Industry Minister says cabinet could overturn CRTC decision on Globalive

Minister of Industry Tony Clement responds to a question during Question Period in the House of Commons on Parliament Hill in Ottawa, Tuesday November 3, 2009. THE CANADIAN PRESS/Adrian Wyld

TORONTO - Cabinet could overturn a decision by the CRTC that prevents cellphone company Globalive from launching its service in Canada, federal Industry Minister Tony Clement says.

"We do have the power through an order of council in cabinet to amend or vary the decision of the CRTC," Clement said Thursday after a speech to the Canadian Club of Toronto.

Ottawa is reviewing the decision by the federal regulator, which said Globalive isn't Canadian-owned and controlled and therefore can't serve the Canadian wireless market.

Egyptian telecom company Orascom owns 65 per cent of Globalive, but a minority of the company's voting shares - a structure that was accepted by Industry Canada when the company's licence was granted last March.

However the CRTC took issue with Orascom also holding a vast majority of Globalive's debt.

Clement said the government wants to encourage competition in the Canadian wireless industry and made it clear he doesn't agree with the decision by the Canadian Radio-television and Telecommunications Commission.

"The government's policy is designed to increase competitiveness in the wireless space, and that is important for Canadian consumers because it increases choice, it increases quality and it reduces cost," Clement said.

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.

Cabinet has sought advice from the provinces on the question of who should be allowed to compete in Canada's cellphone industry, and has also asked current competitors Rogers, (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T) for their opinions.

"We're sifting through all of that information, and then we'll be able to render an informed and I believe correct decision," Clement said.

He added that he has nothing to announce yet, but acknowledged there is "some urgency" to the matter.

Globalive Anthony Lacavera chairman said the company continues to assess its alternatives.

"The reality is that the CRTC decision is unprecedented and we are in unchartered waters," Lacavera said.

Globalive has already hired 800 employees, and approximately half have already finished their training and are now doing paid volunteer work at organizations such as food banks, boys and girls groups, literacy groups and the Salvation Army.

Besides overturning the CRTC's decision, cabinet could also wait for Globalive to launch a petition against the decision or send the matter back to the CRTC, Clement said.

Globalive paid $442 million in 2008 for airwaves over which to operate in an Industry Canada auction and has invested millions more in its network and employees.