Juneau fibre link would cost more than Dempster link: official

The Yukon government has released two reports that show a new fibre-optic link to Alaska would be much cheaper to build than the proposed line up the Dempster Highway.

The Yukon government has released two reports that show a new fibre-optic link to Alaska would be much cheaper to build than the proposed line up the Dempster Highway. But an official says the overall cost to government would be higher for the Juneau line.

In October, the government announced plans to build a new fibre-optic link up the Dempster Highway from Dawson City to Inuvik. The line would provide a back-up Internet and cellular connection to 10 Yukon communities, including Whitehorse.

Previously, the government had appeared to favour a possible link to Alaska, which might have broken Northwestel’s monopoly in the territory.

When the Dempster project was announced, Economic Development Minister Stacey Hassard said he had a report showing the Juneau route was not viable. But he did not make that report publicly available.

Last week, his department released that report and a second one that calculates the cost of the two routes. Both were prepared by engineering consultant Stantec.

The reports show that a link from Whitehorse to Juneau would have a construction cost of $10.7 million, while a link from Stewart Crossing to Inuvik would cost $40.4 million.

But that’s not the whole picture, according to Steve Sorochan, director of technology and telecommunication services with the Department of Economic Development.

Sorochan said the cost of operating the Dempster line for 20 years is estimated at $51.5 million, bringing the total cost of that project to $91.9 million.

Northwestel has offered $10 million toward the construction, which it estimates will cost $32 million in total, and will cover all operating costs. That would leave the cost to government at $20 or $25 million, Sorochan said. The Yukon government also hopes that the governments of Canada and the Northwest Territories may help fund the project, though that has yet to be decided.

Operating costs of the Juneau line are estimated at $45.6 million, with an additional $70 million in bandwidth lease fees to Northwestel and to U.S. Internet carriers, bringing the total cost of that project to $126.3 million, Sorochan said.

He explained that the Yukon government would make money from owning that line, which would bring its net cost down to $42.7 million over 20 years. But that’s still more than it’s expecting to pay for the Dempster line.

Sorochan also said the Juneau link wouldn’t provide the same back-up connection to many Yukon communities that the Dempster link will.

“It doesn’t provide the same level of diversity, particularly in northern Yukon.”

The government did explore the possibility of a public-private partnership to build the Juneau line. The set-up would have been similar to that of the Mackenzie Valley Fibre Link in the Northwest Territories. That project is owned by the government, but it’s being built and maintained by private companies, including Northwestel. The private companies assume the up-front costs and are paid by the government over time, depending on their performance.

Sorochan said the advantage of that set-up is that it transfers some of the risk onto the private sector. But a public-private partnership is not economically viable for a fibre-optic link to Juneau, according to one of the reports.

“Because of the small size of the project, it wasn’t a big surprise that it didn’t provide value for money,” Sorochan explained.

That means that if the government were to build that line, it would have to bear the full cost and all of the risk. That’s not something the government wants, Sorochan said.

“This government’s not interested in directly… owning and competing with the private sector.”

Still, the Juneau line offered the possibility of competition with Northwestel, which the Dempster line does not. Under the proposed arrangement for the Dempster link, Sorochan said, Northwestel would own the line, though the government might retain some rights to use it in the future.

Martin Lehner, co-owner of local Internet technology company Orange Technology, said the decision to let Northwestel own the line will discourage any future competition.

“(This) solidifies their monopoly within the marketplace for pretty much the foreseeable future,” he said. “It’ll be very difficult for a third party to come in at this point and bring in a third line and try and compete with them.”

Lehner also worries that people have the wrong idea about what a second fibre line will mean for their Internet service.

The new link will prevent territory-wide outages that occur when the existing line is cut, he said. But many of the networks he manages experience several short Internet outages every day. Sometimes, he said, a network can go down for a few minutes a dozen or more times in a day.

Lehner said those problems are related to “last-mile delivery,” which won’t be improved by the construction of a new fibre-optic line.

“I would venture to say that a lot of Yukoners think this will drastically improve their Internet service… and that’s not necessarily what the case will be.”

Still, Northwestel spokesperson Adriann Kennedy said the new fibre line will not drive up consumer rates. The company already operates a microwave line between Dawson and Inuvik that has its own maintenance fees. Kennedy did not confirm whether the cost of maintaining a new fibre line will be similar to existing costs for the microwave line.

But she did say that “consumer costs wouldn’t go up as a result of the Dawson Highway fibre line construction.”

Contact Maura Forrest at maura.forrest@yukon-news.com

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