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Wind Billionaire Backer Rips Rigged Canadian Market
Says Incumbents 'Protected' From the Real World
by Karl Bode 02:18PM Friday Nov 18 2011
In 2009 a new Canadian wireless company named WIND Mobile had initial efforts to enter the Canadian market blocked by the CRTC -- who argued that the company technically wasn't Canadian enough. Specifically, the CRTC argued that because WIND was 60% funded by 61% owned by Orascom, a telecom company that does ample business in the Middle East, Africa, Europe and South Asia -- they couldn't do business in Canada. However, the Canadian government ultimately over-ruled the CRTC and allowed WIND to do business and bring a new layer of wireless competition to Canada.

However, as time progressed efforts continued to drive the company out of business. Canadian incumbents, publicly professing to loathe regulation at every turn, continually have attempted to drive Wind from the market with the help of loyal Canadian politicians. Not too surprisingly, Wind Mobile billionaire financial backer Naguib Sawiris now says he regrets even trying to do business in Canada because the game is rigged -- including spectrum, which they say upstarts simply won't get if it's not set aside:
quote:
"We would like to (obtain spectrum at auction), but these are not fair rules," he said. "Our position is clear: if they don't set aside, we won't bid for it — why would we go in and just increase the price so the government makes more money and we get devastated," Sawiris said. Sawiris said Canada's antiquated telecom rules are destined to hurt the economy's productivity and dampen innovation. "You need to ask yourself, why isn't Rogers in the U.K., like Vodafone or France Telecom," he said. "Why aren't they everywhere if they're so good? The answer is simple, here they're protected. They can be inefficient, their cost structure can be expensive."
All of this probably sounds more than a little familiar to broadband users south of the Canadian border.

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gburrell

join:2005-02-10
Wyckoff, NJ

1 recommendation

We will only compete if the game is rigged in our favour!

"Sawiris spent roughly $500 million in a wireless spectrum auction in 2008..... The federal government set aside a certain percentage of that spectrum specifically for new entrants......(i.e. them)

Another spectrum auction of more powerful 700 MHz frequency auction is coming up.......

"We would like to, but these are not fair rules," he said. "Our position is clear: if they don't set aside (for us), we won't bid for it — why would we go in and just increase the price so the government makes more money and we get devastated," Sawiris said."
So let me get this straight. They will only bid on spectrum if it is specifically set aside for "new entrants" i.e. them, and complaining about having to compete in a open auction to buy it (at market price).

I thought they wanted a market where they could compete against the competition.
komal

join:2003-02-16

Re: We will only compete if the game is rigged in our favour!

The incumbents in this case are: Bell, Telus, Rogers.

All of those have landline networks, all of them do:
TV
Phone
Internet
Cellphone

They can obviously completely out-bid any new entrant.

If you want new entrants in the cellphone market, putting them against companies who have monopolies/oligopolies in the major retail telecoms sectors doesn't work.

FFH
Premium
join:2002-03-03
Tavistock NJ
kudos:5
said by gburrell:

So let me get this straight. They will only bid on spectrum if it is specifically set aside for "new entrants" i.e. them, and complaining about having to compete in a open auction to buy it (at market price).

I thought they wanted a market where they could compete against the competition.

Sounds like the Egyptian wants the rules rigged in his favor so he doesn't have to bid more money for it. Too bad - don't get up the scratch, you don't get the spectrum.

It is a world market, and if they really want to bid & win, they can dig up investors anywhere.
--
The nine most terrifying words in the English language are, I'm from the government and I'm here to help.
»www.politico.com/rss/2012-election-blog.xml


Gone
Premium
join:2011-01-24
Fort Erie, ON
kudos:4

Re: We will only compete if the game is rigged in our favour!

said by FFH:

Sounds like the Egyptian wants the rules rigged in his favor so he doesn't have to bid more money for it. Too bad - don't get up the scratch, you don't get the spectrum.
It is a world market, and if they really want to bid & win, they can dig up investors anywhere.

BZZZZZT wrong. The Egyptian is bitching because, under current Canadian laws, it is illegal for him to spend any money in Canada. Period. End of story.

Canada is not a world market. Under our current stupid legal framework, it is impossible for him to really bid and win, no matter how bad he wants, because it is illegal to dig up investors from anywhere. Because it is impossible for him to spend money to bid without spectrum set aside for new entrants, Robellus will easily gobble up any available spectrum as they're the only ones with the Canadian capital available to do it.

Hopefully now you Americans now all understand why he has every right to be bitching and moaning about this, and why our system is ass-backwards.

elwoodblues
Elwood Blues
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Re: We will only compete if the game is rigged in our favour!

said by Gone:

Robellus will easily gobble up any available spectrum as they're the only ones with the Canadian capital available to do it.
out this, and why our system is ass-backwards.

BZZZT wrong!

Being "Canadian companies" they can raise capital anywhere they want. They are not necessarily getting it from Canadian Markets.

Wind via Orascom , is technically not a Canadian Entity, and thus is not allowed to bid on spectrum. He can raise all the money he wants, just can't use it here.
--
It's got a cop motor, a 440 cubic inch plant, it's got cop tires, cop suspensions, cop shocks. It's a model made before catalytic converters so it'll run good on regular gas. What do you say, is it the new Bluesmobile or what?

Gone
Premium
join:2011-01-24
Fort Erie, ON
kudos:4

Re: We will only compete if the game is rigged in our favour!

said by elwoodblues:

Being "Canadian companies" they can raise capital anywhere they want. They are not necessarily getting it from Canadian Markets.
Wind via Orascom , is technically not a Canadian Entity, and thus is not allowed to bid on spectrum. He can raise all the money he wants, just can't use it here.

Oh elwood, your buzzing sounds are all the more amusing when you don't know what you're talking about.

Globalive is a Canadian company. Globalive bid on and owns the spectrum, not Orsacom. Orsacom only backs Globalive's debt used to bid on the spectrum. Yet in our backwards inferiority complex of a nation, that's still not good enough.

And yes, a Canadian company can raise any money they like, so long as they continue to own the company. Foreign investment need not apply, that's not allowed. One of the few countries on Earth that doesn't allow it, and the only industrialized nation that doesn't.

They need to put an end to this bullshit once and for all.

Gone
Premium
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Fort Erie, ON
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Oh, and the only reason Wind exists as a "foreign" company operating in Canada is that they argued Canadians actually controlled the company. So it went like this...

1. Industry Canada rules that Canadian control is good enough and that capital can be foreign. Allows Globalive to bid on spectrum with the understanding that Orsacom is financing the deal.
2. CRTC rules that Globalive is, in fact, foreign and suspends their license.
3. Tony Clement, Minister of Industry, through his ability to overturn CRTC decisions, says no the CRTC is wrong, Globalive is Canadian controlled and therefore legal. Wind launches.
4. Robellus along with Public Mobile (a new entrant) appeal the case to court, saying that they are in fact foreign. Court agrees, says they're foreign, gives Globalive 90 days to get rid of Orsacom or they'd be shut down.
5. Wind frantically appeals the decision. Court of Appeal agrees with Globalive, they're not foreign controlled.
6. Public Mobile appeals the case to the SCC, where it has not been heard and/or referred to the lower court.

THIS is why there is a problem. It has nothing to do with Orsacom wanting a free ride.

Hell, it's not even actually "foreign" capital that Orsacom has used, they're just backing Globalive's debt. It's a weird complicated arrangement. If there were no foreign ownership restrictions, Orsacom along with every other major international wireless carrier would be in Canada right now and Robellus would be shitting themselves over not knowing what to do.

Brantford

@primus.ca

Re: We will only compete if the game is rigged in our favour!

said by Gone:

If there were no foreign ownership restrictions, Orsacom along with every other major international wireless carrier would be in Canada right now and Robellus would be shitting themselves over not knowing what to do.

And the foreign ownership restrictions are there not because of an overriding concern about Canada's national interest. They are there because the incumbents pushed for them in order to prevent competition so that they can continue providing substandard service at rapacious prices.

Canadians are the only losers here and we are the model for what US telecom companies would like to do in the US with the help of the corporate-controlled government in DC.

elwoodblues
Elwood Blues
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said by Gone:

THIS is why there is a problem. It has nothing to do with Orsacom wanting a free ride.

Hell, it's not even actually "foreign" capital that Orsacom has used, they're just backing Globalive's debt. It's a weird complicated arrangement. If there were no foreign ownership restrictions, Orsacom along with every other major international wireless carrier would be in Canada right now and Robellus would be shitting themselves over not knowing what to do.

No, I firmly believe that if foreign ownership rules were lifted, or relaxed, Robellus would be more then happy to sell themselves to the highest bidder.

Think about it for a second, if you were to get into the wireless market, would you rather start from scratch, or buy a existing company?

Look at Walmart and Target, the cost of moving to Canada, finding locations/building stores/setting up a distribution network would be horrendously expensive.

They simply bought or bought into Woolco and Zellers respectively. Bingo Bango, we have stores, we have a distribution network.
--
It's got a cop motor, a 440 cubic inch plant, it's got cop tires, cop suspensions, cop shocks. It's a model made before catalytic converters so it'll run good on regular gas. What do you say, is it the new Bluesmobile or what?

Gone
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Fort Erie, ON
kudos:4

Re: We will only compete if the game is rigged in our favour!

said by elwoodblues:

No, I firmly believe that if foreign ownership rules were lifted, or relaxed, Robellus would be more then happy to sell themselves to the highest bidder.
Think about it for a second, if you were to get into the wireless market, would you rather start from scratch, or buy a existing company?
Look at Walmart and Target, the cost of moving to Canada, finding locations/building stores/setting up a distribution network would be horrendously expensive.
They simply bought or bought into Woolco and Zellers respectively. Bingo Bango, we have stores, we have a distribution network.

Yes, and you make this sound like a bad thing. It's not. If a Canadian company can't exist on its own merit and instead exists for no reason other than for protectionist reasons - all the while we consumers suffer the consequences of that protectionism - then so be it, let them sell out. If it means lower costs for me, screw them. It's not as if they generate high-paying jobs in the Canadian market place or any bullshit like that. Let an American or European company buy them. We'd be better for it and wouldn't be in up to our eyeballs in all this mess we have now.

elwoodblues
Elwood Blues
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Re: We will only compete if the game is rigged in our favour!

said by Gone:

Yes, and you make this sound like a bad thing. It's not. If a Canadian company can't exist on its own merit and instead exists for no reason other than for protectionist reasons - all the while we consumers suffer the consequences of that protectionism - then so be it, let them sell out. If it means lower costs for me, screw them. It's not as if they generate high-paying jobs in the Canadian market place or any bullshit like that. Let an American or European company buy them. We'd be better for it and wouldn't be in up to our eyeballs in all this mess we have now.

So lets say the rules change, and up come Verizon, they buy Telus , ok so now we've exchange Canadian Ownership for American.

What have we accomplished? Will Verizon drop prices? Will there be shorter contracts? Will there be a better selction of phones?

Why would you change the status quo? It works, the company is profitable, it's growing. Could you increase market share? Maybe, at what expense to the consumer? Less choice?
--
It's got a cop motor, a 440 cubic inch plant, it's got cop tires, cop suspensions, cop shocks. It's a model made before catalytic converters so it'll run good on regular gas. What do you say, is it the new Bluesmobile or what?

Gone
Premium
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Fort Erie, ON
kudos:4

Re: We will only compete if the game is rigged in our favour!

said by elwoodblues:

So lets say the rules change, and up come Verizon, they buy Telus , ok so now we've exchange Canadian Ownership for American.
What have we accomplished? Will Verizon drop prices? Will there be shorter contracts? Will there be a better selction of phones?Why would you change the status quo? It works, the company is profitable, it's growing. Could you increase market share? Maybe, at what expense to the consumer? Less choice?

You accomplish opening the market to real competition. Verizon buys Telus but maintains the status quo. Fine. The in comes Orascom who shakes things up by offering lower prices. Verizus is forced to respond to those lower prices. Someone else comes in and drops the prices even further, causing Orascom and Verizus to respond even further.

As it stands right now, The Big Three are safe. No one can come in and shake them up. They can keep prices artificially high because they're only competing amongst themselves and are all relatively the same size. If you remove foreign ownership restrictions you open the flood gates to competition.

And, frankly, it's long overdue.

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
Actually that's not accurate. Under the rules he can't bid on spectrum as a foreign investor UNLESS it's specifically tagged for "New entrants" only. Under the rules. That's really what's he's upset about.

It's rigged so the incumbents will win.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini
highwire2007

join:2008-05-17
Nepean, ON

Well, duh!

Canada is one of the strongest plutocracies in the world. The relationship between wealthy Canadian corporations and the people who run them, and the government, is stronger than ever. Former prime minister Martin owned Canada Steamship Lines, and sits on the boards of many large Canadian corporations, for example. A Venn diagram of high ranking government officials and corporate leaders would have a huge overlap.

That's why the government is so protective of its friends. The game is totally rigged against outsiders/foreign competition. And that's why Canadians pay so much more for most everything compared to many other countries.

Gone
Premium
join:2011-01-24
Fort Erie, ON
kudos:4

Re: Well, duh!

Meh, there is far less overlap on that diagram now than there was when the Liberals were running the country. Knowing that, and knowing that Harper has always said he intends to remove foreign ownership restrictions, this bullshit won't be going on for much longer. Sawiris is simply rattling the bushes to make people realize how necessary these changes are, so that when the Liberals (for the connected to corporate Canada reason) and the NDP (for the protectionist reason) along with Robellus (for fear of having to actually compete in an open market) start blasting the media with opposition, Canadians will know why it is, in fact, necessary and in their best interests to do this.
jj_frap

join:2003-12-15
It's also why the Liberals oppose electoral reform. They'd rather their Plutocrats take turns with Tory Plutocrats rather than being held to the fire by genuine progressives. Canada is a left-wing country with a piece of shit electoral system that creates right-wing government, and real Canadian patriots are sick of it.

Fuck the F35 shit! What Canada needs is to move all those billions of dollars toward building a national FTTH grid and then wholesale to private sector resellers. That'll get the economy going. It's kind of sick really. I call myself a communist, and here I am sounding like a drunk version of the guy who stood up to 1968 in France.

Bill Neilson
Premium
join:2009-07-08
Arlington, VA

Sounds about right in todays corporate world

The major players set the rules then claim that the rules are the rules and we must follow them

Oh, and if the rules arent suited for them? Well, then they either ignore them or pay millions to have them overturned.

Brilliant.

This fake capitalism rocks
Skippy25

join:2000-09-13
Hazelwood, MO

Re: Sounds about right in todays corporate world

I love what Jon Stewart said the other day in referring to our "democracy" as corporate owned and operated here in the US.

"It's not democracy, its DiGiorno"

michieru
Premium
join:2009-07-25
Miami, FL

Re: Sounds about right in todays corporate world

Very funny yet sad.

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
Same applies in the USA.

LazMan
Premium
join:2003-03-26
canada

1 recommendation

Open markets have to be open for all...

I think the incumbents would be happy with a changing of the ownership laws... About 6-7 years ago, TELUS got smacked for Verizon having too big a stake in them; and Verizon was forced to sell off their holdings in TELUS.

Bigger argument is that Wind was given an unfair advantage by the relaxing of the foreign ownership laws for them alone... If it's going to be an open market, it needs to be open for all; so that new entrants AND incumbents can seek international funding and partnerships...

Gone
Premium
join:2011-01-24
Fort Erie, ON
kudos:4

Re: Open markets have to be open for all...

said by LazMan:

Bigger argument is that Wind was given an unfair advantage by the relaxing of the foreign ownership laws for them alone... If it's going to be an open market, it needs to be open for all; so that new entrants AND incumbents can seek international funding and partnerships...

Yup, that's very true. Bell and Telus would absolutely love to get some foreign money pumped into their companies, though their internal structure would receive a head-spinning overhaul the likes they have never experienced before if those foreign investors find themselves competing with other foreign companies on Canadian soil.
MaynardKrebs
Heave Steve, for the good of the country
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Re: Open markets have to be open for all...

Foreign capital would be fine as long as it came with the stipulation that no jobs could be offshored.

Of course there's the fine US Steel/Stelco fiasco in Hamilton, and their job creation 'guarantees'.
»www.thestar.com/article/596186

»www.cbc.ca/news/canada/toronto/s···ada.html

elwoodblues
Elwood Blues
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Re: Open markets have to be open for all...

said by MaynardKrebs:

Foreign capital would be fine as long as it came with the stipulation that no jobs could be offshored.

Of course there's the fine US Steel/Stelco fiasco in Hamilton, and their job creation 'guarantees'.
»www.thestar.com/article/596186

»www.cbc.ca/news/canada/toronto/s···ada.html

That is precisely the problem, they make promises, then renege on them, daring the government to do something.

In the case of US Steel, Tony "Muskoka Pork Barrel" Clement rattled some swords, claimed he'd go after the money they gave US Steel, and then what? SFA!
--
It's got a cop motor, a 440 cubic inch plant, it's got cop tires, cop suspensions, cop shocks. It's a model made before catalytic converters so it'll run good on regular gas. What do you say, is it the new Bluesmobile or what?

evil_gusgus

join:2008-04-14
London, ON

Re: Open markets have to be open for all...

The other thing I can see Rogers/Bell/Telus doing is bidding on the spectrum only to bump up the cost to new entrants even when most of them still have lots. WIND is finally starting to cover southwestern Ontario and once they cover down the 401 I'm sure more people will start jumping ship.

Gone
Premium
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Fort Erie, ON
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said by MaynardKrebs:

Foreign capital would be fine as long as it came with the stipulation that no jobs could be offshored.

What difference does it make when Bell already offshores a shitload of stuff with Canadian capital alone?
chgo_man99

join:2010-01-01
San Jose, CA

american telecom companies have worldwide presence

quote:
quote:
"We would like to (obtain spectrum at auction), but these are not fair rules," he said. "Our position is clear: if they don't set aside, we won't bid for it — why would we go in and just increase the price so the government makes more money and we get devastated," Sawiris said. Sawiris said Canada's antiquated telecom rules are destined to hurt the economy's productivity and dampen innovation. "You need to ask yourself, why isn't Rogers in the U.K., like Vodafone or France Telecom," he said. "Why aren't they everywhere if they're so good? The answer is simple, here they're protected. They can be inefficient, their cost structure can be expensive."
All of this probably sounds more than a little familiar to broadband users south of the Canadian border.
You won't see personal solutions of at&t or verizon in Europe or Asia (besides VZW being 45% foreign owned by Vodafone), but for ex at&t has enterprise presence worldwide. They provide data access, hosting solutions, voip, etc.

El Quintron
Resident Mouth Breather
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Etobicoke, ON
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1 edit

I love Sawiris

Title line says it all... I love the fact that he's ripping the Canadian Telecom a new one. WIND has been one of the best things to happen to the Canadian wireless market.
koreyb
Open the Canadian Market NOW

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Re: I love Sawiris

I have to agree.. I'm a Wind Mobile user, and very VERY happy with them. I can say once Wind/Mobilicity and Public arrived, prices have dropped on everyone's service. This is what Canada needs. I have no issues with non-Canadians setting up shop here, if they run their business as a CANADIAN devision, like Walmart or IKEA does. Walmart has a head office for Canada, based in Mississauga for example. If they are serving Canadians, it does not matter who owns the operation..

Their only requirement should be that they have to employ Canadian's and run it as it's own operation within Canada.

In the US, you have T-Moble that is owned overseas. It makes great profits.. and does well. Canada needs more compition to ensure fair prices are offered to all Canadians. Once the network is built, costs are much less to operate, so don't kid yourself.. The BIG 3, have paid off their network built many times over, and now it's all about profit. They have flexability, but with only 3, you have seen they increase prices jointly because they can.

El Quintron
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Re: I love Sawiris

said by koreyb:


In the US, you have T-Moble that is owned overseas. It makes great profits.. and does well. Canada needs more compition to ensure fair prices are offered to all Canadians. Once the network is built, costs are much less to operate, so don't kid yourself.. The BIG 3, have paid off their network built many times over, and now it's all about profit. They have flexability, but with only 3, you have seen they increase prices jointly because they can.

Exactly they're owned by Deutsche Telekom and no one seems feel the need to protect AT&T from either T. Mo or Verizon (that's owned by Vodafone)
--
I'm watching District 9 again, and I've come to realize something: Wikus's got it all wrong. If I were morphing into a 9 foot tall hyper-dextrous alien that can shoot lightning bolts and get high off cat food why would I ever want to become human again?