Public Mobile CEO warned Industry Minister of ‘cloud of confusion’ if Globalive decision overturned

Public Mobile CEO Alek Krstajic warned Industry Minister Tony Clement in November that reversing the CRTC’s decision on Globalive Wireless Management Corp. would create a “cloud of confusion.” In the letter, dated Nov. 13 and obtained by The Wire Report through a federal court filing, Krstajic asked Clement for a meeting to discuss the CRTC decision. At the time, the government was reviewing the CRTC decision. The letter was submitted as an exhibit to Krstajic’s affidavit, filed in federal court as part of Public Mobile’s legal challenge of the government’s decision to overturn a CRTC ruling. Last October, the CRTC denied Globalive access to the Canadian wireless market due to foreign ownership restrictions. “If Cabinet overturns the CRTC’s decision, Canada would be sending an unfortunate message to everyone considering doing business in our country: ‘take your chances with the rules Canada has in place. Sometimes we apply them and sometimes we don’t. And sometimes we reverse ourselves notwithstanding the rules,’” Krstajic wrote in the letter. Public Mobile argues that the Globalive decision changes the foreign ownership rules and unfairly denied the company access to foreign capital. The company, which plans to launch mobile wireless services in Canada this year, is calling for a reversal of the government’s decision or a change in the foreign ownership rules so that they may apply more evenly. “With a cloud of confusion hanging over the rules and their enforcement, new entrants could fail like they have in the past, with the result being that the benefits of competition are not extended to consumers,” Krstajic’s letter said. Clement’s office did not respond to requests for comment Wednesday, but the minister has previously said that the Globalive decision was made on the facts specific to the case based on a “rigorous application” of Canadian ownership and control requirements. “In varying the CRTC decision, the Government is not removing, reducing, bending or creating an exception to COC requirements in the telecommunication and broadcasting industries,” a government release said Dec. 11. In a message relayed Wednesday through a Public Mobile spokesperson, Krstajic told The Wire Report that the letter was intended to “put down on paper an argument to the Minister that represents the interests of all parties concerned.” He added: “We were hoping to avoid the government making a knee-jerk reaction that actually hurts investment in Canada. We believe there is competition in Canada and we are asking that the government treat all parties fairly.” Clement did not grant a meeting or reply to the letter, said a Public Mobile spokesperson who asked not to be identified. The National Post also reported on Jan. 8 that Krstajic tried but failed to get a meeting with Clement following the government's decision. But Clement “did not turn a blind eye” to Public Mobile’s argument, said Brownlee Thomas, a telecommunications analyst with Forrester Research. She said the law on foreign ownership is unclear and open to interpretation. “ looked closely and decided,” she said in an interview. “As for confusion in the industry, we always would aspire to a level playing field. The law, as it is stated, does not give us clear visibility on the playing field. It may be a level playing field, but we are playing football in the dark.” Eamon Hoey, a telecommunications strategist at Hoey Associates, said it’s the administrative rules that aren’t clear. “These rules are not cast in stone, because if they were, then we should go back to the original act, which said 80 per cent domestic investment and 20 per cent foreign,” he said. “At the end of the day, what we have are rules that are not crystal clear to anyone, particularly to the bureaucrats.” While Krstajic may refer to the best interests of Canadians, Hoey said he believes Public Mobile’s letter was “self-serving.” “Self interest without doubt prevails,” he said. “To suggest it has any credibility is just beyond my understanding.” In the letter, Krstajic defended the CRTC’s ruling, saying it “took courage” to apply the law. “The CRTC’s leadership knew very well it would be controversial to make the decision to deny Globalive and not effectively endorse the approval already granted by Industry Canada,” the letter said.

Public Mobile CEO warned Industry Minister of ‘cloud of confusion’ if Globalive decision overturned

News | February 10, 2010

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