It’s time to break Northwestel’s internet monopoly

It’s tempting to react with resignation to news that the estimated cost of a proposed fibre-optic line up the Dempster Highway has ballooned from around $32 million to upwards of $50 million.

It’s tempting to react with resignation to news that the estimated cost of a proposed fibre-optic line up the Dempster Highway has ballooned from around $32 million to upwards of $50 million.

After all, cost estimates are a notoriously fickle exercise, both in the corporate and governmental spheres. The best-laid plans of desktop studies for infrastructure projects tend to become quickly mired in the realities on the ground.

The thing is, apart from a few select souls at Northwestel and the Yukon government, nobody knows why the Dempster line’s projected costs have gone up. Neither the YG nor our esteemed telecom monopoly have seen fit to release a November 2016 engineering report outlining the details of the project.

There could be very good reasons for the price tag to potentially reach as high as $70 million, but that information has so far proved too sensitive or detailed for us unruly commoners. Northwestel has said it’s willing to release the report but is waiting for the government to give the all-clear. Economic Development Minister Ranj Pillai told the News last week he expected Northwestel to release a summary soon. The full report may not see the light of day because it contains proprietary information, which just shows the need for a public interest override in the Yukon’s access-to-information legislation.

It’s clear neither the company nor the new government really know what’s going on here. We only know about the new price tag at all because a Northwestel employee mentioned it during a community meeting in Fort McPherson, N.W.T., last month. The CBC first reported the figure, apparently without realizing it was new.

Last week, Pillai and Northwestel seemed to be at odds over the project’s status. The company said it’s seeking regulatory approval for the line ahead of time so it can be considered “shovel-ready” and Pillai accused them of getting ahead of themselves.

Meanwhile, Pillai has also met with representatives from Alaska Power and Telephone, who remain interested in a fibre link between the Yukon and their 138-kilometre Lynn Canal cable, which connects Skagway and Haines with the larger offshore fibre network. AP&T thinks it can offer wholesale bandwidth at a rate much cheaper than earlier YG estimates indicated.

All this has the makings of a difficult decision for the Liberal government. A 2014 report commissioned by the Yukon government put the cost of a terrestrial fibre-optic line between Whitehorse at Skagway at between $23 million and $36 million. The report also suggested $12.8 million to start up a non-profit company that would manage this hypothetical line.

The limitation of this option is that it does not offer the redundancy of the Dempster line, which would meet up with the N.W.T. government-owned (and Northwestel managed) Mackenzie Valley line, which terminates in Inuvik.

But even with Northwestel’s offer to pay $10 million towards the cost of the Dempster line, the remaining $40 million to $60 million would amount to a massive subsidy to a monopolistic telecom provider.

By its actions over the years, Northwestel has shown it is little more than an elaborate mechanism for hoovering money out of the North on the behalf of its corporate masters at Bell Canada.

Northwestel has fought like a belligerent drunk being kicked out of a bar against regulatory efforts to force it to lower the wholesale bandwidth rates it charges to would-be competitors. It still has no competitors in the Yukon. These two facts are not a coincidence.

Yellowknife’s SSi Micro, which for years has been fighting a pitched battle against Northwestel — and is actually the dominant ISP in Nunavut — is eager to break into the internet market in the other two territories. The Yukon has had local ISPs before, and could do again.

Linking with Alaska might deprive communities in north and central Yukon of full redundancy. But the line breaks that plague the entire territory usually happen in British Columbia, and besides, the bigger problem for internet customers here is not reliability but cost.

Northwestel’s inflated monopoly prices are a weight on consumers and businesses alike. In a perfect world, the Yukon and N.W.T. governments would expropriate the entirety of Northwestel’s fibre network and sell cut-rate wholesale bandwidth to any company — Northwestel included — that wanted to offer last-mile internet service.

(The odds of this actually happening are nil, since you can bet that Bell and Northwestel would immediately dispatch a battalion of lawyers to stomp the life out of any such radical notion.)

This idea might make conservatives understandably uncomfortable. But Northwestel began life as a Crown corporation, before being privatised into the hands of Bell’s corporate predecessors. It’s never really faced a truly competitive market. It is not a real capitalist organization, but a rent seeker. The market is so warped here that nationalization would actually force the creation of the free market that the toothless CRTC has failed to deliver.

The Dempster line is a white elephant in the making, and apart from Eagle Plains, would add nobody to the fibre network. The vast majority of Yukoners already have access to broadband. They simply pay too much for it.

The Yukon government’s top telecom priority should be to break Northwestel’s artificial monopoly. Our Alaskan neighbours are eager to do a deal. The YG should be eager to do one too.

Contact Chris Windeyer at editor@yukon-news.com

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