The disruption or "loss of earth lock" affected services for customers including Shaw Direct TV, government agencies, and The Canadian Press news agency.
Other companies that use C-band, Ku-band and Ka-band services, frequencies that are primarily used for Wi-Fi, telecommunication and broadcast services, were also affected.
Remote northern locations were the most affected, with 10 of 33 communities served by NorthwesTel seeing disruptions from the outage.
First Air airline cancelled 48 flights, stranding about 1,000 passengers just before the Thanksgiving long weekend.
"It's one of those high-priority travel weekends," said spokesman Chris Ferris, who added that the airline plans extra flights on Friday to get everyone where they need to be for Saturday.
Telesat said the satellite suddenly ceased functioning around 6:36 a.m. and turned away from the Earth as it is programmed to do in safety mode.
"The expectation is that by late this evening that the satellite should be back in normal operations and services restored," spokesman John Flaherty said in an interview.
The Ottawa-based owner and operator of one of the largest and most powerful telecommunications satellites orbiting 35,800 kilometres above the Earth said the satellite faces the sun to charge its batteries.
The root cause of the shutdown is under investigation but Telesat doesn't believe it was caused by a solar storm of the kind that disrupted its satellites in the early 1990s.
"It's not clear yet but all indications are that the spacecraft is healthy, that there are no permanent issues with the satellite," he added.
Telesat believes the problem lies within the satellite but declined to specify if it is related to the construction or design of the spacecraft that was launched in 2004.
The satellite supports a variety of services including voice and data for Internet, broadcaster and business customers in Canada and parts of the United States.
Shaw Direct uses several satellites so its service was only partly affected. Bell TV uses a different satellite while Telus said its customers faced no service problems.
NorthwesTel said long distance service was disrupted in satellite communities. DSL-based Internet in Iqaluit, other data services in the Northwest Territories and Nunavut and some cable television channels were also impacted.
Bell Aliant said about 7,800 residential and business customers in Northern Ontario and Northern Quebec were affected by a disruption to long distance telephone service and some TV channels.
Novanet Communications, which provides customers the satellite signal from Telesat, says the process of restoring service is similar to what needs to be done after the breaker in a home shuts off.
"Once the earth lock has been established it's a matter of slowly turning on all the transponders one at a time," said Novanet official who didn't want to be identified.
Telecom analyst Carmi Levy said such satellite disruptions can be significant because they affect voice, Internet, television and telecom services.
"It's a very rare type of failure for a satellite to simply go off line in an unplanned fashion," he said from London, Ont., where his phone service was affected.
"There's enough redundancy built into these birds, that for example if a circuit fails there's usually a number of other circuits that can take over for it."
Even banking ATM machines that rely on satellite service can be affected, although there have been no reports of widespread outages, Levy added.
Quebec cable and telecommunications provider Videotron said some of its customers in the Bas Saint-Laurent and Cote-Nord regions and a dozen channels were affected by the problems.
The Canadian-Newfoundland and Labrador Offshore Petroleum Board said regular communication channels have been affected with that province's offshore oil platforms. But the board said operators have other ways of communicating in case of an emergency.
Medevacs and search and rescue operations were still active, said Iqaluit mayor Madeleine Redfern, stranded in an Ottawa hotel on her way back home. But she said the disruption highlights the fragility of communications in the North, as underlined by a recent government report.
"We are all very vulnerable," she said. "If (the satellite) had actually gone down more severely, then we're talking about days, if not weeks of disruption.
"And then we find ourselves in a situation of safety if not security, so it is a concern that we don't not have the same amount of options available in southern Canada."
RCMP are able to communicate through radios. And although the majority of northerners use NorthwesTel as their service providers, two smaller companies that route through different satellites were still operating.
Satellite phones were also working.
Telesat has a fleet of 12 satellites, with three more under construction, and manages the operations of additional satellites for third parties.
— With files from Bob Weber in Edmonton