FORMER CABLE ATLANTIC OWNER, and current Newfoundland & Labrador premier Danny Williams is ticked off these days.
His government is getting strafed by daily opposition fire over the recently announced deal to bring another undersea fibre link from the mainland to The Rock. The $52-million project is backed with $15 million in provincial government money and will be built by a consortium of Persona Communications, Rogers Communications and MTS Allstream.
From what’s been published in the press out east, the opposition Liberals don’t seem to care about the project’s potential benefits – which are likely many – and are instead concentrating on the fact that Persona is headed by Williams’ former Cable Atlantic president Dean MacDonald and that Rogers’ eastern regional vice-president, based in St. John’s, is another former Cable Atlantic executive, Ken Marshall. It’s old-time cronyism, say the opposition politicians.
The deal had been percolating for months and was finalized and announced days after most phones in St. John’s went dead for hours on October 21st after a fire at an Aliant office. The complete lack of phone service for those few hours highlighted the utter lack of local wireline phone competition in Newfoundland and that incumbent telco Bell Aliant owns the only links on and off of the island.
The political battle has gotten progressively more absurd as the days pass and the provincial Liberals have gone as far as to suggest the $15 million kicked in by Newfoundland’s Conservative government went to pay for Frank Thomas, the new slugger recently signed by the Rogers-owned Toronto Blue Jays.
Here’s the thing though. When it comes to alternative local telecom companies, Rogers and Persona are basically it in the province. MTS Allstream came on because of its national focus and Aliant already has its network. "We asked everyone we could to participate in order to reduce costs," Persona CEO MacDonald told me Wednesday. "The three partners are the only ones who said yes."
The political problem for Williams – who apparently stayed as far away from the deal as possible because he knew what the optics could be – was just about unavoidable. As the long-time owner of Cable Atlantic, there’s likely no one in cable and telecom in Newfoundland with which he hasn’t done business with in the past. And to get the new fibre link off the ground – and into the Cabot Strait or wherever it will cross – the $15 million from the government was another requirement, beyond the $37 million being paid by the other three members of the consortium. Plus, the province will own a piece of the fibre and share in its profits (which is like its strategy when dealing with the province’s offshore oil riches).
While I hate dim political rhetoric such as the stuff spewing from NL Liberal leader Gerry Reid, it’s worth wondering whether or not it’s good government policy or good for the economy to get involved in telecom like this.
Newfoundland has some of the highest – if not the highest – rates for access to the fibre backbone to the rest of the world when compared to other provinces. One company owns that access. That’s not to say Aliant is gouging, because Newfoundland is an expensive province to serve, but a monopoly is an impediment to local phone competition.
And before this deal, there were no other telecom companies ringing Williams’ office asking to drop more fibre into the ocean. The population is small and Bell Aliant already has two cables. A third is an expensive build, but one that will drive down costs at the consumer level once complete, because for the first time, there will be competition for backhaul off the Rock.
There are only about 512,000 people in the province. So, $15 million works out to almost $30 for every person in the province. For the government, it’s money well spent for the "greater good," you could say: That is, more telecom opportunity and likely better prices through competition. And the new fibre trunk probably wouldn’t get built without the tax dollars.
(Alberta built its SuperNet with provincial government help, too and the province is the envy of most others because of it.)
All this got me thinking about the CRTC’s deferral accounts decision from earlier this year. That’s the one where the Commission has had the incumbent telcos overcharging customers for four years in exchange for not imposing a price cap on certain local residential services. There is now something like $650 million in those accounts, gathering interest. The Commission wants the money to be spent by the incumbents on improving rural broadband as well as bettering telecommunications access for the disabled.
Factor $650 million or so across all Canadians and you’re in the neighbourhood of the $30 per Newf that Williams has committed to spending. The $650 million is a lot of money that scares the heck out of some cable operators, but if spent wisely, it could be an excellent idea.
At one point, I was on side with giving the money back to Canadians, like those who have filed an appeal of the decision. but now I’m not so sure. I can’t see broadband getting to places like Indian reserves and other far flung or isolated places without such money. Like building another fibre line to Newfoundland, it’s not economical without financial assistance. And, I can see how bringing broadband to those communities would be of substantial benefit.
And having lived and worked in some small places, I’m sympathetic to the cause, too.
Broad policy is hard here because it’s truly a case-by-case thing. The telcos shouldn’t be allowed to spend that cash where an ISP already exists (which, in the submissions I’ve read, they’ve all committed not to do). At the same time, there is substantial support from isolated communities – such as Pelee Island – and the disabled for these funds to make broadband possible and their lives easier/better.
Is it a good idea as broad, overreaching policy? Probably not. Can it be a good idea to fill gaps that would never be filled otherwise? Certainly.
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