VANCOUVER—A coalition of groups is opposing an unprecedented federal government decision to overrule the CRTC’s rejection of an application for wireless services by a foreign owned company.
The independent regulator ruled last October that Globalive is controlled by Egyptian phone giant Orascom Telecom, and therefore does not meet the ownership requirements set out in Canada’s Telecommunications Act.
That ruling was overturned by the government, which concluded that Globalive—most of whose voting shares and board seats are owned by Canadians—meets Canadian ownership and control requirements.
However, Ian Morrison, spokesperson for Friends of Canadian Broadcasting (FRIENDS), says the government’s decision is “not valid.”
“The very act of over-turning the decision is not illegal, but our position is that the government exceeded its authority, that the government is also bound by the law and the law is pretty clear on this matter. The government has done something that it doesn’t have the right to do.”
The coalition, which includes FRIENDS, the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) and the Communications, Energy and Paperworkers Union of Canada, is applying to the Federal Court for intervenor status in a judicial review of the decision.
The groups are backing mobile phone company Public Mobile in its bid to challenge the government’s approval of Globalive and its mobile brand Wind. Vancouver-based Telus, which also wants the CRTC ruling upheld, is backing Public Mobile as well.
Globalive began offering mobile services in Canada in December, becoming the first new entrant in a decade into a market dominated by incumbents Bell, Telus, and Rogers.
The new cellular companies, Public, Mobilicity, and Wind have already started making waves with plans that offer unlimited talk and text for the same rate as the base plans of the incumbent providers.
It’s a deal that has left many Canadians, according to comments on chat forums and news articles, anticipating slimmer bills as the new providers get up and running in their cities.
The government’s decision to overrule foreign ownership rules outlined in the Telecommunications Act appear to be part of a deliberate conservative strategy of opening up the market to global competition.
“This government made a decision a couple of years ago that we wanted more competition in the wireless space, that this was important for consumers, it was important for our economy,” Industry Minister Tony Clement said in a Canwest interview.
The government said in the throne speech that it would open key sectors, including the satellite and telecommunications industries, to both venture capital and foreign investment.
In the Globalive case, Clement said it was not undermining the credibility of the CRTC, but rather that it was simply a different interpretation of the Act.
“It is a case where reasonable minds could differ,” he said.
The coalition argues that opening the door in this way to foreign ownership could threaten Canadian content and will make protecting Canadian cultural assets extremely difficult.
“We're adjacent to such a powerful, cultural force—the United States,” says Morrison.
“It's almost always cheaper to purchase programming in the United States and import it to Canada and wrap Canadian ads around it than it is to create programming domestically. So if the marketplace were to operate freely, high-production value Canadian content outside of areas like news—current affairs—would dissipate.”
Morrison says it is next to impossible to differentiate between content providers today, with companies like Rogers owning property in wireless, broadcasting, digital—and even a football team.
Globalive chairman Anthony Lacavera said opening up to foreign ownership will give consumers more choices.
“Canada has got one of the least competitive wireless markets in the world demonstrated by the high pricing and low penetration (of mobile phones),” he told Yahoo News.
Critics of the current system say wireless services are more expensive in Canada than in many EU countries, and that Canadians will be better served with competitors like Globalive in the field.
The coalition however says it is more important that Canadian companies be encouraged to compete. They say the Canadian market is ultimately too small for the global giants, and foreign ownership will only result in the smaller players, including Canadian incumbents, getting bought out—resulting in less, rather than more competition.
A 2007 opinion poll found that most Canadians—61 percent—hold an unfavourable view of foreign ownership of telephone companies.
The Standing Committee on Industry, Science and Technology, which has been holding hearings on Canada’s telecom foreign ownership rules, heard from five groups concerned the Globalive decision could affect Canadian content controls.
“We know that there have been other reviews and studies of foreign ownership in the past,” Rebecca Schechter, president of the Writers Guild of Canada, told the committee on April 1.
“However, we are now in the midst of a digital revolution where carriers and content providers are becoming one and the same. The government is right to consider consumers' interests but consumers have more than money at stake here.”
Stephen Waddell, national executive director of ACTRA, and others pointed out that Canada is not alone in maintaining foreign ownership restrictions on broadcasting.
“Almost all of the OECD countries have restrictions on the ownership of telecommunications and broadcasting, including the United States,” Waddell said.
Conservative MP Mike Wallace, a member of the Standing Committee, argued that government regulation would handle concerns over Canadian identity in broadcasting should the problem arise.
“Are you telling me that we cannot, as a government, regulate to be effective in making sure that broadcasting for Canadian content is protected, even though we have examples of other industries where the government is capable of doing it?” he asked.
“Let’s hope that you do,” answered Waddell.
