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NorthwesTel files new plan to improve Northern telco services

The twilight of the midday sun lights the way down the main street in Inuvik.


Facing sharpened scrutiny from Canada's telecom regulator, NorthwesTel Inc. has revised its plan to upgrade communication services across the Far North.

NorthwesTel, a wholly owned subsidiary of BCE Inc., said Thursday its new modernization plan involves $233-million worth of investments over five years to provide northern Canadians with improved cellular, Internet and home phone services. The Canadian Radio-television and Telecommunications Commission had required the telco to file a revamped strategy by mid-January as part of a sweeping public proceeding that will examine how to overhaul antiquated telecom services across the North.

Among the highlights, NorthwesTel's revised plan includes a promise to deploy 3G (third-generation) wireless services in another 67 northern communities and to earmark more money for DSL and cable network upgrades in order to double Internet speeds in 58 communities. As for improvements to local phone service, NorthwesTel is planning to introduce "enhanced calling features" like call display to more communities, and will allow more northern residents to keep their existing phone numbers if they switch phone companies.

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Although NorthwesTel characterized its proposed capital spending as its "most ambitious investment in infrastructure to date," its proposals underscore the depth of the digital divide between northern and southern communities.

For instance, the introduction of phone number portability and call display are considered rudimentary services in the south, where a growing number of consumers are now getting rid of their home phones altogether to go wireless-only. Similarly, a further rollout of 3G wireless service in northern communities comes at a time when much of southern Canada is benefiting from the rapid deployment of more modern LTE (long-term evolution) wireless networks that are able to stream mobile video at breakneck speeds on the sleekest handsets.

The CRTC has previously said its goal is to ensure that northern Canadians, roughly 107,200 people living across the three territories, have access to communications services that are on par with those in the rest of the country. That's because the dearth of affordable telecom choices and modern networks across the North are seen as barriers to economic development and Arctic sovereignty – two key priorities for the federal government.

Paul Flaherty, NorthwesTel's president and chief executive officer, said the new modernization plan attempts to balance the CRTC's push for enhanced calling features with pent-up consumer demand for advanced Internet and wireless services.

"This is the biggest investment that we've ever made as a company," said Mr. Flaherty. "And I think it is probably the largest investment in telecom services in northern Canada."

The CRTC plans to hold public hearings on June 17, 2013, in Inuvik, and June 19, 2013, in Whitehorse. Last year, NorthwesTel had proposed a five-year, $273-million modernization plan, which included a now-defunct offer to spend $40-million from the tangible-benefits package that formed part of BCE's initial $3.38-billion proposed takeover of Astral Media Inc. The CRTC, however, killed the Astral transaction last fall.

Mr. Flaherty confirmed Thursday that BCE has no plans to resurrect that $40-million proposal as part of its new takeover offer for Astral. "It was a bit disappointing because our argument was that there is convergence. Many people are watching broadcasts over the Internet – being able to provide wireless broadband very much accommodates that, but the commission did not accept that argument."

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As part of its updated plan, however, NorthwesTel cautioned that the loss of that Astral funding dealt a blow to its proposed spending. Moreover, new "competitive pressures" and other factors have weighed on its revenue forecasts, raising the possibility that the company could need more than five years to fully execute the proposed upgrades. Moreover, the prohibitive costs of backhaul services in smaller and more remote communities are raising broader questions about the role of government subsidies.

"NorthwesTel filed a modernization plan last July that looked like a plan to maintain its monopoly market power indefinitely into the future with a lot of government funding to help it do that. We hope the new one will better recognize the role of competitors," said Samer Bishay, president of Ice Wireless and Iristel Inc., sister companies that compete with NorthwesTel in the wireless and home phone markets.

"We will be participating actively in the CRTC's proceeding, particularly with respect to changing the subsidy structure to be compatible with a competitive environment."

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