OTTAWA – As part of its strategy to provide high-speed internet connectivity to all Canadians by 2030, the federal government announced on Wednesday that it will provide the rocket fuel for Telesat’s LEO launch.
The federal government announced Wednesday it has committed to spend up to $600 million over 10 years to buy broadband capacity once Telesat’s planned low-earth orbit (LEO) satellite constellation is operational – and invest another $85 million, through the Strategic Innovation Fund, to support research and development on Telesat’s LEO initiative in which the Ottawa-based company has already invested $403 million.
“Even with our strong history and our strong financial position, without government support on a project of this nature it would be very difficult to move forward,” Telesat president and CEO Dan Goldberg said at a joint news conference in Ottawa with Innovation, Science and Economic Development (ISED) Minister Navdeep Bains (the above photo of the two is borrowed from Minister Bains Twitter feed).
Telesat expects to generate $1.2 billion in revenue over 10 years through its partnership with the federal government, which was formalized through a memorandum of understanding that is “subject to the launch and successful operation of Telesat LEO.”
The MOU states that Telesat “expects to begin offering broadband coverage to Canada’s far North in 2021 and all of Canada from a constellation in mid-2023.” Early last year, the company launched the first of its 298 LEO satellites planned for the constellation.
“These LEO satellites will be 35 times closer to Earth than traditional satellites, resulting in a shorter trip for Internet signals and making low-latency, fiber-like Internet accessible anywhere in the world,” according to a Telesat news release. The satellites themselves are also far smaller than traditional birds, as prototypes are a bit smaller than an average dishwasher.
Says the ISED-Telesat MOU: “Securing broadband capacity on Telesat LEO would position Canada to leverage a private sector led opportunity to reach rural and remote Canadians with broadband coverage, thereby helping to achieve the broadband objectives established in Budget 2019.”
“Canada’s commitment to Telesat LEO – a new flagship program for Canada in space – would also help further position Telesat and its planned constellation for global success.”
Goldberg told reporters that the $600 million earmarked by the federal government to deliver high-speed internet “allows us to achieve a very low and very disruptive price-point so that our customers – the service providers – will be able to offer a much more high-performing, low-cost broadband connectivity throughout all of Canada.”
Bains said the constellation would also make broadband available “at a greater discount than what Canadians are paying right now” and would improve connectivity. “Because these low-earth orbit satellites are much closer to the Earth’s surface, it deals with the latency issue.”
For him it’s a triple win: “better quality [and] higher speed[s] at affordable prices, and that’s why we are investing into this privileged access.”
Telesat plans to finance its LEO constellation through a combination of “debt and equity,” said Goldberg. “Telesat has significant cash on its balance sheet and we also generate a significant amount of free cash flow every year, and direct that in the LEO constellation. We expect to source the debt principally through the export credit-agency market.”
In the first quarter of 2019, the company reported consolidated revenues of $222 million; $39 million in operating expenses; and a net income of $172 million, compared to a $15-million loss for the same quarter in 2018.
Bains told Cartt.ca that Telesat’s LEO constellation will play a pivotal role in the federal government’s target to bring internet download speeds of 50 megabits-per-second and upload speeds of 10 Mbps across the country 11 years from now. “It will be the only viable solution for someone who is really remote and in rural communities, which represents 2-to-3% of our population and where the fibre-backbone solution is not commercially viable,” he said.
Telesat is not the sole Canadian player in the LEO space. In 2018, Toronto-based Kepler Communications launched two wideband satellites: one from China, the other from India.
However, Telesat sees its role as singular in “bridging the digital divide in Canada” with the federal government.
Its “LEO is the most ambitious global broadband infrastructure program ever conceived and will revolutionize how Canadians, and everyone else in the world for that matter, experience and leverage the Internet,” Goldberg boasted in the company’s news release, which noted that “there are currently 2.3 million [Canadian] households that do not have access to affordable and reliable high-speed Internet, which prevents Canadians from fully participating in and benefitting from the digital economy, including opportunities for education, job advancement and access to healthcare.”
In last year’s federal budget, the government committed $100 million over five years for the Strategic Investment Fund to support projects focused on LEO satellites and next-generation rural broadband.
