The North is falling far behind on broadband, where ‘you learn to work within your means’

Following a special, two-day CRTC hearing in the North this week to discuss telecom competition, telcos and analysts say a lack of affordable and reliable broadband in many northern communities is starting to leave them far behind the rest of the country. “If you talk to people in the north, it’s a constant complaint of the egregious prices … and a lack of service,” Bill St. Arnaud, an independent telecom analyst, said in an interview Thursday. “It’s inhibiting innovation.” Right now, northern Internet services are primarily available from incumbent telco Northwestel Inc., a subsidiary of Bell Canada Enterprises Inc., and startup SSi Micro Ltd. Major markets like Yellowknife, N.W.T., and Whitehorse, Yukon, are typically connected by fibre optic cables offering relatively fast Internet services, but most remote communities use costly and often slow satellite broadband. After federal subsidies, a typical Internet subscriber in those communities pays about $60 a month for connectivity with average download speeds of 640 Kbps and upload speeds of 128 Kbps. Those customers are also capped at 3 GB of data usage per month before facing additional charges or speed restrictions. While this kind of connectivity may have sufficed when it was introduced five years ago, it can’t keep up with the demands of today's Internet applications and will only fall further behind unless prices are significantly subsidized, Jeff Philipp, SSi Micro founder and CEO, told The Wire Report in a telephone interview. “Nobody in the South would accept that as an Internet service anymore,” Philipp said. “Economic development is absolutely hindered by the fact that we do not have effective and cost-effective .” E-commerce, distance education, and online banking are some of the fundamental Internet applications already hampered in the North due to broadband conditions. As online activities consume more bandwidth, that list will grow, Oana Spinu, executive director of the advocacy group Nunavut Broadband Development Corporation, said. “As applications get more media rich and demanding of connectivity, it does limit the opportunity of the North to partake,” she said. Spinu recounted her time working for a northern production company, which mailed entire hard drives to partners in southern Canada instead of emailing files of edited videos. The reasons were entirely cost-related, she said. “People buy what they can afford, not necessarily what they want, because bandwidth is so expensive up here. You learn to work within your means.” Speaking to The Wire Report a day after a satellite glitch shut down Internet and long-distance phone services across many northern communities, Spinu noted how disruptive such situations can be to local economies. Although it was an “unprecedented” occurrence, Spinu noted that the satellite glitch had interrupted northern businesses’ abilities to communicate with partners and clients in the South, bringing some to a complete halt. The glitch also shut down northern banks and airports and forced retailers to accept cash payments only. “Yesterday’s blackout really highlighted the importance of broadband in productivity and just in workflow in general,” she said. Philipp agreed. “Economic activity absolutely is tied to communications, for sure,” he said. “Obviously, if you can’t do banking, if you can’t do payroll and communicate with your head office, if you can’t make phone calls, then you can’t have economic development.” Earlier in the week, Philipp attended a special two-day CRTC hearing in Yellowknife, N.W.T., where commissioners discussed, among other issues, the state of competition in the northern telecommunications industry. During that hearing, several parties came forward to criticise Northwestel’s effective monopoly over the regulated northern Internet and telephone service markets. Paul Flaherty, president and CEO of Northwestel, told The Wire Report just following the hearings that what is really needed is more cooperation, not more competition. He noted that while his company receives CRTC funding to service high-cost areas through the a federal subsidy mechanism called the National Contribution Fund, SSi Micro also received federally subsidized contracts to build a competing network in Nunavut. “What we’re really talking about is subsidized competition, where every party is subsidized to compete with each other,” he said. “If you put all of that cost into one network, couldn’t you create a more advanced network?” Northwestel now serves 96 different northern communities spanning across approximately four million square kilometres, with about 40 per cent of those communities served by satellite. If given the funding to do so, Flaherty said Northwestel would extend fibre lines to more northern communities and build more redundancies, or back up networks. Given vast stretches of land between communities, Philipp said fibre is “just not viable” throughout much of the North. SSi Micro serves 56 communities spread out across about three million square kilometres, which are home to approximately 60,000 people. Philipp said the best way forward is to provide lasting federal subsidies in an effort to lower satellite broadband costs. “For decades we’ve had subsidies for voice,” he said. “But really we don’t need a subsidy for voice anymore, we need a subsidy for broadband … for high speed connectivity.” Xplornet Communications Inc. is another satellite provider planning to break into the northern market, following its announcement of the creation of a 4G satellite Internet service in October 2010. Over the next year, Xplornet will launch two new satellites that will help bring increased broadband coverage to the North, Allison Lenehan, chief strategic officer at Xplornet, said in an interview. “As soon as we launch those, it means wherever we don’t have those two new satellites, we’re going to repurpose the capacity. In the North, for example, we’re going to repurpose those to give people faster, cheaper service.” Another potential source for improved communications infrastructure could be large mining and development companies that are taking up operations in the North, Flaherty said. A trio of mining companies working out of the Mackenzie River Delta-area collaborated to build a microwave communications facility. Although no communities were in nearby areas to take advantage of the new, short-wave infrastructure, “if there were, they would also benefit from that,” Flaherty noted. But a lack of infrastructure and high service costs can also deter investment, St. Arnaud said. He recently completed a contract work for a Denver-based mining company that wanted to high-speed connectivity for its operations in the North, and “they were just floored with the price,” he said. The government of Sweden once considered building an Arctic research station in Canada, he added, but concluded that the project would be too expensive. Earlier this year, a report prepared by northern management and communications consultancy Imaituk Inc., the Arctic Communications Infrastructure Assessment (ACIA), noted the difficulties associated with unreliable and costly Arctic telecommunications infrastructure. It warned that northern telecom services could impact the country’s ability “to establish and maintain Canada’s sovereignty, and to meet international obligations for ensuring safe passage for road, sea and air traffic.” The report said that investment strategies must ultimately account for changing technology and new services and devices. Among other recommendations, the report called on the government to “develop an Arctic-specific strategy with clearly defined rules, that articulates a sustained, multi-year funding commitment for communications network development to meet connectivity standards set by policy makers.” nkyonka@thewirereport.ca -- CORRECTION: An earlier version of this article incorrectly stated that Imaituk Inc. had prepared a report on behalf of the Arctic Climate Impact Assessment. The report, the Arctic Communications Infrastructure Assessment, was prepared at the bequest of the Northern Communications and Information Systems Working Group.

The North is falling far behind on broadband, where ‘you learn to work within your means’

News | October 7, 2011

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