Originally established in 1979 by the Canadian National Railway from CN's northern telecommunications assets, it has been owned by BCE Inc. (formerly Bell Canada Enterprises) since 1988.

The earliest telephone service in Northwestel's present-day operating territory was in Dawson City, established in 1899 just after the peak of the Klondike Gold Rush.

The Royal Canadian Corps of Signals established long-distance shortwave telegraphic communications stations in the north in 1923, prior to World War II.

In 1948, the RCAF turned it over to the federal Department of Transport (DOT), which contracted the operation to Canadian National Telegraphs (CNT).

During the 1950s, one of the major shareholders in Yellowknife, Jim Mason, learned that second-hand cables were for sale from a company in Stewart, British Columbia.

An opportunity for CNT to acquire, from the Canadian government, telephone services in the area of Dawson Creek and Fort St. John, British Columbia, as well as Atlin and a line north from Terrace, was not acted on.

In October 1958, CNT purchased the Whitehorse-based Yukon Telephone Company and also the DOT system (established by the US Army) outright.

With the possibility of a nuclear strike by the Soviet Union, the phone company hurriedly dispatched radio technicians to each site, often on a lonely mountaintop, to be ready to restore service in case of a failure.

On July 1, 1992, the service territory of Bell Canada in the NWT was purchased by Northwestel, bringing the entire north under a single company.

A CRTC order in 2003 transferred a small section of Alberta, that had no telephone service, to Northwestel's operating area, as it could better serve the location from Fort Smith than could Telus due to isolation and network cost.

Fort Fitzgerald residents initiated the process by appealing to the CRTC; service was installed at the end of 2005, delayed as the Regional Municipality of Wood Buffalo demanded ongoing access payments for installing the telephone lines, initially at a rate far in excess of the revenue that would be generated by a very small number of customers.

In 2012 Northwestel complied with the CRTC's request for a network modernization plan, which resulted in considerable opposition from northern rival telecoms.

[4][5] Parallel to this, another regulatory process before the CRTC has been underway regarding the wholesale prices Northwestel is permitted to charge competitors for access to its fibre cable connecting the Northwest Territories to southern Canada.

[7] In November 2023, Northwestel took control of telephone service in Atlin, British Columbia, following a purchase from the incumbent provider Telus.

The local Taku River Tlingit First Nation had advocated for this change because of "jurisdictional issues" preventing the community from receiving Internet services from Telus.

Further improvements in the 1990s eliminated "double-hop" relays between two satellite-served communities, halving the transmission time for a satellite as much as 26,000 mi (42,000 km) away over the equator.

[11][12] Until this time, a 320 km (200 mi) long section between Fort Nelson, BC, and Mould Creek (near Liard Hot Springs), telecommunications passing through the area were carried over microwave radio.

Unlike southern phone companies, Northwestel occasionally must decommission exchanges and facilities in previously active communities that are ceasing to exist.

In several cases, a large investment in wiring distribution and exchange infrastructure must be abandoned or removed, and may become surplus (no longer producing revenue to cover its acquisition and installation cost), not being required elsewhere.

Northwestel introduced a form of cellular telephony in 1987 with the Aurora (Automated Roving Radio) system (400 MHz band) developed by Novatel and widely used in Alberta.

[14] Northwestel was in a joint venture with the Dakwakada Development Corporation (an arm of the Champagne and Aishihik First Nations) in Latitude Wireless, offering cellular service in parts of the Territories.

An example of extraordinary maintenance costs occurred in the late 1990s when wind blew the satellite dish at Grise Fiord off its base and wrecked it, cutting off communications for a community of just a few hundred people.

In addition, the CRTC recognized the need for external supplementary funding to sustain the company with competition, since it was viewed as essential that Northwestel remain in business to provide basic phone service to all communities it now served.

The external subsidy allows the company to offer a long-distance plan, to all communities in its operating area, with a rate of 10 cents per minute for calling within Canada during off-peak hours.

Considering the difficulties of the operating area, Northwestel provides a fairly modern telecommunications network, including a basic level of such features as Call waiting, dial-up Internet, Call Number Display in 58 exchanges (62 communities & localities), and, in the largest centres which are still smaller than Bell Canada's fair-sized towns, video conference services.

As NetKaster they also provide Two-way Satellite Internet access to Alberta and parts of the NWT and Nunavut and planned expansion in British Columbia, Saskatchewan, Manitoba and Yukon.

Various groups expressed concern about the unknown long-distance rate reductions, as for competitive reasons, neither Northwestel nor the CRTC could disclose the specifics.

The timing of the CRTC decision conflicted with the company's temporary loss of staff for volunteer activity at the Canada Winter Games.

On May 28, 2012, it was announced that Iristel, one of Canada's largest Voice over IP networks (VoIP), would be the first CLEC to enter the Yukon, Northwest Territories and Nunavut through a partnership with ICE Wireless.

Samer Bishay, president of both Ice Wireless and Iristel, considered it to be the official end of Northwestel's long standing monopoly in northern Canada.