Clement made right call, but it's time to revisit foreign ownership restrictions

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.

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You don't fool me, Bernard Lord

Canada's cellular providers want you to know they're committed to helping consumers make informed decisions about their cellular service. Honest, they totally are. That's why they've developed their own industry created, self-enforcing code of conduct! Let's read more:

Canada's mobile phone companies will be required to make sure consumers understand their contracts when they buy a cellphone under a new code of conduct.

The code of conduct also says cellphone companies are to "communicate with their customers in a way they understand."

The rates, terms and coverage offered all have to be explained clearly to consumers, said Bernard Lord, head of the Canadian Wireless Telecommunications Association.

"In some cases, our members will have to change and adapt some of their practices to meet the code that is now in force as of today," Lord said Tuesday.

Much of the new code of conduct is already respected by cellphone companies, he added.

But wait, there's more:

But, Lord said the new code will give consumers the information they need to make informed decisions.

"This will mean good service, better service, easier to resolve complaints," he said from Ottawa.

Well that's great, the industry and Lord want to ensure consumers have the information they need to make informed decisions. I think that's just super of them, so kudos.

But, wait. Where have I heard Lord's name before?

Bernard Lord, the head of the CWTA and former Conservative premier of New Brunswick, said he did meet with Industry Canada officials to discuss the calculator. The CWTA's position was that the calculator was flawed since it did not take into account data plans, bundle discounts and hardware subsidies offered by carriers.

"The minister made the right decision, to not continue to dump good taxpayer money into a tool that was ineffective," he said.

Oh, that's right. Conservative Party insider and former New Brunswick Premier Bernard Lord is the telecommunications industry lobbyist who claimed credit for convincing Tony Clement and the Conservatives to kill the taxpayer-funded cellphone rate calculator that, independent of industry, would have given Canadians unbiased information to make better decision about cellphone contracts.

Industry Minister Tony Clement is taking fire for scrapping a taxpayer-funded online tool that would have helped consumers pick a cellphone plan, allegedly after being lobbied by the wireless industry.

The cost calculator would have compared rate plans from across different cellphone providers and was scheduled for a June launch.

The service was shelved just weeks before rollout after Clement's officials met with representatives from Bell, Telus and the Canadian Wireless Telecommunications Association, according to University of Ottawa law professor Michael Geist. The cellphone industry was afraid the service would eat into their revenues, Geist said on his blog on Monday.

While I'm sure there's some good things in this voluntary industry code, their actions kind of put the thing in a whole new light, no?

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Bernard Lord confirms he helped kill valuable consumer tool

In a follow-up to yesterday's news that the Conservatives caved to industry pressure and killed an online tool that would have helped Canadian consumers find more affordable cell phone plans, former Conservative Premier of New Brunswick, current industry lobbyist, and likely future Stephen Harper successor Bernard Lord has confirmed he helped convince the Conservatives to kill the tool:

Bernard Lord, the head of the CWTA and former Conservative premier of New Brunswick, said he did meet with Industry Canada officials to discuss the calculator. The CWTA's position was that the calculator was flawed since it did not take into account data plans, bundle discounts and hardware subsidies offered by carriers.

"The minister made the right decision, to not continue to dump good taxpayer money into a tool that was ineffective," he said.

While Lord and his industry friends may be happy with Tony Clement's capitulation, consumers aren't. While a spokesperson for Clement is desperately trying to spin...

"Technical limitations prevented the officials from building a tool at this time that captures the full spectrum of offerings available to consumers in the cellphone marketplace," she said. "The proposed calculator design only considered voice communications and text messaging. As this is an industry with ever-evolving elements, such as bundles, data and seasonal offerings, it made it highly improbable to ensure that Canadians were being presented with current and relevant data."

... their excuses are transparently feeble.

Liberal consumer affairs critic Dan McTeague dismissed the technical issues as an excuse and called on the government to explain the decision.

"If there was a significant problem in the implementation, it would have been discovered much earlier in the process," McTeague said in a statement. "Why is the Harper government against transparency? A significant amount of taxpayer-funded government resources had already gone into this project. This calculator is especially important during these belt-tightening times."

And the scale of this Conservative boondoggle is growing.

PIAC's Lawford, who used to work for a database company, said such extra charges could have easily been added on later, after a tool for calculating basic costs was set up. He estimated the calculator project has cost hundreds of thousands of dollars, possibly even reaching into the millions. The Decima user study cost $60,000 alone.

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Conservatives won't stand-up for Canadian consumers

Interesting piece this morning by technology lawyer and analyst Michael Geist, who writes that the Conservatives have pulled the plug on an online tool that would have helped Canadians find more affordable cell phone plans, apparently under pressure from cellular industry lobbyists:

After spending tens of thousands of dollars creating and testing an online calculator designed to help consumers select their ideal wireless plan, Industry Minister Tony Clement killed the project weeks before it was scheduled to launch. Government records suggest intense lobbying this spring by Canada’s wireless companies, who feared the service would promote lower cost plans, played a key role in the decision.

As Geist reports, the government awarded Decima Research a $60,000 contract to do usability testing with the public in 2008 (the people loved it, by the way). And that doesn't include the unknown amount of taxpayer dollars spent developing the tool in the first place.

A tool that was needed, a tool that consumers wanted, a tool that would help Canadians navigate the minefields of a Canadian cellular industry sorely lacking in competitiveness, an industry that charges Canadians mobility rates far exceeding many other countries.

It's a tool everyone wanted, it seems, but the telecommunications companies, and their lobbying in April of Zoe Addington, director of policy in Tony Clement's office, appears to have paid off in the death of the tool, which despite being near launch, and despite the investment of tens of thousands of taxpayer dollars, will not see the light of day under this Conservative government.

By the way, take a look at the lobbyist filing for the Canadian Wireless Telecommunications Association's meeting with Addington. See if you recognize the name.

Why yes, that's former Conservative Premier of New Brunswick (and perennially-touted Stephen Harper successor) Bernard Lord.

Small world, no?

If the Conservatives aren't willing to stand-up for the interests of Canadians, I'm glad to see the Liberal Party is:

The Harper government is standing against transparency and against the interests of consumers by scrapping a web-based cell phone fee calculator, Liberal Consumer Affairs Critic Dan McTeague said today.

"This project was designed to help Canadians find the most affordable cell phone plans in a country that already faces some of the highest rates in the world," said Mr. McTeague. "Rather than stand strong for Canadian consumers, the Harper Conservatives scrapped the project."

Public reports show that just before the decision to scrap the project was announced, there were meetings between the staff of the Minister and representatives of the cell phone industry. Reports indicate that a significant amount of field testing, all with positive reviews, had already occurred.

"If there was a significant problem in the implementation, it would have been discovered much earlier in the process," said Mr. McTeague.

"Why is the Harper government against transparency? A significant amount of taxpayer-funded government resources had already gone into this project. This calculator is especially important during these belt-tightening times. Industry Minister Tony Clement needs to explain to Canadians why this decision was made.

"The government already provides a similar service for credit cards, why not cell phone plans? This tool would have helped Canadians, especially those on lower incomes, find affordable cellular service. Why the government feels that Canadians don't need that service is beyond me," he said.

Scott has more.

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