Wind may have to go back to CRTC, Lacavera admits

In 2009, the parent company of wireless startup Wind Mobile went through a testy two-week hearing before the federal telecommunications regulator in a vain attempt to get an operating licence.

It took a cabinet ruling to order the Canadian Radio-television and Telecommunications Commission (CRTC) to give it that licence so Wind could start business.

But company chairman and controlling shareholder Anthony Lacavera admits that if he and the Harper government fail to convince the courts that cabinet decision was lawful, he’ll be back before the CRTC trying to again convince the regulator that Wind is controlled by Canadians.

“We’re not afraid of that scenario because we maintain we are in [legal] compliance” with the Telecommunications Act, Lacavera [pictured] said in an interview Thursday after announcing he will join with the government in appealing this month’s Federal Court ruling overturning the cabinet order. 
“It’s possible the CRTC could reject again our [corporate] structure,” he said, “and we would have to go through the same process where we would try to negotiate a structure they find acceptable.”

Asked why the commission, which said Globalive was controlled by its Egyptian-based partner, Orascom Telecom Holding, would change its mind, Lacavera repled: “Because we would get down to specifics on what their concerns are … and hopefully eliminate any doubt on this matter.”

Wind is Canadian-controlled, he insists. And while Orascom wants to protect its investment, he said it doesn’t hold a veto over decisions.

Orascom is a minority shareholder. However, combined with its non-voting shares Orascom holds 65 per cent of the startup’s equity. It also holds almost all of Wind’s debt, its brand name and a technical services contract. As a result the CRTC concluded in October, 2009 that while Lacavera and his partners have majority ownership, Orascom controls the startup.

Under the Telecommunications Act, a telecom carrier not only has to show Canadians control the board of directors and voting shares – what Lacavera calls legal control —  it also has to prove it “is not otherwise controlled by persons that are not Canadians.” It is this so-called “control in fact” test the CRTC said Globalive failed – and the cabinet was satisfied Globalive passed.

However, Federal Court Roger Hughes has ruled the cabinet exceeded its power in that order. On Tuesday, Industry Minister Tony Clement said the government will take that decision to the Federal Court of Appeal, where Wind’s lawyers will be as well.

Should the Hughes decision be upheld, the cabinet order would be dead and Globalive would have to apply again to the CRTC for a licence.

In the meantime, Hughes’ decision has been suspended for 45 days, which will be extended while appeals go on. The case could end up before the Supreme Court.

Asked if he’s concerned the uncertainty over Wind’s status will drag on for more than a year, Lacavera shrugged. “It’s already been two and a half years … It doesn’t look like there’s any end in sight, except I will say we’re very confident in our position and we’re going to keep fighting.”

Globalive Holdings essentially has only two partners: Orascom and Lacavera, who brought his own long-distance and Internet companies under the Globalive name. Lacavera’s personal holding 66 per cent of the voting shares Wind’s parent. Another Canadian, Michael O’Connor, holds another 1.3 per cent.

While the situation suggests the CRTC would want more Canadian investment, Lacavera disagrees. “Our structure is already compliant,” he said, referring to the board of directors and shareholders tests. Globalive negotiated with Industry Canada for six months to amend its structure to assure the government the Canadian-dominated board and management is in control. But uncertainty over what he sees is the ill-defined control-in-fact requirement is what needs to be clarified.
Lacavera repeated – as have independent industry analysts – that it is bad for the telecom industry when the government and its regulator can be split over the interpretation of a statute.


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