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Copyright 2003 Toronto Star Newspapers, Ltd.

The Toronto Star

November 14, 2003 Friday Ontario Edition

Telesat Canada could very well be the most under-appreciated asset within BCE Inc.'s swelled portfolio of companies.

The 31-year-old satellite operator just opened an office near Detroit, Mich., and is hiring 600 contractors there as part of a slow yet determined expansion across the Americas. Its revenues are growing reliably. Profits continue to climb each quarter.

Next April, Ottawa-based Telesat will launch its much-anticipated Anik F2 satellite after more than a year of delay. Once the satellite is fixed in its orbital slot, new Ka-band "spotbeam" technology built into this high-tech bird will be capable of providing two-way, high-speed Internet service to any cottage, outpost, rural residence or underserved community in North America.

This broadband alternative to cable or digital subscriber line, or DSL, service will be commercially available by the end of next year and will be competitively priced for the consumer market, said Paul Bush, vice-president of corporate development at Telesat.

"If you're a direct-to-home (satellite TV) subscriber or live in areas of the country that don't have high-speed Internet access, this becomes an option," Bush said. Consumers should expect to pay $50 to $70 a month for the service, he added.

Millions of Canadians currently do not have access to cable or DSL high-speed services. Using Anik F2, BCE's Bell ExpressVu and Shaw Communications Inc.'s StarChoice will be able to complement existing satellite TV packages with affordable two-way broadband service, opening up new revenue opportunities in what has become a stagnant direct-to-home market.

Similarly, Telesat will deliver high-speed service to U.S. consumers next year through its 20-percent stake in Wild Blue, a Colorado service provider.

The launch of the new satellite and the availability of continental high-speed coverage is perhaps more important from a public policy perspective. The 1-megabit-per-second satellite service would help fulfill a federal government mandate to have broadband access available to all Canadian communities by 2005.

Last month, Industry Minister Allan Rock announced a $155 million national satellite initiative that would help fund the purchase and access of satellite capacity for northern and remote communities.

One outcome of this initiative is a partnership announced last week between Telesat and Ottawa-based March Networks Corp., which will provide video-enabled telehealth services to remote regions of Canada via Anik F2.

As the only domestic satellite operator, Telesat stands to benefit the most from the federal government's broadband mandate.

"In all this work on (bringing) broadband out to remote regions of the country, I think many have underestimated the role that satellite can play there," BCE chief executive Michael Sabia said during a third-quarter conference call on Oct. 29.

"We think there's a pretty extensive role that we can play through Telesat in helping resolve what is an important public policy issue."

Yet the company continues to be taken for granted - both as an asset quietly tucked within BCE's "ventures" portfolio and as a Canadian institution that keeps ATMs, point-of-sale terminals and TV channels up and running 24-hours a day, unbeknownst to much of the population.

The fact is, Telesat performs. For the first nine months of 2003, the company had revenue of $245.5 million, up from $232.4 million a year earlier. Profit was $59.2 million compared to $36.8 million last year. Cash flow was $116.4 million compared to $95.1 million.

It's slow, structured growth - but growth nonetheless as Telesat expands its consulting and satellite services to the United States and parts of South America, and new technology makes high-speed Internet and high-definition satellite television a reality for far-flung Canadian consumers.

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