Bell consortium beats out Telus–Alberta leapfrogs federal gov’t in bid to bring broadband to every community

The Alberta government’s decision last week to award a $193-million infrastructure contract to a Bell Intrigna-led consortium and $163-million service contract to two Bell affiliates has given BCE Inc the network and customer base it needs to aggressively compete on the home turf of its biggest rival. "It’s a very significant step for us," Bell Nexxia president Randy Reynolds told Network Letter. "It advances our ability to deliver at wholesale and we think it’s going to substantially advance our ability to deliver services to businesses and government institutions as part of our retail product suite." The capital project, which will extend broadband Internet access to 420 Alberta communities within three years, also gives the government the infrastructure base it needs to build a high tech cluster that can attract major companies to the province. Lorne Taylor, Alberta’s minister of Innovation and Science, says the next stage in their infrastructure build will see fibre optic connections extended to Vancouver, Seattle and Silicon Valley. "We have some opportunities to move some business units out of some major companies in Silicon Valley to Alberta if we have those good connections," Taylor told Network Letter. "We are already talking to (Microsoft Corp and Cisco Systems) and I believe in the future we’ll see positive results." Not coincidentally, Microsoft and Cisco are also part of the Bell Intrigna consortium. Alberta’s new fibre network – dubbed Supernet – could be the largest and most advanced network of its kind in North America. The points of presence for speeds of at least 10 Mbs will extend from the current 30 POPs to 420, or about 90 per cent of the province’s population. Of the communities with broadband access, 95 per cent will be connected with fibre. More remote communities will receive a fixed wireless link. Communities with a school, library, hospital or government office will receive a broadband link. "I know of no other similar jurisdiction that has taken such a step to provide a minimum of 10 megabits per second to 420 communities and nearly 4,000 facilities," says Ken Hewitt, president of Netera Alliance, the Alberta university research network. "The closest comparison I would pick is Sweden (which is extending broadband to every home)." Alberta’s infrastructure build will cost $300 million in total, with the province footing $193 million of the bill and Bell Intrigna contributing the balance. Bell has also agreed to cover any cost overruns on the project. Bell Intrigna – a registered CLEC two-thirds owned by Manitoba Telecom Services and one-third by Bell Canada – and Telus Corp were among nine companies that responded to the province’s RFP in January. The government narrowed its choice to the two telcos, and in the end, decided to give it to a Bell-led consortium that includes Microsoft, Cisco, Nortel, 360networks, AXIA Netmedia, Total Telcom Inc, WiLAN and Netricom Communications Solutions. In return for its $193-million capital investment, the province will receive a fixed amount of capacity to each community the new network reaches. "They get rights-to-use for that system," says Reynolds. "So they don’t have to pay the typical services charges one would be paying in order to amortize the cost of the network." Reynolds says the government has also committed to spend at least $169 million over five years with Bell Intrigna and Bell Nexxia for a variety of communications services. The contract is for five years with an option to renew for an additional five years, he told Network Letter. Lower Internet rates for all In announcing the deal Nov. 2, Taylor said a key goal of the project is to ensure equal access for equal cost to all Albertans. Access costs under the new model are projected to drop dramatically. A rural business currently paying about $2,000/month for a 1.5 Mbs service would pay about $820/month with the new network. Residential users can expect to pay the same as people in urban areas – about $40/month. Libraries, hospitals and government offices will also benefit from lower rates since the provincial government will be the anchor tenant on Supernet (see box). Taylor says one reason Bell won the contract is because of its proposal to use a condominium model, which ensures open access to the network by any company, even Bell’s competitors. "One of the strengths of the Bell bid was the condominium approach," says Taylor. "The services are separated from the fibre optic strands. So any Internet service provider can provide services down that fibre optic strand. They can either buy the strands, or lease them on a long-term or on a monthly basis… It’s like a train track," he adds. "Bell owns the track, but anyone can run trains down it." Incumbent telcos haven’t always embraced the condominium model. Until recently, it was viewed as a direct threat to their legacy networks, and their traditional revenue models (NL, July 16/00). But as control of the network moves from the carrier to the end user, and as governments make open access a condition for winning large-scale infrastructure contracts, telcos like Bell have been quick to change their ways. The transformation is also receiving praise from Canarie Inc, which has been a vocal proponent of condo fibre and customer-empowered networking. In an email newsletter sent out yesterday, Bill St. Arnaud, Canarie’s senior director of advanced networks, described this condo fibre approach as a new way for delivering telecom services to outlying areas. Alberta’s announcement, he writes, points to a third way, "where government investment for Internet broadband service to schools and other public sector institutions can be used as lever to build open access condominium fiber networks that are available to all competitors. This levels the playing field and lowers the barriers of entry for new competitors, even in rural/remote communities." The president of Canarie’s Alberta counterpart agrees. "A shift to a fibre, condominium open access approach is a shift away from a vertically integrated service, where you provide infrastructure, electronic and data services as one package," says Netera’s Hewitt. "Some people would say the response by Bell of an open access fibre condominium approach represents a change in the traditional ways companies like Bell have responded to such RFPs." Alberta’s initiative will see broadband reaching communities a year ahead of the federal government’s promise to do the same by 2004. Taylor states that Alberta is going further than the federal government, which hasn’t announced programs or funding to back up its commitment. "All they’ve committed to is a task force," says Taylor (NL, Oct. 23/00). "They have not committed to any action. We’re not just talking about it, we’re actually doing it." If federal funding is put in place, , he says Alberta will be there to accept it. "We’ve already had very positive discussions with Industry Canada and we’re so far ahead (in Alberta) that we’ll be a ready receptor for federal dollars."

Bell consortium beats out Telus–Alberta leapfrogs federal gov’t in bid to bring broadband to every community

News | November 6, 2000

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