News Summary

A decade-long legal battle has concluded with a significant victory for investors of the failed Canadian wireless startup Mobilicity. Ontario Superior Court Justice Peter Osborne ruled that the federal government acted negligently by changing spectrum rules, which led to the devaluation of Mobilicity’s primary asset and ultimately cost taxpayers $500 million. In 2008, the government incentivized new entrants into the wireless market, prompting Quadrangle Group and Obelysk Media to invest $243 million in spectrum licenses, with the understanding that they could resell these to major telecoms if necessary. However, a 2013 rule change prohibited such sales, leading to a lawsuit against Industry Canada for $1.2 billion. Justice Osborne criticized the government’s actions as capricious and inconsistent with previous representations. The attempt by Telus to acquire Mobilicity was blocked by the government, forcing a sale to Rogers at a lower price. The court’s ruling mandates that the government repay the original investments plus interest. The government is reviewing the decision, which may be subject to appeal.