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Review of Globalive Wireless Management Corp. under the Canadian ownership and control regime

November 20, 2009

Minister of Industry
The Honourable Tony Clement
235 Queen Street
Ottawa, ON
K1A 0H5

Dear Minister:

Re: CRTC Telecom Decision 2009 -678 Review of Globalive Wireless Management Corp. under the Canadian ownership and control regime

The Public Interest Advocacy Centre (PIAC) has been engaged in interventions on behalf of ordinary and vulnerable Canadian consumers in telecommunications proceedings before the CRTC since PIAC’s inception in 1976. PIAC participated in the proceeding that was preliminary to that in which the above-noted decision was made.

In PIAC’s view, whatever the correctness of the Commission’s determination of de facto control of the wireless carrier, Globalive, the practical effect of the Decision is harmful to consumers. In setting the conditions for the 2008 spectrum auction, Industry Canada recognized the necessity for greater competition in the wireless market in Canada. This conclusion has been supported by a number of reputable independent studies ranging from the 2006 Telecommunications Policy Review Report to the August 2009 OECD Communications Outlook. Consumers need at least another major player to provide better prices, service quality, efficiency and choice.

It should also be noted that the value of the current foreign ownership restrictions has been challenged by much critical comment from policy advisers to the government. The Telecommunications Policy Review Panel Report issued in March 2006 stated that liberalization of the restrictions on foreign investment in the Canadian telecommunications sector:

“…would increase the competitiveness of the telecommunications industry, improve the productivity of Canadian telecommunications markets, and be generally more consistent with Canada’s open trade and investment policies.”[1] <#_ftn1>

More recently the Competition Review Panel Report (“Wilson Report”) also accepted a loosening of ownership restrictions.

“Taking these considerations into account, the Panel finds that the TPRP’s proposed phased liberalization of foreign investment rules for telecommunications and broadcasting has merit.”[2] <#_ftn2>

PIAC notes that whatever the past and current merits of the foreign ownership restrictions, in this case, the burdens borne by the consumers, deprived of choice in the wireless market place, far outweigh the benefits of the CRTC’s enforcement decision. It may be trite to note that such benefits are accruing chiefly to the wireless incumbents.

We are concerned that this new entrant Globalive, together with other carriers granted licenses by Industry Canada earlier this year pursuant to the set-aside policy used in the spectrum auction, face continual efforts on the part of incumbents to frustrate their market entry. These efforts not only include complaints about the nationality of ownership, but obstinance with respect to the resolution of key issues of interconnection and facilities sharing with the incumbents. There is no down side for the incumbents in pursuing this sort of conduct, as each month that goes by without new entry means another month of incumbent revenues unimpeded by real competition. Already, there are rumours in the business media of an impending sale of spectrum by Globalive to an existing incumbent. The government must exercise its leadership to protect Canadian consumers, and to bring a stop to this obstruction of the competitive market.

In the context of the Globalive Decision, PIAC believes that agitation on this issue of foreign ownership will continue even if the carrier meets the Commission objections. PIAC would suggest that the Minister exercise his powers under sec. 12 of the Telecommunications Act to vary Decision 2009- 678 in the following fashion:

1. That Globalive will be in compliance with the provisions of sec. 16 of the Telecommunications Act with respect to Canadian ownership when, after taking the appropriate steps to meet the findings made by the Commission in Decision 2009-578, it satisfies the Minister that Globalive is not in control of a non-Canadian.

2. That all further complaints concerning the nationality of Globalive’s ownership be first addressed to the Minister for his consideration of the exercise of his powers under sec. 5(2) of the Radiocommunications Act and such complaints may not be dealt with by the CRTC before the Minister’s decision.

It also appears to PIAC that Minister may wish to also consider issuing a Policy Direction pursuant to sec. 8 of the Telecommunications Act that the Commission shall rescind any determination of forbearance in relation to a carrier where it finds that there has been intentional conduct on the part of a carrier or carrier that may result in a substantial lessening of competition, or the possibility of frustration of competitive entry. This would enable the Commission more directly control the actions of a carrier that are contrary to the public interest.

PIAC believes that the Commission Decision in this matter should be reviewed carefully to examine its potential effect on the structure of competition and the future conduct of players in the wireless market. We welcome this opportunity to suggest how the consumer problems caused by this Decision might be mitigated.

Yours truly,

Michael Janigan
Executive Director/General Counsel
Public Interest Advocacy Centre

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