Defeat or Delay? Latest Round of SSi Micro Vs. Northwestel

The ongoing battle for more competition is all about third-party access, and timing

A decision this week from Canada’s telecommunications regulator denying SSi Micro access to Northwestel infrastructure has effectively halted SSi’s planned expansion into Whitehorse, and challenged its ability to compete in Yellowknife, at least for now.

“We’d love to get into the Yukon market, but the regulatory conditions have to be there,” Dean Proctor, SSi’s chief development officer, told EDGE. “Third-party access [to Northwestel’s internet cables] would give us an immediate in, as we don’t currently have the infrastructure in place… But if everything is tilted in one direction there’s no reason go in. It would be suicide.”

He didn’t go into much detail about how Monday’s decision would impact SSi’s competitiveness in Yellowknife, but admitted, “it’s more than an annoyance.”

Pushing for competition

In January, the Yellowknife-based company asked the Canadian Radio-television and Telecommunications Commission (CRTC) to allow them third-party access (TPIA) to the Northwestel-owned high-speed internet cables that run through Whitehorse and Yellowknife’s streets. They argued that forcing Northwestel to rent their cables to other companies would “significantly increase the competitive dynamic [in Yellowknife and Whitehorse, which would] … add value, choice and diversity to the local economy.”

As it stands, SSi has zero presence in Whitehorse. In Yellowknife, they purchase internet brought up from Alberta by Northwestel, then deliver it to their customers via a wireless network. This system works fine for delivering lower-speed internet. But because cables running the “last mile” to customers can deliver data much faster than wireless networks, SSi can’t compete in providing the kind of high-speed service needed by online businesses or gamers.

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SSi’s push for increased competition was supported by both the GNWT and the Yukon Government, who intervened on the side of the company. As the GNWT’s deputy minister of finance, Mike Aumond, wrote in a letter to the commission: “Northwestel has already indicated that no technical barriers exist to the provision of TPIA service, and the GNWT does not believe that any compelling reasons exist here to deny Northerners some of the benefits of competition that are widely available in Southern Canada.”

“We also weren’t asking for any new obligation,” said Proctor, claiming that Northwestel had already agreed to offer TPIA to competitors when they purchased the cables back in the mid ‘90s. “We’re only asking that they live up to the commitment they made.”

Northwestel, for its part, claims “there is no current general Commission policy requiring the introduction of TPIA by all broadcast carriers. Contrary to SSI’s suggestion, there is nothing that we have failed to comply with and must immediately remedy.” The company added that “the factual situation in the North shows that the costs of introducing TPIA significantly exceed its potential benefits.”

All about the timing

Even if Northwestel is correct about the benefits, the first part of their argument may no longer be valid following a landmark CRTC decision, issued only two days after the commission rejected SSi’s application. The decision granted TPIA to smaller internet providers across the country, except for those operating in Northwestel territory.

“It was pretty ironic,” said Procter.

Nonetheless, this larger TPIA decision might bode well for SSi in the longer term. The reason their application failed had less to do with Northwestel’s arguments, and more to do with bad timing.

According to the CRTC’s decision, “it would be premature to consider the implementation of TPIA service in Northwestel’s operating territory,” until the country-wide TPIA review was complete (which it now is) and until certain issues about funding and regulating northern infrastructure have been resolved. As the commission pointed out, Northwestel’s regulatory framework is already under review following a 2013 CRTC decision that capped the company’s residential internet rates and ordered them “to make some changes to reduce the disparity between the rates for the company’s Internet services and similar services in other areas of Canada.”

“The next review of Northwestel’s regulatory framework would be a more appropriate forum to consider whether mandating the provision of wholesale services such as TPIA service for Northwestel would be appropriate,” said the commission.

As the decision makes clear, SSi may very well get third-party access in the next few years. But in the meantime, the company is stuck dealing with the status quo.

“It’s still a bit of mystery to me,” said Proctor. “In light of Wednesday’s decision, I don’t know why we should wait until later.”


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