‘Final’ court ruling clears Globalive as Tories table changes to foreign ownership rules

The Supreme Court on Thursday dismissed an application for an appeal hearing on whether Globalive Wireless Management Corp. is Canadian-owned, putting to rest a three-year legal battle for the new entrant wireless carrier. The issue of whether Globalive is Canadian-owned under the existing telecom rules has seesawed over the past three years between decisions of the CRTC, the federal cabinet, the Federal Court, and the Federal Court of Appeal. The Supreme Court decision means the issue will not proceed to a hearing, and the lower ruling of the appeals court, which said Globalive is Canadian, will stand. “The Supreme Court’s decision conclusively ends WIND’s long running regulatory and legal battles with its competitors over its compliance with Canadian ownership rules,” Wind said in a release Thursday. The Supreme Court does not provide reasons for decisions on whether it will accept applications for appeals. Under the Supreme Court Act, it hears appeals based on their “public importance” or importance as an issue of law. The Conservative government last month pledged to remove the foreign ownership restrictions under the Telecom Act for small or startup mobile companies with less than 10 per cent market share, a policy decision that could have rendered the Globalive court hearing moot because it was being sought under the existing statutory restrictions. On Thursday, the Conservative government introduced Bill C-38, the federal budget bill, which includes the amendments to the Telecom Act. The Conservative government is expected to prioritize its budget bill in the coming weeks, passing it into law before the summer parliamentary recess starts in June. Globalive rolled out operations in Canada under the Wind Mobile brand in 2010 and now has about 425,000 customers nationally. The legal dispute over its ownership extends back to 2009, when the CRTC ruled that, due to most of Globalive’s debt being held by Egyptian telco Orascom Telecom Holding SAE (now owned by Amsterdam-based VimpelCom Ltd.), the company was controlled “in fact” by non-Canadians. The Conservative government issued an order-in-council decision the same year that reversed the CRTC ruling and said Globalive qualified for Canadian ownership and operations in Canada under the Telecommunications Act's foreign ownership restrictions. Competing wireless startup Public Mobile Inc. said it sought clarity of the rules and a level playing field, and appealed the cabinet decision to the Federal Court. On Feb. 4, 2011, the Federal Court struck down the Conservative cabinet decision, saying Globalive is foreign owned and the government “cannot restrict its interpretation to one individual and not to others who may find themselves in a similar circumstance.” Globalive appealed the decision to the Federal Court of Appeal, which in June last year ruled that the company is Canadian-owned but said the hearing raised important issues about the foreign ownership control-in-fact test under the Telecom Act, calling it “contextual” and “somewhat imprecise.” Public Mobile then sought to appeal that ruling to the Supreme Court, which on Thursday dismissed the application with costs. The control-in-fact test in the Telecom Act goes beyond basic investment limits to look at other ways a foreign entity can influence a Canadian company, such as the amount of debt lent to a holding company or the amount of non-voting but participating shares. Globalive cleared the foreign investment limits under the act, which restrict foreign capital to 20 per cent of the voting shares in the carrier and 33 per cent of the voting shares in the holding company. Under Bill C-38, those investment restrictions, as well as the control-in-fact test, will be removed for telcos with less than 10 per cent market share. Foreign ownership and investment conditions will continue to apply under the Investment Canada Act. Research firm Convergence Consulting said in a report in April that the new entrants, including Mobilicity, Wind Mobile, Public Mobile, and Videotron Ltd. (owned by Quebecor Media Inc.), collectively had 4.3 per cent of the national mobile market share at the end of 2011. Their share of the market will rise to 6.5 per cent by the end of the year, Convergence said. "WIND is interested in fighting in the marketplace to provide Canadians with fair, transparent and competitive wireless offerings, not in fighting in courtrooms," Anthony Lacavera, chairman of Wind, said in a statement Thursday. "Our employees have stuck by us, we have continued to invest in building Canada's third national wireless network and we continue to grow our customer base,” he said. Lisa Papas, a spokeswoman for Public Mobile, said in an emailed statement Thursday that the Supreme Court ruling “is the final decision so the issue’s been put to rest.” She emailed a statement by Bob Boron, general counsel for Public Mobile, who said the company is disappointed in the decision but that “we nonetheless believe that by bringing this case forward, Public Mobile has put a spotlight on the issue of foreign ownership and control of wireless carriers in Canada.” He said the Supreme Court unfortunately will not to resolve confusion in the industry over cabinet’s authority to vary the decisions of administrative bodies like the CRTC. Boron added: “The continued focus on this issue by Public Mobile has helped lead to the government’s decision to remove foreign ownership and control restrictions for all new wireless entrants and other small telecommunications providers. These legislative changes will restore a level playing field for access to capital.” sdoyle@thewirereport.ca

‘Final’ court ruling clears Globalive as Tories table changes to foreign ownership rules

News | April 26, 2012

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