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Anthony Lacavera, Chairman, Globalive and WIND Mobile, speaks at a press conference on December 11, 2009. (JENNIFER ROBERTS/JENNIFER ROBERTS FOR THE GLOBE AND MAIL)
Anthony Lacavera, Chairman, Globalive and WIND Mobile, speaks at a press conference on December 11, 2009. (JENNIFER ROBERTS/JENNIFER ROBERTS FOR THE GLOBE AND MAIL)

Wireless upstarts, incumbents clash Add to ...

The federal government is getting an earful as it investigates a national digital strategy and prepares to begin a consultation process into easing foreign ownership restrictions in Canada's telecommunications sector to encourage investment.

In two keynotes addresses to the Canadian Telecom Summit on Wednesday, top executives from Telus Corp. and Globalive Wireless Management Corp. painted two very different portraits of Canada's wireless industry.

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The jockeying comes after federal Industry Minister Tony Clement's speech here on Monday about foreign ownership issues, and clearly outlined where the industry's two main stakeholders in the process - new wireless companies and established national incumbents - stand on the policy issues.

With the government also contemplating a national "digital economy" strategy, it is clear the government is going to have accommodate two very different points of view.

Telus executive vice-president and chief financial officer Robert McFarlane said the government was orchestrating public policy based on "myths" of inadequate competition in the sector. He said "regulatory handouts" and sustained uncertainty from the country's regulator were distorting capital markets and "subsidizing political favourites of the day," an obvious reference to cabinet's decision to disallow the CRTC's ban on Globalive and its cellphone provider Wind Mobile.

"Interventionist approaches are the wrong way to pursue a national digital strategy," Mr. McFarlane told the crowd. "It is only from sustainable profits that innovation will be funded, absent public policy funding, which is not affordable for governments in any event."

Globalive's chairman Anthony Lacavera, however, portrayed the industry in a much different light, one in which the government had created a "national oligopoly" of telecommunications carriers and "provincial duopolies" between telecom and cable companies - all at the expense of consumers.

"Trash-talking your local phone service provider has become almost as much of a national pastime in Canada as hockey," said Mr. Lacavera, who vaulted into the public eye when his company was barred by the Canadian Radio-television and Telecommunications Commission in October, 2009, after spending $442-million on wireless spectrum licenses.

Mr. Lacavera argued capital was so scarce in Canada - and that he himself had been "dismissed" by big Canadian lenders - that it was impossible for a new competitor to build and sustain a national wireless network without a foreign backer, such as Orascom Telecom Holding SAE, which backs Globalive. He was also asked whether all the new wireless entrants, which also include Public Mobile and Mobilicity, would make it in the long term. Many in the industry, including top executives, doubt there is any way Canada can maintain this level of wireless providers.

"I don't believe all new entrants will survive," Mr. Lacavera said.

But he also had choice words for the uncertainty of the Canadian regulatory environment, which seems to be the only subject on which most of industry players can agree.

"Securing a foreign investor was a major challenge with the ambiguity of the Canadian regulatory environment," he said.

Part of the regulator's duty is to ensure an equitable distribution of telecom services, such as wireless phone and Internet service, across the country and into rural areas, where the return on investment for companies discourages building advanced infrastructure. This fall, as the federal government contemplates its digital economy strategy, the CRTC will investigate applying these "basic service" principles to modern telecom services such as fibre optic networks, but especially broadband Internet.

But Telus, whose executives have previously argued regulatory surprises are preventing the company from investing, argued that free markets will bring these services with time, and that regulation is simply preventing facilities-based (companies that build their own networks, such as Telus) from doing so. Big providers, such as BCE Inc.'s Bell Canada, have previously argued that new competitors, such as Wind, will only build in urban markets with dense populations, and not bother plunging funds into providing technology in rural areas.

"Only facilities-based competitors can build next generation networks," Mr. McFarlane said, noting that the company's shared wireless network with Bell covers the majority of the Canadian population. "The fact is that governments can't afford to invest in broadband and are incapable of effectively adjusting to shifting market requirements as well as private industry."

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