Meanwhile, the opposition Liberals are upset with the handling of the decision, and one incumbent carrier is disappointed.
Tony Clement, the Minister of Industry, overturned an Oct. 29 Canadian Radio-television and Telecommunications Commission (CRTC) ruling and said Globalive Wireless Management Corp.’s ownership structure does meet the letter of the law. Egyptian-based Orascom Telecom owns a majority of the firm’s equity. But Toronto entrepreneur Anthony Lacavera holds control of the company.
“Now we’re ready for action,” Lacavera said at a press conference. “We are going to change the structure of the (wireless) industry in Canada.”
Wind Mobile may launch in Toronto and Calgary as early as this week, company CEO Ken Campbell added. The two leaders were cheered by a room full of lively employees who will now keep their jobs to staff retail stores and support centres.
Globalive has already hired hundreds of employees to launch its Wind Mobile brand. Before the CRTC revoked its operating licence, it was also set to hire thousands of IT workers and more call center staff.
Clement was out of touch to overrule the CRTC, says Dan McTeague, Liberal MP (Pickering-Scarborough East) and official opposition critic for consumer affairs.
“This is what happens when you mess things up as the Conservatives have and put into limbo laws traditionally dealing with competition and foreign ownership,” he says. “We have no difficulties with foreign investments, but there should be clear rules of engagement.”
Clement also waited until Parliament was not in session to make the decision so he could avoid scrutiny, McTeague added.
Globalive is an example that a foreign-owned company can created domestic jobs, says Michael Geist, an Internet law professor at the University of Ottawa. In the face of high unemployment numbers following this year’s recession, those jobs are hard to refuse.
“To put them through a lengthy delay would result in the loss of hundreds of jobs,” he says. “That weighed on the minds of some around the cabinet table.”
Globalive has existing call centres in Windsor, Ont. and will likely expand its call centres there for Wind Mobile. The WindsorEssex Development Commission had pledged to support Globalive in its bid to launch its network, and now its members are pleased by Clement’s decision.
“We consider this an excellent announcement,” says Lindsay Boyd, chairperson for the WindsorEssex Development Commission. “Globalive is a very good employer in our region.”
At 13.6 per cent, Windsor has the highest unemployment rate in Canada. But it has turned the tide on rising unemployment after the auto manufacturing plants were hit hard by economic woes. Globalive is part of the region’s new job growth strategy.
“The real opportunities lie when you can get 15, 20, or 100 jobs,” Boyd says. “Landing Globalive to be an investor in our community was fantastic.”
In reversing the CRTC’s decision, Clement made it clear he was not giving foreign companies carte blanche to buy up control of Canada’s wireless sector. Globalive’s structure complies with already existing law.
“The Government is not removing, reducing, bending or creating an exception to Canadian ownership and control requirements in the telecommunications and broadcasting industries,” the official order states.
The same order refers to Canada’s wireless industry being controlled by three companies. Bell Canada, Telus Mobility and Rogers Communications Inc. collectively control 95 per cent of the market. The Advanced Wireless Services spectrum auction held in 2008 was designed to boost competition. Globalive bought 30 licences for $442 million.
“It sends a pretty strong signal that the foreign ownership rules are on their way out,” Geist says.
That doesn’t sit well with Telus. The incumbent wireless operator had publicly asked Clement to not overturn the CRTC decision, saying Globalive wasn’t compliant with the same Canadian ownership rules that other carriers must follow.
“This is a decision that will come back to bite them (Conservatives),” warned Michael Hennessy, senior vice-president for broadband and video policy at Telus. “We’re obviously disappointed.”
Approving Globalive’s bid as legal could open the floodgates on foreign ownership in Canada, he says. Not just for the wireless sector, but for other sectors such as broadcasting and banking too.
“I find the Cabinet’s decision unique and unprecedented, but I am not sure if it is the correct interpretation of the law,” Hennessy says.
Wind Mobile will start off with BlackBerry handsets from Research In Motion as well as units from HTC and Samsung.
Wind Mobile hasn’t publicly set its rates yet, but has said it will offer a number of plans with no contracts, no activation fees and no limits on the time of local voice calls.
Plans will likely differ by a number of add-ons, such as long-distance and call answer offerings. There will be limits on the amount of data subscribers can download each month.
Wind Mobile may also have a pay-as-you go offering under the Yak brand. Yak Communications, a long distance dial-around company, was one of the first telecom firms Lacavera created more than 10 years ago. He has folded Yak and several other companies into Globalive Wireless’ holding company, in which Orascom holds a one-third share.
With notes from Howard Solomon