The Yukon government has announced plans to build a new fibre-optic link up the Dempster Highway to Inuvik, which would connect with a new fibre line under construction along the Mackenzie Valley.
The project would complete a loop around the Yukon and Northwest Territories, and would ensure redundancy for all the communities along the route. That means a break in the single line currently connecting the Yukon to Outside would no longer lead to Internet, cellular and emergency service outages across the territory.
The development would extend the existing fibre-optic line north from where it ends at Stewart Crossing, and would provide a back-up connection to Watson Lake, Teslin, Marsh Lake, Whitehorse, Carcross, Carmacks, Pelly Crossing, Stewart Crossing, Dawson City and Eagle Plains.
The Yukon government and Northwestel will pay for the project, possibly with contributions from the federal government and the government of the Northwest Territories.
On Tuesday morning, Minister of Economic Development Stacey Hassard said Northwestel has estimated the total cost of the Dempster Highway construction at $32 million “in the past couple of weeks.” But he said the government has yet to determine who will pay for what.
“We haven’t figured out the financial situation yet or the arrangement,” he explained, adding that the recent federal election and current territorial election campaign in the Northwest Territories have made discussions more difficult. “We haven’t been able to sit down with all of the parties that we need to sit with and come up with firm numbers.”
But later in the day, Cabinet spokesperson Dan Macdonald told the News that Northwestel has committed “up to $10 million” to the project. He did not confirm how much the Yukon government will contribute, and said the exact cost breakdown will depend partly on the results of an engineering report being completed by Northwestel.
Macdonald also said the Yukon government will not own the line. Northwestel will cover all ongoing maintenance and operations costs after construction is complete.
So far, Northwestel has promised to pay for the portion of the line connecting Stewart Crossing and Dawson City. The company has made the same commitment in the past, but scrapped the plans in 2013 after being instructed by the CRTC to reduce the rates it was charging competitors to use its infrastructure.
Northwestel will also make a “significant capital contribution” to the construction of the Dempster Highway extension, according to a news release.
In response to the announcement, Liberal Leader Sandy Silver said he’s pleased to see that a decision has been made to improve service to the Yukon. But he said it’s hard to know what to think with so few details available about the financing.
“The cake seems to be only half-baked,” he said. “The announcement almost seems like a smokescreen with no plan in place behind it.”
In the legislative assembly on Tuesday, Silver introduced a motion requesting the government to provide details about funding contributions and an explanation of why the government chose the Dempster Highway over a route through Skagway to Juneau, Alaska. He also requested an explanation of why the contract was not awarded through a bidding process.
The government has long debated whether a link to Alaska or to the Northwest Territories would be preferable, and has often appeared to favour the Alaska route.
In February, a report prepared by Stantec found that the Juneau route could be built in a single year for roughly $26 million, while the Dempster route would take two years and cost about $54 million.
But Hassard said a more recent Stantec report found the Juneau route was not viable because no private company would be likely to agree to a public-private partnership for such a small project. That report is not publicly available.
In 2014, a group of First Nations development corporations commissioned a study looking at the cost of a public-private partnership to build the link to Juneau. The report estimated that the government and the company would each have to pay $12.8 million. The First Nations ultimately decided the return on investment wasn’t high enough, and the idea was dropped.
But it’s still unclear how Northwestel came up with its estimate of $32 million when previous estimates have calculated the cost of the Dempster route at upwards of $50 million.
In response to inquiries, Northwestel spokesperson Adriann Kennedy said only that the projection was based on the company’s “extensive experience in fibre projects in the North.”
The Dempster link does have the advantage of providing Internet security to more Yukon communities. But it means that Northwestel will retain its fibre monopoly in the North.
Cameron Zubko, chief operating officer with Ice Wireless, a competing Internet service provider in northern Canada, said the announcement left him “conflicted.”
“On one hand, we’re very happy,” he said. “There need to be more infrastructure dollars going into the North.
“The mistake the Yukon government made here was to give the contract to Northwestel.”
Zubko said he would have liked to see the contract awarded through a competitive bidding process. He said Ice Wireless might have bid on the contract, as it did on the Mackenzie Valley fibre-optic contract in 2014, which was ultimately awarded to Northwestel.
Currently, Ice Wireless pays Northwestel to access its network. Owning and operating its own fibre-optic line would reduce its costs and allow it to expand services to communities like Dawson City. At the moment, Whitehorse is the only Yukon community where the company can afford to operate.
“We would have launched 3G in Dawson years ago if the price… quoted to us by Northwestel was not so high,” Zubko said.
As it stands, he said, Ice Wireless has no plans to expand outside of Whitehorse.
The Yukon government estimates that construction of the Dempster Highway line will be complete in 2017. The Mackenzie Valley fibre-optic link between Fort Simpson and Inuvik is scheduled for completion by September 2016.
Contact Maura Forrest at