CRTC to undertake ownership review of Public Mobile
The CRTC announced this week that it will review the ownership structure of Public Mobile, a new Canadian wireless phone provider, in order to determine its compliance with the Telecommunications Act.
Public Mobile, formerly known as BMV Holdings, was created following a $52 million purchase of PCS G Band spectrum in Industry Canada’s wireless auction in 2008.
The company, which was originally slated to launch in the third quarter of 2009, has plans to build a low cost wireless phone network offering $40 a month unlimited voice plans in Quebec and Ontario.
In a December 18th letter to Public Mobile, the commission says it will undertake a “Type 2 review of the ownership and control of Public Mobile in order to determine its eligibility to operate as a Canadian telecommunications common carrier.”
“We expect that the CRTC will very quickly come to a determination that we are Canadian controlled in fact and in law,” said the chief executive of Public Mobile, Alek Krstajic, in a written statement.
This is the second time this year the CRTC has undertaken such a review. In September, after complaints from Telus Mobility and Shaw, the government regulator held several high profile public hearings into the ownership structure of Globalive, the company behind Wind Mobile.
Approximately a month after the public hearings, the CRTC announced that Globalive could not operate in Canada because it said the company was not Canadian controlled. After an intense six weeks of lobbying from Globalive, the CRTC decision was overturned by the federal cabinet and Globalive was allowed to offer mobile service as Wind Mobile.
Original investors in Public Mobile included several U.S. venture capital funds; Rho Canada, a venture capital firm based in Montreal, and Toronto-based Kensington Capital Partners, an independent private equity fund manager. The firm’s ownership structure has since changed including a $50 million investment by OMERS Private Equity.
The following is the complete text of the letter sent to Public Mobile by the CRTC.
Ottawa, 18 December 2009
Mr. Bob Boron
Vice President, Legal and Regulatory Affairs
Public Mobile
130 Merton Street, Suite 600
Toronto, ON
M4S 1A4
Re: Ownership and Control review of Public Mobile Inc. – Type of Review
Mr. Boron,
On March 26, 2009 Industry Canada issued spectrum licences to Public Mobile Inc., formerly 6934579 Canada Inc. (Public Mobile), following the Auction of Spectrum Licences for Advanced Wireless Services and Other Spectrum in the 2 GHz Range.
As noted by the Commission in its letter to Public Mobile dated 22 December 2008, the CRTC is responsible for ensuring that Canadian carriers comply with the Canadian ownership and control requirements of the Telecommunications Act (the Act).
In Telecom Regulatory Policy 2009-428 (the Policy), the Commission established a four-type review framework to apply to all future ownership and control reviews.
The Commission considers that based on a preliminary review of the documentation filed to date, the ownership structure of Public Mobile appears to comply with the legal control requirements of the Act. With regard to control in fact, the Commission notes inter alia, that the foreign equity is provided by a number of investors and the foreign debt is primarily vendor financing. Finally, Public Mobile’s corporate governance provisions largely follow the guidelines laid out in the BCE and Globalive decisions.
At this time, and based on the information available, the Commission considers that the ownership structure of Public Mobile is of a complex nature and could hold precedential value for the industry and the general public. The Commission does not consider, however, that the evidentiary record would be improved by third-party submissions.
Accordingly, based on the framework set out in the Policy, the Commission hereby provides public notice that it will be proceeding with a Type 2 review of the ownership and control of Public Mobile in order to determine its eligibility to operate as a Canadian telecommunications common carrier.
When reviewing the ownership and control of Public Mobile, the Commission will apply the existing jurisprudence relating to determinations of control in fact, cognizant of the fact that in varying Telecom Decision CRTC 2009-678, the Government stated that the “decision to vary is specific to the facts of this case”.
As set out in the Policy, a public decision and examination file will be released upon the conclusion of the Commission’s review.Yours truly,
Original signed byRobert A. Morin
Secretary General
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