Will oil price drop stifle broadband access in Western Canada?

Crude oil prices have plunged below the US$44 per barrel, and published reports today indicate oil could hover at US$43 per barrel early next year. This should provide relief to truckers, cab drivers and anyone else who can’t afford the high gas prices we’ve seen over the past couple of years. But the plunging petrochemical prices could have an indirect effect on broadband Internet access to isolated areas in Western Canada, if oil prices get much lower. The price of oil will affect development in the oil sands region of Alberta, which is one industry requiring wireless access for field workers. Media sources quoted Merrill Lynch this week as saying if prices fall below US$38 per barrel, then Canadian production could be cut by 800,000 barrels a day because some producers will no be able to cover their costs. So how could this affect broadband Internet? In some rural and isolated areas, the best way of getting broadband Internet service is through wireless. In its 2007 financial review, Telus Corp. stated; “Within the oil and gas sector, TELUS extended its footprint through significant investments in the growing northern Alberta communities of Fort McMurray and Wood Buffalo, expanding wireline and wireless networks, including TELUS TV, and securing several contracts.” Statistics Canada this week released revenue figures for September crude oil. It said domestic production was down 4.3 per cent from the same period in 2007. Statscan says a total of 43 per cent of crude oil production was from Alberta's oil sand, compared to 28 per cent in 2000. So if the price for oil craters and oil sands projects slow down (or get mothballed), it would stand to reason the companies would spend less money on wireless and wireline services. This would probably not affect Telus Mobility service. Its coverage map shows most of Alberta – save for the northeastern corner and a few pockets – already have third-generation coverage. But it stands to reason with the recent Advanced Wireless Spectrum auctions and WiMAX technology, more companies were counting on the oil and gas boom out west for business revenue. A major cutback of oil production could make or break the business case for emerging broadband wireless providers.

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Jim Love, Chief Content Officer, IT World Canada

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