Yukon News

How much would you pay for internet redundancy?

Kyle Carruthers

Pointed Views Kyle Carruthers Wednesday March 1, 2017

How much are we willing to pay to complete a second fibre optic line connecting internet users in the territory to the world outside?

It emerged last week that the price for the Dempster Highway route has risen from an estimated $32 million — of which Northwestel would cover $10 million — to somewhere between $50 million and $70 million.

That’s a lot of scratch for a territory our size. The cost of the project could exceed that of the new F.H. Collins School or the combined cost of the Dawson City and Watson Lake hospitals.

It is sometimes hard to believe how quickly we have come to be so reliant on the internet here in the Yukon. My first experience with the “net” was in Grade 6, when my classroom at the then brand new Hidden Valley school was hooked up to other schools around the world via a glitchy and inconsistent connection to share simple text emails. Towards the end of high school more of us were online, but at the slow dialup speeds of the time, it was still of limited use for anything beyond simple web pages that took a long time to load.

Today, stable, high-speed internet access is essential for business and individuals. With cloud computing and exchange servers, more business data is being stored offsite, increasing the necessity of reliable service. We like to mockingly portray Yukoners who lose their internet for a period of time to addicts who can’t get their fix, but losing the internet for several hours or more during the business day as we periodically do can be a real productivity killer. Given the frequency with which our sole fibre optic line to the south is cut, establishing some sort of a redundancy is a legitimate issue for the Yukon government to consider.

But you can buy a lot of inconvenience for $40 million to $60 million worth of taxpayer’s money (I’m deducting Northwestel’s contribution from the total here). That is more than $1,000 for every man, woman and child in the territory. And unless we are serious about the whole idea of selling the Yukon outside as a home for server farms for big IT companies we may want to give a second thought to whether any of this is truly worth it — as dreadful as those periodic cable cuts can be.

I know this is probably a provocative, even heretical, suggestion for some readers. Those outages are extremely annoying.

And if you didn’t know any better, you might be forgiven if you believe that money literally grew on trees here — at least in the last 10 years as federal transfers grew in leaps and bounds. You might think that every time we dream up a new spending idea the finance minister grabs his step ladder and heads out to that money tree behind the legislature and fills up a bucket full of cash.

We, as the public, aren’t accustomed to doing rational cost-benefit analyses. It is the reason why projects like twinning the Alaska Highway through the capital or building a second bridge to Riverdale are actually given (somewhat) serious consideration.

But think about it another way: if Northwestel called you up one day and offered your family of four a deal — the guarantee of uninterrupted internet. No more outages. The price? A mere $4,800 to $7,200.

Would you take it? I doubt it. I know I wouldn’t. Most of us would keep the money and spend it on something more useful.

The problem is that we see government spending as abstract and remote. It is always easier to spend someone else’s money (even if it is, in a way, our own money). But I think that we need to do a better job as a territory of taking a step back and really considering whether particular projects are worth it. The next decade may not be like the last one fiscally speaking.

No, this isn’t a call for austerity or fiscal conservatism. I am just saying that it is too simplistic to determine that we want (even “need”) something and go out and buy it. That is the approach of the impulse shopper. Smart spenders and investors consider their “opportunity cost” — or what else they could spend that money on. And one could identify other areas of need in the Yukon.

I am still open to persuasion that the new higher price tag for a second fibre optic line is still worth it but, in light of this new revelation, would need to be convinced. After all, the internet works just fine 363 to 364 days of the year. Can we quantify the actual damage to the territorial economy each time the internet goes down for the day?

On the other hand, what opportunities are there for economic growth by building a more reliable internet connection? Are we actually being passed over as a destination for IT investment because of our inconsistent net access? Or is the whole idea another economic pipe dream?

Crucially, how much will the federal government be paying for? It is one thing to fund the project with new money coming to the territory but tapping into our own dwindling reserves is another matter.

Economic Development Minister Ranj Pillai, has indicated that “everything is on the table.” Among the options he might want to consider is whether the second line is worth it at all. A second fibre optic line — at a cost of at least $50 million — should not be that shiny new toy that we purchase on an impulse.

We need to step back and really consider if the cost is worth it, even if we really, really want it.

Kyle Carruthers is a born-and-raised Yukoner who lives and practises law in Whitehorse.

7 Comments

Doug Rutherford wrote:
6:44pm Friday March 10, 2017

I am far more in favour of providing the line via the new one at Skagway. That being said, I firmly believe that if any tax money is used to fund it, then it should not be turned over to Northwestel to manage, but rather run as a commercial operation by the territorial government. If it’s to be a profit generating project, why can’t those who paid the most be the ones who profit?

At home in the Yukon wrote:
3:36pm Wednesday March 8, 2017

You have convinced me of the opposite.  Please consider my math:
“if Northwestel called you up one day and offered your family of four a deal — the guarantee of uninterrupted internet. No more outages. The price? A mere $4,800 to $7,200.”  Let’s use the number $6,000.  Let’s amortize this over 30 years.  The service should last far more than 30 years.  We’re talkin’ $200 per year.  That’s less than $20 per month. 

However, the biggest problems I have with internet outage is that it hits at the grocery store and gas pump.  Suddenly credit card services are out.  I am sure that the grocery and gas pump would be prepared to pick up a lot of this cost.  I know, it ultimately gets passed on to the consumer, but so does the convenience of filling up with gas when the gauge says empty.

Not so sure, might be a good deal.

Alan wrote:
12:59pm Wednesday March 8, 2017

Again, asking a question in the title which is not answered in the body. It’s not a rhetorical question, it’s just a poor and inappropriate title.

Down with Northwestel wrote:
11:40am Wednesday March 8, 2017

Given that a CBC story featuring one business owner says he estimated he lost about $30,000 due to an outage, and the Whitehorse Chamber of Commerce alone represents 450+ businesses plus however many businesses represented by the Yukon Chamber of Commerce and the First Nations Chamber of Commerce, I think it’s fair to say the outage costs Yukon’s private sector at least a million dollars.

At the same time though Northwestel should be footing more of the bill; they aren’t a crown corporation anymore, the government should stop treating them like one and provide an environment for real competition.

Mike wrote:
11:05am Wednesday March 8, 2017

The money to fund the redaunt fiber will not be coming from the Yukon tax payers. The bulk will come from the federal government, so it’s all Canadians who will pay for it.

You should speak to busineses about how much money they lose when the internet is down. You should ask businesses how much productivity is lost.

The fiber up the dempster will also benefit the First Nation communities. If the fiber goes to Alaska they will be left out.

fINNIGAN wrote:
10:52am Wednesday March 8, 2017

I think you’re missing the cheaper option of joining in to the new line the USA brought up to Skagway. I believe the coast is around 12 million. I suspect the Gov’t isn’t looking at this option so they can maintain Northwestel’s stranglehold on the Territory. If we joined in with this line, it would probably allow competition.

Bill Polonsky wrote:
10:43am Wednesday March 8, 2017

Why does every conversation about internet have to wait for Northwestel? They have proved to be a dinosaur over and over again (911 service was a technological mystery to them).

I humbly submit that the Yukon needs a proactive partner in its quest for internet stability.  A Google/Amazon/Apple server farm set up in the Yukon might run cheaper considering our climate and the need to keep those big babys cool.

I am and I am sure a majority of the public are tired of hearing about Northwestel and its problems. Competition? It’s hard to be competitive when NWTel is attached to the public purse. Maybe its time to privatize NWTel for transparency or cut it loose from the public teat and revolving door policy with The Yukon government.

The future is now!

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