News

New wireless company Globalive Wireless Management Corp. could launch as early as next week in Toronto and Calgary after the federal government ruled that it is Canadian-owned and controlled, a move that should give consumers more choice as it and other new players enter the market.

“Now we're ready for action,” Globalive chairman Anthony Lacavera said Friday in Toronto after a decision announced by Industry Minister Tony Clement overturned a Canadian Radio-television and Telecommunications Commission ruling that blocked company from launching in November.

“Now we can make it happen.”

Mr. Lacavera said the federal government made the right decision in giving his company — which will operate under the Wind Mobile brand — the green light after the CRTC said Globalive wasn't Canadian enough.

“We are going to launch as early as next week. The last six weeks have not been easy for us,” he said.

Globalive had 800 employees in Toronto and Calgary who had finished training and were waiting to start the wireless business, but ended up doing volunteer work while collecting their salaries after the launch was put on hold.

Wind Mobile CEO Ken Campbell says Globalive won't charge its customers system access or 911 fees. Though it will not offer Apple's touch-screen iPhone, available from competitors, it will offer the BlackBerry and other smart phones.

In Ottawa, Mr. Clement said the federal cabinet decided to “vary” a CRTC October ruling that said Globalive could not enter Canada because it violated ownership rules, finding the majority of its equity and almost all of its debt is owned by an Egyptian company, Orascom Telecom Holding.

Ottawa is keen to spark more competition in the telecommunications business and reviewed the CRTC ruling with input from the industry, although Mr. Clement said his decision was based firmly on legal ownership requirements.

“The decision to vary the CRTC Globalive decision, let me emphasize, was based on the legal facts and not on the government's position that there needs to be more competition in the marketplace,” Mr. Clement said.

“That said, I firmly believe, that Globalive entry into the market to provide near national service will enhance competition for the benefit of Canadian consumers. A competitive marketplace assists consumers by giving more choice, at better prices and higher quality.”

Mr. Clement said 80 per cent of Globalive's voting shares are controlled by Canadians, and just four of its board members are those nominated by foreign interests.

“I think it sends a signal to the world that we are a place where the rule of law triumphs, where you can have two branches of government that can reasonably differ on an interpretation of the facts of a particular case, but that there can be a resolution of this and that the government has the ability to resolve this issue,” Mr. Clement said.

He stressed there is no change to Canadian ownership rules.

“All we have done is, we believe, interpreted the law in the appropriate and proper, correct, way, that Globalive, when you look at the facts on the ground, Globalive meets those Canadian ownership and control requirements,” he said. “This variance is effective immediately, allowing Globalive to enter the market without delay.”

Globalive enters a market now dominated by Rogers Communications Inc. RCI.B-T , BCE Inc BCE-T . and Telus Corp. T-T

Bell said it was disappointed as it believes Globalive “quite clearly” does not meet Canadian control requirements.

“We'll be taking a close look at the reasoning behind this decision,” it said in a statement.

A Rogers spokeswoman said: “We believe competition is good for Canadian consumers. We've always thrived in a competitive environment and we're ready to meet the competition head on.”

There are only “a handful” of countries in the world that have more than three wireless carriers, said Duncan Stewart, director of research at consulting firm Deloitte Canada in Toronto.

While many expected another competitor into the wireless race, the federal government has likely caught most investors off-guard, said National Bank Financial analyst Greg MacDonald.

“This is clearly a negative for incumbent wireless providers,” he said. “I think people kind of assumed that they would probably get a licence, but it certainly wasn't widely expected for the industry minister to overturn it like this.”

Because the firm is backed by foreign investors rather than a financial institution, he said the company is more likely to engage in “irrational” pricing to win new customers.

“In short, we now think there is greater risk of pricing declines in wireless, particularly on voice services,” he said.

Shares of the three incumbents traded lower Friday, with investors considering how each company's profits would be affected by the upstart, which has national capabilities and is expected to price aggressively lower than the established players. Investors should expect each company's shares to fall, Mr. MacDonald said, given that they ran up as high as 8 per cent when Globalive's bid was initially rejected.

“If Canadians had realized how much they had been missing out on when Globalive was rejected, they would have been very upset,” said Canaccord Adams analyst David Lambert.

“These guys have national coverage from Day 1, three data centres, they've managed to get 475 cell sites in the last nine months and have kiosks inside of Blockbuster stores. I think there are many ways they'll undercut prices, especially from Rogers.”

With files from reporters Jane Taber and Steve Ladurantaye