Com Dev Gears Up for Mega-constellaton Opportunity

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PARIS — Satellite component maker Com Dev of Canada on March 9 said it had created a separate “Skunk Works”-type engineering team to prepare the company for bids on one or more of the mega-constellations offering satellite Internet services.

Com Dev specifically said it was working with prospective prime contractors for the proposed 650-satellite OneWeb system. The OneWeb company is expected to create a joint venture this year with the builder of its constellation.

Cambridge, Ontario-based Com Dev has supplied microwave or other components for most of the commercial geostationary-orbit satellites now in service, in addition to providing parts for mobile satellite services provider Iridium’s 66-satellite constellation in low Earth orbit.

Over 40 years, the company has supplied parts to around 900 satellites.

But plans by SpaceX of Hawthorne, California, OneWeb of Britain’s Channel Islands, and others make Com Dev’s record look like weekend garage tinkering. SpaceX, with $900 million from Google, is planning a 4,000-satellite constellation.

SpaceX Chief Executive Elon Musk has suggested his project will build its own satellites and not lean on established satellite-parts builders, who he said do not have much experience in mass production.

Michael Pley Com Dev
“OneWeb doesn’t want to do satellites for more than maybe $1 million or $2 million per satellite,” Com Dev Chief Executive Michael Pley said. “Compare that to a big geo satellite, which is about the size of the room we’re in now. The LEO (low Earth orbit) satellites are the size of a beer fridge.” Credit: Com Dev

In a conference call with investors, Com Dev Chief Executive Michael Pley conceded that point, but said Com Dev is an exception. In addition to building parts for big satellites, it has built its own spacecraft for its exactEarth subsidiary, co-owned with Hispasat of Spain, which provides ship-identification information to maritime authorities.

ExactEarth uses eight small satellites now and has three more scheduled for launch this year. To help it grow — and to generate potential liquidity for Com Dev and its investors — Com Dev and Hispasat have agreed to allow exactEarth to hire investment advisor Canaccord Genuity to explore strategic options.

According to Pley, Com Dev observers have said exactEarth’s full value is not reflected in Com Dev’s share price, and a strategic transaction could unlock that value in addition to giving exactEarth room to expand into the wider maritime data services market.

Pley said Com Dev has been preparing for bids on mega-constellation projects since mid-2014, and that the OneWeb project appears to be moving more quickly than the others.

Key to the Com Dev technologies that should appeal to constellations delivering worldwide Internet service are filters that enable satellite owners to calibrate the spectrum they are using to keep out noise and assure that they remain within the confines of their radio spectrum regulatory allocations.

The constellation ideas demand that Com Dev and other established satellite hardware builders rethink their approach to the business, Pley said.

“OneWeb doesn’t want to do satellites for more than maybe $1 million or $2 million per satellite,” Pley said. “Compare that to a big geo satellite, which is about the size of the room we’re in now. The LEO (low Earth orbit) satellites are the size of a beer fridge.

“You have to think differently in terms of a production paradigm. The [research and development] activity we are doing right now is actually more of a Skunk Works approach, separate from our main group. It’s a dedicated group of guys working with these things in mind.”

The ability of any of these constellations to move to full-scale production has not been demonstrated. For the moment, they have collected a few big-name investors or partners — Google for SpaceX, Qualcomm and Virgin Group for OneWeb among them — but have not incurred material charges for systems to cost $2 billion or more.

In the absence of a firm contract or other metric to judge the seriousness of the mega-constellation ventures, the broader market is left to measure how prospective contractors like Com De view them. In the conference call, Pley made clear he thinks there are real projects on the way.

OneWeb “appears to be moving,” Pley said. “If you look at their original timeline, they are sticking to their plans. For those looking to participate, if you are not ready to do it right now it’s probably too late. We have been working on this since the middle of last year.”

Unlike previous constellation plans of 15 years ago including Teledesic and SkyBridge, both of which failed before satellites were deployed, today’s projects feature what Pley called “the billionaire factor,” meaning they appear to have sufficient financing from the start.