Canada: Government sued for disputes following demise of new wireless firm

A US investment firm is suing the Canadian government for alleged unfulfilled agreements related to the demise of a new wireless competitor, say reports.

US-based Quadrangle Group is suing Industry Canada for $1.2 billion in damages, accusing the federal group of neglecting to fulfill an agreement to have wireless spectrum transferred from failed start-up Mobilicity to one of the five major carriers after five years.

Industry giant Telus has reportedly offered to acquire Mobilicity. The company is currently running under court protection.

Industry Canada has reportedly refused to allow Mobilicity to transfer spectrum to Telus, however.

According to the lawsuit, Quadtrangle argues that Industry Canada assured financial backers of Mobilicity that the new company could boost competition in the market and that investments were secure because Mobilicity spectrum licenses could eventually be sold to larger rivals.

The plaintiffs, Quadrangle and Data & Audio-Visual Enterprises Investments, reportedly invested a combined $243 million to the Canadian government for Mobilicity to acquire its spectrum in 2008.

The establishment of Mobilicity was intended to boost competition in the wireless industry as Canada looks to lower consumer costs. The market is largely controlled by Telus, Rogers and Bell; together, they control 90 percent of the industry.

Mobilicity has made little impact on the three giants, reports say.

Industry Canada says the claims are unfounded.

Full content: City News

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