The Yukon government has chosen the all-Canadian Dempster route for the territory’s redundant fibre line and rejected a route through Alaska that may have brought competition to the territory.
The $79 million project was announced June 20 by federal Minister of Innovation, Science and Economic Development, Navdeep Bains. It is being funded with approximately $59 million in federal money as well as $5 million from the territorial government and $15 million from Northwestel.
“By 2021 Yukon will no longer rely on a single fibre connection that is vulnerable to damage and prolonged interruptions,” Yukon’s Minister of Economic Development Ranj Pillai said.
“Yukon business will no longer lose revenue due to lost internet connections and sever communication with clients and customers.”
For its $15 million the northern telecoms giant will maintain and operate the line at no cost to the government and be the one competitors have to pay to use it.
The 777-km Dempster route, which will connect Dawson City to Inuvik, was one of two routes being considered to provide redundancy to the territory. The second, known as the South Klondike line, would have connected through Skagway, Alaska.
Steve Sorochan, with the Yukon’s Department of Economic Development said the Dempster route is the least costly to the territorial government and has a higher capital investment into the Yukon economy.
Though Northwestel will be maintaining and operating the line, as its owner, the Yukon government will keep the $79 million piece of infrastructure on its books.
According to the government’s numbers, the South Klondike route would have cost $34 million with $21 million of that paid for by the Yukon government.
Yukon issued expressions of interest looking for companies to run both routes.
In the case of the South Klondike route, six companies replied but either “indicated they could not do so in a financially sustainable manner” or did not provide enough information, Sorochan said.
“In year five or 10 or eight would there be additional subsidy required by Government of Yukon? That was a question that we were asking and if so how much? … We either got an answer which was quite a large number or they didn’t provide the information.”
In the case of the Dempster route, two companies expressed interest, he said. One did not provide the information the government wanted. The second was Northwestel.
“Northwestel said they would operate the line at no cost to government of Yukon,” he said. The deal with Northwestel is for 20 years.
The Yukon government says more than 70 communities in Yukon, Northwest Territories Nunavut and Northern B.C. will benefit from the Dempster route.
Building the Dempster line will create 600 jobs compared to 100 jobs for the south Klondike route, Sorochan said.
Sorochan admitted that the Alaska route could have introduced competition for broadband internet to parts of Yukon, in particular in Whitehorse and Carcross.
“It was however difficult to qualify potential pricing impacts and there was also concern raised that competition in certain areas that could impact broadband pricing many cause increase pricing pressures in other parts of Yukon,” he said.
He said choosing the Alaska route would have meant risks in the future.
Eventually infrastructure north of Whitehorse would have had to be upgraded, he said and the cost of that is unknown.
“In the future additional investment would have been required (with the south Klondike route) if we want to maintain the same level of reliability to Yukon communities.”
The Yukon government said construction of the new line is expected to start in 2019 once the project is put out to tender and goes through both the Yukon’s environmental assessment process as well as approvals by the MacKenzie Valley Land and Water Board.
Premier Sandy Silver has previously promised work would start this summer.
Pillai said he considers project management, consulting with First Nations and preparing assessments all part of that work.
“It’s not just about moving dirt, it’s about the whole project,” he said.
Affected Yukon First Nations along the route include the Trondek Hwech’in, Nacho Nyak Dun, Vuntut Gwitchin as well as Indigenous groups based in the Northwest Territories.
“We also have to sit down and have those discussions with our First Nation partners to figure out how we are going to continue to maximize procurement opportunities and how we’re going to partner appropriately with them as well,” Pillai said.
Andrew Anderson, a spokesperson for Northwestel said the company doesn’t expect prices for either individuals or wholesale buyers such as possible competitors to change as a result of the new line.
Wholesale rates are set by the Canadian Radio-television and Telecommunications Commission, he said.
“We don’t expect this to have any impact on customer prices, the goal here is to provide stronger, more resilient internet so that people can count on it not going down during a fibre cut.”
Anderson estimated the operation and maintenance cost of the line paid by Northwestel will be approximately $65 to $70 million over the 20-year period “which includes upgrading all of the electronics on a regular basis.”
The company currently has a microwave network running up the Dempster Highway “that uses a lot of diesel,” he said. The new route means that network can be turned down.
Sorochan said in the past five years the territory has had four interruptions of service caused by a cable being cut.
Pillai said the territory has lost out on business opportunities because it did not have this kind of redundancy.
“We needed this last piece.”
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