As OneWeb goes through bankruptcy restructuring, the newly formed U.S. Space Force hints it could throw out a lifeline to it and other space startups undergoing financial problems due to COVID-19. A report in Defense News says the Department of Defense has a list of proposed investments for emerging space technologies that the military might need and China and others don’t get their hands it.
OneWeb filed for Chapter 11 bankruptcy in New York at the end of March, having put 74 satellites out of a planned 650 into orbit, built roughly half its ground infrastructure, and successfully demonstrated the network could deliver broadband speeds of over 400 Mbps at a latency of around 32ms. The company blamed the COVID-19 crisis for its woes, but it was an open secret among analysts that OneWeb needed at least $3 billion to complete the launch of the rest of its satellites and the ground network.
Defense News notes the Pentagon wants additional bandwidth in the Arctic region. If OneWeb is sold to one of two unnamed Chinese firms bidding on OneWeb’s assets, the Defense Department would be put in the awkward position of being dependent upon a potential adversary for commercial Arctic broadband services. U.S. Northern Command wanted $130 million to experiment with OneWeb and SpaceX services for Arctic connectivity, reported C4ISRNet.
However, Pentagon verbal support is unlikely to be enough to bail out OneWeb. A U.S. buyer with deep pockets would commit to buying OneWeb’s existing assets through the bankruptcy court and pony another $3 billion to complete the network. On the customer side, Canada and NATO would be interested in purchasing high-speed broadband capacity, further making a business case for completing the network – assuming enough customers agreed to pay enough money in long-term contracts to assure lenders and potential buyers.
Iridium provides a partial model for OneWeb to move forward, but there are differences. The Iridium network of around 70 satellites was already in orbit and in operations when the company filed for bankruptcy. Purchased for roughly $25 million — literally pennies on the $3 to 5 billion spent to build the entire network — Iridium was able to significantly reduce its operational costs from Motorola’s extensive overhead and had commitments of about $35 million per year in Department of Defense time on the network.
DoD’s investment proved prescient as the new buyers took ownership in the summer of 2001. Iridium communication services were a critical tool in the War on Terror, supporting U.S. Special Forces teams in Afghanistan in late September 2001 in a rapid evolution that lead to the overthrow of the Taliban government by the end of the year.
The ideal buyer for OneWeb would have sufficient capital to support the completion of its network, the ability to operate a complex business catering to enterprise and government customers, and sufficient experience in large scale acquisitions to integrate OneWeb with its other plans. Amazon would be an ideal candidate with sufficient capital, interest in building and operating its own satellite network, and a growing U.S. government business. Purchasing OneWeb would give Amazon access to precious global spectrum licenses, a first-generation turnkey broadband network, and shared interest in a shiny new satellite factory outside of Cape Canaveral, Florida. Could the vision for Amazon’s future Project Kuiper satellite network mesh with today’s OneWeb template? Only Amazon and Jeff Bezos know.
