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Telesat CEO Dan Goldberg sits beside a model of an Ariane 5 rocket that launched the Anik F2 satellite in 2004 at the company's headquarters in downtown Ottawa on Sept. 4, 2020.

Justin Tang/The Globe and Mail

On a clear, bright morning in early September, SpaceX’s Falcon 9 rocket lifted off from the Kennedy Space Center in Florida, blanketing the ground below with thick, white plumes of exhaust.

Roughly 15 minutes later, the rocket deployed its payload: 60 communications satellites that will form part of the Starlink constellation, a US$10-billion undertaking to bring high-speed internet to remote parts of the globe. Using small engines called ion thrusters, which are powered by a colourless, odorless gas called krypton, the 260-kilogram satellites made their way to orbits roughly 550 kilometres above the Earth. If all goes according to SpaceX founder Elon Musk’s plan, they’ll start beaming internet to customers in rural parts of Canada and the northern United States by the end of this year.

The Sept. 3 launch marked the 12th mission in the company’s ambitious plan to build a constellation of 12,000 low-Earth orbit, or LEO, satellites. But SpaceX is just one of several contenders in the rapidly accelerating race to deliver high-speed broadband from space.

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Tech giant Amazon.com got the green light from the U.S. Federal Communications Commission last month for a 3,236-satellite constellation called Project Kuiper, while London-based OneWeb has emerged from bankruptcy proceedings with US$1-billion in fresh capital to restart its own project. Ottawa-based Telesat, meanwhile, has locked down spectrum – the radio frequencies used to transmit wireless signals – and secured millions in funding from the federal government as it looks to deploy a smaller, more efficient constellation of nearly 300 LEO satellites.

Some of these projects have been met with great excitement, particularly among rural residents who pay higher rates for slower, less reliable internet connections compared with their urban counterparts. SpaceX’s application for a Basic International Telecommunications Services licence in May garnered more than 2,000 responses on the Canadian Radio-television and Telecommunications Commission’s website, many of them from rural households and businesses cheering the initiative.

As the COVID-19 pandemic has moved workplaces, schools and even health care services online, it’s exacerbated the digital divide between users who have access to affordable, high-speed internet and those who don’t. Some governments and private companies are pouring millions into LEO constellations to satisfy the world’s insatiable appetite for bandwidth, particularly in far-flung regions where laying fibre-optic cables is prohibitively expensive.

But the costs of building LEO constellations are astronomical and technological hurdles remain. For Ottawa-based Telesat, much hinges on how fast it can move in this race and how the federal government goes about reclaiming 3,800-megahertz spectrum – a band that Ottawa is planning to repurpose for 5G – from the satellite company.

There’s even some question about just how big the potential market for high-speed space internet will prove to be, according to analysts. Previous attempts to launch constellations of satellites have failed – most notably in the tech bust of the early 2000s. Will this time be different?

Goldberg in the company's Satellite Control Centre in downtown Ottawa, on Sept. 4, 2020.

Justin Tang/The Globe and Mail

Connecting the world via satellites is not a new concept. Telesat, which has been in business for half a century, currently serves airlines, cruise ships, governments and telecom providers from its fleet of geostationary (GEO) satellites roughly 36,000 kilometres above the Earth. A GEO satellite follows an orbit that keeps it over the same spot on the Earth’s surface. From the ground, it appears to be standing still in the sky.

The problem with these satellites, Telesat chief executive Dan Goldberg says, is that they’re so high above the planet, it takes about a second for a signal to go from the ground to the spacecraft and then be sent back down to an internet user. That adds a delay, known in the industry as latency.

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A second doesn’t sound like much, Mr. Goldberg says, but the way that internet traffic works, it adds up. “You send a little data; that gets acknowledged. You send a little more data; that gets acknowledged. And so that second of delay is multiplied over and over again to the point where the quality of the broadband connectivity you have and the user experience you have is sub-optimal,” Mr. Goldberg says.

LEO constellations, which are much closer to the Earth, promise to solve that – but they also come with a much higher price tag. Rather than remaining fixed above one point, satellites in a LEO constellation orbit the planet in a formation, enabling download speeds that, according to Telesat, are eight times faster than traditional satellite systems and on par with those offered by fibre-optic cable.

Telesat’s proposed LEO (low-Earth orbit) satellite constellation

Telesat wants to build a "constellation" of satellites that orbit the globe from about 1,000 km above the planet. This would create a communications network that delivers faster internet from space than traditional "geostationary" satellites, which are about 36,000 km above Earth.

ORBIT CLASSIFICATIONS

The height of the orbit determines the satellite’s orbital velocity. Satellites closer to Earth move more quickly. A satellite in geostationary orbit matches the Earth’s rotational speed and seems to stay in place.

High-Earth orbit

GPS

20,200 km

Mid-Earth orbit

2,000–35,780 km

Low-Earth orbit

180–2,000 km

Geostationary orbit

35,780 km

THE CONSTELLATION

Telesat’s global constellation will consist of 292 satellites, 72 in Polar orbit plus 220 in Inclined orbit. The mix of different orbits is meant to offer global coverage, with the satellites in polar orbit giving better northern coverage and the inclined-orbit satellites covering mid-latitude regions.

Polar orbit

Inclined orbit

ORBIT INCLINATIONS

Inclination is the angle between the equator and the satellite orbit. An inclination of zero degrees is an equatorial orbit. An inclination of 90 degrees is an orbit directly over the North and South Poles.

North Pole

Polar

orbit

Inclined

orbit

90°

Orbital

inclination

Equator

South Pole

The internet

MURAT YUKSELIR / THE GLOBE AND MAIL, SOURCE:

NASA; TELESAT; THE ECONOMIST

Telesat’s proposed LEO (low-Earth orbit) satellite constellation

Telesat wants to build a "constellation" of satellites that orbit the globe from about 1,000 km above the planet. This would create a communications network that delivers faster internet from space than traditional "geostationary" satellites, which are about 36,000 km above Earth.

ORBIT CLASSIFICATIONS

The height of the orbit determines the satellite’s orbital velocity. Satellites closer to Earth move more quickly. A satellite in geostationary orbit matches the Earth’s rotational speed and seems to stay in place.

High-Earth orbit

GPS

20,200 km

Mid-Earth orbit

2,000–35,780 km

Low-Earth orbit

180–2,000 km

Geostationary orbit

35,780 km

THE CONSTELLATION

Telesat’s global constellation will consist of 292 satellites, 72 in Polar orbit plus 220 in Inclined orbit. The mix of different orbits is meant to offer global coverage, with the satellites in polar orbit giving better northern coverage and the inclined-orbit satellites covering mid-latitude regions.

Polar orbit

Inclined orbit

ORBIT INCLINATIONS

Inclination is the angle between the equator and the satellite orbit. An inclination of zero degrees is an equatorial orbit. An inclination of 90 degrees is an orbit directly over the North and South Poles.

North Pole

Polar

orbit

Inclined

orbit

90°

Orbital

inclination

Equator

South Pole

The internet

MURAT YUKSELIR / THE GLOBE AND MAIL, SOURCE:

NASA; TELESAT; THE ECONOMIST

Telesat’s proposed LEO (low-Earth orbit) satellite constellation

Telesat wants to build a "constellation" of satellites that orbit the globe from about 1,000 km above the planet. This would create a communications network that delivers faster internet from space than traditional "geostationary" satellites, which are about 36,000 km above Earth.

THE CONSTELLATION

Telesat’s global constellation will consist of 292 satellites, 72 in polar orbit plus 220 in inclined orbit. The mix of different orbits is meant to offer global coverage, with the satellites in polar orbit giving better northern coverage and the inclined-orbit satellites covering mid-latitude regions.

Polar orbit

Inclined orbit

ORBIT CLASSIFICATIONS

ORBIT INCLINATIONS

The height of the orbit determines the satellite’s orbital velocity. Satellites closer to Earth move more quickly. A satellite in geostationary orbit matches the Earth’s rotational speed and seems to stay in place.

Inclination is the angle between the equator and the satellite orbit. An inclination of zero degrees is an equatorial orbit. An inclination of 90 degrees is an orbit directly over the North and South Poles.

North Pole

Polar

orbit

Inclined

orbit

High-Earth orbit

90°

GPS

20,200 km

Mid-Earth orbit

2,000–35,780 km

Orbital

inclination

Low-Earth orbit

180–2,000 km

Equator

Geostationary orbit

35,780 km

South Pole

The internet

MURAT YUKSELIR / THE GLOBE AND MAIL, SOURCE: NASA; TELESAT; THE ECONOMIST

Part of the reason why the LEO sector has become more attractive in recent years is that space has become more commercially accessible. Launch costs have come down dramatically, particularly since SpaceX started an UberPool-style service last year that allows small satellites to hitch a ride on its Falcon 9 rocket. The company’s rideshare program launches satellites into orbit for as little as US$1-million for 220 kilograms, according to Space X’s website.

Although the technology is aimed at rural and remote areas, not every provider is going after the same market. SpaceX is planning to beam broadband directly to consumers; each home will be outfitted with a half-metre-wide circular antenna resembling a UFO on a stick.

Telesat, meanwhile, is focused on enterprise clients such as the aerospace and maritime industries. It also plans to provide “backhaul” connectivity to telecom companies, which will then transmit the signal to customers' homes via ground-based networks.

Amazon is aiming for a mix of residential customers and telecom carriers. The telecoms don’t view LEO companies as competitors, analysts say, because the new satellite providers are focused on areas where it’s impractical to build networks of fibre-optic cables.

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The LEO industry is projected to expand as global demand for connectivity grows. Today, satellite communications generates about US$10-billion to US$15-billion in revenue annually, comprising about 1 per cent of the telecommunications market, says Lluc Palerm, a senior analyst at consultancy firm Northern Sky Research. That could grow to as much as 5 per cent of overall telecom industry revenues, Mr. Palerm says. Mr. Musk has said he believes the revenue opportunity for SpaceX’s Starlink constellation is around US$30-billion.

But to fulfill such stratospheric expectations, the LEO industry will have to overcome several hurdles – the primary one being costs. The industry has not offered any details on customer pricing, but the ill-fated satellite networks launched in the 1990s tech boom all charged much more for equipment and service than land-based providers.

True, the price of space launches may be coming down, but LEO constellations require more satellites to cover the globe compared with GEO systems, leading to higher manufacturing expenses.

A typical communications satellite costs as much as US$60,000 a kilogram, according to an analysis by consultancy firm McKinsey & Co. At this price, LEO constellations will be “completely unaffordable,” the firm said in a recent report: “If large LEO constellations are to be financially viable, their manufacturing costs must fall by more than an order of magnitude from those of traditional satellites.”

Ground equipment for LEO systems is pricier, too. Traditionally, satellites have been tracked using parabolic-dish antennas, which feature a curved surface that looks like a bowl. But these antennas are unsuitable for LEO constellations, where multiple satellites are passing overhead at the same time.

Instead, electronically steerable antennas are needed to track satellites across the sky. These antennas are more expensive, posing a challenge to SpaceX’s plan to target the consumer market.

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Previous attempts to launch LEO constellations have ended in bankruptcy – in some cases before they even really got going. “Guess how many LEOs didn’t go bankrupt?” Mr. Musk asked the audience at Satellite 2020, a space industry conference held in Washington last March. The Tesla CEO paused briefly, then made a circle with his thumb and his index finger: “Zero.”

The most famous of these is Iridium, a constellation of 66 satellites built by Motorola in the late 1990s that was rescued from the verge of collapse by a group of investors led by a former airline executive. The company had to drastically scale back its plans, restructure and shift gears to providing emergency communications. Iridium’s LEO constellation is one of a small handful of such systems currently in operation, generally focused on the enterprise market.

More recently, British-based OneWeb filed for Chapter 11 restructuring in March after its backer, Japan’s SoftBank, declined to put up fresh capital. The company had put 74 of its planned 648 satellites into orbit before seeking bankruptcy protection, but has since found new owners – the British government and Indian telecom company Bharti Enterprises.

“It’s a very risky business,” Mr. Palerm says. “Finding the business case can be challenging.”

The U.S. telecom regulator, meanwhile, has said in a report it doubts satellite operators will be able to keep latency under 100 milliseconds, even with low-orbit satellites. That means SpaceX and other LEO companies could have a tough time getting access to an FCC fund aimed at supporting rural broadband projects.

Canada’s telecom regulator has not expressed similar concerns. A CRTC spokesperson said there are “inherent risks” associated with new technologies, but LEO satellites are eligible to apply for rural broadband funding. A spokesperson for Innovation, Science and Industry Minister Navdeep Bains said Ottawa, which manages a rural broadband fund, is “keeping all options on the table” as it evaluates applications.

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Some analysts caution that the potential market may not be large or lucrative enough for LEO companies to recoup their sizable investments. Moody’s analyst Peter Adu is skeptical of Starlink’s US$30-billion revenue estimate. Sure, the constellation will cover the globe, Mr. Adu says, but how much of the Earth’s population can actually afford the internet? In some remote regions, getting access to clean drinking water is still a problem, he says. “Who is even thinking about internet access?”

Telesat's Satellite Control Centre in downtown Ottawa is seen, on Sept. 4, 2020.

Justin Tang/The Globe and Mail

Telesat’s Mr. Goldberg is confident his company will overcome these obstacles. He rattles off some of Telesat’s advantages: its 48-year track record as a satellite operator, a roster of enterprise clients eager for faster internet service and a constellation design that, according to Mr. Goldberg, is “qualitatively better” than the other proposals out there. “If we execute on our plan well, we very well could be the largest satellite operator in the world within the next 10 years," he says.

Telesat’s planned LEO constellation of roughly 300 satellites is much smaller than those of its competitors, but it drew top marks for efficiency in a 2018 study by researchers at the Massachusetts Institute of Technology. “We’re building more capable, more advanced satellites so you need fewer of them,” Mr. Goldberg says. A smaller fleet of satellites also means less obstruction of the night sky. (The astronomy community has raised concerns that LEO constellations could obscure views and limit scientific discoveries.)

Still, the project will cost billions – money that Telesat plans to raise through a combination of equity and debt. As The Globe and Mail previously reported, Telesat plans to go public next year through a dual listing on Canadian and U.S. stock exchanges, although the plan hinges on its two current owners – the Canadian pension fund Public Sector Pension Investment Board (PSP Investments) and Loral Space & Communications – coming to an agreement on governance matters. Debt financing, meanwhile, will likely come from Canadian and foreign export credit agencies eager to revive their pandemic-hit economies, Mr. Goldberg says.

“For our project, this is actually a very opportune time to be coming to the market,” Mr. Goldberg says. “There’s a greater focus now on bridging the digital divide and providing good broadband connectivity everywhere, and that’s supportive of the business case of our project.”

But Telesat’s LEO constellation also faces hurdles. Ottawa is looking to reclaim a chunk of the satellite company’s 3,800 MHz spectrum in order to repurpose it for the coming wave of 5G wireless services. To clear much of that band, Telesat will need to shift current customers onto the LEO constellation it has not yet built.

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The company has proposed a solution: It will return 400 MHz of spectrum – half of it on an expedited basis – provided Ottawa lets the satellite operator sell those 200 MHz of airwaves to telecoms and use the proceeds to fund its constellation. The other half of the band would be Ottawa’s to auction off. The government launched a public consultation on the matter last month to help it determine how to proceed.

South of the border, satellite operators have received big payouts from the U.S. government to clear the 3,800 MHz band, Mr. Goldberg says.

Telesat has already secured $85-million in funding from Ottawa, and a $600-million commitment over the next decade to support the delivery of broadband, but Mr. Goldberg says more government support is needed. Many of Telesat’s competitors, including SpaceX, have received ample financing from their governments, and Mr. Goldberg fears his company is at a competitive disadvantage. “When you’re in a global space race, having government support from your domestic government is essential,” he says.

SpaceX also has the upper hand in terms of timing. It has already deployed 715 satellites and its employees have started testing out the service. “By the time Telesat’s constellation is up and running … how many satellites will SpaceX have launched?” Mr. Adu says.

Telesat, meanwhile, is still selecting a manufacturer for its constellation. It isn’t planning to start offering global services until 2023.

“We need to get going,” Mr. Goldberg says, acknowledging the competitive threat. “There are other competitors that are focused on this opportunity with LEOs. I think we’ve got the best plan that’s out there – and we need to get moving on it.”

There's a growing volume of debris in orbit around the earth, commonly called space junk, that ranges from old spacecraft down to tiny flecks of paint. Canada plays a role in scanning the sky for this junk, which can cause serious damage in the event of an impact.

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