Why Telus is so outspoken about Globalive

Telus Corp.’s role as the lead dog in the fight against Globalive Wireless Management Corp. is not a surprise to most wireless industry watchers — it’s because the company has the most to lose.

“The future for Telus is much more friendly if Globalive is out of the picture,” Amit Kaminer, a telecommunications research analyst with the Toronto-based SeaBoard Group, said. He added that Telus has the most to lose from a Globalive market entry compared with the other two major carriers.

“In the Western territories, we have a market that is controlled by Telus and the company would rather limit its exposure to new entrants by limiting the amount of them that can operate,” Kaminer said.

Kaminer said that Globalive is expected to put a significant focus on major Western cities such as Vancouver, Edmonton and Calgary, all of which are currently strongholds for Telus. More from IT World CanadaTelus stalling CRTC hearing, Globalive says

Globalive CEO Anthony Lacavera confirmed this strategy, adding that Telus has great exposure to these three Globalive launch cities. “We’re the real threat in their footprint,” he said.

And because some have speculated that Globalive’s business strategy appears to be to target consumers with low-cost, pre-paid plans, the company could be pitted against Telus’ Koodo offering.

“(Telus) has been pretty successful with the Koodo brand and that’s going to receive more competition with Globalive,” said Mark Tauschek, lead analyst with London, Ont.-based Info-Tech Research Group Ltd.

The fear of competition in its own backyard, Lacavera said, is why Telus has led the charge for the public Canadian Radio-television and Telecommunications Commission control and ownership hearing to be held in September. The telecom regulator will be asked to decide whether Globalive meets the standard of a “Canadian-controlled” wireless provider, despite the fact that Industry Canada has already granted the company an operating licence.

For Telus, the dispute is not a question of competition, but rather of the CRTC’s restrictions on foreign ownership of wireless carriers. The wireless giant claims that Egypt-based Orascom Telecom Holdings SAE holds 65 per cent of the equity in Globalive, constituting foreign control.

“Do we have foreign ownership restrictions or not?” said Michael Hennessy, senior vice-president of regulatory and government affairs at Telus. “We’re happy to live without them, but we’re not supportive of any regime that suggests that we’re stuck with them and others aren’t.”

But while Telus hasn’t been the only organization to push the CRTC for an in-depth review, the issue definitely hasn’t received the same attention from either Rogers Communications Inc. or Bell Canada Inc.

“They’re probably watching us,” Hennessy said. “I know that Shaw has been deeply involved and I think both Rogers and Bell actually filed on the record in the CRTC proceedings in support, but I would agree that we are certainly the most vocal.”

While Bell outright refused to comment on the upcoming CRTC review or the Telus-Globalive spat in general, Rogers spokesperson Elizabeth Hamilton said that as a company with strong Canadian heritage, it’s “very aware of the everyday decisions a ‘made in Canada’ wireless business has to face.”

She added that it’s well within the mandate of the CRTC to seek to review Globalive’s business practices and structure for key decisions such as who is negotiating and meeting with handset vendors, who is negotiating and signing contracts with sales and distribution channels, and who selected and signed the COO, CFO, and senior executives.

For Rogers and Bell, Levy said, sitting quietly on the sidelines and letting Telus fight this battle solo might actually be the best course of action, whether or not they are worried about the added competition Globalive might bring to the market.

“This tempest in a tea pot keeps a major competitor occupied, so from where they sit it’s a good thing to simply do nothing,” he said. “It’s neither a fight that Rogers nor Bell needs to be a part of, but are only too happy to watch evolve from a safe distance.”

While Telus’ primary motivations are likely its fear of Globalive driving down the price of wireless services and the opportunity to disrupt its services before the fast approaching launch date, some observers feel the Vancouver-based wireless giant might actually be trying to sway public opinion.

“They could be trying to raise doubts in the minds of Canadians as to the viability of Globalive,” said Tony Olvet, vice-president of communications and segments research with IDC Canada Ltd., referring to a tactic that many pundits and some politicians are using in this week’s Research In Motion Ltd.-Nortel Networks Corp. saga.

“Of course, how long the memory of the average wireless customer in Canada is remains to be seen,” he added

But according to Levy, whether Telus wishes to cast Globalive in the same light as the current Nortel-Ericsson-RIM dogfight, the company’s strong Canadian-based leadership and resourcing will make that a difficult venture. He added that any potential public relations benefit or backlash for Telus would most likely be minimal given that the upcoming CRTC hasn’t exactly dominated primetime TV coverage.

“While some tech-savvy bloggers may vigorously debate the issue online, the impact won’t extend much beyond this limited audience,” he said. “For the most part, this brouhaha hasn’t registered on the radar for most Canadians, and likely won’t.”

How Telus or any competing carrier arrives at its market position is beyond the willingness of most Canadians to understand, Levy added.

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