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«Delivered to | Northern Communications Information Systems Working Group c/o Government of Yukon Delivered by | Nordicity Date | Foreword The Project ...»

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‘Contention ratio’ is the potential maximum number of users that use the network bandwidth concurrently. The higher the contention ratio, the greater the number of users that may be trying to use the actual bandwidth at any one time and, therefore, the lower the efective bandwidth ofered, especially at peak times. A 10% contention ratio was used in this study. Contention ratios are adjusted downwards as the cumulative number of users on the network increases from the community to the territorial level.

Table : Average of estimated backbone trafc – This Report versus ACIA Report

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Reliability No specifc standard for reliability is set in this study, as this service standard is more properly set in light of operational experience – post-engineering and post- build/implementation of improved connectivity. Reliability is also a function of the technologies utilized in the network, which in the case of the three Territories means that the reliability of one part of the network or community may vary a great deal. As such, no single standard would be appropriate to set, nor could it be measured in this study.

Redundancy Where no redundant link existed for a given community, redundancy calculations were based on the assumption that 100% of the projected bandwidth used for critical applications: health, justice / public safety and security would be included.

Service Quality Based on the analysis above, the following suggested minimum standards for bandwidth and

service quality were devised:

Bandwidth – diferentiated according to the characteristics (population, demand of user categories, simultaneous usage, platform(s), etc.) of the sector entity. The overall starting point service standard was 9 Mbps download and 1.5 Mbps upload. To be clear, this is the service package that would be subscribed to, NOT a guaranteed 24hr/day throughput guarantee. However, the physical infrastructure would generally support use of those speeds as needed;

Latency (two-way) – As diferent technologies exhibit great variation in latency, no specifed latency standard. While fbre optic sites will exhibit latency of 10ms, satellite sites will exhibit latencies of several hundred milliseconds;

Jitter (Packet Delay Variation) – 0.5ms average, not to exceed 10ms maximum jitter

more than 0.1% of time; and, Lost or dropped packets - 0.1%.


Our research indicated that the fnancial resources of stakeholders in the Territories were likely to be inadequate for the recommended network upgrades and that some outside funding of an initial capital investment would be necessary. This was expressed as the fnancial incentive required to attract existing operators and/or third party commercial investors to invest and operate the network.

Four scenarios were considered based on connectivity infrastructure improvements – as shown in the table below. The required fnancial incentive to attract the incumbent to invest in the upgrade and operate the network ranges from $547.23 million to just under $2 billion, depending on the scenario. In the scenarios without fbre builds, the required fnancial incentive is less than the primary network-upgrade CAPEX. In the scenarios with fbre-build options, the required fnancial incentive is more that the primary network upgrade CAPEX. The additional fnancial incentive would cover the present value of these future Free Cash Flow defcits.

In addition to the fnancial incentive, there would be a household subsidy requirement to ofset the higher cost of broadband. For the 2016-2023 period; this household subsidy is estimated to be $35.39 million or $4.42 million on an annual average basis.

Table : Financial Model Summary – Rolled-Up Analysis for the 3 Territories

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There is compelling evidence that the fnancial resources of stakeholders in the Territories are unlikely to be sufcient for the investment required to meet the recommended connectivity standards. Thus, it is likely that some outside funding of an initial capital investment would be necessary. Average incomes of northern residents - with the exception of the Yukon are lower and cost of living higher in comparison with the rest of Canada. In the focus group and survey research, front line managers indicated that territorial governments have limited fnancial resources even for connectivity improvements for delivery of government services. In the run up to the June 2013 CRTC Hearing, evidence fled indicated that NorthwestTel’s modernization plan would provide incremental improvement on current connectivity levels – nowhere near the minimum levels proposed.

Statistics Canada 2006 Census, Catalogue Number 97-563-XCB2006016

The initial capital investment required was expressed as the fnancial incentive required to attract the operators and/or other commercial parties to invest and operate the network. The implantation plan in Chapter 5 illustrates the action items for the Task Force to undertake for broadband in the Territories. The fnancial requirements outlined in this report will be a topic for consideration by the Task Force to fund broadband implementation.

The of upgrade to existing infrastructure with satellite redundancy was selected as the base case for reference purposes10 and correspondingly, the aggregate capital cost estimate is $765 million (capital costs). A breakdown for each of the 3 Territories provided in the table below.

Table : Costs to Upgrade Current Network Infrastructure by Technology by Territory using baseline assumptions (Mackenzie Valley Fibre exists, and carrying only high priority trafc on redundant links.)

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Designation of this as base case, does not preclude selection of other scenarios as a preferred option rather it simply refects the fact that this scenario would meet the minimal objectives of improving connectivity and providing redundancy while reducing the fnancial incentive required for the long-term sustainability.


Investment in enhanced broadband access is expected to generate signifcant economic and socio-economic impacts over the projected 2016-23 time frame as shown in Table below.

Without improved broadband connectivity in the North, the three Territories may lose potential growth and their ranking relative to other economies worldwide that are experiencing these positive impacts. As a result, the North might lose its competitive advantage in the global market, experience losses in jobs (migration of workers) and a decrease in quality of life (e.g., consumers will no longer gain utility via consumer surplus).

Economic Impacts Our assessment of economic impacts identifes changes in GDP, employment and consumer surplus while socio-economic impacts focus the transformative efects improved connectivity has on health, education and other social services which in turn will support cultural groups, institutions and communities.

Using an economic impact model and leveraging previous studies, the impact of enhanced connectivity10 on the GDP, employment and consumer surplus10 in each of the three Territories was estimated - as shown in the table below.

These estimates are projected totals from 2016 to 2023.

Consumer surplus is a measurement that assigns a monetary value to benefts that consumers experience when using a service or product – in this case, broadband connectivity. Consumer surplus is calculated using the consumer’s ‘willingness to pay’ for that service – that is, they assign their own monetary value on that service or product. The market determines the actual price the consumer pays for the service or product. The consumer surplus is thus the diference between that market price that the consumer actually pays, and the willingness to pay price.

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Employment In total, the expansion of the broadband services in the North (in accordance with the forecast in this analysis) is expected to create between 249 and 636 new jobs - depending on the connectivity investment scenario - in the North between 2016 and 2023.

Fiscal Impacts The fscal impacts analysis showed the tax revenue for all Territories that is tied to improved broadband. The analysis showed the that the NWT government will see the most tax revenue attributed the economic impact of broadband, at $22.3 million, while the Yukon and Nunavut governments see $9.86 million and $5.45 million in tax revenues, respectively for the 2016-2023 period. In total, broadband will generate $37.61 million in tax revenues for all the Territories between 2016-2023.

Consumer Surplus Across the three Territories, the annual incremental consumer surplus is forecast to range from $0.3 million to $11.6 million. Over the 2016-2023 period, the incremental consumer surplus is forecast to total $133.8 million in economic benefts for broadband users in the North.

Socio-economic Impacts Socio-economic (or ‘social’) impacts were identifed from our primary (focus groups, survey) as well as literature review. Consistent with benchmarking of similar projects in best practice jurisdictions, Impacts are generally expressed as indicators of improvements for society, like increased healthcare quality, better quality of education or enabling better quality of an employee’s work. However, as socio-economic impacts are generally the result of complex interactions of multiple causes, it is difcult to quantify the impact of a single cause such as enhanced connectivity on outcomes.

Government services Healthcare, education and justice - government agencies providing frontline services – were cited in the primary research as having the highest bandwidth needs and potential benefts.

Potential benefts are summarized as follows:

Healthcare – enhanced broadband would improve healthcare access and service quality. One critical advantage would be the ability of specialists from outside of the North to provide diagnoses in northern communities through remote access.

Correspondingly, wait times for diagnoses and treatment as well as transportation costs would be reduced.

Education – improvements are expected due to improved distance education, access to video-conferencing and access to course materials. Also reducing the amount of time to do research and improving educational outcomes by improving access to information.

Justice – Focus group research showed that currently, justice court circuits are heavily back-logged and an increase in the use of videoconferencing would contribute to reducing the load on the Justice system. Unfortunately, current connectivity available to the courts is limited and is unreliable. Enhanced connectivity would allow for regular video-conferencing among the parties: police, lawyers, judges as well as allowing for video-conference appearances for routine court appearances (e.g., for witness deposition, court sessions, remand, etc.). This would result in improved justice services and a reduction in travel costs.

Government–Improved connectivity would allow administrators (both support functions such as HR and fnance as well as personnel dealing with the public - to use more functions in current applications as well as new, bandwidth intensive applications. This in turn, would improve communications within government departments. There is also the potential for savings in travel costs for training and meetings.

Public safety and frst responders – enhanced connectivity and redundancy would ensure that frst responders had access to real-time videos, images, and other data as well as more reliable services in the event of a natural disaster or emergency.

It would also allow better contact with rural and remote access communities that currently rely on very limited satellite connections and/or even short-wave radio.

Businesses Small and medium sized enterprises (‘SMEs’) generate signifcant employment in the Territories and enhanced connectivity would mean more competitive businesses with the rest of Canada and the world. Arts and crafts and tourism - important to the economies and employment in the Territories - were identifed as two sectors that are where enhanced connectivity would provide important benefts.

Arts and crafts constitute the second largest occupation in Nunavut and is important in the Yukon and NWT. More reliable network connections and video-conferencing, etc. would enable contacts with material suppliers and buyers, collaborate design and production with artists in other communities and continuous learning. PEOPLELink – a direct video link between carvers and end-purchasers in global metropolitan markets enables artists to produce custom designed, on-demand, higher value art work, and retain a greater percentage of the profts locally and ultimately, increased sales.

In the case of outftters and the hospitality industry in the north – much like the benefts aforded by PEOPLELink – improved connectivity entails a host of economic and social benefts. The Tourism Industry would be better equipped with the necessary tools to communicate with potential clients, tour organizers, airlines, cruise ships and others in the travel industry necessary both for seasonal planning and on-going logistics. Enhanced connectivity would enable the Tourism Industry in the north to be more agile and respond to rapid changes in technology, and tourism market trends.

Large companies such as those in mining and other resources, transportation (shipping, airlines) and services (hotels), etc. often have their own on-site satellite communications. These companies are potential partners in the development of communications as long term clients that can share the costs of infrastructure improvements and new builds. In cases where mine sites are located close to existing communities, some large mining companies have made broadband connectivity used during working hours for business – available to those communities.

Northern Residents Quality of Life including Culture, Social Values - Enhanced connectivity has been shown to enhance quality of life in communities, allowing for access of outside resources for training and development, and enabling communities to cooperate in cultural initiatives and language preservation. One of the greatest benefts aforded by broadband connectivity to rural and remote communities is the ability to share in the experience of preserving their societal values and disseminating their culture to the rest of Canada – in other words, to those that have not had access to their culture before. Broadband connectivity can assist in creating a ‘cultural repository’, which is a goal of the elders in the northern communities but has been impossible due to bandwidth requirements.


Enhanced connectivity is critical to improvements to quality of life and economic development in the Territories. A comprehensive strategy for implementation and stakeholder engagement is just as critical as initial funding to the success of the project. This strategy - including recommendations on roles and responsibilities, process, deliverables and an action plan will provide the basis for sustainable development of connectivity in the Territories. The strategy is based on a joint federal and pan-territorial partnership and long term commitment to Arctic communications that would enable sustainable funding, adherence to common principals and development of innovative solutions adapted to territorial needs. The implementation of the strategy would require the formation of a Broadband Implementation Task Force with the necessary fnancial resources and functional expertise. The Broadband Implementation Task Force must also possess the authority and administrative capacity to administer RFIs and RFPs, as required, and then evaluate and act upon the accumulated information and proposals.

Based on best practices and accountability frameworks of the agencies cited above, four key

recommendations form the core of the Implementation and Stakeholder Engagement Plan are:

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The process fow for the Broadband Implementation Task Force as the Oversight and Gating Committees for selection and implementation of regional projects is shown in the fgure below.

Figure : Organizational diagram of Task Force and Regional Projects

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With the territorial governments as lead, the success of this project will depend on implementation and engagement strategies with key stakeholders, including businesses, governments, residents and the operator. It is assumed that the territorial government will take the lead in defning connectivity projects in order to ensure their citizen’s needs are met.

Furthermore, successful implementation depends on a fnancially viable model, predicated upon external fnancial assistance. As the committee structure and processes proposed here will be in place for multiple years, multi-year funding will be required to complete the tasks described. It is suggested that to ensure fnancial stability for implementation and stakeholder engagement, the federal and/or territorial governments will need to provide funding on a recurring basis.

As discussed in Chapter 3 (fnancial sustainability) and in Chapter 5 (implementation and stakeholder engagement), there is a critical role for the federal government and its agencies to develop connectivity in the Territories.

Without improved broadband connectivity in the North, the three Territories may lose potential growth and their ranking relative to other economies worldwide that are experiencing these positive impacts. As a result, the Territories might lose their place in the national economy, as well as a loss in competitive advantage in the global market, experience losses in jobs (migration of workers) and a decrease in quality of life (e.g., consumers would no longer gain utility via consumer surplus).

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