Two year target for satellite internet in Canada called unrealistic

Shruti Shekar
·Telecom & Tech Reporter
·4-min read
Space communications satellite in low orbit around the Earth. Elements of this image furnished by NASA
GETTY

Telesat’s goal to offer high-speed internet services through low-earth-orbit satellites within two years is optimistic and unrealistic, experts say.

In an effort to connect more rural Canadians to high-speed internet, the government announced a $600 million agreement with the Canadian satellite company.

Innovation Minister Navdeep Bains said during a press conference on Monday that LEOs will be constructed next year and will offer services in 2022. The government plans to connect 100 per cent of Canadians to high-speed internet by 2030.

“We made a big bet as a government to support this technology through Telesat,” Bains said. “We’re very proud of that and we’re very proud of the fact that these LEOs will be launched late next year, and will be made available to communities in 2022, particularly those remote and rural communities where the fibre backbone infrastructure economics doesn’t make sense.”

Reza Rajabiun, a competition policy and industrial regulation expert, said in an interview that in general LEOs are capital intensive, requiring a lot of money to build out infrastructure to offer services.

He added that it was unrealistic that Telesat will be able to offer services by 2022, noting that a more realistic timeframe would be in the next four or five years.

“That timeframe may still be somewhat optimistic, but potentially realistic," he said, adding this is only possible if Telesat is able to acquire necessary capital in order to deliver services to remote and rural Canadians.

Last week, Innovation, Science, and Economic Development also gave the green light to Elon Musk’s low-earth-orbit (LEO) satellite project. The Canadian Radio-television and Telecommunications Commission (CRTC) also approved the project in late October.

Both approvals mean SpaceX will be able to operate its Starlink constellation in Canada. As of now, SpaceX has launched 800 satellites. According to the company’s website, it plans to offer services in Canada and northern U.S. in 2020 and globally in 2021.

The company is conducting beta tests with some customers in the U.S. The company did not respond to requests from Yahoo Finance Canada confirming it still plans to launch services in Canada this year.

Rajabiun said that because the company has gotten regulatory approval it is possible to offer services in Canada, only if satellites are in a location that would permit it.

“They could if the satellites are located in areas that would be able to deliver service, they could start offering service,” he said.

Similar to SpaceX, Rajbuin said that Telesat will need capital and a lot of customers to launch. Telesat’s CEO said during the company’s October earnings call that it plans to announce contracts with vendors by the end of this year.

Ben Klass, a telecom expert and PhD candidate at Carleton University, added it would be surprising if Telesat were able to launch services by 2022, but it was too early to definitively say it won’t be able to.

Canadians are excited, this will potentially offer more competition

Klass said when SpaceX was going through its consultation period with the CRTC there was a lot of support coming from Canadians.

“There was a lot of support that the CRTC had to give them their licence,” he said. “A lot of people particularly in rural and remote areas haven’t got any sort of worthwhile internet service. The number one thing is that people who are frustrated with their situation not being able to get internet access... this presents a real option. There’s a lot of people who are looking forward to this.”

Klass said that if Musk is able to scale his service and get a lot of customers, there is a possibility of creating more competition.

“At first it doesn’t sound that competitive, but this is a play for scale,” he said. “The only way to pay to [maintain and operate the satellites] is by getting lots of customers. It’s kind of like Netflix or Uber. As far as I can tell, if [SpaceX] wants this to work they’re going to need a lot of customers all around the world.”

Klass said that Musk could also be anti-competitive and come in initially with predatory pricing in order to attract market share.

According to internal emails, as reported by Reuters, SpaceX is planning to test the technology at a cost to users of US$99 per month, plus $499 for a setup kit.

With files from Reuters

Download the Yahoo Finance app, available for Apple and Android and sign up for the Yahoo Finance Canada Weekly Brief.