Commentary: Cabinet must tread wearily on Globalive appeal

The decision seems so simple for Industry minister Tony Clement: if you believe in free markets, one needs to overturn the CRTC’s decision to block would-be wireless entrant Globalive from rolling out a national discount cell phone service. But, as he well knows, nothing has been simple since he took over one of the more thankless jobs at the cabinet table. If you are, say, Mike Wallace, the Member of Parliament from Burlington, you’ll be highly conscious that your constituents would prefer to see better competition in the cellphone world. The fact that Globalive is controlled by a foreign company is irrelevant to anyone’s daily life, you just want a cheaper cellphone bill. Intellectual consistency should suggest that the CRTC ruling against Globalive is about as relevant at the doorstep as Ericsson buying Nortel's intellectual property assets, or the foreign control of Inco, Alcan, Falconbridge, Noranda, Sleeman, Dofasco, etc., etc. Not true, as DAVE Wireless founder John I. Bitove pointed out yesterday . There are specific Canadian ownership rules in wireless land, which is why Rogers Wireless isn’t a subsidiary of AT&T. If the federal cabinet overturns the CRTC on Globalive, the dreaded Law of Unintended Consequences will kick in. Why shouldn’t DAVE also be loosely controlled by a foreigner, such as Verizon? I can only imagine what kind of premium a U.S. cellular provider would pay to join the ownership ranks of DAVE, along with Mr. Bitove and merchant banker Quadrangle Capital Partners . If you favour a free market, why shouldn’t they join the party? If the federal cabinet’s political goal is increased competition, there appear to be plenty of players around who can provide consumers with a better deal than the status quo: Videotron, Public Mobile, Bragg…. And, assuming that the DAVE business plan would only improve if they acquired Globalive’s spectrum, it could also be financed locally; look at the size of the cheque (US$300 million) that the CPP Investment Board wrote to join Skype’s ownership group (see prior post “Skype deal: is it a tech or infrastructure deal?” Sept 2-09). Whether there are three or four new wireless players, the good people of Burlington are soon to enjoy more competition. Overturning the CRTC is as political a move as a cabinet can make; if the CRTC’s math is wrong, than so be it. Otherwise, ignoring our country’s current ownership rules will be the demarcation line. The unintended consequence will be simple: a foreign bidder for Bell Canada (for example) will have the luxury of using the Globalive decision against the feds in Federal Court. How long ago was it that Canadian pension funds were the only lead bidders for Bell, solely because of Canadian ownership rules? A matter of months. Tread wearily. Mark McQueen is president & CEO of Wellington Financial LP, a Toronto-based debt fund. This column appeared earlier this week on his Wellington Financial Blog.

Commentary: Cabinet must tread wearily on Globalive appeal

News | November 24, 2009

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