Memorandum of understanding between Industry Canada and Telesat Canada

Industry Canada (commonly known and hereinafter referred to as “Innovation, Science and Economic Development Canada or “ISED”) and Telesat Canada (“Telesat”), hereinafter referred to as the “Participants”,

RECOGNIZING that high-speed Internet connectivity at affordable prices is critical for ensuring all Canadians benefit from access to growth in the digital economy,

SEEKING to leverage advancements in low Earth orbit (“LEO”) satellite technologies with potential to serve the most rural and remote regions of Canada with high-speed, low-latency Internet,

BUILDING on Canada’s investment of $85 million through the Strategic Innovation Fund (“SIF”) to develop and test pre-commercial technologies for Telesat’s planned LEO satellite constellation,

WORKING to achieve objectives of Canada’s Innovation and Skills Plan and new space strategy, Exploration, Imagination, Innovation,

AIMING to leverage Telesat’s recognized capabilities in advanced LEO satellite technologies and service delivery for the benefit of all Canadians,

HAVE COME to the following understanding:

  1. Introduction

    Broadband networks are a foundational platform of the digital economy. Improved broadband access benefits economic, productivity, and employment growth. High-speed Internet connectivity enables Canadian consumers, businesses, and public institutions, such as schools and medical facilities, to take advantage of online tools and data-rich applications that require faster speeds and higher quality of service.

    In Budget 2019, the Government of Canada committed to setting a national target, in which 95 percent of Canadian homes and businesses will have access to Internet speeds of at least 50 Megabits per second (“Mbps”) download and 10 Mbps upload (“50/10 Mbps”) by 2026 and 100 percent by 2030.  Achieving this target requires collaboration with partners across Canada, including provincial and territorial jurisdictions, Indigenous partners, and the private sector.

    In many regions of Canada underserved by existing broadband Internet services, where geographic and market challenges exist, government support is required to achieve public policy objectives related to Internet connectivity. Budget 2019 commitments help address these market failures and ensure that Canadian consumers, businesses, and public institutions in the most underserved communities across Canada have access to the affordable, high-speed Internet services they need to succeed in the digital economy.

    Given Canada’s large and varied geography, the government recognizes that advanced satellite technologies will play an important role in addressing connectivity needs in the hardest to reach rural and remote areas. Budget 2019 included a commitment to secure advanced LEO satellite capacity to help bring reliable high-speed Internet access to even the most challenging rural and remote homes and communities in Canada.

    To address growing demand for broadband Internet, Telesat plans to launch and operate “Telesat LEO”, a constellation of satellites to provide reliable and economical high-speed, high-capacity broadband with global coverage. Telesat expects to begin offering broadband coverage to Canada’s far North in 2022 and all of Canada from a constellation in mid-2023.

    Securing broadband capacity on Telesat LEO would position Canada to leverage a private sector led opportunity to reach rural and remote Canadians with broadband coverage, thereby helping to achieve the broadband objectives established in Budget 2019. Canada’s commitment to Telesat LEO – a new flagship program for Canada in space – would also help further position Telesat and its planned constellation for global success.

  2. Purpose

    The purpose of this Memorandum of Understanding ("MOU”) is for the Participants to define a common set of objectives and establish the basis of a partnership to realise the Government of Canada’s Budget 2019 commitment to secure LEO satellite capacity over Canada to address connectivity gaps in the most challenging rural and remote communities across the country within the next decade.

    The Participants will seek to reach a definitive agreement on the terms of a contribution agreement under which the Government of Canada would secure capacity on Telesat’s LEO constellation to provide high-speed, reliable broadband access to challenging rural and remote communities throughout Canada and secure high economic benefits for Canada and Canadian industry. This proposed agreement, including the Government of Canada’s contribution (the “Canada Contribution”), is expected to result in up to $1.2 billion in revenue for Telesat over 10 years and ensure affordable access to broadband for Canadians living in rural and remote communities.

  3. Objectives

    The objectives of the Canada Contribution will be to:

    1. Maximize and optimize rural and remote broadband coverage to reach target Internet speeds of at least 50/10 Mbps for all Canadians.
    2. Position Canada as the global leader of LEO technologies.
    3. Secure sufficient, high-speed, reliable broadband capacity to serve challenging rural and remote communities in Canada.
    4. Maximize the potential for high-quality job creation in Canada stemming from this investment.
    5. Open a platform for development of other applications using Telesat LEO.
  4. Process

    The Participants will undertake negotiations and work to develop a binding commitment for the Canada Contribution as defined by the Purpose and Objectives of this MOU.

    The Participants will work in collaboration to achieve the Purpose and Objectives of this MOU in a timely manner.

    Telesat will covenant certain provisions and obligations related to price, capacity, and geographic coverage in sub-agreements between Telesat and its Internet Service Provider (“ISP”) customers in order to achieve the Government of Canada’s goals with respect to broadband coverage.

    Achieving the Purpose and Objectives of this MOU is subject to the launch and successful operation of Telesat LEO and the provision from that system of sufficient satellite capacity and geographic coverage to rural and remote regions of Canada, including the far North.

  5. Status

    The Participants hereby acknowledge and agree that this MOU does not create any legally binding obligations as between them. Any binding agreement is subject to negotiation to agree on terms mutually satisfactory to both Participants and the securing of approvals as required by either Participant.

  6. Final Dispositions

    1. This MOU will come into effect on the date of its last signature by the Participants (“Effective Date”) and will remain valid for a period from the earlier of one (1) year from the Effective Date or the date of signing a binding Canada Contribution.
    2. The Participants may renew this MOU for a period to be determined upon their mutual written consent.
    3. The Participants may amend or terminate this MOU upon their mutual written consent.
    4. A Participant may terminate this MOU by giving three (3) months written notice to the other Participant.

Signed in duplicate at Ottawa, Ontario, Canada on this 23rd day of July 2019, in the English and French languages, each version being equally valid.

For Innovation, science and economic development Canada

For Telesat