August 10, 2007
Qiniq: from high speed to no speed?
“I’m really worried as a community service provider and as a customer that
a Crown corporation is taking such a position”

JIM BELL

http://www.nunatsiaq.com/news/nunavut/70810_394.html


More than 3,700 users of Nunavut's highly-praised Qiniq high-speed
internet system will soon see their service deteriorate because of a
dispute that prevents technicians from repairing equipment located on
property controlled by the Qulliq Energy Corp.

The complex dispute is rooted in business deals alleged to have been made
as far back as 2000, involving the Qulliq Energy Corp., the Nunavut
Broadband Development Corp, and SSI Micro. SSI Micro is the Yellowknife
firm contracted to operate and maintain the Qiniq network on behalf of the
broadband corporation.
Darrell Ohokannoak, chair of the Nunavut Broadband Development Corp.,
speaks at an event held in Iqaluit this past March to promote the popular
Qiniq network’s need for more bandwidth to host new services they want to
run on their network. Those plans are now on hold because of a nasty legal
dispute with the Qulliq Energy Corp.
(FILE PHOTO)

It boiled over this past May 7, when the power corporation told SSI Micro
that its technicians are now barred from entering QEC property, which the
broadband corporation uses in 25 communities to house servers and wireless
base stations.

This means SSI Micro staff cannot conduct a $500,000, 25-site network
maintenance tour that was set to start June 15 and continue for 60 days.
SSI Micro is now stuck holding $300,000 worth of replacement equipment,
including new servers, that cannot be installed.

In a lawsuit filed against the QEC on June 13, the broadband corporation
alleges the QEC's actions jeopardize at least $15 million worth of
investment.

"Many, if not all of the 3,700 subscribers throughout the 25 communities
in Nunavut stand to lose all access to Internet Broadband service,
community by community, as system failures occur," the broadband
corporation's statement of claim alleges.

Those 3,700 customers include businesses, government and non-government
organizations, MLAs, and ordinary people, representing more than 35 per
cent of internet users in Nunavut.

The dispute also means the broadband corporation cannot offer new services
that could generate badly-needed new revenue, such as VOIP (a type of
internet-based phone service) and wireless hot spots at restaurants,
hotels and other places.

In addition to the June 13 statement of claim, the broadband corporation
filed a request for an injunction on July 5.

In it, they want the Nunavut Court of Justice to issue an order saying the
QEC must grant them unrestricted access to broadband equipment located on
QEC property, at least until after the lawsuits have been resolved.

It's not clear when the motion for an injunction will be heard. On July
25, the QEC's in-house lawyer, Calvin Clark, filed a statement of defence
and counterclaim against the broadband group.

In it, the QEC denies most of the broadband corporation's allegations and
seeks compensation of its own. None of the allegations contained in either
the statement of claim or the statement of defense and counterclaim have
been proven in court.

Meanwhile, broadband corporation employees and board members say they're
deeply disappointed by the QEC's actions.

"I'm really worried as a community service provider and as a customer that
a Crown corporation is taking such a position," said Bob McLean of
Sanikiluaq, who serves as the broadband corporation's vice-chair.

The broadband corporation is a non-profit coalition, made up mostly of
small businesses that provided various forms of internet access in the
past.

After forming in 2003, the broadband corporation built its Qiniq high
speed network in 2004 and launched it in 2005, financing the system with
grants from Industry Canada and loans from the Atuqtuarvik Corp. and the
Nunavut Business Credit Corp.

In 2003, the broadband corporation had selected SSI Micro from a group of
six bidders to operate and maintain the Qiniq network.

"We have invested millions of our own money into the Qiniq network and we
provide services to thousands of clients across Nunavut. The recent action
by the QEC has significant implications for the network and makes no sense
to me whatsoever," Jeff Phillips, president and CEO of SSI Micro, said in
a news release.

Allegations set out in the broadband group's statement of claim suggest
the dispute is likely rooted in an earlier joint-venture agreement - dated
April 1, 2000 - between SSI Micro and the QEC.

Under that deal SSI Micro was to have built a satellite network for the
power corporation in Nunavut's 10 largest communities, and the two
companies would split ownership of satellite equipment on an agreed
percentage.

But in 2003, QEC - which by then had run into financial trouble - told SSI
Micro they could no longer honour the deal. The broadband corporation
alleges in its statement of claim that "QEC failed to pay for all its
obligations" and "continues to remain liable for unpaid invoices and
costs."

To fix that, the broadband corporation proposed in 2004 that SSI Micro
give them its share of the old satellite equipment. At the same time, they
began negotiations for purchase of QEC's share of the same equipment.

Also under the proposed agreement, the broadband group would have entered
commercial tenancy agreements with QEC worth $1 a year for 15 years, for
each community broadband site located on QEC property.

But the parties were never able to set a final price for the old satellite
equipment, so a final deal never closed. In any event, the broadband
corporation now alleges those proposed arrangements are now legally
binding agreements because of certain letters written in 2004.

For its part, the QEC denies the existence of any legally-binding
agreements that may have been reached in 2004.

And in its statement of defence, the QEC alleges the broadband corporation
hasn't paid for its use of QEC assets, including: electrical and cooling
costs, space rental, labour costs, use of ground station equipment, and
connection services.

The Qiniq network has been widely admired as a model for providing
internet access to remote areas. In 2006, the Qiniq network was named by
the Intelligent Community forum as one of the top 21 "smart communities"
in the world that year.

And in 2005, the Conference Board of Canada said Qiniq may turn out to be
the best infrastructure investment ever made in Nunavut.


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