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The OneWeb Crash, first space victim of Covid-19 by Prof Serge Plattard, Deputy Director of the UCL Space Domain
By sergeplattard, on 30 April 2020
On March 27, the global space-based communication company OneWeb filed for Chapter 11 bankruptcy protection, with the intention of pursuing the sale of the company. This decision was triggered by the sudden withdrawal of one of its main investors, the Japanese SoftBank- already holding 35 % of OneWeb assets-, unable to abound additional money to fully fund the company through its deployment and commercial launch. OneWeb’s press release said that “While the Company was close to obtaining financing, the process did not progress because of the financial impact and market turbulence related to the spread of COVID-19.” It said also that before filing for bankruptcy, 85% of its 531 employees were laid-off.
OneWeb, created in 2015, is headquartered in the UK and is chaired by its charismatic founder Greg Wyler with subsidiaries in the United States, Singapore, and the UAE. The company aims to bring Internet access for everyone, everywhere, via a constellation of 650 low Earth orbit (1200 km) satellites with a network of global gateway stations and a range of user terminals in order to provide an affordable, fast, high-bandwidth and low-latency communications service for businesses and governments around the world. Initial services were planned to start in 2021.
To date, 74 satellites have been launched by Arianespace (last batch launched on March 21, 2020), while half of the 44 ground stations are completed or in development. The system has performed successful demonstrations with broadband speeds in excess of 400 Mbps and latency of 32 ms.
It is also worth mentioning that the OneWeb-Airbus joint venture has built and owns a satellite manufacture in Florida with a delivering capacity of the constellation’s microsats of 14/week for a couple of hundred thousand dollars each.
Considering such a major blow to the “New Space” world, some defeatists will say that this is the beginning of a series of innovative space enterprises going bust, underlining the fragility of their business plans, while others will observe that it was just a clap of thunder in the serene sky of New Space, hence highlighting two severe difficulties faced by OneWeb and exacerbated by the Covid-19 crisis. No more than that. These can be summarized as follows:
First, the business model was indeed difficult to set up as it relied primarily on SoftBank, and on other contributors such as Qualcomm, Hughes Network, Intelsat, Coca-Cola, Deutsche Bank and Airbus. This was not an easy task since the business case for this new kind of comsat constellations is not yet proven. Indeed in 2012, Greg Wyler himself went through a bitter experience when creating O3b (Other3 billion) destined to provide connectivity to the 3 billion off-networked people that would access to communications through a constellation of 20 medium Earth orbit satellites. Eventually this endeavour was salvaged in 2016 by SES (a European world leading geosynchronous orbit satcom operator) as it bought 03b and redirected its purpose to B2B connection needs. Quite the opposite of its intended initial purpose to say the least… However, since today’s technology and demand are quite different from those of the late 90s’- remember the astounding failures of Bill Gates’s Teledesic and Alcatel’s Skybridge constellations, it was worth introducing a new type of constellations using light, cheap and fast to manufacture satellites. These constellations looked so attractive that major satcom operators felt destabilised for a while, having to face such a disruptive model that may threaten the well-established geostationary telecom market. Yet, OneWeb achilleas heel remained: having already secured 3.5 billion dollars from investors, it needed twice this amount to complete the final financial round. The Covid-19 related level of featured financial uncertainties eventually discouraged the financiers to step up their commitments.
Second, this fragility was stressed by incoming competitors, the most serious of them being SpaceX with its project Starlink – consisting of populating orbits with thousands of satellites starting with 12 000 and possibly extending up to 42 000 connecting the whole world through ultra-fast broadband telecommunications, internet of things, etc- delivered at about the same price as a standard monthly internet subscription. Early 2019, the first batch of 60 satellites was launched. Today 417 operational satellites are on 550 km circular orbits and 1000 should be deployed by the end of the year. As for OneWeb, the business case underpinning such massive constellation still needs to demonstrate its profitability to attract new investors. To that end, indisputably Elon Musk’s holds a few trump cards, having its own launching means with the reliable Falcon 9 rockets family, benefiting of his company (SpaceX) portfolio of activities comprising large US civilian and defence public orders: a comfortable cushion allowing him to invest in risky technologies and innovative systems. Additionally, the successful launches of the constellation batches (April 22 was the last one with 60 satellites) have certainly built up confidence among investors witnessing the pace at which the system is deployed, notwithstanding the still long way to go. Moreover, SpaceX CEO Gwynne Shotwell, a predestined name in the launching business, opened hostilities in October 2019 at a popular investors’ meeting when declaring that Starlink, once fully operational, would be “17 times more efficient per bit “ (…) ”(OneWeb) deceives people who will face mid-term disappointment”. For its part, Elon Musk on March 9 showed how determined was his company: “Guess how many constellations projects didn’t go bust? Zero (…) we just don’t want to fall into that category”.
Under such pressures it was difficult for this British company to survive the shock following SoftBank’s withdrawal, its largest backer, highlighting the dependency, hence vulnerability, on just a few critical investors.
OneWeb’s bankruptcy announcement indicated that it intends to use the court proceedings to pursue a sale of its business in order to maximize the value of the company. Who may be the buyers?
Is SpaceX interested? Probably not, because it is pursing the development of its own system, convinced that better services/dollar than OneWeb can be delivered. The fall of OneWeb is taken by SpaceX as a major stone block removed from its path to success and domination of the info world.
How about Jeff Bezos’- Amazon’s CEO-? Amazon requested authorization to launch 3236 low Earth orbit satellites for its Kuiper project “a new initiative to launch a constellation of low Earth orbit satellites that will provide low-latency, high-speed broadband connectivity to unserved and underserved communities around the world”. A move from Amazon to benefit from OneWeb‘s technology and knowhow, in particular fast production lines, could reduce costs and time to market for the millions of beneficiaries of such new services.
Last but not least, Airbus? The European air and space giant might want to gain a foothold on the information market served by space means, requesting possible financial boost from the EU giving more visibility to European technologies, namely in space, adding to the already existing Galileo and Copernicus systems. No wonder that Thierry Breton, the new European Commissioner for internal market, in charge of space too, will look into that, notwithstanding it would take a strategic agreement of the 27 member states to go ahead…
The future of OneWeb remains definitely open for buyers. Through this blog we plan to keep you regularly posted as things unwind.
Updated UK Government Response 26 June 2020
Update: OneWeb on the recovery, ready to conquer broadband satellite services again
Prof Serge Plattard, Deputy Director, Space Domain, UCL
On July 11, the bankruptcy judge validated the takeover of OneWeb by the BidCo 100 Limited consortium made up of the British government (Department of Business, Energy and Industrial Strategy-BEIS)) and the Indian telecommunications company Bharti Global Limited for an amount of $ 1 billion. The ruling concluded OneWeb’s bankruptcy proceedings, which had been under Chapter 11 of US bankruptcy law since last March. In this way, OneWeb can once again conquer the global broadband satellite service provision market, competing with SpaceX’s Starlink and Amazon’s Kuiper constellations. To date, OneWeb has deployed 74 of the 720 satellites in its Ku / Ka band constellation in low Earth orbit (1200 km).
End of August, the company received approval from the Federal Communications Commission (FCC) for the deployment of 1280 additional V-band satellites at an altitude of 8500 km, as well as the carriage of V-band payloads on the 720 satellites of the first constellation. The FCC believes that this new infrastructure will increase the services offered as well as competition in the sector and lower the costs of access.
This decision follows a request from OneWeb filed last May with the FCC to launch 48 000 additional satellites. According to FCC licensing criteria, OneWeb will have to deploy half of this mega constellation by the end of August 2026 and the remaining by the end of August 2029.
For the record, SpaceX has already launched more than 700 Starlink satellites and has started Beta tests with very good performance. For its part, Amazon received approval in July from the FCC for the deployment of 3236 satellites of its Kuiper constellation into low Earth orbit for the provision of broadband services. The mega constellation race seems now well underway indeed!
Prof Serge Plattard
s.plattard@ucl.ac.uk
Prior to Prof. Serge Plattard’s current position as Deputy Director of the UCL Space Domain, Serge was Senior Resident Fellow at ESPI since 2012, a European space policy think tank he started and ran in 2004, working on space governance, exploration policies, and space security. From 1998-2003, he was CNES’s director for international relations. A nuclear physicist for 12 years, he then turned to science & technology diplomacy, first at the French Ministry of External relations in 1981, and later as science & technology counsellor with French Embassies in India, Japan, US and UK. He lectured in nuclear physics at Université d’Orsay, and in R&D innovation and technology economy at Université Paris-Dauphine, and the French Business School ESSEC. He also lectures at UCL and at the International Space University in Strasbourg. He is a life member of the American Physical Society, founding member of Euroscience and member of the International Academy of Astronautics. Serge is a Knight in the order of the Légion d’Honneur, and holds the Golden Rays in the order of the Sacred Treasure (Japan).
Prof Serge Plattard, Deputy Director of the UCL Space Domain, is currently involved in several activities with the International Astronautical Federation (IAF). He has been appointed on March 22, 2020 as the Secretary of the IAF Working Group on Space Traffic Management (STM). This working group, together with two others steered respectively by the International Academy of Astronautics (IAA), and the International Institute of Space Law (IISL) will present a White Paper on STM at the annual International Astronautical Congress to be held in Paris in October 2021. This White Paper will serve as a new platform to help contributing to a consensual approach on the major challenge of defining and applying common guidelines and/or regulatory processes to ensure a stable, secure, safe and sustainable space traffic.
Ideas and suggestions for input to this IAF Working group are most welcome and can be sent directly to Prof Serge Plattard until September 30, 2020.
Within IAF, Serge also holds two other positions as:
Chair of the Technical Committee on Space Security comprising over 50 members belonging to government departments, space agencies, industry, research and academic institutions;
Co-Chair of the newly created Symposium on Space Security that will hold its first session during the International Astronautical Congress in October 2020 taking place in Dubai. This symposium has received 47 contributions, feeding its two sessions,:
1. Policy, Legal, Institutional and Economic Aspects of Space Debris Detection Mitigation and Removal;
2. Cyber-security threats to space missions and countermeasures to address them, respectively. It is anticipated that in 2021, two other sessions will be added to this symposium.
Find out more about Serge Plattard on:
