Competitors pan NorthwesTel’s modernization plan

NorthwesTel's new modernization plan doesn't look any better than the old one, say its competitors. "It's basically more of the same," said Dean Proctor, the chief development officer for SSi Group.

NorthwesTel’s new modernization plan doesn’t look any better than the old one, say its competitors.

“It’s basically more of the same,” said Dean Proctor, the chief development officer for SSi Group, a Yellowknife-based Internet provider. “It’s what any normal telecommunications company should be doing with respect to network upgrades.”

Inuvik-based cellular provider Ice Wireless was even more blunt.

“This is an attempt by NorthwesTel to continue its dominance of the long-haul transportation market in the North and reassert its monopoly over all telecommunications in northern Canada,” said Cameron Zubko, the vice president of Ice Wireless.

The Canadian Radio-television and Telecommunications Commission ordered NorthwesTel to produce a modernization plan in December 2011 after lambasting the telco for the age and condition of its network infrastructure.

NorthwesTel’s initial plan contained an additional $40 million that would have been paid out from the public benefits fund its parent company, Bell Canada Enterprises, was required to set aside as part of its $3.4-billion purchase of Astral Media.

After the commission scuttled the Astral deal, NorthwesTel had to go back to the drawing board.

Last month the company unveiled its revised, $233-million plan. It would see 3G wireless services expanded to 99 per cent of the company’s service area, features like call display available everywhere and improved Internet speeds.

“We think that our customers are looking for these services and we need to give them to them,” said Paul Flaherty, president of NorthwesTel.

But what both northerners, and the commission, want is competition, said Zubko.

“NorthwesTel has really missed the point of what the CRTC has asked them to do,” he said.

Much of the plan deals with wireless services and high-speed Internet, services that are not regulated by the commission, so there is some question of how much say the CRTC has over this plan.

“NorthwesTel says they’re not accountable to the CRTC, this plan is not for their approval and that the plan will proceed one way or another regardless of what the CRTC has to say about it,” said Zubko. “I think this demonstrates contempt for the CRTC.”

Both SSi and Ice Wireless say it’s NorthwesTel’s high prices for wholesale bandwidth that are keeping competition out of the North.

NorthwesTel owns the only fibre-optic link to the south.

“We’ve got (Internet service providers) lined up at the Yukon border that would quite happily start offering services in the Yukon if there was any reasonable cost of access for long-haul transportation services,” said Zubko.

“What we’re seeing is basically a lack of a holistic plan,” said Proctor. “There’s no real vision as to how the money they want to put into the ground will lead to communication services that are affordable… It’s certainly not talking about how NorthwesTel should be part of a northern solution in a competitive marketplace.”

But there is a lot in this plan that helps facilitate competition, countered Flaherty.

After the modernization plan is complete, most of NorthwesTel’s customers will be able to keep their phone number if they choose to switch to another provider.

In addition, NorthwesTel plans to expand Wholesale Connect, its high-volume Internet transport service, to 57 communities from 30.

The commission is currently looking at the prices that NorthwesTel charges for both Wholesale Connect and its V-Connect service – which is basically Wholesale Connect with a few more bells and whistles.

At the same time the CRTC will be putting all of NorthwesTel’s operations under the regulatory microscope as it completes a wide-ranging review of the North’s telecommunications needs and its regulatory framework.

That framework needs to change, said Proctor.

The commission has to figure out what a reasonable rate is for backbone Internet transport, not only in terms of NorthwesTel’s terrestrial fiber-optic and microwave network, but also in satellite-served communities as well, he said. Subsidies can then be adjusted accordingly.

NorthwesTel currently gets about $20 million a year from a fund administered by the CRTC to meet its basic service objective – the telecom services it’s required by law to provide in all the communities it serves.

Those objectives include dial-up Internet but not high-speed Internet. That makes no sense, said Proctor.

“Part of that subsidy is to pay for the cost of supporting dial-up, but nobody has dial-up,” he said. “Most computers can’t even handle dial-up modems any more, so there’s actually money being wasted in subsidies.”

Both SSi and Ice Wireless said they would like to see the retail and wholesale sides of NorthwesTel treated separately.

Proctor’s company is pushing for the creation of a portable subsidy that each telco can access based on the number of customers it has.

The CRTC created something similar when it opened up southern Canada’s telecommunications market to more competition in 1997, he said.

It will be a while before the commission makes any decisions. The regulator is holding public hearings across the North this summer.

It’s scheduled to be in Whitehorse June 19.

Contact Josh Kerr at

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