Telesat vs Starlink: a canary in the coal mine?
Companies are often reluctant to name-drop their competitors, but it’s no secret that virtually every satellite communications operator is squaring up against Starlink. Telesat CEO Dan Goldberg didn’t mince words on the company’s March 28 earnings call, saying the Canadian operator is facing Starlink “everywhere,” most acutely in competition for maritime vessels.
The acknowledgement is notable, because a longstanding argument employed by Goldberg and other Telesat executives was that Lightspeed, the company’s future LEO constellation of 156-198 satellites, is designed for markets that Starlink isn’t. By painting Starlink as a consumer-first network, Telesat can emphasize Lightspeed’s differentiation for the enterprise and mobility-networks.
Other satellite operators have done the same, but it’s increasingly apparent they will all face direct competition with Starlink, if they aren’t already. Goldberg’s discussion of Telesat’s competition with Starlink is an important bellwether for the industry as to where Starlink is most aggressive today, and where it will be in the future. Those areas include:
Intense competition: Maritime, particularly cruise ships. Goldberg said Telesat is seeing intense competition here, and he’s not alone. Maritime competition with Starlink has been most strongly felt by SES, whose O3b constellation in Medium Earth Orbit (MEO) serves many of the world’s largest cruise lines. Even amongst smaller ships, Starlink has cemented its presence since activating maritime service in 2022, as evidenced by Starlink reseller strategies adopted by KVH, Marlink, and Speedcast.
Medium competition: cellular backhaul. While GEO excels in providing five-nines reliability (a critical MNO requirement), LEO networks have an advantage in providing lower latency (<100 ms vs 600-800 ms for GEO). Goldberg indicated that Telesat is seeing Starlink going for “backhaul requirements on certain networks.” That said, until Starlink can provide sufficient reliability, we expect the nod will continue to go to GEO. Once fully deployed, Starlink’s DTD service could represent a different type of competition for the cellular backhaul market.
Light competition: corporate networks. Goldberg described corporate business customers as a less affected vertical in Telesat’s business. This may be thanks to Telesat’s entrenched position with customers who have relied on the company for years of remote connectivity across Canada and other geographies. Starlink has a business connectivity offering, but it is admittedly less attention grabbing, perhaps because it has fewer marquee deals announced compared to other enterprise and mobility segments.
Starlink is also active in government, inflight connectivity (IFC), and of course, consumer internet. As the company deepens its presence beyond consumer markets, traditional satellite operators will need to craft strategies to compete with a well-capitalized, agile alternative. Telesat expects to even the playing field with the launch of its first Lightspeed satellites in June 2026, with service following by the end of 2027. Will Lightspeed tip the scales back in Telesat’s favor?
SOURCE: https://seekingalpha.com/article/4681081-telesat-corporation-tsat-q4-2023-earnings-call-transcript