New Stars: SpaceX's Starlink Satellites

March 3, 2021 - Pikangikum First Nation is the first community in Canada to connect to SpaceX’s Starlink, a satellite internet network.

 

This development almost immediately followed Innovation, Science and Economic Development Canada’s Twitter announcement on November 6, 2020 that confirmed SpaceX was approved to join the government’s effort in connecting Canadians to high-speed internet. Thanks to collaborative efforts led by FSET Information Technology & Services, based in Kenora, installations commenced on December 2, 2020.

Starlink satellites represent a capable future of connectivity in rural and remote communities. Starlink ingenuity has gone as far as providing satellite dishes with a built-in heating system to prevent snow and ice build-up; which reduces future costs of professional removal.

For communities that are unserved or underserved, the development of Information and Communications Technology (ICT) infrastructure represents an unparalleled opportunity to connect communities to otherwise inaccessible services and markets. However, ICT services can only be as accessible as they are affordable. Usership is the inherent value of ICT infrastructure. 

In Canada, the initial start-up cost for connecting to Starlink is approximately $800 followed by a monthly fee of $129. This is a particularly high cost for economically challenged families, and a reoccurring example of the financial barrier facing connectivity in rural and remote areas.

Ian Stevens from the Canadian Communication Systems Alliance (CCSA) presented an intervention to the Standing Committee on Industry, Science and Technology in December 2020, stating that the development of successful and affordable ICT services in rural and remote communities are, “… never standalone businesses cases – it took government funding to happen.” This argument does not diminish the fact that connecting Pikangikum to Starlink satellite internet is a landmark success story for remote communities. However, it is also evident that while Elon Musk’s SpaceX can sustainably finance innovative capital expenditure at Starlink, SpaceX alone cannot deflate consumer prices set by urban precedence.

Internet Service Providers (ISPs) could offer more affordable internet rates through government partnerships, like Canada’s agreement with SpaceX, if they were backed by investment. Subsidizing ISP costs associated with serving rural and remote areas was one of the recommendations presented by Mr. Stevens. Urban pricing has benefitted from economies of scale as prices are determined on a customers per kilometer basis. However, the rural pricing formula is the reverse: kilometers per customer. On a per customer basis, maintenance costs are therefore higher in rural areas and require government funding to offset. Of course, this naturally leads to questions regarding the threshold of cost advantages between urban and rural areas, as well as the balance between cost and human capital benefits, for example. However, that threshold is another subject in itself.

The ICT market in Canada is an oligopoly. To stimulate greater competition, subsidized government partnerships with ISPs would relieve maintenance costs. Providers could then offer competitive pricing in rural and remote areas and, focus on the race to achieve better internet quality.

Furthermore, subsidizing service costs is an indirect investment by the federal government in enhanced services and a growing tax base. Affordable internet service would stimulate economic activities online. It would increase the effectiveness of healthcare and education infrastructure. It would aid the delivery of other social services in rural and remote communities by making them readily accessible, virtually. It would also support communications, entertainment, and remote access to cultural institutions.

For nearly two decades, Pikangikum First Nation battled the politics of infrastructure funding while enduring boil water advisories, a diesel-powered electrical system, and an over-crowded mouldy school. Infrastructure expenses and unaffordable, poor quality services contributed to these emergencies. The digital divide between urban and remote Ontario will persist and expand if affordability is not addressed.

Pikangikum First Nation will be defined by its next generation, as 75 percent of the population is made up of children, youth, and young adults. The policy measures and funding that government enacts today will leave a long-term impression on the government’s relationship with Pikangikum First Nation and other remote communities.  The technology and infrastructure capital to connect communities and improve the future of this next generation exists today. It is available and feasible to install; it is a matter of making it profitable for ISPs and financially accessible for all Canadians. Starlink is just the beginning.

 

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Sandra Janjicek is a Policy Analyst at NPI.

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