Upstart wireless company Globalive Wireless Management Corp. has won the right to compete with its bigger rivals, after a stunning court ruling upheld the federal government’s move to allow the foreign-backed company into the regulated sector.
Globalive’s executives were jubilant after the unanimous decision by the Federal Court of Appeal on Wednesday, convinced the ruling will dissuade rivals from taking their concerns about Globalive’s foreign financing to the Supreme Court of Canada.
The judges wrote that Globalive was a “a Canadian owned and controlled company” and upheld cabinet’s decision to allow it to operate.
Ever since a federal regulator blocked Globalive from launching cellular brand Wind Mobile in October of 2009, the company has been on a roller-coaster ride to prove its compliance with Canada’s strict foreign ownership restrictions. The process has involved endless court battles, thrown the sector into a period of prolonged uncertainty, and involved everyone from Canada’s biggest wireless companies to the federal cabinet. Wednesday’s court ruling appears to resolve that confusion.
It has also done much to resolve an awkward problem for the federal government, which was accused of trying to alter Canada’s foreign-ownership laws by decree, outside Parliament, when it intervened on Globalive’s behalf.
Anthony Lacavera, Globalive’s chairman, had been speaking to investors in Toronto on Wednesday when he got the news. “Now we can actually fight in the market,” he said in an interview.
The saga has been a distraction for Globalive, starting in the fall of 2009 with a ruling by the Canadian Radio-television and Telecommunications Commission.
The regulator ruled that a foreign backer – originally Egyptian billionaire Naguib Sawiris and now Russian carrier VimpelCom – exerted too much control. But the federal cabinet, eager to boost competition in a sector where three large players – BCE Inc., Rogers Communications Inc. and Telus Corp. – had 95 per cent of the market, overturned that CRTC ruling with a dramatic order-in-council, allowing Globalive to launch Wind Mobile in December, 2009.
Shortly after that, however, Public Mobile, another new wireless player, appealed to the Federal Court for clarity on the cabinet decision. Public Mobile was backed in that process by Telus Corp., and they succeeded in having the court strike down the original decision, which threw Globalive – and the entire $40-billion sector – into a tailspin of uncertainty and confusion.
Opponents of Globalive’s approval had argued the government was changing foreign-ownership restrictions in the sector by stealth, without the backing of Parliament. Many in the executive suites of BCE Inc., Telus and Rogers supported this view, and argued that Globalive was effectively foreign-owned.
Mr. Lacavera said the regulatory and legal confusion has been a distraction. “It’s one thing to have three of the most powerful companies in the country end up in a symphony against you, but it’s another thing to also then have regulatory and legal issues,” he said. “It’s been an immense challenge.”
The formal appeals are still not over, however: Late on Wednesday, Public Mobile said it plans to seek leave to appeal the decision to the Supreme Court.
The appeal court decision also appears to have given breathing room to the federal government, which pledged in a previous Throne Speech to loosen foreign-ownership restrictions in the sector, but has been more ambivalent about the issue since.
Tony Clement, who heads the Treasury Board but was Industry Minister when cabinet overturned the CRTC ruling, took to Twitter on Wednesday to voice his satisfaction with the court’s decision.
“Well, well,” wrote Mr. Clement, who was at times criticized for governing the multibillion-dollar sector by Tweets instead of bold, long-term policy. “I certainly feel vindicated.”