Connecting the Dots | Diverging NGSO distribution strategies
After revolutionizing the launch industry through vertical integration, SpaceX hopes to do the same for satellite broadband with its Starlink megaconstellation.
Starlink’s go-it-alone approach contrasts with OneWeb and others planning non-geostationary orbit (NGSO) services through a network of distributors.
Part of the reason is Starlink is initially focusing on consumer broadband, while others aiming to deploy hundreds or thousands of broadband satellites target government and enterprise customers.
Consumer broadband is a “highly price elastic market,” says NSR consultant Vivek Prasad. A Starlink price hike can reduce consumer demand — “hence control over pricing the services is very important across regions.”
The more players in the value chain, the more margins are compounded, impacting overall service pricing.
However, this does not shield the company from macroeconomic effects. SpaceX told Starlink customers March 22 that it is hiking up the cost of the service and hardware to tackle “excessive levels of inflation.”
And while the company’s do-it-all strategy enables Starlink to move faster in some markets because it does not have to wait for partners, Prasad said “growth acceleration gets restricted as it will take time for a new entrant to understand and deploy services in a new region or community.”
SpaceX COO Gwynne Shotwell said Starlink has been gaining market access and customer acceptance faster than expected.
“We’ve been quite pleased with the [adoption] of Starlink in countries that we thought would take a really long time,” with Brazil being a “perfect example,” Shotwell told the Satellite 2022 trade show in Washington in March.
After working for weeks to secure approval for Starlink in Ukraine through standard regulatory procedures, she said a Feb. 26 tweet to Elon Musk from a government minister requesting the service provided “our permission to provide capability” in the country.
However, rollout has not all been smooth sailing. India publicly ordered SpaceX in November to stop taking preorders for Starlink in the country until it has a license to operate there. Starlink’s lead executive in India resigned about a month later as SpaceX started refunding Indian deposits.
Nearby Pakistan issued a similar public order in January, advising its population to refrain from pre-ordering Starlink.
For the enterprise market, Prasad says progressing through partnerships is a “win-win strategy in order to deploy services fast in a region.”
Using “the ground-zero know-how of the regional players” is an efficient strategy for rapidly deploying services for them, he says.
OneWeb has announced numerous distribution partnerships worldwide — mostly with telecoms operators — for a constellation that has paused deployment following Russia’s invasion of Ukraine.
OneWeb had hoped to reach global coverage by August before scrapping plans to use six Russian Soyuz rockets to complete its deployment.
Once OneWeb’s rollout gets back on track, the company should be able to scale more quickly for enterprise customers by “integrating its network into existing solutions rather than trying to develop end-to-end solutions for various B2B market segments,” says Josephine Millward of early-stage investor Seraphim Capital.
OneWeb’s need for partners has grown after running into launch issues. The company said March 21 it has agreed a deal with SpaceX to resume launches this year in an announcement that offered no details about the arrangement.
On March 22, OneWeb announced that its second-largest shareholder, Eutelsat, signed a multiyear deal to sell OneWeb’s NGSO capacity globally across maritime, aviation, enterprise, telcos and government markets.
A day earlier, OneWeb said Speedcast, one of the largest buyers of satellite capacity, has also become a distribution partner.
With a partial in-orbit network that appears to only have full coverage in the upper parts of the northern hemisphere — and for fixed services and not mobile applications — OneWeb will likely be drawing on these partnerships for technology support as it seeks ways to cover a capacity shortfall.
In addition to eventually distributing capacity, Speedcast plans to participate in OneWeb customer trials starting in mid-2022 with Speedcast’s energy and enterprise customers, followed by maritime mobility customers in 2023.
This article originally appeared in the April 2022 issue of SpaceNews magazine.