New details have emerged about the Yukon government’s planned fibre-optic line up the Dempster Highway that would provide Internet security to 10 Yukon communities, including Whitehorse.
The government has been slow to provide information about the project, which was announced last month. At the time, it revealed that the total cost of the construction is estimated at $32 million, of which Northwestel would contribute up to $10 million. But officials refused to answer questions about exactly how much the territorial government will pay and who will own the line.
Since then, Northwestel has clarified that the $32 million price tag refers specifically to the portion of the line along the Dempster Highway, from Dawson City to Inuvik. The telecommunications company says it will assume the full cost of construction of the line to Dawson City from where it currently ends at Stewart Crossing. It estimates that cost at $5 million, which would be on top of the possible $10 million it will contribute to the Dempster Highway extension.
Northwestel will also cover all ongoing maintenance and operations costs after the construction is complete. Spokesperson Andrew Anderson said those costs will be significant.
“The total ownership cost of the fibre is more than double the total building cost,” he explained.
Despite his use of the word “ownership,” neither Northwestel nor the government has absolutely confirmed that Northwestel will own the line. However, Anderson said that is what his company has in mind. “That’s the proposal that we put forward to the government.”
Cabinet spokesperson Dan Macdonald refused to confirm that Northwestel will be the owner, but he has said the Yukon government will not own the line.
That means this project will be structured quite differently from the Mackenzie Valley Fibre Link in the Northwest Territories, which is currently being built from Fort Simpson to Inuvik. Together, the two projects will create a fibre loop that will prevent cuts to Yukon’s fibre-optic line south of Whitehorse from wiping out Internet access across the territory.
Unlike the proposed Dempster Highway line, the Mackenzie Valley project is owned by the N.W.T. government as part of a public-private partnership. The line is being built by Northern Lights, a joint venture between Northwestel and Ledcor, a construction company.
Sean Craig, a public-private partnership analyst with the N.W.T. government, explained that Northern Lights will pay the up-front costs of construction, maintenance and operation of the line. The government will then make monthly payments to Northern Lights based on its performance.
He said the net cost of the project is about $234 million, and the average payment to Northern Lights will be $7 million a year over the 20-year term of the partnership.
But he said part of those payments could be docked if Northern Lights doesn’t live up to its obligations – for instance, if it doesn’t repair breaks in the line quickly enough.
“If they don’t meet certain monthly targets, then we reduce that monthly availability payment,” he explained. “It’s performance-based and it drives a level of service.”
Craig said another reason the government decided to own the line was to keep rates down and to promote competition between service providers. As it stands, local providers in N.W.T. and the Yukon have to negotiate with Northwestel to access its network.
“At this point in time, Northwestel can charge… generally almost what they want,” he said. “With us as the (government), we’re obviously a not-for-profit. So that would mean obviously that the number would be less.”
He said the government will charge the same rates to all providers, including Northwestel.
When asked if the Yukon government would have any say in determining rates after the Dempster Highway extension is built, Macdonald simply responded that “rates are determined and set through the CRTC” – the federal telecommunications regulator.
Macdonald said the Yukon government chose not to own the Dempster Highway extension because it “didn’t want Yukon taxpayers having to pay operations and maintenance for the line afterwards.”
However, it’s still unclear how much taxpayers will pay for this project, or how the $32 million estimate was calculated. The current construction cost of the Mackenzie Valley line is about $82 million, more than double the Dempster Highway estimate for a line that is less than twice as long.
Peter Clarkson, the N.W.T. government’s regional director for the Beaufort Delta, said it makes sense that the Mackenzie Valley project would cost more, because there’s no road along much of the route. That means all the work needs to happen during the winter, which is much more expensive.
But he also cautioned that the Dempster Highway project could lead to higher rates in the Yukon, because Northwestel isn’t accessing many new customers – it’s largely providing additional security to customers it already has.
“It would be possible that the rates for everybody could go up,” he said. “There’s additional cost, but at least you know you’re going to have backup when you need it.”
Contact Maura Forrest at