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Canadian court overturns ruling that let Wind Mobile launch

updated 07:10 pm EST, Fri February 4, 2011

Canada court says Globalive, Wind can't run as-is

The Federal Court in Canada on Friday rejected a government exemption that allowed Wind Mobile to run. A judge ruled that the Conservative government violated the Telecommunications Act's rules on foreign ownership by allowing Globalive, which owns Wind, to run the cell carrier with more than a 20 percent share stake owned by a foreign company. Globalive has 45 days to either appeal the verdict or reduce its foreign owner's share.

Egypt's Orascom Telecom currently has a 32 percent voting share in Globalive and 65 percent of the fiscal equity. Following the court's verdict would force it to shed much of its stake and could jeopardize Wind's fledgling network, which grew from its beginning in December 2009 to an estimated 225,000 subscribers at the end of last year, according to RBC. Globalive chairman Anthony Lacavera planned to appeal the decision.

"We don't intend to back down," he told Reuters.

The Conservatives had exempted Globalive as they hoped to foster real competition in the cellular industry. Canada's market is dominated by just three major carriers -- Bell, Rogers and Telus -- and only got additional significant entries after a 1,700MHz wireless auction opened the door to new networks.

An upheld ruling could hurt competition in Canada by forcing a reorganization at Globalive or, in an extreme case, shutting it down. The original objection was originally submitted by Public Mobile, which has just 25,000 subscribers and likely wants an edge. Incumbent carriers have also supported the move since it would prevent them from having to compete with Wind's typically lower-priced plans.

Lacavera speculated that Public Mobile was being used as a proxy by the top three carriers as it was too small to be any real challenge to carriers. He further suggested it was guilty of some hypocrisy, as it purportedly had more outside influence than Globalive.



By Electronista Staff
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Comments

  1. Telekinesis

    Fresh-Faced Recruit

    Joined: Mar 2009

    +7

    Yikes

    I am a Wind customer with a Nexus One (pictured) I also signed up my dad, mom, brother and step dad! Wind was a little shaky at launch but I've had no problems for many months and they are easily 200 - 400% cheaper than the incumbents. Why is it that monopolies are getting so much concessions in Canada as of late? The only thing I can think of since it's so completely anti-consumer and constituency is that they are paid off.

  1. Geoduck

    Junior Member

    Joined: Jan 2010

    +7

    The real question

    is who is 'protected' by the foreign ownership rule? Obviously not the customer.

  1. aristotles

    Grizzled Veteran

    Joined: Jul 2004

    +3

    When did this law come into effect?

    I ask this because Cantel (Rogers Wireless) used to be owned in part by BT and AT&T.

    See:
    http://www.itworldcanada.com/news/att-bt-buy-into-rogers-cantel/135247

  1. que_ball

    Fresh-Faced Recruit

    Joined: Aug 2000

    0

    Foreign owner

    Having investment by foreign owners is allowed as long as it remains a minority stake. Controlling interest in a regulated telecommunications company must be held by Canadians.

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