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NorthwesTel scaling back network modernization plan
Smallest communities to lose out on enhanced services after rejection of BCE-Astral deal

Thandiwe Vela
Northern News Services
Published Saturday, Oct. 27, 2012

NORTHWEST TERRITORIES/NUNAVUT
The loss of the $40-million Astral component that was to go toward NorthwesTel Inc.'s network modernization plan for the North, will likely result in the smallest communities being shut out of the planned upgrades to telecommunications services.

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The smallest communities in the North might not see any enhanced Internet and cellphone services under NorthwesTel Inc.'s five-year network modernization plan, after $40 million in tangible benefits money that was planned to go to NorthwesTel's overhaul of Northern telecommunications infrastructure, went out the window with the CRTC's rejection of the acquisition of Astral Media by NorthwesTel parent company Bell Canada Enterprises. - photo courtesy NorthwesTel Inc.

The Canadian Radio-television and Telecommunications Commission (CRTC) this month denied Bell Canada Enterprises Inc.'s application to acquire control of broadcast entity Astral Media -- throwing out the possibility of $40 million from tangible benefits funding as part of the deal being channelled toward NorthwesTel's proposed $273 million modernization plan.

The fall-out of the BCE-Astral deal came as a surprise to NorthwesTel, said Paul Flaherty, president and CEO.

"We were hopeful that we were going to be successful actually, in getting access to the money," he told News/North. "Clearly, it's not going to happen so we need to think about how we're going to go forward."

The $273-million plan hinged on the $40-million Astral component, and would have provided every community in the North with improved Internet and cellphone services.

The company still plans to invest the remaining $233 million over the next five years, but is revisiting the original plan, to see how far the money can go.

"The reality of it is, we're not going to be able to do it all. Obviously, if you take $40 million out, there's things that have to fall off the table," Flaherty said.

"I think in all likelihood, it's unfortunate, but I think the smallest communities are the ones who will not see the enhanced services," Flaherty said, noting investments will likely not be made in communities where the revenues cannot support the infrastructure costs. "Some communities may not see any changes," he said.

The $273-million modernization plan submitted last July, was in response to a December 2011 CRTC ruling, requiring NorthwesTel to submit a modernization plan within six months, that would detail how the company plans to update what the commission described as an aging, and often unreliable, telecommunications network.

NorthwesTel will now be submitting a revised, $233-million network modernization plan to the CRTC, that does not include the Astral component.

The GNWT, and competing Northern telecommunications companies SSI Micro and Ice Wireless, were among the interveners who spoke out at the CRTC hearings over the BCE-Astral deal against the allocation of the public benefits funding going toward NorthwesTel's plan, arguing that the $40 million boost would be unfair to NorthwesTel's competition.

Opposition to the Astral component had little bearing on the denial of the $3.4-million Astral takeover, which came as a result of BCE failing to persuade the commission that the deal would benefit Canadians, an Oct. 18 decision stated.

"It would have placed significant market power in the hands of one of the country's largest media companies," stated Jean-Pierre Blais, chairman of the CRTC, referring to BCE acquiring Astral Media's 84 radio stations and 20 pay and specialty television channels. "We could not have ensured a robust Canadian broadcasting system without imposing extensive and intrusive safeguards, which would have been to the detriment of the entire industry."

With the Astral component off the table, NorthwesTel is still committed to making sure its existing services work properly, Flaherty said, but next generation wireless, such as the smartphone-capable 3G and 4G technology currently not available in communities such as Norman Wells and Fort Simpson, and next generation broadband, will likely not be rolled out to the smallest communities without the $40 million.

"The intent was every community was going to have access to next generation wireless and wireless broadband and that's the piece now with this $40 million coming off where we're going to have to scale our plans back," Flaherty said. "Unfortunately, we can't go everywhere but I think you will see that we will continue to advance the footprint of next generation services in the North so it's not like all is lost and the whole thing is dead. There is still a fair bit of money that we are proposing to put forward to this that will allow us to do a fair bit."

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