UPDATED: Clement elaborates on the Globalive decision - Macleans.ca

UPDATED: Clement elaborates on the Globalive decision

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In a news story published this morning, Industry Minister Tony Clement seems to explain that the federal cabinet overruled the CRTC last month to allow Globalive to launch a Canadian cell phone business because the government is determined to see more competition in the wireless marketplace.

That might sound like a straightforward position, except it’s at odds with what Clement said when he originally announced cabinet’s trumping of the federal telecom regulator on Dec. 11. At that time, he stressed that the move was “based on the legal facts of [Globalive’s] ownership, and not on the government’s position that there needs to be more competition in this marketplace.”  [UPDATED AT THE BOTTOM]

Here, for the sake of contrast, is the apparently different tack Clement took in his interview with Canwest New Service’s Andrew Mayeda, as reported this morning:

“[The CRTC] looked at a set of facts and came to one conclusion; we looked at the facts and came to a different conclusion. That’s all this was. So the CRTC still has a job to do, we still have a job to do in terms of the development of proper public policy, and the proper public policy in this area is more competition, more choice, better rates for consumers.”

The “set of facts” Clement refers to is Globalive’s ownership structure. The CRTC had ruled in October that Globalive didn’t satisfy federal Canadian-control requirements because Egypt’s Orascom holds almost all of its debt and most of its non-voting shares. But cabinet, which has the final say, accepted Globalive’s argument that its corporate structure puts voting shares mainly in Canadian hands.

Cabinet would not have been legally justified in rejecting the CRTC’s interpretation of the Canadian ownership law simply on the grounds that more competition is better. So its reason was—had to be—that it disagreed with the regulator’s judgment that Globalive is foreign-controlled. Yet Clement now appears to be linking the decision very closely to the government’s policy preference for “more choice.” (The Ottawa Citizen sure heard him that way, headlining Mayeda’s story “Wireless competition behind CRTC overruling.”)

As well, Clement explained that the government’s key pro-competition move was its 2008 auction of wireless spectrum to companies ready break into the marketplace, making sure Rogers (owner of Maclean’s), Bell and Telus couldn’t consolidate their cell dominance. He’s right, of course—but that landmark auction would have made no difference if new entrants like Globalive were blocked from using the spectrum they’d bought because they failed to meet Canadian ownership rules.

In other words, to make the 2008 auction matter, Globalive needed to pass muster by being deemed sufficiently Canadian. Clement comes perilously close in this story to admitting that the driving factor behind cabinet’s decision to reject the CRTC’s ruling was increasing competition, rather than any interpretation of the Canadian-control law.

UPDATE:

Tony Clement’s office disagrees with any interpretation of his remarks that draws a link between the government’s avowed preference for a more competitive cell phone market and its decision that Globalive is sufficiently Canadian to provide some of that competition.

“The decision is, as it was in December, based entirely on our finding of the facts Globalive presented to CRTC on the company’s ownership and control,” Darren Cunningham, the industry minister’s director of communications, emailed to say. “We remain resolute in our finding that Globalive is a Canadian company; that is what our review was to determine, and the only factor in the decision was that determination.”

On the relationship between the  government’s decision two years ago to make sure companies just entering the market got a share of the newly available wireless spectrum and cabinet’s ruling last month that one of those aspiring entrants is Canadian enough to launch its business, Cunningham added this:

“Two years ago, the government set aside spectrum for new entrants, and the intent was for increased competition in the market with the some of the highest cell rates in the world, that was two years and another Minister ago. Minister Clement’s job simply was to  determine if Globalive was a Canadian company under the Telecommunications Act. It is, and they are now in business.”



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