A Yellowknife company thinks it can pull off a major advance for northern internet by building its own fibre-optic network from Alberta to the NWT in the next two years.
KatloTech Communications, or KTC, says its project to run a fibre line alongside the highway will bring jobs to the South Slave and create cheaper, more stable internet access.
Critics question whether the plan is feasible.
At the moment, Northwestel – a subsidiary of telecoms giant Bell – is the dominant internet provider in the North, holding ownership of the only fibre line connecting Yellowknife to southern Canada.
“We’re not here to compete with Northwestel,” KTC president Lyle Fabian told Hay River’s town council late last month.
“We’re here to open up the North to choice, to healthy competition.”
The first phase of the project envisages building a 310-km fibre line from High Level, Alberta, to the South Slave’s Kátł’odeeche First Nation, of which Fabian is a member.
Fabian said he was not able to comment on the project’s anticipated cost, how much investment KTC has secured, or which partners have signed on. He said the project is still in the planning and investment stage.
KTC does, however, have letters of support from companies like Microsoft, Blackstone Homes, and the City of Yellowknife. He hopes those letters will help secure private investment to finance the project.
Fabian told Cabin Radio he decided to publicize the project as the Covid-19 pandemic had made digital innovation even more critical, with NWT residents working and studying from home.
“What we’re focusing on from now until next year is bringing more knowledge of our project to communities like Hay River,” Fabian said.
Eventually, KTC hopes its project will grow into a fibre network spanning the NWT, northern British Columbia, northern Alberta, and the Yukon, connecting more than a dozen communities.
How will the project work?
If the fibre line is built, KTC will not supply internet to residents itself.
Instead, KTC will rent out space on its network to internet service providers who can in turn sell packages to northerners.
That’s similar to how Yellowknife’s SSI Micro currently leases space from Northwestel, or how Inuvik’s New North Networks leases space on the territorial government’s Mackenzie Valley Fibre Link.
A map shows KatloTech’s planned fibre-optic network. Click to expand.
KTC believes it can offer wholesale broadband space that’s cheaper than those options, and says it won’t enter into competition with internet service providers in the way that Northwestel, for example, competes with SSI Micro.
“What we’re doing is 90 percent of the heavy lifting where industry does not want to bring investment to the North,” said Fabian. “The return on investment for such a small customer base in Northwest Territories … is just not there.”
Fabian says KTC’s fibre line would be equivalent to Northwestel’s in terms of capacity, allowing what he called an “almost limitless” number of service providers to lease space, then sell packages to customers.
It’s too early to estimate the price of those packages, he said, but he expects more competition to mean prices across the territory fall.
“I’ve been waiting for a good 10 years for someone to do this,” said Fabian. “We just felt now’s the time, with our experience building fibre optic networks … let’s just stop waiting and let’s get this network up and going.”
‘Subsidized competition’ a threat
Tom Zubko, the president of New North Networks, called Fabian’s plan “aggressive” and “needed.”
“Lyle Fabian has worked for a long time on this concept. He’s got some really excellent partners supporting him and I think government should be looking really long and hard at how, number one, they support that project, and number two, how they make sure that infrastructure is supportive of competition rather than excluding competition,” Zubko told Cabin Radio.
“But the problem is not just having the infrastructure. The problem is having policies in place that are designed to support northern businesses and local businesses.”
Zubo wants the NWT government to throw its support behind a northern-owned business like KTC rather than Bell and Northwestel.
“We live in a business environment where one party is highly subsidized by the federal government and that creates a very uneven playing field,” he said.
“The problem is the threat of subsidized competition.”
Jeff Philipp, chief executive officer at SSI Micro, said he was unfamiliar with Fabian’s project and unsure of its feasibility.
“Maybe they’ve got a great business case that I’m just not aware of. So, do I think that I have one for building it myself? No. I think that it would be very difficult,” Philipp said.
“Could you build it across the North? It’d be foolish because we already have one. We just need a regulatory regime and a government that opens it up to competition, because Northwestel and Bell, frankly, are not interested in having competition.”
The last mile
Philipp said KTC would need to address the challenge of linking remote communities to a fibre line.
As an example, he used the Mackenzie Valley Fibre Link, which was completed in 2017 at a cost of more than $80 million. It’s a fibre line running up through the Dehcho and Sahtu to Inuvik.
Philipp said the territorial government built that fibre line with the same intention of leasing space to internet service providers. However, the cost of connecting “the last mile” – the distance between the fibre line and individual homes and businesses in communities – lies with the internet service provider, not the NWT government.
That cost is so expensive that few internet service providers are showing any interest.
In the legislature last week, Frame Lake MLA Kevin O’Reilly said: “For Fort Simpson, Wrigley, Tulita, Norman Wells, and Fort Good Hope, the fibre line runs past the communities. As I understand it, it will cost $1 million-plus to run the line into these communities. Without that money, the line might as well not be there at all.”
Finance minister Caroline Wawzonek, who holds responsibility for internet access in the North, replied: “The Mackenzie Valley Fibre Link is essentially the highway that makes it possible for these communities to have access to high-speed internet.
“We are the owner of that highway. We are not the Internet service provider, so we’re not necessarily, then, going to take it from the point of access and run the line into somebody’s home.”
Philipp worries KTC’s fibre line would encounter exactly the same difficulty. He says instead of a new fibre line, a better use of time may be to lobby the NWT government for fairer access to the backbone already paid for by taxpayers.
Redundancy for Northwestel?
KTC argues the situation is slightly different. Rather than running a line through the Mackenzie Valley like the GNWT, the company is proposing a line that runs along the same pathways as those already built by Northwestel.
Fabian says that could mean Northwestel becomes a customer, rather than a rival.
“We’d like to have Northwestel as a potential client for redundancy because they’ve they had their infrastructure cut numerous times and everybody suffered,” said Fabian, referring to multiple instances of vandalism to Northwestel’s fibre line in the past two years.
Hay River deputy mayor Robert Bouchard wryly remarked last month: “Depending on which side of the road the backhoe cuts the line, we’d have continuation of service. That’d be great.”
Since those summer 2019 disruptions to its service, Northwestel has said it wants to spend $25 million running a new fibre line under Great Slave Lake to provide redundancy. A Northwestel spokesperson this week said the company had no immediate update on its aspiration to develop that project.
KTC said it would do the same thing, eventually, in phase five of its plan – if it can get federal and territorial funding.
How will the fibre line be funded?
Getting access to that kind of money is a key problem.
Fabian said KTC has tried applying for all available federal broadband investment funds, but always loses out to larger, established companies like Northwestel and Rogers.
“So we decided to opt out of federal grants [for phase one] and raise money privately,” he said.
Fabian plans to use KTC’s letters of support to attract the attention of “investors that understand the long-term gain of infrastructure ownership,” where returns are measured not in years but a decade or more.
“They’re going to be in it for the long haul, for the betterment of Indigenous communities, and to create long-term and sustainable economic development in jobs in the North,” he told Cabin Radio.
The letters of support KTC has received focus on the importance of affordable, high-speed internet service to the North’s well-being and economy.
“Access to high-speed internet … provides access to education and drives innovative solutions to address societal challenges,” wrote Nuzio Ruffolo, a Microsoft Canada representative, in support of the project.
Mayor of Yellowknife Rebecca Alty wrote that a project like KTC’s is “a real area of need in our community.”
Alty continued: “It contributes to quality of life for our residents, is a key tool for growing our local economy, and is core to the operation of efficient government programs and services.
“The investments planned in your proposal will make meaningful improvements to speed and price, and having an unlimited option will be especially well received.”