Innovation, Trade and Rural Development
August 27, 2007

Provincial Government Signs Agreement that
Advances Telecommunications Operations in Province

The Honourable Trevor Taylor, Minister of Innovation, Trade and Rural Development, today announced the signing of the contract that will provide the province with a new trans-gulf fibre optic link. This advanced network will form the backbone of the province’s data and telecommunications operations.

"I am pleased to announce that the Government of Newfoundland and Labrador has completed negotiations and signed a contract to own strands on a second fibre optic network connecting the island portion of the province to the rest of North America," said Minister Taylor. "This new link will further enhance the province’s existing telecommunications infrastructure for the benefit of Newfoundlanders and Labradorians throughout the province and will be capable of meeting our future communications needs."

The Provincial Government is contributing $15 million to this project, with Persona Communications Inc. and its partners – Rogers Communications and MTS Allstream – committing a minimum of $37 million. The agreement provides the province with six fibre strands between St. John’s and Port aux Basques, four strands between Port aux Basques and Halifax, two strands from Port aux Basques along the south coast to St. John’s, and four strands between Cow Head and Plum Point. This phase of the project is anticipated for completion in October 2007 with the Cow Head to Plum Point portion of the Northern Peninsula set to be finished in 2008.

"Our objective as a partnership is to provide connectivity to urban and rural communities," said Paul Hatcher, chief operating officer, Persona Communications. "This new connection enables us to deliver the same level of services that are available in the rest of Canada to our Newfoundland and Labrador-based customers."

"The new network makes it easier to deliver broadband access to Newfoundland and Labrador," said Paul Frizado, chief technical officer, MTS Allstream. "It provides the framework for bringing new and innovative technologies to the province’s residents."

"This new link provides the necessary infrastructure that is required to improve our existing services to our customers and introduce new products to the market," said Ken Marshall, regional president, Rogers Cable, Atlantic. "We want to ensure that our customers in this province receive the most advanced products and services available."

Based on an external independent assessment by EWA, it is conservatively estimated that the province will recover its investment within five years through cost savings on current and future telecommunications contracts. In addition to cost-efficiencies, the new network will be beneficial to industry and economic development.

"This robust network offers a wide-array of opportunities for many sectors including health care and education," said Minister Taylor. "Physicians will be able to instantly send diagnostic imaging to specialists in other hospitals for faster diagnoses. Research costs for Memorial University and the College of the North Atlantic will be lower as they will be able to connect to research networks at the same rates as those charged on the mainland and at faster than existing speeds."

The business community of the province will also benefit from a more competitive telecommunications marketplace through greater choice and lower rates. An enhanced communications infrastructure will increase opportunities for investment attraction. Companies wishing to re-locate or expand in the province will have the assurance of a redundancy of fibre optic networks connecting the province to the mainland.

As part of its innovation strategy, it is the Provincial Government’s goal to connect this network to all of the province’s regions. The Provincial Government is currently examining the viability of making a fibre optic connection to Labrador and is working with community organizations to identify protocols pertaining to public safety and emergency readiness.

"Construction of the new network illustrates this government’s aggressive commitment to economic development, efficiently improving government services, and enhancing access to emerging technologies for all regions," said Minister Taylor. "The Province of Newfoundland and Labrador will be better positioned for future economic growth."

-30-

Media contacts:

Scott Barfoot
Director of Communications
Department of Innovation, Trade and Rural Development
709-729-4570, 690-6290
ScottBarfoot@gov.nl.ca  
Paul Hatcher
Chief Operating Officer
Persona Communications Inc.
709-749-9299
Greg Burch
Media Relations
MTS Allstream
204-941-8576
 

 

SUMMARY OF CONTRACT

between

Persona Communications Corporation

and

Government of Newfoundland and Labrador

The telecommunications industry refers to ownership in a fibre optic cable condominium as an Indefeasible Right of Use Agreement (IRU). Within the fibre optic cable condominium, IRUs have been granted by the owner, Persona Communications inc. (Persona), and its partnership – Rogers Communications, Manitoba Telephone System (MTS) Allstream – and the Government of Newfoundland and Labrador. The IRU granted between Persona and the Provincial Government is for an initial term of 20 years, with the right to renew.

The Provincial Government will contribute $15 million to the network construction over a two-year period. An initial payment of $5 million has been made and four subsequent $2.5 million installments will begin on October 1, 2007, and be made every three months thereafter with the final payment on July 1, 2008.

Persona will build and own the network referred to as the Atlantic Cable Facility, and is required to meet several milestones and obligations as the construction is underway. The contract requires Persona to establish a performance bond to assure that construction can be completed in the event that it (Persona), for any reason, should be unable to accomplish this itself. In that occurrence, Rogers Communications has agreed to oversee construction to completion. The schedule for construction estimates an October 2007 completion date.

The agreement provides the province with six fibre strands between St. John’s and Port aux Basques, four strands between Port aux Basques and Halifax, two strands from Port aux Basques along the south coast to St. John’s, and four strands between Cow Head and Plum Point.

Persona has committed to providing a minimum of four strands on any network it may construct between Deer Lake and St. Anthony. Through a separate contract with the Centre for Distance Learning (CDLI) 176 km of cable will be laid between Cow Head and Plum Point in 2008. Once this is constructed, the Provincial Government will immediately assume an IRU on four strands in that segment.

All fibre strands are "dark", that is, the equipment necessary to use the fibres will be the separate responsibility of government. Persona will make available, should the Provincial Government request it, space, electricity, back-up power, air conditioning, etc. at any of its equipment shelters along the fibre route.

Persona will be responsible for acquiring all easements, rights of way, pole rentals, landing zones, etc. Persona is also responsible for all maintenance related to the physical fibre cables. The Provincial Government has an initial 10-year period in which maintenance will be provided at Persona’s cost. After this period, the actual average annual cost will be determined and shared amongst the IRU parties based on a sharing formula, with Persona performing the work for an administration fee based on 25 per cent of the costs.

Persona and the IRU parties will share in the cost of catastrophic failure of the cable. For instance, should a break occur on the underwater portion, a ship would be retained to raise the cable and repair it. Costs will be shared on a formula based on the number of strands each party owns in the segment that failed.

Attached to the contract are technical documents related to construction, testing and physical location that will not be released to comply with national security provisions.

2007 08 27                                                        2:00 p.m.


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