The Telecom Tango: Federal Court Overturns Cabinet

Mark Kohras is a JD candidate at Osgoode Hall Law School.

The Federal Cabinet is taking an active interest in the affairs of the CRTC recently, as evidenced by the Industry Minister’s stance on the usage-based billing decision. Days ago, the Federal Court ruled that the government may have overstepped its authority to overturn such decisions made by the CRTC.  However, the ruling relates to government action taken over a year ago in relation to Globalive (more commonly known as Wind Mobile).

The CRTC denied a telecommunication’s licence to Globalive because it did not meet the Canadian ownership requirements. The ruling became so controversial that the Federal Cabinet decided to overturn the ruling.  After the original CRTC decision was overturned, Public Mobile (a competitor to Wind) asked for judicial review of the decision from the Federal Court. Justice Roger Hughes recently issued a decision in that judicial review. His conclusion was that the Federal Government erred in 2 ways: First in limiting the decision to Globalive, and second, in “reading in” an additional policy objective in the legislation.

The Federal Cabinet, in its decision, stated that the telecommunications act “should be interpreted in a way that ensures that access to foreign capital, technology and experience is encouraged in a manner that supports all of the Canadian telecommunication policy objectives.” This is the crux of the issue. By referring to “Access to foreign capital” as a policy objective in rendering its decision, the Federal Government essentially “read in” an additional policy objective not present in Section 7 of the Telecommunications Act (which lists a series of policy objectives of the Act).

Justice Hughes also noted that it was improper to restrict the decision to Globalive. As Justice Hughes noted, “The Governor in Council cannot restrict its interpretation to one individual and not to others who may find themselves in a similar circumstance.”

This decision by the Federal Court will have implications in the Canadian telecom sector going forward. It will certainly have an effect on how the Cabinet approaches other CRTC decisions to overturn them. It might already have, given the government’s caution in regards to the usage-based billing decision. As of now, the decision has also created uncertainty as to the future of Wind Mobile, however there are several options moving forward. The Federal Government has announced that they will appeal the decision which, in all likelihood, will allow Wind Mobile to continue operating until a decision is rendered.

It is also possible that Wind may merge in partnership with an existing new entrant or otherwise re-shape its ownership structure to satisfy the CRTC. Given the current public desire for competition in the wireless marketplace, the Federal Government might also go forward with proposed legislation to allow foreign investment in Canadian telecoms with less than 10% market share, as it indicated it might in last year’s speech to the throne. Either way, this Federal Court decision is likely to have a great impact on the Canadian telecom industry going forward.