Federal Government Provides $1.44 Billion to Telesat to Bring Broadband Internet to Rural Canada

Founded in 1969, Telesat operates a fleet of geostationary satellites, which remain fixed over a service area 36,000 kilometers above the Earth.

Justin Tang/The Globe and Mail

The federal government is providing $1.44 billion to satellite company Telesat to expand broadband Internet service to Canada’s rural and remote areas.

Ottawa-based Telesat’s global network, called Lightspeed, will consist of 298 low-Earth orbit (LEO) satellites operating 35 times closer to Earth than traditional telecommunications satellites.

Telesat, founded in 1969, already operates a fleet of geostationary satellites, which remain stationed over a service area 36,000 kilometers above the Earth.

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Lightspeed will enable broadband internet and LTE and 5G connectivity in Canada from 2024, eventually connecting approximately 40,000 households in rural and remote regions, the company said in a news release. Edition.

Financing comes in the form of a $790 million and $650 million repayable loan in preference shares, from from which the government would receive dividends. Ottawa will also receive warrants that can be converted into common stock. Telesat plans to go public a while on the Nasdaq stock exchange this year, and could be listed on the Toronto Stock Exchange thereafter.

The announcement comes days before the Liberal government is expected to hold fall elections, and follows years of industry and government commitments to provide high-speed internet to rural households.

“We will be able to connect some Canadians, but the available market for Telesat is much, much bigger than that,” said Innovation Minister François-Philippe Champagne in an interview. The priority, he said, is investing in the Canadian aerospace industry and ensuring Canadian companies remain competitive in the satellite services market.

“For an investment, which is primarily through debt, we’re driving more than $5 billion in economic activity over the next decade,” he said.

Mr Champagne said the financing has been in the works for months.

“I don’t think anyone involved is thinking about whether or not there will be a general election,” Mr Champagne said. “Not really from our perspective, but if you look at [Telesat’s] From a perspective, they look at what their American competitors are doing and how quickly they put satellites into orbit. I think the timing of this is more in line with what you see competitors doing.”

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Telesat also raised $400 million of the government of Quebec earlier this year — half for stock and half for loan — and announced a $109 million partnership with the Ontario government in early August. Currently, Canada’s Public Sector Pension Investment Board and Loral Space & Communications Inc. the major shareholders of the company.

In 2019, the liberal budget included $1.7 billion in funding for broadband infrastructure, including the Universal Broadband Fund to support broadband projects across the country, support for LEO satellite capacity and two new Statistics Canada surveys to measure broadband usage.

But Ben Klass, a PhD candidate at Carleton University’s School of Journalism and Communication who studies communications policy said the government should be aware of the risks of a capital-intensive project like Telesat’s LEO constellation. He points out the maintenance costs and possible damage to the environment.

“This isn’t the first time anyone has tried LEO satellites, and there have been some failures. It’s not that once you put the satellites in the sky, they go [to] be there forever,” said Mr. Klass.

The satellites also need physical infrastructure on the ground to provide broadband, which means more costs to develop connectivity, he said.

The COVID-19 pandemic has fueled calls for a more equitable internet connection. According to the CRTC, only 45 percent of Canadian rural households have broadband speeds of at least 50 megabits per second (Mbps) for download, 10 Mbps for upload and access to unlimited data. The government has set a goal of giving everyone in Canada access to high-speed internet with a minimum speed of 50/10 Mbps by 2030.

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The satellites that make up Telesat’s $5 billion LEO constellation are made by Franco-Italian aerospace manufacturer Thales Alenia Space. telesat announced in February it has chosen MDA Ltd., a long-standing Canadian space robot company, to manufacture antennas for the satellites.

Telesat has committed to $3.6 billion in capital expenditures in Canada, as well as $1.6 billion in Canadian operating expenses over the next 15 years.

“Today’s announcement is about building a strong future for Canada,” Deputy Prime Minister Chrystia Freeland said in a press release. “It strengthens our position as a global leader in tomorrow’s technologies and helps ensure that all Canadian communities have access to the critical infrastructure that is high-speed internet.”

Telesat is one of many providers developing LEO technology. Elon Musk and Jeff Bezos both have projects launched. Musk’s Starlink LEO, Though SpaceX, Already Has More Than 1,000 satellites in orbit and began to offer services to Canadians. Amazon’s Project Kuiper aims to create a network of 3,236 satellites to provide internet in the US

OneWeb, a London-based internet company in the space, has also launched some of the 648 planned satellites and expects to provide global service by 2022.

Telesat said it will increase its Canadian workforce to 700 people, and support post-secondary students through 100 co-op jobs and $800,000 in scholarships, with a focus on women in STEM programs.

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