By Dom Serafini
It’s pronounced Globalive, but for some Canadians it is written Murdoch! This seems to be the root of the fight between the Canadian government and the regulatory telecommunication agency, CRTC over the proposed relaxation of the country’s foreign ownership rule.
The case concerns wireless communications, but it has greater implications.
First, some background. Canada’s wireless market is dominated (like a cartel) by three companies; therefore, the conservative government putatively wants to break this de-facto cartel by allowing Globalive into the marketplace, presumably for more competition. The problem is that even though Globalive is a Canadian company, it is controlled by foreign interests and thus considered a non-Canadian company. Globalive relies on debt financing and technology from Egyptian wireless giant Orascom Telecom.
Reportedly, the CRTC is concerned about an agreement that allows Globalive’s Canadian chairman to sell his shares at a guaranteed minimum price, even if the company fails. To the CRTC, this reads as a guaranteed payout and implies that Orascom can oust the chairman at any time.
And so, regulators and the opposition are up in arms. “You can interpret what’s happening with Globalive as essentially changing foreign ownership rules through the back door,” complained media critic Marc Garneau to The Globe and Mail newspaper.
“Now they’ve opened the door. So what’s next? It opens the door to companies picking apart telecom and broadcasting,” Democratic Party member of Parliament, Charlie Angus is quoted as saying.
This is the crux of the matter: assuring protection of the television broadcasting industry in solid Canadian hands. Examples abound. Television groups that own unprofitable television stations are selling them to management and employees of the local stations for just C$1 each, simply to get rid of them, since they’re unable to approach potential foreign buyers for even a partnership.
Another bone of contention between the Canadian government and the telecommunications regulators is the government interpretation of the Telecommunications Act concerning the foreign ownership rule that should be enforced “when possible.” Meaning, not always.
In effect, this government action allows for a broad interpretation of Canadian telecom laws, and effectively renders the CRTC irrelevant.
Considering the sad financial state of Canadian broadcasting, politicians and the CRTC are said to be worried that allowing any loopholes within the foreign ownership rule will allow Rupert Murdoch entry to the Canadian TV market like Napoleon the Conqueror.