Why Wind Mobile’s largest investor is wrong

It hurts like a dropped call: Cellular telephone company Wind Mobile's billionaire financier stated recently he regrets investing in this country.

A CBC News report quotes Naguib Sawiris, the Egyptian founder of the Orascom -- the media conglomerate that provided much of the financing for Globalive's Wind Mobile service when the brand launched in 2009 — as stating "it was a bad idea" funding Globalive's ownership due to Canada's stringent foreign ownership rules.

"Canada is the only country in the world, besides China, that hasn't opened up to foreign direct investment for foreign capital, Sawiris said. "I don't know why Canada wants to be matched with China," he said. "There's only two countries [with] very ridiculous old laws, and nothing is happening. There's no real political will here to introduce competition into this closed market."

Damning words those.

"To say there's just two countries in the world with statutory limits or degrees of who can own how much of what telecom company is being over-simplistic," remarks Lawrence Surtees, vice-president, Communications Research for IDC Canada Limited in Toronto. "Now that the Harper government has a majority government, most people are expecting that there will be the tabling of some form of legislative change to the Canadian Telecommunications Act. The question becomes how far does Ottawa go? There are a whole variety of options open to it. It's not an all or nothing proposition.

"Frankly if Wind went into the United States and tried to buy 51 per cent of AT&T, there'd be a firestorm."

Warren Shiau, director of research, Consumer Insight & IT Practice at Leger Market Research in Toronto, says Ottawa is walking a fine line between protecting Canadian telcos and encouraging foreign investment.

"Have we ever had an organization like T-Mobile entering the Canadian market — a huge, new competitor coming in from the outside? No we haven't. The competition we have had come in have been small competitors that have been restricted through various arrangements that are in place," he says. "I think there's a balancing act the government is trying to play. In the end, they need to open things up but it looks like they're taking a managed approach to doing that.

"I'm not privy to the government's industrial policy but it sure seems to me they're opening things up at a measured pace. One of the purposes behind this is to give our incumbent suppliers a lot of time to adjust to new competition entering the market."

Stewart Lyons, president of Mobilicity in Toronto, says while he agrees with Wind Mobile that the current environment favours the incumbents he adds Ottawa has not finished what it set out to do: Foster competition.

"The concern now is will the support continue into this next spectrum auction and beyond," he says. "I think the government will take a look at all the great things the new entrants have been able to accomplish and they'll want for that effort to continue as it really benefits the Canadian consumer in the long run."

Unlike government and corporations, Canadian consumers aren't nearly as concerned with the perceived nationality of their chosen telecommunications provider, Shiau adds.

"I don't think the consumer cares about whether or not their mobile provider is German, for instance," he says. "They care about a good data plan and good prices."