Saturday, December 12, 2009

How many billions did Harper’s Globealive decision cost taxpayers?

The CRTC ruled that Globealive did not meet the test for being a Canadian controlled company, which would have precluded its entry as a fourth national telecom competitor.

In his usual whimsical and wholly arbitrary fashion, Stephen Harper decided that he would overrule the CRTC's decison and let Globealive proceed to launch its service anyway. Globealive hired a former senior advisor to Harper
to make their case for them.

Money talks. Harper complies. Taxpayers lose.

So now we have a company that enters the Canadian telecom market after being the winning bidder in an auction in which all bidders had to meet strict Canadian ownership rules. Globealive won that bid, except they did not meet the tests that had been laid down to compete for the license, and it turns out that they aren’t Canadian after all.

So here’s the point. A constraint was placed on who could bid for this license, namely you had to be Canadian. That constraint, meant there were fewer bidders than otherwise. Many deep pocketed foreign companies were precluded from bidding, lessening the amount of money that would have been raised under this competitive auction process. We are talking about billions of dollars here folks, but due to Harper’s skewed auction we will never actually know for sure.

The final upshot of Harper’s completely flawed process of the auction itself and his whimsical rewriting of the rules after the fact, means that we have a foreign entity who has entered our market at a price that is not at all reflective of what taxpayers would have received for this immensely valuable wireless spectrum, had all foreigners been allowed to bid in the first place.

This is insane. And to think that people still go around calling Harper a trained economist. More like a trained seal, if you ask me, where money and lobbyists are able to get Harper to do anything they please, notwithstanding how negative the consequences of those decisions are on taxpayers at larger. Just look what Paul Desmarais Jr. was able to get Harper to do on income trusts:

Kill Desmarais’ competition for Canadians’ retirement savings dollars, namely income trusts even if it meant destroying $35 billion of Canadian hard earned retirement savings and the wholesale foreign takeover of Canadian companies at a cost to taxpayers of over $7 billion a year, once all is said and done.

That’s the price of having a trained seal for a Prime Minister.

Simple solutions to deal with Harper's screw-up:

This adverse situation and loss of taxpayer dollars that Harper has created is not too late to remedy as there are many solutions to avoid Canada and taxpayers from being taken advantage of.

First, enforce upon Globealive the requirement that they meet the test of being Canadian. Failure to do so will result in a stiff fine or forfeiture of the deposit they made when they first registered to bid for a license. The spectrum would then be put up for re-auction, depending upon what was considered the optimal outcome for taxpayers under the circumstances.

Alternatively, reopen the auction that Globealive won, on the false pretenses of its being Canadian, by requiring Globealive to honor its bid on the terms of its current non-Canadians ownership structure and allow others with similar foreign structures to compete for the license that Globealive won at prices equal to or greater than what Globealive bid. Globealive would be permitted to increase its bid in the face of higher bids from others, such that Globealive could end up as the winner, except however taxpayers would have received full value for this wireless spectrum and the "cost" associated with allowing foreigners like Globealive into our market. Something which our trained seal Prime Minister's blind eye, wink wink, nudge nudge, solution did not.


Dr Mike said...

So does this mean that Konrad W. von Finckenstein is next to meet his demise??

All I can say is goodbye Konrad.

Dr Mike

Anonymous said...

Ah, but you forget that we exist and conduct our affairs and live our little lives at the whim of Herr Harper, in his world he is the market and you ignore that at your peril.

I was in stitches to read Tony Clement in the Globe this AM saying that this decision swung on an interpretation of the legislation and was in no way political. How stupid do these people think we are? This was just the Harpercrite demonstrating that no matter what the law book says, he makes the rules, so heel! L'etat est moi!


Bruce Benson said...

Yes, Harper is top seal on the list, no others need apply. So how come so many Canadians want to be led by a trained seal? All of this enabled by the Press and of course, don't forget the Loyal Opposition. Doesn't say much for the intelligence of Canadians does it?

Anonymous said...

Globealive is just another example. Politicians are costing taxpayers billions - in dollars and lives.

Income Trust tax change legislation = politicians incite hatred.

Afghanistan Detainees handed over and, perhaps, tortured = politicians incite hatred.

Carving out anything and everything that Canada has and is (now becoming had and was) and knocking it down and then giving it away = politicians inciting hatred.

In these situations, the politicians create hazard, peril and a continuance of war against the people; soldiers included. Who in their right mind supports and enables this?

Mr. Brent Fullard - Canadians would be well served by you as Prime Minister of Canada.

crf said...


I can guess where this will lead: lawsuits from any number of other companies who bid (or didn't bid) at the frequency auction. I imagine Canadian, foreign, or mixed ownership companies would have had different strategies if they knew that the conservatives were planning on ignoring the law.

Anonymous said...

I don't see how it's not the SCC's jurisdiction insofar as the SCC is a court, and courts are responsible for the enforcement of laws in this country. Sure, the CRTC has immediate authority to rule on this issue as authorized by the telecom act, but just like with anything else in this country, I could file suit against them taking some issue with the ruling, and the suit would end up at the SCC should all appeals be exhausted.

And I would just add that harper is bound by the telecom act to only sell spectrum to "canadian" companies. As long as he didn't change the telecom act, he would not be able to just open up the auction to foreigners as easily as you'd make it out to be. Sure, that definitely reduced the potential revenues the government could have collected in the auction, but he had no choice if he was not going to amend the legislation (which would be politically unfeasible).


CAITI said...

Yes FF, your first your point is very valid and had Globealive believed that they had some real valid legal issue concerning the CRTC ruling, they could have challenged it in court, and maybe appeal that challenge all the way to the sleepy crowd at the SCC.

But here’s the point: They did not.

Instead they chose the easier route or maybe the only route that they concluded was available to them, given the air tight nature of the CRTC’s ruling. They went crying to Harper. Used one of Harper’s closest CON buddies to lobby for them (Bookensomething is his name?).

This approach to policy making and enforcement of legislation like the CRTC is cahrged to do, represents the leading edge of corruption and degradation of our laws and our system that some people (Globealive) prefer to use, knowing they have inherently corrupt people at the top to exploit in one way or another (Harper). Without due process, you may as well not even have laws to begin with?

It’s a complete re-enactment of how the income trust tax came into being,

On your second point, I believe that Harper did effectively over-rule the Telecom Act, when you look at it in braod terms, in making the arbitrary choice that he did, in my layman’s opinion. Because its the Telecom Act that lays out the definition of the term “Canadian” and its the Telecom Act that also defines the need to create and empower the CRTC in the first place, and it is the Act that empowers the CRTC to be the regulator that exists to enforce the Telecom Act and make interpretations about what is contained in that Act. Which is what the CRTC did in this instance like all others. Except in this instance, unlike all others, the CRTC was overruled by the PM and Industry Canada. Not good. Why have a Telecom Act or a CRTC first place, if only to emasculate it.....on the fly.

The CRTC is of the view that Globealive fails to meet the test of Canadian as required of it under the rules laid out for this auction. They were an ineligible bidder, so how could they end up the winner. Maybe the license should revert from Globealive to whomever was bidder #2, assuning they were Canadians and are willing to proceed at this point with their bid. If not, open the thing up again, since the winner has been disquailified.

My solutions do not require any new legislation, as the problem that was created in this circumstance was created by Globealive themselves who were playing too close to the edge. Knowingly I would add, and they seem unwilling to fix their mistake. Instead we make one for them, by giving them a “pass”. Why not simply do one of the things that I suggested, in order to fair to all concerned and not simply reward Globealive for their underhanded approach to their bid consortium?