Big promise of LEO satellite broadband will require big bucks

Low earth orbit (LEO) satellite broadband networks promise to deliver fiber-like latency and gigabit speeds to a global audience.  In the next five years, a handful of companies plan to build and launch over 5,000 satellites to create high-speed, low-latency global communications networks. And that’s just the start.  Second and third generation proposals to add capacity move the bar to nearly 10,000 satellites placed into orbit, with nearly all launched by OneWeb and SpaceX.

The price tag for a first-generation LEO broadband network seems to be in the range of $3.5 billion, with additional billions added for follow-on networks with still more satellites. Unlike New Space start-ups in Internet of Things (IoT) and imaging, LEO broadband networks require a significant number of operational satellites in orbit to start offering service.  Each satellite is a fast-moving router in the sky that quickly passes over a location on the Earth.  To offer continuous service, you need a steady train of satellites passing overhead, each capable of relaying data between the ground and to other satellites.

LEO satellites provide lower latency over traditional geosynchronous Earth orbit (GEO) satellites. Round trip latency is in the range of 25 milliseconds for LEO satellites a couple hundred miles above the earth, while GEO satellites suffer from 500 milliseconds latency due to being parked more than 22,000 miles away.

Such “fiber-like” latency is a key selling point for LEO services along with significantly higher data rates, with OneWeb offering 500 Mbps, SpaceX and Telesat talking about gigabit speeds and enterprise-focused LeoSat discussing 1.6 Gbps to 5.2 Gbps options.

LeoSat, OneWeb, SpaceX and Telesat have publicly committed to build global LEO broadband networks, plus have secured investors and/or launched prototype satellites. While Boeing has secured radio spectrum rights for an initial 1,400 plus satellites, it has yet to find a business partner to fund and/or build its project; Apple and Google have come up as potential backers.  Facebook plans to send up a pathfinder satellite for testing in the near future but has not discussed any plans beyond that. Samsung floated the idea of a 4,600 satellite constellation in 2015, but there has been no further public discussion.

Who will be first? OneWeb say it will have an initial service launch in 2019, a second-generation constellation planned for 2021, and the third wave launched in 2023. But with an initial 10 satellites going up at the end of this year and no launch dates assigned beyond that date, it isn’t clear how fast the company will get to full global coverage.

SpaceX expects to offer initial commercial coverage in the 2020-2021 timeframe once it gets around 800 satellites into orbit, according to testimony it gave to Congress last year, with the full initial constellation of 4,425 satellites up and running over a 5 year span. A second generation of 7,500 satellites is on the drawing board,

Telesat expects to have global coverage up by 2022, a service date that fits in with its timeline to select a satellite and ground station manufacturer by mid-2019.

LeoSat expects to start launching satellites in 2021 through 2022.  It can initially offer service with 54 satellites in orbit, but needs to have 78 in order to offer uninterrupted service. Depending on customer demand, LeoSat could scale up to a total of 108 satellites in its constellation. The company plans to raise $1.2 billion in financing for its $3.6 billion network, borrowing the remaining $2.4 billion

OneWeb has several advantages in establishing a LEO broadband network.  The company has raised at least $1.7 billion dollars in investment money, a significant chunk of the estimated $3.5 billion needed to complete its first-generation network. Key investors include Airbus, Bharti, Coca-Cola, Hughes Network Systems, Qualcomm, SoftBank, Totalplay, and the Virgin Group. Airbus has built a dedicated factory in Florida to build up to three OneWeb satellites per day. OneWeb has launch arrangements with a number of providers, including Arianespace, Blue Origin, and Virgin Orbit, with at least 21 launches to be conducted with Arianespace. The first 10 OneWeb satellites are expected to be launched by the end of this year.

Both SpaceX and Telesat have launched pathfinder satellites.  Telesat just this week selected Thales Alenia Space and Maxar to develop a proposal to build and launch its 117 satellite LEO network. As a satellite operator, it already has ground networks and infrastructure that could be tailored to support a larger LEO network, along with the ability to self-fund development and deployment.  The Canadian government plans to support LEO services through a multi-year $82 million program to extend broadband to rural areas and promote high-tech job growth. 

SpaceX has secured FCC licensing rights for its Starlink network to operate in the United States and has a pair of test satellites in operation.  It plans to build everything from satellites to end-user equipment priced around $200, but the company has yet to discuss its plans for producing the 4,400 satellites and cranking out ground hardware. Perhaps SpaceX’s key advantage is its fleet of reusable launch vehicles, providing it with the capability to put its own satellites into orbit between (and possibly with) its paying customer launches. A $10 billion estimated price tag for Starlink may tempt SpaceX into partnering with firms for both distribution and investment.

LeoSat has decided not to launch pathfinder satellites next year and will instead move forward with production hardware. The company has secured financial backing and distribution agreements through partnerships with Japan-based Jsat and Spanish operator Hispasat. It is in talks with Thales Alenia Space for production of its satellites, but no formal agreement has been announced.

Building and launching satellites may be the easiest part of the network. The potential Achilles heel for LEO networks is in antenna technology.  Establishing a reliable data connection on a LEO network will require tracking signals on two different satellites at a time, one approaching and one departing. Having a pair of dish antennas with mechanical tracking works but is complex and expensive. Next-generation flat-panel antennas using metamaterials and electronically steered electronics are starting to be produced, finding their way into aircraft and other applications.  The challenge for the satellite industry is production of a low-cost flat-panel antenna in consumer electronics-type quantities.

Assuming the antenna challenge is met, expect all four companies to deploy LEO broadband networks with service available in 2020-2023 timeframe. What the pricing will be for service and equipment is still an open question at this point in time, other than SpaceX floating a rough equipment price of $200 for end-user gear it (will presumably) produce in-house.

Doug Mohney

Doug Mohney, a principal at Cidera Analytics, has been working and writing about IT and satellite industries for over 20 years. His real world experience including stints at two start-ups, a commercial internet service provider that went public in 1997 for $150 million and a satellite internet broadband company. Follow him on Twitter at DougonTech or contact him at dmohney139 (at) gmail (dot) com.

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