Michael Geist

Corporate structures and loan agreements are rarely the stuff of public interest, yet, as my weekly technology column notes (Toronto Star version, homepage version) last month they attracted considerable attention in a case involving Globalive, a new wireless company vying to shake up Canada’s telecommunications industry.  Operating as Wind Mobile, the company paid hundreds of millions of dollars in 2008 to scoop up spectrum to enable it to operate as a new national wireless carrier.

Bell Canada, Telus Corp., and Rogers Communications, the big three incumbent carriers, unsurprisingly opposed the new rival.  First they lobbied against a set-aside of spectrum for new entrants. When that failed, they argued Globalive failed to comply with the Telecommunications Act's foreign control restrictions. Last month, the Canadian Radio-television and Telecommunications Commission agreed. While Industry Canada previously concluded the company met the Canadian control requirements for the purposes of the Radiocommunications Act when it bid for spectrum, the CRTC concluded that its ownership and control structure do not meet the legal requirements to operate as a wireless carrier.  

The commission identified a number of changes that will be needed to comply with the law and Globalive says it is evaluating its options. The first option is presumably for the federal cabinet to overrule the CRTC. Last week, Industry Minister Tony Clement gave Canada's telecom players until Wednesday to provide their views on the issue as he conducts a pre-cabinet review.  A decision may be weeks away, but the process puts a much bigger question into play: Will the Globalive case become the catalyst for the elimination of telecom foreign control restrictions?

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