Court blows away challenge to Wind Mobile

The Federal Court of Appeal has upheld the Harper government’s decision to allow the parent of wireless startup Wind Mobile a licence to operate.

“It’s a full win,” company chairman Anthony Lacavera said Wednesday in an interview. “We’re very pleased.”

However, the fight isn’t over yet. Late Wednesday Public Mobile issued a press release saying it will seek leave to appeal the decision to the Supreme Court of Canada. The Toronto-based carrier, which also operates in Montreal, said the fight is over a level playing field for foreign investment.

“There have been five different decision makers in this process with a flip-flopping of the decision each time,” Public Mobile CEO Alek Krstajic said in an news release. “Industry Canada, the CRTC, the Governor in Council (the federal cabinet), the Federal Court and now the Federal Court of Appeal have reached conflicting verdicts. Today’s decision shows us just how clouded this issue has become and demonstrates more than ever the national importance for consistent rules that should be applied equally to all Canadian wireless carriers. If you’re going to change the rules, change them equally for everyone, not just for Wind.”

That announcement means there is still a cloud over Wind, although it isn’t automatic that the Supreme Court will hear the case. On the one hand it deals with the power of the federal cabinet to overturn regulatory bodies, which could interest the high court. On the other, it may find the reasoning of the appeal court sound. Telus Corp. which also brought the matter before the courts, hasn’t said if it will be part of the Public Mobile appeal.

What Public Mobile’s move does is temporarily keep investors and bankers edgy about Wind at a time when it is looking for tens of millions of dollars to buy spectrum in upcoming auctions. It also might delay the Harper government’s plans to liberalize the ownership restrictions for telecom carriers. That plan had been expected last fall, but was delayed, the government said, to ensure it dovetailed with the rules being set for upcoming spectrum auctions. A court decision clearing Wind would have helped seal the government’s options.

The legal battle started earlier this year when a Federal Court judge said the cabinet was wrong in December, 2009 to overturn a ruling by the Canadian Radio-television and Telecommunications Commission (CRTC) that Globalive Wireless Management Corp. wasn’t controlled by Canadians. At the time Globalive’s was almost entirely funded by Egyptian-based Orascom Telecom Holdings (now part of VimpelCom Corp.), which also owned the Wind brand.

Justice Rogers Hughes said cabinet erred in making a policy decision that the Telecommunications Act — which sets limits on who can own a carrier licence — should be interpreted to encourage foreign investment. There is no such requirement in the act, the judge said. Cabinet also erred saying its decision only applied to Globalive Wireless, which many felt meant it alone got a break. The cabinet can’t restrict its interpretations to one person or organizations, the judge said.

But in its decision the appeal court said cabinet first concluded Globalive is Canadian-controlled because Orascom does not have the ability to determine Globalive’s strategic decision-making activities or to manage day-to-day operations.

“The divergence between the CRTC and Governor in Council [the cabinet] comes in the factual inferences, or conclusions, the Governor in Council drew from the evidence,” the appeal court said. “The Governor in Council simply had a different appreciation of things, and that appreciation was rational and defensible.”


After that, cabinet “clearly based its decision to vary at least in part on the policy concern that the CRTC’s decision undermined competition in the wireless telecommunications market,” the appeal court added. But Parliament gave the cabinet the power to vary a CRTC decision, so it was proper.

“Exercise of the variance power is meant to be informed by the telecommunications policy objectives set out in section 7” of the Telecommunications Act, the appeal court said. “In this case, the Governor in Council referred to a number of the enumerated objectives, including rendering reliable and affordable telecommunications services of high quality to both urban and rural Canadians, enhancing the efficiency and competitiveness of Canadian telecommunications, at the national and international levels, as well as promoting the ownership and control of Canadian carriers by Canadians.”

Hughes said the cabinet erred by relying on an objective not included in the act, ensuring the telecom industry has access to foreign capital.

But the appeal court said “the promotion of access to foreign capital, technology, and experience can further a number of the policy objectives” in section 7 of the act.

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