Northwestel Inc. president Paul Flaherty says the company is having to make a serious shift in future upgrades because of a recent CRTC order.

Northwestel has asked the Canadian Radio-television and Telecommunications Commission to reconsider its Feb. 25 order regarding how much the company can charge competitors to buy room on its network, Flaherty explained in an interview last Friday afternoon.

He said the company is cancelling the $3.6-million extension of its fibre optics cable between Stewart Crossing and Dawson City which had been scheduled for this summer.

The company also plans to cancel up to $35 million in fibre upgrades across the North.

"With this decision, there is no economic benefit for us to go forward with fibre,” Flaherty said.

The CRTC, he said, has to ensure the rates are low enough to encourage competition, but not so low they discourage investment.

If Northwestel went ahead with the Stewart Crossing-Dawson extension, Flaherty said, it could only recover 10 per cent of its cost with the rate the CRTC has imposed for its wholesale connect service.

Without a change in the rate, Northwestel will drop about $40 million in the expansion of fibre cable that was part of the overall $233-million, five-year modernization plan for the entire service area, he said.

In its April 11 application to have the CRTC review the order, Northwestel wrote:

"Simply put, these rates are too low, and have already caused Northwestel to cancel all of its planned fibre builds in 2013 and suspend any plans for future fibre builds contained in the Modernization Plan.

"As a result, Northwestel will invest in other types of technologies instead of fibre, because the company faces less risk in recovering its investment.

"The company submits that the Wholesale Connect Service rates established in Order 2013-93 cannot stand,” the submission goes on to say.

"These unreasonably low rates threaten the business case for any future investment by Northwestel in fibre-based transport facilities.

"These rates also undermine the company's ability to make the planned capital investments in its transport network as contained in the Modernization Plan.”

Flaherty said in the case of Dawson City, the company will go ahead with the necessary upgrade to its microwave service to stay current with the needs of its customers, though it simply won't have the same capacity as fibre optics.

The CRTC has failed to recognize the cost of the fibre installation, and how it reflects Northwestel's need for a higher rate of revenue than down south, where the fibre optic infrastructure has been in place for much longer, he said.

Flaherty said improving fibre optic service in the south means upgrading the hardware at each end of the cable.

In the North, it still means digging trenches and connecting communities, but the commission hasn't recognized that cost, he said.

Years down the road, once the fibre optic infrastructure has been completed, Flaherty said, the company will be in a similar rate structure as companies in the south, but not now.

Northwestel's fibre optic cable runs up from down south along the Alaska Highway, through Whitehorse and west to Haines Junction and north to Stewart Crossing.

In addition to Dawson City, Mayo is not yet serviced by fibre optics, nor are Faro, Old Crow, Destruction Bay and other communities up the North Alaska Highway.