SAWS Project Update

Important Update Concerning SAWS Project

Purpose

The purpose of this blog is to inform you that the ADnet South Algoma/West Sault (SAWS) Broadband Gap Filler project has been placed on “hold” awaiting clarification of recent funding policy changes by the federal and provincial governments. This action is due mainly to the uncertainty of the impact on subsidy funding caused by the announcement about the creation of the federal Broadband Canada program.

Background

On July 20, 2009 MNDMF/NOHFC staff implied in an exchange of communications with ADnet that the provincial criteria for broadband funding support was in a state of limbo as a result of the creation of the federal Broadband Canada program but did not provide a lot of details.

Unfortunately, to date Industry Canada has published only a general overview and loose guidelines for the Broadband Canada program with detailed information to be announced in the summer of 2009. While the Broadband Canada website indicates “…Program implementation will seek to ensure that federal investments complement, not duplicate, initiatives already under way” and “… will seek to identify those areas where expansion is currently planned by provinces/territories or the private sector in order to ensure the federal investment is complementary, not duplicative, to programs already underway” there is not a clear understanding by either the federal or provincial authorities I am in contact with exactly what these statements mean.

A major area that requires reconciliation is the differences in approach between the federal and provincial programs; Broadband Canada proposes to fund directly with broadband vendors while the province currently funds through a third party facilitator such as ADnet.

One change that did become evident on July 20^th was that since the announcement of Broadband Canada, the provincial funding program now excluded any areas identified as being part of the CRTC Deferral Account litigation currently before the Supreme Court of Canada (SCC). This meant that the West Sault broadband requirements had to be removed from the project scope as the total area was addressed in the Bell Canada CRTC Deferral Account submissions. (One can only assume that the decision to remove the Deferral Account areas is based on the presumption that the SCC will rule in favour of the Deferral Account program proceeding. It is not clear what happens if the SCC rules otherwise.)

The vendors were advised of the change by e-mail on July 24^th. On the same date, I wrote a letter to the NOHFC Executive Director asking for a definitive answer as to whether or not NOHFC would process a funding application predicated on the results of the RFP for the South Algoma/West Sault Area in light of the Broadband Canada program. A copy is attached. A preliminary response indicates that there may be a delay in the final response due to holiday schedules.

Until I receive a reply from NOHFC, the availability of provincial funding is in the air. If the province is not prepared to consider a funding application, then I am asking the vendors to expend a lot of resources for no purpose.

Under the circumstances I felt there were three viable options:

(1) cancel the RFP

(2) proceed as per the amended RFP scope but extend the due date to mid September to accommodate the scope change;

(3) place a “hold” on the RFP pending further clarifications; or

After consultations with the vendors and other advisors, I decide to adopt option (3) and place a “hold” on the project. Further action will depend on information provided by the federal and provincial authorities. This means the responses due on August 11^th are postponed and the there will be no evaluation panel held during the week of August 17.

I am extremely disappointed that it was necessary to take this action at this time but I felt it was the only fair option for all concerned. I will continue to monitor the situation closely and make adjustments as necessary.

On the positive side, my discussions with Bell Aliant indicate they are ready to move quickly if the SCC decision which is expected in September 2009 favours proceeding with the Deferral Account program. The West Sault area is part of the first tranche for implementation and could be completed within months of a favourable decision.

I will issue additional update as news become available or monitor the website at www.adnetalgoma.ca