NorthwesTel scales back planned upgrades

NorthwesTel has received some bad news from the Canadian Radio-television Telecommunications Commission. Late last week the telecom regulator scuttled a $3.4 billion deal for Bell Canada.

NorthwesTel has received some bad news from the Canadian Radio-television Telecommunications Commission.

Late last week, the telecom regulator scuttled a $3.4-billion deal for Bell Canada Enterprises – NorthwesTel’s parent company – to buy specialty TV and radio company Astral Media.

As part of the deal, Bell proposed giving NorthwesTel $40 million it had paid into the public benefits fund.

NorthwesTel planned to use that money to fund some of its five-year, $273-million modernization plan. That plan would have seen every one of the 96 communities it serves hooked up to high-speed Internet and 3G cell service.

Under the commission’s rules, any company purchasing a Canadian broadcaster has to set aside roughly 10 per cent of the purchase price for a “public benefits” fund.

That fund is supposed to go to projects that “yield measurable improvements to the communities served by the broadcasting undertaking and to the Canadian broadcasting system.”

NorthwesTel’s competitors argued that using money from that fund to expand Internet and wireless services was inappropriate. The commission agreed.

It was one of several reasons it cited in its decision to kill the Astral deal.

Without that money, the modernization plan is going to have to be scaled back, said Paul Flaherty, president of NorthwesTel.

“The reality is that if you don’t have that $40 million you can’t do it all, and I think that the thing that will fall by the wayside is the smaller communities, the ones that are uneconomic to service in the first place,” he said.

The company is still committed to the plan, which was required by the CRTC after the regulator slammed NorthwesTel for the age and quality of its network infrastructure in a decision late last year.

Just which communities will be left behind, Flaherty couldn’t say.

The company is still working on a revised modernization plan, which it then has to resubmit to the CRTC.

“I can tell you right now the plan, in my view, will include more wireless and advanced wireless and Internet and probably a little less in the voice area of our network because fewer and fewer people are having landlines these days,” said Flaherty.

That has raised the ire of some of NorthwesTel’s competitors.

As an “incumbent local exchange carrier,” NorthwesTel is required to provide landline telephone service and dial-up Internet to its customers. To help it meet that requirement, the company gets a $20 million annual subsidy from the CRTC.

Under the original modernization plan, NorthwesTel was going to use that money to help upgrade its equipment. Some of this gear supports landline services, but a large part of the plan would upgrade wireless and high-speed Internet services.

In effect, that amounts to using the subsidy to lock out competition, said Cameron Zubko, vice-president of Ice Wireless in a previous interview.

But while the CRTC hasn’t yet included wireless or high-speed Internet as mandatory services, it just makes sense to focus more resources on that area, said Flaherty.

“I know many young people these days don’t even have local telephone service, they only have wireless service,” he said. “Really, you’re seeing a shift over time and more and more people are going to wireless services only, or wireless on a fixed broadband service.

“The home phone is becoming a bit of a way of the past.”

The CRTC was set to hold hearings specifically on the communication needs of the North, but it put those plans on hold while it considered the Astral sale, said Dean Proctor, the chief development officer for SSi Micro, a Yellowknife-based Internet provider.

“The NorthwesTel modernization plan was a bit of a sideshow, and it ended up derailing the real work to be done,” he said.

No date has been set for those hearings yet, but Proctor is optimistic that the commission will move on it soon.

“What really has to be looked at is: What are the services that are essential for people in the North?” said Proctor.

With broadband Internet and cellular telephones eclipsing landlines, it no longer makes sense to give NorthwesTel $20.5 million a year to maintain its copper-line voice service, he said.

The high cost of NorthwesTel’s fibre-optic network is the other big issue for the North.

Right now NorthwesTel is charging wholesale customers like SSi Micro 5.6 times as much for Internet as it does for retail customers, which is the main reason that SSi has no presence in the Yukon.

“We will blow our brains out if we try to go in with those prices,” said Proctor. “We can’t move into the Yukon with pricing the way it is right now.

“We can’t compete with them.”

If enough people speak out to the commission when it holds hearings on the North, Proctor is hopeful that things will change for the better.

“We believe there needs to be a system in place – and you see this in the States, you see this in the U.K., you see this in Finland, you see this in Australia – there needs to be a sustainable system to allow broadband to be affordable for consumers but in a competitive and neutral fashion so there’s not just one player that gets all the cookies.”

Contact Josh Kerr at

Just Posted

Silver rules out HST, layoffs and royalty changes

Yukon’s financial advisory panel has released its final report

City of Whitehorse budgets $30M for infrastructure over four years

‘I think we’re concentrating on the most important things’

Yukon community liaison for MMIWG inquiry fired

Melissa Carlick, the Whitehorse-based community liaison officer for the national Missing and… Continue reading

Yukon man holds no grudge after being attacked by bison

‘The poor guy was only trying to fend off someone who he knew was trying to kill him’

Straight and true: the story of the Yukon colours

Michael Gates | History Hunter Last week, I participated in the 150th… Continue reading

Get ready to tumble: Whitehorse’s Polarettes to flip out at fundraiser

‘There’s a mandatory five-minute break at the end, just so people don’t fall over’

Alaska’s governor goes to China

There are very different rules for resource projects depending on which side of the border you’re on

Yukon survey shows broad support for legal pot

But there’s no consensus on retail and distribution models

Yukon government releases survey on the territory’s liquor laws

Changes could include allowing sale of booze in grocery stores

Get family consent before moving patients to other hospitals: NDP critic

‘Where is the respect and where is the dignity?’

Bill C-17 passes third reading in House of Commons

The bill, which will repeal controversial amendments made to YESAA by Bill S-6, will now go to Senate

White Pass and Yukon Route musical chugs on without director

The cast and crew of Stonecliff are pushing forward without Conrad Boyce, who went on medical leave

Most Read