Globalive approval challenged by rival wireless upstart

Upstart wireless company Globalive is facing another legal challenge after another new player in the mobile phone market asked for a court review of the government's decision to approve Globalive's ownership structure.

Public Mobile filed an application for judicial review of the government's Dec. 11 decision, which paved the way for Globalive to launch its Wind brand of mobile phones in some cities in December, adding a new rival to established players like Bell, Telus and Rogers.

In doing so, federal Industry Minister Tony Clement set aside an earlier ruling from the Canadian Radio-television and Telecommunications Commission, which found Globalive did not meet Canadian ownership and control requirements.

The regulator said last year the fact that the Toronto-based company has received most of its funding from Naguib Sawiris, the billionaire head of Egyptian telecommunications company Orascom, disqualified it from operating in Canada.

But Clement overturned the CRTC ruling, saying a government review found Globalive met Canadian ownership and control requirements under the Telecommunications Act.

Public Mobile said in its application to the Federal Court of Canada on Friday that the government was wrong to overturn the CRTC decision, and that in doing so had essentially disregarded foreign-ownership restrictions in the telecommunications industry.

Decision unfair, says Public Mobile chief

"We believe Cabinet's decision is unfair to other wireless carriers, especially new entrants like Public Mobile that have played by the rules and secured substantial Canadian investment," Public Mobile CEO Alek Krstajic said in a statement.

"Furthermore, while we respect the government’s authority we believe what it has done amounts to a change in law, and only Parliament can change Canadian law."

However, Globalive chairman Anthony Lacavera said his company did follow the rules.

"The same rules apply to all new entrants, including us. The government determined that we are in compliance with the rules," he told CBC in an email Friday.

"The minister made it clear that the government was 'not removing, reducing, bending or creating an exception to Canadian ownership and control requirements in the telecommunications and broadcasting industries. The Government's decision to vary is specific to the facts of this case.'"

Clement said the ruling was a one-time decision specific to the company's situation and would not have any bearing on foreign-ownership restrictions currently in place.

Consumer advocates cheered the government's decision as a big win for cellphone customers, since the addition of new players is expected to lower prices.

"More competition should elevate Canada's market to that approaching what exists in the rest of the world," said Michael Janigan, director of the Public Interest Advocacy Centre.

But established carriers were disappointed with Clement's ruling.

"If Wind is Canadian, then so was King Tut," quipped Michael Hennessy, head of regulatory affairs for Telus, on his Twitter page after the decision was made in December.