OTTAWA - New cellphone company Globalive could launch as early as next week in Toronto and Calgary after the federal government ruled it's Canadian-owned and controlled, a move that should give consumers more choice as it and other new players enter the market.
"Now we're ready for action," Globalive chairman Anthony Lacavera said Friday in Toronto after the decision by Industry Minister Tony Clement overturned a CRTC ruling that blocked company from launching in November.
"Now we can make it happen."
Lacavera said the federal government made the right decision in giving his company -- which will operate under the Wind Mobile brand -- the green light after the CRTC said Globalive wasn't Canadian enough.
"We are going to launch as early as next week. The last six weeks have not been easy for us," he said.
Lacavera had 800 employees in Toronto and Calgary who had finished training and were waiting to start the company's wireless business, but ended up doing volunteer work while collecting their salaries after the launch was put on hold and the Globalive awaited word on its future.
Wind Mobile CEO Ken Campbell says Globalive won't charge its customers system access or 911 fees. Though it will not offer Apple's touchscreen iPhone, available from competitors Rogers, Bell (TSX:BCE) and Telus (TSX:T), but it will offer the BlackBerry and other smartphones.
The Canadian Radio-Television and Telecommunications Commission had initially turned down Globalive's attempts to set up shop, on the grounds the company is heavily backed by a foreign firm, Orascom Telecom Holding of Egypt.
Orascom holds 65 per cent of parent company Globalive Holdings, while CEO Lacavera owns the rest. The Egyptian-based telecom also holds much of the company's debt, a sticking point for the CRTC.
But Clement argued that most of Globalive's shareholders are Canadian and the wireless company, based in Toronto, should be considered Canadian. He said he consulted with provincial governments and industry players before overturning the CRTC ruling.
Clement also said no additional changes would be required to Globalive's structure and shareholder arrangements.
He specified that the debt financing provided to Globalive by a foreign lender, as well as its four directors on the company board, do not contravene Canadian ownership requirements.
"We came to the conclusion the lender had influence over the company, which is perfectly acceptable under our legislation, it did not have control over the company," Clement said.
The new wireless company will compete with Rogers Communications Inc. (TSX:RCI.B), Bell Canada (TSX:BCE) and Telus Corp. (TSX:T), who have lobbied to halt Globalive's advances.
Globalive's arrival is expected to put more pressure on consumer prices across the industry, as it heralds the entry of more players into the market opened up through an auction of wireless spectrum in 2008.
Bell expressed its discontent with the decision and wants to take another look at it.
"It's disappointing, as we think Globalive quite clearly does not meet the requirements for Canadian control," said spokeswoman Jacqueline Michelis. "We'll be taking a close look at the reasoning behind this decision."
Law professor Michael Geist of the University of Ottawa said the government came down on the side of increased competition.
"It's a big win for consumers," said Geist, who also holds the Canada Research Chair in Internet and e-commerce law.
The big three players, Rogers, Bell and Telus, recognize that they're going to face more competition, he said.
"While some of the big three have started to make some changes, the fact that there will be another player offering up an alternative is bound to shake things up."
Deloitte Canada analyst Duncan Stewart also said the federal government wants more competition in the cellphone industry. Globalive is probably the new competitor that the established players fear the most, said Stewart.
"Globalive, being back in the game, is the one most likely to have effect on the marketplace," he said, adding that consumers could see significant price cuts.
Aside from Globalive's Wind network, DAVE Wireless and Public Mobile are expected to launch their services in the coming months, while Videotron (TSX:QBR.B) is expected to get into the cellphone business in that province and in parts of eastern Ontario next year.
The CRTC reviewed Globalive's corporation structure last spring and decided its operations here would contravene the Telecommunications Act provisions that companies be controlled by Canadian interests. That decision flew in the face of an earlier review by Industry Canada that gave the company a licence to set up here, in the interest of competition.
Clement stressed that Friday's announcement was not giving Globalive special treatment.
"Let me state for the record, government is not removing, reducing, bending or creating an exception to Canadian ownership and control requirements in the telecommunications and broadcast industries," he said.
Shares in the major telecom companies dropped in morning trading on the Toronto Stock Exchange. Rogers shares fell $1.73 or five per cent, Bell Canada parent BCE's stock was off about three per cent at $27.60 and Telus stock edged about two per cent to $32.97.
-- With files from Diana Mehta in Toronto
