Why is Satellite Internet Hot Right Now?

In recent weeks Elon Musk has confirmed that he is looking at creating a 4,000 satellite worldwide internet network with his team at SpaceX in Seattle. Before this, he was rumored to be considering working with satellite internet pioneer Greg Wyler on a new ~700 satellite network called WorldVu, in which Google is an investor. However, it appears Elon decided to go it alone, and Wyler has instead partnered up with fellow space pioneer Richard Branson.

Google previously invested in Wyler’s satellite company O3B Networks, and he was for a time a Google employee, rumored to have been in the [X] lab. Now it turns out Google is mulling a large investment in SpaceX, most likely to propel its satellite internet ambitions forward. Then today, one of the companies pioneering the low cost satellites which could make this network possible, Planet Labs, announced it has closed a $95M financing round — and Google Ventures was an early investor.

So why is now the time for satellite internet to go mainstream?

Why Satellite Makes Sense Again

For years, satellite internet has the last resort for consumers wanting to get online, burdened with an image of being slow and expensive. However satellite technology is now advancing towards a critical point which could make it the predominant ‘leapfrog’ access mechanism for the billions around the world still not online.

The cost of access to space has fallen significantly already, driven mostly by Elon Musk and his mission at SpaceX. The company has stated that if they are successful in commercializing their reusable Falcon 9, then a trip to low earth orbit (about 1,200 miles away) could cost a mere $5–7m versus SpaceX own $61m price tag today, a 10x reduction in cost. Also, the broader trend towards miniaturization and commoditization has affected satellite construction positively too. A new generation of smaller satellites are now being built with off-the-shelf components at smaller sizes that allow multiple satellites to be launched in one rocket payload, by companies such as Planet Labs and Skybox Imaging (previously acquired by Google).

Thus, the cost of creating this global satellite network will be cheaper than ever before possible. Press reports have quoted the cost for building and launching these satellites at $1bn up to $3bn. That’s $3bn dollars to create a network that once launched will have close to zero operating costs and connect everyone in the entire world. Compare that figure to the ~$17bn that Verizon Wireless alone spent on capital expenditure on its network in 2014 — to serve only the small fraction of the world population who are Verizon customers in the United States.

While putting that many satellites in the sky for that price is indeed revolutionary, the other revolution will be what is done on the ground. The majority of Verizon and any other network operator’s costs goes to acquiring, upgrading, connecting and powering their cellular base stations. This is an expensive endeavor, with land procurement, rental costs and many other hurdles slowing down adoption and adding expense — none of which is included in this $3bn figure.

How will next-gen satellite internet providers avoid building out an expensive ground network?

Satellite Smartphones

Satellite phones today are bulky items with large antennae only capable of a minimum level of data transfer. They are also expensive. Fixed satellite connections into buildings require large, expensive satellite dishes and professional installation. However just as the high-profile technology in the sky is evolving, so is the technology on the ground.

There are numerous research teams and startups today looking at shrinking the size and cost of satellite antennae. This work could see antennae for high speed satellite data connections (think Ka-band instead of today’s L-band) small enough to be built into handsets directly. Imagine a worldwide satellite network paired with today’s $30 smartphones with a miniaturized satellite antennae built-in. Suddenly global communication and access to the internet is opened up for hundreds of millions of consumers worldwide, at a cost incomprehensible to “traditional” operators.

Companies such as Kymeta have already built small, flat antenna for high speed communications using the Ka-band. Kymeta has been a pioneer in the space and has raised over $82m in venture capital to support its goal, and has Bill Gates on its Board and as an investor. They’ve recently started the journey into mass producing these antennae, and continue to work on miniaturizing their form-factor.

While these antennae may not yet be able to fit on a handheld device, other companies such as Flish and Phasor Solutions are at the early stage of commercializing even smaller antennae that are about the size of an iPad today. Its not unfathomable that these teams can further shrink these packages to the size of a smartphone in the not-so-distant future.

The Path to the Satellite Adoption

On the way to that world, there are a number of other technologies closer to real life adoption. Companies like Endaga are creating base stations that cost 10x less than traditional cellular base stations and can use current antennae to interface directly with satellites rather than needing any ground infrastructure. At $6,000 each today, communities across Africa have been using them to build their own cell networks when national providers have forgotten about them. Building a satellite connection directly into one of these boxes (and perhaps a solar panel and battery for extremely remote areas) would create the ability to build an instant mobile network anywhere.

There also are other hurdles to handheld satellite communications, namely they require a line-of-sight between the two transmitters, creating problems for any users that are indoors. However using technologies such as hand-off to a WiFi network powered by a similarly inexpensive roof-mounted transmitter when indoors can solve that problem. Also, if operators wish is to deploy legacy mobile phone networks in parallel, traditional regulatory processes will have to be entered into before commencing operations.

Why Google & Facebook?

Most people with an internet connection (outside of mainland China) use both Google and Facebook everyday. As both companies reach full user penetration, growing the internet population will soon be one of the only key levers left to drive new user growth. While both organizations are working with governments and traditional internet service providers to instigate change, the fastest way to get access to the 3bn+ unconnected population is to build the infrastructure for them.

Building communications infrastructure on the ground in a traditional manner is expensive and time-consuming. Avoiding wires and red tape by beaming straight from the clouds is the quickest way to get to market. Google and Facebook have both explored using drones (through the acquisitions of Titan Aerospace and Ascenta, respectively), and Google has looked at using high-altitude balloons too (via Project Loon), but the pace of satellite and rocket technology development has picked up considerably and helped it push out into the lead once again.

US cellular operators spent over $300bn over the last ten years building their infrastructure in the US, and have passed on this plus running costs and subsidies for $800 handsets directly to the consumer. Google, SpaceX, Facebook and others think that this size of investment will never need to happen to connect the remainder of the world, namely Africa, which will be home to 40% of the world’s population by 2050.

What Could the Future Hold?

Thus it is not inconceivable that in a few more years, high speed satellite communications will be possible around the globe from small handheld devices.

Consumers in emerging markets who already spend a high proportion of their income on basic mobile telecommunication services will have the world of high speed data connectivity opened up to them via $30 Android or Nokia/Microsoft handset paired with a direct satellite connection.

Suddenly these three billion people are getting onto the internet for the first time, or getting out of the sandboxed web experiences they are accustomed to today. This will open up a world of education and information to those who want to be better informed and connected.

Africans leapfrogged fixed-line networks straight to mobile; they have leapfrogged credit/debit cards and gone straight to mobile payments; and they may never need the same road or retail infrastructure as the developed world by using drones for more effective distribution and delivery of goods.

All of this has been enabled by basic mobile phone networks, and when ubiquitous high-speed data is also part of the mix, there is no predicting the economic growth which could be unleashed.

Not inconsequentially, they will also be able to see as many ads as we are accustomed to on our smartphones today in the developed world, which will quickly return the investments made by Google, Facebook or any other platform in the technology today and explains some of their veracity in investing ahead of this opportunity.

Originally published at pmurphy.ie on January 20, 2015.