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Yukon government’s giveaway of millions to Northwestel is a huge mistake

All Northwestel has to do to rake in a $64-million public subsidy, it seems, is exist.
Ranj Pillai, Yukon Minister of Energy, Mines and Resources, centre, Yukon MP Larry Bagnell, left, and Northwestel president Curtis Shaw listen as media asks questions about the newly-announced fibre optic link in Whitehorse on June 20. (Crystal Schick/Yukon News)

All Northwestel has to do to rake in a $64-million public subsidy, it seems, is exist.

Our monopolistic telecom provider is being showered with public money, once again, in the form of a 777-km fibre optic line up the Dempster Highway that will terminate in Inuvik, where it will link up with the Mackenzie Valley fibre optic cable.

The project does have its merits, and they deserve to be known: the Dempster line will mean that outages caused by cable cuts will be a thing of the past. The Northwest Territories, which is also served by a single cable and is likewise vulnerable to such outages, also benefits. All that is fine, as far it goes.

Thing is, those cable cuts have taken place, by the government’s own figures, four times in the last five years. The outages are annoying, to be sure, but hardly cataclysmic. Is preventing those scattered outages worth $64 million?

Economic development minister Ranj Pillai said last week the Yukon has lost out on economic opportunities because of unreliable internet. Naturally, he didn’t bother to give any details about what those opportunities were.

Nor did he mention anything about the economic damage wrought by runaway bandwidth fees and overage charges that Yukoners must cope with every month. One suspects the monthly bottom-line costs of Northwestel’s internet packages have scared away more investment than a not-even-annual day without bank machines.

Has the government considered that? Well, we don’t really know. The government has yet to release the agreement in principle with Northwestel, though it says it is “reviewing the agreement to determine if a request through the ATIPP office will be required.” This should have been done before the announcement, so that any proprietary data could have been redacted to satisfy Northwestel.

We do know that Northwestel says it will pay some $65 million to $70 million to maintain the line over the next 20 years, even though the YG will own it. But that doesn’t really matter, because Northwestel gets control over the line and any would-be competitors would have to pay Ma Tel to use it. You can bet that will never happen.

By the government’s estimation, the Northwestel proposal is superior to a proposed link to Skagway, that would have cost less overall ($34 million) but would have required $21 million in government capital. Alaska Power & Telephone, which owns an existing fibre line that connects Haines and Skagway, was eager to provide service to Whitehorse and provide badly-needed competition to Northwestel.

But the AP&T route had its own problems, including, the Juneau Empire reports, frequent earthquakes along the undersea portion of the Lynn Canal line. And there are genuine concerns about passing Canadian data through U.S. lines and becoming subject to draconian security laws.

Yet there were six companies who expressed interest in the South Klondike route and another company besides Northwestel who expressed interest in the Dempster line. The government says none of those other proposals passed muster, but, again, we can’t know the merits of the other options because the government won’t release the expressions of interest.

The South Klondike route may not have been perfect, but it would have opened the door to competition, which is a far more pressing concern for most internet subscribers. Consumers could decide for themselves if they were willing to tolerate the drawbacks of service that runs through the U.S. and the mere existence of another player would likely be enough to force Northwestel to reduce prices, increase bandwidth caps or explore some combination of the two in order to protect market share.

So the Yukon government has willingly signed a deal that expressly protects Northwestel from competition.

(Here is your periodic reminder that the useless CRTC still has not forced Northwestel to reduce its internet wholesale rates to a level that makes competition feasible. Some blame is also due to the federal Liberals — in a desperate hurry to shovel as much infrastructure money out the door as humanly possible — who were willing to pony up more funding for the Dempster line than for the South Klondike line.)

Nor will the government release Ranj Pillai’s briefing notes on the matter. This is permitted under the Yukon’s opaque access to information laws, a holdover from the previous government. But again, the Liberals, who would love to remind you they are not the Yukon Party, should have been ahead of this, and prepared the documents for release. Instead, obtaining those notes will require an access to information request, which the government will almost certainly censor at length, to be made public.

(It is a further flaw in the ATIPP Act that the government can refuse to disclose information that would “harm” business interests. The act is woefully vague and the public’s right to know how its money is being spent should outweigh those concerns. But that is a matter for another day.)

The Yukon Party backed this route three years ago, and are rightly questioning what the point of all this delay was, if the government was going to go with Northwestel anyway.

“Earlier this year Premier Silver guaranteed Yukoners that the work on this project would be done this summer,” Yukon Party chief of staff Ted Laking wrote in an email. “Yet we are halfway through the summer and not only is the work nowhere close to being done, it hasn’t even started.” (It doesn’t seem very conservative to directly subsidize a profitable monopoly, but there you have it.)

The Liberals will argue due diligence, but it’s not like there weren’t existing studies. The delay does mean that once construction is complete in 2021, the government will be able to count the $79-million line as an asset, making it easier to claim it is in surplus.

When the Yukon Party pulled this trick with the Dawson sewage plant in 2016, Klondike MLA Sandy Silver called it “not good financial accounting.” Now, it seems, such magic bean counting is fine.

Oh, also, the next territorial election must be held by 2021. But that, too, must be a total coincidence.

What the Silver government has done here is opt for the most self-serving path of least resistance imaginable.

It is a mistake to treat Northwestel as a benevolent partner instead of a predatory, rent-seeking monopoly designed to vacuum as much money as it can out of the North and send it to the good shareholders of Bell Canada.

Even with the benefits, the giveaway of $64 million to a highly-profitable monopoly amounts to a colossal missed opportunity.

Contact Chris Windeyer at