Courts Reject Government's Accomodation For WIND Mobile

Crosspost from Sitting on an Atomic Bomb

The Federal Court has made uncanny timing with their latest decision relating to the government's ability to reverse CRTC decisions. The Harper government's ruling that allowed Globalive to establish WIND Mobile in the Canadian marketplace despite the CRTC's objection has been struck down on the basis that the government had no justification in overruling the regulator. Given that Industry Minister Tony Clement announced on Wednesday the federal government's intention to overrule the CRTC's decision to impose usage-based billing on independent ISPs, concern over this development may be understandable.

Globalive participated in the government's wireless spectrum auction in 2009, despite the fact that most of the start-up's investment was coming from the Egyptian-based Orascom. Feeling that the company was not authentically Canadian enough, the CRTC denied them entrance into the market. Under the banner of encouraging competition in the Canadian telecommunications sector, the federal government overruled the regulator's decision and allowed WIND Mobile to open shop in Canada and compete with companies run by Canadian capital.

Unsurprisingly, an appeal against this decision was filed by Alek Krstajic, CEO of Public Mobile, the wireless upstart which has arguably been having the hardest time gaining traction. Although Krstaljic insists that he had no intention of killing WIND Mobile, this is going to create unforeseen hurdles in the company's operations. It is unlikely that WIND Mobile, which has gained 250,000 subscribers since it first launched last year, will be shut down. However, this will pull both the company's future manner of operation, as well as the current status of our policies on foreign competition into further scrutiny.

It is also unlikely that this will set a precedent for the usage-based billing decision which was made just this past week. Although Tony Clement has been touting similarities between these two overrulings as being in the interest of competition and consumer choice, the circumstances are considerably different in both cases. The CRTC's decision about WIND Mobile, anti-competitive as it may be, is in line with the Telecommunications Act, which prohibits this level of foreign ownership and investment. It is much more likely that the government's overruling of the UBB decision will stick, since it does not defy the Telecommunications Act in any obvious way.

While it likely won't have a direct effect, this does add a new dimension to the debate about the government's ability to overrule the decision of an arm's length organization such as the CRTC. It seems undoubtedly clear that some kind of overhaul is needed to Canada's grossly outdated broadcast and telecommunications regulatory regime. However, we must be cautious to ensure that any major change that does happen will continue to be in the best interests of an innovative Canadian industry. While maintaining a competitive market is very important, it should not be the sole motivating factor behind intervening the regulatory process. In the fervour of support for the government's current stance, the public still needs to understand that actions as drastic as dismantling the CRTC or completely opening the floodgates to foreign competition without restraint is not going to be the most efficient way of achieving innovation and accessibility for Canadians.

Full story can be found at The Globe and Mail.

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