NEWS
09/05/2014 12:15 EDT | Updated 11/05/2014 05:59 EST

Mobilicity's U.S. backers sue Industry Canada over losses

The U.S.-based backers of Mobilicity are suing Industry Canada for blocking the sale of struggling wireless startup and not establishing an environment where it could thrive.

Mobilicity is currently under bankruptcy protection, but Industry Canada has twice blocked the transfer of its wireless spectrum to Telus, saying it would reduce competition in the wireless industry.

Investment firm Quadrangle Group and Mobilicity parent firm Data & Audio Visual Enterprises Investments Inc. say they had assurances from Industry Canada that they would be able to transfer spectrum when they invested millions in Mobilicity.

They filed a lawsuit with Ontario Superior Court of Justice seeking $1.2 billion in damages.

Quadrangle and Data & Audio Visual Enterprises say in their filing that their backing helped Mobilicity build its network and create thousands of jobs, but they ended up losing their investment.

Industry Canada “breached its assurances that it would enforce foreign ownership rules, require incumbent carriers to provide roaming and access to cell towers at reasonable rates and terms, prevent unfair and anti-competitive competitive practices and allow spectrum to be transferred,” the filing said.

The CRTC is currently reviewing Canadian roaming rates and has suggested they should be capped so that smaller wireless players can roam using the big telcos’ networks at a reasonable price.

Telus was successful in buying small startup Public Mobile, but has shut the network down saying its technology was outdated.

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