Tuesday, September 21, 2021

Federal government invests $1.44 billion in Telesat satellite internet

The federal government has announced an additional CA$1.44 billion in funding for Telesat, a Crown-owned Canadian satellite communication company, to build its Lightspeed low-earth-orbit (LEO) satellite constellation.

Under the agreement announced on Thursday, the government will grant Telesat a CA$790 million loan and purchase CA$650 million in preferred shares, through which the government would receive dividends. The government will also receive warrants that can be converted into Telesat common shares.

“As part of [the investment], there is a series of capital and operating expenditure thresholds that the company (Telesat) needs to achieve as part of that commitment,” a government spokesperson said during a press briefing call regarding the announcement. “There are both significant domestic capital expenditures tied to the development of the first generation of satellites, as well as the second generation of satellites for this project, as well as seeing domestic employment targets and things of that ilk. “

This new funding is in addition to the CA$600 million reserved in the Universal Broadband Fund (UBF), which will be distributed over the next 10 years to secure capacity from Telesat for regional providers at a reduced cost.

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Telesat’s Lightspeed constellation will comprise 298 low earth orbit (LEO) satellites that promise to bring gigabit speeds with 30 to 50-millisecond latency to anywhere in the world. The network will operate on global priority Ka-band spectrum and has a capacity of 15 Terabits per second.

In Canada, the satellite constellation will connect the country’s most isolated areas. Internet and cellular services enabled through Telesat will begin service in 2025 and connect 40,000 households in underserved communities, a critical step in achieving the government’s goal of providing high-speed internet to all Canadians by 2030.

Telesat is expected to invest CA$3.6 billion in capital expenditure in Canada, provide up to 700 jobs, and offer $800,000 in scholarships with a focus on women in STEM programs.

As Telesat readies its operation in Canada, SpaceX’s Starlink is already making its way into Canadian homes, albeit with limited availability. Earlier this year, Starlink launched its testing phase in Canada, allowing eligible Canadian customers to sign up for its satellite internet subscription.

Unlike Starlink, which sells its service directly to consumers, Telesat will be selling to regional ISPs, who will in turn sell to their subscribers.

Telesat has also received funding from provincial governments. On Aug 11, Ontario inked its own CA$109 million deal with Telesat to secure capacity specifically for rural and indigenous communities in the province over the next five years. In February, the Quebec government also announced a CA$200 million loan to Telesat and invested another CA$200 million in the company.

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Jim Love, Chief Content Officer, IT World Canada
Tom Li
Tom Li
As an avid technology enthusiast, Tom loves to fix, break, and talk about electronics. Now he gets to writes about them. Talk about a dream career.

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