globalive/Wind Mobile situation that the documents would not become public information. However, some of them have had Excerpts online (like TELUS)… but nothing like the Public Mobile submission.
The National Post somehow got hold of their letter and it’s entirety is below. Let us know your thoughts:
From: Public Mobile Inc.
November 13, 2009
To: The Honourable Tony Clement, P.C., M.P. Minister of Industry Ottawa,
RE: Two Wrongs Don’t Make a Right!
I am writing this to you today to express my concern over the issue of Globalive and its authority to operate as a wireless carrier and specifically the CRTC’s decision to deny that authority based on Globalive’s foreign ownership and “control in fact” situation. As the CEO of one of the new wireless entrants, Public Mobile, and the former President of a wireless incumbent, Bell Mobility, I am absolutely in favor of more competition in our country.I understand how important competition is for all Canadians.
However, I believe that our government and our government’s institutions must ensure that the rules we have in place under the Telecommunications Act, while they continue to exist, are applied consistently and fairly to all players, new and incumbent alike. The CRTC’s decision is clearly reasonable, justified, and correct. If Cabinet overturns the CRTC’s decision, Canada would be sending an unfortunate message to everyone considering doing business in our country: “Take your chances with the rules Canada has in place. Sometimes we apply them and sometimes we don’t. And sometimes we reverse ourselves notwithstanding the rules.”
Market uncertainty is bad for everyone. The rules are very clear with respect to Canadian ownership and control in fact, and Globalive does not meet the test. The CRTC reached this conclusion based on a complete record and an oral hearing. Reversing a sound CRTC decision severely hurts both incumbents and new entrants like Public Mobile who have complied with the rules. For Public Mobile, this has nothing to do with adding a competitor in the market. Rather, it is about the difficulty that would be caused if there are effectively two sets of rules and the impact this would have on securing further investments that will ensure sustainable competition. Investors and lenders want the certainty that comes with consistent and fair application of the rules.
Turning a blind eye and approving a player that doesn’t meet the legal requirements hurts Canadians in the long run. With a cloud of confusion hanging over the rules and their enforcement, new entrants could fail like they have in the past, with the result being that the benefits of competition are not extended to consumers. Canadians have a strong sense of the importance of following the rules. Ignoring the rules will not foster competition, it will create chaos!
The first wrong: Orascom [the Egyptian owner of Globalive] should not be in the position where they believed that Industry Canada approval would translate directly to approval by the CRTC. Clearly, one can argue that both Globalive (and perhaps Industry Canada) could have been more vigilant with a view to the requirements, but it is also nothing less than cavalier for a sophisticated player like Globalive to not realize that the process in Canada has checks and balances. The CRTC has a mandate to review (and approve) wireless carriers; full stop.
When we had our initial meetings in late 2008 / early 2009, we received guidance from the CRTC and from Industry Canada and my shareholders realized that to become a wireless operator in Canada requires conformity with all relevant Canadian laws and regulations. In order to comply, we brought on additional Canadian investments from OMERS and other prominent Canadians (including the Thomson and Eaton families, and most recently Peter Munk). However, with what we knew about the Globalive ownership structure, we were surprised that Industry Canada approved Globalive in the absence of any meaningful Canadian investment. …. But we also knew that Globalive would need to clear the CRTC’s review. When the CRTC ruled that Globalive did not comply under the Telecommunications Act there was a feeling that the law had been properly applied.
The second wrong hasn’t been committed yet, but your decision will ultimately determine if it is to be the case…
If the decision is reversed in the absence of Globalive taking demonstrable steps to comply with the CRTC’s decision and the current law, a second wrong will be committed and an unfortunate set of messages will, unintentionally or not, be sent:
- To new entrants and incumbents: “Canadian ownership and control rules are sometimes applied and sometimes not.”
- To potential telecommunications investors in Canada: “Be aware that we aren’t saying ‘we reserve the right to change the rules’, we are saying ‘we reserve the right to sometimes not apply the rules’.”…
It is admittedly awkward that the CRTC’s decision is at odds with Industry Canada, but the CRTC’s decision is reasonable, justified, and correct. I believe your government must do the right thing and allow the CRTC decision to stand. Globalive should also do the right thing and go back to the CRTC as soon as possible with an amended structure that has real Canadian dollars of investment that allows it to operate in a fashion that is onside with the current legal regime.
Alternatively, if the foreign ownership and control rules under the statutes are found to not be good for this country, then I respectfully submit that it is for your government to make changes that apply to everyone. That way all players are extended the same opportunity and flexibility to seek foreign capital on a level playing field.
Yours very truly,
Alek Krstajic, Chief Executive Officer