Starlink should not be blocked from northern internet subsidy, parent company argues

Starlink parent Space Exploration Technologies Inc. (SpaceX) says it would be unfair to exclude its satellite internet services from the northern internet subsidy the CRTC plans to launch, following arguments from the incumbent provider in the region. The goal of the monthly subsidy for all households in the Far North, announced by the CRTC in January, is to make home internet more affordable regardless of customers’ internet service provider (ISP). As part of that announcement, the CRTC launched a consultation to determine the specifics of the subsidy. The subsidy is to be funded by the National Contribution Fund, which collects money from telecommunications companies and also supports the regulator’s Broadband Fund. BCE Inc. and its Northwestel subsidiary jointly filed arguments against Elon Musk’s Starlink getting any money from the subsidy. In its reply to arguments its competitors made earlier in the CRTC proceeding, Starlink says Bell and Northwestel, which is the incumbent carrier in the north, “make a series of generalized assumptions about Starlink” as they seek to have the satellite provider blocked from eligibility for the subsidy. Instead of offsetting increased costs in the north by raising prices for customers, Starlink says it harmonizes prices across Canada. It offers residential service via its low-earth-orbit (LEO) satellite network for $140 per month in Canada. It also offers two roaming packages for people who want to use it in more than one location. In July 2024, the company said in a social media post it had more than 400,000 customers in the country. Bell and Northwestel assert to the regulator in its proceeding on the subsidy that companies with national pricing, such as Starlink, should be barred from the retail internet subsidy because without any difference in prices for internet service for a northern customer versus southern Canadians, there is “no affordability ‘gap’ for Starlink’s plans and thus no basis for a subsidy.” “If the commission chooses to move forward with a subsidy model that Starlink can collect, it will produce the perverse result that subscribers in the Far North will have less expensive service than equivalent subscribers in southern Canada, and that revenues collected from southern Canadian consumers will be used to subsidize Starlink's bottom line,” Bell and Northwestel argue. “If this subsidy is extended to Starlink, it would be in spite of the fact that Starlink incurs no unique costs to serve the Far North than it does anywhere else in Canada,” the companies assert. But that argument is “simply inaccurate,” according to Starlink, which said in its reply to interventions in the proceeding that Bell and Northwestel’s argument “fails to appreciate the unique costs posed of delivering high-quality services to these underserved communities. “Just as the extreme northern latitudes of the Far North create unique infrastructure deployment challenges for terrestrial operators due to weather, terrain, and population density, among other issues that may arise, these northern latitudes create particular challenges for LEO satellite operators,” Starlink said. READ MORE: - CRTC commissioner dissents on pitch to subsidize northern internet service - Indigenous communities to buy Northwestel for up to $1B - Starlink: Saviour of rural connectivity or threat to Canadian sovereignty? Bell and Northwestel’s argument is, in part, that the subsidy is meant to address high retail prices for residential internet customers in the north and the difference in rates they pay for services compared to other Canadians — disparities in pricing that businesses with national pricing, such as Starlink, “either do not have or have already absorbed through their business model,” the companies argue. But to exclude companies with national pricing from the subsidy would bring down competition and would prioritize and selectively subsidize “more costly and less effective” legacy tech instead of “innovative and competitive technologies that consumers are increasingly adopting,” according to Starlink. “Ultimately, designing a subsidy program aimed at increasing affordability in the Far North, while deliberately handicapping a primary driver of pricing and performance pressure amongst competitors, would be a poor public policy outcome…,” Starlink said. The company says it does experience higher costs in the north because the satellites serving that region are “under-utilized” compared to satellites serving more populous “southern latitudes.” “Therefore, the costs of satellites in these orbits are spread across comparatively fewer users and, as such, the per-satellite costs attributable to users in these geographies are materially higher than in other locations globally,” Starlink said in the document signed by senior counsel Shea Boyd. Companies differ on amount subsidy should cover Starlink says that because connectivity concerns in the north are “primarily driven by geography,” the subsidy should be location-based and available to “every potential subscriber” in the Far North. The CRTC took the preliminary view in launching the proceeding that small businesses should be eligible for the subsidy in addition to residential customers. The government of the N.W.T. proposed a multi-band approach in how to value the amount of the subsidy, pitching in its reply to interventions that terrestrially served residential and small business/community groups receive $45 and $70, respectively, and satellite-dependent residential and small business/community groups get $70 and $95, respectively. If the CRTC were to opt for one uniform subsidy regardless of type of service, the territorial government proposed $55 for residential customers and $80 for small businesses and community institutions. Bell pitched a subsidy of $25 per month just for residential customers with fixed-address internet plans. The company argued that services like Starlink’s “portable” Roam plan, which allows people to use the service in more than one location, should not be eligible for the subsidy. “This subsidy amount effectively balances the need for meaningful affordability relief in the Far North with the need to consider the impact on the National Contribution Fund (NCF) and on consumers in southern Canada,” Bell said in its reply to the proceeding. It noted that all but one internet plan publicly offered to northern residents is priced at or above $25 per month. “Setting the subsidy amount at or above the price of most retail Internet plans, while making plans priced below that amount ineligible for subsidy, will ensure broad eligibility, will minimize the risk of over-collecting by ISPs, and will make the subsidy administratively straightforward to implement,” Bell said. Bell noted that the subsidy is not funded by the government or the regulator, but rather telecom companies fund it through contributions to the NCF and could look to recover their costs from customers. “While the subsidy will bring immediate benefits to Far North residents, that benefit will come at a cost to telecommunications customers in the rest of Canada who will fund this subsidy through increased rates for their services,” Bell said. The Public Interest Advocacy Centre (PIAC) noted Telus Corp.’s proposal of a $10 per month subsidy for low-income households and argued that that amount is not enough. “It is crucial that the subsidy amount applied in the Far North is meaningful to address affordability concerns in the Far North at least to a reasonable extent, and to be able to better support low-income households in the Far North,” the advocacy group said. The Kativik Regional Government, which represents people in the Nunavik region of Quebec, noted in its reply that some intervenors used data indicating that household income in the north is higher than in southern areas of Canada. “This is misleading. It is true that average household income in the North is higher than in southern Canada; however, this does not paint an accurate picture of the cost of living in the North. Household expenses are also much higher,” the regional government wrote. Rogers Communications Inc. is concerned that other intervenors have pitched subsidies it says would “overcompensate” customers in the Far North while “placing extreme financial pressure on all contributing telecommunications service providers (TSPs).” According to the company, the CRTC can find ways to support the north “without causing undue harm to TSPs who do not serve the Far North.” “We believe that TSPs that do not provide any services in the Far North should not pay into the new regime, as they have no prospect of receiving any of their contributions back from their customers. Requiring these TSPs to contribute would only serve to widen regulatory asymmetries, not close them,” Rogers argued, adding that companies such as itself would need to “reevaluate customer pricing or their network development plans” to make up the money going into the fund. Rogers did not take a particular stance for or against Starlink being eligible, though it did note in its reply that it expects “multiple new satellite connectivity options will enter the market over the next few years.” Support subsidy with public reach-outs, economic reconciliation, CRTC told The First Mile Connectivity Consortium wrote that it agrees with assertions from Telus about the need for public awareness campaigns to make sure people know about the subsidy and what makes them eligible, in addition to how much the subsidy is. The consortium said that outreach should include information on how to find out which ISPs have qualified to offer the subsidy and outreach efforts should include notices sent in the mail, emails, texts, posters, and announcements on the radio. The group additionally suggested that local band councils and governments could disperse information as well. Part of the CRTC’s motivation behind establishing the subsidy was advancing economic reconciliation. Taku River Tlingit First Nation wrote in its reply submission that “the subsidy is a very good step towards this goal, but there is other work that needs to be done. “Fixing the inequalities that exist for customers purchasing services in the Far North is only one part of placing First Nations on a more equal telecommunications footing with other areas of Canada,” the First Nation said. “...steps must be taken to enable First Nations to fully participate in the provision of their telecommunications services or they risk being ignored. This participation could take the form of more information and better interactions with the commission and service providers. However, if economic reconciliation is a goal, it should also include more participation in and control over how services are provided to First Nations,” it said. hdaley@thewirereport.ca

Starlink should not be blocked from northern internet subsidy, parent company argues

Regulatory |
By Hannah Daley
| March 25, 2025

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