SOMBA K'E/YELLOWKNIFE - A Yellowknife-based Internet provider fears his company won't be able to keep up if the competition continues to offer cheap service packages.

"We're going to have difficulty. It'll be impossible to meet their plans," said Ryan Walker, CEO of SSI Micro.

He is frustrated because NorthwesTel is not only SSI Micro's competition, but they're also the business's only option as a service provider; NorthwesTel owns all cable transporting Internet transmissions in the territory.

Walker says Northwestel now has an advantage because they're offering significantly lower bandwidth rates for residential customers but they haven't cut prices for wholesale customers like SSI Micro.

Walker says his company can't offer competitive rates because they're paying NorthwesTel five times as much for the same wholesale service.

Walker calculates that NorthwesTel is advertising $1 per gigabyte but wholesalers, like SSI Micro, which purchase large quantities of bandwidth, continue to pay $5 for the same amount.

"They have one client, one connection, zero tech support, it's way cheaper to sell to me as a wholesaler than it is to other users," said Walker, referring to NorthwesTel's relationship with SSI.

"What boggles my mind is how they're able to sell to home users at one dollar a day when wholesalers are purchasing thousands for that quantity. How is that anywhere close to reasonable? It's not."

Walker said his company already pays a premium for transporting the service north that makes it six times more expensive than anywhere else in the country.

NorthwesTel unveiled a new rate plan for its home and small business Internet customers at a press conference in Yellowknife last week and have been advertising more bandwidth and faster connection speeds on their website.

The company is advertising that its rates for small businesses are going down 40 per cent. The changes went into effect automatically for existing customers on Sept. 1.

They previously charged residential customers $60 per month for 20 gigabytes of space when they also purchased cable. Now they charge the same amount for 60 gigabytes.

SSI Micro offers customers 10 gigabytes of bandwidth for $60.

Walker said that in order to meet these prices, his company would have to shoulder the $300 price difference.

"With the launch of these new plans, the gap has gotten so much bigger that it's not even close anymore," he said.

When asked about the price discrepancy, Muriel Chalifoux, director of carrier services at NorthwesTel, said comparing the two price plans is like comparing apples and orange.

Chalifoux said wholesalers pay for a different service than residential customers because they pay for sustained megabytes travelling on the network.

"We sell (wholesalers) something completely different. We sell them a big pipe to the Internet," said Curtis Shaw, NorthwesTel's vice-president of consumer and small business.

He said residential customers pay a flat rate per month and most won't even use their maximum bandwidth, so averaging out the price that way doesn't apply to residential users. He said 98 per cent of customers don't use more than 10 gigabytes of bandwidth, which he described as the equivalent of downloading 3,000 songs from iTunes in one month. He emphasized that NorthwesTel's new plan offers faster connection speeds, with bandwidth as a secondary benefit to the few customers who use it.

Chalifoux said that just because NorthwesTel is in direct competition with SSI for residential internet customers, it shouldn't prevent them from lowering prices.

"It's presumed that if there is enough competition in the market, the consumer protection happens naturally in the market," she said.

Walker said SSI Micro intends to restructure their pricing over time and for the meantime they're focusing on improving wireless connection speeds and maintaining personalized customer service.

He said he doesn't anticipate many residential customers being lured away by more bandwidth because, like Shaw said, clients only exceed the 10 gigabytes when they're doing massive amounts of downloading.

In the long term, the price change may become more of an issue.

"We haven't seen people flocking away and we don't expect to see that but … over time we couldn't compete."

Walker said he contacted NorthwesTel a month ago after seeing the price slashes advertised on their website. He said the company told him it was re-evaluating their wholesale price plan and he expects to hear back in the next few weeks. Chalifoux said the prices for wholesalers were reduced by 25 per cent one year ago and a further 10 per cent at the beginning of August. She doesn't anticipate another price reduction in the next few months.

SSI Micro provides residential internet service to customers in 56 different communities in Nunavut and the N.W.T. They have 28 people working in Yellowknife and more than 50 employees around the two territories.