The decision by Canada’s telecommunications regulator to deny a new nation-wide wireless carrier a licence could result in the loss of thousands of new jobs and is being criticized for choking off competition.
Globalive Wireless Management Corp. was denied by the Canadian Radio-television and Telecommunications Commission (CRTC) Oct. 29. The regulator expressed concern over the firm’s foreign ownership by Cairo-based Orascom Telecom.
Now Anthony Lacavera, the chairman of Globalive Holdings, may need to raise more than $100 million in Canadian investment to launch the Wind Mobile brand. The new cell phone competitor was to open up its doors before year’s end in five major cities. Now it’s in doubt whether the company will even be allowed to operate, and Globalive is considering its next move.
The brand had planned to fill 300 positions in customer service and up to 2,000 more IT related jobs over the next year. Wind Mobile was to set up shop in Windsor, Ont. a border town with a heavy automotive manufacturing sector that was hard hit by the recession.
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The city is concerned that those new jobs now won’t be created, says Patrick Persichilli, acting CEO of Windsor’s Economic Development Corporation.
“Any new jobs are incredibly important for us,” he says. “We’ve got a highly skilled, highly available work force and a positive track record in terms of customer service type of operations.”
Globalive already has an established footprint in Windsor. It was attracted by a broadband network that was build to handle large data transmissions between auto-manufacturers and low real estate and labour costs. But now its future in the region is uncertain, Persichilli says.
The region has a 14 per cent unemployment rate to fill. It wants a second look taken at Globalive’s ownership structure and plans to support the company in getting one.
“We encourage the federal cabinet and the CRTC to take a second look at this,” Persichilli says. “We will be lobbying hard over the next couple of days on that issue.”
The federal Liberal Party is also calling for increased cell phone competition, joining the Consumer’s Association of Canada in its campaign.
The party points to Organization for Economic Co-operation and Development (OECD) studies that placed Canada 28th out of 30 countries for affordable cell phone packages.
The average monthly cell phone bill in Canada is $43.35 compared to the average of $29.42 for other countries, according to the study.
The CRTC should have considered the need for more competition in making its decision about Globalive, says Dan McTeague, consumer affairs critic for the Liberals.
“In one fell swoop, the CRTC has thrown cold water on the hope and the promise that the sale of spectrum would actually lead to new competition,” he told ITBusiness.ca. “At the same time, it’s put at risk greater opportunities for Canadians to work at new, innovative companies.”
Globalive bought $442 million of spectrum in Industry Canada’s wireless auction last year. Industry Canada approved its licence at that time. But incumbent carriers asked the CRTC to review Globalive’s ownership structure.
Orascom owns two-thirds of the company while Lacavera owns one-third. However, Lacavera holds two-thirds of the voting shares in the company. But the CRTC was concerned with Orascom’s debt financing for the company.
“The commission finds that Orascom has the ongoing ability to determine Globalive’s strategic decision-making activities,” the CRTC decision says.
Some Canadians blamed the CRTC and incumbent carriers for the decision on Twitter and Web forums. But the law itself might need to be overhauled, says Michael Geist, an Internet law professor at the University of Ottawa. The law determining foreign-ownership is outdated.
“There’s no guarantees that Canadian-owned businesses will create jobs in Canada and that foreign-owned businesses won’t create jobs in Canada,” he says. “There are examples of businesses that will set up shop in Canada even though they are controlled by a foreign-controlled industry.”
Industry Minister Tony Clement can’t “sit back and do nothing,” Geist adds. There are jobs at stake and consumers clamouring for more competition. Plus, Globalive should rightfully expect to be able to use the spectrum it purchased.
The Liberals aren’t looking to change the law right now, McTeague says. But would like to see the CRTC do a better job of defining a way that Globalive can get a licence.
“It is a serious mistake to allow the executive body of the country to make a decision to say yes you can buy this, you meet the requirement, you meet the criteria, only to a year later find the criteria on which you were accepted has now changed,” he says. “You can’t do that in a business environment.”
Globalive has encouraged supporters to leave comments on its Wind Mobile Web site.
A “Save Wind Mobile” Facebook group has also been created.