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OTTAWA — The Canadian government overruled its regulator Friday and declared a start-up wireless carrier financed largely by an Egyptian company to be Canadian. The move allows the company, Globalive, to offer service in Canada.
While the decision, announced by Tony Clement, the industry minister, appeared to undermine foreign ownership restrictions, it was welcomed by consumer advocates.
Several surveys have shown that Canadian wireless rates are among the highest in the world. In a bid to improve service and prices through competition, the federal government has licensed four new operators. But of them, only Globalive, which will use the Wind Mobile brand, intends to offer service in most of the country.
Its plan was derailed in October when the Canadian Radio-television and Telecommunications Commission ruled that Globalive was effectively controlled by Orascom Telecom Holding, a wireless carrier based in Egypt. Orascom holds about 65 percent of Globalive's equity, and Naguib Sawiris, the chairman and chief executive of Orascom, lent most of the money the Canadian carrier is using to build its network through companies he controls.
Voting control of Globalive[[[[[[']]]]]]s stock, however, resides with its minority Canadian shareholders, who include Globalive[[[[[[']]]]]]s chairman, Anthony Lacavera.
Mr. Clement said that the federal cabinet found that although Orascom had influence, it did not control Globalive.
Speaking to reporters, Mr. Clement emphasized that the decision did not indicate a shift in rules that prohibit foreign control of Canadian telecommunications companies.
Two of Canada[[[[[[']]]]]]s wireless carriers, Bell Canada and Telus Communications, said they disagreed with the government[[[[[[']]]]]]s conclusion, but neither said they intended to challenge the decision in court. The largest carrier, Rogers Communications, said it welcomed the new competition.
In an interview, Michael Hennessy, the senior vice president for regulatory and government affairs at Telus, said the government had set a precedent that other firms could use to challenge laws that block foreign owners.
Michael Geist, a law professor at the University of Ottawa, agreed that the decision might be a step toward eliminating ownership rules in telecommunications, but he added that it was unlikely to spill over into other sectors. He praised the government for its ruling, noting that just the prospect of Globalive[[[[[[']]]]]]s entry into the marketplace had already improved competition among the three existing carriers.
Globalive executives suggested at a news conference that the company might start offering service in Toronto and in Calgary, Alberta, as soon as Monday.
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