Government Connectivity Seen as Modest LEO Opportunity
Government-supported internet connectivity, already an important market for geostationary orbit (GEO) satellite operators, is set to be a notable driver of business for non-geostationary systems as well, satellite industry officials and experts told us. Except for perhaps the poorest nations, government-backed connectivity is "everywhere and it's growing," said Telesat CEO Dan Goldberg. Telesat announced a memorandum of understanding (MOU) in July signed with Canada for the country to buy capacity on Telesat's planned low earth orbit (LEO) constellation as part of its universal service goal.
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Government-led or government-funded connectivity is "a big stimulator of demand" for the satellite broadband industry, though not the chief revenue stream, and a LEO operator generally wouldn't count on its being a main driver of business, said Northern Sky Research analyst Lluc Palerm-Serra. LEO isn't likely to elbow geostationary operators out of the government-supported connectivity market, and GEO will remain relevant, though LEO has advantages such as throughput in some situations, he said.
Government-led connectivity can come through direct support of subsidizing connectivity for rural citizens -- as is done in much of the Western Hemisphere, Asia and Africa -- or more indirect support such as mandating coverage to a particular region, which then can create provider demand for partnering with a satellite operator, Palerm-Serra said. Australia and parts of Europe have programs with public financing of terminals, but the users pay the service fees, he said.
Nations usually look to commercial operators for government-supported connectivity but some also have put up their own satellites. Australia launched geostationary satellites in 2015 and 2016 under its National Broadband Network plan, and Brazil launched one in 2017 to provide connectivity for rural schools and government centers. Palerm-Serra said Indonesia also plans a government-operated satellite to provide some rural connectivity.
Around the world, issuance or auction of new wireless licenses often comes with coverage commitments or requirements, Goldberg said. Even developed nations such as in Western Europe have remote agricultural regions where building fiber or microwave doesn't always make sense, and can have 2-5 percent of their households without broadband access, he said.
Under the Canada MOU, Telesat will begin offering broadband coverage via its LEO constellation in Northern Canada in 2022 and nationwide by mid 2023. It said the Canadian investment helps achieve the nation's broadband objectives and "would help further position Telesat ... for global success." Canada's national target is 95 percent of homes and businesses having access to 50/10 speeds by 2026, and 100 percent by 2030 said the MOU. It said Canada will buy up to $1.2 billion worth of capacity over 10 years and invest an additional $85 million on developing and testing the LEO constellation's technologies. Innovation, Science and Economic Development Canada didn't comment.
Goldberg said Canada "saw this as a great opportunity," with the Canadian company developing its LEO constellation as the country was trying to prioritize broadband connectivity nationwide. Canada will use other providers, including fiber and microwave buildouts, toward its universal connectivity goal, he said.
A satellite industry executive said the Telesat deal seems to make sense for Canada because it involves issues beyond just broadband provision, such as jobs and economic development, but such a deal between the U.S. and a satellite operator -- aimed at promoting one domestic company -- seems unlikely.