Caprice no way to run the telco game

They clapped. They cheered. They wore T-shirts in sunny yellow and bright blue and green with the word "Hello" across the chest. Not a single person flung a shoe at the podium or got up to claim that she, too, was Tiger Woods' mistress.

It was, in other words, a scene of undiluted happiness for Anthony Lacavera and his merry band at Globalive Wireless. Better than a stay of execution, they had received a complete pardon on the crime the CRTC had convicted them of - too much foreignness.

For the three-headed monster of Rogers, Telus and BCE, who had argued that Globalive should be kept out of Canada unless it could play by the rules, this was the worst possible outcome, and for Mr. Lacavera, the best.

What man needs good fortune to smile upon him when he can count on the bespectacled grin of Industry Minister Tony Clement?

"The Canadian government made the right decision and it's a great day for Canadians in wireless," Mr. Lacavera gushed during an event at Globalive HQ that was part pep rally, part media conference from Surrealistan.

He's right on the last point - the presence of Globalive greatly enhances the odds that country's talkers and texters will soon be enjoying cheaper service.

But on the first? Was this the "right" decision? That's more nuanced.

The most charitable interpretation is that Mr. Clement has smashed holes in a law that didn't deserve to exist in the first place.

If there was once a compelling argument that our culture would be at risk if Americans or Spanish or Egyptians owned the country's telecom and cable networks, that argument is now gone.

The Internet broke down the portcullis that had protected Canadian content - and in any event, the modern telecommunications industry is anything but a guardian of culture.

It's just a collection of wires and towers and handsets that deliver YouTube videos from Russia and news stories from Argentina and soccer matches from Portugal and all manner of "foreign" content, if such a thing even exists any more. More mature countries have already grasped this concept - which is why, for example, a German company is a big wireless player in the U.S., and the French sell phone service in Romania, and the Spanish operate one of the largest networks in Britain, and nobody gets too fussed about it.

If the Globalive decision moves us closer to the day when we will be like them, that's a good thing. But there's the less charitable, and more disturbing, spin on it. The government of Canada has just flouted its own law - antiquated and silly as that law may be - for political convenience because it lacked the cojones to stand up and do it the proper way: by changing the Telecommunications Act.

The act is a complicated one. Where foreign ownership is concerned, however, the spirit of it is quite simple. Canadian telecom companies are supposed to be controlled by Canadians. And by any reasonable definition of the word, Globalive is controlled by Orascom, its de facto Egyptian parent.

Mr. Lacavera may protest that he officially has voting control. Follow not the votes, but the money. Globalive expects to spend at least $1.5-billion over 10 years to implement its aggressive business plan; it already has its hands on about half of that - and virtually all of it provided by Orascom.

Orascom owns 65 per cent of the shares. It owns the debt (which can be the biggest lever of control of all, for if a business fails, it's the creditors who can determine whether it lives or dies). It owns the Wind Mobile brand under which Globalive will do business. More to the point, Orascom's the one with the knowledge and 84 million wireless customers around the world. But here's the ultimate test. If this goes badly, do you think it will be easier for Mr. Lacavera to get rid of Orascom, or the other way around?

Exactly.

So, for the first time, Canada has allowed a foreign telco to waltz in and set up shop. If this is a precedent, the Tories have just done an end-run around Parliament to change the structure of an industry, with massive implications. If it's not, they've just proved they're prone to caprice on important business matters.

"I would not have even considered going into the business without a partnership like Orascom," Mr. Lacavera admitted Friday. But he's the only one who'll have that advantage.

Congratulations, Mr. Clement. You've just opened up the fusty old Canadian telecom business. And a whole can of worms, too.