Ice Wireless ramps up in Far North

Even as some wireless upstarts continue to struggle in parts of Canada, a new entrant is getting ready to dramatically expand service in the most unlikely of places, the Far North.

Ice Wireless Inc. plans to launch its 3G wireless phone and Internet services in 10 communities across the three territories this September, with six more markets to be added next year. It’s a direct challenge to BCE Inc. subsidiary NorthwesTel Inc., which is the dominant provider of telecommunications services in the North.

The region is a notoriously challenging place in which to do business. NorthwesTel provides telecom services to 72,000 customers in 96 far-flung communities across about four million square kilometres of rugged northern terrain. Ice Wireless is betting that there’s room for another telecom company in the North.

Earlier this year, Iristel Inc., the owner of Ice Wireless and one of this country’s largest voice over Internet protocol (VoIP) service providers, started offering home and business VoIP services in the three territorial capitals.

While the demographic and geographic realities of the North are a challenge, Ice says it has also been hampered by technical challenges related to NorthwesTel’s aging infrastructure. NorthwesTel owns the fibre-optic lines and telephone switches that Ice must use. “It’s just been hurdle after hurdle,” said Samer Bishay, the president and chief executive officer of both Ice Wireless and Iristel.

Even relatively simple technical details, like number portability, posed significant challenges, Mr. Bishay said. In some communities it proved impossible, forcing Ice to rent phone numbers from NorthwesTel.

NorthwesTel has a $233-million modernization plan, which includes upgrades to equipment that will expand number portability. Nine of the 10 communities in which Ice Wireless plans to launch will have their infrastructure upgraded over the next two years, NorthwesTel CEO Paul Flaherty said.

The incumbent has also has promised to expand its Wholesale Connect service, which provides vital backbone connectivity to competitors, to all but one of the 58 communities that are connected to its fibre-optic network. The modernization plan came about after the federal regulator, the Canadian Radio-television and Telecommunications Commission, ordered NorthwesTel to start upgrading its network to allow competitors to enter the North.

That plan has yet to be approved by the CRTC, which is reviewing the regulatory framework that governs NorthwesTel’s operations. NorthwesTel’s parent, BCE Inc., also owns a 15-per-cent stake in The Globe and Mail.

“We’re moving forward with implementing the plan and I think there’s going to be a lot of good and exciting things for both our retail customers as well as our competitors,” Mr. Flaherty added.

Mr. Bishay said he’s hopeful the CRTC will also order NorthwesTel to lower its wholesale rates. He’s pushing for the regulator to open up the subsidy regime – NorthwesTel receives an annual subsidy to help lower the cost of basic phone service – to other companies. Last year, NorthwesTel received $20.9-million in government subsidies, according to the CRTC.

John Lawford, executive director of the Public Interest Advocacy Centre, which also took part in the hearings last week, said it’s likely the commission will take a more aggressive stance toward NorthwesTel. In 2011, the regulator chastised the company for failing “to make the necessary investments in its network,” while booking $69.2-million in profit.

“To have a regulator say that, especially these days, that’s a pretty clear shot across the bow that they are going to do something,” Mr. Lawford said.