Public Mobile court challenge boils down to semantics, Globalive says

OTTAWA—The fundamental disagreement between the CRTC and the Conservative government on whether Globalive Wireless Management Corp. is “not controlled by non-Canadians” is above all a semantic issue, Globalive told the Federal Court Thursday. “The governor-in-council and the CRTC had a fundamental disagreement about what amounts to control of a Canadian telecom company,” McCarthy Tétrault counsel Thomas G. Heintzman, representing Globalive, told the court Thursday. “That disagreement had nothing to do with the factual issues or determinations made by the CRTC. It had everything to do ... in large measure over what the words 'not controlled by a non-Canadian' mean in section 16(3)(c) .” In 2009, the CRTC ruled that Globalive, which had been cleared to purchase spectrum through an Industry Canada auction, could not provide wireless services under the Telecommunications Act because it was not controlled in fact by Canadians. But a few weeks later the government issued an order in council reversing the decision, stating that Globalive was “not controlled in fact by Orascom , a non-Canadian.” The ruling allowed Globalive to launch its services in several cities across Canada under the Wind Mobile brand. But fellow new entrant Public Mobile opposed the government's ruling and launched a legal challenge seeking to quash the decision. Thursday was the second and final day of a Federal Court hearing on the challenge, which seeks to determine whether the government's order-in-council decision will stand. Heintzman told the court that the disagreement between the CRTC and the government boils down to a fine distinction between whether Globalive is in fact not controlled by Canadians or whether it is controlled by non-Canadians. According to section 16 of the Telecommunications Act, a carrier cannot be “otherwise controlled by persons that are not Canadians.” Heintzman said the CRTC interpreted the act to mean that carriers must be Canadian-controlled, and in finding that, through debt obligations, Globalive was subject to the influence of Egyptian investor Orascom, it denied the application. Heintzman added that the commission misinterpreted the double negative in the act's wording, which he said indicates that a company can meet the requirement to operate in Canada if it is not controlled by either Canadians or non-Canadians. “The legislation purposefully made sure the legislation said, 'not otherwise controlled by persons who are not Canadians,' meaning that if you're not controlled by either, you're OK,” he said. “The CRTC refused to accept that this third category existed ... and that was a fundamental disagreement ... The governor-in-council said 'no, you're wrong.'” Heintzman said the government acted within its powers to correct the commission's interpretation of the act. But Michael Ryan, counsel for Public Mobile in the case, told the court that the interpretation of the double negative in the act came up as the commission was making its decision—but it came to a different conclusion. “It's not appropriate to read into the decision the suggestion that the commission did not understand the test. Simply, it went further than the test required in finding that non-Canadians do proactively control Globalive,” he said. On Wednesday, Ryan told the court that the government exceeded its powers by reversing the CRTC's determinations of fact, which he qualified as “binding and conclusive.” Ryan added that the reversal of the Globalive decision marked the first instance that any federal government had revised a CRTC finding of fact. But Robert MacKinnon, representing the federal government at the hearing, disagreed, arguing that the government regularly varies CRTC findings. “Otherwise, you wouldn't have all these decisions from the governor-in-council,” he said. “If the governor-in-council couldn't review factual decisions ... what's left for to determine?” Globalive's counsel also questioned Public Mobile's motives in the legal challenge. McCarthy Tétrault partner Malcom M. Mercer, representing Globalive in the case, said Public Mobile's challenge attempts to use the court to gain access to new foreign capital. “Public Mobile thinks cabinet did the right thing, that should be available. And what it's really doing, when you look at it through that light, is lobbying through litigation for legislative change,” he said. Public Mobile CEO Alek Krstajic previously told The Wire Report that his company isn’t lobbying but is using the courts to stand up for consumers. “We think that we're doing what our customers would want us to do, and that is, when a government oversteps its bounds, call them on it,” he said. kfournier@thewirereport.ca

Public Mobile court challenge boils down to semantics, Globalive says

News | January 20, 2011

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