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Why yes, that is Prime Minister Stephen Harper riding a snow mobile in Frobisher Bay in Iqaluit, Nunavut on Thursday, February 23, 2012. (Sean Kilpatrick/THE CANADIAN PRESS)
Why yes, that is Prime Minister Stephen Harper riding a snow mobile in Frobisher Bay in Iqaluit, Nunavut on Thursday, February 23, 2012. (Sean Kilpatrick/THE CANADIAN PRESS)

Digital divide: The high costs of Arctic broadband Add to ...

When Peter Jackson was making The Lord of the Rings trilogy, his iPod racked up some serious frequent-flyer miles. The device journeyed around the world multiple times as the director shuttled music for the films between his home and shooting locations in New Zealand and his studio in London.

With the high cost of Internet bandwidth in New Zealand at the time, it was the only realistic way to move the data around. Over the course of production, Jackson sent 1.5 terabytes of data back and forth via courier. Each trip, carrying 30 gigabytes, took about two days. The process added lengthy delays to the production of the films, which would go on to win multiple Academy Awards.

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More than a decade later, Canadians and businesses in the north know the director’s pain. Poor services and especially high prices are interfering with their ability to join the rest of the world’s burgeoning digital economy.

“We’re in the same position,” says Kirby Marshall, president of Yellowknife-based IT provider Global Storm. “It’s nothing short of abysmal.”

Mr. Marshall’s company provides services and support for corporations and First Nations in the Yukon, Northwest Territories and Nunavut. With the cost of bandwidth prohibitively expensive across the territories, many customers are manually backing up their important client information by sending it via courier on hard drives, to be installed in data centres in Edmonton and California.

“If they have hundreds of gigabytes of data that they’re trying to back up, try doing that over a pipe where you’re paying $10 a gig,” he says. “Down south, what you take for granted with managed services and all sorts of stuff, up here a lot of people aren’t even using because it just costs too much money.”

Mr. Marshall’s frustration is typical of consumers and business owners in the north. In conversations with them, it’s felt most clearly in references to “us” and “you,” as in northerners and southerners. It’s the digital divide, presented in the clearest terms.

While the rest of Canada marches along into a digital age where steadily faster and cheaper connectivity is opening up new opportunities, the north is left limping along in a pre– Lord of the Rings era. With the vast distances and isolation they have to contend with, entrepreneurs including Mr. Marshall believe it’s a tragedy in the making.

In concluding its review of the situation last fall, the Canadian Radio-television and Telecommunications Commission found things to be dire indeed. Aging networks, service outages, prohibitive costs – the hallmarks of a neglected region. The culprit: a regulated monopoly by incumbent provider Northwestel.

The company, owned by Bell Canada Enterprises since 1988, has historically been the sole provider of Internet and phone services in the territories. In its review, the CRTC said Northwestel had failed to make necessary investments in its network despite receiving an annual subsidy of $20-million since 2007 to provide services in remote communities.

Over that same time, the company’s annual income from operations had nearly doubled, to $69.3-million in 2010. The company, according to the CRTC, had unjustly enriched its shareholders at the expense of the 100,000 people it had been charged with serving.

Prices remain startlingly high compared to southern Canada. Single business phone lines start at $63, while a 16-megabit home Internet connection costs $84. A business wanting the same will pay $200. In both cases, the upload speed – necessary for any sort of managed or cloud service – is low at one megabit or less, as is the monthly usage of about 70 gigabytes. Going over is prohibitively expensive, at $7.50 per gigabyte.

The commission was “concerned that this situation has likely affected the quality, reliability and choice of services available to customers, as evidenced by a number of outages in various communities and the lack of service options.”

The solution, it was decided, was to open the north up to competition. In May, the figurative doors were thrown wide. Other companies could come in, access Northwestel’s network and sell their own telecommunications services, similar to the wholesale system that has existed in the provinces for some time.

In response, Northwestel proposed a $273-million five-year modernization plan that would have seen much of its aging infrastructure updated and improved. The company planned to roll out 3G or 4G wireless in the 96 communities it serves and upgrade 79 of those to have wired Internet download speeds of at least five megabits per second.

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