Cabinet must tread warily on Globalive appeal
The decision seems so simple for Industry Minister Tony Clement: if you believe in free markets, one needs to overturn the CRTC’s decision to block would-be wireless entrant Globalive from rolling out a national discount cell phone service.
But, as he well knows, nothing has been simple since he took over one of the more thankless jobs at the cabinet table. If you are, say, Mike Wallace, the Member of Parliament from Burlington, you’ll be highly conscious that your constituents would prefer to see better competition in the cellphone world. The fact that Globalive is controlled by a foreign company is irrelevant to anyone’s daily life, you just want a cheaper cellphone bill.
Intellectual consistency should suggest that the CRTC ruling against Globalive is about as relevant at the doorstep as Ericsson buying Nortel IP assets, or the foreign control of Inco, Alcan, Falconbridge, Noranda, Sleeman, Dofasco, etc., etc. Not true, as DAVE Wireless founder John I. Bitove pointed out yesterday.
There are specific Canadian ownership rules in wireless land, which is why Rogers Wireless isn’t a subsidiary of AT&T. If the federal cabinet overturns the CRTC on Globalive, the dreaded Law of Unintended Consequences will kick in. Why shouldn’t DAVE also be loosely controlled by a foreigner, such as Verizon? I can only imagine what kind of premium a U.S. cellular provider would pay to join the ownership ranks of DAVE, along with Mr. Bitove and merchant banker Quadrangle Capital Partners. If you favour a free market, why shouldn’t they join the party?
If the federal cabinet’s political goal is increased competition, there appear to be plenty of players around who can provide consumers with a better deal than the status quo: Videotron, Public Mobile, Bragg…. And, assuming that the DAVE business plan would only improve if they acquired Globalive’s spectrum, it could also be financed locally; look at the size of the cheque (US$300MM) that the CPPIB wrote to join Skype’s ownership group (see prior post “Skype deal: is it a tech or infrastructure deal?” Sept 2-09).
Whether there are three or four new wireless players, the good people of Burlington are soon to enjoy more competition. Overturning the CRTC is as political a move as a cabinet can make; if the CRTC’s math is wrong, than so be it. Otherwise, ignoring our Country’s current ownership rules will be the demarcation line. The unintended consequence will be simple: a foreign bidder for Bell Canada (for example) will have the luxury of using the Globalive decision against the Feds in Federal Court. How long ago was it that Canadian pension funds were the only lead bidders for Bell, solely because of Canadian ownership rules? A matter of months.
Tread warily.
MRM
I fully agree, but isn’t this the crux of it? We’ve been talking about deregulating telcom (changing the telcom act) to allow foreign ownership for a decade now.
There used to be old arguments about cultural protectionism in the telecom and broadcast acts. But these are based on last century’s distribution models.
The internet makes it a different world. The owners of the pipes are no longer synonymous with the content and the services that run along them.
The argument now comes down to economic protectionism, or this "hollowing out" argument.
Would it really be so bad if, like in every other industrialized country, some or all of the telcoms were owned/operated by large scale multinationals?
Maybe it’s time we had this debate. I’d like to hear both sides. Got an opinion?
I also fully agree; it is about time Canada applies the Free-Trade-Agreement to wireless networks in Canada. The oligopoly of Bell, Rogers, and Telus need to stop hiding behind the CRTC and get real. These are large companies and they should be able to compete fairly. If they can’t operate profitably without new competition, with new competition being able to compete on a national level, then they should not be in the business. Just because the CRTC believes they should be allowed to gouge Canadians doesn’t mean Canadians feel the same way.
First of all I noticed your edit… (from tread wearily to tread warily) – I would have left the mistake as is – it provided a good deal of amusement.
I had a long response typed out, but I think I can shorten it to this… As much as the NEP was a failure (and I’m a westerner) there is no doubt that the Canadian economy is still a colonial economy – hewers of wood and drawers of water. There needs to be some aspect of protectionism in terms of ownership of our resources (natural, intellectual, etc.), I would consider spectrum just such a resource.
Whether we give it away or sell it away, there is still a hollowing out of Canadian ownership of Canadian assets.
David
Most blogs get written at 5am, before the Latte store opens. I was particularly weary that morning, and only caught the typo when a Wireless blog emailed to ask if they could repost it.
Send me your home tel #, and we can do a snap spelling bee tomorrow at 5am. 😉
I agree with your last point. Thanks for stopping by.
MRM
Hehehe…
I’m the proud father of a 4 week old baby boy – I’m probably awake at 5AM.
In all seriousness I thought the “typo” was quite clever and wasn’t altogether sure it actually was a typo. Comments like that add a bit of satire and humanity to a blog – both of which are next to impossible to find on the net.
Look at it this way, you are an engaging enough writer that a Vanouverite wanders over to your site even when you write about the TPA.