Ontario Cancels $100 Million Starlink Contract Amid U.S.-Canada Trade Tensions

In a shocking move, Ontario Premier Doug Ford announced the cancellation of a $100 million contract with Elon Musk’s Starlink satellite company. This decision comes amid escalating trade tensions between the U.S. and Canada, particularly due to U.S. tariffs imposed on Canadian goods. The contract, signed in November, was intended to provide high-speed internet services to rural and northern Ontario residents. However, Ford made it clear that Ontario will not do business with companies that contribute to economic attacks on the province or the country.

The Contract and Its Termination

The contract with Starlink was part of a larger initiative to bridge the digital divide in Ontario’s underserved regions. Starlink, a subsidiary of SpaceX, was expected to deliver high-speed internet to areas where traditional broadband services are unreliable or unavailable. However, the imposition of U.S. tariffs on Canadian products led to a reevaluation of the deal. Ford emphasized that Ontario cannot support businesses that enable or encourage economic attacks on the province and its people. The decision to terminate the contract was first mooted in early February when U.S. tariffs against Canada and Mexico were imminent. However, the cancellation was put on hold when the Trump administration delayed the tariffs.

Elon Musk, the CEO of SpaceX, responded to the initial cancellation news with a brief and nonchalant "Oh well" on the social media platform X. Since the second cancellation announcement, neither Starlink nor SpaceX has publicly commented on the matter. An email seeking a response from SpaceX also went unanswered. This lack of communication has left many wondering about the company’s stance on the situation and its implications for existing and potential customers.

The Impact on Ontario Residents

The cancellation of the Starlink contract has left many Ontario residents in a state of uncertainty, particularly those who rely on the service for internet access. Starlink currently serves approximately 533,000 customers in Canada, many of whom are in rural and remote areas where alternative high-speed internet options are scarce. While the cancellation affects future service delivery, it is unclear whether existing customers will be affected. Ontario residents who directly subscribe to Starlink’s services may continue to access the internet uninterrupted unless the Canadian government intervenes at the national level to revoke Starlink’s operating authorization.

For those who rely on government-subsidized programs that use Starlink as the provider, the future is more uncertain. These customers may find themselves switched to alternative providers or, in the worst-case scenario, without internet access altogether. The Ontario government has not yet provided details on how it plans to address the gap left by the cancellation, leaving many residents worried about the continuity of their internet services.

Opportunities for Alternative Providers

The cancellation of the Starlink contract has opened up opportunities for other internet service providers and satellite companies to fill the void. Micah Walter-Range, president of the space-consulting firm Caelus Partners, noted that while Starlink is currently the best option for many, recent events have incentivized governments and customers to seek alternatives. Companies like Telestat, which is developing a service called Lightspeed, could potentially step in to provide high-speed internet to Ontario’s underserved regions.

However, Walter-Range cautioned that developing a robust alternative service will take time. Telestat’s Lightspeed service, for instance, is still in development and not expected to launch for several years. In the meantime, existing alternatives rely on satellites in higher orbits, which provide lower-quality internet services compared to Starlink’s low-earth orbit satellites. This means that while the cancellation of the Starlink contract creates opportunities for competitors, it may be some time before they can offer a comparable service.

The Broader Implications for Starlink’s Business

Despite the cancellation of the Ontario contract, Starlink’s overall business is unlikely to be significantly impacted in the short term. Starlink has established itself as a leading provider of high-speed internet services, particularly in remote and underserved areas. With approximately 533,000 customers in Canada alone, the company has a substantial presence in the market. While the loss of the Ontario contract is a setback, it is not expected to jeopardize Starlink’s overall business.

In many parts of the world, Starlink remains the best available option for high-speed internet, even among customers who may have reservations about Elon Musk or the political climate surrounding the company. However, Walter-Range noted that recent events could create long-term incentives for governments and customers to explore alternatives. This suggests that while Starlink’s business may not be immediately affected, the company may face increased competition and regulatory challenges in the future.

The Future of High-Speed Internet in Ontario

The cancellation of the Starlink contract has significant implications for the future of high-speed internet in Ontario. While the province has taken a stand against what it perceives as economic attacks, this decision may leave many residents without access to reliable internet services in the short term. The Ontario government will need to explore alternative solutions to ensure that rural and northern communities are not left behind in the digital age.

As the situation unfolds, it remains to be seen how Ontario will address the gap left by Starlink. Whether through partnerships with other providers or investments in local infrastructure, the province will need to act quickly to prevent a digital divide from widening further. For now, residents are left waiting for clarity on what the future holds for their internet access.