Established Companies Feeling ‘Déjà Vu’ on Mega-constellations

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COLORADO SPRINGS, Colo. — Major satellite builders and operators gathered here for the 31st Space Symposium invoked the specter of the 1990s space-telecom bust when asked about potentially disruptive low Earth orbit (LEO) constellations planned by upstarts OneWeb and SpaceX.

“Many of us who have lived through the decade of the ’90s do have a certain sense of déjà vu all over again,” Mike Hamel, vice president and general manager of commercial space at Lockheed Martin, said April 14 during the symposium’s “Commercial Satellite Mega-Panel” discussion.

Hamel was alluding to the large low-orbiting satellite constellations conceived in the 1990s that either never got off the ground or whose companies went bankrupt shortly after the satellites launched.

Hamel was perhaps the most optimistic panelist here.

“All that happened in the decade of the 90s were good technical ideas that, because of the time to market, got beat by other forms of terrestrial buildout,” Hamel said. “Now you’re seeing a lot of investments where there’s already established business cases and market bases as well as mass consumer markets out there.”

Others on the panel remained wary, and suggested that established commercial providers of space-based communications are better positioned than the newcomers to capitalize on demand for space-based Internet.

“Very large companies have lost more than $1 billion in this industry before,” Rupert Pearce, chief executive of London-based satellite operator Inmarsat. “Just because the first $1 billion goes in doesn’t mean the success is preordained.”

In January, SpaceX confirmed that Google and Fidelity Investments had invested a combined $1 billion in the Hawthorne, California, rocket maker, which simultaneously announced plans for a new satellite manufacturing plant in Seattle. SpaceX is planning a constellation of low Earth orbiting satellites for global high-speed Internet.

Also in January, OneWeb LLC, formerly WorldVu Satellites, netted an undisclosed investment from London-based Virgin and chip-giant Qualcomm, San Diego, for a planned global Internet constellation of 650 satellites. OneWeb’s system in particular aims to bring Internet to parts of the world where terrestrial communications infrastructure is lacking.

ViaSat CEO Mark Dankberg
ViaSat CEO Mark Dankberg. Credit: SpaceNews/Tom Kimmell

“One thing the LEOs are sort of trying to capitalize on its the sense that latency is a fatal problem in satellites,” said Mark Dankberg, chairman and chief executive of Carlsbad, California-based satellite operator ViaSat. He was referring to the time lag between signal transmission and reception for geostationary-orbiting satellites 36,000 kilometers above the equator.

However, “there’s a tradeoff between speed bandwidth and latency. If the metric is bandwidth delivered on target at the lowest capital cost, it seems like [geostationary satellites] have the best opportunity, mostly because it’s the most efficient way to get payload electric power in a geographical area.”

To prove his point, Dankberg cited a survey from consumer air-travel agent Route Happy, which found passengers on commercial flights preferred high-bandwidth space-based WiFi to air-to-ground WiFi, despite the lower latency offered by cell towers.

The head of the world’s second-largest satellite operator said neither the technical nor business challenges that face low Earth orbiting constellations have gone away.

“There’s no doubt about it, there’s real technical challenges for a system like this,” Stephen Spengler, chief executive of Intelsat, said during the panel. “There are also “business case challenges: You’re putting an awful lot of capacity over parts of the world where there’s no population.”