Ottawa’s $2 Billion Loan for Satellite Development Sparks Political Debate

Last updated: 2025/01/26 at 10:05 PM

Irfan Ameer

6 Min Read

Why did Ottawa decide to invest $2 billion in satellites? The Canadian government recently gave a $2.14 billion loan to Telesat, a satellite company based in Ottawa. This move has sparked a big debate among politicians. Is this loan a smart way to secure Canada’s internet future, or is it just an expensive gamble? Let’s break down what’s going on, why some think it’s the right move, and why others are not so sure.

Contents

Why Pick Telesat Over Starlink?Telesat’s Response: It’s Not That Simple National Security: More Than Just Money Political Backlash: Conservatives Push Back The Stakes: More Than Just Internet Is This the Right Bet?

Why Pick Telesat Over Starlink?

Canada’s goal is to connect every household to high-speed internet by 2030. This is especially important for rural and remote areas where regular broadband just doesn’t cut it. The solution? Low-Earth-orbit satellites that can deliver reliable internet to even the most remote places. But Telesat isn’t the only company in the game.

Elon Musk’s Starlink is already well known for providing fast satellite internet in many parts of the world, including Canada.

Conservative politicians, like MP Michael Barrett, argue that Starlink could do the job for a lot less. Musk himself said his company could do it for “less than half” the cost of Telesat’s deal. Barrett called Musk’s offer a “common-sense solution” for Canada. So, why didn’t the government take Musk up on it?

Telesat’s Response: It’s Not That Simple

Telesat CEO Dan Goldberg quickly responded to critics. He pointed out that Telesat got a loan—not free money. The company has to pay it back with nine per cent interest. Plus, the Quebec government is also lending Telesat $400 million. In return, the two governments will get about 12 percent ownership of Telesat. Goldberg made a key point: no one asked Musk if he’d be willing to take a $2 billion loan at nine per cent interest and give up a share of his company.

Interestingly, part of the Telesat loan will go to Musk’s SpaceX since Telesat uses SpaceX to launch its satellites. So, in a way, Musk is still benefiting from the deal. But Ottawa’s choice to back Telesat reflects a bigger picture: keeping satellite tech and operations under Canadian control, especially when security is on the line.

National Security: More Than Just Money

The Canadian government says the Telesat loan isn’t just about internet service but security. Innovation Minister François-Philippe Champagne defended the loan, saying it’s crucial to have Canadian-controlled satellite networks, especially in the Arctic.

He stressed that relying on a foreign company like Starlink could be risky for Canada’s sovereignty, particularly in sensitive areas like military operations in the North.

Champagne also argued that having a homegrown satellite system adds resiliency to Canada’s network. This is not just a decision for today but one that impacts the future. Security experts agree that having a satellite network owned and operated in Canada helps protect national interests long-term. After all, who knows what could happen if control shifted to an outside company in the years to come?

Political Backlash: Conservatives Push Back

Despite the government’s arguments, the Conservative Party isn’t convinced. They claim the Liberals are wasting taxpayer money on insiders instead of picking cheaper options. Conservative Industry Critic Rick Perkins said that Starlink could provide high-speed internet without costing taxpayers billions.

Adding more controversy, some Conservatives pointed to Telesat CEO Dan Goldberg’s friendship with Mark Carney, who recently joined the Liberals as an economic adviser. They suggested that this connection might have influenced the government’s decision to back Telesat. Goldberg strongly denied this, saying Carney had “absolutely nothing” to do with the loan.

The Stakes: More Than Just Internet

This isn’t just a debate about the price of internet service. It’s about Canada’s future and whether the government is making the right choice to invest in domestic tech. Telesat’s plan to connect remote areas with high-speed internet is a key part of closing Canada’s digital divide. However, Telesat has faced delays and isn’t expected to have global coverage until 2027.

Meanwhile, Starlink already provides coverage in Canada. However, questions remain about whether Starlink can meet Canada’s specific needs, especially for the military and other critical services. Experts point out that the U.S. Department of Defense uses SpaceX, which suggests that the technology is reliable. But Musk’s controversial political stances are also seen as a potential risk that Canada must consider.

Is This the Right Bet?

Ottawa’s $2 billion loan to Telesat is more than just an investment in technology; it’s a bet on Canada’s independence and security in space. Critics argue that Starlink could do the job for less, but the government believes a Canadian-made solution offers better long-term stability.

As Telesat moves forward, only time will tell if this investment pays off or if Canada will be left questioning its decision.