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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 ...

The CRTC’s review, as well as critics’ charges about outdated services and too-high prices, are off base, says president and chief executive Paul Flaherty. Such views don’t properly consider the “step functions” the company has taken over the years, such as its 2007 purchase or Northern Television Systems or its launch the same year of cellphone provider Latitude Wireless.

These were necessary moves to improve services, but they weren’t as easy for regulators to gauge as the presence of older network equipment in switch buildings.

“On the surface it was easy to see [problems], but there was no attempt to get underneath it and understand all the elements,” Mr. Flaherty says. “Those statements are misleading to say the least.”

Rivals don’t really know what they’re in for, nor are they prepared to offer the latest technology to northerners, he says. In Whitehorse and Yellowknife, for example, Northwestel wireless customers are enjoying fast 4G speeds while the only mobile data service Ice has managed to launch so far is itself outdated.

Mr. Flaherty also says Northwestel is the only company willing to service every community, 80 per cent of which have fewer than 500 people. Prices, meanwhile, are naturally going to be higher, simply because there are great distances to be covered and fewer customers to pay back on the investments.

“If I’m going out for dinner in Edmonton and I live in Whitehorse, I’ve got to get to Edmonton before I can go out for dinner,” he says. “That’s the issue with our services.”

Some observers begrudgingly agree, that the company is the only one with the size and scale to provide meaningful services. There is the worry that opening the territories up to new service providers may ultimately make things worse by introducing so-called cosmetic competition. With larger southern companies such as Rogers and Shaw seemingly unwilling to enter a market where a Bell-owned subsidiary is getting a big annual subsidy, a stronger regulated monopoly that’s more strictly overseen by the CRTC may be the way to go.

“Some small companies can come in and make some chump change and Northwestel can then use those people as an indication that they have competition and maintain their high price regime,” says Rick Steele, a researcher in Whitehorse. “The notion that there could be competition in those small communities is not real. Who wants to have six customers in Old Crow? Who’s going to compete for that?”

Ice Wireless, however, is taking the same tack being used in southern Canada by fellow new entrants such as Wind and Mobilicity: customer-friendly terms with low pricing. Ice is selling unlocked phones without contracts, with free incoming text messages and low calling rates. Mr. Zubko believes such prices will be hard for consumers to resist.

MR. Bishay also objects to the notion that he’s not interested in smaller communities. Iristel currently does business in smaller Quebec towns, such as Gaspe and Rimouski, while Ice is already servicing communities such as Bechoko and Iklavik, with respective populations of 2,000 and 700. Old Crow, with 300 people, is indeed on the radar.

“There’s no market too small to enter into,” he says.

The competitors would also like to see an opening up of the $20-million subsidy that Northwestel has been getting. Having access to those funds, they say, would allow for real competition to happen.

Whoever ends up getting the subsidy, northern residents and businesses stress the urgency of the situation. Without immediate action, the region risks being left behind in a permanent digital divide.

While Oscar-winning films may not necessarily be at stake, Mr. Steele sums it up succinctly: “You can’t do business on the Internet here.”

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