Opinion

Branson-backed global internet project secures $500m, but will the costs prove out of this world?

8 min read

29 June 2015

OneWeb – which aims to bring about global satellite internet – recently announced a $500m series A round with investors including the Coca-Cola Company, Airbus Group and Hughes Network Systems.

Silicon Valley’s Greg Wyler has established OneWeb, with initial backers including Richard Branson’s Virgin Group and Qualcomm. Wyler had previously founded O3b Networks, which has satellites in orbit providing high-speed backbone internet to ISPs in emerging markets.

With OneWeb, he hopes to orchestrate an arrangement of mini-satellites around the world, intending to provide global internet access – rather than just to specific emerging markets. An alliance with communications satellite company Intelsat has set the foundations here. As part of the deal, Intelsat has taken a $25m stake in OneWeb.

The series A funding will be directed towards further establishing OneWeb’s satellite technology and stations based on the ground for mobile providers to distribute internet access via WiFi and LTE. It’s aiming to have the internet services functioning effectively by 2019. Hughes Network is building the ground stations – and has already been providing high-speed satellite internet to some markets from satellites in geostationary orbit.

Wyler said: “The dream of fully bridging the digital divide is on track to be a reality in 2019. Together with our committed founding shareholders we have the key elements in place: regulatory, technology, launches, satellites, as well as commercial operators in over 50 countries and territories.”

The lofty goals have meant questions are already circling as to how feasible the plans are – including whether Airbus will be able to keep up a rate of creating four satellites a day in a bid to make the initial deadline – and keep the cost down to $500,000 per satellite

There are also question marks as to whether the network, which will be considerable, will be able to communicate in and among itself without significant teething problems that it set it back – and without interfering with other signals.

When OneWeb completes its satellites, they will be in low Earth orbit, which would have the advantage of lowering the latency of its signals (making them comparable to fibre optic networks on Earth). Those in low Earth orbit do though, have a limited range of geography that they’re able to target, so utilising Intelsat’s communications satellite network, which is located in geostationary orbit, should enable them to make use of both satellites across the orbits.

Intelsat’s CEO Stephen Spengler said: “In collaborating on Ku-band access hardware, we will develop technologies with additional scale that will simplify access, reduce costs and open new addressable markets.”

Wyler didn’t provide significant insight into why he left O3b originally – simply stating there was a strong management team in place. Some may wonder why he didn’t attempt the project there, and expand O3b’s long-term aims to encompass the globe. He had joined Google’s internet satellite space project in 2013 and then left amid chatter he was going to work with Elon Musk’s Space X, so it’s interesting that a team-up hasn’t yet occurred.

Musk himself is also involved in the race to bring about high-speed internet via satellite. In May, he filed an application with the Federal Communications Commission to begin testing a similar system. Both his proposed system and Wyler’s OneWeb would utilise the low Earth orbit for their satellites – cutting the gap in time the satellite takes between receiving a request and responding from 500 milliseconds to around 20 milliseconds.

Sending up numerous satellites to blanket the Earth again flags up just how expensive the process could turn out to be. This is pertinent when considering the overriding aim of each of these initiatives – to give those access to the internet who don’t yet have it.

They’re not targeting the typical investors of their innovative ideas, or wealthy executives wanting to keep up to date with work while holidaying from every location they frequent. All elements of the planned service need to be factored in, so while it’ll be imperative to keep an eye on the cost of each satellite, the subscription cost also needs to be considered.

Bill Gates also ventured into the idea of using satellites to create high-speed internet, with Teledesic in the 90s – it planned to use 840 satellites, but suffered setback after setback and suspended operations in 2002, before handing over its wireless spectrum rights to the FCC in 2003.

More recently, Facebook’s Mark Zuckerberg had been waxing lyrical about the Internet.com initiative, where he hopes to bring internet services across the developing world. He had toyed with the possibility of providing satellite internet service here, but supposedly put the idea on hold after assessing the prospective cost.

Wyler has so far outlined that he predicts satellites will be set up in public places like schools which will provide WiFi connections – rather than every individual user buying their own dish.

With this project being unknown though, it seems difficult to accurately estimate just how much the system will cost until the network is set up to test the concept.

Having several planned satellite systems from different companies also conjures up concerns as to how they’ll operate around each other. Branson has said quite simply that they can’t.

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“Greg [Wyler] has the rights and there isn’t space for another network – like there physically is not enough space,” he said to Businessweek.

“If Elon wants to get into this area, the logical thing for him would be to tie up with us, and if I were a betting man, I would say the chances of us working together rather than separately would be much higher.”

Musk’s initial plans had tests beginning in 2016, with a provisional service up and running in five years – so it remains to be seen whether the projects will align sooner rather than later, or if obstinacy wins out and all systems run into trouble with the suddenly rather crowded space.

Google too, was rumoured to be coordinating a launch of 180 satellites – again to provide internet access to those 4.8bn people who aren’t online. The internet giant has also been looking into balloons and drones after acquiring Titan Aerospace, which builds solar-powered drones, and establishing Project Loon utilising high-altitude balloons to provide broadband. Overcrowding looks highly likely unless someone blinks first.

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