The internet space race is hotting up

The internet space race already had three heavy-hitting contenders: SpaceX, OneWeb and Facebook. Now Amazon has entered the game.

The space internet these companies are promising is very different to the inherent satellite we have today.

Current satellite internet is pretty useless for most tasks because of its high latency. Latency is basically the amount of time it takes for a signal to reach you.

If you have a fast internet but high latency, it makes it useless for anything other than browsing static web pages.  You can’t stream music, you can’t make video calls, you can’t play games… you can’t do much of anything.

The reason the latency is so high with satellite internet is because the satellites are so far away.

Current internet satellites are geostationary, which means they are circling the Earth at the same speed as the Earth spins. So the satellite is always at the same point in the sky.

If one of these satellites is orbiting roughly around the equator, it can give a signal to most of the world.

The problem is, in order to do this, it needs to be around 36,000 km above the Earth. So it will always have a very high latency.

This new generation of space internet will use low earth orbit (LEO) satellites – hundreds of them.

It won’t matter that these satellites aren’t geostationary because there will be enough of them to cover the entire globe.

I’ve written before about the advantages of LEO satellite internet over what the world currently has, but to recap:

The benefits of LEO satellite internet

It covers the whole planet.

Even in many parts of the world’s most developed countries, internet coverage is a problem. If you live in the countryside, you will know this issue all too well.

And that’s before we even get to less inhabited areas. Try getting a decent internet connection in the wilderness.

It is (relatively) cheap.

This one may sound counterintuitive. But launching a few hundred satellites is actually a lot cheaper than building millions of miles of cable all around the world.

It can be used during natural disasters.

One of the first things to go during any natural disaster is communication. However, this would never happen in the age of LEO satellite internet.

All you would need is a laptop or phone and a fold-up satellite receiver to access the internet. Just imagine how many lives this could save.

It is universal.

Many people now see access to the internet as a human right. However, as of June last year, only 51% of the world has internet coverage.

The only way you are reading what I’m writing right now is because of the internet. I don’t have to tell you how fundamentally important internet access is to people’s lives and businesses.

LEO satellite internet puts the whole world on a level playing field.

It is resistant to censorship.

Live in a country where the state controls the media and only lets stories it approves see the light of day? Just connect to the LEOS internet and your local dictator can’t censor anything.

Trying to report from a war-torn county where the warring sides have severed all communication? Oh, wait, now they can’t.

Visiting China and want to go on Facebook? No need to use a VPN any more, just connect to the LEO satellite internet and get the same service you do at home.

This is one of the reasons people are getting concerned about China’s space lasers. From CNN in February:

A new Pentagon report on threats in space warns that China and Russia are both developing capabilities to threaten the US’ preeminent position, including lasers that could target and destroy US satellites.

“China and Russia, in particular, are developing a variety of means to exploit perceived US reliance on space-based systems and challenge the US position in space,” the Defense Intelligence Agency report said.

But to get back to the new space internet race…

Why Amazon will give SpaceX a run for its money

There are going to be a lot of LEO satellites circling the Earth fairly soon. From Spaceflight Now:

Starlink’s [SpaceX] biggest near-term competitor is OneWeb, backed by the Japanese firm SoftBank, Virgin Group, Airbus, Coca-Cola, Intelsat, the Mexican conglomerate Grupos Salinas, and other investors.

OneWeb launched its first six broadband satellites in February on a Russian-made Soyuz rocket from French Guiana.

The first phase of OneWeb’s fleet will number 648 satellites to fly into orbit on Soyuz rockets from Kazakhstan, Russia and French Guiana under the auspices of a multi-launch contract with Arianespace. OneWeb built a new satellite factory at Exploration Park near the Kennedy Space Center in Florida to produce the refrigerator-sized spacecraft in an assembly line fashion.

Telesat is planning a smaller network of broadband satellites in low Earth orbit. The Telesat LEO fleet will initially include 117 satellites, but could grow to hundreds more.

The first tech demo satellite for Telesat’s broadband project launched on an Indian rocket in January 2018. Earlier this year, Telesat selected Blue Origin’s New Glenn rocket, set to debut in 2021, to deliver many of the constellation’s satellites to orbit on multiple launches.

Blue Origin is owned by Jeff Bezos, the founder of Amazon, which is also designing a constellation of more than 3,000 broadband satellites under a project codenamed Kuiper.

So you would imagine this is going to lead to an awful lot of “space junk” and cause problems down the line.

However, a big advantage of LEO satellites is when they go wrong they don’t produce space junk. They drop out of orbit and burn up in the Earth’s atmosphere.

Until now it seemed like SpaceX had a big advantage over OneWeb and Facebook in that it has its own rocket company.

As I said back in March last year:

But because these LEO satellites are so small, they can stow away on rockets carrying bigger satellites further out to space.

This means anytime someone wants to use SpaceX (Tesla’s reusable rocket space programme) to launch something, Musk can send up a few of his Starlink satellites along too.

This is how he got his first two satellites into orbit last month [February 2018]. They went up with some Spanish military satellites SpaceX was launching.

However, Jeff Bezos, who owns Amazon, has his own commercial rocket business: Blue Origin. So it will definitely be giving SpaceX’s satellite internet a run for its money.

But that begs the question, will there be enough demand to support all these space internet projects?

From Wired:

This raises the question of whether there will be enough of a market to support one, much less four, multi-billion-dollar satellite mega-constellations. Although Starlink, Telesat, OneWeb, and Project Kuiper all aspire to connect the world, there may not be enough people who can afford their services. “Is there enough demand in the world for all that capacity coming online over the next 10 years? No one really knows,” says Matt Desch, CEO of Iridium, a satellite communication company that focuses on voice and data. “The investment markets are clearly concerned, which is why these new markets are being slow to be funded, at least by the public equity and debt markets.”

And that question is now even more of a concern thanks to the rapid evolution of 5G.

But will space internet be able to compete with 5G?

5G is already being rolled out in many parts of the world, including the UK, and it will be even faster, and most likely cheaper than space internet.

From Wired:

SpaceX will also have to compete with terrestrial internet providers. Even if SpaceX can lower its latency to around 20 milliseconds and match the average US internet download speed (around 93 megabits per second), the arrival of 5G could undermine its business. The eventual promise of 5G is to bring bandwidths of 10 gigabits per second to your phone. A lot needs to be done before 5G becomes a reality, but even on the slowest 5G development schedules it will likely be deployed before the 2027 deadline for SpaceX to finish its Starlink constellation. “My view is that these LEO constellations are totally uneconomic,” says Roger Rusch, president of TelAstra, a consulting firm that advises investors in the satellite industry.

So 5G will be faster, cheaper and easier to use than satellite internet. The one thing 5G won’t have going for it is uniform coverage though.

It also won’t be as resistant to government censorship and certainly won’t work in natural disasters.

So perhaps satellite internet will become a sort of base layer. Something you can always access anywhere on the planet if you need to. But if that’s the case, it surely won’t be commercially viable.

This is just one of the areas my publisher Nick O’Connor covers in his tech investment book: The Exponentialist.

He also dives into AI, robotics and renewable energy… all with the aim of finding out the best tech areas to invest in. And right now, you can get a free copy of The Exponentialist by following this link.

If you’re interested in tech investing, it makes for a very good read. But then I would say that, wouldn’t I? So why not find out what it’s like for yourself here.

This is just one of the areas my publisher Nick O’Connor covers in his tech investment book: The Exponentialist.

He also dives into AI, robotics and renewable energy… all with the aim of finding out the best tech areas to invest in. And right now, you can get a free copy of The Exponentialist by following this link.

If you’re interested in tech investing, it makes for a very good read. But then I would say that, wouldn’t I? So why not find out what it’s like for yourself here.
Until next time,

Harry Hamburg
Editor, Exponential Investor

Category: Technology

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