Ottawa backs Telesat in internet space race

$600M DEAL

Canadian satellite company Telesat landed $85 million from the federal government to help it launch a constellation of hundreds of satellites that aims to provide faster internet to rural and remote locations, including the North.

The Government of Canada also committed to spending $600 million over 10 years to buy broadband internet capacity from Telesat’s low-earth orbit (LEO) satellites once they are in space, it announced at a joint news conference with Telesat on Wednesday in Ottawa.

The ongoing contribution from the government is not yet binding. It hinges on the successful launch and operation of the Ottawa-based private company’s LEO constellation, which it expects to be in service in the far North by 2022 and the rest of Canada by mid-2023.

So far, Telesat, which was a Crown corporation until 1998, has launched one of the planned 298 LEO satellites in the constellation.

It expects to generate $1.2 billion in revenue from the project over the next decade by selling half the internet capacity to the government and the rest to telecommunications service providers, chief executive Dan Goldberg said in an interview.

Satellite internet in remote areas is relatively slow, choppy and expensive, but this “very ambitious” project will result in a “mind-boggling” expansion of satellite capacity, Goldberg said.

LEO satellites orbit at about 1,000 kilometres above the Earth, enabling them to provide much faster internet connections than traditional geostationary satellites that operate at a distance of 36,000 kilometres.

A handful of companies around the world including Telesat, Elon Musk’s SpaceX and U.K.-based OneWeb are racing to put hundreds of the smaller satellites in space to improve internet capacity and speed in hard-to-reach locations. While the technology is promising, the volume of micro-satellites could make it difficult to avoid collisions within and between constellations — especially since there aren’t cohesive international regulations monitoring space activity in the lower orbits.

Despite the challenges, Ottawa’s investment aims to position Canada as global leader of LEO technology at the same time as it improves broadband speeds and prices in rural and remote areas. The government investment will enable service providers to sell internet at more affordable rates, Goldberg said.

“Access to high-speed internet is essential for the economy of tomorrow, and all Canadians should have access, regardless of where they live,” Economic Development Minister Navdeep Bains said in a statement. “Today’s announcement will maintain Canada’s leadership in satellite communications, and provides us with a glimpse of the future of connectivity in rural and remote communities.”

As part of the investment from the Strategic Innovation Fund, Telesat agreed to create and maintain 485 jobs over the next decade (170 are new roles, mostly in engineering), invest $215 million in research and development over the next five years and spend $2.4 million on space-focused activities and scholarships for youth.

The investment comes after the government promised to bring internet speeds of 50 Mbps download and 10 Mbps upload to 95 per cent of households by 2026 and universally by 2030.

In the 2019 budget, the government committed to spend $100 million on LEO satellite projects over the next five years as a way to achieve this goal in northern communities that rely on expensive and slow satellite internet connections.

The Conservatives called Telesat’s technology promising, but criticized the Liberals for not moving quickly enough.

The announcement is “nothing more than a desperate pre-election stunt that kicks the can further down the road. Canadians in rural and remote communities need concrete action now,” opposition critic MP Dan Albas said in a statement.

Financial Post