OneWeb Launch 3, March 21, 2020 (Source: OneWeb)

SpaceX, OneWeb add broadband satellites amid growing financial concerns

Last week SpaceX and OneWeb successfully added clusters of satellites to their constellations, but both companies face looming financial questions. Reports of a OneWeb bankruptcy filing and SpaceX seeking federal bailout money have emerged against the backdrop of a forthcoming global recession.

SpaceX performed its sixth launch of Starlink satellites on March 18 at 8:16 a.m. EDT from Launch Complex 39A (LC-39A) at NASA’s Kennedy Space Center in Florida, but the mission did not go without hiccups.  The Falcon 9 first stage, flying for the fifth time, had a single engine shutdown and was unable to land on a drone shop for recovery.  While the 60 Starlink satellites onboard were successfully delivered into low Earth orbit (LEO), the engine failure is likely to result in an operational pause for future SpaceX launches and depletes the company’s fleet of Falcon 9 first stages for other uses.

No Falcon 9 first stage has previously flown five times and Starlink launches push the Falcon 9 to its limits. The company’s previous two flights resulted in one loss of a Falcon 9 first stage due to a communications glitch and a hard landing of the other, likely requiring additional refurbishment and testing before reflight.  

Given the recent pace of Starlink launches and the launch pause around the March 18 Falcon 9 first stage launch, SpaceX will not be able to meet its goal of conducting Starlink launches twice a month through the end of 2020. It is also unclear if coronavirus mitigation measures in Washington state, California and the rest of the country have or will slow the pace of satellite production and launch rates through 2020.

SpaceX Starlink now has nearly 300 satellites in orbit, but details on the number of ground relay stations and teleports remain unknown, as does when end-user terminal equipment will be available for mass production and how much such equipment will cost.  Initial end-user services also remain obscure as the company backs away from initial suggestions of gigabit speeds with CEO Elon Musk now saying customers will be able to get ultra-high-definition (UHD) streaming without problem.

OneWeb successfully conducted its third launch of satellites on March 21 at 1:06 p.m. EDT from Baikonur Cosmodrome, Kazakhstan.  The 34 satellites were put into orbit by a Russian Soyuz rocket and distributed in nine batches. All satellites have successfully checked in, making a total of 74 OneWeb production satellites in orbit.

Among its accomplishments, OneWeb boasts it has installed ground stations around the world and has a range of user terminals in development for customer need.  The company has established an ecosystem of satellite ground equipment suppliers and resellers to address different vertical markets.

While SpaceX continues to say it will be able to deliver services to Canada and the Northern United States by the end of 2020 and both companies say they will provide global connectivity by 2021, a combination of economic factors are likely to slow them down if not stop them all together.

Even prior to the coronavirus impact upon the global economy, OneWeb had reportedly been facing a cash crunch and was looking at a possible bankruptcy filing according to a Bloomberg March 19 report.  OneWeb is already implementing layoffs of up to 10 percent, according to TechCrunch, due to the impact of coronavirus disruptions.  Launch operations will also likely be delayed, but OneWeb had previously discussed a slight “pause” in launches after the first two of the year instead of keeping to a roughly monthly cadence as it previously discussed.

The Commercial Spaceflight Federation (CSF) has reportedly sent a letter to Congress asking for $5 billion in grants or loans to keep space company employees on the job, according to The Wall Street Journal. CSF is also asking for the Internal Revenue Service to immediate refund research tax credits to increase available cash.

SpaceX has three potential advantages and one disadvantage in seeking government funds relative to other companies.  The company is a second-source launch provider to the Department of Defense and while times are tight, nobody in their right mind wants to lose assured access to space or become dependent upon a sole source provider.  SpaceX is the only proven and affordable “Made in the USA” launch provider in the game at this time.

Department of Defense connections specifically come into play with Starlink.  SpaceX has conducted a series of Starlink demonstrations with the United States Air Force, while the Pentagon has a continuing need for more global bandwidth.  Given the Department of Defense was the savior anchor customer for Iridium in 2001 during its bankruptcy, history could repeat itself.

Starlink also may have a better case to get Federal Communications Commission rural broadband service funding if it is part of a wider government stimulus package like measures taken in the 2008 financial crisis.  The company has been lobbying Congress and the FCC for more cash.

Based outside of the United States, OneWeb has less leverage to secure federal funding. SoftBank seems to be disinclined to contribute more money, breaking from its trend of funding failing firms such as WeWork.  OneWeb may have to seek European help and/or “trickle down” funding from investor Airbus to keep it and their jointly owned satellite factory located in Florida afloat.

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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