Northwestel ordered to justify wholesale Internet rates
CRTC directive could lower prices
Jessica Davey-Quantick
Northern News Services
Friday, November 25, 2016
SOMBA K'E/YELLOWKNIFE
People across the NWT might soon be in for a pleasant surprise on their Internet bills, according to SSi Micro Ltd.
Northwestel has been ordered by the CRTC to look at the price it charges competitors to use its infrastructure. SSi Micro Ltd. says if those prices come down, so too would the cost to consumers. - NNSL file photo
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The Canadian Radio-television and Telecommunications Commission (CRTC) has ordered Northwestel to look at what it charges for wholesale Internet. If those prices drop, Dean Proctor, chief development officer for SSi says customers could see their prices drop as well.
"If we have proper determinations, as opposed to some tiny little incremental drop, consumers should see very very quickly the benefits of that," he said.
Currently, Northwestel owns the only fibre-optic lines bringing Internet from the continental grid north to the Northwest Territories and the Yukon. This means competitors must first pay Northwestel for the use of its infrastructure before they can offer services to customers.
In a news release, SSi claimed Northwestel has been charging competitors wholesale rates up to 30 times higher than what similar services cost in the south, and several times higher than Northwestel's own retail Internet pricing.
"Northwestel is actually providing to itself those backbone services at a rate much much lower than they're charging to us," said Proctor. "And they're even selling to consumers at a rate much lower than they're selling to us as a competitor."
The CRTC ruling states Northwestel needs to back up what they charge to other carriers to use their fibre-optic lines. SSi stated in a news release it has done its own cost analysis and determined the actual wholesale price is seven to 10 times lower than Northwestel's current wholesale connect tariff.
These are costs, Proctor says, that get passed on to the consumer in the form of higher rates for services. In turn, he says this explains why SSi is one of the few telecom competitors left in the North.
"Five years ago the CRTC opened up all of the North to voice competition, so you could have a choice of local phone companies," he explained. "But you don't. There is no choice of local phone companies in the North, at least in the western arctic. And you have to wonder why that is."
He says the difference can be seen in the Eastern Arctic, where Northwestel isn't the sole provider of telecom infrastructure.
"We don't rely on Northwestel for anything in Nunavut. So when they don't control that vital input to us, that backbone transport, we're able to compete, we're able to invest, we're able to innovate," said Proctor. "If you have a monopoly and you're a telecom carrier, you have certain obligations not to discriminate against competitors. And that's what's been happening."
Northwestel has until Jan. 9 to file its revised rates.
In February 2013, the CRTC reduced Northwestel's wholesale rates by close to 80 per cent. In Yellowknife, this meant the rate for 100 megabytes went from $15,279, as proposed by Northwestel, to $3,762. After the price went down, residential Internet users with SSi saw their usage caps go from 8GB to 20GB at no additional cost. But in April 2013, Northwestel appealed that decision, and the CRTC softened their position, allowing Northwestel to only lower their rates by around 40 per cent, according to SSi. Three years later, SSi is still fighting to have those rates lowered.
Northwestel declined to comment on the issue of monopolies, but Andrew Anderson, director of communications with Northwestel stated in an e-mail to Yellowknifer the CRTC directive to look at their pricing is nothing out of the ordinary.
"Northwestel routinely provides detailed cost studies to the CRTC as part of the process of establishing a fair and reasonable rate for its regulated telecommunications services in the North," said Anderson. "With this decision, the CRTC is simply indicating that it is the appropriate time for us to update the cost study associated with our wholesale connect service."
