Progress and peril for new broadband constellations

OneWeb, SpaceX, and Telesat recently had more activity shedding light on their respective plans to build Low Earth Orbit (LEO) broadband constellations.  But questions still linger on how the new constellations will be financed.

OneWeb is spreading the word to the investment community that it is rightsizing the number of satellites it will launch from 900 plus to around 600.  Company officials have told financial analysts and select media that better ground test performance of its first 10 satellites means OneWeb can launch fewer satellites in total, saving money in terms of building hardware and launches to put the constellation into orbit.  OneWeb is also making clear it will focus initial sales efforts on customers with means – essentially airlines, ships, and government – over consumer retail.

SpaceX has simplified its Starlink communications satellite design, as previous noted, to focus on Ku-band. The company also completed a $500 million private financing round with funds going into its Starlink network and won a nearly $29 million Air Force contract for data connectivity research.  The Defense Experimentation Using Commercial Space Internet (DEUCSI) program is working to enable the Air Force to have a “path-agnostic” approach to broadband, enabling it to switch satellite networks easily.  Ideally, the Air Force and other defense users would be able to switch between OneWeb, StarLink, and Telesat with a couple of keystrokes, picking the right network(s) depending on availability and cost.

Among the more interesting features in the SpaceX contract award are a Phase 1 demonstration including connectivity to Air Force ground sites and aircraft and Phase 2 experiments to show a space-to-space data relay service and mobile connectivity directly from space to aircraft.  Being able to move data between satellites to ground stations more quickly is a business companies are working to crack.  

Canadian-based Telesat, with the lowest number of satellites to deploy for its network at 117 initially, has received independent approval for its efforts from DARPA and MIT.  DARPA will use Telesat’s LEO network as a testbed and evaluation for its Blackjack program, which is focused on an architecture demonstration of a small satellite constellation to provide global persistence, low latency communications, and rapid technology refresh. 

DARPA’s decision to go with Telesat may have been influenced by a public study conducted by MIT evaluating Telesat’s network design compared it to OneWeb and SpaceX. The study evaluated information within Federal Communication Commission (FCC) spectrum application filings, finding Telesat’s system provides four times more capacity per satellite in terms of average Gbps than the SpaceX constellation and 10 times more than OneWeb. To be fair, MIT likely needs to update its study results based upon the recent news provided by OneWeb and SpaceX on their respective changes.

Industry analysts have questioned how OneWeb and SpaceX will fund their constellations, with OneWeb needing to come up with more debit financing for a system that may cost anywhere from $3.5 billion to $6 billion to finish.  France’s BpiFrance export bank was expected to be a source of funds, but the agency has not yet been able to come to terms with OneWeb to move forward.  In a worst-case scenario, investor SoftBank might be forced to reach into its $100 billion Vision Fund to provide more cash to OneWeb.

SpaceX’s $500 million private round is expected to go to support Starlink buildout as well as other projects, such as building the company’s next-generation “Starship” rocket for a flight to Mars.  Since SpaceX is a privately-held company, there’s no transparency as to how it chooses to allocate funds or what level of cash it is generating from its current operations.  SpaceX needs to build factories for its satellites and its end-user ground equipment, both hardware it plans build in house to control costs and optimize design.

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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