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Ford government agrees to fee canceling $100M deal with Elon Musk's Starlink
The Ford government has negotiated a break fee to cancel its $100 million contract for Starlink internet, Global News has learned, officially ending its deal with Elon Musk-owned SpaceX.
The now-defunct agreement between Ontario and SpaceX was first signed in November to provide satellite internet to roughly 15,000 homes in the north of the province.
A spokesperson for the Ministry of Energy and Mines confirmed to Global News the deal had ended.
'Our government has cancelled the Starlink contract,' they wrote in an email. 'We are seeking an alternate solution as we continue our efforts to secure long term, stable high-speed internet access across the province.'
Ending the deal meant the province had to pay a fee, although it is unclear how much that was.
A senior government source, speaking on background, told Global News negotiations with SpaceX to settle on the fee had gone well, but still left Ontario on the hook.
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They said the cost of the cancellation was 'not zero,' stressing it was substantially less than the $100 million valuation of the original deal.
SpaceX did not respond to a request for comment in time for publication.
A deal that hinged on Donald Trump
Ontario's $100-million agreement with SpaceX was announced just days after Donald Trump won the U.S. presidential race, with the help of the world's richest man, Elon Musk.
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On Nov. 14, when the Ford government unveiled its agreement with SpaceX, Musk had been a major figure in Trump's campaign and was preparing to take on an even bigger role in his new administration.
The agreement was announced at the same time Ontario was mounting a 'charm offensive' directed at Trump, hoping to convince him to work with the province and not to slap massive tariffs on Canadian goods.
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It didn't work, however, and months later, tariffs were levied on some Canadian products.
When tariffs were unveiled, Ontario Premier Doug Ford announced retaliation, including the fact that he would 'be ripping up' the $100 million agreement with Musk.
'It's done,' Ford said in March. 'We're not going back there, it's done.'
At the time, Musk responded on social media with two words: 'Oh well.'
The Cancelling Starlink Act
Working out how to end the lucrative agreement with Musk's company proved more complicated than simply declaring the plan at a news conference.
According to sources and documents, the government toyed with the idea of introducing legislation to end the agreement.
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A law was considered under a working title, the Starlink Cancellation Act, to end the contract. A senior government source said it would have had the advantage of allowing Ontario to indemnify itself if SpaceX tried to sue it for backing out of the deal.
It could also have provoked the U.S. company to refuse to work with the province in the future, or even cancel other contracts it has in Ontario. Some northern health care facilities, for example, use satellite internet to deliver services.
By negotiating a deal with Starlink, instead of unilaterally cancelling it, the province is able to ensure other agreements aren't touched, and the two parties could work together in the future, sources indicated.
What next for the north?
Cancelling the deal does leave 15,000 homes in northern Ontario which had been promised high-speed internet without it.
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The government has not said which companies it is considering to pick up the hole left by the end of the Starlink agreement or when it plans to sign a new deal.
Ontario NDP Leader Marit Stiles said the situation meant Ontario residents are without internet service, and Musk is making money off a deal he didn't even have to fulfil.
'This should have been done a long time ago and the premier should have secured a proper deal for those in Northern and rural communities who still don't have the reliable internet that they were promised by this government,' she said in a statement.
'Handing over hard-earned tax dollars to Elon Musk's company was never the right approach. Months have passed and we still don't have a plan or even a process that's calling for home-grown solutions.'
