There was obviously much talk about foreign ownership and how the Big Three (Rogers, Bell and TELUS) have his organization on their radar and doing what they can to call them anti-Canadian. Lacavera stated “To call us anything but Canadian would, quite simply, be untrue. But, that’s the kind of fear-mongering that the incumbents would like to seed in order to continue their anti-competitive hold on the Canadian telecom market. A market that has under served Canadian consumers for a decade and one that has been hamstrung by a national oligopoly and provincial duopolies.”

Lacavera went on to speak about how the Big Three rake in the profits with the average Canadian pays over 2.2 times per minute than customers in the United States. In addition, he said our wireless network lags behind other countries with our penetration level at 67% compared to 89% in the U.S. and over 100% in Europe.

So Globalive saw an opportunity when the government had the Wireless Spectrum Auction. He decided to seek out investors and the soap opera of Egyptian-based Orascom Telecom began. Months later with the reversed CRTC-decision behind them but still very much in the public eye – Wind Mobile has invested over $800 million, employs over 700 people and stores open in Toronto, Calgary, Ottawa and Edmonton (Vancouver is coming next).

“Competition is alive and well in Canada!” Lacavera stated. “The launch, although highly hailed by consumers, has also seen its fair share of early barriers” such as they have been unable to secure any Canadian investment and even though it’s Industry Canada’s policy to mandate tower-sharing, they’ve made over 100 requests and have yet to successfully share a single tower with any of the incumbents.

At the end of the speech Lacavera said “If we can’t fund it on our own backyard, then we have to allow for foreign capital… If we’re serious about competition to provide greater benefits for Canadians then we have to allow the free market to work”. In order for this to happen he stated if Canada wants to compete in the global market and foster the development of Canadian content, there must be 3 major policy changes:

1. Liberalize current foreign ownership rules
2. Facilitate access to foreign capital for telecommunications
3. Move forward with a policy review on the separation of broadcasting content policy from telecommunications.

All these are big changes and will take a while to come to fruition. In the meantime, Wind is active in the market and competition is increasing, prices are slowly falling and hopefully – eventually – those 3-year contracts will be history.

Krstajic believes “if you’re going to have one set of rules for him, have them for us as well” and also stated “we believe Cabinet’s decision is unfair to other wireless carriers, especially new entrants like Public Mobile that have played by the rules and secured substantial Canadian investment”. He requested the Federal Court to give more clarity on the decision.

Over the past month Krstajic appeared on a few TV shows expressing his viewpoints and possibly looking for more foreign investment. On Fox he stated “if we are going to allow Egyptian money, surely we should allow U.S. money to qualify as well… we think competition is great. We just want to make sure that we can have that same access to foreign capital that others players have… we just think that we should have fair rules and allow the Americans to come north and invest… we’d love to see U.S. capital classified the same way… surely our Governments intent is not to put Egyptian capitol ahead of U.S capital… that would be a travesty”.

Today however the federal government refused to release documents that led to the Globalive decision to overturn the CRTC.  In a letter addressed to the court, the Privy Council’s assistant clerk wrote that, “all documents submitted to the Governor in Council are confidential documents of the Queen’s Privy Council for Canada and therefore cannot be disclosed.”

Bob Boron, Public Mobile’s vice-president of legal and regulatory affairs, stated “it’s very peculiar. If it’s a facts-based decision, why wouldn’t they be okay with filing the record of that decision with the court?”

What are your thoughts… do you think the Court should release the documents? Or do you just want Public Mobile to launch?

Via: Globe

Globalive today has “announced its intention to enter into a private debt financing for the purposes of continuing to expand the WIND Mobile network, create new distribution partnerships and for general working capital purposes”. Although no names are mentioned about who is helping with the funding or specifically how much was raised, Globalive did say that it’s both Canadian and international investment banks and also stated that “the financing will not impact the ownership and control structure of WIND Mobile”.

Globalive Chairman Tony Lacavera previously said “We need to accelerate our business plan. We’ve got to get that network built aggressively and stick with our model across the country as fast as possible.”

WIND currently has signed up well over 10,000 subscribers and will be launching in Edmonton and Ottawa later this month. Within 3 years they hope to bring on 1.5 million subscribers.

According to an article by Bloomberg, parent company Globalive Communications is in talks with banks to raise “several hundred” million dollars in debt to finance expansion in Western Canada and Ontario. Lacavera stated today “We need to accelerate our business plan. We’ve got to get that network built aggressively and stick with our model across the country as fast as possible.”

In addition to this news, Lacavera said they are considering an initial public offering in the future. “We do think there is a great opportunity but we’re long- term players. We’re not looking for a quick flip.”

Jeff Fan and his team over at Scotia Capital have weighed in on the continuing topic. In their Daily Edge newsletter titled “Public Mobile Challenges the Government’s Globalive Decision”, they state some possible implications of the action and believe “This could drag out for months”. It reads:

“Last Friday, wireless new entrant Public Mobile applied to the Federal Court (Canada) to overturn the Government of Canada’s decision that allowed Globalive Wireless to operate.

Highlights of Public Mobile’s Federal Court Application
■ Public Mobile applied to the Federal Court (Canada) asking it to overturn the Government’s Dec. 10, 2009 decision that allowed Globalive Wireless to operate. Public Mobile believes the Government’s decision effectively “threw out” Canadian foreign ownership laws, which Public Mobile asserts only Parliament can change.

■ Specifically, Public Mobile is asking the court to quash the Government’s decision and to declare:
1. The decision was made without, or was beyond, the Government’s jurisdiction;
2. The Government’s decision was an error in law;
3. The Government’s decision was contrary to law.

■ Public Mobile is not opposed to Globalive’s presence in the marketplace and is not opposed to more competition. However, it is looking for a level playing field for all wireless carriers.

■ The Federal Court, Canada’s national trial court, hears and decides legal disputes, including claims against the Government of Canada.

■ Public Mobile is in the process of building a wireless network covering 19 million POPs in Ontario and Quebec to provide unlimited talk and text for $40/mo, with a service launch anticipated in 1H/F10.

■ Public Mobile is backed by numerous Canadian investors with the largest being the OMERS pension fund.  Public Mobile also has non-Canadian investors.  The CRTC initiated on December 18, 2009, a Type 2 Ownership and Control review (non-public process) of Public Mobile.

Our Thoughts on Public Mobile’s Application
■ We believe this was a good move by Public Mobile.  Whichever way the court rules, we believe Globalive’s competitors (other new entrants and incumbents) will benefit.

■ Greater uncertainties and costs for Globalive. We believe this adds uncertainty and potentially costs for Globalive. While we do not expect this application will stop Globalive from operating immediately (i.e., no injunction), it could impact its efforts in successfully attracting new investors given the possibility that the court could overturn Industry Canada’s decision. At a minimum, even if investors come forward, this could raise Globalive’s borrowing cost.

■ Incumbents could benefit. Incumbents (Rogers, TELUS, and BCE) are not the applicants in this case.  We believe they passed at the opportunity as this could damage relationships with Industry Canada, which is currently reviewing annual spectrum fees.  Nevertheless, we believe they should benefit from the Globalive uncertainties and potentially the higher  borrowing costs.

■ Public Mobile and DAVE Wireless could also benefit. Public Mobile and DAVE do not plan to launch for several more months and anything that creates a barrier for Globalive should be beneficial for the other new entrants.  With Orascom being a significant foreign backer, we believe Globalive has some competitive advantages over the other new entrants. Furthermore, Public Mobile and DAVE could also benefit if this leads to changes in foreign ownership rules.

■ This could drag out for months. Public Mobile also believes it has a reasonable chance of success.

■ This could be the catalyst for broader changes.  We believe this could be the catalyst that begins the process that would ultimately lead to a relaxation of the foreign ownership rules.  If the court rules against the government, in order for the government to maintain its pro-competition objective, it may have to consider changes to the foreign ownership rules.

DragonWave President and CEO Peter Allen said “DragonWave delivered solid results again this quarter. The Company continues to scale the business to meet expanding worldwide demand for our market-leading packet microwave solutions”. Hopefully Peter Allen recognizes who helped with the results and a bottle of bubbly is sent their way! Here are some additional stats:

Third Quarter Fiscal Year 2010 Performance Summary

• Revenue: $55.8 million, up 421% versus Q3 FY09 and 57% versus Q2 FY2010
• Gross margin: 43%, versus 35% in Q3 FY09 and 42% in Q2 FY2010
• Operating margin: 23%, versus 18% in Q2 FY2010
• Net income: $12.6 million, versus $ 6.3 million in Q2 FY2010
• Diluted EPS: $0.37, versus $0.21 in Q2 FY2010
• Total cash generated from operations: $12.2 million
• DSO performance: 39 days, based on ending balance
• Ending cash, cash equivalents and short-term investments: $104.0 million
• A single North American customer accounted for 82% of total fiscal third quarter revenue, and was the only greater-than-10% contributor in the quarter
• Shipped product to 13 new customers in Q3 FY10, bringing year-to-date total to 32 new customers

Via: DragonWave

From earlier pics we got a sneak peak of what the actual Wind Mobile stores will look like, very stylish and modern. This past week Chris Robbins, Wind’s Chief Customer Officer, wrote a post on the company blog that stated “we’ve launched our stores! Well… at least some of them. Before you get too excited, the bad news is that we’re not selling anything”. He’s talking about the kiosks that they’ve placed inside Blockbuster locations in the GTA and Calgary.

We got hold of a pic and honestly these are the nicest kiosks we’ve ever seen. It actually looks like a store, not a dinky kiosk. They are certainly making the experience a memorable one. You like them?

This news might shed some light on his upcoming and very anticipated decision. Still no date on when he’s going to announce if they’ll be given the green light to launch, Clement did say he knows there is “some urgency” to resolve this issue quickly, but again stated “We’re sifting through all of that information, and then we’ll be able to render an informed and I believe correct decision”.

We spoke Globalive Chairman Tony Lavacera last week and he was more optimistic than ever they’ll be able to launch. WIND has already hired over 800 people and have set up their stores, plus kiosk in BlockBuster locations.

Via: MSN

“The goal of the campaign is to raise awareness about the current state of Canada’s wireless industry compared to the rest of the world, and to highlight why more choice is essential.”

Anthony Lacavera, Chairman of Globalive and WIND Mobile said “The heart of the issue is that Canadians pay some of the highest rates for some of the most complained-about wireless service in the world. This campaign is about focusing the conversation to the need for real wireless competition in Canada in order to lower prices, increase penetration and finally deliver the kind of customer service that has been sorely lacking for Canadians.”

“The pro-competition campaign, set to launch nationally this Saturday, comes as Globalive awaits the government’s response to the subsequent Canadian Radio-Television Telecommunications Commission’s (CRTC) decision on its ownership structure and ability to operate. The CRTC decision has put a delay on the intended 2009 launch plans of WIND Mobile.”

The campaign features print and online advertising as well as a series of videos for the web which highlight the following facts:

• Higher prices: Due to lack of competition and real alternatives, Canadians pay an average of 60% more for mobile wireless services than Americans according to the Telecommunications Policy Review Panel.
• Staggering complaints: The Better Business Bureau released its list of top ten consumer complaint calls. Cell phone companies top that list – soaring above car dealers, movers and even utilities.
• Among the weakest in the world: Canada’s wireless industry is one of the weakest in the developed world. Merrill Lynch ranks current Canadian wireless penetration at 65% – just ahead of Indonesia and Iraq – but dead last among 22 developed countries.  Similarly, the International Telecommunications Union (ITU) has tracked a steady decline in Canada’s wireless penetration rank: from 35th in 1998 to 128th in 2008.
• Oligopoly:  The Canadian wireless market is dominated by three very large, very profitable players – Telus, Rogers and Bell. WIND Mobile, is the only new entrant that offers a truly national wireless alternative.

Ken Campbell, CEO of WIND Mobile stated “Our plan was to bring Canadians a new choice in wireless this holiday season as the first truly national alternative with a cross-country network. Our campaign is about competition and choice but it’s also about inviting Canadians to have their say and giving them a forum on WIND Mobile to help build Canada’s first truly alternative choice to the status quo.”

The campaign invites Canadians to express their opinions about the future of wireless in Canada at windmobile.ca.

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!

Sir,

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