One $40 million cable down, one more to go

With one $40-million fibre-optic network complete, Northwestel is already laying plans for a new one. But this time, the company is looking for government backing.

With one $40-million fibre-optic network complete, Northwestel is already laying plans for a new one.

But this time, the company is looking for government backing.

“If we make a capital investment, we need to cover that through the rate base,” said Curtis Shaw, vice-president of consumer and small business for Northwestel.

“If we (lay the second cable), I’d like to keep it out of the rate base, so we don’t have local ratepayers bearing the cost,” he said.

The new cable would be all about creating “redundancy,” said Shaw.

With only one cable, even a minor accident can grind the Yukon’s internet to a standstill for upwards of 12 hours.

In June alone, the new cable was torn three times, causing Yukon cellphone networks to crash and internet speed to slow to a crawl.

Twice, the cuts were due to botched construction digs.

Once, the cable was severed by a forest fire.

The first cable – built adjacent to the Alaska Highway – was the cheapest route available.

A second cable will likely be built over more difficult terrain – and cost much more than $40 million.

Probably in the “tens of millions,” said Shaw.

Several routes are under consideration.

Yellowknife is already connected to Edmonton by cable.

Northwestel could string an “over-the-top” line between Whitehorse and the NWT capital.

The company could

also lay a line through Alaska, and then run an undersea cable to Vancouver.

Or, the second could simply be laid on the other side of the highway, adjacent to the existing cable.

Many fibre cuts result from human error, like a badly placed backhoe or jackhammer.

“Typically, you’re not going to see a (construction crew) shovel through a fibre cable on one side at the exact same time as the other side,” said Shaw.

A forest fire or landslide, of course, would be a different story.

Customers liked the first network, but they’re unlikely to welcome rate premiums just to cover some “redundancy.”

From a business standpoint, redundancy isn’t worth upwards of $40 million.

But from the government’s perspective, ensuring consistent internet is a great way to stimulate innovation.

There’s more public-sector benefit than private-sector benefit in building a second cable, said Shaw.

“It’s a strategic investment for the Yukon, it’s a strategic investment for Canada,” he said.

The first cable, completed last summer, ushered in a faster internet for lower prices.

“This is not a limited-time offer. This is here to stay,” read a Northwestel brochure.

The new rates are long-awaited relief for Yukon businesses plagued by high internet rates.

“We heard loud and clear from small businesses that couldn’t afford services that they needed to run their business,” said Shaw in comments to the Whitehorse Chamber of Commerce on Wednesday.

With less rate money coming through, Northwestel’s internet revenue may take a hit for the short term.

But the company hopes that new subscribers will take up the slack.

“We’re taking the long-term view that, over time … revenue will be made up,” said Shaw.

It’s not often that monopolies make large, money-losing concessions to their customers.

But again, it’s all part of the big picture.

“You can’t assume that we’re going to have a monopoly forever,” said Shaw.

“It would be pretty naive for us to just sit back and not innovate.”

Contact Tristin Hopper at

tristinh@yukon-news.com

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