Canadians have long craved for a new wireless carrier to bust onto the scene and break up what is often described as the anti-competitive practices of incumbents Bell, Rogers and TELUS (aka “The Big Three”). Following Industry Canada’s 2008 auction of Advanced Wireless Services, the majority of hope was placed in a swaggering upstart which recently announced it would operate under the WIND brand name. But this Thursday, the Canadian Radio-television and Telecommunications Commission informed WIND that it that it couldn’t go live with its HSPA network. The reasoning behind the CRTC’s decision was that if felt WIND’s parent company, Globalive Wireless, did not meet the criteria set forth in the Telecommunications Act which stipulates all carriers must be majority owned and controlled by Canadians. To meet these requirements, at least 80% of the board of directors and voting shares must be controlled by Canadians and the company cannot be “otherwise controlled by persons that are not Canadian.” What the CRTC found was that Oracsom, Globalive’s Egyptian financiers, controlled 65.1% of WINDs equity, the Canadian rights to the WIND brand, carried the majority of the company’s debt and that liquidity rights were “inconsistent with the relative voting interests of the shareholders.” The situation is complex, but all is not lost for WIND. With this in mind, we sat down with WIND’s CEO Ken Campbell and asked him what the future holds.
Mike: Prior to the ruling, you were quite optimistic that the CRTC would approve WINDs launch given that Industry Canada had previously ruled that your ownership structure complied with the Telecommunications Act. What do you think caused the CRTC to rule differently?
Ken: What we do know is that Industry Canada approved us back in March, on March 13th, and the frame of reference that they used was pretty much the same as the CRTC. The two groups came to different conclusions, obviously, and right now what we are doing is reviewing what’s come out and assessing what our options could be. It’s a pretty sad day for Canadian consumers. It’s unfortunate, Canada needs competition and needs a new national wireless operator and this is a setback.
Mike: There has been a lot of talk about having Industry Minister Tony Clement and the Cabinet overturn the CRTCs ruling, something they are legally permitted to do. Are you actively exploring this option, and if so, are you fearful of any backlash?
Ken: I am not sure what you are referring to, but no, for our part, we are just looking at what our options might be and reviewing what the CRTC has come out with. I am not aware of what Minister Clement might have commented on today.
[Ed. Prior to our interview, Industry Minister Tony Clement publically stated that he and Industry Canada will be investigating the CRTC’s decision. Said Clement: “We are examining the CRTC decision very closely, and certainly we are still very much in favour of more competition in the telecom space for Canadian consumers. That’s why we opened up these contracts to other new entrants.”
Mike: What are some of your options as you understand it? Certainly there is talk of WIND aligning itself with…
Ken: At this time all of those things are just media speculation. As I said, we are looking at all of our alternatives. We are going to assess all of them very seriously and will determine what sort of action we can take. We have to review the CRTC ruling – there is a lot to it – and we are going to look at what our options which include many.
BG: Not being Canadian and looking at the Canadian landscape in terms of wireless carriers, the premise of what you set out to do seems so great. There have been rumors, and much of them have been confirmed, that there was to be a simple 3-tier price plan, great handsets, a great retail experience, etc. How important do you think the whole retail experience is to the customer and providing a great service?
Ken: I think the customer experience is absolutely important. Here we’ve got a situation where we pay twice as much as they do in the US, our minutes of use are half of what they are in the US, and wireless penetration is at 65%. Clearly it is a market that is under-developed and where customers simply overpay. The other thing is that in Canada our customer saturation numbers are extremely low. We’ve got a very disenfranchised and very frustrated customer base that is really ripe and in need of competition. The other thing you should know is that this country is dominated by three carriers, but if you look regionally, it is typically two carriers that dominate regional markets. Canada is effectively an oligopoly and in many regions pretty much a duopoly. There is definitely an opportunity with consumers and the numbers speak for themselves.
BG: Going forward, you were really hopeful from everything that we read…
Ken: We’ve got 800 employees. We’ve got retail staff, we’ve hired call centers, we have a brand, we have a great experience, and definitely, as you mentioned, we have some good price plans and a very solid proposition that will resonate with consumers. We’re definitely teed up and ready to go.
BG: Have you announced the price plans at all?
Ken: No, we haven’t announced them. We did announce that we have a few, three, and I think that customers will find them simple and easy to understand and, frankly, a great value.
BG: So, like you said, everyone is hired and things are read to go. Can you continue those operations in the mean time until you get approval, or does all of that have to stop now?
Ken: Well, we are assessing what our options are. But the network has been being built in Calgary, Edmonton, Vancouver, Toronto and Ottawa and our coverage was being deployed. What we are going to continue to focus in on is our operation and assessing what our options are with this unfortunate ruling.
Mike: Are you still allowed to continue the development of the network , or are you abandoning this work until you can get things sorted out?
Ken: We’re really assessing and evaluating our options right now.
Mike: So it sounds as if you are more focused on the legal matter at hand as opposed to continuing to develop the network.
Ken: Yes, it’s just prudent that we evaluate the situation and the ruling. Obviously to run our business we need the CRTC to approve it, so we will see what our options might be. Canada definitely deserves some competition here and so for our part we just have to focus in on the ruling and see what, if anything, can be done.
Mike: How confident are you that a compromise will be reached in the near future that would allow you to continue the development of your network and eventually launch?
Ken: It’s just not clear right now. It’s too early to say.
BG: Well, Ken, thank you so much for your time we really appreciate it.
Ken: Thanks very much for reaching out to us. I like your site.