Canadian politicians are debating whether American billionaire Elon Musk poses a national security risk over a $2.14 billion federal loan to an Ottawa-based satellite operator.
Canada is trying to fulfill its promise to connect every Canadian home to high-speed internet by 2030, and part of that fight involves connecting people in remote areas.
Telesat CEO Dan Goldberg said there “appears to be a misunderstanding” about the nature of the company’s contract with the government.
A week ago, the Liberal government announced a loan to Telesat, which is launching a constellation of low-orbit satellites that can connect the country’s most remote areas to broadband internet.
Conservative MP Michael Barrett took issue with the pricing, asking Musk in a social media post how much it would cost to provide Starlink to every Canadian home that doesn’t have a high-speed connection.
“Less than half that,” Musk replied, to which Barrett concluded, “That seems like a common sense solution for Canada.”
In an interview, Goldberg rejected the comparison because his company received a loan, not a grant.
Telesat will pay the government 9 percent interest, and the Quebec government will also lend $400 million. In return, Telesat will give each government about 12 percent of its shares in the company.
“Nobody asked Elon, ‘Do you want to take a $2 billion loan from the Canadian government at 9% interest and give up 10% of Starlink?'” he said. “I think there would have been a totally different response.”
He noted that some of the loan would end up going to Musk’s SpaceX because of Telesat’s use of the company to launch satellites.
An Innovation Canada spokesperson said the new loan replaces a $1.44 billion loan announced but never disbursed in 2021. The government remains committed to spending $600 million to purchase internet capacity once the system is up and running.
The Liberal government has a long-standing commitment to connecting every Canadian household to high-speed internet, with a goal of reaching 98% by 2026 and 100% by 2030.
The last community is the most challenged because they rely on satellite service. Traditional satellite internet, which uses geostationary satellites high in orbit, has limitations.
Newer generations of low-orbit satellite systems, such as those being launched by Telesat and those used by Musk’s Starlink, use large numbers of satellites that orbit closer to Earth and can provide high-speed internet without the same issues.
Telesat’s launch plans have already been delayed for years. Goldberg said those delays, some related to COVID-19-related challenges, are “in the past” and the company plans to launch full global service by the end of 2027.
Starlink’s coverage area map shows the service as available in Canada, but the parent company did not respond to questions about the availability in the country’s most remote areas.
After Barrett’s exchange with Musk, Innovation Minister François-Philippe Champagne accused the Conservatives of “selling out national security”.
“If you’re further north you need a reliable network and you need network sovereignty and resilience, so it’s a bit crazy to suggest to me otherwise.”
He said Telesat will design and build the system in Canada.
“That’s the sovereignty and resilience we want to see, especially when we’re talking about critical military infrastructure that is also needed to defend North Korea.”
In a statement, the Conservatives stuck to their claim that Musk was the better candidate, with industry critic Rick Perkins saying, “We now have an established, available platform that can deliver high-speed internet, without the need for billions of dollars of taxpayer money to end up in the pockets of Liberal-linked insiders.”
The Conservatives also tried to link the deal to Mark Carney, the former governor of the Bank of Canada, who was appointed economic adviser to the Liberal party on Sept. 9, four days before the Telesat loan was announced.
Conservative Deputy Leader Melissa Lanzman said in the House of Commons this week that Carney’s “close friend, the CEO of Telesat, spent more than $2 billion of Canadian taxpayer money to build a broadband network that other companies could have built for half the cost.”
Goldberg acknowledged that Carney was a friend but said he had “nothing to do with” the loan.
In announcing the loan, Downing Street said Telesat would provide capabilities to the defense industry and support NATO and NORAD modernization.
Goldberg said the agreement did not include specifics about using the system for defense purposes, but he said Telesat’s constellation could be a “significant driver” for NORAD’s modernization effort.
In 2022, the Liberal government outlined a $38.6 billion plan to modernize the joint Canada-U.S. aerospace warning system.
Musk has become an increasingly controversial political figure in recent years since buying the social media platform Twitter and renaming it “X,” and he has used his considerable influence to spread misinformation.
Just last week, Musk shared false reports of explosives found near a Donald Trump rally, warned that “if Trump isn’t elected, America will fall into tyranny,” and questioned why no one has tried to assassinate President Joe Biden or Vice President Kamala Harris after the assassination attempt on President Trump.
Goldberg suggested there are good reasons to maintain such contracts with Canadian companies.
“Space is a highly strategic sector and it’s capital intensive, and governments around the world are regularly partnering with their own operators,” Goldberg said.
Eric Bolin, chair of the Telecommunications Economics, Policy and Regulation department at the Ivey School of Business, said there has always been some restriction on foreign ownership in the telecommunications industry, including in Canada, but the satellite sector is “a new area where there’s a lot going on.”
Adam Lajeunesse, an associate professor at St. Francis Xavier University who specializes in Arctic and maritime security, said the government has a legitimate claim when it comes to Arctic defense and national security.
He said he has no doubt that Starlink can meet the Canadian military’s current needs, but it’s important to see what happens with the company in 10 or 20 years’ time.
“Strategic communications are vital to all safety, security and defense activities throughout North Korea, not to mention civilian activities,” he said. “Having only one supplier, especially one outside of government control, is a dangerous situation.”
James Ferguson, a senior fellow at the University of Manitoba’s Centre for Defence and Security Studies, said Musk is a “Trump supporter” and has “made statements that are at odds with current US foreign policy”.
But he noted that the U.S. Department of Defense uses Starlink’s parent company, SpaceX.
“To the Americans, he is not a security problem.”
This report by The Canadian Press was first published Sept. 21, 2024.
