Eastern Ontario broadband contract under fire as an incumbent ‘handout’

The new Eastern Ontario Regional Network (EORN) is bringing together public bodies and companies Bell Aliant (a subsidiary of BCE Inc.) and Xplornet Communications Inc. to establish a broadband network stretching across 13 rural communities by early 2014. But the contract to roll out the network is drawing fire from critics who say the process excluded small competitors and that it is a multi-million dollar “handout” to incumbent Bell Canada Enterprises Inc. The network is a project of the Eastern Ontario Wardens’ Caucus Inc. (a group of 11 Eastern Ontario counties and municipalities the City of Kawartha Lakes and the County of Prince Edward) and has an estimated total cost of $170 million. The wardens' caucus says the federal Conservative government and the Ontario provincial government are each contributing $55 million to the project (it is not part of the federal Broadband Canada Plan). The private sector will contribute approximately $50 million and the caucus will contribute $10 million to cover remaining costs. But the multi-million dollar contract, awarded in September 2010, is not without controversy. Mike Fiorini, vice-president and general manager of independent cableco and Internet service provider Cable Cable Inc., said the company bid on the contract in an alliance with others, but it was excluded as a stand-alone provider for its service area. “The way the RFP was written and the bonding requirements alone meant they asked that we get a letter of credit or company to guarantee the build. I spoke to several guys and they said, 'We don’t do that. It doesn’t work that way,'” Fiorini said. “The only way for someone to be able to do that is if they had their own construction crews, which Bell does.” Another industry insider, who asked not to be named, agreed, writing to The Wire Report by email that the contract is a multi-million dollar “handout” to Bell Canada. The insider said the contract is helping Bell roll out its own fibre network under the guise of an open broadband community network. Fiorini said the contract is another example of government-funded overbuild. “We are a regional cable operator in the City of Kawartha Lakes, and so far to date, we’ve been overbuilt twice on government initiatives, and this one is the third time. We already had the infrastructure in place that they are looking to build, and it’s going to be duplicated, and taxpayer dollars wasted,” he said. “Projects like this create unfair competition. We are at a competitive disadvantage. We want to build to an area that someone else has been given capital to do. We looked twice at it, and in that respect, it doesn’t cater to competition. It creates monopolies.” Pine said Bell was awarded the contract through a competitive request for proposal process. In an email statement, Bell Aliant spokeswoman Norma Hughes added that “Bell was awarded the contract to build the core network in what was an open and transparent process.” She added: “The core build involves some of Bell's existing fibre, the installation of some new fibre lines and upgrades to our switching centres, which serve the points of presence.” Bell Canada is currently rolling out fibre, mostly fibre-to-the-node, with an aim to make it available to four million households this year. The company is focusing its efforts on the high-density areas of Montreal, Toronto, and Quebec City. In a release issued in 2009, the regional and municipal caucus said the network will take two-to-three years to complete, but the high-speed, high-capacity fibre optic broadband network will link 13 communities from Durham, Ont. to the west of the province in Renfrew county. “As we understand it, our project is the only one of this scope and reach that has received the support of both senior governments anywhere in Canada,” the release said. According to a report by the caucus, the network will deliver broadband access to 95 per cent of Eastern Ontario’s population, and 85 per cent of the region’s population will have access to Internet speeds of up to 10 Mbps. The caucus says that, currently, 300,000 people in Eastern Ontario have limited or no access to the Internet. Jim Pine, co-leader of the caucus project and chief administrative officer for the County of Hastings, said in an interview that the network will connect nearly 50,000 square kilometers of terrain. “It’s moving along,” Pine said. “We’re on schedule and we’re on budget, which is really good news.” Pine said one of the project’s goals is to complete sections of the network and to “light them up” as the connection is progressively established. “People will start to be able to get access to this new network as we’re building it over the next couple of years,” he said. Pine said the entire project must be completed by the first quarter of 2014. Bell Aliant, which is rolling out a fibre-to-the-home network in Eastern Canada, will provide the gigabit backhaul for the network and Xplornet will distribute satellite service, Pine said. “Really, there’s three parts,” he said. “There’s this backhaul network that we need, and there’s 160 points of presence around the region. Then there’s the last mile contract, with wired or wireless customers, and satellite.” Pine added that Xplornet is the satellite provider because there are parts of Eastern Ontario that are very sparsely populated and have very difficult terrain. “We built into our project a component for satellite service to customers, for those folks who can’t get any other basic type of service or who would prefer a satellite service,” Pine said. Right now, he said, the network's first phase is 30 per cent completed. “We are well along in terms of building the first phase, which we call the gigabit Ethernet backhaul network,” he said, which he called “the big fibre optic pipes around the region that deliver raw bandwidth.” According to a network update report prepared by the caucus and released in January, more than 500 kilometres of new optical fibre will be laid to establish the network, which will have 41 fibre segments connecting 160 new points of presence. The caucus says each point of presence will possess an initial network capacity of 10 Gbps, which can increase to 100 Gpbs as demand for the service grows. Phase two of the project will include expanded access capabilities and satellite service to remote locations. The caucus says satellite customers will have access to service speeds ranging from 1.5 Mbps to 5 Mbps. Bill Macdonald, Xplornet’s senior vice-president of strategic business development, said in an interview that the satellite component of the project will help those who cannot be reached by wireline on the last mile. “The third component is satellite,” Macdonald said, “which is delivering broadband to the remaining, approximately five to seven per cent, residents in Eastern Ontario who wouldn’t be able to get access to the terrestrial last mile services because of very low density and aggressive terrain.” Macdonald said Xplornet’s first high-speed, or high throughput satellite, will be launched Oct. 19, 2011. A second satellite is scheduled to go up next year. “The new satellites bring greater speeds and capacity compared to current solutions,” he said “The satellite itself will support speeds of up to 10 Mbps for residential services and 25 Mbps for business services.” Macdonald added that Xplornet is also planning a rollout of terrestrial 4G WiMax services in the region. He said the company recently completed successful tests of its 10 Mbps service in the first zone of Embrun, Ont. dgrenier@thewirereport.ca

Eastern Ontario broadband contract under fire as an incumbent ‘handout’

News | October 14, 2011

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