Governments around the world have a habit of dropping significant news on Fridays, and this Friday is no exception with word that Industry Minister Tony Clement and the federal cabinet have over-ruled the CRTC and will allow Egyptian-connected Globalive to offer mobility and cellular service to Canadian consumers.
"We have concluded through normal review that Globalive meets the Canadian ownership and control requirements," Mr. Clement said in a press conference Friday morning.
The much-anticipated announcement comes six weeks after the Canadian Radio-television and Telecommunications Commission denied Globalive's bid to be the country's fourth-biggest wireless operator. The CRTC initially said Globalive's corporate structure violated foreign-ownership rules, as Egypt's Orascom Telecom Holding SAE held too much control through debt financing.
The decision is expected to be a blow to the big three wireless providers -- Rogers Communications Inc., BCE Inc., and Telus Corp. -- as they fought to keep Globalive out of the Canadian market.
Clement made the right call in isolation here in over-turning the CRTC and giving Globalive the go-ahead. While overturning the regulatory authority is a major step, it had to be done.
Clement’s decision was necessary to untangle the mess created when Globalive was deemed Canadian-enough by Industry Canada to bid on spectrum and invest hundreds of millions of dollars to build a service in Canada, but not Canadian-enough by the CRTC to comply with foreign ownership restrictions.
Allowing the CRTC’s ruling to stand would have opened the government up to huge legal liabilities, as Globalive would probably sue their asses off, and rightly so.
Still, this seems to be a problem of Industry Canada’s making, and not the CRTC’s. The CRTC is empowered to interpret and apply the laws and regulations as they’re on the books, and I believe that’s just what the CRTC did in this case. Clement’s department created this mess when they allowed Globalive to bid on the spectrum; that’s why he had to over-rule the CRTC.
I support Clement’s decision, and I do think we need increased competition. But I’m disappointed Clement is not seizing this opportunity to launch a review of our foreign ownership rules for telcos, with an eye to allowing more foreign ownership and increased competition.
Instead, he appears to be spinning it not as him bailing-out the department, but as correcting a CRTC mistake, which just isn’t true.
Canadians pay insanely-high rates for mobility and cellular service. The way to change this is opening-up the market to more competition, and that means allowing more foreign players. In an interconnected, 21st century world, our regulations in this area are outdated.
Rather than blaming the CRTC, Clement should use his Globalive decision as a springboard to re-examining our foreign ownership rules to provide a legal framework for increased competition, not to mention head-off legal challenges from the incumbent carriers for a decision unsupported by the current laws. Recommend this Post on Progressive Bloggers