Yukon News

It’s time to break Northwestel’s internet monopoly

EditorialChris Windeyer Friday March 3, 2017

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It’s tempting to react with resignation to news that the estimated cost of a proposed fibre-optic line up the Dempster Highway has ballooned from around $32 million to upwards of $50 million.

After all, cost estimates are a notoriously fickle exercise, both in the corporate and governmental spheres. The best-laid plans of desktop studies for infrastructure projects tend to become quickly mired in the realities on the ground.

The thing is, apart from a few select souls at Northwestel and the Yukon government, nobody knows why the Dempster line’s projected costs have gone up. Neither the YG nor our esteemed telecom monopoly have seen fit to release a November 2016 engineering report outlining the details of the project.

There could be very good reasons for the price tag to potentially reach as high as $70 million, but that information has so far proved too sensitive or detailed for us unruly commoners. Northwestel has said it’s willing to release the report but is waiting for the government to give the all-clear. Economic Development Minister Ranj Pillai told the News last week he expected Northwestel to release a summary soon. The full report may not see the light of day because it contains proprietary information, which just shows the need for a public interest override in the Yukon’s access-to-information legislation.

It’s clear neither the company nor the new government really know what’s going on here. We only know about the new price tag at all because a Northwestel employee mentioned it during a community meeting in Fort McPherson, N.W.T., last month. The CBC first reported the figure, apparently without realizing it was new.

Last week, Pillai and Northwestel seemed to be at odds over the project’s status. The company said it’s seeking regulatory approval for the line ahead of time so it can be considered “shovel-ready” and Pillai accused them of getting ahead of themselves.

Meanwhile, Pillai has also met with representatives from Alaska Power and Telephone, who remain interested in a fibre link between the Yukon and their 138-kilometre Lynn Canal cable, which connects Skagway and Haines with the larger offshore fibre network. AP&T thinks it can offer wholesale bandwidth at a rate much cheaper than earlier YG estimates indicated.

All this has the makings of a difficult decision for the Liberal government. A 2014 report commissioned by the Yukon government put the cost of a terrestrial fibre-optic line between Whitehorse at Skagway at between $23 million and $36 million. The report also suggested $12.8 million to start up a non-profit company that would manage this hypothetical line.

The limitation of this option is that it does not offer the redundancy of the Dempster line, which would meet up with the N.W.T. government-owned (and Northwestel managed) Mackenzie Valley line, which terminates in Inuvik.

But even with Northwestel’s offer to pay $10 million towards the cost of the Dempster line, the remaining $40 million to $60 million would amount to a massive subsidy to a monopolistic telecom provider.

By its actions over the years, Northwestel has shown it is little more than an elaborate mechanism for hoovering money out of the North on the behalf of its corporate masters at Bell Canada.

Northwestel has fought like a belligerent drunk being kicked out of a bar against regulatory efforts to force it to lower the wholesale bandwidth rates it charges to would-be competitors. It still has no competitors in the Yukon. These two facts are not a coincidence.

Yellowknife’s SSi Micro, which for years has been fighting a pitched battle against Northwestel — and is actually the dominant ISP in Nunavut — is eager to break into the internet market in the other two territories. The Yukon has had local ISPs before, and could do again.

Linking with Alaska might deprive communities in north and central Yukon of full redundancy. But the line breaks that plague the entire territory usually happen in British Columbia, and besides, the bigger problem for internet customers here is not reliability but cost.

Northwestel’s inflated monopoly prices are a weight on consumers and businesses alike. In a perfect world, the Yukon and N.W.T. governments would expropriate the entirety of Northwestel’s fibre network and sell cut-rate wholesale bandwidth to any company — Northwestel included — that wanted to offer last-mile internet service.

(The odds of this actually happening are nil, since you can bet that Bell and Northwestel would immediately dispatch a battalion of lawyers to stomp the life out of any such radical notion.)

This idea might make conservatives understandably uncomfortable. But Northwestel began life as a Crown corporation, before being privatised into the hands of Bell’s corporate predecessors. It’s never really faced a truly competitive market. It is not a real capitalist organization, but a rent seeker. The market is so warped here that nationalization would actually force the creation of the free market that the toothless CRTC has failed to deliver.

The Dempster line is a white elephant in the making, and apart from Eagle Plains, would add nobody to the fibre network. The vast majority of Yukoners already have access to broadband. They simply pay too much for it.

The Yukon government’s top telecom priority should be to break Northwestel’s artificial monopoly. Our Alaskan neighbours are eager to do a deal. The YG should be eager to do one too.

Contact Chris Windeyer at .(JavaScript must be enabled to view this email address)

11 Comments

Evon De Yukon wrote:
11:40am Friday March 10, 2017

Send this garbage back to facebook. When did the Yukon News start filling their papers with ignorant nonsense? Maybe if the author learned to read a little more than he writes, our news would actually be informative instead of being filled with ill-informed ideas of a better market.

Max Mack wrote:
7:01pm Tuesday March 7, 2017

Mr. Windemeyer - I’m not really clear what you are asking for when you demand the break-up of Northwestel’s monopoly.

Northwestel owns the equipment, the software, the hardware, transmitters, the lines, the towers, the cables . . . you name it. So . . . do we force Northwestel to sell parts of its operations? All of its operations? Or, are you only referring to the second fibre-optic line?

Would there be a public-private partnership to own the assets? A Crown corp? Selected corps invited to bid? Or, an open bidding war on the forcibly carved off bits?

As for the Alaska offer, how would that end Northwestel’s “monopoly”? As-is, Northwestel would lease from the Alaska outfit and we, the consumers, would still be stuck with a monopoly on our end. Wouldn’t we then be paying for both Northwestel and the Alaska outfit to take a profit?

I agree with your sentiments about Northwestel - their behaviour has been monopolistic, and demonstrating that they are more than willing to suck as much as they can out of a captive market.

But, I’m not convinced that “breaking up the monopoly” will bring lower prices, stability, faster service or improved coverage. More hands-in-the-pot might just make everything more expensive, with nothing else substantively changing. There are multiple well-known examples of where breaking up monopolies has ended very badly for consumers.

ProScience Greenie wrote:
4:24pm Saturday March 4, 2017

The Dempster line will be nothing but a money pit with millions flushed down the drain. Anyone that’s been in the north for awhile knows that. Not releasing any detailed cost estimates is a sure sign of that. Money aside the project makes zero sense. Walk away from it YTG and don’t look back.

The Alaska line has a lot more merit and worth further study.

As far as this editorial goes, a wee bit of ranting but it is mostly deserved. Overall it is a good piece. Thumbs up.

Anonymous wrote:
2:26pm Saturday March 4, 2017

The editor taking his personal vendetta against Northwestel from Twitter to the Yukon News. No surprise there. Unethical, but no surprise there.

Gigabye wrote:
11:50am Saturday March 4, 2017

I won’t comment any further ,but, I guarantee no matter who does the work it will not be cheaper and eventually they will be the target of your editorial.

Riptide wrote:
11:29am Saturday March 4, 2017

Well said S.Pink. Everyone seems perfectly happy getting the benefits that come from living here (wage, tax,etc) but are awfully quick to bitch about how some of the services also cost more. Wait… services will cost more when employees of said company also get paid the same higher wages and such that many others up here also enjoy?  Shocking I know.

Honestly I think the hate for Nwtel is two fold. 1) historical from when rates where a lot higher and they were apparently gouging customers. However, that having been well before my time you’d think people would get over it and live in the present. 2) that because they constantly see the prices that Rogers, Shaw, etc charge and forget where they choose to live.

Yukon wrote:
8:45am Saturday March 4, 2017

This article is spot on. Nwtel is only adjusting the costs of its estimate due to the CRTC ruling and it is outright thievery.

The Yukon NEEDS a second option, if we as taxpayers are going to pay for a fiber link and allow a private company to collect the profits from it, then we as tax payers should have a choice on whether or not a monopoly is perpetuated in order to do so.

I call for sandy silver to put this issue to referendum and allow the people of the Yukon to dictate their own future when it comes to internet access.

Shovel pink wrote:
8:01pm Friday March 3, 2017

I can’t believe it!

Number one: You are taking extra amenities because you live in the north and life here is more expensive, like northern tax deduction, travel allowance, free health insurance and GST refund. You are taking it. Period. But when it comes to spending it for services provided in a vast area under harsher conditions than down south you wine. Go down south then!

Number two: I wish Northwestel’s services would be cheaper. But I chose to live here. And the market is small. And big companies like Rogers and Telus just don’t f… care about us. They don’t want to pay to bring in the infrastructure. They. Don’t. Care. About. Us.

Number 3: We are talking only about Whitehorse now, right? You egoist! Even if a different provider shows up here will they serve the other communities? They will grab the money and not more. Northwestel does serve the whole north as far as I know. I am convinced we pay for that. Is that unfair? Well then I suggest Ottawa stops their money transfers too, because it must be unfair too then to let the rest of Canada pay for the roads in the Yukon and whatnot.

Rowdy R wrote:
5:40pm Friday March 3, 2017

Frank and Gigabyte: where is the editorial wrong? Please provide specifics.

The contention that Northwestel has been an “excellent corporate citizen” is debatable, but either way is a red herring in a debate about whether the Inuvik extension is in the best public interest of Yukoners, and for that matter, whether we as a jurisdiction should continue to invest public money into a regulated, monopoly corporate interest.

Gigabyte wrote:
5:03pm Friday March 3, 2017

The is article soundless like a objective opinion and more like the rantings of a wronged ex .Comments like   ‘’ Northwestel has shown it is little more than an elaborate mechanism for hoovering money out of the North’’ OR ‘‘Northwestel has fought like a belligerent drunk being kicked out of a bar’‘. you mumble on about scenarios through Alaska like you know something engineers , the CTRTC and various contractors overlooked.He decides cost is more important than reliability?Really the next time there is an outage and you can’t see how many likes your bias articles haven’t got .Everybody becomes an expert telecommunication planner from behind the safety of their keyboard .Northwestel has been a excellent corporate citizen and is and continues to be active in the growth of the North .But I guess instead of being CEO of Bell its just easier to sling mud .

Frank wrote:
4:31pm Friday March 3, 2017

Good to see that trolls are getting their own full-page opinion pieces now. Another nwtel hater with 0 actual knoweledge. Troll on brother !

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