RuralCom Corp. will bring cheap smorgasbord-style cellphone service to most of the Alaska Highway in May 2008 — if Industry Canada and Northwestel let them.
A cellphone user in southern Yukon would pay $50 a month for unlimited service from Whitehorse to Beaver Creek at the Alaska-Yukon border and down to near Wonowon, BC.
“We’re kind of in love with the concept of an all-you-can-eat, for nominally $50 a month plus some taxes,” explained RuralCom CEO Bob Hillman.
Hillman is targeting RuralCom’s planned cellular service offering along 1,684 kilometres of the Alaska Highway to compete with basic local phone service, for which Northwestel charges $31.33 a month in Whitehorse, never mind long distance charges.
Hillman also plans to siphon cents from an untapped and lucrative roaming market.
“Local residents, commercial long-haul trucking, vacationers and the travelling public are all denied access to full digital roaming along this important highway corridor,” he wrote in his company’s application for allocation of cellular bandwidth last July.
In the application to Industry Canada, RuralCom asked to be given to go-ahead to sue the entire cellular “sub-band A,” which employs several separate frequency bands in the 824-892 MHz range.
Now RuralCom must wait and see — see if competitors file counter-applications; see if their investors come through with the $10 million capital needed to buy digital transmission equipment.
And they must wait to see if the owners of the microwave transmission towers dotting the Alaska Highway are willing lease the infrastructure.
Industry Canada posted a public notice of RuralCom’s intentions online on June 27 and invited other cellular providers to counter-bid for 45 days until August 11.
Northwestel, at least, isn’t in the game for sub-band A.
“This is a bandwidth that we don’t have access to. It’s been reserved for competitors,” said Northwestel spokesperson Anne Kennedy.
Bell mobility and NMI mobility, both branches of Northwestel’s parent company, and Northwestel’s partly owned Latitude Wireless already provide spotty cell services in Yukon.
An Industry Canada spokesperson wouldn’t comment if any other companies were in the running to use the band in southern Yukon.
If no competition comes forward, Industry Canada will be evaluating RuralCom’s application solely on the basis of its corporate affiliations and ownership structure, likelihood of success, network capability and capacity and technological choices.
RuralCom’s plan is to drop central switching, opting instead for what Hillman calls “mesh-networks,” where the switching work is distributed among cell sites.
A distributed architecture results in lower costs for initial deployment and operation, in addition to the ability to scale as needed for growing capacity.
RuralCom is also looking at the very real possibility of integrating its own solar technology purchases with existing diesel-sourced power at the microwave transmission sites.
The newer digital technology available consumes only a third of the power that equipment made five years ago does, Hillman said.
Also, by incorporating both GSM and CDMA capability into their transmission network, as they plan to, RuralCom will leave itself open to the widest customer base possible.
It may also be able to tap the hip iPhone market — the gadget is solely GSM compatible.
GSM is the no-cost roaming and no-cost long-distance standard used in Europe and Asia, while the much-criticized and more expensive CDMA standard reigns in North America.
Yukoners signing up with RuralCom would be able to take advantage of the GSM network, while CDMA-equipped travellers along the Alaska Highway would still be able to connect to the network— and for the first time they’d be able to immediately send photos of bison along the roadside to loved ones, or call out for roadside assistance when they run out of gas.
But Northwestel is as the landlord of Yukon’s internet and cellphone-transmission microwave towers that connect into the digital main in Alberta.
So far, Northwestel rents the tower infrastructure to only a few small radio associations and security businesses and to Northwestel’s cellphone family members.
In 2005, the Yukon News reported that Ice Wireless was facing difficulty with the monthly tariff payments to Northwestel for the use of their microwave links, which were four times what they would have been paying for a similar service in the South.
Hillman assumes that RuralCom will be able to use the existing microwave tower structures and power systems — not actual transmission equipment — for an annual rent of $850,000.
“The tariffs are too high for circuits on their microwave so we’re actually putting in our own point-to-point microwave along the line,” said Hillman.
Northwestel wouldn’t confirm that RuralCom would be able to get access to three-dozen of the cold-war era towers that it inherited and upgraded over the years for that amount.
“We have rates that are set, rates that the CRTC approves, for site space, for power, and attachments to our towers,” said Kennedy.
Northwestel’s talks with RuralCom have been very preliminary, she said.
Hillman approached Northwestel initially as a matter of courtesy to offer them a stake in the project, he said.
RuralCom was willing to raise the capital, build the networks, own them, maintain them, and lease them back to Northwestel to operate.
“They basically told us: no, we’re not interested and we don’t like people playing in our sandbox,” he said.
Even with the problem of bandwidth allocation and tower rent out of the way, RuralCom will still have to raise the capital to purchase and install the network equipment at a cost Hillman estimates at $10 million.
Since federally incorporating in July 2005, the start-up has sunk money into research in development but not much else. RuralCom is operating out of a ghost-office on Burrard Street in Vancouver.
RuralCom has one secret investor willing to put up the initial $10 million in capital for the Alaska Highway project. For the most part, RuralCom’s board of directors is secret.
While the results of the company’s first stab at licence application are in limbo, RuralCom won’t be advertising the make-up of its board. Hillman doesn’t want undue interference with them from major carriers, he said.
Hillman did say that the directors of RuralCom are, as he is, veterans of the early days of cellular service technology.
Some claim that parts of Africa are better served, at cheaper prices, than cellular customers are in Canada, so it’s not surprising that when RuralCom formed to look for under-exploited markets across the world, they found the best opportunities in its own backyard.
For a total investment of $124 million into 300 cellular sites, RuralCom is looking to cover 23 other underserved and underserved areas in Canada including Kitimat and Terrace up the Cassiar to the Alaska Highway; the BC Coast from Campbell River up to Prince Rupert; from Ontario’s Lake of the Woods to Thunder Bay; from Thunder Bay to Sioux St. Marie, and Newfoundland outside of St John’s.
Providing rural cellular access is neither as sexy nor as profitable as running a metropolis’ network, but Hillman still considers what he’s doing “a worthy and exciting goal.”
Hillman estimates they could become the sixth- or seventh-largest wireless carrier in Canada, and one of the best loved.
“The incumbent carriers don’t care about the areas for the most part, otherwise they would have built sometime in the last 22 years since they’ve had licences,” he said.
Though RuralCom could have opted to compete solely within existing central markets, such as Whitehorse as Fort Nelson, that’s not how the company chooses to operate, said Hillman.
“When you operate under a licence of public convenience, you have a duty to take the not-so-good with the good. You can’t just eat the icing on the cake.”