LeoSat corporate broadband constellation sees GEO satellite operators as partners

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SINGAPORE – LeoSat Enterprises, which is designing a constellation of low-orbiting satellites to provide secure broadband links to corporate and global networks, is positioning itself as a natural partner to established geostationary-orbit satellite operators as it seeks to complete its Phase a fundraising round of $100 million.

LeoSat Chief Executive Mark Rigolle said that while the company’s original schedule has slipped a bit, the reaction of prospective investors and customers to the LeoSat idea has been encouraging.

In an interview here at the recent CommunicAsia conference, Rigolle said satellite manufacturer Thales Alenia Space of France and Italy has completed the LeoSat preliminary design review.

A Phase B funding round of $175 million will need to be completed before Thales Alenia Space moves to a detailed design review, which will refine the system architecture — including its overall cost and the number of satellites required — before hardware construction starts.

The LeoSat satellite design uses the same Thales Alenia Space Elite bus that is flying on the O3b Networks medium-Earth-orbit broadband constellation and is expected to launch starting this summer for mobile communications provider Iridium’s Iridium Next constellation of 66 low-orbit satellites.

Rigolle conceded that with so many low-orbit constellations shopping around for support, LeoSat has had to stress the fact that it is not offering broadband to consumers or to rural villages.

LeoSat is currently designed as a network of 78 satellites in six orbital planes, connected by optical intersatellite links, delivering Ka-band broadband to corporations and governments that want low-latency, high-speed secure links between Point A and Point B.

“Forget that we’re using satellites for a second,” Rigolle said. “We are a fully meshed optical network in space, an enterprise-grade VPN in the sky in terms of latency, security and redundancy. We are better than fiber because over distances of 10,000 kilometers, we are faster: Light travels faster in space than through glass.”

Rigolle said the work with Thales Alenia Space has tentatively confirmed, through a Phase A study of the system’s broad technical feasibility, that a 78-satelite network is likely to cost $3.5 billion, with the satellites being the largest compent. “Our design is not one where we can produce a satellite $500,000 per satellite,” he said, referring to OneWeb LLC, which has created a joint venture with Airbus Defence and Space to build 900 low-orbiting satellites, at $500,000 or less apiece.

Whether OneWeb Satellites will reach that $500,000 cost target remains to be seen.

“We are serving applications that are highly secure, latency-sensitive and need to get from point to point without traveling over third-party networks,” Rigolle said. “This is not a bent-pipe network like most other satellite systems.”

Rigolle said LeoSat does not view itself as competing with either traditional fixed satellite service fleet operators or with the other low-orbiting satellite constellations, most of which are directed at millions of consumers and small businesses.

“We are targeting maybe 3,000 to 5,000 customers total after a few years, selling them big chunks of fiber-like connectivity,” Rigolle said. “Each customer would have 2-3 tracking antennas on its rooftop for redundancy, so it’s several hundred thousand dollars of equipment. To give an example, the smallest increment we will be selling in is 100 megabits per second. For us, that is low throughput.”

Rigolle is a former chief financial officer of geostationary satellite fleet operator SES of Luxembourg, and former chief executive of O3b. SES was an early O3b investor and recently exercised an option to purchase 100 percent of O3b, citing complementarities between geostationary-orbit and low-orbit satellites.

OneWeb’s investor mix includes satellite fleet operator Intelsat of Luxembourg and McLean, Virginia, which like SES sees business opportunities in the low-orbit design, at least for some of its customers. Airline connectivity provider Gogo Inc. of Chicago has said it would use OneWeb to connect customers travelling over the polar regions where geostationary-orbit satellites, located over the equator, might be challenged to make the links.

Fleet operator Telesat of Canada is launching two small technology demonstration satellites for a low-orbiting constellation, although Telesat has not committed to building the system.

Rigolle said the LEO-GEO link in these cases is one reason he views a partnership with an established geostationary satellite fleet operator as a likely outcome for LeoSat. He explained the delay in Phase-A funding to the company’s shift in focus from financial investors such as investment funds to strategic investors such as established satellite operators.

With LeoSat still looking to complete its first round of funding, and OneWeb having announced no new investors since its initial $500 million a year ago, industry officials are beginning to question both the business case and the financial traction of these proposed systems.

Rigolle said that’s one reason LeoSat is strongly supportive of OneWeb, which has been the most active of the new low-orbit systems in lining up initial investors and contracting with a satellite manufacturer.

“OneWeb’s success would be good news for LeoSat, no doubt about it, even if they are moving toward a business-to-business orientation for their early operations – just as O3b did,” Rigolle said. “We are not in OneWeb’s business but the perception of the industry is such that a OneWeb problem would not be good news for us.”