its time to regulate northwestel

I do not share in the local excitement about the recent CRTC decision putting an end to Northwestel's phone service monopoly in the North. People who think service will get markedly better and/or cheaper are being delusional.

I do not share in the local excitement about the recent CRTC decision putting an end to Northwestel’s phone service monopoly in the North.

People who think service will get markedly better and/or cheaper are being delusional. The brute fact is that we are a pretty marginal, unattractive commercial market for cellphone companies. On top of that, cellphone service is pretty much the same all over Canada anyway – overpriced and crappy wherever you are or whatever telco is selling it.

Of much more interest to me is the CRTC’s most recent decision to call Northwestel to task for the heinous prices it charges for Internet gateway services – the services you need if you are going to buy large amounts of bandwidth for resale to the outside world or for government or commercial operations.

Those prices have been vastly inflated for more than a decade now, as Northwestel has milked its unregulated monopoly over terrestrial high-speed Internet bandwidth to an extent that has crippled the territory’s economy and its government-service, education and health sectors.

The Yukon is an IT-crippled economy not because, like Nunavut, it lacks access to bandwidth and infrastructure. It is IT-crippled because Northwestel insists on ransacking the territory’s pockets to further pad its already unjustifiably inflated bottom line.

The CRTC has not actually said it is going to start regulating Northwestel’s gateway service pricing; it has only tasked the company with justifying its pricing structure, on warning that price regulation might follow.

Given the CRTC’s long history of smug indifference to the interests of northerners, I can’t say I am very hopeful that it will step out of character and actually do something, for a change; but it has at least raised the right issue, for once – the issue of how to finally make Northwestel accountable for its corporate behaviour.

The financial reality is that Northwestel is not really a northern company addressing the communications needs of northerners. It is a sub-company of Bell Canada, harvesting northern money and southern federal subsidies for the benefit of its mother corporation.

Since 2007, Northwestel has harvested fully $20 million in public subsidies for its operations and has doubled its operational income to $69 million.

That may be chump change by southern telco standards, but it represents roughly $620 in income from every man, woman and child in the three territories it serves.

Sorry, guys, the only word for that kind of figure is profiteering.

It is certainly true that Northwestel has financed the completion of the fibre-optic link to the south from its own in-house resources; but it is also true that it had those resources because of the high rates it has been allowed to charge of phone and Internet services, and because of hefty public subsidies that underwrote its operations.

Furthermore, it is ludicrous that Northwestel should expect it has the right to recover that investment in an artificially short time frame by running up its charges on the people, governments and industries which are forced to depend on it for digital services.

In the early days of Internet service in the Yukon, I was the manager of the publicly subsidized company that managed the territory’s internet gateway services. YKnet was a small enterprise jointly operated by Northwestel and the non-profit YukonNet Operating Society.

Internet infrastructure was thin and expensive in those days and YKnet received a substantial subsidy from the federal government to make the connection affordable.

The YKnet approach to doing business, however, was the polar opposite to Northwestel’s modus operandi. It ran an open-book operation, showing how it was fairly using and apportioning that subsidy and it actively supported competing internet service enterprises in the territory.

All that came to an end when, through its own operational weakness and some short-sighted decisions on the part of the Yukon government, the YukonNet Operating society was shunted aside and the control and pricing of the territory’s Internet services was handed over to Northwestel.

It speaks volumes that, within a few years of gaining control of the Internet gateway, Northwestel succeeded in exterminating all local competition in Internet service provision. And it did it under the very nose of the CRTC, which only now, belatedly, seems to have started smelling a rat.

We will see what comes of the CRTC’s recent activities. But if the CRTC fails yet again to do the right thing and impose rate regulation on Northwestel’s digital services, the local territorial governments should jointly step up to the plate and do it themselves.

Nobody denies that the communications industry in the North is an expensive, often thankless, enterprise and will probably always need some form of public subsidy. But it is also true that the Canadian taxpayers have a right to expect that their subsidy dollars are actually doing honest work in the North, not just being drained off to the already over-stuffed coffers of Bell Canada.

Rick Steele is a technology junkie who lives in Whitehorse.

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