EastLink raises red flag on telecom contracts in Nova Scotia, P.E.I.

Communications service provider EastLink is taking aim at untendered contracts that competitor Bell Aliant has inked with Atlantic provinces. Earlier this year, Bell Aliant announced it would spend $15 million to roll out its fibre-to-the-home high-speed Internet service, FibreOP, to more than 30,000 homes and businesses in Nova Scotia. The company said the provincial government is contributing $2 million to the project in the form of a forgivable loan. In late September, the government of P.E.I. announced that Bell Aliant would also bring FibreOP to the province. The provincial government is pitching in $300,000 to support workforce training and extending its existing phone-service contract with Bell Aliant to 2016. But rival communications carrier EastLink says the agreements are unfair because the governments didn’t run tendered processes for the contracts. “ on a path of awarding untendered contracts, and subsidizing the rollout of services by businesses where similar or better services already exist,” EastLink spokeswoman Jill Laing said by email. She said EastLink offers high-speed Internet services where Bell Aliant is installing FibreOP, and added that EastLink’s system is also based on the same fibre-optic infrastructure as Bell’s. But Bell Aliant spokeswoman Isabelle Robinson said the company isn’t getting special treatment from the governments. Robinson said Bell Aliant was operating within each provincial government’s guidelines when it made the proposals to the governments. “They saw merit in what we were doing and provided their support,” she said. Robinson added that there’s no comparison between Bell Aliant’s FibreOP technology and EastLink’s fibre-based service. FibreOP delivers fibre-to-the-home while EastLink’s fibre infrastructure only goes as far as the neighbourhood node. But Laing said EastLink’s system provides download speeds similar to and sometimes higher than those available via FibreOP. Toby Koffman, a spokesman for Nova Scotia’s Department of Economic and Rural Development, said in an interview there’s nothing stopping any communications service provider from approaching the province with an investment proposal. “In this case, the proposal had significant merit, especially with regard to job creation and return on investment,” he said. “We expect this investment will create several million dollars in tax revenue for the province, and put Nova Scotia at the leading edge of telecommunications technology.” Koffman said Bell Aliant will have to meet several benchmarks regarding job creation and complete the roll out by an agreed deadline for the $2 million loan to be forgiven. In P.E.I., Mike Currie, the Conservative MLA for Georgetown-St. Peters, is critical of the Liberal provincial government’s decision to extend the contract with Bell Aliant for government phone services. He said the contract supports an outdated, Centrex-based phone system that the former Conservative government intended to replace with voice-over-IP. “There are thousands of phones in the province belonging to the government, between our hospitals, schools and offices,” he said, estimating that the contract is worth millions of dollars. Laing said EastLink is more concerned about the P.E.I. government’s agreement to extend its contract with Bell Aliant than it is about the $300,000 in training funding the government is providing. “The ‘real money’ lies in the untendered … contract extensions. However, this is not about the amount of money,” she said. “At the heart of the issue is perceived government favouritism of any business in a highly competitive environment. It makes it less palatable and less attractive to invest based on a competitive telecom landscape of this nature.” Allan Campbell, P.E.I.’s minister of innovation and advanced learning, said in an interview that the extended contract saves the province money because it negotiated a lower price with Bell Aliant. He added that the $300,000 the province is contributing will go to training—not funding for the FibreOP rollout. Campbell added that Currie, former P.E.I. development and technology minister, also oversaw similar contract extensions. news@thewirereport.ca

EastLink raises red flag on telecom contracts in Nova Scotia, P.E.I.

News | October 19, 2010

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