"If the rules are going to be effectively gutted, and this type of foreign investment is possible, then I think what you will see is every telecom and broadcasting carrier in the country looking anew at what is within the art of the possible with respect to ownership and structure."
One scenario could see the incumbents racing to partner with the strongest foreign players, among them Britain's Vodafone Group, Spain's Telefonica, and U.S. giants Verizon Communications and AT&T.
For now, the incumbents are portraying Mr. Lacavera and his holding firm, AAL Telecom Holdings Inc., as a bit player in a power play by Mr. Sawiris.
"AAL is a minnow swimming with a whale. Its principal shareholder, Mr. Lacavera, is a comparatively youthful 35 years old and has no track record in the wireless industry," Telus said in a filing to the CRTC last month.
Globalive lawyers fired off a response to Telus's filing, comparing Mr. Lacavera to Bill Gates and Ted Rogers. "[Telus's]comment misses an important point of the technology revolution of the past two decades. Many whales have been beached over those years and agile young minnows have grown up to replace them."
This is not the usual stuff of CRTC proceedings, which tend toward the dry and legalistic. Last week, Globalive accused Rogers of playing "regulatory gamesmanship" that is "harmful," "distasteful" and "disappointing."
For its part, Rogers has expanded its attack, asking the CRTC to begin similar intensive reviews of the structure of the two other wireless startups. Rogers says the structures of Data & Audio-Visual Enterprises Wireless Inc. (DAVE Wireless) and Public Mobile Holdings Inc. have grown sufficiently complicated since last summer that only a public proceeding will illuminate their ownership and control.
As with Globalive, Industry Canada has already determined that those two entrants satisfy ownership and control rules, although the CRTC must conduct its own investigation.
If the CRTC rejects Globalive's structure, the company could be forced to add Canadian equity. "Imagine how that negotiation goes, now that it is a public process," Mr. Lacavera says. "The Canadian investment community would know that we have to take in funds, and we're playing in a small universe. The terms could be unfavourable. We can't be put in a situation where we have to take capital on anything other than commercial terms."
Orascom doesn't expect to be tripped up at this stage of the process. The company came to Canada with its eyes wide open. The rules are well documented in Canada and the requirements much clearer than in some other countries where Orascom has invested, Mr. Lacavera says.
"It would be counterproductive for the Canadian government to say, 'We don't want our market to take advantage of foreign best practices.' That would be to everyone's detriment."
The market battle
Despite all the invective Canada's wireless oligarchs have hurled toward Globalive and its big sibling, they dismiss the notion that they will be threatened by Orascom's size and experience once things move from the regulatory arena into the marketplace.
"I find the conclusion ludicrous," Telus's Mr. McFarlane says. Experience in markets like North Korea, where Orascom recently set up a wireless network, won't create competitive advantage in Canada, he says.
As well, Orascom operates mostly in cities with big populations, which is completely different from building for a country like Canada, he says. "I would much rather have people who are bred in Canada, with significant management expertise [and who understand]the dynamics of this marketplace."
Still, it is bound to mean a new game. Traditionally, the incumbents' major challenges come from each other. Rogers, Bell and Telus spend billions of dollars on network upgrades, advertising, promotions and handset subsidies in a battle that plays out weekly in small gains and losses in market share.
With the advent of new wireless players - not just the likes of Globalive but also some of Canada's cable companies - the incumbents will see their market share drop from nearly 100 per cent today to 76 per cent five years from now, according to a study by the Toronto-based Convergence Consulting Group Ltd.
While Orascom, for one, has international clout behind it and, it argues, a superior set of services to sell customers, the incumbents have some strengths too: established brands, the ability to bundle wireless services with other offerings, and world-class networks.
It will be an expensive game. Investment demands will be high and it will take about 10 years for Globalive Wireless, DAVE Wireless and Public Mobile to see real profits, says Brahm Eiley, a principal at Convergence.
That scenario makes it more likely that the battle will eventually turn into a very different sort of endgame, with some or all of the upstarts pursuing strategies to get bought out by one of the incumbents after 2014, when most of the wireless spectrum licences become transferable.
|RCI.A-T Rogers Communications||45.81||
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