The Universal Broadband Fund was to have been announced in the spring, but due to the novel coronavirus COVID-19 it was delayed. That delay resulted in Telesat pushing back its plans to move forward with its Low Earth Orbit (LEO) satellite constellation program.
Yesterday Prime Minister Justin Trudeau unveiled the much anticipated Universal Broadband Fund and announced that the government had upped its funding from an initial $1 billion to $1.75 billion.
We reported in August that the related Memorandum of Understanding (MOU) signed in 2019 between the government and Telesat had expired. The government in August did tell use they were still working with Telesat on getting an agreement in place. We now know why the delay occurred.
We also know now that it seems more likely that Telesat will finally give the green light to its Telesat LEO constellation before the end of the year. In their recent Q3 earnings call, Telesat’s CEO Dan Goldberg in response to an analysts question on the timeline for building the constellation, answered by saying “my expectation is that we’d be in a position to make some announcement — some announcements about who those vendors are by the end of this year.”
Combined with yesterday’s government announcement, all signs now do point to a major announcement before year end.
So what did the government commit to? Over the course of 10 years from when the Telesat LEO constellation is built, the government will pay Telesat up to $600 million to secure capacity on the constellation. The government said that capacity will be made available to “Internet Service Providers at a reduced rate in order to provide high-speed, reliable Internet access to the most challenging rural and remote communities in Canada.” In other words, the government will be subsidizing Internet access for users in eligible rural and remote locations.
It’s a sweet deal for Telesat and helps make the case to investors. Goldberg in a press release stated “Telesat LEO will transform connectivity in Canada, and this agreement will bring affordable enterprise grade, high-speed connectivity to underserved Canadians no matter where they live and work. We applaud the Government of Canada and Innovation, Science and Economic Development Canada for leveraging revolutionary technologies like Telesat LEO to drive widespread social and economic benefits. We look forward to working with Canadian service providers to provide this capacity to qualified communities across the country to get all Canadians connected as soon as possible.”
Telesat has unveiled a new section on their website to promote and provide information on what they’re calling “Universal Connectivity.”
Telesat expects to have its constellation launched with initial operations starting in late 2022.
The news also comes just days after Innovation, Science and Economic Development Canada announced that it had given the go ahead to SpaceX for its Starlink constellation which is offering broadband satellite internet direct to consumers.
Elon Musk told SpaceQ that invitations to test Starlink will go out this week. However, while Starlink will have users beta testing the service this year, it still faces several issues. Notably the company has no gateways (ground stations) in Canada yet for the service. Those need to be approved and built. It will use U.S. based ground stations to start, which limits accessibility of the service in northern Canada, and even where there is accessibility now, latency will be higher the farther north you go. As well, Musk cautions this is a beta test, which is why it was nicknamed “Better Than Nothing Beta.”
It could take time to iron out the kinks in the Starlink constellation service. In the meantime, Telesat now appears ready to move ahead with their constellation.
At the end of the day, should both constellations transition from hype to reality and to a stable revenue source, everyone wins.