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.
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, and will cover all operating costs, leaving the cost to government at less than $30 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 the Yukon government would make money off 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.
“This government’s not interested in directly… owning and competing with the private sector,” Sorochan said.
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.
But he said he doesn’t believe consumer rates will be driven up by the construction of the new line up the Dempster Highway.
That’s because Northwestel already maintains a microwave line between Dawson and Inuvik.
“They already actually have existing operating costs for that existing telecommunications system,” Sorochan said. He believes the price of maintaining a fibre-optic line should be similar to those existing costs.
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