Mark Rigolle
LeoSat’s new chief executive, Mark Rigolle. Credit: LeoSat

PARIS — LeoSat Enterprises of Delaware, backed by two former Schlumberger executives, changed chief executives in March but has not much changed its business model or satellite architecture.

After a feasibility study performed by Thales Alenia Space of France and Italy — which will be LeoSat’s prime contractor, using a satellite bus derived from the Iridium Next mobile communications constellation — LeoSat wants to launch 78-108 satellites into polar low Earth orbit.

Unlike most large constellations that have surfaced in the past couple of years, LeoSat remains resolutely business-to-business. Its customers are not individual consumers in connectivity-starved locales, but corporate giants that need to move large quantities of data quickly and securely from one place of business to another, with about equal amounts of traffic moving in both directions.

LeoSat’s new chief executive, Mark Rigolle — former chief financial officer of satellite fleet operator SES of Luxembourg, then chief executive of O3b Networks, a medium Earth orbit constellation of broadband satellites in equatorial orbit — is focused first and foremost on raising the capital needed to begin work.

What is your financing status?

We have selected a financial partner, GH Partners LLC of New York, a boutique investment house I have worked with before, and we are kicking off a $100 million A round of funding.

That seems like a lot for an A round.

It does, but we decided that instead of a small A round that doesn’t get you anywhere and turns into a B round even before it closes, we’d get the pain over with until probably the end of Phase B.

When do you hope to close A round funding?

We hope to close by the end of the first quarter of 2016. Then in the third or fourth quarter we will need more capital to sign the contract with Thales.

Will it be difficult to raise $100 million?

Anyone who says it’s not difficult to raise $100 million probably hasn’t done it recently.

What’s the total estimated capital expenditure needed?

Just over $3 billion, with peak funding of around $3.5 or $3.6 billion including operating costs, financing charges and so on. [The French export credit agency] Coface, for example, gives you 100 and then takes 5 or 10 back immediately as an up-front commission, a premium for the guarantee they provide. The all-in cost is acceptable, and my point is that the commission increases the peak funding requirement because it’s money that is off the table.

Have you definitively selected Thales Alenia Space as prime contractor?

Yes. I often get asked: Have you conducted a rigorous [request for proposal] process? The answer is: rigorous, yes, but not formal. There has been no formal [request for information] and so forth. That would have been wasting people’s time and we would have received lots of no-bids because not everybody can build these kinds of things.

Who else would have a production line that is ready, that will be available once Iridium Next construction is completed sometime in mid-2016, and so on? By the second half of 2016 we will need more funding to sign the construction contract with Thales.

Are you making any changes to the Iridium Next platform?

Yes, it is a few centimeters longer and we are adding solar arrays to increase the power to get us to 2.5 kilowatts per satellite.

Leosat satellite network
Concept of LeoSat satellite network. Credit: LeoSat

What does the system architecture look like?

It’s 78-108 satellites in polar orbit at 1,430 kilometers in altitude, six orbital planes with 18 satellites each. The satellites have 10-year operating lives and will use Ka-band radio frequency links up and down to the gateways, and optical inter-satellite links [ISLs], which sounds futuristic but has been tried and tested. Satellite mass is still to be determined, but we think we can get eight on a [SpaceX] Falcon 9 or four on a [Europeanized Russian] Soyuz rocket.

System throughput?

We will start where other people stop. Inmarsat’s new Global Xpress system has 50 mbps per spot beam to be shared by all the users. We will have dedicated spot beams to sell to a customer starting at 50 megabits per second up to 1.2-1.3 gigabits per second. So this is a different nature.

We think 90 percent of our traffic will be from one customer premise to another premise of the same customer — multinational corporations, banks and the like.

Do you need gateways?

We have gateway beams in our design but we think the beams will not be used much of the time, so they can be used as customer beams as well. So we have 10 1.2-gbps beams, and gateway beams will be 5-5.5 gigabits per second each. The idea is to be able to offload all the traffic that comes up on our satellites and then they go down to the ground, or to ISLs to be routed to the other satellite.

Each ISL can move 10 gigabits per second. We think only 10 percent of our business will go to gateway, and so we don’t need more than six to 10 gateways, with locations still to be determined. Our system is full duplex, completely symmetrical.

No enterprise wants just to ping the Internet and then download a video. They send and receive files and it’s roughly 50-50 even when it’s head office to branch, or retail outlet or logistics centers — what they send and receive is roughly equivalent.

The ISLs are needed for security?

Yes, and also for speed. New York to Tokyo on fiber takes around 250 milliseconds and for some customers this is too long a time. I heard recently about a consortium that wants to lay a cable through the Arctic to nibble off 60-70 milliseconds of that time and is raising $1.5 billion for that. Depending on the routing, our system can deliver that data in a minimum of 97 milliseconds to a maximum of around 130 milliseconds. There are many applications that want the kind of connectivity we can provide.

You are based in Delaware, but your International Telecommunication Union regulatory filing is from France. How will that work?

If we’re going to be using a French filing we will need a French entity. The French administration wants the filing to be in the hands of a French entity, which is fine with us. But then we cannot get Coface export credit financing because Thales is in France.

So we are in Delaware for the moment, but within six months there will be multiple companies. The legal headquarters will depend on operational concerns, export credit concerns and so on.

Your two co-founders are ex-Schlumberger managers. Are they going to retain a sizable stake in LeoSat?

Over the past two years they have been working with their own resources and resources from friends. They have been using that money as part of an LLC to create LeoSat Enterprises Delaware. Their role is to continue to move this project along and to fill gaps wherever they see them.

Are they as enthusiastic now as a year ago?

Yes — more than ever. They want to be involved in continuing to push the company forward.

What’s an example of a corporate need that LeoSat fills that is not filled today?

The idea started with oil rigs and oil exploration. The expensive data analysts and seismic experts are in headquarters, while the rigs are in the Arctic or the Gulf of Mexico. Helicopters come daily to pick up hard drives of seismic data. It’s because of the economics of not wanting to drill for 24 hours more than needed in an unproductive area.

It’s hard to believe satellites have not been used for this.

Satellite throughput is a trickle, that’s why.

Your former company, O3b Networks, has a similar idea.

O3b is a great network if all your rigs happen to be in a band north and south of the equator — with the proviso that, given the bent-pipe nature of each individual satellite, you have to go up to O3b, then down to a gateway, and then get somewhere from that gateway.

We will take it end to end and that leads us beyond just oil rigs to the enterprise-to-enterprise market — anyone who wants to get, in a secure way, lots of data fast from point A to point B.

I can get that on fiber though.

The fiber network gets you everything but not security. And it doesn’t necessarily get you the speed that we can. Let’s say you are a corporation in California that wants to move large amounts of data to China. Your AT&T fiber that takes it to a landing point, say in Los Angeles, and then there is a big exchange building where the fibers are linked up, and then you go from AT&T onto a submarine cable to take you to China. You land on the coast and then go onto the Chinese national telecom network’s fiber line, with an exchange probably in Beijing.

So even in that example you have had to change twice and you have been on three networks. That is not a secure solution.

If you have an antenna on your roof at both locations, you go up to one of our satellites, then across maybe two others, and then down in China. It hasn’t touched down anywhere, and no one can touch your signal. And in addition it will be encrypted, offering another layer of protection.

What is the minimum constellation size for the business model?

We can do this as soon as we have 78 satellites, from anywhere to anywhere. We’re in a polar orbit, which means good coverage of the poles even with only a few satellites, and then our coverage grows as we add satellites toward the equator. So it is a design that is completely complementary to O3b.

We can actually start generating revenue with 56 satellites, with coverage from the poles to within 30 degrees north and south of the equator. And if you look where global [gross domestic product] is, this is a pretty good portion of global demand. Then we add another eight satellites to get another big chunk of coverage that gets closer to full coverage at the equator.

What are your key goals in the next six months?

With any startup, you have a triangle. You need to build the system, get customers to sign up, and you need to get the funding. You can’t get the funding without customers, you can’t get the customers without building the system, and you can’t build the satellites if you don’t have the money. So everything has to happen at the same time.

You need customer commitments that soon?

We need to be able to look people in the eye and say we have serious traction in the market. One of the businesses LeoSat’s founders built is a business using terrestrial antennas serving the cruise industry in the Caribbean. Antennas are placed on a building and communicate with ships to offer a land-based solution out to around 60 kilometers at sea.

The problem is that if the ship diverts a bit, you have a loss of line of sight, and second if the ship wants to be used in the Mediterranean in addition to the Caribbean. So they want a global solution. That’s just an example of another application.

Peter B. de Selding was the Paris bureau chief for SpaceNews.