Northwestel
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Northwestel (a short-form name, sometimes spelt NorthwesTel, for Northwest Telecommunications) Inc. is the incumbent local exchange carrier (ILEC) and long distance carrier in northern Canada.
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[edit] Modern corporate history
Northwestel was established in 1979 by its owner, Canadian National Railways, spinning off the "northwest" operations of Canadian National Telecommunications (which is not to be confused with CNCP Telecommunications, a joint venture that CP Telegraphs and CN Telegraphs formed). The Newfoundland operation was, the same year, spun off as Terra Nova Tel (TNT). TNT was later purchased by Newtel Enterprises and merged with Newfoundland Telephone in late 1988.
Northwestel was sold to Bell Canada Enterprises (parent of Bell Canada) on November 1, 1988. Since then, Northwestel has become a direct subsidiary of Bell Canada, although still regulated (by the CRTC) separately from Bell Canada, with its own method of regulation: rate of return. Most companies in Canada have a method of regulation -- price regulation and a split rate base -- that is appropriate to the highly competitive environment in which they operate.
The company's original service territory was the entire Yukon, plus parts of northern British Columbia, and the western portion of the Northwest Territories, including the Kitikmeot Region, Nunavut communities of Pelly Bay (now Kugaaruk), Spence Bay (Taloyoak) and Gjoa Haven. On July 1, 1992, the service territory of Bell Canada in the NWT was purchased by Northwestel, bringing the entire north under a single company.
A CRTC order in 2003 transferred a small section of Alberta, that had no telephone service, to Northwestel's operating area, as it could better serve the location from Fort Smith than could Telus due to isolation and network cost. Fort Fitzgerald residents initiated the process by appealing to the CRTC; service was installed at the end of 2005, delayed as the Regional Municipality of Wood Buffalo demanded ongoing access payments for installing the telephone lines, initially at a rate far in excess of the revenue that would be generated by a very small number of customers.
The 2003 order had the effect of eliminating an anomaly - Northwestel already had some customers in Alberta adjacent to Fort Smith, though not as far from Fort Smith as Fort Fitzgerald.
[edit] Origins
[edit] Pre-World War II
The earliest telephone service in the territory was in Dawson City, established during the Klondike Gold Rush of 1898. However, this system was not linked into the North American phone network until the 1960s, barring any short-wave radio links. This independent company, Yukon Telephone Syndicate, was purchased by CNT from Northern Light Power and Coal Company of England in 1962 and a dial telephone system was installed later in the 1960s to replace the 1901 magneto board. Robert W. Service was one of the few Dawson residents able to afford telephone service during his residence in Dawson prior to World War I.
At least one other independent company was established in Whitehorse, Yukon, Whitehorse able to trace its service back to 1900. The Mayo Utilities Company was established in 1920, providing telephone, electricity and water in Mayo and Elsa/Keno. It was sold in 1942, and the owner sold off the electric and water operations and joined it with the Whitehorse company to form the Yukon Telephone Company.
The Royal Canadian Corps of Signals established long distance shortwave communications stations in the north prior to World War II.
[edit] World War II
In 1942, the United States Army erected the first terrestrial long distance system in the form of a pole line along the Alaska Highway. Components normally taking months to build were assembled in weeks.
Although limited in capacity, it served after the war as the backbone long distance network that linked Whitehorse with the south, and provided ring-down magneto phones to highway establishments.
This US Army system was turned over, April 1, 1946, to the Royal Canadian Air Force (RCAF). In 1948, the RCAF turned it over to the federal Department of Transport (DOT), which contracted the operation to Canadian National Telegraphs (CNT).
[edit] Post-war development
Other independent companies were established in Yellowknife, Northwest Territories in 1947, Fort Smith, and Hay River, Northwest Territories in the late 1950s. These systems were all purchased by CNT during the 1961-1964 period.
The Yellowknife independent company, its formation begun in the spring of 1947 with a buy-in of $50 per share, has its own colourful history. In order to obtain the franchise, they needed to have 100 telephones operating by December 31 at midnight, but by early December had only 15 connected. They rushed by putting five or six phones in some homes. The inspector attempted to call 100 numbers and received 100 answers, although only a quarter were functioning properly. Service was problematic, with many unhappy customers, and up to ten people were partied on a line. By 1958, the Yellowknife company's service improved, with 700 phones hooked up.
During the 1950s, one of the major shareholders in Yellowknife, Jim Mason, learned that there were second-hand cables for sale from a Stewart, B.C., company. The owner had died and his brother, the executor, not knowing much about the company, accepted an offer of $1000 for the cables, to be shipped by the executor. The cables arrived at a desperate time, long after they were expected, allowing an upgrade of the lines, and turned out to be worth $35,000.
In October 1958, CNT purchased the Whitehorse-based Yukon Telephone Company, and also purchased the DOT system outright. From there, it began to develop a complete public telephone exchange service in the Yukon.
Whitehorse converted from partial dial to full dial service on October 31, 1960. After this date, local communities' ring-down phones were replaced with local exchange service, using surplus central office switches that could be acquired at a relatively low cost. Most of these switches were Ericsson Rurax switches that during the late 1970s were modified to enable direct dialing of long distance calls, though without Automatic Number Identification. The Ruraxes were mostly replaced in the mid-1980s with modern solid-state digital switches, though the last Rurax remained in service in Swift River until 1987.
The three local independent companies in the NWT were connected to the CN long distance network by 1961, and additional locations in 1962 as CN extended its telephone service mandate into the vast NWT (by this time, Bell Canada was operating in Frobisher Bay in the east). In July 1961, CN purchased the Hay River Telephone Company; on 31 December 1963, CN purchased the Yellowknife Telephone Company (at $250 per share), and in May 1964, CN purchased the exchange in Fort Smith.
By 1975, the company was known as Canadian National Telecommunications.
The original pole line along the Alaska Highway was overbuilt by a modern analog microwave line that was completed in 1962. Like much of the northern long distance infrastructure, a long-term government contract was required to make the cost affordable, in this case, United States military need for a reliable link to its Alaska radar stations. The CNT link joined Alascom microwave facilities with Alberta Government Telephones (now Telus) microwave facilities. Other US government contracts with CNT resulted in tropospheric scatterwave facilities being installed to link up Distant Early Warning Line sites, along a line stretching from Barrow, Alaska to the east side of Greenland, with a scatterwave antenna in Hay River, NWT. These troposcatter facilities were also later used to carry civilian long distance circuits until satellite facilities were implemented in the 1980s.
The microwave system on the Alaska Highway was inaugurated with a phone call from Prime Minister John Diefenbaker, visiting Whitehorse, to President John F. Kennedy in Washington, D.C.. Later that year, the line's worth was proven in the Cuban Missile Crisis. With the possibility of a nuclear strike by the USSR, the phone company hurriedly dispatched radio technicians to each site, often on a lonely mountaintop, to be ready to restore service in case of a failure. This route was upgraded to modern digital microwave technology in the early 1990s.
Direct Distance Dialing (DDD) was first introduced in 1972, just 21 years after its initial introduction in Englewood, New Jersey, and 14 years after introduction to Canada at Toronto and Montreal. DDD became available on all but a handful of exchanges by the spring of 1980.
The pole line remained until the early 1980s, being used for multi-party line service for rural telephone customers, who are now served by point-to-point radio connections for their telephone service.
The company's corporate headquarters were transferred from Edmonton to Whitehorse in 1980. Operations have been diversified with Yellowknife being another prime center for the company.
[edit] Modernization
CN inherited a mixture of switching technologies, some dial exchanges (Whitehorse, Yellowknife, Hay River, Fort Smith), some manual exchanges (Dawson City). Most settlements had no phone service or only one or two lines from a larger center. Dial telephone service was ubiquitous by the end of the 1960s wherever a local exchange was established.
Microwave installations similar to the Alaska Highway route and others in southern Canada replaced outdated or overcrowded pole-line systems on routes paralleling the Yukon's Klondike Highway, and highways in the Northwest Territories, as well as a mammoth pole-line along the Mackenzie River to Inuvik that was only in service from 1968 to 1973. Satellite relays replaced Tropospheric scatterwave systems to DEW-line communities such as Cambridge Bay and Spence Bay, improving signal quality immensely.
Manual mobile telephone service, using VHF frequencies, were introduced by the company along all major highways, the Mackenzie River valley and additional off-road regions, during the 1960-1990 period.
Further improvements in the 1990s eliminated "double-hop" relays between two satellite-served communities, halving the transmission time for a satellite as much as 26,000 miles away over the equator. Nevertheless, bad atmosphere conditions can still skip satellite signals out of the atmosphere for far-north points where the antenna points horizontally across the ground. (The effect is similar when looking at an oar in the water, and the oar appears bent.)
Until the 1980s, Northwestel's current operating area (including the Bell Canada area it acquired) was characterized by north-south communications and transportation links. Airlines flew mainly north-south. Highways such as the Alaska Highway and the Mackenzie Highway were routed north-south. Telecommunication lines and tropo links routed north-south, following the natural transportation corridors.
As a result, the area's low requirements were met by long distance switching as part of southern area codes - 403 in the west and 819 in the east. The Yukon was also covered by 403, not 604, since its lines were handled, prior to Direct Distance Dialing, by operators in Edmonton, Alberta. The northern British Columbia locations were served by area code 604 so that there would be uniformity of dialing codes within that province.
In 1997, the single area code 867 was introduced to replace 403 and 819, although the British Columbia locations, by now serviced by 250, remained on 250. The inauguration of 867 signaled a truly trans-northern communications network that was finally capable of routing calls across the north without having to route through the territories of southern telephone companies.
A Service Improvement Plan (SIP), similar to ones implemented by other Canadian telephone companies, extended basic levels of service to more of the north during the four years starting in 2001.
Unlike southern phone companies, Northwestel occasionally must decommission exchanges and facilities in previously active communities that are ceasing to exist. Past communities served by Northwestel that have vanished include: Pine Point (1988), Port Radium (1982) and Tungsten (1990), Northwest Territories; Little Cornwallis Island, Nunavut (2005); Clinton Creek, Yukon (1978); Bearskin Lake, B.C. (2004). Nanisivik, Nunavut, is the matter of a current proceeding before the CRTC; Cassiar, Yukon is a shadow of its former self. Other communities have been added and then deleted in a short space of years: McDame Lake, B.C.; Ketza River, Yukon. Elsa survives as a rate center only because it was eclipsed by relatively stable Keno, which is served by the same exchange.
[edit] Subsidiary operations
Northwestel Cable is a wholly owned subsidiary of Northwestel. Originally approved by the CRTC to provide cable television in numerous communities across the north, the timing was poor as DTH satellite services became available; Northwestel Cable was unable to subscribe enough customers to make systems viable except in Norman Wells; the company also purchased the system in Yellowknife. In 2005, Northwestel Cable purchased the Fort Nelson, British Columbia system and upgraded it for digital and internet. In August 2006, the system in High Level, Alberta was also purchased and is to be upgraded for digital cable and internet.
Northwestel introduced a form of cellular telephony in 1987 with the Aurora (Automated Roving Radio) system (400 MHz band) developed by Novatel and widely used in Alberta. It was available in limited areas, and although intended to replace most of the VHF manual mobile telephone service, the widespread deployment of cellular service (800 MHz band) across southern Canada rendered the Aurora system obsolete, despite Aurora's superior geographic reach. The Novatel system was manufacturer discontinued, and, not being Y2K compatible, was discontinued late in 1999.
800 MHz cellular technology was introduced in 1993, though with far less availability than Aurora in the Yukon and Northwest Territories. The cellular operations were, soon after, spun off as Northwestel Mobility Inc. (NMI). In 2003, NMI was sold to Bell Canada Mobility, leaving Northwestel as strictly landline and VHF manual mobile provider.
Northwestel is now in a joint venture with the Dakwakada Development Corporation (an arm of the Champagne-Aishihik First Nations) in Latitude Wireless deployment of cellular in all Yukon communities other than Whitehorse.
[edit] Unique service area
Northwestel's service area is uniquely recognized by the Canadian regulator, the Canadian Radio-television and Telecommunications Commission (CRTC) as being entirely a high-cost serving area, characterized by the most severe climate, extremely low population density, the smallest communities to use expensive fixed assets such as exchanges, no all-weather road access to 44 of 99 communities, and terrestrial long distance networks only to 48 of the 99 communities.
As an example of the low population density, the area of Kluane National Park in the southwest Yukon, which has an adjacent population of less than 1,100, is roughly equal to the area around Toronto and Hamilton, Ontario, which has some four million people. Northwestel's operating area is one third of Canada's land mass, but only 1/300th of Canada's population. Other phone companies serve much smaller territories and have cities of hundreds of thousands of people. Telus and Bell Canada have cities and urban regions in excess of two million population.
As a result of these factors, long distance competition arrived some nine years later than in the rest of Canada, and local competition is still not allowed. In addition, the CRTC recognized the need for external supplementary funding to sustain the company with competition, since it was viewed as essential that Northwestel remain in business to provide basic phone service to all communities it now served.
The external subsidy allows the company to offer a long distance plan, to all communities in its operating area, with a rate of 10 cents per minute for calling within Canada during off-peak hours. Without the subsidy, this low rate could not be offered. The Carrier Access Tariff (CAT) rate is also subsidized at just 7 cents per minute, and a lower CAT rate would require even greater subsidy; other Canadian companies can offer lower CAT rates without subsidization. In addition, the "toll connecting trunks" (portions of the long distance networks that connect local exchanges to the long distance exchanges) are unusually long, and are regarded as part of monopoly local, requiring external subsidy to sustain. Circuit charges are also priced well above cost in order to cross-subsidize non-profitable services such as monopoly local.
Considering the difficulties of the operating area, Northwestel provides a fairly modern telecommunications network, including a basic level of such features as Call waiting, dial-up Internet, Call Number Display in 59 of 92 communities, and, in the largest centres which are still smaller than Bell Canada's fair-sized towns, video conference services. More advanced features, such as Name Display, are not available, and long distance transmission of Call Number Display is limited to just 14 communities. They also provide cable services, as "TheEdge", with television and DSL Internet in some communities, many of them with government assistance). As NetKaster they also provide Two-way Satellite Internet access to Alberta and parts of the NWT and Nunavut and planned expansion in British Columbia, Saskatchewan, Manitoba and Yukon.
The CRTC initiated a proceeding on 17 January 2006 (Telecom Public Notice CRTC 2006-1) to review the regulatory framework for Northwestel, with an expected decision for a new framework to go into effect in 2007. The CRTC will examine moving Northwestel from rate-of-return regulation to price regulation, or a transitional regime. It will also examine the possibility of local service competition (and under what conditions), possible split of rate base between competitive and utility, further SIP proposals, and status of long distance competition and the setting of the CAT rate.
The strongest opposition to the proposal by Northwestel came from Telus. The proposal envisions a substantial increase in supplemental funding in order to shift from an implicit subsidy (circuit charges far above cost) to an explicit subsidy (charges closer to parity with elsewhere in Canada); there would also be a major cut in the 7 cent-per-minute CAT rate to a new toll connect rate lower than one cent per minute, again replacing an implicit subsidy with an explicit subsidy through supplemental funding. Consumer groups expressed concern about the price-cap regime, suggesting continued regulation. Various groups expressed concern about the unknown long distance rate reductions, as for competitive reasons, neither Northwestel nor the CRTC could disclose the specifics.
To date, no decision has been rendered, but it is expected early in 2007, according to an interim order issued on 6 December 2006 that allowed the first raise in basic network service rates since 2001 (residence customers face an increase of $2.00, equal to 1.11 percent per year over six years).
- See also: List of Canadian telephone companies
