Vancouver-based RuralCom Corp. appears to be betting that a number of small niche services can add up to more than the sum of their parts. The company has bid for only two eligibility points, requiring an $80,000 deposit. But its recent history suggests it’ll be choosing its geography with an eye to the underserved.
Incorporated in 2005, RuralCom is almost 70 per cent owned by CEO Robert L. Hillman, who didn’t return a number of calls requesting an interview. According to an application filed with Industry Canada made in July 2006, RuralCom tried for more than a year to make arrangements with Rogers Wireless to provide cellular services along the Alaska Highway corridor from Wonowon, B.C. to Beaver Creek in the Yukon. Rogers owns unused or underused spectrum in the area.
According to Industry Canada’s Policy for the Provision of Cellular Services by New Parties, from March 1998, a new provider proposing cellular service can ask Industry Canada to turn unused spectrum over if an area is unserved or underserved – that is, it has access to two or fewer carriers. (This applies only to cellular spectrum in the 900 MHz range, not PCS spectrum or the 2-plus GHz AWS range up for auction now.)
RuralCom is also demanding Rogers spectrum off the B.C. coast from Vancouver Island to Prince Rupert to serve the cruise ship market, and in a patch of Northern Ontario including the communities of Hornepayne, Manitouwadge and Atikokan and along several highways north of Nipigon.
Though Hillman told the Whitehorse Daily Star last year he hoped to have full commercial service up and running by June of this year, the applications are still under review, according to Industry Canada sources.
“Generally, it takes some time,” said Jacques Filiatrault, manager of spectrum services for the Northern Ontario district.
Hillman told the Star RuralCom planned to put $10 million into new equipment for the Alaska Highway corridor, which would be mounted on Northwestel towers. The plan would cover all but 32 kilometres of the roughly 1,600-km stretch, he told the paper.
The company has plans to serve 23 areas across the country, according to the paper.
Yellowknife-based SSI Micro Ltd. was founded in 1990 and became one of the first Internet service providers in the Northwest Territories. The company is run by president Jeffrey Arthur Philipp and operates as part of a larger group of companies owned by the Philipp family. As of January 2008, it was reported that SSI has just 17 employees.
While SSI put up only $80,000 as an auction deposit, giving them just two eligibility points to use in the bidding process, one analyst says the company might have aspirations for the entire Canadian North.
“SSI Micro can serve the entire Northwest Territories, all of Nunavut and the Yukon with its points,” Iain Grant, managing director at Montreal-based telecommunications consultancy SeaBoard Group said. “And it may even get access to the Fort McMurray, Alta., market, but we haven’t done that math yet. But if we were running the joint, we would.”
In recent years, SSI shifted its focus to specialized IT services ranging from local and metropolitan area networks, wide area networks, frame relay, satellite and wireless communications and DSL services. The company remains of one the largest ISPs in the Northern Canada, providing broadband access through wireless services to more than 60 remote communities throughout Nunavut and the Northwest Territories.
SSI was in the news earlier this year for an incident that had little to do with the spectrum auction. A Northwest Territories judge fined SSI Micro $150,000 last March for negligence in the deaths of two of its employees. The incident dates back to October 2005, where two SSI workers were electrocuted while erecting a 20-metre metal communications tower.
Thunder Bay Telephone (TBayTel) is owned by the City of Thunder Bay and acts as the largest telephone company in Northwest Ontario. It also operates Thunder Bay Tel Mobility, a member of the cross-Canada Mobility service family.
TBayTel’s primary interest in the spectrum auction, according to Grant, is to expand its service area beyond the city limits and into other parts of Northwest Ontario.
“TBTel has aspirations beyond the borders of Thunder Bay,” Grant said. “If you live in Northwest Ontario, your communities of interest would stretch from Nipigon/Geraldton, through to Ignace, Dryden, Atikokan, Fort Frances and Rainy River.”
Don Campbell, who serves as the chairman of the board of governors of Lakehead University, was appointed as interim CEO of the company earlier this year. For the impending auction, the municipally-owned telecom company put forward $960,000, which gives it 24 eligibility points to work with in the bidding. Grant said that 20 Mhz of spectrum in Thunder Bay equates to eight eligibility points and $358,760, 40 Mhz costs $717, 520, and 50 Mhz costs $896,900.
“You can see that TBTel would like to grab as much spectrum as they can in their home market,” he said. “They’d become the wholesaler of choice for any other carrier in the territory.”
Another sub-plot that could play out in some form during the auction is the public battle between TBayTel and Calgary-based Shaw Communications Inc., which is also bidding for spectrum. Last year, Shaw Cable announced its plans to bring telephone service to Thunder Bat to compete with TBaytel.
According to TBayTel, Shaw has a commercial agreement to use the Thunder Bay telecom company’s coaxial cable for video and Internet services, but it argues Shaw cannot use its cables to supply telephone services. TBayTel has filed an application to the CRTC to determine whether it will be required to let Shaw use its cable lines.