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Despite their relatively small populations and challenging terrain, Canada's territories are brimming with opportunity for telcos due a surge of investment from mining and exploration companies. Communications networks are needed to support those businesses, along with the accompanying increase in government services, banking and e-commerce.

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Iristel Inc., one of this country's largest voice over Internet protocol (VoIP) service providers, is gearing up for some northern exposure.

The Toronto-based telecom is set to announce Monday a strategic partnership with Ice Wireless that promises to break NorthwesTel Inc.'s grip on the home phone market in Canada's North, while also dialling up competition in the wireless space.

Starting this summer, privately held Iristel, which operates a VoIP network in all 10 provinces, will leverage its large ownership stake in Ice to offer a new telecom service bundle to communities in the Northwest Territories, Yukon and Nunavut. The rollout of home phone and additional wireless services is scheduled to begin in Yellowknife on July 1.

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"We are proud to finally be able to give Northern Canadian residents a choice when it comes to their local phone company while at the same time launch an aggressive expansion of our cellular network across the North," said Samer Bishay, who is president of both Iristel and Ice.

Iristel already has roughly 4 million residential and business telephone numbers on its VoIP network. Its northern expansion drive comes just months after the federal telecom regulator announced it was opening up the North to local telephone competition for the first time. The Canadian Radio-television and Telecommunications Commission issued a decision in December that laid the groundwork for other companies to enter the market.

There are more than 107,200 people living in Canada's three territories, according to the last census. And NorthwesTel, which is a wholly-owned subsidiary of BCE Inc., is the only option for the majority of residential and business customers. Iristel's announcement suggests it is poised to be the first new entrant to offer competitive services. SSi Micro, a Yellowknife-based broadband service provider, is also preparing to offer local telephone services but has not announced a launch date.

Despite their relatively small populations and challenging terrain, the territories are brimming with opportunity for telcos due a surge of investment from mining and exploration companies. Communications networks are needed to support those businesses, along with the accompanying increase in government services, banking and e-commerce.

Ice, which is headquartered in Inuvik, NWT, operates a cellular network that covers large swaths of the Northwest Territories and Yukon. (It also has a roaming agreement with Rogers Communications Inc. that covers other parts of Canada.) Ice is eager to compete more aggressively with BCE in northern markets. It is upgrading its network to provide high-speed 3G (third-generation) data services, while broadening its wireless coverage. Ice's new partnership with Iristel will also help lower wireless prices, Mr. Bishay said.

Moreover, expanding Iristel's VoIP network to the territories will also give consumers access to IP services that are already common in southern Canada, such as virtual faxing. "We are making the North a next-generation network," Mr. Bishay added.

Still, Ice and Iristel face an uphill battle.

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As Ice catches up on 3G, Bell Mobility has already turned on its 4G LTE (fourth-generation, long-term evolution) network in Yellowknife and Whitehorse. BCE also operates The Source stores in all three territories, which sell Bell Mobility and its Virgin flanker brand. NorthwesTel, meanwhile, offers wireless in communities that fall outside of Bell Mobility's coverage.

Additionally, telephone number portability is just arriving in the North, which could prove to be an initial hurdle in getting customers to switch. So far, the CRTC has only ordered NorthwesTel to provide number portability in Fort Nelson, B.C., Inuvik, Iqaluit, Whitehorse and Yellowknife within six months of a request by a competitor.

Iristel will also eventually face competition from SSi Micro, which is working furiously to enter the local phone market. SSI currently offers high-speed wireless Internet service in 56 northern communities.

"It's a no-brainer for us to provide local voice as well," said Dean Proctor, chief development officer of the SSi Group of Companies, noting Internet technology is the basis for new phone systems around the world.

NorthwesTel, meanwhile, is eager to defend its turf. It serves more than 110,000 residents of the Northwest Territories, Nunavut, Yukon and northern British Columbia and its operations span 4 million square kilometres.

In anticipation of competition, Paul Flaherty, president and chief executive officer, said the company is improving customer service and revamping how it sells products and services.

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"We've been very much a product company, where almost we're a bit more of order takers. And we need to be more of a company that is solution-focused," Mr. Flaherty said.

On the residential side, NorthwesTel will launch a new bundle in Yellowknife on June 1, prior to Iristel's arrival. That bundle, already offered in Whitehorse, includes TV, Internet and home phone. By signing up, consumers get discounted Internet and a cheaper unlimited long-distance package for North America.

"We're looking very much to do more of that as we get into the future. So that is the first one of many to come," Mr. Flaherty said.

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