The CRTC has announced it will review the ownership structure of DAVE Wireless, now called Mobilicity, in order to determine its compliance with the Canadian ownership and control requirements of the Canadian Telecommunications Act.

In early February, Mobilicity said it was working towards launching its wireless phone service in Toronto this spring, with a rollout in Vancouver, Edmonton, Calgary and Ottawa later this year later this year.

In a March 5th letter to Mobilicity, the commission says it will undertake a "Type 2 review of the ownership and control of DAVE Wireless in order to determine its eligibility to operate as a Canadian telecommunications common carrier."

This is the third such review undertaken by the CRTC in the last twelve months.

The first review was in September of 2009 when the CRTC probed 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.

The second ownership and control review by the CRTC was regarding Public Mobile and was announced just prior to Christmas. The results of that review have not been announced.

Digital Home attempted to contact Mobilicity in order to determine what impact this review would have on the company's plan but was unable to get any feedback prior to publication.

The following is the complete text of the letter sent to DAVE Wireless (aka Mobilicity) by the CRTC.
Ottawa, 5 March 2010
Mr. Stewart Lyons
Vice-President
DAVE Wireless Inc.
Suite 2300, Canada Trust Tower
161 Bay Street
Toronto, Ontario M5J 2S1

Re: Ownership and Control review of Data & Audio-Visual Enterprises Wireless Inc. – Type of Review

Mr. Lyons,

On 11 February 2009, Industry Canada issued spectrum licences to Data & Audio-Visual Enterprises Wireless Inc. (DAVE Wireless) following the Auction of Spectrum Licences for Advanced Wireless Services and Other Spectrum in the 2 GHz Range.

As noted in its letter to DAVE Wireless dated 22 December 2008, the Commission 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 CRTC 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 (see summary of documents submitted by DAVE Wireless, appended to this letter), the ownership structure of DAVE Wireless appears to comply with the legal control requirements of the Act. With regard to control in fact, the Commission notes inter alia that on a fully diluted basis, 67% of the voting interest will be held by the largest Canadian investors and that the largest non-Canadian investor has provided less than 55% of the total capital of the company.

The Commission further notes that a significant debt facility has been provided through an export credit arrangement with a foreign bank for the purchase of telecommunications equipment. DAVE Wireless’ 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 DAVE Wireless is of a sufficiently complex nature and that it holds 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 DAVE Wireless in order to determine its eligibility to operate as a Canadian telecommunications common carrier.
When reviewing the ownership and control of DAVE Wireless, the Commission will apply the existing jurisprudence relating to determinations of control in fact, while taking into consideration that when the Government varied Telecom Decision CRTC 2009-678, it 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 by
Robert A. Morin
Secretary General
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