YELLOWKNIFE and GATINEAU – If the CRTC doesn’t change its mind on the wholesale rates Northwestel can charge its clients providing competing telecom services on its network, the company won’t be building out any more fibre, according to its CEO.
In an interview with Cartt.ca on Friday, Northwestel CEO Paul Flaherty said that the CRTC’s February 25th decision on the telco’s wholesale connect service set rates far too low, making it uneconomical to continue any of its fibre deployment program. The company has filed a Review and Vary with the Commission, asking the CRTC to rethink its decision and reset rates it believes are more reasonable.
“Today, we serve 58 terrestrial communities and 30 of those offered this wholesale connect service,” explained the CEO. “The challenge that we ran into is we had proposed pricing and the CRTC… reduced the rates we proposed by 70%. The problem it’s creating is they’re just taking away our entire business case to build any fibre ever again between communities.
“We were proposing to build fibre to Dawson City (YT) this year and it’s about a $3.6 million project. With the changes they’ve made to the rates, over the life of that plant and the demand that we expect, we should be able to recover about 10% of that cost and that’s it. So… it just makes absolutely no sense for us to go and invest in fibre,” Flaherty continued. “We will upgrade our microwave facilities and make sure customers have the bandwidth they need but it makes no sense with these rates for us to build fibre at all.”
The R&V doesn’t ask for a full return to the original rates the company was asking for in the first proceeding, either, offering in the document to decrease its original proposal by 45%. The company wants costs plus a 60% markup, rather than the 30% granted by the CRTC in February. It also wants the Regulator to recognize a higher fibre deployment cost than the decision stipulates.
In its reaction to the decision in February, Northwestel competitor SSi, one of the ones who’ll be paying those wholesale rates, was very pleased, claiming it the Bell-owned northern incumbent’s wholesale rates are up to 30 times higher than carriers in more southerly, populous regions of the country.
However, says Flaherty, “when you look at the cost of providing service that we have within our operating territory, to get fiber from the edge of our territory in the south to Whitehorse, and to provide some diversity for a portion of that fiber, we spent $60 million – and the population that that serves is probably about 35,000 people. So we’ve got very high costs.
“At one point when we were just looking at pure telephone services, the average cost for a NAS line in our territory was like $7,400. I think in Bell’s case it’s about $1,000,” he added, “and that’s just in investment of course. That’s not operating costs.”
Flaherty doesn’t yet know how the Commission will respond, or what it will do if the R&V is dismissed, but the company wanted to be very clear how offside it believes the February decision is. “As a result of the decision until such time as the Commission revisits it, we’ve pulled out all of the fibre – not the electronic – investments,” he added. “We thought about this long and hard, but we felt that unless we send a strong message, they’re not going to get it. We need them to make a change here, for sure.”
