MONTREAL - The CEO of new cellphone company Public Mobile says the confusion over telecom ownership rules when it comes to competitor Globalive is "embarrassing" for Canada.

CEO Alek Krstajic said in a letter to Industry Minister Tony Clement that he supports a CRTC decision that prevents Globalive from launching its cellphone business because it isn't Canadian enough.

But Krstajic said the situation is not only contradictory, but unfair to Globalive and nothing to be proud of.

"The situation we currently have is embarrassing for Canada and is unfair to Globalive and its Egyptian owners," Krstajic said in a letter obtained by The Canadian Press.

"Orascom should not be in the position where they believed that Industry Canada approval would translate directly to approval by the CRTC," Krstajic said.

Industry Canada had approved Globalive's ownership structure, but a recent CRTC decision ruled that Globalive isn't Canadian owned and controlled.

The Public Mobile CEO said Globalive and its Egyptian owner Orascom shouldn't have believed that early Industry Canada approval would translate directly to CRTC approval.

Krstajic said if foreign ownership rules need to be changed, they should apply fairly to everyone.

"That way all the players are extended the same opportunity and flexibility to seek foreign capital on a level playing field. In the meantime, ignoring the rules for one player harms all of us."

Clement has asked for comment on Globalive's ownership by Wednesday.

Globalive wants to be Canada's fourth major wireless carrier and compete nationally with Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T). It has spectrum across Canada, but not in Quebec.

Public Mobile is one of several new regional players in Canada's cellphone industry. Other new players in the domestic cellphone industry include satellite radio player John Bitove's DAVE Wireless Inc. and Quebecor Inc. (TSX:QBR.B).

Krstajic has said his company will be able to reach nearly 19 million Canadians in Ontario and Quebec. It's expected to be operating next year.

Analysts say Globalive could be a catalyst for some change in foreign ownership restrictions on telecom companies.

"It seems to me the time is ripe to go ahead and make some changes," said the University of Ottawa's Michael Geist.

Either the CRTC or Industry Canada should decide what companies are eligible to get into the telecom field, but not both, Geist said.

"That kind of uncertainty in the market place isn't good for anybody," said Geist, Canada research chair of Internet and e-commerce at the University of Ottawa.

Geist said the changes may not apply retroactively to Globalive but may open the telecom market in the future.

There may be a desire by the federal government for more competition but the reality is that other wireless companies have played by the foreign ownership rules, he said.

Telecom analyst Mark Goldberg said he doesn't believe that CRTC's decision will be overturned and Globalive and Orascom will have to make some additional concessions to be considered Canadian.

"The challenge of course is how do you preserve some measure of integrity in the foreign ownership procedures," said Goldberg of Toronto-area Mark H. Goldberg and Associates.

Iain Grant of the SeaBoard Group technology consulting company said consumers will still have more choice even if Globalive doesn't get up and running.

"The benefits of competition are still going to be felt by Canadians," he said, noting the new players. "We are feeling some of them already."

Globalive is still hoping to launch its new, national cellphone company and will continue to test its wireless network connections, chairman Anthony Lacavera said this week.

The federal broadcast regulator has ruled that all wireless carriers must continue to co-operate in the testing of Globalive's network with theirs, as long as its proposed wireless carrier status hasn't been revoked.