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Hub Dialogue: Canada is poised to compete in the 21st century space economy

Podcast & Video

In this Hub Dialogue, The Hub’s editor-at-large Sean Speer speaks to Telestat President and CEO Daniel Goldberg about Telestat Lightspeed, the largest space program in Canada’s history.

This conversation has been revised and edited for length and clarity.

Sean Speer

Today’s Hub Dialogue is with Dan Goldberg, President and CEO of Telesat, the Ottawa-based satellite company which is among the world’s largest and most successful global satellite operators.

Dan has been leading Telesat since 2006 and is now overseeing the company’s ambitious plan to launch a new constellation of low earth-orbit satellites which has the potential to help solve for broadband access issues in rural and remote parts of the globe. Telesat Lightspeed (which is name of the project) is the largest space program in Canada’s history and reflects the energy and ambition of Dan’s leadership.

I am honoured to speak to Dan about the project, what it is like to compete with Elon Musk and Jeff Bezos and whether Canadian businesses need to face more global competititon.

Thank you for joining me, Dan.

Dan Goldberg

Thanks, Sean. It’s my pleasure.

Sean Speer

Your decision to pursue a new low earth orbit satellite constellation – called Telesat Lightspeed – has set Telesat on the course to carry out the largest space program in Canada’s history. It also puts you in the middle of an intense global competition with the likes of Elon Musk and Jeff Bezos. Why did you make the decision to pursue this project? And why do you think Telesat can ultimately win this intense global competition?

Dan Goldberg

Well, Telesat is a for-profit satellite operator; we’re one of the largest in the world, and, so, first and foremost, we saw it as a great business opportunity. Telesat Lightspeed addresses this burgeoning market for global broadband connectivity, which has been growing very rapidly for 20 years or so. The pandemic accelerated a lot of change that was already underway. The pandemic underscored, for everyone, just how important affordable, reliable, high-quality, ubiquitous broadband connectivity is. And, so, that was really the genesis of deciding to move forward with Telesat Lightspeed.

We’re one of the largest satellite operators, and we’ve been in this business for 52 years now. We’ve been serving the market, mostly exclusively with satellites that are in a geostationary orbit — that means they’re 36,000 kilometers above the earth. And satellites that high above the earth are fantastic for certain applications, like video distribution. But for really fast, affordable broadband connectivity, they’re just too far out in space. So, that compelled us to the drawing board, to work with our customers, and evaluate all the different technology solutions that were out there to provide this high-quality broadband. That’s how we conceived of the underlying technology for this new model of low earth orbit satellites.

Now, in your multi-part question, you raised the fact that we’re not alone in pursuing this, and we’ve got some formidable competitors, like Elon Musk and Jeff Bezos, and it’s the right question to ask. How are we going to compete with them? How are we going to win?

It’s a big market and it’s not going to be a “winner-take-all” kind of proposition. But we need to be competitive. Obviously, nobody’s going to contract with us, at least it’s never been my experience, just because they think we’re nice folks. We’ve got to deliver a really great value proposition out there. The reason I think that we’re going to be able to do that, even alongside SpaceX and Amazon, is because, at the end of the day, we’re delivering a communication service, and our ability to be competitive goes to the design of our network: how much we’re investing to get the bits that we’ll be delivering all over the world. And we’re good at this stuff. I mean, the colleagues that I work with are really good at this stuff, and they’ve designed a really smart, efficient system that’s optimized to serve these market requirements that we’re focused on.

It’s hard not to have a super high regard for Elon Musk and Jeff Bezos. They are probably the two most successful entrepreneurs on the face of the Earth right now. But they are new to providing satellite services, and that gives them some advantages in some ways, but being deeply experienced in the area bestows some advantages on us too. We understand the technology, the markets, and the customers. We’ve been successfully competing in a very competitive market for decades. And so, that gives us a core competence that represents a comparative advantage. It doesn’t necessarily mean that we’re going to win and beat those guys, but it does mean that we’re going to ultimately be successful. That means providing a great service for our customers and achieving really good returns for our shareholders.

Sean Speer

One difference between Telesat Lightspeed and Musk’s Starlink is that you’ll sell access to satellite capacity to existing fixed and mobile network operators, as opposed to providing services directly to the end user. As part of the project’s development and planning, did you consider developing capacity to provide services directly to businesses and households? If so, what caused you not to pursue that path?

Dan Goldberg

Our business models are different. What SpaceX is doing is a consumer-oriented play. They’ve designed a constellation that serves the consumer market.

We designed our constellation to serve enterprise verticals, namely the terrestrial, aeronautical, maritime and government verticals, and we did this for a couple of reasons. First, we understand the markets and the customers that we’ve been serving for several decades. If we had focused on the consumer market like SpaceX, it would have driven us towards a different design and different design principles. That also plays back to the first question you asked, which was why we think we’re going to be competitive against these guys. So, we focused on these enterprise markets, and we built our constellation to serve those markets. They didn’t, and you need to make trade offs. I think our plan will give us a competitive edge in those markets.

Second, the world’s a big place, and these low earth orbit satellites are inherently global, meaning we’ll be providing service in every country in the world that will let us in. But just because you’re let in these markets doesn’t mean that you’re set up to serve everybody in these markets.

In my experience, I’ve found that when you’re close to home, like for us here in Canada, you’re a little bit better set up to address issues and to go right to the end user. In many markets, however, you’ll find whether it’s because of regulatory reasons or logistics, having strong local partners is important. Oftentimes, in fact, it’s not just important, but it’s essential. You just won’t be able to get your service out or installed, or get your bills collected. Those are some of the practical market reasons.

And lastly, being a bit technical, you need a very low-cost capable antenna that’s going to go on everyone’s home. We were more skeptical that that antenna would be available in the near-term. SpaceX has developed its own antenna and has been rolling it out and they’re subsidizing it over time. I’m confident that a low-cost capable antenna will eventually be available on the market more broadly. At that point in time, maybe we’ll revisit our plan to focus just on the enterprise market and contemplate a direct to consumer service too.

Sean Speer

The space sector has always been involved in a degree of public-private partnerships given the massive capital needs and its geopolitical and security relevance. Why should Canadians care if we have a space industry in general and why should they care if Telesat Lightspeed is ultimately successful in particular?

Dan Goldberg

That is a great question. First of all, the “space industry” is a big term and covers a wide spectrum. On one end of that spectrum is space exploration, which until recently has been the exclusive domain of governments. There aren’t that many spacefaring nations, and Canada, given its size, has long punched above its weight, and has been one of those early pioneers as a spacefaring nation. Space exploration is in some ways aspirational and inspirational. We’ve had very inspirational Canadian astronauts over our long history in space. Chris Hadfield is of course a great recent example.

Going to the other end of the spectrum are the more hard-headed, commercial parts of the space sector including of course for-profit companies. There are some companies here in Canada that are that are really world-leading in the space industry that are making money, providing jobs, and developing technology.

You asked: why should Canadians care? I could be poetic about why the government funding the astronaut program is really in the Canadian public interest for expanding our collective imagination and inspiring young people to commit to a career in science and space research. But I tend to be a little bit more of a hard-headed, pragmatic person. So, I’ll offer other reasons for why I think Canadians should care along those lines.

One, there’s a reason why there’s a space race that’s playing out between the U.S. and Russia historically, and China and others, including the Europeans who care a lot about the sector and are quite worried about what they perceive as a waning influence and competitiveness in space. The reason that this space race started decades ago and frankly, is now accelerating and intensifying, is strategic. Now, more than ever, big national security issues play out with a major space component. It’s why, for instance, the U.S., under President Trump, and continued with President Biden, set up a separate Space Force, and why other countries who are heavily focused in this area are also committing massive new resources. Space is important to a country’s sovereignty. Their national security is on the line based on whether they have (or don’t have) space capabilities. Canada is no exception. Our national security interests are inextricably tied up in space competence.

Second, most Canadians and most people in the world are blissfully unaware of how much they’re already relying on space-based technologies in their daily lives, whether that’s getting on the internet, receiving television, flying in an airplane, swiping their credit or debit card at a point-of-sale terminal in some shop or pulling money out of an ATM. A lot of that is getting distributed over space-based infrastructure, namely satellites, including our own satellites. So having a domestic space industry is fundamental to a lot of aspects of the day-to-day lives for ordinary people.

Take broadband for instance. Canada is a big country. I think that there’s a giant recognition that in order for everybody to be able to equally participate in a twenty-first century economy, which is a digital economy, you need access to affordable, high-speed, reliable internet connectivity. Given a country the size of Canada, you need satellites to provide that infrastructure in certain rural and remote areas.

Perhaps finally is the economic value and opportunity generated by the sector. There’s a fast-growing new space economy out there which has brought in the likes of an Elon Musk, Jeff Bezos, and Richard Branson, and underlying that there’s a big economic opportunity for jobs, technology creation, and exports. That fast growing, promising market is why we’re investing about $6.5 billion (CAD) in our Telesat Lightspeed program, and that investment will create a lot of really good, high-quality STEM jobs right here in Canada for ourselves and for our Canadian suppliers. It’ll create a lot of wealth. I think Canadians should care about that.

When I look at the modern global economy, and how Canada fits into that, there are certainly things that one can worry about in terms of a transition to a lower carbon environment and what that means for certain parts of our economy. And so, I think Canada needs to be thoughtful and strategic about where it’s going to place bets to build a sound economy for the future and to ensure prosperity for Canadians. The good news is we already have certain key industrial competencies in space, and space is a very promising growth sector right now. It’s why the U.S., the U.K., Australia, Russia, and others are investing in it. I think that’s another great reason for Canadians to care about the space sector, which is it’s a promising path to develop and expand Canada’s economy.

Sean Speer

You just talked about the massive investment that you’re making in what is an increasingly competitive market. That stands in contrast to a popular assumption in public commentary that Canadian businesses are too risk averse and conservative. Do you think that perception is justified? And if so, what, in your view, can public policy do to encourage greater ambition and risk-taking similar to Telesat Lightspeed?

Dan Goldberg

I’ve heard that observation before about Canadian business. I think it’s a fair criticism to a certain level about certain business sectors in Canada. I’m a big believer in the benefits that come from competitive markets. There are lots of great things that come from competition, even though it’s not always a lot of fun to operate a business in a hyper-competitive market. But at the end of the day, it forces you to be very efficient, to innovate, and to provide a great value proposition to your customers, because if you don’t, that becomes an existential issue for yourself.

There are many parts of the Canadian economy that are subject to full and open competition. Certainly, the satellite services sector is one of those – it’s fully open to competition. To that end, we just welcomed SpaceX as our most recent, non-Canadian competitor in the Canadian market. I was teasing a little bit when I said it’s no fun to be running a business in a hyper-competitive market, but I think it’s a lot more fun than being in a market that isn’t competitive, because I think that breeds complacency. And I think it is the case that there are certain sectors of the Canadian economy that are still sheltered from competition, and that’s not good. What that generally leads to is higher prices, less innovation, and less positive outcomes for consumers. If I were having conversations with policymakers, one of the things I would encourage them to look at is those parts of the economy that are still sheltered from competition.

I know it’s a balancing act. You give certain things up when you open up markets, and it’s painful. It’s wrenching, and there’s displacement. But I’d say it’s worth the pain. I would encourage policymakers to look at those sectors that are still protected and ultimately invite more competition in them.

Sean Speer

This has been a fascinating conversation, Dan. Thanks for joining us and best of luck to you and the employees at Telesat as you roll out this exciting project and compete for global market share in such a dynamic high-tech sector.

Dan Goldberg

Thanks, Sean. I appreciate the opportunity.