Elon Musk, champion of Canadian consumers?
Not exactly. But the Tesla founder’s satellite service Starlink, which was announced last week as the winner of a $92 million provincial government contract to provide high-speed internet service to 15,000 customers in rural Ontario, could eventually take a big chunk of business from Canadian telecommunications giants like Rogers, BCE and Telus, analysts say.
Starlink’s growing presence in rural areas, says independent technology analyst Carmi Levy, could serve as a springboard for a broader expansion into the Canadian market.
“Telecom is an industry that’s been ripe for disruption for decades, and Starlink, among all of the new generation orbital providers, is the one that’s best equipped in terms of scaling and global potential to be that disruptive force,” said Levy.
While the speed offered by Starlink’s Low Earth Orbit satellites doesn’t come close to that offered by fibre-optic cable used by the existing telecommunications companies, it could eventually prove to be a competitive threat to their mobile data offerings, Levy argued.
For the moment, Starlink customers require a home receiver that costs almost $500, and pay a monthly fee of roughly $140 in Canada. For customers signing up under the deal announced last week, the receiver will be free, and the monthly fee will be $150.
It’s not a huge stretch technologically to envision a scenario where Starlink offers a receiver for mobile devices, Levy said.
“We’re increasingly moving to a regime where the barriers between land-based broadband and mobile access are breaking down,” said Levy. “It may not necessarily be the be-all end-all replacement for fibre in the home, but if it’s good enough and flexible enough to offer in-home and mobile service, that becomes compelling.”
For now, the service has already proven to be a hit with existing rural customers, who say it’s been a boon for businesses and home users.
“I don’t know if I can use a stronger word than phenomenal, but that’s what it’s been so far,” said Andrew Ryeland, who lives on a lake in Seguin, Ont., near Parry Sound. He’s recently been averaging download speeds of 149 megabits per second. While that’s about 15 per cent of the gigabit speed offered by the telecommunications companies, it’s more than adequate for most uses, said Ryeland — even when everyone in the family is using it.
“I can do video calls, or Zooms, and nobody would know I’m on satellite,” said Ryeland, who’s also president of the Parry Sound Chamber of Commerce.
For years, said Ryeland, he begged the big telecommunications firms to service the rural area. It never really came to pass.
“They’d always say ‘we’ll come up and see what we can do. But I’d be walking through the woods holding an antenna up, and there’d be no reception. It just didn’t happen,” said Ryeland, who thinks Rogers, BCE and Telus should be worried.
“If I had shares in Rogers or BCE, I’d be s———g bricks right now,” said Ryeland. “Why would you be investing in all that ground-based fibre when someone can come along with thousands of satellites and provide a decent service?”
And the ability to launch more satellites was one of the reasons the Ontario government chose to go with Starlink over a rival bid, said Ash Milton, a spokesperson for Ontario infrastructure minister Kinga Surma.
“A factor in the ministry’s decision to select Starlink is that they are the only satellite operator with the ability to launch its own satellites as needed,” said Milton of the company, which is owned by Musk-controlled SpaceX. “With frequent, low-cost launches, satellites are constantly updated with the newest technology.”
The push by Starlink isn’t, however, a major business fight — at least not yet. Last year, Rogers announced a “satellite to phone” partnership with SpaceX to bring its customers service in areas where they currently have no reception.
In a written statement, a spokesperson for the Canadian Telecommunications Association, which represents major providers including Rogers, Bell and Telus, said satellite access isn’t a substitute.
“While satellite-home internet offers a viable solution for more remote areas, it is not a replacement for the world-class services delivered by Canada’s terrestrial networks. Terrestrial network providers continue to invest in expanding and enhancing their networks to ensure high-speed, reliable internet access for Canadians,” said Nick Kyonka. “These complementary technologies can work together to ensure seamless connectivity for everyone.”
Still, though, the cost of the deal caught some observers — including Levy — by surprise. At 15,000 households or businesses, the $92 million price tag amounts to just over $6,100 per account. And with the receivers typically going for $499, it’s fair to ask whether the government is getting good value.
“It’s a laudable project,” said Levy, “but this is gold-plated.”
Milton, however, said that as part of the deal, Starlink is guaranteeing bandwidth will always be available for their rural consumers.
But while making sure rural consumers have consistent, high-speed internet access is important, Geoff White, executive director of the Public Interest Advocacy Centre, questions whether a private, non-Canadian company is the best solution.
“It’s part of the solution, but having a foreign company control a key part of our telecommunications infrastructure isn’t ideal.”
