The CRTC has refused a request by Globalive Wireless Management Corp. (operating as Wind Mobile) to initiate a review of the ownership structure of TELUS Corporation (TELUS Corp.) and TELUS Communications Inc. (TCI) in order to determine whether they might be operating in contravention of Canadian ownership rules.
Wind Mobile had suggested that approximately 48% of the beneficial holders of the voting shares of TELUS Corporation were located outside of Canada, and submitted that this provided compelling evidence that TELUS Corp. had exceeded the maximum 33 1/3% non-Canadian voting interests permitted for a carrier holding company by the Canadian ownership requirements, which are set out in the regime created by Telecommunications Act and the Canadian Telecommunications Common Carrier Ownership and Control Regulations (the Regulations).
Although the Canadian ownership requirements no longer apply to most telecommunications carriers, following amendments earlier this year to the Telecommunications Act, the ownership requirements do continue to apply to the three largest carriers, including TELUS.
In denying the application, the Commission found that there was insufficient evidence of non-compliance on the record of the proceeding to warrant a review of the ownership of TELUS Communications Corp (TCC) (a partnership that is ultimately owned by publicly traded TELUS Corp.), which is the TELUS entity that is registered with the CRTC as a Canadian carrier.
In support of its application, Wind Mobile had provided reports by Broadridge Financial Solutions Inc., an independent investor communications services company, which provided a geographic breakdown of what the applicant characterized as virtually all beneficial holders of TELUS Corp. voting and non-voting shares, categorizing such shareholders on the basis of the shareholder’s addresses, as maintained by their financial intermediaries.
The CRTC also found that Wind Mobile had failed to demonstrate that TELUS’s board of directors had any reason to question the information it had received pursuant to the procedures set out in the Regulations. In this regard, the CRTC noted that the Canadian ownership and control regime places the onus on carriers to remain in compliance, also requiring that each carriers file an annual report with the Commission that includes a statement respecting the percentage of voting shares beneficially owned and controlled by Canadians, as well as an affidavit or declaration affirming that the carrier continues to be in compliance with Canadian ownership requirements. The Commission further noted that the Regulations provide detailed instructions to assist carriers and ensure compliance with the ownership rules. The CRTC explicitly found that TELUS’s mechanisms for ensuring compliance are consistent with the provisions and requirements of the Regulations.
Readers of Canadian Communications Law will recall that, when originally licensed, Wind Mobile was itself the subject of an intensive CRTC review of its ownership and control structure, which found that Wind Mobile was not in compliance with Canadian ownership requirements, and therefore ineligible to operate as a telecommunications common carrier -- although Industry Canada, which granted radio spectrum licences to Wind Mobile, had earlier found that the company was compliant. That CRTC decision was overturned by the federal cabinet, allowing Wind Mobile to commence operations; but the cabinet decision was itself quashed by the Federal Court. Then the Federal Court of Appeal restored the cabinet decision. The Supreme Court of Canada refused leave to hear a further appeal.