In the ongoing legal battle between Canadian mobile operator WIND Mobile and rival Public Mobile, WIND has criticised an attempt by Public to bring a case against it and against the government in the Supreme Court.
The legal controversy regarding WIND…
In the ongoing legal battle between Canadian mobile operator WIND Mobile and rival Public Mobile, WIND has criticised an attempt by Public to bring a case against it and against the government in the Supreme Court.
The legal controversy regarding WIND Mobile has largely centred on Canada’s foreign ownership regulations.
WIND Mobile Chief Regulatory Officer Simon Lockie told TelecomFinance that he believed the case should not even be heard by the court. Rather, Lockie said, the court should focus on cases of “national importance”.
Despite expressing confidence that “the court will find better uses for its time,” he also said that WIND Mobile will prepare for a court case, saying “of course we always prepare for the worst”.
On 2 September, Public Mobile filed an application to the Supreme Court, asking for leave to appeal against a prior ruling by the appeals court. This earlier ruling had been in favour of the Canadian government, saying a government move to vary a decision regarding WIND Mobile by the country’s telecoms regulator (the CRTC), was within government powers and therefore legal. For WIND Mobile the decision meant that it was legally allowed to operate in the country.
Public Mobile said it would not be able to comment before the press deadline.
The application to the Supreme Court comes after a long legal process over the last two years, which initially focussed on the issue of whether WIND Mobile’s ownership structure violates the strict Canadian foreign ownership rules.
Subsequently, the controversy surrounded the position of the Canadian government, particularly whether it had exceeded its authority under the Canadian Telecommunications Act in this case.
The Telecommunication Act states that for a telco to operate in the country, at least 80% of its board positions and voting shares should not be held by non-Canadians. It also demands (in terms that have been widely criticised as ambiguous and subjective) that “the corporation is not otherwise controlled by persons that are not Canadians”.
100% of voting shares in WIND Mobile are held by Canada-based holding company Globalive Investment Holding Corp (GIHC).
Egypt-based telco Orascom Telecom holds a 65% equity stake in WIND Mobile. But its voting share in GIHC is just 33%. This minority voting share, according to WIND Mobile, means that the company does pass the conditions set out in the Telecoms Act.
Yet that has not prevented two years of legal to-and-fro.
Public Mobile and another Canadian telco, Telus, brought a case against the Canadian government’s decision to allow WIND Mobile to operate.
In February this year, a federal court ruled that the government’s decision had been based on legal errors and must be quashed. This court ruling was then overturned by the appeals court in June.
Public Mobile’s application to seek leave to appeal this time round puts it against WIND Mobile and the Canadian Attorney General.
Telus has not joined Public Mobile in seeking leave to appeal. A Telus spokesman confirmed this to TelecomFinance, but would not give any comments on the cause.
Public Mobile’s application for leave to appeal was filed on 2 September, which leaves WIND Mobile with 30 days to respond.
Lockie said that his company would be filing its response shortly.
“We are hopeful for a quick decision dismissing this application (by Christmas) but it could be as late as the spring,” he said.
He also sharply criticised the foreign ownership rules as they apply to start-up “pure” telecoms companies (i.e. those not also operating in the broadcasting space), describing the situation in Canada as “an unnecessary and embarrassing state of affairs”.
He said that WIND Mobile had endorsed relaxing the restrictions for pure telecoms companies that had less than 10% market share.
Phillip Huang, an analyst for UBS, said that the Canadian telecoms industry is in need of some clarification from the government on how the foreign ownership rules are applied.
He said that the relaxation of the rules had been recommended by a number of parliamentary committees, but not much progress had been made “mainly because it’s such a politically sensitive topic”.
He added: “Now that the Conservative government (which is in support of relaxation of foreign ownership restrictions) commands a parliamentary majority, the industry is hopeful that the telecom foreign ownership restrictions may finally see some changes.”
Ronald Gruia, principal telecom analyst at Frost & Sullivan, argued that both Public Mobile and WIND Mobile are looking for the government to relax the foreign ownership rules, particularly for telcos that have less than a 10% share in the market.
He said that Public Mobile wants “to force the government to pass a clear resolution on this”.
