LEOsats are back - and this time they'll fly

Metaratings
17 Jun 2015
00:00
Article

Back in the early to mid-1990s, a handful of companies were convinced that the key to connecting the unconnected was building a constellation of specially-designed low-earth-orbit (LEO) satellites providing voice and/or internet connectivity to everyone on Earth.

Famously, all of them failed – a couple of them spectacularly, although they still survive today.

Twenty-something years later, LEOsats are back, with no less than three (3) projects greenlighted this year, all of them offering broadband access. And this time, we are assured, they’re going to get it right.

This month alone, we’ve seen several announcements on the LEOsat front.

On Tuesday, OneWeb – backed by Qualcomm and Richard Branson, and helmed by Greg Wyler, formerly of Google and MEOsat operator O3b Networks – signed a deal with Airbus Defence and Space to deliver 900 mini-satellites that will provide global broadband internet access by 2018.

The same day, LeoSat LLC and Thales Alenia Space announced that they expect to complete their feasibility study on LeoSat’s proposed constellation of 120-140 high-power Ka-band LEOsats next month. If all goes as planned, LeoSat will start handing out development contracts next year with the aim of launching satellites in 2019 or 2020.

Last week, Elon Musk’s SpaceX filed its plan with the FCC for its own LEOSat system comprising 4,000 small satellites that will also provide high-speed internet connectivity worldwide.

Not unexpectedly, all of these plans raise memories of the Iridium/Globalstar boondoggles of the 1990s, which failed for various reasons that can be boiled down to two things: the sheer cost of the systems (including ground equipment and handsets), and the fact that their business models were based on providing mobile voice communications – a market that had been overtaken by GSM and CDMA by the time their constellations were in place.

Judging by the various comments from SpaceX, OneWeb and LeoSat execs over the past six months, history won’t repeat itself with these new systems. For one thing, they're offering broadband internet connectivity, demand for which isn’t going anywhere anytime soon, and LEOsats promise far lower latency for IP traffic than standard geostationary satellites. Also, both LEOsats and the necessary ground antenna technology are less costly and more advanced than they were 25 years ago.

That leaves the business model. SpaceX and OneWeb are talking up ubiquitous internet connectivity for the unconnected, which is nice. But Google and Facebook – who were also early champions of using satellites to connect the unconnected (or at least connecting them to Google and Facebook) – have both since backed away from the idea. Earlier this month, according to a report from The Information, Facebook quietly killed off its own plan to build an internet satellite.

LeoSat’s business model is more narrowly focused, offering a broadband data platform for “the top 3,000 rather than the other 3 billion”, as CEO Vern Fotherington recently told Space News.

If nothing else, O3b Networks has demonstrated with its MEOsat constellation that there’s at least a viable business case for wholesale gigabit broadband satellite backbones that offer lower latency than traditional satellites. LeoSat isn’t proposing exactly the same thing, but – like O3b – it at least has an idea where the money is.

Meanwhile, skepticism abounds about the viability of these projects, not least because of the 1990s failures. At the CASBAA Satellite Forum in Singapore at the start of this month, ABS co-founder and CEO Thomas Choi complained that “dubious” projects with “unrefined business models” could endanger the rest of the satellite industry from an investment standpoint.

“We don’t want to see a recurrence of what happened years ago where we saw $20 billion in losses from projects like Iridium, Globalstar, ICO and Teledesic,” he said. “Investors shunned us for years after that.

Choi suggested the industry set up some kind of technology advisory panel so investors can talk to experts who actually understand how the satellite industry works. “We need to communicate to investors who are not as sophisticated when it comes to the satellite business, and give them advice over what is realistic and what isn’t.”

Meanwhile, Sir Martin Sweeting – chairman of small-satellite firm Surrey Satellite Technology Ltd. (SSTL), who spoke at another industry forum last month – warned that all the enthusiasm over LEOsats could create a technology investment bubble that will burst if these companies don’t come up with a sustainable business model, reports Space News:

Referring specifically to proposals for constellations of hundreds, even thousands, of small satellites for Internet delivery and Earth observation, Sweeting suggested that the “heady enthusiasm” behind these projects is like the froth on a cappuccino.The industry can only hope that “there is some espresso at the bottom of the cappuccino,” Sweeting said.“[…] what we need is to reduce the cost to orbit by a factor of 10, not two,” he said. Costs are still around $20,000 per kilogram to orbit in many cases, a price that discourages innovation, Sweeting said. Referring specifically to proposals for constellations of hundreds, even thousands, of small satellites for Internet delivery and Earth observation, Sweeting suggested that the “heady enthusiasm” behind these projects is like the froth on a cappuccino.The industry can only hope that “there is some espresso at the bottom of the cappuccino,” Sweeting said.“[…] what we need is to reduce the cost to orbit by a factor of 10, not two,” he said. Costs are still around $20,000 per kilogram to orbit in many cases, a price that discourages innovation, Sweeting said.

Sweeting also noted that launch costs remain a major stumbling block, even with SpaceX having pioneered that road, offering launch prices up to 50% cheaper than incumbent launch providers. That’s a good start, he said, but it’s not enough:

Referring specifically to proposals for constellations of hundreds, even thousands, of small satellites for Internet delivery and Earth observation, Sweeting suggested that the “heady enthusiasm” behind these projects is like the froth on a cappuccino.The industry can only hope that “there is some espresso at the bottom of the cappuccino,” Sweeting said.“[…] what we need is to reduce the cost to orbit by a factor of 10, not two,” he said. Costs are still around $20,000 per kilogram to orbit in many cases, a price that discourages innovation, Sweeting said.

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