NorthwesTel must make infrastructure upgrades regardless of its financial position, the Canadian Radio-television Telecommunications Commission ruled today.
The decision is in response to NorthwesTel’s $233 million, five-year modernization plan. The commission first ordered the modernization plan in 2011, when it found that the telco had not been making appropriate investments, given its aging infrastructure and the relative lack of services available to people in the North.
The commission found that the modernization plan, which promises 4G wireless and faster Internet across most of the North, will improve service to customers.
But it doesn’t do enough to improve the backbone infrastructure that allows communities to connect with the world, according to the decision.
NorthwesTel has also indicated that its investment is dependant on meeting expected revenues as well as, in some cases, government subsidies.
The commission ruled that the telco must commit to making the investments it has promised, and has asked that NorthwesTel resubmit the modernization plan by March 31, 2014, to reflect that expectation.
The new plan should also be modified to allow for a greater emphasis on the need for improved backbone infrastructure, especially in communities served by satellite.
NorthwesTel must submit regular progress reports to the CRTC on the modernization plan.
But the commission has also softened an earlier decision on how much NorthwesTel can charge competitors to access its network.
Earlier this year the CRTC slashed the wholesale rates that the telco is allowed to charge by 70 per cent.
It ruled the NorthwesTel had exaggerated the cost of laying fibre optic cable and that the telco can only charge a 30 per cent markup over the lower, adjusted cost.
In reply, NorthwesTel argued that it should be able to charge a markup of at least 60 per cent.
In today’s decision, the CRTC agreed that the telco can charge a 40 per cent markup on wholesale rates.
That rate will “more appropriately balance the need to ensure that NorthwesTel is reasonably compensated for its costs and continues to invest in its fibre networks with the need to ensure that competitors provide competitive alternatives in the marketplace.”
The commission’s ruling also found that NorthwesTel alone should not be responsible for ensuring that northern communities have equal access to Internet and telecommunication services.
“The commission finds that the plan will not be successful in delivering services to Canadians across all of NorthwesTel’s operating territory that are comparable to services available to consumers in southern Canada.”
Accordingly, it has promised to launch two inquiries in 2014. The first will investigate satellite data services in Canada. Old Crow is Yukon’s only community served by satellite.
The second proceeding will aim to establish a mechanism for subsidizing telecommunications infrastructure across the North.
This new subsidy “would complement other investments from the private sector and governments, including public-private partnerships,” according to the decision.
Contact Jacqueline Ronson at