'I'm really worried as a community service provider and as a customer that a Crown corporati

Qiniq: from high speed to no speed?


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.

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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