Open Letter to Thunder Bay City Council: Back to Basics

Thunder Bay is entering into a period of fiscal restraint and decisive decision making which it has yet to see before. Budget deficits, MPAC reassessments, globalization and infrastructure deficits are all combining to force Thunder Bay’s hand when it comes to the decisions it makes now and into the future. Thunder Bay’s city council, administration and citizens need to be willing to accept change, embrace hard decisions and sacrifice. We need to part with, make sacrifices in order to sustain overall gains made over the last 50 years. Hard decisions will need to be made during the 2015 and future budgets but these decisions if laid out correctly will effectively repair Thunder Bay’s foundation for the future.

I am writing this open letter to ask a single member or council members to bring forward a recommendation that core services from now on be fully funded and effectively managed. These core services would include Infrastructure & Operations, Emergency Services, Transit, Administration and other provincially required mandates. Bringing these different operations to full funding in order to effective preserve the mandate in which the municipal government is required by the Municipal Act. After these services are fully funded and operational providing services to institutions like the Shelter House, Thunder Bay Art Gallery etc.. with funding that is requested if available. Our core services have been eroded in order to fund pet projects, well intention operations and items beyond the city’s scope. A return to our basic services will be hard and some operations will fail but we need to provide the best service possible and then go above and beyond.
Thunder Bay was recently given a C rating by an internal report which outlined the state of our infrastructure within city limits. This report states that we are severely underfunding our infrastructure and running an annual deficit of around $17 million dollars. It needs to be a priority for the City of Thunder Bay to raise the proper amount of funding for infrastructure to protect not only itself from liability issues but provide citizens with safe, clean infrastructure. The Enhanced Infrastructure Renewal Program (EIRP) is an effective start but more money will need to be allocated through the capital and tax supported budget moving forward. Returning to basics in how council funds projects would see items like roads, sewers, sidewalks along with city own buildings be renewed and upgraded at a much faster rate. Using money currently allocated for other items would provide both potential tax reductions for citizens or potential cost reductions in deficits and backlogs of projects. Roads when left to decay often cost much more then if they were replaced at their proper time frames. We annually add cost to our bill by deferring projects to the next generation.

The Event Center is a hot topic in Thunder Bay but it is an effective means of taxpayers money when it comes to replacing existing city owned property. The benefits of the project have been laid out in the Phase 3 report found here: http://www.thunderbay.ca/Assets/City+Government/Event+Centre/docs/Phase+3+Feasibility+Study+Report+Presentation.pdf. Along with replacing aging city own venues this building will make use of existing infrastructure and increase the tax values of neighbouring businesses. As an infrastructure project I feel it is something that needs to be promoted and pushed ahead. Our current facility has seen its life come and go and needs to be replaced. This is not simply a facility replacement but needs to be a representation of the community as it stands today and where we hope it will be in the future. There are many ways to reduce the cost associated with this building and managing its operational costs.
Emergency Services are a hot button issue for Thunder Bay but we are seeing the detrimental effects of under-budgeting annually. Thunder Bay Police Service are expected to run a deficit in their budget and are asking for additional money come budget 2015 to ensure capital budgets are maintained at effective levels. I personally feel that it is more prudent budgeting to set aside more for these departments then to annually come back with deficits. Providing the departments with their proper budgets means they will come back with budgets in the black annually. This will help for future budget projections and to maintain emergency services effectiveness and operations. Thunder Bay needs to receive some help from the emergency services in order to maintain these budgets going forward. We need to look at the potential for items such as a volunteer-public operation of fire halls in the suburban areas of town. Reducing the number of firefighters on city payroll with volunteers can be an effective way of providing fast and reliable service but at a reduced cost. Thunder Bay Police could also look at a auxiliary program to get more officers onto the road and have more 2 man vehicles for officer safety and cost savings. Many businesses experience a majority of their costs with wages and our emergency services are no different. If at all possible wage increases should be maintained at inflation or below for both Thunder Bay Police Service and Thunder Bay Fire Department. Population stagnation and a tax base collapse has caused these two items to become a significant strain on the overall budget. These jobs are difficult and deserving are paid very well but lower costs associated with wages could allow for increases in personnel or increased assistance with items such as mental health. We can have a productive meeting with the members of both groups and come to a outcome that works for both groups.

Transit is an important part of the lifeblood of Thunder Bay. Thousands of people use the system daily and it helps to reduce the strain on city infrastructure, the environment and negates negative health effects. The transit system will need more then funding from council to maintain its service and grow the system. It needs a promise from Thunder Bay city council and administration to fast track development along its routes. Promote density around the areas of its terminals/stops and provide the citizens of Thunder Bay with a fast and effective system. A fully funded transit system will provide many benefits for its citizens and could help to rein in the outward urban sprawl that has been sapping Thunder Bay of infrastructure dollars. In a follow up blog post I will present a proposal to change Memorial Avenue to be as transit friendly as the Mississauga Express Link. There are a number of bright, young individuals coming up in the transit management such as Mr. Jon Hendel who will see Thunder Bay Transit through to its future. Introduction of new routes and improving existing ones will be important for its promotion as a viable option for travel. Working with businesses and events to show people who normally wouldn’t travel transit it is viable will be important for its exposure. I am extremely proud of Thunder Bay transit for having a completely accessible transit system. This is something that all citizens should be proud of.
There are a number of provincially mandated operations in which Thunder Bay needs to operate and should continue to operate as effectively as possible. Operations such as the DSSAB, Pioneer Ridge retirement home among others should be funded to the provincial average.

Providing these departments with their respective required funding will not be cheap and will require that the Citizens of Thunder Bay lessen their requirements/expectations of the city and allow for services to be reduced or eliminated. Below are a number of services and items, I personally believe should be looked at in order to reduce the cost associated with the city.

City print shop – Many private operations can do this

City owned Daycares – Daily losses of $3000. Sell these spaces to the private sector and rent the buildings to these operations.

Reduce number of ball parks/soccer fields – Number is too great to support and maintain

Close Neebing Arena and Grandview – Buildings cost $1 million in annual losses. Replace with a second sheet at Port Arthur Arena and Delaney.

Close the Conservatory – $600,000 annual losses or 0.6% tax assessment

Eliminate sidewalk plowing for residential areas (minus those heavily populated with seniors)

Reduce Staffing associated with these areas and simplify the management throughout the entire system.

Sell Trowbridge Campground and Chippewa Campground

Introduce technology to make working away from desk (on site) easier for staff members

Introduce pay-per-use fees. 15% fee on top of capital fees to pay directly for the use of that site. Ex. A complex gym membership – 15% goes to replacing equipment and upgrades.

Find ways to reduce the 17 million annual payment from Tbaytel. Allow the Tbaytel board to set this based on their income and business needs.

While not all will agree with my list of closures or what I view to be as core services there is one common denominator. Thunder Bay has some big decisions to make in the coming years. Either it continues to increase taxes, over extend itself and provide a number of different services at lower quality levels or it can focus itself on a smaller number of services offering them at greater levels. Thunder Bay is in the predicament where its industrial tax base is being ripped from beneath it by globalization and MPAC. It cannot afford to continue offering all these services at the same rate it once did. Thunder Bay finds itself now looking and choosing which services it believes it can afford and which ones it can’t. I like this option of picking and choosing cuts rather than the potentially disastrous option where we need to cut and slash without mercy due to budget restraints. Even if Thunder Bay sees a boom from a mining sector growth or massive tax increases it still needs to adequately fund the core. Without doing so we will find ourselves in worse condition tax wise and infrastructure then we currently are when the taps run dry.

References:
http://www.tbnewswatch.com/News/366143/Report_card_gives_city_infrastructure_C_grade

Advertisements

The 800 million dollar question

The idea of putting Tbaytel up for sale is one that has been in the community for years. Proponents of the idea say that the sale of Tbaytel would rid the city of a potential liability and bring in a huge amount of cash to the city. People against the idea feel that selling would cause a huge increase in the city’s tax base (Tbaytel current subsidizes the tax base by 17 million or 12%) and that losing control would mean higher prices for consumers. Both sides have positives and negatives to them but I will look at what a potential sale of Tbaytel could mean for the city. Someone who works within the telecommunications industry believes that the city could fetch $800 million to $1 billion dollars for Tbaytel and its assets. Now these numbers are estimates and guesses but the $800 million is an interesting talking point.

So if we were to say that the sale has been completed; the government didn’t intervene in the sale and Tbaytel is now a private entity. Where do we spend the money and how do we go about spreading the wealth to the community. I believe that the city needs to look to the long term with this investment and take a page from Fort William First Nation and what they are doing with their land settlement claim money. A sudden investment of $800 million if not managed properly could easily be spent and gone in a matter of years. Making sure we have the right people in charge to make these decisions and involving the community are going to be incredibly important if we are too do this right.

If we were to sell Tbaytel we would lose an annual investment of $17 million dollars that are currently subsidizing the city budget. In order to reduce the burden on the city taxpayer some of the money would need to be used to pay down the city debt completely. Current the city debt stands around $180-$190 million dollars owed. Paying this off would allow the city to completely eliminate debt servicing charges and debt payments from its expenses. This means that we could reduce the burden of Tbaytel loss making the tax increase more manageable for the community. For ease of numbers sake we will say that the debt is $200 million which means that our total is now down to $600 million overall.

After the debt for me it gets a little murky on what we should do with the remaining money. We shouldn’t use it to subsidize our tax base to keep taxes low. We would simply burn through this money and then only delay the inevitable. We saw this with Mississauga who was forced to raise taxes 7% after burning through their reserve funds. I do believe that we should be setting aside a portion of this money to invest into our infrastructure and maintaining what we have. Roads, bridges, sewers, parks, sports facilities are all items that have been overlooked for years and are in desperate need of attention. If we were to set aside $100 million over 10 years over and above what we already spend we could effectively upgrade and maintain what we have. Making sure that fields like Chapples which are used by the Thunder Bay Chill aren’t unavailable for a majority of the season due to poor conditions. Managing effectively this money will be important to avoid the price increases that occurred with the marina. Of we throw a lot of money into a short period of time we may receive less then anticipated. If so this may need to be pushed back to a 15 or 20 year plan. We now have spent $300 million through this plan to invest in infrastructure and eliminate the debt.

With $500 million left it leave us with a lot of choices as to what we want to do with the money. I believe that if the sale of Tbaytel were to happen it should result in an improved quality of life for citizens in the community. The question then becomes how much money should we set aside and how should we be spending that money. I believe that $100 million over 10 years could be a fair number to not only the citizens of today but tomorrows taxpayers. $50 should be earmarked to increasing the size and scope of green spaces within the community. Investing in new playground equipment for children, bringing in new sports like Disc Golf, Cricket to the community and making these spaces enjoyable. The other $50 million should be earmarked for remediation of industrial land for future public use and removing dilapidated buildings in the community. These could include the industrial areas along the waterfront, removing grain elevators and old business/homes that are devaluing neighboring properties. After this additional investment into the community we are now down to $400 million in which to use.

This final $400 million should be split into two savings account where it can grow money through interest and benefit the community even more into the future. I would like to see $200 million go into the city reserve funds for future use and to help prop up the city’s reserves. This increase in reserves and a reduction in debt will increase the city’s credit rating and allow the city to take out loans at much lower interest rate. This will also allow the city some breathing room if the city goes over on snow removal in that budget year. Money in the reserve funds also grow interest which means the reserves will grow at a faster rate. The other $200 million should be put into a bank account where it cannot be touched for a 20 year period. This will allow the money to grow untouched for that period of time and increase the total amount available to the city in the future. When that 20 years is over there should be a restriction applied to the amount that can be taken out annually to protect from large project spending by the council members.

With this being said I have my own personal thoughts about selling Tbaytel. I believe that it is valuable asset to the community and is a good fit in our hands. Now it will be up to the council and community to decide if they want to sell the company or continue to hold onto it. I do believe however that the City of Thunder Bay needs to remove itself from Tbaytel’s annual contribution and allow the company to keep that money. With regards to the current dividend that the city is receiving from Tbaytel over and above that initial $17 million I think this should be up to the board. Successful companies provide a dividend to their shareholders when they are profitable and expanding. This money could continue to be pumped into a fund like ReNew Thunder Bay for projects such as the Event Center or Golf Links Expansion.

So this is what I believe we should do with the $800 million we got from a potential Tbaytel sell if we received it. What do you think we should do with the money?

Editors Note: The assessment value was provided by someone who works in the Telecommunication industry based on his assessment of the company. He didn’t have access to financial statements or asset values which would be necessary for a true costing of the company. This number was his belief.

Rumour Mill

Update: Tbaytel is taking part in the 700 Mhz spectrum auction which is designed to help launch LTE in remote areas of the country. The 700 Mhz spectrum travels farther and penetrates in buildings better then other spectrum. It should help companies keep costs down when launching LTE in less populated centers. It was confirmed by @mobilesyrup today that Tbaytel is taking part but there is no idea yet as to how much money they are willing to spend.

A couple months ago I was told that Tbaytel was looking at launching its own LTE network. Massive investment has been poured into the mobility portion of the company to expand the reach of the current towers. I truly believe that there is more afoot then the company is letting on. While there are still dead spots in town the majority of the city has above average coverage already. This extra investment would only be necessary for the 4G network if Tbaytel truly believed that there was a huge influx of new customers signing on. Add to the fact that Rogers has launched their LTE MAXX system which uses a different bandwith to run their service and opens up room on their LTE service. Rogers has a strong partnership already with Tbaytel and it is the one that helped them launch the 4G network. It is conceivable that Rogers uses some of the available LTE to help Tbaytel bring that speed here to Northwestern Ontario. I believe that a November/December launch of the Network is something that could be considered a real option. If true it seems that they have learned how to properly roll out a new network since the majority of the work is coming in Northwestern Ontario’s 2 largest centers.

Tbaytel - Thunder Bay

Tbaytel - Kenora

The top item shows the investment into Thunder Bay over the past/coming months. 16 towers have been added or will have received an upgrade all across the city. All of these projects are within a very short period of time as well. To me it would say that they are pushing for a goal which should be around the corner very shortly.

Below is the Kenora upgrades. 5 projects for the city which is a major investment for a city of that size. I don’t really know much about how the coverage is in that area but a investment like that has to be for something big.

I could totally be of on this one. It could simply be the end product of a major increase in spending from Tbaytel towards their coverage. The comment about LTE coming from a source and the potential opening of LTE space on Rogers network seem to come together like a puzzle. The only thing missing if this was to happen would be the date. With towers still being put up in September they miss the back to school rush for the latest phones but a Late November/Early December launch would be perfect for the company. They could grab all the people who jumped on 3 year plans when the 4G network was launched 3 years ago. Having LTE could being Tbaytel on a level playing field with Bell and Telus in the mobile wars.

Mobile space needs to grow not shrink

There are reports out that Telus is considering buying Mobilicity and using the purchase to expanding their desperate need for more spectrum. Telus justifies the purchase by saying they serve almost as many customers as Bell and Rogers but yet have half of the spectrum available. While this purchase would allow for Telus to provide a better service for its customers there are larger negative effects for Canadian customers. The big 3 or Canadian Carriers Rogers, Bell and Telus own a significant portion of the Canadian mobile space. Because they own such a large portion of the population there isn’t a significant battle for new customers and in turn the prices of mobile are extremely high in Canada. Mobilicity was one of a number of new entrants into the Canadian mobile space. It was hoped that they would come in and reduce the cost that the average Canadian pays for cellular. The new entrants have made headway into the Canadian market and have helped to drive down the price if ever so slightly. The issue now is that the Big 3 are looking to swallow them up for their spectrum. Wind Mobile, Mobilicity are both up for sale with their customers/ spectrum on the dinner plate of the big 3. If these companies are swallowed up by the Big 3 then Canadians are back at square 1 and this experiment was a failure.

Telus should not be allowed to purchase this company simply for the the spectrum. The Canadian government is opening up 2 different spectrum sales upcoming in the next couple of years which will be beneficial for all companies. If its true that Telus has the same number of customers waiting for more spectrum then Telus needs to open up its wallets and purchase a large amount of the available spectrum in the next auction. Spectrum should also be made available at a cheaper price for telecommunications companies like Wind, Tbaytel, Sasktel and MTS to allow them more freedom to fight the Big 3 influence. Promoting these smaller companies will allow them to help reduce the price of cellular closer to the prices that customers of other G8 nations pay. The decision on the merge or purchase of Mobilicity will be one of the CRTC but I believe it needs to be denied. Hopefully a owner with money can be found to purchase Wind Mobile and a merger between Wind and Mobilicity can be undertaken. We need to grow our smaller companies and help them to reduce the price that Canadians pay for mobile service. Based on our country size and population we will always pay a higher amount but our costs are over the top.

 

Comment Below.

Tbaytel LTE launch – How it should be done

Tbaytel is now one of the only carriers in the country who is still running 4G as its main service. The company has spent a large amount of money on towers in recent years to address issues with coverage, capacity and customer complaints. In 2012, Tbaytel spent close to 9 million dollars investing in the service to make the service quick, cover more and deal with issues in the system. I can say that the service is much better with the investments and a lot of my personal complaints have been fixed. The issue as it stands now is that competition has moved in to the area and they are offering much more in terms of speed, data strength and phones. For Tbaytel to catch up they will need to offer a new and improved LTE system for the most modern phones. Tbaytel will likely be getting help from Rogers on this expansion but personally, I feel they need to do it differently then they did before. When Tbaytel started offering 4G they rolled it out almost system wide at once. This massive undertaking along with the migration of Rogers customers under the Tbaytel banner created havoc for Tbaytel employees and the service. Towers were overloaded, it was taking weeks for activation and general consensus with customers was anger. With the LTE service it will need to do things differently and take things on slower to make sure that it works out best for the customer. Below is a map showing Northwestern Ontario and I will describe why I believe each individual phase should happen.

Phase 1:

Blue shows phase 1
Blue shows phase 1

While it might be hard to see there is blue covering Kenora, Dryden and Thunder Bay. My preferences for these 3 cities as phase 1 varies from competition to making a good impression. Thunder Bay and Kenora are the 2 largest cities in Northwestern Ontario and covering these first will be important for Tbaytel to remain competitive. Bell, Telus and Virgin mobile also have LTE in these 2 sites already and are promoting them heavily. While Tbaytel has coverage across NWO compared to those companies, it is only a matter of time before they add coverage as well. Dryden’s mobility customers were recently bought out by Tbaytel and providing them with a good first look will be important to keeping them. A first look will be important to keep them with Tbaytel when the other companies provide service in these areas. This phase will cover a majority of Tbaytel customers and allow the service to get the biggest pressure out of the way, right away.

Phase 2:

Thunder Bay

A big complaint that Tbaytel customers have is that the drive down to Duluth is a mess of cell service and no cell service. Providing them with a nice welcome back 5 bar signal strength could go a long way to making people extremely happy to be a Tbaytel customer. Expanding into Ignace, Fort Frances, Nipigon and expanding the reach of LTE in Kenora will be important for phase 2 success. The movement over to LTE will also have an advantage for 4G users as more capacity opens up. I don’t believe at this time that it is economical or practical to provide LTE along both highways. The extra capacity of 4G is better suited for these tasks with LTE going into the urban areas.

Phase 3: Putting LTE into the cities and having 4G covering the highways will be the best option to making effective use of both existing and future infrastructure. I believe that a slow roll out of LTE will be important for Tbaytel to avoid the same mistakes it made during the 4G launch. If it does plan to roll it out as one package I hope that the lessons are learned and more staff/capacity has been added.

To give a visual of how I think the Duluth expansion should be rolled out. See this story for details https://thenotsonews.wordpress.com/2013/01/23/tbayduluth/

Thunder Bay 2

The red would be LTE covered space and the green would be 4G covered space. Again the roll out of LTE would be in urban spaces like Lutsen, Grand Marais. This could be importantly vital to Tbaytel as it gets squeezed in the NWO market by Bell, Telus and Virgin Mobile. See the previous blog for details.

TbayDuluth?

Northwestern Ontario, a large and majestic parcel of Canada with more moose and deer then people. This area is considered to be around the same size as France but is only home to around 400,000 people of which 110,000 are living in Thunder Bay alone. Tbaytel is the locally owned and operated telephone company which offers mobile, internet, digital TV and phone services to Northwestern Ontario. It has been serving Thunder Bay for over 100 years and was created because the city council at the time didn’t like Bell Mobility. Tbaytel along with northwestern Ontario is in an interesting phase and a smart decision could help to protect its future as Canada’s Largest municipally owned telephone company.

Northwestern Ontario is just beginning a new expansion with mines and the potential for a population expansion but it still is dealing with the same issues. Northwestern Ontario is large and doesn’t have the population to warrant expansion for many larger companies. Tbaytel paid Rogers 46 million dollars to take all of their customers with a 807 area code because Rogers didn’t want to spend a dime in the area. As I stated in my previous blog post about Tbaytel expansion idea, making its way to the south could provide both economic and opportunistic benefits for the company. Duluth is roughly the same size as Thunder Bay but its surrounding areas are home to over 350,000 people. Tbaytel might have a hard time expanding into the United States if it doesn’t have some form of ownership by an American company/city. For that reason I would try to interest Duluth into purchasing a portion of the ownership of Tbaytel. A 30% stake in the company might be enough to give them a helping hand to expand south but also pay for upgrades in equipment elsewhere.

When Bell and Virgin Mobile moved into Thunder Bay they brought with them 4G LTE speeds that Tbaytel can’t hope to compete with at this time. They also brought it to Kenora which is the other large population base in Northwestern Ontario. For the average consumer who might not know a lot about technology more speed could be a major selling point. Tbaytel might be able to combat this with the sale to Duluth if they were willing to invest into the plan. I have heard that Tbaytel is estimated to be worth 300 million (which I think is a little high) but if we were to sell 30% we could gain 90 million in cash. This would be more then enough to provide the cell service to Duluth and back but also upgrade to 4G LTE or even 5G during the process. So what could be in it for Duluth to make it worth their time and money to invest in a Canadian company owned by another city?

Thunder Bay has a fairly sweet deal when it comes to Tbaytel and its dividends. It employs over 400 people company wide with a majority living in Thunder Bay. It provides the City of Thunder Bay a minimum of 17 million dollars which reduces the tax rate by 12% and in cases where it exceeds expectations it provides more to the city. Last year alone it provided 17 million + 3.25 million to the city in performance dividends. On top of that the city also took cash to help pay for projects like a new event center, a new library and a expansion to the waterfront. With a stake in the company Duluth could receive a payment (based on ownership) along with a special performance revenue. They could also gain a seat at the decision table along with economic gains by having Tbaytel employ people in and around Duluth.

Thunder Bay would seem to get the short end of this stick but with the added population living under its coverage its likely that the increase could offset losses. The addition of Duluth and the shore to its possibly subscriber base doubles the potential with a massive reduction in operating costs for the company. Even if 50% of the population of Duluth signed on to be a Tbaytel customer that would be another 46,500 people signed on. A common package would likely be in the range of 50-60 bucks a month meaning Tbaytel would be bringing in 2.325/2.79 million more a month or 27,900,000/33,480,000 a year. Tbaytel made 168 million total revenue last year, by adding the number above we could increase the revenue by 6-8%. The deal signed with Rogers also has benefits of traveling into the US with other US carriers . By continuing these partnerships they could provide the basic coverage in the city but also be able to have coverage elsewhere provided by AT&T, Verizon etc….

Tbaytel is facing the issue of having more competition come into an area which isn’t getting any smaller. A population which is aging and seeing more people reduce spending but most drastic is a reducing population. Thunder Bay was expected to double in population to 250,000 people by 2012 when Port Arthur and Fort William merged. It hasn’t come even slightly close to fruition and the opposite seems to be occurring with Thunder Bay 1 of only 2 cities in Canada to lose population in the 2011 census. Either we will see more areas where gaps in coverage occur, technology falls behind, increase in prices or a mixture of all 3. Tbaytel is already spending more on towers, infrastructure etc but is starting to be left behind by the larger companies who have more capital to draw on.

So what do you think? Would this be something of interest to Thunder Bay city council or its citizens? Do you think Duluth would even have the slightest interest in a business venture like this? Would US laws like the patriot act discourage Canadian companies to get involved in the US. What are your thoughts on this idea? Comment in the section below…..

Link to a previous blog about the same issue/idea…. https://thenotsonews.wordpress.com/2012/12/09/opportunity-for-tbaytel/

I was told by a friend that the way to value a company might be by multiplying its revenue by 3. In that case Tbaytel would be worth roughly 504 million and a 30% stake would cost 151.2 million.

 

 

 

 

Opportunity for Tbaytel

One of the issues that Tbaytel faces is that the population base of northwestern Ontario is small and the region size huge. The mismatch of people to size has made the area famous for hunting, wildlife, trees, lakes and other environmental adventures but as a telecom company it makes it almost impossible to cover. The rolling hills and the massive size of the landscape means that there needs to be a huge investment into towers to properly provide the service. Tbaytel has been around for over 100 years which means that they have had a long time to be able to build up their network and improve coverage. Even with that amount of time they still have spots where the coverage goes dark and its back to the days of LAN. Tbaytel is able to justify expanding into these regions because it promotes itself as a NWO telephone company. Other larger companies have tried to avoid this region like the plague with the exception of Thunder Bay and Kenora. It isn’t worth their time or money to invest in the region to connect the east and west networks. While Bell has stated that they will connect the region over the next couple of years by lighting up Highway 17 with their 4G network, it will remain to be seen if it happens. Thunder Bay/ Kenora becomes the battle ground for people to decide if they want to stay with Tbaytel or if they want to go to a competition’s offer. Continuing to improve the network and expand will be important for Tbaytel to reach new customers and supplement the income it loses to Bell/ Virgin Mobile.

One would think of possibly expanding west into the Manitoba region to tap into the Winnipeg market. That region right now is quiet but in 2013-2014 will be a battleground between MTS, Rogers, Bell, Telus and others as they launch their LTE networks and try to expand to cover more territory. The agreement with rogers will see them do all the heavy lifting when it comes to expanding the network west and east. Staying out of the battles between the big 3 will allow for Tbaytel to improve its own network and roll out more towers, technology and service. I believe that there is an opportunity to expand south to the USA.

Thunder Bay and Duluth are more then simply sister cities. The successful of one directly helps the other and the constant movement of people between the two would make it seem like they are much closer together. Duluth is around the same population size as Thunder Bay but they have some retail and service outlets that we cannot yet get in Thunder Bay. In turn there are some fishing experiences and attractions that they can’t get down there which is why they come here. The land mass is much closer then the time traveled would make it seem. If it wasn’t for a number of smaller towns the trip could be done in two hours. The one issues that many complain about between the 2 cities though is the terrible reception that mobile phones get after the border. AT&T, Verison, T-Mobile and others all provide service to this area but like Northwestern Ontario it isn’t worth their time to invest into the region because of cost. The tenacity to build where others wont and expand could make this a prime region for Tbaytel to move into. The distance between Thunder Bay and Duluth is around 305 KM which is about 50KM then driving to Dryden. The difference between the Duluth run and the Dryden run is the possible subscribers and population base to tap into. Between Thunder Bay and Duluth there are a number of smaller towns built around the coast line; together they form a population of 7343 including some of the best ski hills in the area. Lutsen while only a small town of 360 sees a huge amount of tourists from Northwestern Ontario going down to golf in the summer and ski in the winter. Its likely that the town triples in population when the tourists all flock to the area, this could be an important spot for Tbaytel to introduce some coverage to the area. In total, Duluth -Thunder Bay has 93, 608 people but adding in the Duluth MDA its over 373, 379 people. Basically in a 300 KM stretch the Duluth run could put all of Northwestern Ontario into 1 area. Tbaytel’s income of 170 million could easily be doubled if it were able to make a significant headway into these regions.

There would likely be some challenges when it came to bringing new networks to the Duluth region but it seems that the money could be there to make it worth Tbaytel’s wile. Depending on Rogers and AT&T agreement and a number of other factors the Duluth run could end up being one of Tbaytel’s best expansions to date. It could help fuel the expansion in Canada and help to bring new investment into Thunder Bay.

This is just what I think. What about you?