Space Race Pits SoftBank-Backed OneWeb Against Musk, Bezos: Q&A

(Bloomberg) -- From one floor of a low-key office block overlooking a busy overpass in west London, OneWeb is preparing for a battle in space with Elon Musk and Jeff Bezos.

The company is racing the two billionaires to install thousands of washing machine-sized satellites in low-earth orbit to bring high-speed internet to the half of the world’s population who can’t get it today.

OneWeb only decided on a corporate logo in April. It’s launched six satellites so far compared to 60 from Musk’s SpaceX Exploration Technologies Corp. But it’s done enough to convince Richard Branson’s Virgin Group, Japan’s SoftBank Group Corp., Qualcomm Inc., Airbus SE and other investors to part with more than $3.4 billion in funding.

Chief Executive Officer Adrian Steckel says he’s got priority access to many of the airwaves that offer the most reliable services and reckons OneWeb will beat SpaceX and Bezos’ Blue Origin LLC to switch on the first commercial low-earth orbit signals for phone networks, transportation companies, homes and schools that cannot be reached by fiber optic cables.

Steckel sat down with Bloomberg to explain how he plans to make it happen.

What’s the big idea?

OneWeb wants to envelop the globe with a web of constantly orbiting satellites offering low-latency connections roughly equivalent to 4G mobile, helping people on the move or in the majority of the world where it makes no economic sense to lay fiber lines. “We’re particularly focused on schools,” said Steckel. Company founder Greg Wyler spent much of his career developing rural telecommunications in Africa and OneWeb’s office is adorned with drawings by children from schools in Rwanda, Kyrgyzstan, Nepal, Honduras, Ecuador and Alaska who were asked to name each of its first six satellites.

Why OneWeb?

The satellites will orbit higher than those of SpaceX, giving wider coverage, yet not as high as the bigger satellites operated by older outfits like Intelsat SA and ViaSat Inc. which sit in fixed, “geostationary” positions above the Earth. Steckel says those traditional players have a disadvantage because signals from those satellites must travel much further. “We’re at 1,200 kilometers (746 miles), they’re at 36,000 kilometers. No terrestrial operator would be happy with the type of latency that you get from a geostationary satellite.” Intelsat already tried and failed to merge with OneWeb in 2017 and Steckel says his team has had discussions with other players to work together. “We think that there’ll be two to three players. We think we’re one of them, clearly SpaceX will be another.”

How’s It Coming Along?

The company sent up the first six satellites in February and wants to be launching 30 a month by December using mostly Arianespace SA’s Soyuz rockets to build an initial network of 648 units. By the end of 2021, OneWeb aims to secure about 25% of global space broadband capacity. “We’re going to have global coverage first, and then we’ll add more capacity to it. We’ve done filings for 2,000 satellites,” said Steckel. OneWeb will open a Florida factory on July 22 to mass produce satellites in a joint venture with European aerospace giant Airbus. Steckel says OneWeb has enough cash to keep it ticking over until next year and it’s raising more.

Can It Make Money?

That’s the tricky part — satellites are a big drain on capital and many projects never make any money. Several players are piling in with grand promises to connect the world’s internet users from space, from traditional operators such as Inmarsat Plc and Eutelsat SA to deep-pocketed new contenders including SpaceX, Blue Origin and LeoSat Enterprises. The OneWeb venture aims to prevail by slashing production costs. The first 648 units will cost about $1 million each. “But when you go to the next batch, it goes way below that, because we’ve amortized all the costs of the factory and whatnot,” said Steckel. “We will be able to broaden it and make it more affordable to everybody.”

Is Anyone Signing Up Yet?

Steckel says he’s speaking to governments in central Asia and Africa that want connectivity for schools, telecom companies aiming to fill gaps in their networks and business customers that want to connect their branches. OneWeb still needs U.S. regulators to approve the ground receivers its customers will need to use the service. Steckel expects the revenue to be flowing in soon enough for OneWeb to have positive cash flow by the time the service is up and running in 2022.

To contact the editor responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Thomas Pfeiffer

©2019 Bloomberg L.P.