Calvinball continues

As I have explained before, Calvinball is a game that has rules, but the rules keep changing.

Here is how Wikipedia describes the game, which was introduced about 20 years ago in the comic strip Calvin and Hobbes:

The only consistent rule is that Calvinball may never be played with the same rules twice. Scoring is also arbitrary, with Hobbes reporting scores of “Q to 12″ and “oogy to boogy.” The only recognizable sports Calvinball is similar to are the ones that it emulates (i.e., a cross between croquet, polo, badminton, capture the flag, and volleyball.) Equipment includes a volleyball (the eponymous “Calvinball”), a soccer ball, a croquet set, a badminton set, assorted flags, bags, signs, and a hobby horse. Other things are included as needed, such as a bucket of ice-cold water, a water balloon, and various songs and poetry. Players also wear masks that resemble blindfolds with holes for the eyes. When Rosalyn asked Calvin what the reason for the requirement was, Calvin responded, “Sorry, no one’s allowed to question the masks.”

For the past 4 years, I have used Calvinball to describe Canada’s communications policy, such as here, here, here and here.

The government has been advertising that it welcomes foreign investment in telecommunications; foreign investment apparently forms a key part of the government’s strategy to encourage competition in the sector. Yet, this evening, the government turned down the sale by Manitoba Telecom (MTS) of Allstream to Accelero Capital for “national security reasons,” having taken four and a half months to make a decision. According to MTS, the government “rejected an offer from MTS and Accelero to take whatever actions are necessary to address the government’s concerns.”

Keep in mind that the principals of Accelero are well known to the government. These are the same people that were permitted to buy spectrum and operate WIND Mobile. Indeed, the government seemed to bend over backwards to approve their entry into the market, overturning a CRTC decision that denied WIND Mobile’s right to operate (prior to the liberalization of foreign investment rules).

The Government says:

The Government of Canada has concluded its review of Accelero Capital Holdings’ proposed acquisition of the Allstream division of Manitoba Telecom Services Inc. (MTS) under the national security provisions of the Investment Canada Act. The result of this review is that the transaction will not proceed.

MTS Allstream operates a national fibre optic network that provides critical telecommunications services to businesses and governments, including the Government of Canada.

Just last December, Allstream announced that it had been awarded a multi-year contract to manage theMPLS network, for Shared Services Canada, the Government of Canada department responsible for providing telecommunication services, email and data centres. Allstream also appears to be a major supplier to Canada’s civil aviation navigation services provider, NAV Canada, among other government sector clients.

This evening’s government press release seems to be saying that foreign companies will not be permitted to acquire telecom companies that are providing services to the Government of Canada.

As MTS states,

the transaction would have, among other things:

  • contributed to increased competition in Canada’s telecommunications sector;
  • sent a strong message that Canada’s telecommunications sector is, in fact, open to foreign investment;
  • enabled Allstream to accelerate the introduction of innovative products to increase the productivity of Canadian businesses;
  • provided MTS the capital necessary to increase its investment in Manitoba’s telecom infrastructure, such as fibre-to-the-home for rural Manitobans; and
  • resulted in $165 million of funding for MTS pension plans benefitting more than 10,000 Plan members.

Will MTS still be in a financial position to bid in the 700 MHz auction? Will it be able to continue its FTTH program, introducing some of the world’s most advanced services and competitive TV distribution in small rural Manitoba communities? What will become of Allstream and its need for continued capital investment? Accelero said that it had planned to inject an additional $300M into Allstream “to increase Allstream’s competitiveness and accelerate the introduction of innovative new products to increase the productivity of Canadian small, medium and enterprise businesses”.

The government’s “Fact versus Fiction” page talks about concerns that Canadians might have dealing with foreign owned telecommunications companies. One of its “Fictions” is “Your privacy is at risk if you choose a foreign cell phone provider” with a response “FACT: Canada has strong privacy laws to ensure our citizens’ personal information is safeguarded. These laws apply equally to all organizations that collect such information in Canada. The laws prevent any provider from disclosing personal information except with consent or when permissible by Canadian law.”

Maybe the government doesn’t have as much faith in dealing with foreign owned telecom service providers as it wants you to have.

2 thoughts on “Calvinball continues”

  1. After reading Boyd Erman’s piece “Spectrum Auction Rules Don’t Make Sense” in today’s edition of the Globe and Mail’s Report on Business, I think he’d agree that CALVINBALL could also applied to the rules for the upcoming 700 MHz auction. He concludes his piece by saying “….. the strange dynamic created by the auction rules ….. to keep the auction full of bidders will have done exactly the opposite. Oops.” Truly CALVINBALL at its best!

  2. As a Canadian that has lived in Europe for 17 years its disheartening to read about the continued misunderstanding that exists wrt foreign ownership and the risks it supposedly creates.

    Most northern European countries have free and open competition and there is now talk of simplifying pan-European regulation.

    Open and shared access, less regulation and encouragement for competition are always a better means for consumers and businesses to get the best prices for the services they need.

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