**UPDATED** County cancels internet contract: Mayor cites KWIC, Xplornet merger as reason

***UPDATE— After publication of this article, The Haldimand Press was contacted by Johanne Senecal, Vice President of Government and Public Affairs at Xplornet Communications Inc, and Craig Manley, Chief Administrative Officer at Haldimand County, offering the following statements:

Senecal: “Contrary to what was published on June 3, Xplornet has not acquired KWIC Internet.”

Manley: “Since 2019, Haldimand County has been working towards its commitment to bring affordable, reliable high-speed internet service to all residents as part of Council’s top priorities for the 2018-2022 term. In 2020, Haldimand County Council approved a plan to accelerate the delivery of internet services to underserviced areas in Haldimand County via private sector entities through a competitive bid process and provision of an interest-free loan. At that time it was felt that there was a need to incentivize the expansion of broadband to encourage its development in rural areas.   In June 2020, KWIC Internet was announced as the successful proponent and subsequently had begun the process of construction and installation of fibre internet in accordance with the commitments outlined in the agreement and the committed timeline of 5 years. 

Since this time, numerous changes have occurred in the Telecommunications sector, which is governed Federally by the Canadian Radio-television and Telecommunications Commission (CRTC).  These changes, including amalgamation, increased grant funding opportunities and new technological opportunities have increased competition in this sector and made servicing rural communities more attractive.  Recently, Xplornet Communications Inc., through their acquisition of a number of local telecommunication companies including Metro Loop, announced that they intend to offer high-speed, fiber broadband service to over 19,000 homes and businesses throughout the County within two (2) years.  It is our understanding that KWIC Internet as a company has not been acquired by Xplornet Communications Inc., however, some of the infrastructure recently emplaced and owned by KWIC in Haldimand County may be of interest to Xplornet for acquisition as part of its expansion efforts.  This is a matter between the two private sector companies.

As a result of these dramatic changes in the broadband sector Haldimand County and KWIC Internet have mutually decided to terminate the agreement to facilitate broadband internet service across the County.  The increased competition and the arrival of large, nationally backed service providers in our community has resulted in the County’s objectives of facilitating the extension of broadband internet services being achieved without the need of financial backing of the municipality. 

Haldimand County is excited to see the commitment by Xplornet to the establishment of high speed broadband in the short term and is currently facilitating the necessary municipal approvals processes to allow the installation of fiber and other technologies throughout the County. “

Please see article in June 10th issue for further clarification on the original article. ***

 

Original article:

By Mike Renzella

The Haldimand Press

HALDIMAND—According to Haldimand Mayor Ken Hewitt, Xplornet Communications has “merged” with KWIC Internet, the company that was approved for a $15 million loan from Haldimand to develop a county-wide broadband network.

“In the private communications industry, there’s all sorts of different mergers and acquisitions going on. In this particular case, there’s an investment fund that owns Xplornet and obviously wants to expand,” said Hewitt. “They picked up KWIC, and as a result, that caught us and our agreement with KWIC in the middle of that process.”He added that this information was a surprise: “Nobody at Haldimand County would have been aware or had any knowledge of this merger happening.”

The cancellation of the arrangement with KWIC was first discussed in a closed Council session on May 11, with the first public information in a Council agenda item posted online last week. Although a project agreement was in place and construction was in the early stages, the report said the “project has been superseded by significant private sector investment achieving County corporate goals with the result that the County initiative became redundant and has been cancelled.”

This leaves many questions regarding the future of internet availability and reliability in the county. Under the agreement with KWIC, a series of quality standards were set into the finalized agreement, including:

An ability to meet required minimum speeds of 50/10 Mbps for download/upload

Unlimited broadband service to 100% of underserviced areas

A guarantee to have services fully operational within five years

On whether or not these standards would be maintained, Hewitt responded, “If the intent of the new entity is to honour the original agreement and work with Haldimand on the program that we started to establish, my answer would be yes. If their intent is to no longer use us as a funding source to facilitate their capital project, they’re going to have the freedom to expand the way they see fit.”

Haldimand held a two-step competitive bid process to choose KWIC, who was among only three companies to be shortlisted and given scores by a consultant “evaluating various technical and financial components,” said a County release at the time. KWIC was chosen over Metro Loop and Xplornet Communications because it “was the highest scoring.”

Prior to initializing their own plans, the County turned down the opportunity to apply for the provincially funded SWIFT program, which has a $209 million project budget and has funded the implementation of 3,095km worth of fibre optic cable to rural areas. Council stated at the time that they turned down the opportunity in an effort to speed up local plans instead of waiting in line for funding.

“All we were doing was acting as a third-party lender to create some favourable terms to expedite service. If they no longer need us as a vendor, I still feel that the service will be expedited because the real bang for their dollar is going to be in Niagara,” said Hewitt, noting that Haldimand stands between the Niagara Region and Xplornet’s hub in Simcoe. “There’s a lot of moving parts, but the long and short of it is this acquisition is actually going to be to Haldimand’s favour.”

Xplornet, as reported previously, has been aggressively purchasing local service providers, with Metro Loop, Detour Wireless, Silo Wireless, and OptionsDSL being bought out by the growing company over the course of the last year. The Press has also reported on critical feedback from the community, with claims of unreliable speeds and service interruptions topping the list.

According to a press release issued in April, Xplornet is now planning to lay over 600km of fibre optic cable in Haldimand County, bringing high speed internet to 19,000 underserved homes and closely reflecting the plan initially proposed by KWIC and agreed upon by Council last summer.

At the time the KWIC contract was awarded, it included a $15-million interest free loan to help with implementation and construction costs, to be paid back over a 12-year period. Hewitt said approximately “a couple hundred grand” has been spent so far for “consulting and tender fees,” adding, “We never got to the point where we had a draw on those kinds of dollars. It was just starting when this acquisition happened.”

The Press called KWIC Internet for comment Monday but were told no comment would be made at that time. The Press attempted to reach Xplornet following Hewitt’s statements on Tuesday, but did not receive a response prior to publication. No press release had been made about any arrangement between Xplornet and KWIC as of publication, and therefore no information was forthcoming on the companies’ plans in relation to the County agreement.

Hewitt summed up the County’s position at this time: “We didn’t know this was happening, but it looks like it’s going to play out in our favour. It looks like we’re going to get the ultimate system that we wanted, and we’re not going to have to follow through on these loans that we were committing to.”

More information will be shared as available.

 

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