Law Times

PAGE 10 FOCUS April 18, 2011 • lAw Times Globalive appeal heads to court Matter considers cabinet decision on foreign-ownership restrictions BY ROBERT TODD Law Times A battle over wireless up- start Globalive Commu- nications Corp.'s ability to meet ownership and control requirements under the Tele- communications Act is headed to the Federal Court of Appeal. In February, Industry Min- ister Tony Clement announced the federal government's plans to appeal a controversial Federal Court ruling on that matter ear- lier that month. Th e court over- turned the federal cabinet's 2009 decision to alter a Canadian Radio-television and Telecom- munications Commission ruling on foreign ownership and pave the way for Globalive to launch its Wind Mobile wireless service in December of that year. Clement maintained Glo- balive did in fact meet Cana- dian ownership and control requirements under the act and said its presence in the market- place was good for Canada. He pointed out that cabinet has re- viewed just 13 of the CRTC's approximately 2,200 decisions since 2006 and has upheld sev- en of them. "Th e policy of our govern- ment is to encourage choice and competition in wireless and In- ternet markets," Clement said at the time. "Ours was the gov- ernment that set aside spectrum during the 2008 auction to al- low new entrants to compete. New entrants mean more com- petition, lower prices, and better quality services for Canadians." Globalive announced its own plans to appeal the Fed- eral Court ruling days after Clement's announcement. Th e company's chairman, Anthony Lacavera, said "regulatory gam- ing by our competitors" is be- hind the ongoing court battle. fully compliant with the existing rules, and the Federal Court did not suggest otherwise. Th e deci- sion was about two 'legal errors' in the cabinet ruling, according to the judge. We disagree and we fully expect to prevail at the Court of Appeal." Th e court has scheduled the appeal hearings for May 18. Th e controversy over Glo- It would be inappropriate to make an exception from foreign- ownership rules for Globalive, says John Laskin. "Th e Federal Court decision is not about Globalive being 'Ca- nadian enough,'" said Lacavera. "Th e government and Globalive have always agreed that we are balive began when the CRTC released what many considered a surprising ruling indicating that the company didn't meet requirements under the act. Th e CRTC said Globalive had failed to meet a requirement under the Telecommunications Act that Canadians eff ectively control common carriers. In coming to that determination, it noted that Egypt's Orascom Telecom Hold- ing owned 65.1 per cent of Glo- balive's equity. (Orascom's par- ent company has since merged with VimpelCom Ltd., a major Russian wireless fi rm.) It also pointed out that Orascom owned and controlled the Wind trade- mark, was responsible for much of its technical knowledge base, and held 99 per cent of its debt. Globalive was able to go ahead with its plans to launch Wind Mobile when cabinet overruled the CRTC. But an- other company that succeeded in the 2008 auctioning of radio frequency spectrum, Public Mo- bile, asked the Federal Court to overturn cabinet's decision as it said the government had cast aside foreign-ownership rules in coming to its decision. John Laskin of Torys LLP, who represented Public Mobile at the Federal Court, says his cli- ent initially expressed its opinion that it would be improper to set aside the CRTC's decision. "All of the telecommunica- O'BRIEN'S ENCYCLOPEDIA OF FORMS, ELEVENTH EDITION COMPUTERS AND INFORMATION TECHNOLOGY, DIVISION X Editor: Louis H. 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"So to make an exception in the case of Globalive would not be appropriate." Th e Federal Court seemed to agree, ruling that cabinet made a pair of legal errors in vary- ing the CRTC's decision. Th e court said the Telecommunica- tions Act doesn't contain any policy objective urging foreign investment, something cabinet had referenced in its rationale for the variance. Th e court also ruled cabinet was unable to include the caveat in its ruling that its decision didn't apply to other common carriers. "Th e intent of the act is clear that a situation such as this is to be determined in a manner so as to ensure that there is Ca- nadian control," wrote Justice Roger Hughes. "Where there is a concern that foreign investment and other factors may put Canadian control at risk, then it is the promotion of Canadian con- trol that is to be the essential criterion upon which the mat- ter is to be determined. It is for Parliament, not the governor in council, to rewrite the act." Laskin says the main ques- tion the Federal Court of Ap- peal will have to address is the scope of cabinet's ability to overrule a CRTC decision and whether the government can consider additional factors when weighing an application from a common carrier. "Th e judge at fi rst instance CANADA LAW BOOK® www.lawtimesnews.com CLB - O'Briens Forms.indd 1 4/14/11 10:41:15 AM — Justice Hughes at the Fed- eral Court — determined that the cabinet had committed a legal error in considering the question of access to foreign capital in determining whether to interfere with the CRTC's decision that Globalive was in fact not Canadian owned and controlled," Laskin explains. "Th e central question on the appeal is whether that's correct."

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