Ontario regional network contract defended as fair and transparent

The chief administrator of the $170-million Eastern Ontario Regional Network (EORN) is defending the network's contracting process as “completely public and transparent” amid criticism that was a “handout” to incumbent telco BCE Inc. “At the end of the day, we ended up evaluating the Bell/Bell Aliant as being by far the best value for the project and for the customers in Eastern Ontario,” Jim Pine, co-leader of the group leading the project and chief administrative officer for the County of Hastings, told The Wire Report in an interview. “It was very much a fully public and transparent process.” The EORN will connect nearly 50,000 square kilometers of Eastern Ontario terrain to Internet and satellite network services. But the awarding of the project’s first phase contract has sparked criticism from smaller companies that say they were effectively shut out of the request for proposal (RFP) process. Mike Fiorini, vice-president and general manager of independent cableco and Internet service provider Cable Cable Inc., told The Wire Report in a previous interview that the RFP process was geared towards large telcos—particularly Bell. “The way the RFP was written and the bonding requirements alone meant they asked that we get a letter of credit or company to guarantee the build,” Fiorini said. “The only way for someone to be able to do that is if they had their own construction crews, which Bell does.” Pine said the first part of the project, dealing with the fibre optic backhaul network, was awarded to a partnership of Bell Canada and Bell Aliant (a subsidiary of BCE) on Aug. 27, 2010, for $73 million. “The two companies together are putting in about $24 million towards the cost of the project,” Pine said. “The rest of it is being paid through our project monies that we have from all three levels of government.” The federal government and the Ontario provincial government are each contributing $55 million to the project (it is not part of the federal Broadband Canada Plan). The private sector is contributing approximately $50 million, and the Eastern Ontario Wardens’ Caucus Inc. (EOWC)—a group of 11 counties and municipalities as well as the City of Kawartha Lakes and the County of Prince Edward— is contributing $10 million to cover remaining costs. Pine said that, in terms of winning the contract, Bell and Bell Aliant put forward the best bid. He said when the municipal caucus' engineering team reviewed the bids, Bell and Bell Aliant came out very strong as the number one bid and offered the best value. Bell also made the best bid in terms of the number of points of presence, the amount of fibre that will be provided, and the backhaul network capacity that can be delivered. Independent technology analyst Carmi Levy reviewed the RFP and agreed in an interview that it set a very high bar for participation. It’s difficult for smaller telcos to be bonded at levels of 100 per cent for construction and then at 50 per cent for other stages of the project, he said. “It seems to eliminate from contention those smaller players who on their own, aren’t capable of achieving that level of bonding coverage,” Levy said. He said smaller or regional focused organizations do not have the resources to compete with larger telcos on that scale. “As a result, they are almost from the outset put at a distinct disadvantage because they’re not even allowed on the playground to compete,” Levy said. The request for proposal document drafted by the EOWC said that “the Contractor shall supply a labour and materials bond in the amount of 50 per cent of the construction contract price and a performance bond in the amount of 100 per cent of the construction contract price and otherwise on terms and conditions acceptable to EOWC Inc.” It also said: “The Contractor shall supply an irrevocable, unconditional (except for the awarding of the Contract), commitment letter from a surety or bonding company or acceptable alternative, conforming the availability to the Proponent and EOWC Inc. of such bonding.” Fiorini said in a follow-up email to The Wire Report that to fulfill the request for proposals, a company such as Cable Cable would have had to put its whole business on the block as a security. He noted that large public corporations such as Bell can offer security via equity or publicly traded stocks. In response to Fiorini’s comments, Pine said “there are absolutely no stipulations, from our point of view, on something like having their own contractors.” He said any company could have submitted a bid in the request for proposal process and that smaller companies could have got together in a consortium to place a bid. Pine said the multi-million dollar project has three parts. “There’s this backhaul network that we need, and there’s 160 points of presence around the region. Then there’s the last mile contract, with wired or wireless customers and satellite,” he said. He added that the EORN project is on budget and on schedule with 44 per cent of its first phase completed. “We’ve actually been moving it along quite quickly,” Pine said. “We have about 44 per cent of it done now. That’s building the fibre rings and the points of presence, are really off ramps from the super highway.” Pine said as of last Tuesday 61 of the total 160 points of presence were operational and 18 backbone rings were fully functional. The EOWC says 500 kilometres of optical fibre will be laid to establish the network in which 160 points of presence will be connected by 41 fibre segments. Phase two of the project will include expanded access capabilities and satellite service to remote locations, which will be provided by Xplornet Communications Inc. The entire EORN project is expected to be completed by the first quarter of 2014. dgrenier@thewirereport.ca

Ontario regional network contract defended as fair and transparent

News | November 15, 2011

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