By Arctic Fibre

Arctic Fibre Inc. has launched a process to quantify Canadian demand for its proposed fibre optic network spanning 15,300 kilometres from Tokyo, Japan to New York City and London, England. Canadian carriers and government agencies will have until September 1, 2012 to request specific bandwidth on the dedicated fibre pair serving the Canadian Arctic and Alaska which has a contemplated inservice date of November 1, 2014.

The backbone 40G network will provide the lowest latency network between Japan and England with a round trip latency of 168 milliseconds. It will also provide much-needed bandwidth to communities in the Canadian and Alaskan Arctic enabling consumers to access technologies taken for granted in urban areas. The network will also facilitate the provision of essential governmental services in tele-medicine, distance education and the administration of justice at far lower cost than present practices.

Concurrently, WFN Strategies is completing the end-to-end desk stop route study which underpins an extensive 2013 marine survey. Upon completion of the desk top study in mid-August, Arctic Fibre will issue a formal request for proposals to construct the network with a vendor decision being made in the fourth quarter.

Arctic Fibre has conducted extensive research and marketing efforts with international carriers and has ascertained that there appears to be sufficient market demand to construct a subsea fibre optic network between Japan and the United Kingdom provided that there is sufficient demand from Canadian and Alaskan carriers to absorb a portion of the network capital.

Based upon the domestic demand indications collected to date, Arctic Fibre has determined that construction of an integrated domestic and international backhaul network is viable. International transit revenues should reduce domestic tariffs by 30%-40% based upon current indications of interest from international carriers.

The Open Access Season will refine indicative pricing into formal bandwidth pricing which will prevail during the 2015-2017 tariff years. Canadian carriers are being asked to estimate consumer price elasticity and ultimate demand in the context of backhaul costs of $390 per megabit month compared with satellite bandwidth priced at $2,500 or greater. Arctic Fibre anticipates that Canadian pricing will deflate to less than $150 per megabit month as both domestic and international throughput increase in years two and three.

For pricing purposes, Segments One, Two and Three between Milton, Newfoundland and Tuktoyaktuk, NT have been combined into a single zone for tariff-making purposes to accommodate intra-territorial traffic patterns. This enables the economies of scale derived on southbound traffic from Iqaluit to be combined with the higher costs associated on the east-west transmission of traffic from Iqaluit through various hamlets along the backbone network to Cambridge Bay. The backbone will provide virtually unlimited bandwidth to 52% of Nunavut's population at the same price as limited-capacity, often problematic satellite feeds.

There are additional domestic segments or spurs which can be constructed off the backbone network in Labrador, Nunavik, Kivalliq and Baffin Island although these may be considered uneconomic given the combination of low throughput and high capital cost. Additional domestic segments would extend the network to 92% of the Nunavut population as well as to 26,000 residents of Northern Labrador, Nunavik and the Northwest Territories.

Negotiations are underway with the view to providing access to the Arctic Fibre backbone to the Alaskan communities of Prudhoe Bay, Barrow, Wainwright, Kotzebue, Nome and Shemya as well as to Thule, Greenland.

Arctic Fibre has extended the “Open Access Season” to these segments in an effort to firm up bandwidth demand and thus ascertain the amount of subsidy, either operating or capital, which may be required on these additional segments. At this juncture there is no certainty that the segments will be constructed.

Arctic Fibre Canada will sell capacity to licenced telecommunications carriers and government agencies on a non-discriminatory basis. In most instances Arctic Fibre will not be providing local access, but provide bandwidth at its landing stations in Iqaluit, Cambridge Bay or at carrier-neutral facilities in smaller hamlets.

At Arctic Fibre's primary cable landing station in Milton, NL, users will have access to downstream networks operated by Arctic Fibre as well as those operated by Bell Aliant, MTS Allstream, Rogers Communications, Eastlink and Tele-Greenland.

The Open Access Season provides all existing carriers and potential market participants with the opportunity to secure bandwidth on the backbone network through the Arctic region on an equitable basis and to choose downstream networks without restriction. Carriers which do not participate in the process will not be able to procure access on the network before January 1, 2018 and will not benefit from the economies of scale generated by increased throughput.

For further information: Douglas Cunningham, President Tel: 416-613-6263

Email: [email protected]

Sarah Nelson, Marketing Co-ordinator Tel: 289-635-2279

Email: [email protected]