Eyeing more competition, CRTC zeroes in on Northwestel’s wholesale rates

A CRTC decision earlier this month could pave the way to break Northwestel’s de-facto monopoly on internet services in the territory.

A CRTC decision earlier this month could pave the way to break Northwestel’s de-facto monopoly on internet services in the territory.

At least that’s what an internet service provider who’s been eyeing the territory for the past decade hopes.

“This has been a long fight,” Dean Proctor, SSi Micro’s chief development officer told the News Wednesday. “There is no competition and that’s not a normal situation.”

In a Nov. 8 ruling, the CRTC ordered the company to re-evaluate the costs it uses to calculate the wholesale rates it charges competitors.

Because Northwestel owns the only fibre optic line that connects the Yukon to Outside, it’s obligated to offer wholesale bandwidth to would-be competitors.

But how much it charges for that bandwidth has been the real issue, with SSi arguing the company effectively prices out any competition by keeping wholesale rates high.

In previous filings to the CRTC, SSi argued Northwestel’s wholesale rates are seven to 10 times higher than what they should be.

The company says Northwestel charges competitors up to 30 times what is paid down south.

SSi Micro first challenged Northwestel’s monopoly in 2011, with the CRTC ordering Northwestel to offer wholesale bandwidth in 2012.

But to date no internet company has jumped into the market, maintaining Northwestel’s monopoly on internet services.

“The Yukon government spoke to the fact that five years ago, all three northern territories opened up to local competition,” Proctor said. “Five years later there is no local competition (in the Yukon).”

Since then SSi has gone on to challenge the rates themselves.

For Proctor, this is a stark contrast with the situation in Nunavut where SSi and Northwestel compete to offer internet services.

“In the meantime, we’re investing millions into new network infrastructure in Nunavut,” he said, citing the company’s plan to roll out 4G LTE technology.

But the situation there is also different, since all Nunavut communities get internet via satellites that are not owned by either company.

In its intervention to the CRTC, the Yukon government took a clear stance on the issue: it wants competition in the territory over internet services.

The government noted that Northwestel and its competitors couldn’t come to an agreement on the wholesale price.

“It is clear that a mutual commercial consensus is not possible; that Northwestel is not interested in providing the service on terms and conditions that entrants find acceptable,” the government wrote in its filing to the CRTC.

For the government, it’s logical to infer that Northwestel’s rates are too high because there still isn’t competition, while there used to be before Northwestel started buying up competitors in 2007.

Northwestel has to submit new cost studies by Jan. 9 detailing how it comes up with the rates it charges for wholesale service.

SSi and other parties will then have to tell the CRTC whether they’re satisfied with those rates before the ruling body can make a decision.

For Northwestel, the CRTC’s decision is “business as usual.”

“This is part of our ongoing interaction with the CRTC,” spokesperson Andrew Anderson told the News Thursday. “We are continuously providing cost studies in order to set fair and reasonable prices.”

When asked whether Northwestel was opposed to competing for internet services in the Yukon, Anderson talked at length about the other areas where the company competes for services: TV, internet in Nunavut, and government contracts.

Anderson also noted that it’s not just a matter of “laying down a fibre line:” the company wants to double its capacity every 18 months, which he says requires continuous investments.

Internet usage has dramatically increased over the past years, he said.

“Our focus is on providing our customer with the best internet and telecommunication services,” he said. “People in the company are very proud of what we’ve been doing.”

He spoke about the increase of internet speeds in 40 communities in the North.

There could be at least a six month wait between Northwestel filing its new rates and the CRTC making a ruling, Proctor said.

He wouldn’t comment specifically about the CRTC’s slow pace, but encouraged Yukoners to contact the commission.

“The commission is very sensitive to public concern,” he said.

“If there are people in the Yukon interested in seeing faster justice, it’s really open for consumers to write the commission.”

Contact Pierre Chauvin at pierre.chauvin@yukon-news.com

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